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PROSPECTUS

424(b)(3)

PETMED EXPRESS, INC.

14,441,932 Shares of Common Stock

This prospectus covers the 14,441,932 shares of common stock
of PetMed Express, Inc. being offered for resale by certain
selling security holders.

Our common stock is traded on the OTCBB under the trading
symbol "PETS". On July 31, 2002, the closing price for our common
stock was $2.00.

-------------------------------

This investment involves a high degree of risk. You should
purchase shares only if you can afford a complete loss of your
investment. See "Risk Factors" beginning on page 3.

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities, or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.

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August 12, 2002

PROSPECTUS SUMMARY

This summary contains what we believe is the most important
information about us and the offering. You should read the entire
document for a complete understanding of our business and the
transactions in which we are involved. The purchase of the
securities offered by this prospectus involves a high degree of
risk. See the "Risk Factors" section of this prospectus for risk
factors.

The Company

Business Description

PetMed Express, Inc. and subsidiaries, d/b/a 1-888-PetMeds,
is the leading nationwide pet pharmacy. We deliver prescription
and non-prescription pet medications along with health and
nutritional supplements at a savings direct to the consumer,
through the PetMed Express catalog and postcards, customer
service representatives and on the Internet through our web site
at www.1888PetMeds.com. Our nationwide pet pharmacy provides an
attractive alternative for obtaining pet medications in terms of
convenience, costs savings, superior customer service, enhanced
shopping flexibility, ease of ordering and reordering, and rapid
home delivery.

Our fiscal year end is March 31, and our executive offices
are located at 1441 S.W. 29th Avenue, Pompano Beach, Florida
33069, telephone number is 954-979-5995.

References throughout this prospectus to "PetMed Express,"
"PetMed Express.com," "PetMed," "1-888-PetMeds," "the Company,"
"we," "us" and "our" refer to PetMed Express, Inc., a Florida
corporation and its subsidiaries.

The Offering

Selling Shareholders

This prospectus covers up to 14,441,932 shares of our common
stock which may be sold by the selling stockholders identified in
this prospectus. The shares of common stock are underlying
certain warrants and options not covered by our 1998 Stock Option
Plan.

Summary Financial Information

The financial data set forth below under the captions
"Results of Operations Data" and "Balance Sheet Data" as of March
31, 2002 and for the years ended March 31, 2002 and 2001 are
derived from the audited financial statements of PetMed Express,
included elsewhere in this Prospectus, by Goldstein Golub Kessler
LLP, independent public accountants. The data set forth below
should be read in conjunction with the financial statements and
notes thereto included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations." Note that current financial condition is
not indicative of future results.

Results of Operations Data
--------------------------

Year Year
Ended Ended
March 31, 2002 March 31, 2001
-------------- ---------------

Sales $ 32,025,931 $ 10,006,285
Cost of sales 18,894,493 6,367,604
------------ ------------
Gross profit 13,131,438 3,638,681

Operating expenses 12,383,498 6,277,779
------------ ------------
Net income (loss) $ 825,413 $ (2,826,707)
============ ============
Net income (loss) per
common share:
Basic $0.05 $(0.28)
===== ======
Diluted $0.04 $(0.28)
===== ======
Weighted average number
of common shares outstanding:
Basic 16,360,010 9,943,625
========== =========
Diluted 19,739,493 9,943,625
========== =========

Balance Sheet Data
------------------

Year Year
Ended Ended
March 31, 2002 March 31, 2001
-------------- ---------------

Working capital (deficit) $ 690,588 $ (2,473,349)
Total assets 4,654,236 4,504,757
Total liabilities 3,071,536 3,747,470
Shareholder's equity 1,582,700 757,287

FORWARD LOOKING STATEMENTS

The discussion in this Prospectus regarding our business and
operations includes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1996.
Such statements consist of any statement other than a recitation
of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or
other variations thereon or comparable terminology. The reader is
cautioned that all forward-looking statements are speculative,
and there are certain risks and uncertainties that could cause
actual events or results to differ from those referred to in such
forward-looking statements. This disclosure highlights some of
the important risks regarding our business. The risks included
should not be assumed to be the only things that could affect
future performance. Additional risks and uncertainties include
the potential loss of contractual relationships, fluctuations in
the volume of procedures performed by our facilities and
physicians, changes in the reimbursement rates for those services
as well as uncertainty about the ability to collect the
appropriate fees for services provided by us.

RISK FACTORS

You should carefully consider the risks described below
before making an investment decision. Please also note that
there are other risks and uncertainties not presently known to us
or that we currently deem immaterial. If any of the following or
such other risks actually occur, our business, financial
condition or results of operations could be materially and
aversely affected.

We have only recently attained profitability and there are
no assurances that we can sustain profitable operations in future
periods.
- -----------------------------------------------------------------

While we reported net income of approximately $825,000 for
the year ended March 31, 2002, we reported a net loss of
approximately $2,827,000 for the year ended March 31, 2001 and
have an accumulated deficit at March 31, 2002 of approximately
$4,971,000. Our profitability during fiscal 2002 is due in part
to an increase in our revenues of approximately $22,000,000, or
approximately 220%, from fiscal 2001. There are no assurances we
will continue to generate revenues at this increased level, or
that we will remain profitable during fiscal 2003 and beyond. If
our operations were to cease being profitable, our liquidity in
future periods would be adversely affected.

We may fail to comply with various state or federal
regulations covering the dispensing of prescription pet
medications. We could be subject to reprimands, sanctions,
probations, fines, suspensions or the loss of one or more of our
pharmacy licenses.
- -----------------------------------------------------------------

The sale and delivery of prescription pet medications is
generally governed by state laws and state regulations. Since
our pharmacy is located in the state of Florida, the Company is
governed by the laws and regulations of the state of Florida.
Each prescription pet medication sale we make is likely to be
covered by the laws of the state where the customer is located.
The laws and regulations relating to the sale and delivery of
prescription pet medications vary from state to state, but
generally require that prescription pet medications be dispensed
with the authorization from a prescribing veterinarian. To the
extent that we are unable to maintain our license with the
Florida Board of Pharmacy as a community pharmacy, or if we do
not maintain the licenses granted by other state boards, or if we
become subject to actions by the FDA, or other enforcement
regulators, our distribution of prescription medications to pet
owners could be severely reduced, which could have a material
adverse effect on our operations.

While we make every effort to fully comply with the
applicable state rules and regulations, from time to time we have
been the subject of administrative complaints regarding the
authorization of prescriptions prior to shipment. We cannot
assure you that we will not continue to be the subject of
administrative complaints in the future. We cannot guarantee you
that we will not be subject to reprimand, sanctions, probations,
or to fines, or that one or more of our pharmacy licenses may not
be suspended or revoked.

Our alternate veterinarian program was discontinued and was
under investigation by the Florida Board of Pharmacy and Florida
Agency for Health Care Administration, and by various other
state's pharmacy boards, which could reduce or eliminate our
ability to verify certain prescriptions outside the state of
Florida.
- -----------------------------------------------------------------

We utilized the services of alternate veterinarians to
verify certain prescriptions for animals residing outside the
state of Florida. The alternate veterinarian was not the
veterinarian who had actually seen the animal and may reside in
another state from the animal. We have received complaints not
disclosed of in the September 20, 1999 settlement with the
Florida Board of Pharmacy and Florida Agency for Health Care
Administration. These complaints alleged violations of the
Florida Pharmacy Act and regulations promulgated thereunder. In
February 2002, we voluntarily ceased the use of the alternate
veterinarian program, and in March 2002 a business decision was
made to enter into a settlement agreement with the Florida Board
of Pharmacy. Many of the complaints were for prescriptions
verified through our alternate veterinarian program. The
alternate veterinarian program used a veterinarian outside the
state of Florida to verify the prescription for certain pets
outside the state of Florida. The program was not used for pets
residing in the State of Florida. Future complaints may be
brought against the Company by states in which this program was
utilized. We are unable to assess the potential impact on our
business or any future penalties that may be assessed from these
or other complaints.

We may need to raise additional capital in order to continue
to implement our business plan.
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We may be required to raise additional capital during the
next 12 months to satisfy our cash requirements in order to
implement our business plan. Presently our working capital is
limited to capital available to us from operations or under our
line of credit. We may seek to raise additional capital through
the sale of equity securities. We cannot guarantee that we will
be successful in obtaining capital upon terms acceptable to us,
if at all. Our failure to secure necessary financing may have a
material adverse effect on our financial condition and results of
operations.

We currently purchase our prescription and non-prescription
medications from third party distributors and we are not an
authorized distributor of those products. We do not have any
guaranteed supply of these medications at any pre-established
prices.
- -----------------------------------------------------------------

For the fiscal year ended March 31, 2002, approximately 92%
of our sales were attributable to sales of prescription and non-
prescription medications. Sales of these products have also
accounted for 79% of our total sales during the fiscal year ended
March 31, 2001. Historically, substantially all the major
pharmaceutical manufacturers have declined to sell prescription
and non-prescription pet medications directly to us. In order to
assure a supply of these products, we purchase medications from
various secondary sources, including a variety of domestic
distributors. Our business strategy includes seeking to
establish direct purchasing arrangements with major pet
pharmaceutical manufacturing companies. If we are not successful
in achieving this goal, we would need to rely upon distributors.

We cannot guarantee that if we continue to purchase
prescription and non-prescription pet medications from
distributors that we will be able to purchase an adequate supply
to meet our customers' demands, or that we will be able to
purchase these products at competitive prices. As these products
represent a significant portion of our sales, our failure to fill
customer orders for these products could adversely impact our
sales. If we should be forced to pay higher prices for these
products to ensure an adequate supply, we cannot guarantee that
we will be able to pass along to our customers any increases in
the prices we pay for these medications. This inability to pass
along increased prices could materially adversely affect our
results of operations.

Our failure to properly manage our inventory may result in
excessive inventory carrying costs, which could materially
adversely affect our financial condition and results of
operations.
- -----------------------------------------------------------------

During the fiscal year ended March 31, 2002 our current
product line contained approximately 600 SKUs. A significant
portion of our sales is attributable to products representing
approximately 50 SKUs. We need to properly manage our inventory
to provide an adequate supply of these products and avoid
excessive inventory of the products representing the balance of
the SKUs. We generally place orders for products with our
suppliers based upon our internal estimates of the amounts of
inventory we will need to fill future orders. These estimates
may be significantly different from the actual orders we receive.
In the event that subsequent orders fall short of original
estimates, we may be left with excess inventory. Significant
excess inventory could result in price discounts and increased
inventory carrying costs. Similarly, if we fail to have an
adequate supply of some SKUs, we may lose sales opportunities.
We cannot guarantee that we will maintain appropriate inventory
levels. Any failure on our part to maintain appropriate
inventory levels may have a material adverse effect on our
financial condition and results of operations.

Resistance from veterinarians to authorize prescriptions
could cause our sales to decrease and could materially adversely
affect our financial condition and results of operations.
- -----------------------------------------------------------------

Since we began our operations, from time to time, some
veterinarians have resisted providing our customers with a copy
of their pet's prescription or authorizing the prescription to
our pharmacy staff, thereby effectively preventing us from
filling such prescriptions under state law. Sales of
prescription medications represented approximately 34% and 23% of
our sales for the fiscal years ended March 31, 2002 and 2001,
respectively. Although veterinarians in some states are required
by law to provide the pet owner with this prescription
information, if the number of veterinarians who refuse to
authorize prescriptions should increase, our sales could decrease
and our financial condition and results of operations may be
materially adversely impacted.

Our success depends in part on the willingness of consumers
to purchase pet medications from us. If we do not succeed in
changing consumer-purchasing patterns, our results of operations
may be materially adversely affected.
- -----------------------------------------------------------------

The direct marketing of prescription and non-prescription
pet medications and health and nutritional supplements is in its
infancy. Our success will depend upon our ability to engage
consumers who have historically purchased pet medications and
health and nutritional supplements from veterinarians. We may
not be able to convert a large number of these pet owners to our
customers. In order for us to be successful, many of these
consumers must be willing to utilize new ways of buying these
products. We cannot guarantee that we will be successful in
shifting these consumers' purchasing patterns away from
veterinarians to us. If we do not attract consumers to purchase
these products from us, our results of operations may be
materially adversely impacted.

In the past we have purchased medications from international
distributors and we did not always know if those distributors had
the authority of the manufacturer to sell the products in the
United States. As a result, we may be subject to future civil or
administrative actions regarding those products.
- -----------------------------------------------------------------

During fiscal 2002, a business decision was made to
discontinue purchasing any product from international
distributors. We have purchased a portion of our prescription
and non-prescription medications from international distributors
in the past. These medications may be trademarked and/or
copyrighted products manufactured in foreign countries or in the
United States and sold by the manufacturer to foreign
distributors. Some of the prescription and non-prescription
medications may have been manufactured by entities, particularly
foreign licensees, who are not the licensors or owners of the
trademarks or copyrights for the medications. From time to time,
United States trademark and copyright holders, their licensees,
trade associations and the United States Customs Service have
instigated litigation or administrative agency proceedings in an
attempt to halt the importation or sale of trademarked and/or
copyrighted products. The courts remain divided on the extent to
which trademark, copyright or other laws, rules, regulations or
decisions may restrict the importation or sales of this
merchandise without the consent of the trademark or copyright
owner.

There can be no assurance that future judicial, legislative
or administrative agency action, including possible import,
export, tariff or other trade restrictions, will not limit or
eliminate some of the secondary sources of supply used by us.
Moreover, there can be no assurance that our business activities
or merchandise sold to us will not become the subject of legal or
administrative actions brought by manufacturers, distributors,
the United States Customs Service or others. Such judicial,
legislative, administrative or legal actions could have a
material adverse effect on our business and results of
operations.

Significant portions of our sales are made to residents of
seven states. If we should lose our pharmacy license in one or
more of these states, our financial condition and results of
operations would be materially adversely affected.
- -----------------------------------------------------------------

While we ship pet medications to customers in almost all 50
states, approximately 52% of our sales for the fiscal year ended
March 31, 2002 were made to customers located in the states of
Florida, California, Texas, New York, North Carolina, Georgia,
and Virginia. If for any reason our license to operate a
pharmacy in one or more of those states should be suspended or
revoked, or if it is not renewed, our financial condition and
results of operations may be materially adversely affected.

We face significant competition from veterinarians and
traditional and online retailers and may not be able to
profitably compete with them.
- -----------------------------------------------------------------

We compete directly and indirectly with veterinarians in the
sale of pet medications and health and nutritional supplements.
Veterinarians hold a competitive advantage over us because many
pet owners may find it more convenient or preferable to purchase
these products directly from their veterinarians at the time of
an office visit. We also compete directly and indirectly with
both online and traditional retailers of pet medications and
health and nutritional supplements. Both online and traditional
retailers may hold a competitive advantage over us because of
longer operating histories, established brand names, greater
resources and an established customer base. Online retailers may
have a competitive advantage over us because of established
affiliate relationships to drive traffic to their web site.
Traditional retailers may hold a competitive advantage over us
because pet owners may prefer to purchase these products from a
store instead of online or through traditional catalog/telephone
methods. In order to effectively compete in the future, we may
be required to offer promotions and other incentives, which may
result in lower operating margins or operating losses.

We also face a significant competitive challenge from our
competitors forming alliances with each other, such as those
between online and brick and mortar retailers. These
relationships may enable both their retail and online stores to
negotiate better pricing and better terms from suppliers by
aggregating the demand for products and negotiating volume
discounts which could be a competitive disadvantage to us.

The content of our web site could expose us to various kinds
of liability, which, if prosecuted successfully, could negatively
impact our business.
- -----------------------------------------------------------------

Because we post product information and other content on our
web site, we face potential liability for negligence, copyright
infringement, patent infringement, trademark infringement,
defamation and other claims based on the nature and content of
the materials we post. Various claims have been brought, and
sometimes successfully prosecuted, against Internet content
distributors. We could be exposed to liability with respect to
the unauthorized duplication of content or unauthorized use of
other parties' proprietary technology. Although we maintain
general liability insurance, our insurance may not cover
potential claims of this type, or may not be adequate to
indemnify us for all liability that may be imposed. Any
imposition of liability that is not covered by insurance, or is
in excess of insurance coverage, could materially adversely
affect our financial condition and results of operations.

We may not be able to protect our intellectual property
rights, and we may be found to infringe on the propriety rights
of others.
- -----------------------------------------------------------------

We rely on a combination of trademark, trade secret,
copyright laws and contractual restrictions to protect our
intellectual property. These afford only limited protection.
Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy our private label
generic equivalents, when and if developed, as well as aspects of
our sales formats, or to obtain and use information that we
regard as proprietary, including the technology used to operate
our web site, our content and our trademarks.

Litigation or proceedings before the United States Patent
and Trademark Office may be necessary in the future to enforce
our intellectual property rights, to protect our trade secrets
and domain names, and to determine the validity and scope of the
proprietary rights of others. Any litigation or adverse priority
proceeding could result in substantial costs and diversion of
resources, and could seriously harm our business and operating
results.

Third parties may also claim infringement by us with respect
to past, current or future technologies. We expect that
participants in our markets will be increasingly involved in
infringement claims as the number of services and competitors in
our industry segment grows. Any claim, whether meritorious or
not, could be time consuming, result in costly litigation, cause
service upgrade delays or require us to enter into royalty or
licensing agreements. These royalty or licensing agreements
might not be available on terms acceptable to us or at all.

If we are unable to protect our Internet domain name or to
prevent others from using names that are confusingly similar, our
business may be adversely impacted.
- -----------------------------------------------------------------

Our Internet domain names, www.1888PetMeds.com,
www.petmedexpress.com, and www.petmeds.com are critical to our
brand recognition and our overall success. If we are unable to
protect these domain names, our competitors could capitalize on
our brand recognition. We are aware of substantially similar
domain names, including www.petmed.com, used by competitors.
Governmental agencies and their designees generally regulate the
acquisition and maintenance of domain names. The regulation of
domain names in the United States and in foreign countries has
changed, and may undergo further change in the near future.
Furthermore, the relationship between regulations governing
domain names and laws protecting trademarks and similar
proprietary rights is unclear. Therefore, we may not be able to
protect our own domain names, or prevent third parties from
acquiring domain names that are confusingly similar to, infringe
upon or otherwise decrease the value of our domain names.

Since all of our operations are housed in a single location,
we are more susceptible to business interruption in the event of
damage to or disruptions in our facility.
- -----------------------------------------------------------------

Our headquarters and distribution center are located in the
same building in South Florida, and all of our shipments of
products to our customers are made from this sole distribution
center. We have no present plans to establish any additional
distribution centers or offices. Because we consolidate our
operations in one location, we are more susceptible to power and
equipment failures, and business interruptions in the event of
fires, floods and other natural disasters than if we had
additional locations. Furthermore, because we are located in
South Florida, which is a hurricane-sensitive area, we are
particularly susceptible to the risk of damage to, or total
destruction of, our headquarters and distribution center and
surrounding transportation infrastructure caused by a hurricane.
We cannot assure you that we are adequately insured to cover the
amount of any losses relating to any of these potential events,
business interruptions resulting from damage to or destruction of
our headquarters and distribution center; or interruptions or
disruptions to major transportation infrastructure or other
events that do not occur on our premises.

A portion of our sales are seasonal and our operating
results are difficult to predict and may fluctuate.
- -----------------------------------------------------------------

Because our operating results are difficult to predict, we
believe that quarter-to-quarter comparisons of our operating
results are not a good indication of our future performance.
Portions of our sales are seasonal in nature, primarily as a
result of the volume of sales of flea and tick control products
during the summer season. This seasonality results in increased
sales of these products during our first and second fiscal
quarters. In addition to the seasonality of some of our sales,
our annual and quarterly operating results have fluctuated in the
past and may fluctuate significantly in the future due to a
variety of factors, many of which are out of our control.
Factors that may cause our operating results to fluctuate
include:

* Our inability to obtain new customers at a reasonable
cost, retain existing customers, or encourage reorders;

* Our inability to increase the number of visitors to our
web site, or our inability to convert visitors to our
web site into customers;

* The mix of medications and other pet products sold by
us;

* Our inability to manage inventory levels;

* Our inability to adequately maintain, upgrade and
develop our web site, the systems that we use to
process customer's orders and payments, or our computer
network;

* Increased competition within our market niche;

* Price competition;

* Increases in the cost of advertising;

* The amount and timing of operating costs and capital
expenditures relating to expansion of our product line
or operations; and

* Disruption of our toll-free telephone service
technical difficulties, systems outages or Internet
slowdowns.

Any change in one or more of these factors could materially
adversely affect our results of operations in future periods.

Our shares of common stock currently have a limited trading
market.
- -----------------------------------------------------------------

Our shares of common stock are currently quoted on the OTC
Bulletin Board. Our shares of common stock currently have only a
limited trading market. As a result, you may find it difficult
to dispose of shares of our common stock and you may suffer a
loss of all or a substantial portion of your investment in our
common stock.

Our stock price fluctuates from time to time and may fall
below expectations of securities analysts and investors, and
could subject us to litigation, which may result in you suffering
the loss of your investment
- -----------------------------------------------------------------

The market price of our common stock may fluctuate
significantly in response to a number of factors, some of which
are beyond our control. These factors include: quarterly
variations in operating results; changes in accounting treatments
or principles; announcements by us or our competitors of new
products and services offerings, significant contracts,
acquisitions or strategic relationships; additions or departures
of key personnel; any future sales of our common stock or other
securities; stock market price and volume fluctuations of
publicly-traded companies; and general political, economic and
market conditions.

It is likely that in some future quarter our operating
results may fall below the expectations of securities analysts
and investors, which could result in a decrease in the trading
price of our common stock. In the past, securities class action
litigation has often been brought against a company following
periods of volatility in the market price of its securities. We
may be the targets of similar litigation in the future.
Securities litigation could result in substantial costs and
divert management's attention and resources, which could
seriously harm our business and operating results.

The interests of our controlling stockholders could conflict
with those of our other stockholders.
- -----------------------------------------------------------------

Our directors and executive officers, together with our
other principal stockholders, own or control approximately 84% of
our voting securities, after the offering. These stockholders
are able to influence the outcome of stockholder votes, including
votes concerning: the election of directors; amendments to our
charter and by-laws; and the approval of significant corporate
transactions like a merger or sale of our assets. This
controlling influence could have the effect of delaying or
preventing a change in control, even if many of our stockholders
believe it is in their best interest.

We may issue additional shares of preferred stock that could
defer a change of control or dilute the interests of our common
stockholders. Our charter documents could defer a takeover
effort, which could inhibit your ability to receive an
acquisition premium for your shares.
- -----------------------------------------------------------------

Our charter permits our board of directors to issue up to
5,000,000 shares of preferred stock without shareholder approval.
Currently there are 2,500 shares of our Convertible Preferred
Stock issued and outstanding. This leaves 4,997,500 shares of
preferred stock available for issuance at the discretion of our
board of directors. These shares, if issued, could contain
dividend, liquidation, conversion, voting or other rights which
could adversely affect the rights of our common shareholders and
which could also be utilized, under some circumstances, as a
method of discouraging, delaying or preventing our change in
control. Provisions of our articles of incorporation, bylaws and
Florida law could make it more difficult for a third party to
acquire us, even if many of our stockholders believe it is in
their best interest.

CAPITALIZATION

The following table sets forth our capitalization as of
March 31, 2002. The table should be read in conjunction with our
consolidated financial statements and related notes included
elsewhere in this prospectus.

March 31, 2002
--------------

Current maturities of long-term debt $ 68,442
Long-term debt...................................... 278,099
Shareholders' equity:
Common stock, $.001 par value, 40,000,000
shares authorized, 16,360,010 shares issued
and outstanding................................... 16,360
Preferred stock, $.001 par value, 5,000,000
shares authorized, 2,500 shares issued or
outstanding....................................... 8,898
Additional paid-in capital.......................... 6,528,885
Accumulated deficit................................. (4,971,443)
--------------
Total shareholders' equity.......................... $ 1,582,700
==============
Total capitalization................................ $ 1,929,241
==============

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Our shares of common stock are traded on the OTCBB under the
symbol "PETS". The closing price of our common stock on July 31,
2002 as reported on the OTCBB was $2.00. The following tables set
forth the high and low closing sale prices for the common stock
as reported by OTCBB:

Common Stock

Period High Low
------ ------- -------

April 1, 2000-June 30, 2000................... $ 3.25 $ 1.00
July 1, 2000-September 30, 2000............... $ 1.50 $ .38
October 1, 2000-December 31, 2000............. $ .44 $ .22
January 1, 2001-March 31, 2001................ $ 1.13 $ .09
April 1, 2001-June 30, 2001................... $ 2.25 $ .81
July 1, 2001-September 30, 2001............... $ 1.45 $ .56
October 1, 2001-December 31, 2001............. $ 1.21 $ .65
January 1, 2002-March 31, 2002................ $ 1.30 $ .73
April 1, 2002-June 30, 2002................... $ 1.80 $ .76

As of July 1, 2002 there were 50 holders of record of our
common stock. We estimate that there are in excess of 300
shareholders of our common stock.

Holders of our common stock are entitled to cash dividends
when, as may be declared by the board of directors. We do not
intend to pay any dividends in the foreseeable future and
investors should not rely on an investment in us if they require
dividend income. We intend to retain earnings, if any, to finance
the development and expansion of our business. Future dividend
policy will be subject to the discretion of our board of
directors and will be based upon future earnings, if any, our
financial condition, capital requirements, general business
conditions and other factors. There can be no assurance that cash
dividends of any kind will ever be paid.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares
of common stock by the selling shareholders. If, and when, the
warrants and non-plan options are exercised by the selling
shareholders, the proceeds of $1,922,636 from the exercise shall
be used by us for general corporate purposes.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS

Overview

We were incorporated in the state of Florida in January
1996. From inception until approximately August 1996, our
operations consisted mostly of start-up activities that included
the development of a business plan and the initial activities
involved in obtaining the necessary licenses and permits to
dispense prescription medications. We began selling pet
medications and products in September 1996, and in the fall of
1997 we issued our first catalog. This catalog displayed
approximately 1,200 items, including prescription and non-
prescription pet medications, pet health and nutritional
supplements and pet accessories. We have recently focused our
product line to approximately 600 of the most popular pet items
for dogs and cats. We also market our products on our web site,
where we currently generate approximately 40% of all sales, and
47% of all new orders. Since October 1997, we have advertised
our products on national cable and syndicated television and
through the direct mailing of catalogs and postcards.

Our sales consist of products sold to retail consumers and
sales to other pet suppliers, or wholesale sales. Typically, our
retail customers pay by credit card or check at the time the
order is shipped. For our sales paid by credit cards we usually
receive the cash settlement in one to three banking days, which
minimizes our accounts receivable balances relative to our sales.
Certain wholesale customers are extended credit terms, which
usually require payment within 30 days of delivery. To date, the
Company's sales returns average approximately 2% of sales.

The following should be read in conjunction with our
Consolidated Financial Statements and the related notes included
elsewhere in this prospectus.

Forward-Looking Statements and Associated Risks

Except for historical information contained herein, the
matters discussed in this report are forward-looking statements
made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. These forward-looking statements
are based largely on our expectation and are subject to a number
of risks and uncertainties, including but not limited to factors
discussed elsewhere in this prospectus and in other documents
filed by us with the Securities and Exchange Commission from time
to time. Many of these factors are beyond our control. Actual
results could differ materially from the forward-looking
statements. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained in
this prospectus will, in fact, occur.

Critical Accounting Policies

General

Our discussion and analysis of our financial condition and
the results of our operations are based upon our consolidated
financial statements and the data used to prepare them. The
Company's financial statements have been prepared in accordance
with accounting principles generally accepted in the United
States. On an ongoing basis we re-evaluate our judgements and
estimates including those related to product returns, bad debts,
inventories, long-lived assets, income taxes, litigation and
contingencies. We base our estimates and judgements on our
historical experience, knowledge of current conditions and our
beliefs of what could occur in the future considering available
information. Actual results may differ from these estimates
under different assumptions or conditions. Our estimates are
guided by observing the following critical accounting policies.

Revenue recognition

We generate our revenue by selling our pet medication
products to retail consumers and other pet suppliers, or
wholesale sales. Our policy is to recognize revenue from product
sales upon shipment, when the rights and risk of ownership have
passed to the consumer. Outbound shipping and handling fees are
included in sales and are billed upon shipment. Shipping and
handling expenses are included in cost of sales.

The majority of our sales are paid by credit cards and we
usually receive the cash settlement in one to three banking days.
Credit card sales minimize our account receivable balances
relative to our sales. We maintain an allowance for doubtful
accounts for losses that we estimate will arise from our
customers' inability to make required payments. We make our
estimates of the uncollectibility of our accounts receivable by
analyzing historical bad debts and current economic trends. At
March 31, 2002 the allowance for doubtful accounts was $7,475.

Valuation of inventory

Inventories consist of prescription and non-prescription pet
medications that are available for sale and are priced at the
lower of cost or market value using a weighted average cost
method. We write down our inventory for estimated obsolescence.

Property and equipment

Property and equipment are stated at cost and depreciated
using the straight-line method over the estimated useful lives of
the assets. The furniture, fixtures, equipment and computer
software are depreciated over periods ranging from three to ten
years. Leasehold improvements and assets under capital lease
agreements are amortized over the shorter of the underlying lease
agreement or the useful life of the asset.

Long-lived assets

Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. Recoverability of assets is
measured by comparison of the carrying amount of the asset to net
future cash flows expected to be generated from the asset.

Advertising

The Company's advertising expense consists primarily of
television advertising and catalog and postcard production costs.
Television costs are expensed as the ads are televised and
catalog and postcard costs are expensed when the related catalog
and postcards are produced, distributed or superseded.

Accounting for income taxes

The Company accounts for income taxes under the provisions
of SFAS No. 109, Accounting for Income Taxes, which generally
requires recognition of deferred tax assets and liabilities for
the expected future tax benefits or consequences of events that
have been included in the consolidated financial statements or
tax returns. Under this method, deferred tax assets and
liabilities are determined based on differences between the
financial reporting carrying values and the tax bases of assets
and liabilities, and are measured by applying enacted tax rates
and laws for the taxable years in which those differences are
expected to reverse.

2002 Compared to 2001

Results of Operations

The following table sets forth, as a percentage of sales,
certain items appearing in the Company's statements of
operations:

Fiscal Year
--------------------------------
March 31, 2002 March 31, 2001
-------------- --------------

Net sales 100.0 % 100.0 %
Cost of sales 59.0 63.6
-------------- --------------
Gross profit 41.0 36.4
-------------- --------------

Operating expenses:
General and administrative 19.0 45.0
Advertising 17.9 14.0
Severence charges 0.6 -
Depreciation and amortization 1.2 3.7
-------------- --------------
Total operating expenses 38.7 62.7
-------------- --------------

Income (loss) from operations 2.3 (26.3)
-------------- --------------

Other income (expense):
Adjustment of estimate for legal
settlement 1.1 -
Loss on disposal of property and
equipment (1.0) -
Interest expense (0.1) (2.3)
Interest income 0.1 0.5
Other, net 0.2 (0.1)
-------------- --------------
Total other income (expense): 0.3 (1.9)
-------------- --------------

Income (loss) before provision for
income taxes 2.6 (28.2)

Provision for income taxes - -
-------------- --------------
Net income (loss) 2.6 (28.2)
============== ==============

Sales

Sales increased by approximately $22,020,000, or 220.1%, to
approximately $32,026,000 for the fiscal year ended March 31,
2002, from approximately $10,006,000 for the fiscal year ended
March 31, 2001. The increase in sales was primarily attributable
to the positive effects of increased advertising. Advertising as
a percentage of sales increased to 17.9% in fiscal 2002 from
14.0% in fiscal 2001. The Company has committed certain amounts
specifically designated towards television advertising to
stimulate sales and create brand awareness. Historically, sales
have a tendency to increase in the first and second fiscal
quarters due to the seasonality of certain pet medications. The
Company cannot accurately predict future sales, however, based on
current circumstances the Company does expect increases to the
first and second quarter sales of fiscal 2003.

Cost of sales

Cost of sales increased by approximately $12,527,000, or
196.7%, to approximately $18,895,000 for the fiscal year ended
March 31, 2002, from approximately $6,368,000 for the fiscal year
ended March 31, 2001. The increase in cost of sales is directly
related to the increase in retail sales in fiscal 2002 as
compared to 2001. However, as a percent of sales, the cost of
sales was 59.0% in fiscal 2002, as compared to 63.6% in 2001.
This percentage reduction can be attributed to the Company's
continued efforts to purchase medications in larger quantities,
by bulk, to take advantage of any and all purchasing discounts
and promotions available.

Gross profit

Gross profit increased by approximately $9,493,000, or 260.9%,
to approximately $13,132,000 for the fiscal year ended March 31,
2002 from approximately $3,639,000 for the fiscal year ended
March 31, 2001. Gross profit as a percentage of sales for fiscal
2002 and 2001 was 41.0% and 36.4%, respectively, reflecting the
positive impact of purchasing medications in larger quantities.

General and administrative expenses

General and administrative expense increased by approximately
$1,588,000, or 35.2%, to approximately $6,095,000 for the fiscal
year ended March 31, 2002 from approximately $4,507,000 for the
fiscal year ended March 31, 2001. General and administrative
expense as a percentage of sales was 19.0% and 45.0% for the
fiscal years ended March 31, 2002 and 2001, respectively. The
increase in general and administrative expense for the year ended
March 31, 2002 is primarily due to the following: a $1,159,000
increase to payroll expenses can be attributed to the addition of
new employees in the customer service and pharmacy departments,
which enabled the company to sustain its continued growth, a
$599,000 increase to bank service and credit card fees is
directly related to the increase in fiscal 2002 sales, the
$268,000 increase in property and office expenses, which includes
utilities and rental expenses, can be attributed to leasing our
facilities for the majority of fiscal 2002, while owning the same
facility in fiscal 2001, a $37,000 increase in telephone and
other expenses, offset with a $424,000 decrease to professional
fees and a $51,000 reduction in travel and entertainment
expenses.

Advertising expenses

Advertising expenses increased by approximately $4,320,000, or
approximately 309.1%, to approximately $5,717,000 for the fiscal
year ended March 31, 2002 from approximately $1,397,000 for the
fiscal year ended March 31, 2001. The significant increase in
advertising expense for the fiscal year ended March 31, 2002 was
due to the Company's plan to commit certain amounts specifically
designated towards television advertising to stimulate sales and
create brand awareness. The Company expects this trend in
advertising to continue into the first and second quarters of
2003.

Severance charges

Severance charges for the fiscal year ended March 31, 2002
of $195,000 relate to severance due to two former executive
officers, the CFO and COO, of the Company. No comparable charges
were made in fiscal 2001.

Depreciation and amortization expenses

Depreciation and amortization expenses increased by
approximately $3,000, or .8%, to approximately $377,000 for the
fiscal year ended March 31, 2002 from approximately $374,000 for
the fiscal year ended March 31, 2001. The slight increase to
depreciation and amortization expense for fiscal 2002 can be
attributed to a significant increase in property additions,
offset with the depreciation expense reduction related to the
sale of our facilities in fiscal 2002.

Adjustment of estimate for legal settlement

In fiscal 2002, the Company recognized income of $345,000 on
a reversal of a legal assessment estimate, which was originally
booked in fiscal year ended March 31, 2001. On September 28,
2001, the Company and the EPA entered into a Consent Agreement
and Final Order ("CAFO"). The settlement agreement requires the
Company to pay a civil penalty of $100,000 plus interest, a
reduction from the original $445,000 fine. For the purpose of
this CAFO, the Company admitted to the jurisdictional allegations
set forth, and neither admitted nor denied the alleged
violations.

Loss on disposal of property and equipment

During fiscal 2002, the Company recorded a loss on disposal
of land and building of $314,000. An $185,000 loss was the
result of the sale of the corporate office building, which
includes the principal executive offices and warehouse, to an
unrelated third party. The Company received gross proceeds of
$2,150,000, of which approximately $1,561,000 was used to pay off
the mortgage. The remaining $129,000 loss relates to the
impairment of outdated computer equipment, which was no longer
utilized by the company.

Other income and expenses

Other income and expenses decreased by approximately
$234,000, or 124.5%, to approximately $47,000 of other income for
the fiscal year ended March 31, 2002 from approximately $188,000
of other expense for the fiscal year ended March 31, 2001. The
$234,000 decrease can be attributed to a reduction in interest
expense relating to the mortgage payoff of the Company's
principal executive offices.

Provision for income taxes

The Company had incurred significant net losses since its
inception in 1996. These losses have resulted in net operating
loss carryforwards and deferred tax assets, which have been used
by the Company to offset tax liabilities, which may have been
incurred in prior periods. The Company recorded a valuation
allowance against the deferred income tax assets, since future
utilization of these assets is subject to the Company's ability
to generate taxable income. There was no income tax accrual for
the fiscal years ended March 31, 2002 and 2001 due to the
utilization of prior net operating losses to offset taxable
income for the period.

Net income (loss)

Net income (loss) increased by approximately $3,652,000, or
129.2%, to $825,000 net income for the fiscal year ended March
31, 2002 from $2,827,000 net loss for the fiscal year ended March
31, 2001. The increase was attributable to the aforementioned.

2001 Compared with 2000

Results of Operations

The following table sets forth, as a percentage of sales,
certain items appearing in the Company's statements of
operations:

Fiscal Year
--------------------------------
March 31, 2000 March 31, 2001
-------------- --------------

Net sales 100.0 % 100.0 %
Cost of sales 57.9 63.6
-------------- --------------
Gross profit 42.1 36.4
-------------- --------------

Operating expenses:
General and administrative 40.4 45.0
Advertising 9.8 14.0
Depreciation and amortization 2.7 3.7
-------------- --------------
Total operating expenses 52.9 62.7
-------------- --------------

Loss from operations (10.8) (26.3)
-------------- --------------

Other income (expense):
Interest expense (1.5) (2.3)
Interest income 0.2 0.5
Other, net (0.1) (0.1)
-------------- --------------
Total other expense: (1.4) (1.9)
-------------- --------------

Loss before provision for income taxes (12.2) (28.2)

Provision for income taxes - -
-------------- --------------
Net loss (12.2) (28.2)
============== ==============

Sales

Sales decreased by approximately $4,671,000, or 31.8%, to
approximately $10,006,000 for the fiscal year ended March 31,
2001, from approximately $14,677,000 for the fiscal year ended
March 31, 2000. The decrease in sales was primarily attributable
to a decrease in customer verification rates, customer retention
and wholesale sales in the year ended March 31, 2001. The
reduction in wholesale sales was due to a management decision to
focus more on the retail market. During March of 2001, the
Company discontinued sales of all accessories and PetMed Express
memberships, which the Company believes will have a minimum
impact on future sales.

Cost of sales

The cost of sales in fiscal year ended March 31, 2001 was
$6,368,000 as compared to $8,496,000 in fiscal year ended March
31, 2000. The decrease of $2,129,000, or 25.1%, is primarily due
to decreased sales in 2001 as compared to 2000. As a percent of
sales, the cost of sales was 63.6% in 2001, as compared to 57.9%
in 2000. The increase in 2001 is due primarily to increased
supplier prices of prescription and non-prescription medications.
The Company is concentrating more on purchasing medications in
larger quantities, by bulk, to take advantages of any and all
discounts available.

Gross profit

Gross profit decreased by approximately $2,542,000, or
41.1%, to approximately $3,639,000 for the fiscal year ended
March 31, 2001 from approximately $6,181,000 for the fiscal year
ended March 31, 2000. Gross profit as a percentage of sales for
the fiscal years ended March 31, 2000 and 2001 was 42.1% and
36.4%, respectively, reflecting the negative impact of not being
able to source certain products outside the United States.

General and administrative expenses

General and administrative expense decreased approximately
$1,420,000, or 24.0%, to approximately $4,507,000 for the fiscal
year ended March 31, 2001 from approximately $5,927,000 for the
fiscal year ended March 31, 2000. General and administrative
expense as a percentage of sales was 40.4% and 45.0% for the
fiscal years ended March 31, 2000 and 2001, respectively. The
change in general and administrative expense is primarily
attributable to the fees associated with meeting the
requirements of the OTCBB, and the fees associated with
investment banking and litigation settlements. In the year
ended March 31, 2000, the Company incurred approximately
$378,000 for the preparation and filing of a Form 10-KSB.
Approximately $259,000 of investment banking related fees was
incurred as the Company explored various opportunities to raise
capital and $354,000 related to litigation settlements. In
addition to the fees mentioned above, salaries and related
expense for sales, marketing and administrative employees
decreased by $117,000, or 6%, to $1,842,000 for the fiscal year
ended March 31, 2001, from $1,959,000 for the fiscal year ended
March 31, 2000 as a result of reducing personnel.

Advertising expenses

Advertising expenses decreased by approximately $47,000, or
approximately 3.2%, to approximately $1,397,000 for the fiscal
year ended March 31, 2001 from approximately $1,444,000 for the
fiscal year ended March 31, 2000. The decrease in advertising
expense was due to primarily a reduction in catalog production
and distribution expenses.

Depreciation and amortization expenses

Depreciation and amortization expenses decreased by
approximately $22,000, or 5.5%, to approximately $374,000 for the
fiscal year ended March 31, 2001 from approximately $395,000 for
the fiscal year ended March 31, 2000. In the year ended March
31, 2000, the Company expensed approximately $78,000 of software
cost, which the Company determined to be impaired. Due to the
sale of the Company's corporate office building on May 31, 2001,
the Company expects a significant reduction to depreciation
expense in fiscal 2002.

Other income and expenses

Other income and expenses decreased by approximately
$21,000, or 10.1%, to approximately $188,000 for the fiscal year
ended March 31, 2001 from approximately $209,000 for the fiscal
year ended March 31, 2000. The $21,000 decrease can be
attributed to an increase in interest income relating to the
Company's overnight sweep bank account.

Provision for income taxes

The Company had incurred significant net losses since its
inception in 1996. These losses have resulted in net operating
loss carryforwards and deferred tax assets, which have been used
by the Company to offset tax liabilities, which may have been
incurred in prior periods. The Company recorded a valuation
allowance against the deferred income tax assets, since future
utilization of these assets is subject to the Company's ability
to generate taxable income. There was no income tax accrual for
the fiscal years ended March 31, 2000 and 2001 due to the
utilization of prior net operating losses to offset taxable
income for the period.

Net loss

Net loss increased by approximately $1,032,000, or 57.5%, to
$2,827,000 for the fiscal year ended March 31, 2001 from
$1,794,000 for the fiscal year ended March 31, 2000. The
increase was attributable to the aforementioned.

Liquidity and Capital Resources

The Company's working capital at March 31, 2002 was
$691,000, as compared to the $2,473,000 deficiency at March 31,
2001, an increase of approximately $3,164,000 from the deficiency
at March 31, 2001. The increase in working capital was primarily
attributable to net cash provided by operating activities of
$476,000 for the year ended March 31, 2002 as compared to net
cash used in operating activities of $1,035,000 for the year
ended March 31, 2001. Net cash provided by investing activities
increased to $1,461,000 for the year ended March 31, 2002 as
compared to $58,000 for the year ended March 31, 2001, primarily
as a result of the proceeds received from the sale of the
corporate office building and land in the first quarter of fiscal
2002. Net cash used in financing activities increased to
$1,609,000 for the year ended March 31, 2002 as compared to net
cash provided by financing activities of $1,074,000 for the year
ended March 31, 2001. This increase relates directly to the
satisfaction of the mortgage on the corporate office building.
No common stock was issued or sold during fiscal 2002.

Since inception, the Company has primarily funded its growth
through the private placement of securities. In April 1998, the
Company raised an additional $888,000 of net proceeds from the
private placement of 250,000 shares of Convertible Preferred
Stock. In February 1999, the Company raised approximately
$819,000 of net proceeds from the sale of 330,333 shares of
common stock. In November 2000 the Company raised $2,000,000
from the private placement of 10,000,000 shares of equity
securities. The Company had financed certain equipment
acquisitions with capital leases. As of March 31, 2002 the
Company had no outstanding lease commitments.

In March 1999, the Company purchased a 50,000 square foot
building, which served as our headquarters and distribution
center. At March 31, 2001, the Company had a $1,567,000 mortgage
on the building and a $1,000,000 line of credit from SouthTrust
Bank. At fiscal year ended March 31, 2001, borrowings under the
line of credit have been limited to $150,000. The line is
secured by substantially all of our assets, and interest is at
the bank's base lending rate plus 1%, which equaled 9% at March
31, 2001. As of March 31, 2001, the Company had $141,000
outstanding under the line of credit. On February 24, 2000, the
Company agreed to maintain $300,000 with SouthTrust Bank, as
additional collateral on the mortgage, in exchange for waivers
and amendments to two financial covenants. The requirement to
maintain the funds expired on December 24, 2000. On December 17,
2000, the Company received a six-month credit line extension,
effective through June 17, 2001. This extension limited the
credit line to $150,000. On June 29, 2001, the Company received
a three-month forbearance from the line of credit. The Company
thereafter received a six-month renewal from the line of credit
with SouthTrust Bank, effective through February 17, 2002. On
March 12, 2002, the Company renewed the $150,000 line of credit
with SouthTrust Bank, effective through May 13, 2003, with an
interest rate at the lending institution's base rate plus 1%
(5.75% at March 31, 2002). The Company is currently negotiating
with SouthTrust Bank for the possible increase to the line of
credit. At March 31, 2002, $141,214 was outstanding under the
line of credit agreement. The line of credit contains various
financial and operating covenants. No assurances can be made;
however, the Company reasonably believes an agreement will be
reached with SouthTrust Bank to increase the line of credit terms
satisfactorily.

On May 31, 2001, the Company sold their 50,000 square foot
office building, which houses the Company's principal executive
offices and warehouse, to an unrelated third party. The Company
received gross proceeds of $2,150,000, of which approximately
$1,561,000 was used to pay off the mortgage, and the Company
recognized a loss on the sale of approximately $185,000. The
Company then entered into a five-year term lease agreement for
20,000 of the 50,000 square foot Pompano Beach office building.
Then on February 22, 2002, the Company entered into a lease
addendum which added approximately 12,000 square feet, effective
June 1, 2002, to accommodate the Company's warehouse expansion.
According to the lease addendum, all additional costs,
approximately $150,000, associated with tenant improvements
related to the warehouse expansion, will be paid by the lessee.
The payments will be amortized over a period of 24 months at a 9%
interest rate. These additional tenant improvements costs will
be included with the scheduled monthly lease payments.

On March 12, 2002, the Company entered into a $205,000,
three year term loan agreement with SouthTrust Bank, with
interest accruing at the lending institution's base rate plus 1%
(5.75% at March 31, 2002). The loan proceeds were used to
purchase a $250,000 computer server. The aggregate loan
maturities are $68,000 per year for the next three years.

Presently, the Company has approximately $250,000 planned
for capital expenditure commitments for the warehouse expansion
and fulfillment automation, during fiscal 2003, which will be
funded through cash from operations. Other than working capital
and credit line, the Company presently has no other alternative
source of working capital. For the year ended March 31, 2001,
the Company had incurred significant operating losses and cash
flow deficiencies. However, for the year ended March 31, 2002
the Company had net income of $825,000, and has sustained
profitability for three consecutive quarters. Additionally, the
Company has committed certain amounts specifically designated
towards advertising to stimulate sales. The Company may seek to
raise additional capital through the sale of equity securities.
No assurances can be given that the Company will be successful in
obtaining additional capital, or that such capital will be
available in terms acceptable to the Company. At this time, the
Company has no commitments or plans to obtain additional capital.
Further, there can be no assurances that even if such additional
capital is obtained that the Company will sustain profitability
or positive cash flow.

Recent Accounting Pronouncements

The Company does not believe that any recently issued, but
not yet effective, accounting standards, if currently adopted,
will have a material effect on the Company's consolidated
financial position, results of operations or cash flows.

Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure

On April 7, 1999, PetMed engaged Ernst & Young LLP as its
independent auditor. Ernst & Young LLP remained PetMed's
independent auditor until January 2001. On January 16, 2001,
Ernst & Young LLP resigned as PetMed's principal accountants.

In connection with the audits of PetMed's financial
statements for the fiscal year ended March 31, 2000 and the nine
months ended December 31, 1999, and in the interim period through
the date of there resignation, there were no disagreements with
Ernst & Young LLP on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to the satisfaction of Ernst &
Young LLP, would have caused Ernst & Young LLP to make reference
to the matter in their report on PetMed's financial statements.

Ernst & Young LLP previously advised PetMed in connection
with the audits of PetMed's financial statements for the periods
referred to above that it had material weaknesses in internal
controls (as defined in Item 304 (a)(1)(iv)(B)(1) of Regulation
S-B) related to the lack of formal accounting policies and
procedures, lack of adequate staffing in the financial reporting
function, lack of timely account reconciliations, unsupported
journal entries, and lack of proper inventory and accounts
payable cut-off procedures.

Ernst & Young LLP's report on PetMed's financial statements
for the year ended March 31, 2000 was qualified as to PetMed's
ability to continue as a going concern. Other than such
qualification, the reports of Ernst & Young LLP on PetMed's
financial statements for the fiscal years ended March 31, 1999
and March 31, 2000 did not contain an adverse opinion or a
disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles.

On January 22, 2001, PetMed appointed Lopez Levi &
Associates, LLC, as its independent auditor and Lopez Levi &
Associates, LLC accepted such appointment. PetMed had not
consulted with Lopez Levi & Associates, LLC on the application of
accounting principles to any completed or proposed transaction or
on the type of audit opinion that might be given. On April 24,
2001, the Company terminated the engagement of Lopez Levi &
Associates, LLC as the Company's independent auditor. There were
no disagreements with Lopez Levi & Associates, LLC on any matters
of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which, if not
resolved to the satisfaction of Lopez Levi & Associates, LLC,
would have caused Lopez Levi & Associates, LLC to make reference
to the matter in their report on PetMed's financial statements.

On April 24, 2001, PetMed appointed Goldstein Golub Kessler
LLP as its independent auditor and Goldstein Golub Kessler LLP
accepted such appointment. PetMed had not consulted with
Goldstein Golub Kessler LLP prior to their engagement as our
independent auditors, on the application of accounting principles
to any completed or proposed transaction or on the type of audit
opinion that might be given.

The decisions to change audit firms were approved by our
Board of Directors.

BUSINESS

General

Our Products

We offer a broad selection of products for dogs and cats.
These products include a majority of the well-known brands of
medication, such as Frontline[R], Sentinel[R], Heartgard[R],
Revolution[R], Interceptor[R] and Advantage[R]. Generally, our
prices are discounted from the prices for medications charged
by veterinarians.

We research new products, and regularly select new products
or the latest generation of existing products to become part of
our product selection. In addition, we also refine our current
products to respond to changing consumer-purchasing habits. Our
web site is designed to give us the flexibility to change
featured products or promotions. Our product line provides
customers with a wide variety of selections across the most
popular categories for dogs and cats. Our current products
include:

Prescription Medications: Heartworm tablets, antibiotics,
anti-inflammatory medications and medications for chronic
diseases, such as arthritis and thyroid conditions, as well as
several generic substitutes;

Non-Prescription Medications: A majority of the well-known
flea and tick control products; and

Health and Nutritional Supplements: Daily vitamins for
nutritional balance.

Sales

The following table provides a breakdown of the percentage
of our total sales, by each category during the indicated
periods:

Fiscal Year
March 31, 2002 March 31, 2001
-------------- --------------

Prescription medications 34% 23%
Non-prescription medications 58% 56%
Accessories 0% 3%
Shipping charges, memberships
and other 8% 18%
------ ------
Total 100% 100%
====== ======

During March 2001, the Company discontinued the sales of all
accessories. Additionally, the Company discontinued the PetMed
Express, Inc. membership plan. It was determined by management
to concentrate sales efforts on the prescription and non-
prescription pet medications and the health and nutritional pet
supplements.

We offer our products through three main sales channels,
including the PetMed Express catalog and postcards, customer
service representatives and the Internet, through our web site.
We have designed both our catalog and web site to provide a
convenient, cost-effective and informative shopping experience
that encourages consumers to purchase products important for a
pet's health and quality of life. We believe that these multiple
channels allow us to increase the visibility of our brand name
and provide customers with increased shopping flexibility and
service.

The PetMed Express Catalog

The PetMed Express catalog is a full-color catalog that
features approximately 300 products. The catalog is produced by
a combination of in-house writers, production artists and
independent contractors. We mail catalogs and postcards in
response to requests generated from our advertising and direct
mail campaigns.

Call Center

We currently employ 69 customer service representatives in
our call center. Our customer service representatives receive
and process inbound customer orders, and facilitate our outbound
campaigns around maximizing customers' reorders on a consistent
basis. Our telephone system is equipped with certain features
including pop-up screens and call blending capabilities that
gives us the ability to efficiently utilize our customer service
representatives' time, providing quality customer service and
support. Our customer service representatives receive a base
salary and are rewarded with commissions for achieving targeted
sales.

Our Web Site

We seek to combine our product selection and pet health
information with the shopping ease of the Internet to deliver a
convenient and personalized shopping experience. We believe that
our web site offers health and nutritional product selections for
dogs and cats, supported by relevant editorial and easily
obtainable or retrievable resource information. From our home
page, customers can search our web site for products and access
resources on a variety of information on cats and dogs.
Customers can shop at our web site by category, product line or
individual product.

Our Customers

Approximately 327,000 active customers have purchased from
us within the last year. During fiscal 2002, we attracted
approximately 275,000 new customers, while currently growing at a
rate of approximately 40,000 new customers per month. Our
customers are located throughout the United States, with the
largest concentration of customers residing in Florida,
California, Texas, New York, North Carolina and Georgia. The
current average retail purchase is approximately $70.

While our primary focus has been on retail customers, we
have also sold various non-prescription medications wholesale to
a variety of businesses, including pet stores, groomers and
traditional brick and mortar stores in the United States. For
the fiscal year ended March 31, 2002, approximately 91% of our
sales were made to retail customers and approximately 9% of our
sales were made to wholesale customers. Our focus remains on the
retail customers, and we anticipate that the percentage of our
total sales attributable to wholesale sales will continue to
decrease in the future.

Marketing

The goal of our marketing strategy is to build brand
recognition, increase customer traffic, add new customers, build
strong customer loyalty, maximize reorders and develop
incremental revenue opportunities. We have an integrated
marketing campaign that includes television advertising, direct
mailing and e-mailing and online marketing.

Television Advertising

Our television advertising is designed to build brand
equity, create awareness, and generate initial purchases of
products via phone, mail, fax and the Internet. We have used 30
second television commercials to attract new customer orders,
with this tagline "your pets same exact medications delivered to
your home, saving you time and money". Our television
commercials typically focus on our ability to rapidly deliver to
customers the same medications offered by veterinarians, but at
reduced prices. We generally purchase advertising on national
cable channels to target our key demographic groups. We believe
that television advertising is particularly effective and
instrumental to building brand awareness.

Direct Mailing and E-mailing

We use direct mailing and e-mailing, for our customers with
e-mail accounts, to advertise our products to selected groups of
customers. We utilize potential customers from the responses to
our television advertising and our customer database to encourage
and remind our customers to reorder.

Online Marketing

We supplement our traditional advertising with online
advertising and marketing efforts. We are also members of the
LinkShare and Overture Networks, affiliate programs with merchant
clients and affiliate web sites. These networks are designed to
develop and build a long-term, branded affiliate program in order
to increase online sales and establish an Internet presence. The
LinkShare and Overture Networks enable us to establish link
arrangements with other web sites, as well as portals and search
engines.

Operations

Purchasing

We purchase our products from a variety of sources,
including certain manufacturers, domestic distributors, and
wholesalers. We have multiple suppliers for each of our
products. We source prescription and non-prescription
medications from a variety of national distributors in order to
obtain the lowest cost. We purchase the majority of our health
and nutritional supplements directly from manufacturers. See
Risk Factors. Having strong relationships with product
manufacturers will ensure the availability of adequate volume of
products ordered by our customers, and enable us to provide more
and better product information. Historically, substantially all
the major manufacturers of prescription and non-prescription
medications have declined to sell these products to direct
marketing companies, including us. As part of our growth
strategy, we will seek to develop direct relationships with
leading pharmaceutical manufacturers of the more popular
prescription and non-prescription medications.

Order Processing

The Company provides its customers with toll-free telephone
access to its customer service representatives. Our call center
generally operates from 8:00 AM to 11:00 PM Monday through
Thursday, 8:00 AM to 9:00 PM on Friday, 9:00 AM to 6:00 PM on
Saturday, and 10:00 AM to 5:00 PM on Sunday, Eastern Standard
Time. The process of customers purchasing products through
PetMed Express consists of a few simple steps. A customer first
places a call to the PetMed Express toll free phone number or
visits our web site. The following information is needed to
process prescription orders: general pet information,
prescription, and the veterinarian's name and phone number. This
information is entered into our computer system. Then our
pharmacists and pharmacy technicians verify all prescriptions.
The order process system checks for prescription verification for
medication orders and a valid payment method for all orders. An
invoice is generated and printed in our fulfillment center, where
items are picked for shipping. The customer's order is then
selected from the Company's inventory and shipped via priority
mail or United Parcel Service. Our customers enjoy the
convenience of rapid home delivery, with approximately 60% of all
orders are shipped within 24 hours via priority mail or United
Parcel Service. Our web site allows customers to easily browse
and purchase substantially all of our products and services on
line. Our site is designed to be fast, secure and easy to use
with order and shipping confirmations, with on-line order
tracking capabilities.

Warehousing and Shipping

We inventory our products and fill all customer orders from
our 32,000 square foot facility in Pompano Beach, Florida. We
have an in-house fulfillment and distribution operation, which is
used to manage the entire supply chain, beginning with the
placement of the order, continuing through order processing, and
then fulfillment and shipment of the product to the customer. We
offer a variety of shipping options, including next day delivery.
We ship to anywhere in the United States served by the United
Parcel Service or the United States Postal Service. Priority
orders are expedited in our fulfillment process. Our goal is to
ship the products the same day that the order is received. For
prescription medications, our goal is to ship the product
immediately after the prescription has been authorized. A
shipping and handling fee is added to each customer's order.

Customer Service and Support

We believe that a high level of customer service and support
is critical in retaining and expanding our customer base.
Customer service representatives participate in ongoing training
programs under the supervision of our training manager. These
training sessions include a variety of topics such as product
knowledge, computer usage, customer service tips and the
relationship between PetMed Express and veterinarians. Our
customer service representatives respond to customer's e-mails
and calls that are related to order status, prices and shipping.
Our customer service representatives also respond to customers
through our newly implemented live web chat. If our customer
service representatives are unable to respond to a customer's
inquiry at the time of the call, we strive to provide an answer
within 24 hours. We believe our customer service representatives
are a valuable source of feedback regarding customer
satisfaction. Our customer returns currently average
approximately 2% of total sales.

Technology

PetMed Express utilizes the latest integrated technologies
in call center, e-commerce, order entry, and inventory
control/fulfillment operations. The systems are custom
configured by the Company to optimize our computer telephone
integration and mail order processing. The system is designed to
maintain a large database of specialized information and process
a large volume of orders efficiently and effectively. Our
systems provide our agents with real time product availability
information and updated customer information to enhance our
customer service. We also have an integrated direct connection
for processing credit cards to ensure that a valid credit card
number and authorization have been received at the same time our
agents are on the phone with the customers. Our information
systems provide our agents records of all prior contact with a
customer, including the customer's address, phone number, e-mail
address, fax number, prescription information, order history,
payment history and notes.

Competition

The pet medications and health and nutritional supplements
market is competitive and highly fragmented. Our competitors can
be divided into several groups including: other mail-order
suppliers of pet medications and health and nutritional
supplements, veterinarians, and web or online stores that
specialize in pet medications and health and nutritional
supplements. The Company believes that the following are
principal competitive factors in our market:

* Product selection and availability, including the
availability of prescription and non-prescription
medications;

* Brand recognition;

* Reliability and speed of delivery;

* Personalized service and convenience;

* Price; and

* Quality of web site content.

We compete with veterinarians in the sale of prescription
and non-prescription pet medications and health and nutritional
supplements. Many pet owners may prefer the convenience of
purchasing the pet medications or health and nutritional
supplements at the time of the veterinarian visit, or may be
hesitant to offend their veterinarian, by not purchasing these
products from the veterinarian. In order to effectively compete
with veterinarians, we must continue to educate pet owners about
the service, convenience and savings offered by PetMed Express.

We also compete with brick and mortar and online retailers
of health and nutritional supplements. Many of these competitors
have longer operating histories, larger customer or user bases, a
more established online presence, greater brand recognition and
significantly greater financial, marketing and other resources
than we do. Many of these current and potential competitors can
devote substantially more resources to web site and systems
development than we can.

The pet medication market size is estimated to be
approximately $3 billion, consisting of veterinarians with 98% of
the market share, 1-888-PetMeds with 1%, and pet stores and
groomers, and other mail order companies make up the other 1%.
The cat and dog population is approximately 141 million, with
approximately 62% of all households owning a pet.

The Company believes that the following are the main
competitive strengths which differentiate 1-888-PetMeds's from
the competition:

* Experienced management team;

* Consumer benefit structure of savings and convenience;

* Licensed pharmacy to conduct business in 49 states;

* Operating / technology infrastructure in place;

* Multiple sources of supply for pet medications; and

* Quality customer service support.

Intellectual Property

We conduct our business under the trade name "1-888-
PetMeds". We believe this name, which is also a toll-free phone
number, has added significant value and is an important factor in
the marketing of our products. We have also obtained the right
to the Internet addresses www.1888PetMeds.com, www.petmeds.com,
along with www.petmedexpress.com. As with phone numbers, we do
not have and cannot acquire any property rights in an Internet
address. We do not expect to lose the ability to use the
Internet addresses; however, there can be no assurance in this
regard and the loss of these addresses may have a material
adverse effect on our financial position and results of
operations. We hold the trade name "PetMed Express[R]", which is
a registered trademark.

Government Regulation

Dispensing prescription medicines is governed at the state
level by the board of pharmacy, or similar regulatory agencies,
of each state where prescription medications are dispensed. We
are subject to regulation by the State of Florida and, in
particular, are licensed by the Florida Board of Pharmacy. Our
license is valid until February 28, 2003. We are also licensed
and/or regulated by 48 other state pharmacy boards and other
regulatory authorities including, but not necessarily limited to,
the Federal Drug Administration ("FDA") and the United States
Environmental Protection Agency ("EPA"). As a licensed pharmacy
in the State of Florida, we are subject to the Florida Pharmacy
Act and regulations promulgated hereunder. To the extent that we
are unable to maintain our license with the Florida Board of
Pharmacy as a community pharmacy, or if we do not maintain the
licenses granted by other state boards, or if we become subject
to actions by the FDA, or other enforcement regulators, our
distribution of prescription medications to pet owners could be
severely reduced, which could have a material adverse effect on
our operations.

Employees

At July 1, 2002, the Company had 120 full time employees,
including: 69 in marketing and customer service; 12 in
fulfillment and distribution; 29 in our pharmacy; 2 in
information technologies; 3 in administrative positions; and 5 in
management. None of the Company's employees are represented by a
labor union, nor governed by any collective bargaining
agreements. The Company considers relations with its employees
as satisfactory.

Description of Property

As of March 31, 2001, our facilities, including our
principal executive offices, a 50,000 square foot building, were
located at 1441 SW 29th Ave. Pompano Beach, FL 33062. The
Company purchased this building in February 1999, and financed it
with a seven year, 7.75% mortgage with a commercial bank in the
original principal amount of $1,680,000. On May 31, 2001, we
sold our facilities (50,000 square foot corporate office
building), which includes the principal executive offices and
warehouse, to an unrelated third party. We received gross
proceeds of $2,150,000, of which $1,561,000 was used to pay off
the mortgage. The Company recognized a loss on the sale of
$185,000 in the first quarter of fiscal year end March 31, 2002.
The Company then entered into a five-year term leaseback
agreement for 20,000 of the 50,000 square foot Pompano Beach
office building.

On February 22, 2002, the Company entered into a lease
addendum which added approximately 12,000 square feet, effective
June 1, 2002, to accommodate the Company's warehouse expansion.
According to the lease addendum, all additional costs,
approximately $150,000, associated with tenant improvements
related to the warehouse expansion, will be paid by the lessee.
The payments will be amortized over a period of 24 months at a 9%
interest rate. These additional tenant improvements costs will
be included with the scheduled monthly lease payments.

Legal Proceedings

Various complaints have been filed with the Florida Board of
Pharmacy. These complaints, the majority of which were filed by
veterinarians who are in competition with the Company for the
sale of pet prescription-required products, allege violations of
the Pharmacy Practice Act and regulations promulgated thereunder.
The vast majority of the complaints allege that the Company,
through its pharmacists, improperly dispensed prescription-
required veterinary medication based on prescriptions verified
through the Company's alternate veterinarian program. The
alternate veterinarian program uses a veterinarian outside the
state of Florida to verify prescriptions for certain pets outside
the state of Florida. While the program is not used for pets
residing in the state of Florida, the complaints have, for the
most part, been filed with the Florida Board of Pharmacy. Other
complaints allege the dispensing of medication without a valid
prescription, the sale of non-conforming products and that the
Company's pharmacy is operating at the same location as another
pharmacy, with which it has a contractual relationship. The
Company contested all allegations and continued discussions in an
attempt to reach a resolution of these matters.

In February 2002, the Company voluntarily ceased the use of
its alternate veterinarian program, and in March 2002 a business
decision was made to enter into a settlement agreement with the
Florida Board of Pharmacy, rather than to proceed with costly and
lengthy litigation. In April 2002, The Florida Board of Pharmacy
approved the settlement stipulation. The Florida Board of
Pharmacy did not reach any finding of fact or conclusion of law
that the Company committed any wrongdoing or violated any rules
or laws governing the practice of pharmacy. According to the
settlement agreement, the Company's pharmacy license was placed
on probation for a period of three years and the Company, the
Company's pharmacists and contracted pharmacy and pharmacist,
were required to pay approximately $120,000 in fines and
investigative costs. The Company remains licensed with the State
of Florida and continues to operate its principal business in
Florida.

Additional complaints have been filed with other states'
Pharmacy Boards. These complaints, the majority of which were
filed by veterinarians who are in competition with the Company
for the sale of pet prescription-required products, allege
violations of the Pharmacy Practice Act and regulations
promulgated thereunder. The vast majority of the complaints
allege that the Company, through its pharmacists, improperly
dispensed prescription-required veterinary medication based on
prescriptions verified through the Company's alternate
veterinarian program. The Company contested all allegations and
continued discussions in an attempt to reach a resolution of
these matters.

During fiscal 2002, there were outstanding allegations
relating to the discontinued alternate veterinarian program with
Alabama, Louisiana, Missouri, New Mexico, Pennsylvania, and Ohio
State Pharmacy Boards. The Company has or is currently in the
midst of negotiating a settlement agreement with these states.
To be conservative, the Company accrued $60,000 as of March 31,
2002, to cover any or all administrative fines and investigative
costs associated with settlements.

In fiscal 2002, the Company reached settlement with the
state of Alabama and subsequent to fiscal 2002, the Company
reached settlement agreements with the Louisiana, Missouri and
New Mexico. According to the settlement agreements, the Company
was required to terminate the alternate veterinarian program in
the state and the Company's permit was placed on probation. The
Company paid approximately $35,000 in administrative fines and
investigative costs relating to these states settlement
agreements.

In February 2000, the United States Environmental Protection
Agency ("EPA") issued a Stop Sale, Use or Removal Order to the
Company regarding the alleged distribution or sale of misbranded
Advantage products in violation of the Federal Insecticide,
Fungicide, and Rodenticide Act ("FIFRA"), as amended. The order
provides that the company shall not distribute, sell, use or
remove the products listed in the order, which are allegedly
misbranded. The order further provides that the Company shall
not commence any sale or distribution of those products without
the prior written approval from the EPA. The Stop Sale, Use or
Removal Order does not assert any claim for monetary damages;
rather, it is in the nature of a cease and desist order. The
Company denied any alleged violations. On February 16, 2000, the
Company submitted a written response to the order. The EPA
assessed a fine in the amount of $445,000. In fiscal 2001 the
Company accrued $445,000 of legal settlement expense.

In September 2001, the Company and the EPA entered into a
Consent Agreement and Final Order ("CAFO"). The settlement
agreement required the Company to pay a civil penalty of $100,000
plus interest, requiring a payment of $56,000 due on September
30, 2002 and $53,000 due on September 30, 2003, a reduction from
the previously assessed fine of $445,000. For the purpose of
this CAFO, the Company admitted to the jurisdictional allegations
set forth, and neither admitted nor denied the alleged
violations. On September 28, 2001, the CAFO was approved and
ordered by the regional judicial officer. Accordingly, a gain of
$345,000 is reflected in the accompanying statement of operations
to reflect the adjustment to the settlement.

On March 19, 2002, Novartis Animal Health U.S., Inc.
("Novartis") filed a complaint against the Company and two other
defendants in U.S. District Court for the Southern District of
Florida. Novartis purports to assert seven (7) claims related to
the Company's alleged sale of pet medications produced for a
Novartis Australian sister company: Count I: Infringement of
Registered Trademark Under Section 32 of the Lanham Act, 15
U.S.C. Sec. 1114; Count II: Infringement of Unregistered
Trademarks Under Section 43(a) of the Lanham Act, 15 U.S.C. Sec.
11125(a); Count III: False Advertising Under Section 43(a) of the
Lanham act, 15 U.S.C. Sec. 1125(a); Count IV: Misleading
Advertising Under Florida Statutory Law; Count V: Deceptive and
Unfair Trade Practices Under Florida Statutory Law; Count VI:
Injury to Business Reputation Under Florida Statutory Law; Count
VII: Common Law Unfair Competition.

The Company has answered the complaint and asserted defenses
and affirmative defenses. The parties have met pursuant to Rule
16, S.D. Fla. L.R., and Novartis is in the process of drafting a
proposed scheduling report. No discovery has been propounded,
and no documents have been produced. The parties have engaged in
preliminary settlement discussions; however, it is unknown
whether these discussions will result in an early settlement of
this matter. If not, the Company intends to defend itself
vigorously, and will likely assert counterclaims. Unless and
until the parties engage in substantial discovery, it is not
possible to evaluate the likelihood of an unfavorable outcome or
estimate the potential loss in the event of an adverse outcome at
this time.

In June 2000, the Company agreed to pay $210,000 to two
former employees who had alleged wrongful termination by the
Company. Of this amount, $60,000 was paid in varying monthly
installments from August 2000 through March 2001, $60,000 was
paid in $5,000 installments from August 2000 through August 2001,
and the remaining $90,000 is payable in twelve equal monthly
installments beginning in July 2001. Such amounts have been
expensed in fiscal 2000 as part of general and administrative in
the accompanying statement of operations. The settlement is
recorded as "accrued expenses" in the accompanying balance sheet.

Routine Proceedings

We are also a party to routine litigation incidental to our
business. Management does not believe that the resolution of any
or all of such routine litigation is likely to have a material
adverse effect on our financial condition or results of
operations.

MANAGEMENT

Directors and Executive Officers

Our directors, control persons and executive officers are as
follows:

Name Office Age
------------------- --------------------------------- -----

Marc A. Puleo, M.D. Chairman of the Board, President
and Corporate Secretary 39

Menderes Akdag Chief Executive Officer 41

Bruce S. Rosenbloom Chief Financial Officer and
Treasurer 33

Guven Kivilcim Director 29

Huseyin Kizanlikli Director 39

Kenneth Jacobi Director 54

MARC PULEO, M.D., age 39, has served as Chairman of our
Board of Directors since our inception in January 1996. From
January 1996 until March 2000, Dr. Puleo also served as our
President, from January 1996 until March 2001, Dr. Puleo served
as our Chief Executive Officer, from January 1996 until May 2000,
Dr. Puleo served as our Treasurer, and as our Corporate Secretary
from January 1996 to the present. Dr. Puleo has also been the
President of South Florida Anesthesia Professionals, an entity
located in Fort Lauderdale, Florida, since founding that company
in January 1996. Dr. Puleo was Vice President of Dynamic Press,
Inc., an offset printing and direct marketing company, from June
1997 until June 1998. Dr. Puleo, an anesthesiologist, was
employed with Anesthesia Professional Association, North Ridge
Medical Center and North Ridge Outpatient Surgery Center from
December 1994 through December 1995. Dr. Puleo was an anesthesia
resident with the University of Illinois Hospitals and Clinics,
the Michael Reese Hospital, the Westside Veteran's Administration
Hospital, the University of Illinois Eye and Ear Infirmary, the
Nathan Cummings Surgicenter, and the University of Illinois Pain
Clinic, all located in the Chicago, Illinois area, from July 1991
through June 1994. Dr. Puleo received his medical degree from
the University of Illinois College of Medicine, Chicago,
Illinois.

MENDERES AKDAG, age 41, was appointed Chief Executive
Officer on March 16, 2001. Prior to joining PetMed Express, from
November 2000 until March 2001, Mr. Akdag served as Chief
Executive Officer of International Cosmetics Marketing Co. d/b/a
Beverly Sassoon & Co., a publicly held (OTCBB: ICMK) direct sales
company distributing skin care and nutritional products. From
May 1991 until August 2000, Mr. Akdag was employed by Lens
Express, Inc., a direct sales company distributing replacement
contact lens, serving as its President from May 1996 until August
2000, Chief Executive officer and a member of the Board of
Directors from August 1992 until May 1996, and Chief Financial
Officer and a member of the Board of Directors from May 1991
until August 1992. On December 14, 1998, Netel Inc., a
corporation in which Mr. Akdag served as a member of the Board of
Directors, filed a Petition for Chapter 11 bankruptcy in the
United States Bankruptcy Court Southern District of Florida. The
proceeding was styled IN RE: NETEL, INC., CASE NO. 98-28929-BKC-
PGH. On July 19, 1999, the Bankruptcy Court entered an Order
Confirming an Amended Chapter 11 Plan. On December 21, 1999, the
Bankruptcy Court entered a Final Decree, Discharge of Trustee,
and closed the case. Mr. Akdag holds a Bachelor of Science
degree in Business Administration with a major in finance from
the University of Florida where he graduated with high honors.

BRUCE ROSENBLOOM, age 33, was appointed Chief Financial
Officer on May 30, 2001. Mr. Rosenbloom served as the Manager of
Finance and Financial Reporting of Cooker Restaurant Corporation,
a $147 million, 65 location, publicly held (OTCBB: CGRT)
restaurant, in West Palm Beach, Florida, from December 2000 until
May 2001. Mr. Rosenbloom's duties included all internal and
external reporting including all SEC filings and Annual Report to
Shareholders. Mr. Rosenbloom was a senior audit accountant for
Deloitte & Touche LLP, West Palm Beach, Florida, from January
1996 until December 2000. Mr. Rosenbloom was responsible for
planning and conducting all aspects of audit engagements for
clients in various industries, including direct marketing,
healthcare, manufacturing, financial institutions, and
professional service firms. From August of 1992 to May of 1995,
Mr. Rosenbloom was an Account Executive for MCI
Telecommunications. Mr. Rosenbloom, a certified public
accountant, received a Bachelor of Science in Accounting from
Florida Atlantic University, Boca Raton, Florida in 1996 and a
Bachelor of Arts in Economics from the University of Texas,
Austin, Texas in 1992.

GUVEN KIVILCIM, age 29, has been a member of our Board of
Directors since November 2000. Since December 1997, Mr. Kivilcim
has been Chairman and President of Radiant Telecom, Inc., a long
distance telecommunications company. Mr. Kivilcim is also a 20%
shareholder of Tricon Holdings, LLC, a principal shareholder of
the Company. From 1995 to present, Mr. Kivilcim has been employed
as a Vice President with Tel3.com, a telecommunications company.
Mr. Kivilcim is also Secretary and Treasurer of Next
Communications, Inc.

HUSEYIN KIZANLIKLI, age 39, has been a member of our Board
of Directors since November 2000. Since December 1997, Mr.
Kizanlikli has been Vice President and a director of Radiant
Telecom, Inc., a long distance telecommunications company, and
since October 1996, he has been Vice President and a Director of
Creslin of Florida, Inc., a real estate corporation established
in 1995. Mr. Kizanlikli is also CEO of a European company, Yesil
Kundura, based in Istanbul, Turkey since 1995. Mr. Kizanlikli is
also a Director of Managed Vision.

KENNETH JACOBI, age 54, has been a member of our Board of
Directors since November 2000. He has been a principal of Regnum
Group, Inc., a consulting and advisory firm in the
telecommunications industry since 1999. Since January 1999, Mr.
Jacobi has been a member of the Board of Directors, Secretary and
Treasurer of Radiant Telecom, Inc., a long distance
telecommunications company, and Vice President of Regulatory
Affairs since June 1999. Since June 2000, Mr. Jacobi has been
President of Broadway Motor Sports, Inc., a used car dealership.
From 1997 through 1999, he served as Vice President of Regulatory
and Administrative Affairs for Netel, Inc.; a telecommunications
company located in Fort Lauderdale, Florida, where he was
responsible for regulatory and legislative research, government
affairs, negotiation of contracts and strategic alliances with
various telecommunications companies. From 1992 through 1997,
Mr. Jacobi served as Vice President of Regulatory and
Administrative Affairs for Colmena Corp., a telecommunications
company located in Pompano Beach, Florida, where he was involved
in regulatory affairs, dispute management and business policy.
Mr. Jacobi attended the University of Southern California and
Miami-Dade Community College. Mr. Jacobi is also a non-voting
member of the Federal Communication Commission Bar Association.

On December 14, 1998, Netel Inc., a corporation in which Mr.
Jacobi served as a member of the Board of Directors, filed a
Petition for Chapter 11 bankruptcy in the United States
Bankruptcy Court Southern District of Florida. The proceeding
was styled IN RE: NETEL, INC., CASE NO. 98-28929-BKC-PGH. On July
19, 1999, the Bankruptcy Court entered an Order Confirming an
Amended Chapter 11 Plan. On December 21, 1999, the Bankruptcy
Court entered a Final Decree, Discharge of the Trustee, and
closed the case.

Board of Directors

Each director is elected at our annual meeting of
shareholders and holds office until the next annual meeting of
stockholders, or until the successors are elected and qualified.
At present, our bylaws provide for not less than one director.
Currently, we have four directors. The bylaws permit the Board of
Directors to fill any vacancy and such director may serve until
the next annual meeting of shareholders or until his successor is
elected and qualified. Officers are elected by the Board of
Directors and their terms of office are, except to the extent
governed by employment contracts, at the discretion of the Board.
There are no familial relationships between any of the executive
officers and directors other than that Guven Kivilcim and Huseyin
Kizanlikli are cousins. Our officers devote full time to the
business of the Company.

Board Committees

The Board of Directors has established an audit committee
and a compensation committee, both of which are comprised of non-
employee directors. The compensation committee establishes
guidelines and standards relating to the determination of
executive compensation, reviews executive compensation policies
and recommends to our board of directors compensation for our
executive officers and other employees. Our compensation
committee also administers our stock incentive plan and
determines the number of shares covered by, and terms of, options
to be granted to executive officers and other employees under
this plan.

The audit committee recommends independent auditors, reviews
internal financial information, reviews audit reports and
management letters, participates in the determination of the
adequacy of the internal accounting control system, reviews the
results of audits with independent auditors, oversees quarterly
and yearly reporting, and is responsible for policies,
procedures, and other matters relating to business integrity,
ethics and conflicts of interests. The members of the
compensation and audit committees are Messrs. Kivilcim,
Kizanlikli, and Jacobi.

Compensation of Directors

Directors are currently not compensated for serving on the
board of directors.

Executive Compensation

The following table sets forth the annual and long-term
compensation paid by us for services performed on our behalf for
the last three completed fiscal years ended March 31, 2002, 2001
and 2000, with respect to our Chief Executive Officer and those
persons who were, as at March 31, 2002, our executive officers
who earned compensation greater than $100,000 for the year ended
March 31, 2002:

SUMMARY COMPENSATION TABLE

- -------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
--------------------------------- --------------------------------------
Awards Payouts
--------------------------------------
Securities
Name and Other Underlying
Principal Annual Options/ LTIP All Other
Position Year Salary($) Bonus($) Compensation(#) SARs (#) Payouts Compensation
- --------------------------------------------------------------------------------------------------------------

Marc Puleo, M.D. 2002 $ 88,462 - - - - -
Chairman of the Board 2001 85,000 15,000 - 200,000 - -
President 2000 (a) - - - - - -

Menderes Akdag 2002 176,923 - - - - -
Chief Executive Officer 2001 6,000 - - 750,000 - -
2000 - - - - - -

Bruce S. Rosenbloom 2002 77,962 - - 75,000 - -
Chief Financial Officer 2001 - - - - - -
2000 - - - - - -

(a) During the fiscal year ended March 31, 2000, Dr. Puleo did
not receive a cash salary as compensation for his services
to the Company. Dr. Puleo's compensation for the year
ended March 31, 2000 was in the form of stock options. The
Company had, however, recognized an expense of $100,000 for
the fiscal year ended March 31, 2000, as the value of his
services to PetMed.

The following table sets forth certain information concerning
grants of options to the Named Executive Officers during the
fiscal year ended March 31, 2002.

OPTION GRANTS FOR FISCAL YEAR ENDED MARCH 31, 2002

Individual Grants
Number of Percent of
Securities Total Options
Underlying granted Exercise or
Options Granted to Employees Base Price Expiration
Name (shares) in Fiscal Year ($/share) Date
- ----------------------------------------------------------------------------------------

Marc Puleo, M.D. - (a) - - -

Menderes Akdag - (a) - - -

Bruce S. Rosenbloom 75,000 (b) 19.4% $1.39 03/06/08

(a) No options were issued during fiscal 2002.

(b) The Company granted Mr. Rosenbloom options to purchase
75,000 shares of its common stock under the Company's 1998
Stock Option Plan: 50,000 options at an exercise price of
$1.65 per share which vest at the rate of 16,667 options on
each of May 31, 2002, 2003, and 2004, and 25,000 options at
$.86 per share, which vest at the rate of 8,333 options on
each of March 6, 2003, 2004 and 2005.

The following table sets forth, as of March 31, 2002, the
number of stock options and the value of unexercised stock
options held by the Named Executive Officers and the exercises of
stock options during the year ended March 31, 2002 by the Named
Executive Officers.

AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END STOCK OPTION VALUES

Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired on Value Options at Fiscal Year End (#) Options at Fiscal Year End ($) (1)
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------- ------------ -------- ----------- ------------- ----------- -------------

Marc Puleo, M.D. - - 1,340,000 600,000 281,100 -

Menderes Akdag - - 375,000 375,000 180,000 180,000

Bruce S. Rosenbloom - - - 75,000 - -

(1) Represents the difference between the closing price ($.80)
of the Company's Common stock on March 29, 2002, the last
trading day of the Company's 2002 fiscal year, and the
exercise price of the options.

Employment Agreements

On March 16, 2001, the Company entered into an employment
agreement with Menderes Akdag to serve as the Company's Chief
Executive Officer. Under the terms of this three-year agreement
the Company will pay Mr. Akdag an annual salary of $150,000 for
the first six months of the agreement, and thereafter his annual
salary will be increased to $200,000. The Company can terminate
the employment of Mr. Akdag either upon mutual consent or for
cause. If the Company should terminate Mr. Akdag for cause, or
if Mr. Akdag should terminate the agreement without "good reason"
as described in the employment agreement, no severance benefits
shall be paid. If the Company should terminate Mr. Akdag without
cause, the Company must give Mr. Akdag three months notice and
continue to compensate him under the terms of this employment
agreement during those three months. At the end of the three-
month period, the Company must pay Mr. Akdag severance benefits
equal to the annual base salary of the executive, and any
previously granted but unvested options shall immediately vest.
If the Company should terminate Mr. Akdag for cause, as defined
in employment agreement, no severance benefits shall be paid.
The agreement can be terminated upon the mutual consent of the
parties, or upon 90 days notice by the Company during which time
the Company shall continue to compensate him under the terms of
his employment agreement. The Company also granted Mr. Akdag
options to purchase 750,000 shares of its common stock under the
Company's 1998 Stock Option Plan at an exercise price of $.32 per
share, which vest at the rate of 187,500 options on each of March
16, 2001, 2002, 2003 and 2004. The employment agreement contains
customary non-disclosure provisions, as well as a non-competition
restriction for a period of 18 months following the termination
of the agreement.

Incentive and Non-Qualified Stock Option Plan

1998 Stock Option Plan

The Plan, adopted July 1998, provides for the grant of
options to purchase up to 5 million shares to key employees,
including officers, and to non-employee directors and
consultants. The purpose of this plan is to attract and retain
persons eligible to participate in the plan, motivate
participants to achieve our long-term goals by further aligning
the interests of participants with those of our stockholders
through compensation that is directly linked to the profitability
of our business and increases in stockholder value. These options
are intended to qualify either as incentive stock options within
the meaning of Section 422 of the Internal Revenue Code, or as
non-statutory stock options, which are options that are not
intended to meet the requirements of that section of the Internal
Revenue Code.

The plan is administered by the compensation committee.
Under the plan, our compensation committee has the authority to
determine: the persons to whom options will be granted, the
number of shares to be covered by each option, exercise price of
each option, whether the options granted are intended to be
incentive stock options, the manner of exercise, and the time,
manner and form of payment upon exercise of an option.

Incentive stock options granted under the plan may not be
granted at a price less than the fair market value of our common
stock on the date of grant (or less than 110% of the fair market
value in the case of employees holding 10% or more of our voting
stock). Non-statutory options may be granted at an exercise price
established by our board of directors, but cannot be less than
par value per share ($.001) of our common stock. Incentive stock
options granted under the plan must expire not more than ten
years from the date of grant, and not more than five years from
the date of grant in the case of incentive options granted to an
employee who holds 10% or more of our voting stock.

As of July 1, 2002, options to purchase 2,159,600 shares of
our common stock, at exercise prices ranging from $.32 to $4.50,
per share were outstanding under the Plan.

Option Agreements

As of July 1, 2002, non-plan options to purchase 91,500
shares of our common stock, at an exercise price of $1.33 per
share, and 25,000 shares of our common stock, at an exercise
price of $.20 per share, were outstanding.

CERTAIN TRANSACTIONS

Members of Tricon Holdings, LLC, which include members of
the Company's board of directors: Mr. Kivilcim, Mr. Kizanlikli,
and Mr. Jacobi, have a controlling interest in Intelligent
Switching & Software LLC, Florida Connect Services, Inc., Numind
Software Systems, Inc., and Inmar, Inc., with which the Company
conducted business with during the fiscal year ended March 31,
2002. Intelligent Switching & Software LLC and Florida Connect
Services, Inc. provide the Company with certain telecommunication
services, and Numind Software Systems, Inc. and Inmar, Inc.
provide the Company with Internet and web site consulting
services. The Company paid $64,000 to Intelligent Switching &
Software LLC, $44,000 to Florida Connect Services, Inc., $0 to
Numind Software Systems, Inc., and Inmar, Inc., for services
during the fiscal year ended March 31, 2002. The Company owed
$64,100 to Intelligent Switching & Software LLC, $7,000 to
Florida Connect Services, Inc., $37,300 to Numind Software
Systems, Inc., and $7,000 to Inmar, Inc., which were included in
the Company's accounts payable balance as of March 31, 2002.

The Company believes that transactions with our officers,
directors and principal stockholders have been made upon terms no
less favorable to us than we might receive from unaffiliated
third parties. The Company has adopted a policy whereby all
transactions between us and one or more of our affiliates must be
approved in advance by a majority of our disinterested directors.

PRINCIPAL SHAREHOLDERS

As of July 1, 2002, there were 17,158,010 shares of the
Company's common stock issued and outstanding. These securities
represent all of the Company's issued and outstanding voting
securities. The following table sets forth, as of the close of
business on July 1, 2002, (a) the name and number of shares of
each person known by us to be the beneficial owner of more than
5% of the class of stock; and (b) the number of shares of these
securities owned by each director and all officers and directors
as a group, together with their respective percentage holdings of
such shares. Beneficial ownership is determined in accordance
with the rules of the SEC, and generally includes voting or
investment power with respect to securities, and includes any
securities, which the person has the right to acquire within 60
days after July 1, 2002, through the conversion or exercise of
any security or other right. Except as otherwise specifically
set forth herein, the following tables give no effect to the
exercise of any outstanding stock options or warrants. Unless
otherwise indicated, the address for each person is 1441 SW 29
Avenue, Pompano Beach, Florida 33069.

Name Number of Shares Percent of Shares
of Beneficial Owner Beneficially Owned Outstanding
- -----------------------------------------------------------------

Tricon Holdings, LLC 13,000,000(1) 64.5%
Marc Puleo, M.D. 2,596,250(2) 14.5%
Guven Kivilcim 511,000 3.0%
Menderes Akdag 375,000(3) 2.2%
Bruce S. Rosenbloom 18,767(4) *
Huseyin Kizanlikli - -
Kenneth Jacobi - -
All executive officers 3,501,017 19.3%
and directors as a
group (six persons)
____________________

* Less than 1% of the issued and outstanding shares.

(1) Tricon Holdings, LLC holdings' include 3,000,000 shares
issuable upon exercise of warrants at $.33 per share.
Mr. Jacobi is the manager of Tricon Holdings, LLC, and
Mr. Kivilcim is a director and the secretary of Tricon
Holdings, LLC, but each individual disclaims beneficial
ownership of the securities held by Tricon Holdings, LLC.

(2) Dr. Puleo's holdings include 1,496,250 shares of our
common stock held by Marpul Trust, a trust established by
Dr. Puleo under an agreement dated September 3, 1999 and
of which he is the beneficiary. Southpac Trust
International, Inc. is a trustee of Marpul Trust. Dr.
Puleo's holdings also include vested options held by him
to purchase 600,000 shares at $1.25 per share until May
2003 and options held by him to purchase 200,000 shares
at $.35 per share until March 2006, but exclude options
to purchase 240,000 shares of common stock at $1.05 per
share, which has not yet vested.

(3) Mr. Akdag's holdings include options to purchase 187,500
shares of common stock at $.32 per share until March
2005, but exclude options to purchase an additional
375,000 shares of common stock at $.32 per share, which
has not yet vested.

(4) Mr. Rosenbloom's holdings include options to purchase
16,667 shares of common stock at $1.65 per share until
March 2005, but exclude options to purchase an additional
33,333 shares of common stock at $1.65 per share and
25,000 shares of common stock at $.86 per share, which
has not yet vested.

DESCRIPTION OF SECURITIES

As of July 1, 2002, we had authorized 40,000,000 shares of
par value $0.001 common stock, with 17,158,010 shares issued and
outstanding. Additionally, we have authorized 5,000,000 shares of
preferred stock, with 2,500 shares issued and outstanding.

Common Stock

The holders of Common Stock are entitled to one vote for
each share held of record on all matters to be voted on by
stockholders. There is no cumulative voting with respect to the
election of directors, with the result that the holders of more
than 50% of the shares voted for the election of directors can
elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the
Board of Directors out of funds legally available therefor. In
the event of our liquidation, dissolution or winding up, the
holders of Common Stock are entitled to share ratably in all
assets remaining available for distribution to them after payment
of liabilities and after provision has been made for each class
of stock, if any, having preference over the Common Stock.
Holders of shares of Common Stock, as such, have no conversion,
preemptive or other subscription rights, and there are no
redemption provisions applicable to Common Stock. All of the
outstanding shares of Common Stock are, and the shares of Common
Stock offered hereby, will be duly authorized, validly issued,
fully paid and nonassessable.

Preferred Stock

We are authorized to issue 5,000,000 shares of Preferred
Stock with such designation, rights and preferences as may be
determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders
of the Common Stock. In the event of issuance, the Preferred
Stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control.

In April 1998, the Company issued 250,000 shares of its
$.001 par value preferred stock at a price of $4.00 per share,
less issuance costs of $112,187. Each share of the preferred
stock is convertible into approximately 4.05 shares of common
stock at the election of the shareholder. The preferred stock was
recorded at $887,813, net of the value of the beneficial
conversion feature of $771,525. The value of the beneficial
conversion feature was computed as the difference between the
closing market price of the Company's common stock ($1.75 per
share) and the conversion price of the preferred stock ($.988 per
share) on the date the preferred stock was sold. This amount was
immediately recognized as a reduction to net income available to
common stockholders. The shares have a liquidation value of $4.00
per share and may pay dividends at the sole discretion of the
Company. The Company does not anticipate paying dividends to the
preferred shareholders in the foreseeable future. Each share of
preferred stock is entitled to one vote on all matters submitted
to a vote of shareholders of the Company. As of March 31, 2002,
2,500 shares of the convertible preferred stock remained
unconverted and outstanding.

In the event of any liquidation, dissolution or winding up
of our company, holders of the Series A preferred stock are
entitled to receive a liquidating distribution before any
distribution may be made to holders of our common stock and other
Series of our preferred stock.

Transfer Agent

The Transfer Agent for our shares of Common Stock is Florida
Atlantic Stock Transfer, Inc. (FAST), 7130 Nob Hill Road,
Tamarac, Florida 33321. The telephone number for FAST is (954)
726-4954.

SELLING SECURITY HOLDERS

This prospectus relates to the registration of shares of our
common stock and shares of our common stock underlying certain
convertible securities held by various parties listed below. We
will not receive any proceeds from the sale of the shares by the
selling shareholders. If, and when, the warrants and non-plan
options are excercised by the selling shareholders, the proceeds
of $1,922,636 from the excercise shall be used by us for general
corporate purposes. The selling shareholders may resell the
shares they acquire by means of this prospectus from time to time
in the public market. The costs of registering the shares offered
by the selling shareholders are being paid by us. The selling
shareholders will pay all other costs of the sale of the shares
offered by them.

The following table sets forth the name of the selling
shareholders, the number of common shares that may be offered by
the selling shareholders and the number of common shares to be
owned by the selling shareholders after the offering. The table
also assumes that each selling shareholder sells all common
shares listed by its name.

The table below sets forth information as of July 1, 2002.
The percentage calculations for the selling shareholders do not
include any common shares issuable upon the exercise of any
currently outstanding warrants, options or other rights to
acquire common shares, other than those that the selling
shareholders beneficially own.

Common Shares Common Shares
Owned Prior to Offering Offered in the Offering
Name of Shareholder Number Percentage Number Percentage
- ------------------- ---------- ---------- ---------- ----------

Marc Puleo 2,596,250 14.5% 300,000 2.1%
Adam Terris 86,534 * 91,500(1) *
Wayne Horne 801,061 4.6% 379,721(2) 2.6%
Nico Pronk 806,561 4.6% 379,721(2) 2.6%
Mike Cerisano 140,490 * 130,490(3) *
Lynda Reitzenstein 75,000 * 75,000(4) *
J.W. Genesis Capital
Markets, Inc. 75,000 * 75,000(5) *
Tricon Holdings, LLC 13,000,000 64.5% 13,000,000(6) 90.0%
Joe Scarfuto 10,500 * 10,500 *

- --------------------

* Less than 1% of the issued and outstanding shares.

(1) Includes 91,500 shares of common stock underlying an option
exercisable at $1.33 per share. The option expires on April
7, 2004.

(2) Includes 369,721 shares of common stock underlying a common
stock purchase warrant exercisable at $.43 per share. The
warrant expires on March 19, 2003. Also includes 10,000
shares of common stock underlying a warrant exercisable at
$3.125 per share. This warrant expires on March 7, 2003.

(3) Includes 130,490 shares of common stock underlying a warrant
exercisable at $.43 per share. The warrant expires on March
19, 2003.

(4) Includes 75,000 shares of common stock underlying a warrant
exercisable at $3.50 per share. The warrant expires on
November 11, 2002.

(5) Includes 75,000 shares of common stock underlying a warrant
exercisable at $1.48 per share. The warrant expires on
November
12, 2004.

(6) Includes 3,000,000 shares of common stock underlying a
warrant exercisable at $.33 per share. The warrant expires
on November 22, 2005.

Plan of Distribution

The shares of common stock owned, or which may be acquired,
by the selling shareholders may be offered and sold by means of
this prospectus from time to time as market conditions permit in
the over-the-counter market, or otherwise, at prices and terms
then prevailing or at prices related to the then-current market
price, or in negotiated transactions. These shares may be sold by
one or more of the following methods, without limitation:

* a block trade in which a broker or dealer so
engaged will attempt to sell the shares as agent but
may position and resell a portion of the block as
principal to facilitate the transaction;

* purchases by a broker or dealer as principal and
resale by such broker or dealer for its account
pursuant to this prospectus;

* ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and

* face-to-face transactions between sellers and
purchasers without a broker/dealer.

In effecting sales, brokers or dealers engaged by the
selling shareholders may arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or
discounts from selling shareholders in amounts to be negotiated.

The selling shareholders and any broker/dealers who act in
connection with the sale of the shares hereunder may be deemed to
be "underwriters" within the meaning of section 2(11) of the
Securities Acts of 1933, and any commissions received by them and
profit on any resale of the shares as principal might be deemed
to be underwriting discounts and commissions under the Securities
Act. We have agreed to indemnify the selling shareholders, and
any securities broker/dealers who may be deemed to be
underwriters against certain liabilities, including liabilities
under the Securities Act as underwriters or otherwise.

We have advised the selling shareholders that they and any
securities broker/dealers or others who may be deemed to be
statutory underwriters will be subject to the prospectus delivery
requirements under the Securities Act. We have also advised each
selling shareholder that in the event of a "distribution" of the
shares owned by the selling shareholder, such selling
shareholder, any "affiliated purchasers", and any broker/dealer
or other person who participates in such distribution, may be
subject to Rule 102 under the Securities Exchange Act of 1934
until their participation in that distribution is completed.
Rule 102 makes it unlawful for any person who is participating in
a distribution to bid for or purchase stock of the same class as
is the subject of the distribution. A "distribution" is defined
in Rule 102 as an offering of securities "that is distinguished
from ordinary trading transactions by the magnitude of the
offering and the presence of special selling efforts and selling
methods". We have also advised the selling shareholders that
Rule 101 under the 1934 Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or
stabilizing the price of the common stock in connection with this
offering.

We do not intend to distribute or deliver the prospectus by
means other than by hand or mail.

SHARES ELIGIBLE FOR FUTURE SALE

As of July 1, 2002, we have 17,158,010 shares of common
stock issued and outstanding. This does not include shares that
may be issued upon exercise of options or warrants.

We cannot predict the effect, if any, that market sales of
common stock or the availability of these shares for sale will
have on the market price of our shares from time to time.
Nevertheless, the possibility that substantial amounts of common
stock may be sold in the public market could negatively damage
and affect market prices for our common stock and could damage
our ability to raise capital through the sale of our equity
securities.

LEGAL MATTERS

The validity of the securities offered by this prospectus
will be passed upon for us by Adorno & Yoss, P.A., 350 East Las
Olas Boulevard, Suite 1700, Fort Lauderdale, FL 33301, Florida.

EXPERTS

Our consolidated financial statements as of March 31, 2002,
for the two years in the period ended March 31, 2002, are
included herein in reliance on the reports of Goldstein Golub
Kessler LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

We have filed with the SEC the registration statement on
Form SB-2 under the Securities Act for the common stock offered
by this prospectus. This prospectus, which is a part of the
registration statement, does not contain all of the information
in the registration statement and the exhibits filed with it,
portions of which have been omitted as permitted by SEC rules and
regulations. For further information concerning us and the
securities offered by this prospectus, we refer to the
registration statement and to the exhibits filed with it.
Statements contained in this prospectus as to the content of any
contract or other document referred to are not necessarily
complete. In each instance, we refer you to the copy of the
contracts and/or other documents filed as exhibits to the
registration statement, and these statements are qualified in
their entirety by reference to the contract or document.

The registration statement, including all exhibits, may be
inspected without charge at the SEC's Public Reference Room at
450 Fifth Street, N.W. Washington, D.C. 20549, and at the SEC's
regional offices located at the Woolworth Building, 233 Broadway,
New York, New York 10279 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of these
materials may also be obtained from the SEC's Public Reference at
450 Fifth Street, N.W., Room 1024, Washington D.C. 20549, upon
the payment of prescribed fees. You may obtain information on the
operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.

The registration statement, including all exhibits and
schedules and amendments, has been filed with the SEC through the
Electronic Data Gathering, Analysis and Retrieval system, and are
publicly available through the SEC's Web site located at
http://www.sec.gov.

______________________________________________________________________
______________________________________________________________________

_______________________

PETMED EXPRESS, INC.

_______________________

FOR THE FISCAL YEAR ENDED:

MARCH 31, 2002

_______________________

CONSOLIDATED FINANCIAL STATEMENTS

_______________________

______________________________________________________________________
______________________________________________________________________

PETMED EXPRESS, INC AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Independent Auditor's Report.................................... F-2

Consolidated Balance Sheet as of March 31, 2002................. F-3

Consolidated Statements of Operations for the fiscal years
ended March 31, 2002 and March 31, 2001....................... F-4

Consolidated Statements of Changes in Stockholders' Equity
for the fiscal years ended March 31, 2002 and
March 31, 2001................................................ F-5

Consolidated Statements of Cash Flows for the fiscal years
ended March 31, 2002 and March 31, 2001....................... F-6

Notes to Consolidated Financial Statements...................... F-7-F-17

F-1

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders
PetMed Express, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of PetMed
Express, Inc. and Subsidiaries (the "Company") as of March 31, 2002,
and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the two years in the
period then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of PetMed Express, Inc. and Subsidiaries at March 31, 2002, and the
results of its operations and its cash flows for each of the two years
in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.

May 17, 2002 /s/Goldstein Golub Kessler LLP
------------------------------
New York, New York Goldstein Golub Kessler LLP

F-2

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

March 31,
2002
------------
ASSETS

Current assets:
Cash and cash equivalents $ 737,284
Accounts receivable, less allowance for
doubtful accounts of $7,475 291,513
Inventories 2,306,620
Prepaid expenses and other current assets 148,608
------------
Total current assets 3,484,025

Property and equipment, net 1,120,056
Other assets, net 50,155
------------
Total assets $ 4,654,236
============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses $ 2,724,995
Current portion of loan obligation 68,442
------------
Total current liabilities 2,793,437

Line of credit 141,214
Loan obligation, less current portion 136,885
------------
Total liabilities 3,071,536
------------

Commitments and contingencies

Stockholders' equity:
Preferred stock, $.001 par value,
5,000,000 shares authorized;
2,500 convertible shares issued
and outstanding with a liquidation
preference of $4 per share 8,898
Common stock, $.001 par value,
40,000,000 shares authorized;
16,360,010 shares issued and
outstanding 16,360
Additional paid-in capital 6,528,885
Accumulated deficit (4,971,443)
------------
Total shareholders' equity 1,582,700
------------
Total liabilities and shareholders' equity $ 4,654,236
============

See accompanying notes to consolidated financial statements

F-3

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended March 31,
-------------------------------
2002 2001
------------- -------------

Sales $ 32,025,931 $ 10,006,285
Cost of sales 18,894,493 6,367,604
------------- -------------
Gross profit 13,131,438 3,638,681
------------- -------------
Operating expenses:
General and administrative 6,094,493 4,506,509
Advertising 5,717,242 1,397,418
Severence charges 195,000 -
Depreciation and amortization 376,763 373,852
------------- -------------
Total operating expenses 12,383,498 6,277,779
------------- -------------
Income (loss) from operations 747,940 (2,639,098)
------------- -------------

Other income (expense)
Adjustment of estimate for legal
settlement 345,000 -
Loss on disposal of property and
equipment (314,332) -
Interest expense (48,835) (231,414)
Interest income 18,582 52,922
Other, net 77,058 (9,117)
------------- -------------
Total other income (expense) 77,473 (187,609)
------------- -------------

Income (loss) before provision for
income taxes 825,413 (2,826,707)

Provision for income taxes - -
------------- -------------
Net income (loss) $ 825,413 $ (2,826,707)
============= =============

Net income (loss) per common share:
Basic $ 0.05 $ (0.28)
============= =============
Diluted $ 0.04 $ (0.28)
============= =============

Weighted average number of common shares
outstanding:
Basic 16,360,010 9,943,625
============= =============
Diluted 19,739,493 9,943,625
============= =============

See accompanying notes to consolidated financial statements

F-4

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Fiscal years ended March 31, 2002 and March 31, 2001

Convertible
Preferred Stock Common Stock Additional
------------------ ------------------------ Paid-In Accumulated
Shares Amounts Shares Amounts Capital Deficit Total
------ -------- ---------- --------- ------------ ------------- ------------

Balance, March 31, 2000 6,250 $ 22,246 6,369,822 $ 6,370 $ 4,572,385 $ (2,970,149) $ 1,630,852

Conversion of convertible
preferred stock into
common stock (3,750) (13,348) 15,188 15 13,333 - -
Sale of common stock, net
of issuance costs - - 10,000,000 10,000 1,944,142 - 1,954,142
Purchase and retirement
of treasury stock - - (25,000) (25) (975) - (1,000)
Net loss - - - - (2,826,707) (2,826,707)
------ -------- ---------- --------- ------------ ------------- ------------
Balance, March 31, 2001 2,500 8,898 16,360,010 16,360 6,528,885 (5,796,856) 757,287

Net income - - - - - 825,413 825,413
------ -------- ---------- --------- ------------ ------------- ------------
Balance, March 31, 2002 2,500 $ 8,898 16,360,010 $ 16,360 $ 6,528,885 $ (4,971,443) $ 1,582,700
====== ======== ========== ========= ============ ============= ============

See accompanying notes to consolidated financial statements

F-5

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended March 31,
-------------------------------
2002 2001
------------- -------------

Cash flows from operating activities:
Net income (loss) $ 825,413 $ (2,826,707)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 333,014 362,605
Amortization of intangibles 43,749 11,247
Amortization of deferred membership fee
revenue (140,048) (462,139)
Loss on disposal of property and
equipment 314,332 -
Bad debt expense 6,862 (19,007)
(Increase) decrease in operating assets
and liabilities:
Accounts receivable (135,907) 44,412
Inventory (1,675,226) 1,121,302
Prepaid expenses and other current
assets (126,494) 328,430
Other assets (42,500) 11,429
Accounts payable and accrued expenses 1,072,829 64,485
Deferred membership fee revenue - 328,789
------------- -------------
Net cash provided by (used in) operating
activities 476,024 (1,035,154)
------------- -------------

Cash flows from investing activities:
Net proceeds from the sale of property 2,016,921 -
Purchases of property and equipment (555,645) (241,888)
Certificate of deposit - 300,000
------------- -------------
Net cash provided by investing activities 1,461,276 58,112
------------- -------------

Cash flows from financing activities:
Payments on mortgage payable (1,566,833) (65,079)
Payments on capital lease obligations (247,209) (179,183)
Borrowings under loan agreement 205,327 -
Payments under line of credit agreement - (634,985)
Net proceeds from sale of common stock - 1,954,142
Purchase and retirement of treasury stock - (1,000)
------------- -------------
Net cash (used in) provided by financing
activities (1,608,715) 1,073,895
------------- -------------

Net increase in cash and cash equivalents 328,585 96,853
Cash and cash equivalents, at beginning of
year 408,699 311,846
------------- -------------

Cash and cash equivalents, at end of year $ 737,284 $ 408,699
============= =============
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 29,150 $ 239,007
============= =============

See accompanying notes to consolidated financial statements

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

Organization

PetMed Express, Inc. and subsidiaries, d/b/a 1-888-PetMeds, (the
"Company") is a direct marketer of household pet prescription and
non-prescription medications along with health and nutritional
supplements and is located in Pompano Beach, Florida. The
Company distributes catalogs to its potential customers and takes
orders by telephone, Internet, fax, and mail. The majority of
all of the Company's sales are to residents of the United States.

During the fiscal year ended March 31, 2001, the Company formed
two wholly owned subsidiaries. One company was formed to assist
in the purchasing of products and the other for advertising. The
Company's fiscal year end is March 31. References herein to
fiscal 2002 or 2001 refer to the Company's fiscal years ended
March 31, 2002 and 2001, respectively.

Principles of Consolidation

The consolidated financial statements include the accounts of
PetMed Express, Inc. and its wholly owned subsidiaries. All
significant intercompany transactions have been eliminated in
consolidation.

Revenue Recognition and Deferred Membership Fee Revenue

Product sales are recognized upon shipment. Deferred membership
revenue consists of cash collected on the sale of one and three-
year memberships. Membership fees are amortized to income
ratably over the membership period. During fiscal year 2001 the
Company discontinued the PetMed Express, Inc. membership plan.
Outbound shipping and handling fees are included in sales and are
billed upon shipment. Shipping and handling expenses are
included in cost of sales.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity
of three months or less when purchased to be cash equivalents.
Cash and cash equivalents at March 31, 2002, consist of the
Company's cash accounts, overnight repurchase agreements, and
short-term investments with a maturity of three months or less.
The carrying amount of cash equivalents approximates fair value.

The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts.

Use of Estimates

The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.

Inventories

Inventories consist of prescription and non-prescription pet
medications that are available for sale and are priced at the
lower of cost or market value using a weighted average cost
method.

Property and Equipment

Property and equipment are stated at cost and depreciated using
the straight-line method over the estimated useful lives of the
assets. The furniture, fixtures, equipment and computer software
are depreciated over periods ranging from three to ten years.
Leasehold improvements and assets under capital lease agreements
are amortized over the shorter of the underlying lease agreement
or the useful life of the asset.

F-7

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may
not be recoverable. Recoverability of assets is measured by
comparison of the carrying amount of the asset to net future cash
flows expected to be generated from the asset.

Advertising

Accounting for Stock-Based Compensation

The Company accounts for employee stock options using the
intrinsic value method as prescribed by Accounting Principles
Board Opinion (APB) No. 25, Accounting for Stock Issued to
Employees. The Company follows the disclosure provisions of SFAS
No. 123, Accounting for Stock-Based Compensation and for valuing
common stock equivalents issued to non-employees.

Significant Risks and Uncertainties - Product Supply

Three multi-national pharmaceutical companies which manufacture,
among other products, heartworm medication and/or flea and tick
control products, two of the best-selling products of the
Company, have refused to sell these items directly to the
Company. Therefore, the Company must obtain its inventory of
these items through cooperating wholesale sources. To the extent
that the Company is unable to purchase these products from other
sources or if they can only be purchased at prices that make
their resale uncompetitive in the marketplace, it could have a
materially adverse impact on the Company's sales.

Fair Value of Financial Instruments

The carrying amounts of the Company's cash and cash equivalents,
accounts receivable and accounts payable approximate fair value
due to the short-term nature of these instruments. The carrying
amount of the loan payable, line of credit and capital lease
obligations approximate fair value as their interest rates
approximate current market rates.

Comprehensive Income

The Company has adopted SFAS No. 130, Reporting Comprehensive
Income, which requires that all items that are recognized under
accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same
prominence as other financial statements. The items of other
comprehensive income that are typically required to be displayed
are foreign currency items, minimum pension liability adjustments
and unrealized gains and losses on certain investments in debt
and equity securities. There were no items of other comprehensive
income for any periods presented herein.

Income Taxes

The Company accounts for income taxes under the provisions of
SFAS No. 109, Accounting for Income Taxes, which generally
requires recognition of deferred tax assets and liabilities for
the expected future tax benefits or consequences of events that
have been included in the consolidated financial statements or
tax returns. Under this method, deferred tax assets and
liabilities are determined based on differences between the
financial reporting carrying values and the tax bases of assets
and liabilities, and are measured by applying enacted tax rates
and laws for the taxable years in which those differences are
expected to reverse.

Recent Accounting Pronouncements

The Company does not believe that any recently issued, but not
yet effective, accounting standards, if currently adopted, will
have a material effect on the Company's consolidated financial
position, results of operations or cash flows.

F-8

(2) Property and Equipment, Net

Major classifications of property and equipment consist of the
following:

March 31,
2002
-----------

Leasehold improvements 42,891
Computer software 302,537
Furniture, fixtures and equipment 1,325,635
Equipment and software under capital lease 280,849
-----------
1,951,912

Less accumulated depreciation and amortization (831,856)
-----------
Property and equipment, net $ 1,120,056
===========

Amortization expense for equipment and software under capital
leases was $93,169 and $114,881 for fiscal 2002 and 2001,
respectively.

(3) Mortgage Payable, Line of Credit Agreement and Loan Obligation

On February 22, 2002, the Company entered into a lease addendum
which added approximately 12,000 square feet, effective June 1,
2002, to accommodate the Company's warehouse expansion.
According to the lease addendum, all additional costs,
approximately $150,000, associated with tenant improvements
related to the warehouse expansion, will be paid by the lessee.
The payments will be amortized over a period of 24 months at a 9%
interest rate. These additional tenant improvements costs will
be included with the scheduled monthly lease payments.

On March 12, 2002, the Company renewed the $150,000 line of
credit with a bank, effective through May 13, 2003, with an
interest rate at the lending institution's base rate plus 1%
(5.75% at March 31, 2002). The Company is currently negotiating
with a bank for the possible increase to the line of credit. At
March 31, 2002, $141,214 was outstanding under the line of credit
agreement. The line of credit contains various financial and
operating covenants.

On March 12, 2002, the Company entered into a $205,000, three
year term loan agreement with a bank, with interest accruing at
the lending institution's base rate plus 1% (5.75% at March 31,
2002). The loan proceeds were used to purchase a $250,000
computer server. The aggregate loan maturities are $68,000 per
year for the next three years.

The line of credit and the term loan are secured by substantially
all of the Company's assets.

(4) Shareholders' Equity

On November 22, 2000, Tricon Holdings, LLC, a Florida limited
liability corporation ("Tricon") a related party (see Note 7),
acquired 10,000,000 shares of the Company's authorized and
unissued shares of common stock and warrants to purchase
3,000,000 shares of the Company's authorized and unissued shares
of common stock. The warrants are exercisable at $.33 per share
and expire on November 22, 2005. Tricon acquired the Company's
shares and warrants in exchange for $2,000,000, which was paid in
fiscal year 2001.

A change in control of the Company occurred as a result of (i)
the issuance to Tricon of shares representing approximately
61.03% of the Company's issued and outstanding shares of common
stock at the completion of the transaction (67.06% after giving
effect to the exercise of the warrants and issuance of the
warrant shares); and (ii) the election of three new directors to
fill vacancies on the five member Board of Directors.

F-9

At any time, the holders of the then outstanding shares and
warrant shares may require the Company to register all or any
part of their common stock and/or warrants. The holders may not
make an aggregate of more than two demand registration requests,
and of the foregoing, no more than once in any calendar year. In
addition, the holders may request an unlimited amount of
piggyback registrations. The Company will bear the entire cost of
any such registration statement.

On May 31, 2001, the Company's Board of Directors adopted an
amendment to the Corporations Articles of Incorporation to
provide for the increase in the authorized amount of shares of
common stock from 20,000,000 to 40,000,000 and adopt an amendment
to the Company's 1998 Stock Option Plan (the "Plan") to increase
the number of shares of common stock issuable under the Plan from
3,000,000 to 5,000,000 shares.

Preferred Stock

In April 1998, the Company issued 250,000 shares of its $.001 par
value preferred stock at a price of $4.00 per share, less
issuance costs of $112,187. Each share of the preferred stock is
convertible into approximately 4.05 shares of common stock at the
election of the shareholder. The preferred stock was recorded at
$887,813, net of the value of the beneficial conversion feature
of $771,525. The value of the beneficial conversion feature was
computed as the difference between the closing market price of
the Company's common stock ($1.75 per share) and the conversion
price of the preferred stock ($.988 per share) on the date the
preferred stock was sold. This amount was immediately recognized
as a reduction to net income available to common stockholders.
The shares have a liquidation value of $4.00 per share and may
pay dividends at the sole discretion of the Company. The Company
does not anticipate paying dividends to the preferred
shareholders in the foreseeable future. Each share of preferred
stock is entitled to one vote on all matters submitted to a vote
of shareholders of the Company. As of March 31, 2002, 2,500
shares of the convertible preferred stock remained unconverted
and outstanding.

(5) Income Taxes

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. The tax effects of temporary differences that give
rise to significant portions of deferred tax assets and deferred
tax liabilities are as follows:

March 31, March 31,
2002 2001
----------- -----------

Deferred tax assets:
Bad debt and inventory reserves 30,946 43,673
Deferred compensation (stock options) 231,400 231,400
Intangible assets 7,410 11,643
Accrued expenses 155,087 237,930
Net operating loss carryforward 1,856,732 2,127,438
----------- -----------
Deferred tax assets 2,281,575 2,652,084
Less Valuation allowance (2,204,877) (2,554,081)
----------- -----------

Total deferred tax assets 76,698 98,003

Deferred tax liabilities:
Depreciation (76,698) (98,003)
----------- -----------
Total net deferred taxes $ - $ -
=========== ===========

The change in valuation allowance for the year ended March 31,
2002, is $349,204. At March 31, 2002, the Company had net
operating loss carryforwards of approximately $4,937,000, of
which $1,412,000 relate to the exercise of stock options that
will result in an adjustment to equity when the benefit is
realized. The net operating loss carryforwards expire in the
years 2013 through 2020. The use of such net operating loss
carryforwards is limited to approximately $266,000 annually; due
to the November 22, 2000 change of control described in Note 4.

F-10

The reconciliation of income tax benefit computed at the U.S.
federal statutory tax rates to income tax expense is as follows:

March 31, March 31,
2002 2001
----------- -----------

Income taxes (tax benefit) at
U.S. statutory rates $ 280,640 $ (961,080)
State and income taxes, net of
federal tax benefit 29,962 (102,609)
Nondeductible items 877 3,946
Change in valuation allowance - 1,026,096
Utilization of net operating losses (311,479) -
Other - 33,647
----------- -----------
$ - $ -
=========== ===========

(6) Stock Options and Warrants

Stock Options Granted to Employees

The Company established the 1998 Stock Option Plan (the "Plan")
effective July 31, 1998, which provides for the issuance of
qualified options to officers, directors and key employees, and
nonqualified options to consultants and other service providers.
The Company has reserved 5,000,000 shares of common stock for
issuance under the Plan. The exercise prices of options issued
under the Plan must be equal to or greater than the market price
of the Company's common stock as of the date of issuance. The
Company had 3,039,700 options outstanding under the Plan at March
31, 2002. Options issued prior to July 31, 1998 are not included
in the Plan.

A summary of the status of stock options issued by the Company,
together with changes during the periods indicated, is presented
in the following table:

Weighted-
average
Options exercise price
------------- --------------

$
Balance at March 31, 2000 3,705,500 1.84
Granted 1,175,000 0.35
Canceled (335,800) 4.73
------------- --------------

Balance at March 31, 2001 4,544,700 1.24
Granted 387,500 1.26
Canceled (695,100) 2.81
------------- --------------

Balance at March 31, 2002 4,237,100 0.98
============= ==============

The per share weighted-average fair value of stock options
granted during fiscal 2002 and 2001 was $.70, and $.23,
respectively, on the date of grant using the Black Scholes
option-pricing model, as prescribed by SFAS No. 123, with the
following weighted-average assumptions: dividend yield 0.0
percent and 0.0 percent; risk-free interest rates of 6.00 percent
and 6.00 percent; expected lives of 3-5 years and 3-5 years, and
expected volatility of 60 percent and 91 percent, respectively.
At March 31, 2001, the range of exercise prices and weighted-
average remaining contractual life of outstanding options was
$.16-$4.50 and 4.3 years, respectively. At March 31, 2002 and
March 31, 2001, the number of options exercisable was 2,752,803
and 2,786,057, respectively, and the weighted-average exercise
price of those options was $.96 and $1.14, respectively.
Adjustments are made for options forfeited prior to vesting.

F-11

The Company applies APB Opinion No. 25 in accounting for its
Plans and, accordingly, no compensation cost has been recognized
for its stock options in the consolidated financial statements.
Had the Company determined compensation cost based on the fair
value at the grant date for its stock options under SFAS No. 123,
the Company's net income (loss) would have been decreased or
increased to the pro forma amounts indicated below:

March 31, March 31,
2002 2001
----------- ------------

Net income (loss): As reported $ 825,413 $ (2,826,707)
Pro forma $ 695,948 $ (3,251,263)

Diluted net income (loss)
per share: As reported $ 0.04 $ (0.28)
Pro forma $ 0.04 $ (0.33)

Warrants

On November 22, 2000, Tricon Holdings, LLC, a Florida limited
liability corporation ("Tricon"), acquired 10,000,000 shares of
the Company's authorized and unissued shares of common stock and
warrants to purchase 3,000,000 shares of the Company's authorized
and unissued shares of common stock. The warrants are
exercisable at $.33 per share and expire on November 22, 2005,
and were assigned a value of $601,260 using the Black Scholes
option-pricing model, as prescribed by SFAS No. 123, with the
following weighted-average assumptions: dividend yield 0.0
percent; risk-free interest rates of 6.00 percent; expected lives
of 3-5 years, and expected volatility of 91 percent.

(7) Related Party Transactions

Members of Tricon Holdings, which include members of the
Company's board of directors: Guven Kivilcim, Huseyin Kizanlikli,
and Kenneth Jacobi, have a controlling interest in Intelligent
Switching & Software LLC, Florida Connect Services, Inc., Numind
Software Systems, Inc., and Inmar, Inc., with which the Company
conducted business with during the fiscal year ended March 31,
2002. Intelligent Switching & Software LLC and Florida Connect
Services, Inc. provide the Company with certain telecommunication
services, and Numind Software Systems, Inc. and Inmar, Inc.
provide the Company with Internet and website consulting
services. The Company paid $64,000 to Intelligent Switching &
Software LLC, $44,000 to Florida Connect Services, Inc., $0 to
Numind Software Systems, Inc., and Inmar, Inc., for services
during the fiscal year ended March 31, 2002. The Company owed
$64,100 to Intelligent Switching & Software LLC, $7,000 to
Florida Connect Services, Inc., $37,300 to Numind Software
Systems, Inc., and $7,000 to Inmar, Inc., which were included in
the Company's accounts payable balance as of March 31, 2002.

(8) Earnings Per Share

Basic earnings per share is computed by dividing net income by
the weighted average number of shares outstanding and diluted
earnings per share reflects the dilutive effects of stock options
(as calculated utilizing the treasury stock method) and the
equivalent common shares of outstanding convertible preferred
stock. Options and warrants and the effect of convertible
securities were not included in the calculation of diluted
earnings per share for fiscal 2001 because their effect would
have been antidilutive.

F-12

The following is a reconciliation of the numerators and
denominators of the basic and diluted net income (loss) per share
computations for the periods presented:

Year Ended March 31
-----------------------------
2002 2001
------------ ------------

Net income (numerator):

Net income (loss) $ 825,413 $ (2,826,707)
============ ============
Shares (denominator)
Weighted average number of common shares
outstanding used in basic computation 16,360,010 9,943,625
Common shares issuable upon exercise
of stock options and warrants 3,369,358 -
Common shares issuable upon conversion
of preferred shares 10,125 -
------------ ------------
Shares used in diluted computation 19,739,493 9,943,625
============ ============

Net income (loss) per share:
Basic $ 0.05 $ (0.28)
============ ============
Diluted $ 0.04 $ (0.28)
============ ============

At March 31, 2002, 2,124,600 shares of common stock options and
warrants, with a weighted average exercise price of $1.53, were
excluded from the diluted net income per share computation as
their exercise prices were greater than the average market price
of the common shares for the period.

(9) Valuation and Qualifying Accounts

Activity in the Company's Valuation and Qualifying accounts
consists of the following:

2002 2001
------------ ------------

Allowance for doubtful accounts:
Balance at beginning of period $ 9,740 $ 28,747
Provision for doubtful accounts (319) (19,007)
Write-off of uncollectible accounts
receivable (1,946) -
------------ ------------
Balance at end of period $ 7,475 $ 9,740

Valuation allowance for deferred tax assets:
Balance at beginning of period $ 2,554,081 $ 1,527,985
(Deletions) / Additions (349,204) 1,026,096
------------ ------------
Balance at end of period $ 2,204,877 $ 2,554,081
============ ============

F-13

(10) Commitments and Contingencies

Legal Matters

In February 2002, the Company voluntarily ceased the use of its
alternate veterinarian program, and in March 2002 a business
decision was made to enter into a settlement agreement with the
Florida Board of Pharmacy, rather than to proceed with costly and
lengthy litigation. In April 2002, The Florida Board of Pharmacy
approved the settlement stipulation. The Florida Board of
Pharmacy did not reach any finding of fact or conclusion of law
that the Company committed any wrongdoing or violated any rules
or laws governing the practice of pharmacy. According to the
settlement agreement, the Company's pharmacy license was placed
on probation for a period of three years and the Company, the
Company's pharmacists and contracted pharmacy and pharmacist,
were required to pay approximately $120,000 in fines and
investigative costs. The Company remains licensed with the State
of Florida and continue to operate its principal business in
Florida.

Additional complaints have been filed with other states' Pharmacy
Boards. These complaints, the majority of which were filed by
veterinarians who are in competition with the Company for the
sale of pet prescription-required products, allege violations of
the Pharmacy Practice Act and regulations promulgated thereunder.
The vast majority of the complaints allege that the Company,
through its pharmacists, improperly dispensed prescription-
required veterinary medication based on prescriptions verified
through the Company's alternate veterinarian program. The
Company contested all allegations and continued discussions in an
attempt to reach a resolution of these matters.

During fiscal 2002, there were outstanding allegations relating
to the discontinued alternate veterinarian program with Alabama,
Louisiana, Missouri, New Mexico, Pennsylvania, and Ohio State
Pharmacy Boards. The company has or is currently in the midst of
negotiating a settlement agreement with these states. To be
conservative, the Company accrued $60,000 as of March 31, 2002,
to cover any or all administrative fines and investigative costs
associated with settlements.

In fiscal 2002, the Company reached settlement with the state of
Alabama and subsequent to fiscal 2002, the Company reached
settlement agreements with the Louisiana, Missouri and New
Mexico. According to the settlement agreements, the Company was
required to terminate the alternate veterinarian program in the
state and the Company's permit was placed on probation. The
Company paid approximately $35,000 in administrative fines and
investigative costs relating to these states settlement
agreements.

F-14

In September 2001, the Company and the EPA entered into a Consent
Agreement and Final Order ("CAFO"). The settlement agreement
required the Company to pay a civil penalty of $100,000 plus
interest, requiring a payment of $56,000 due on September 30,
2002 and $53,000 due on September 30, 2003, a reduction from the
previously assessed fine of $445,000. For the purpose of this
CAFO, the Company admitted to the jurisdictional allegations set
forth, and neither admitted nor denied the alleged violations.
On September 28, 2001, the CAFO was approved and ordered by the
regional judicial officer. Accordingly, a gain of $345,000 is
reflected in the accompanying statement of operations to reflect
the adjustment to the settlement.

On December 19, 2001, a Complaint for Violations of the Lanham
Act, Trademark Dilution, Copyright Infringement, and related
State law Claims was filed by 1-800 Contacts, Inc. ("Contacts")
against the Company in the United States District Court in the
Central District of Utah. Among Contacts' requests to the court
was a request for the issuance of temporary, preliminary and
permanent injunctive relief enjoining the Company's use of its
logo 1-888-PetMeds and other advertising, including, but not
limited to, its television commercial and website. On January
31, 2002, the Company submitted a Memorandum in Opposition to
Contacts' Motion for Temporary Restraining Order and Preliminary
Injunctive Relief, which disputes every one of Contacts claims as
unfounded. On February 5, 2002, the parties stipulated to the
entry of an injunction as to the Company's first allegedly
infringing advertisement, which has not aired since December
2001, and the Company's prior website, which was updated in
December 2001. The United States District Court of Utah denied
Contacts' motion for a preliminary injunction with respect to any
remaining issues, regarding the Company's current advertising,
pending expedited discovery and further briefings. Subsequent to
the year ended March 31, 2002, the Company reached a final
settlement agreement with the Contacts. According to the May
2002 settlement agreement, the Company was required to pay
$50,000 in fines and agreed to modify the Company's logo and
advertising tagline.

On March 19, 2002, Novartis Animal Health U.S., Inc. ("Novartis")
filed a complaint against the Company and two other defendants in
U.S. District Court for the Southern District of Florida.
Novartis purports to assert seven (7) claims related to the
Company's alleged sale of pet medications produced for a Novartis
Australian sister company: Count I: Infringement of Registered
Trademark Under Section 32 of the Lanham Act, 15 U.S.C. 1114;
Count II: Infringement of Unregistered Trademarks Under Section
43(a) of the Lanham Act, 15 U.S.C. 11125(a); Count III: False
Advertising Under Section 43(a) of the Lanham act, 15 U.S.C.
1125(a); Count IV: Misleading Advertising Under Florida Statutory
Law; Count V: Deceptive and Unfair Trade Practices Under Florida
Statutory Law; Count VI: Injury to Business Reputation Under
Florida Statutory Law; Count VII: Common Law Unfair Competition.

The Company has answered the complaint and asserted defenses and
affirmative defenses. The parties have met pursuant to Rule 16,
S.D. Fla. L.R., and Novartis is in the process of drafting a
proposed scheduling report. No discovery has been propounded,
and no documents have been produced. The parties have engaged in
preliminary settlement discussions; however, it is unknown
whether these discussions will result in an early settlement of
this matter. If not, the Company intends to defend itself
vigorously, and will likely assert counterclaims. Unless and
until the parties engage in substantial discovery, it is not
possible to evaluate the likelihood of an unfavorable outcome or
estimate the potential loss in the event of an adverse outcome at
this time.

Routine Proceedings

The Company is a party to routine litigation incidental to its
business. The Company's management does not believe that the
resolution of any or all of such routine litigation is likely to
have a material adverse effect on the Company's financial
condition or results of operations.

F-15

Employment Agreements

On March 16, 2001, the Company entered into an employment
agreement with its new Chief Executive Officer ("CEO"). Under
the terms of this three-year agreement the Company will pay the
CEO an annual salary of $150,000 for the first six months of the
agreement, and thereafter his annual salary will be increased to
$200,000. The Company can terminate the employment of the CEO
either upon mutual consent or for cause. If the Company should
terminate the CEO for cause, or if the CEO should terminate the
agreement without "good reason" as described in the employment
agreement, no severance benefits shall be paid. If the Company
should terminate the CEO without cause, the Company must give the
CEO three months notice and continue to compensate him under the
terms of this employment agreement during those three months. At
the end of the three-month period, the Company must pay the CEO
severance benefits equal to the annual base salary of the
executive, and any previously granted but unvested options shall
immediately vest. If the Company should terminate the CEO for
cause, as defined in employment agreement, no severance benefits
shall be paid. The agreement can be terminated upon the mutual
consent of the parties or upon 90 days notice by the Company
during which time the Company shall continue to compensate him
under the terms of his employment agreement. The Company also
granted the CEO options to purchase 750,000 shares of its common
stock under the Company's 1998 Stock Option Plan at an exercise
price of $.32 per share, which vest at the rate of 187,500
options on each of March 16, 2001, 2002, 2003 and 2004. The
employment agreements mentioned above contain customary non-
disclosure provisions, as well as a non-competition restriction
for a period of 18 months following the termination of the
agreement.

Other

On May 1, 2001, the former Chief Financial Officer ("CFO") of the
Company, provided notice of termination of his Executive
Employment Agreement with the Company dated March 7, 2000, as
amended. In the notice, the former CFO also demanded payment of
certain benefits allegedly due under the Executive Employment
Agreement. The Company continued discussions in an effort to
resolve this matter, and in accordance with the CFO's Executive
Employment Agreement, the Company accrued a severance charge for
the amount of $120,000 in fiscal 2002. On October 31, 2001, the
Company entered into a Release and Termination agreement with its
former CFO. The former CFO's termination date was effective as
of May 31, 2001. The agreement entitles the former CFO to
receive an amount of $120,000, which was paid in fiscal 2002.
The former CFO had a right to exercise any stock options granted
to him by the Company (the "vested options"), for a period of 30
days from the termination date. Additionally, the former CFO
agreed to provide consulting services to the Company on financial
matters until March 31, 2002, for which he was separately
compensated.

On June 13, 2001, the Company entered into a Release and
Termination agreement with its former Chief Operating Officer
("COO"). The former COO's termination date was effective as of
May 18, 2001. The agreement entitles the former COO to receive
an amount of $75,000, which was paid in fiscal 2002. The former
COO had a right to exercise any stock options granted to him by
the Company (the "vested options"), for a period of 30 days from
the termination date. Additionally, the former COO agreed to
provide consulting services to the Company on regulatory and
legal matters until December 31, 2001, for which he was
separately compensated.

In June 2000, the Company agreed to pay $210,000 to two former
employees who had alleged wrongful termination by the Company.
Of this amount, $60,000 was paid in varying monthly installments
from August 2000 through March 2001, $60,000 was paid in $5,000
installments from August 2000 through August 2001, and the
remaining $90,000 is payable in twelve equal monthly installments
beginning in July 2001. Such amounts have been expensed in fiscal
2000 as part of general and administrative in the accompanying
statement of operations. The settlement is recorded as "accrued
expenses" in the accompanying balance sheet.

F-16

Operating Lease

The Company leases their 32,000 square foot principal executive
offices and warehouse, which expires in fiscal 2007. The
Company is responsible for certain maintenance costs, taxes and
insurance under this lease. The future minimum annual lease
payments as of March 31, 2002, are as follows:

Years Ending March 31
---------------------

2003 $ 315,000
2004 352,000
2005 301,000
2006 300,000
2007 50,000
-----------
Total lease payments $ 1,318,000
===========

Rent expense was $149,000 for the year ended March 31, 2002.

(11) Subsequent Events

Subsequent to fiscal 2002, the Company received net proceeds of
$159,000 upon the exercise and issuance of 600,000 shares of
common stock, of which 300,000 shares were exercised by the
Company's president.

(12) Quarterly Financial Data (unaudited)

Summarized unaudited quarterly financial data for fiscal 2002 and
2001 is as follows:

Quarter Ended: June 30, 2001 September 30, 2001 December 31, 2001 March 31, 2002
- -------------- ---------------- ------------------ ----------------- --------------

Sales $ 5,363,650 $ 7,762,825 $ 8,248,904 $ 10,650,552
Income (loss) from operations $ (880,765) $ 56,246 $ 368,433 $ 1,204,026
Net income (loss) $ (1,090,684) $ 393,378 $ 353,348 $ 1,169,371
Diluted net income (loss) per share $ (0.07) $ 0.02 $ 0.02 $ 0.07

Quarter Ended: June 30, 2000 September 30, 2000 December 31, 2000 March 31, 2001
- -------------- ---------------- ------------------ ----------------- --------------

Sales $ 2,636,715 $ 2,667,336 $ 1,795,439 $ 2,906,795
Loss from operations $ (960,837) $ (248,212) $ (326,564) $ (1,103,485)
Net loss $ (1,037,944) $ (298,602) $ (364,202) $ (1,125,959)
Net loss per share $ (0.16) $ (0.05) $ (0.03) $ (0.04)

F-17

You should rely only on the information contained in this
document or that we have referred you to. We have not authorized
anyone to provide you with information that is different. This
prospectus does not constitute an offer of any securities other
than those to which it relates or an offer to sell, or a
solicitation of any offer to buy, to any person in any
jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this prospectus nor any sale
made hereunder shall, under any circumstances, create an
implication that the information set forth herein is correct as
of any time subsequent to the date hereof.

TABLE OF CONTENTS

Page
----

Prospectus Summary............................................. 1

Forward-Looking Statements..................................... 3

Risk Factors................................................... 3

Capitalization................................................. 10

Price Range of Common Stock and Dividend Policy................ 11

Use of Proceeds................................................ 11

Management's Discussion and Analysis or Plan of Operation...... 12

Business....................................................... 21

Management..................................................... 28

Certain Transactions........................................... 33

Principal Shareholders......................................... 34

Description of Securities...................................... 35

Selling Security Holders....................................... 36

Shares Eligible for Future Sale................................ 37

Legal Matters.................................................. 37

Experts........................................................ 38

Additional Information......................................... 38

Financial Statements........................................... F-1

14,441,932 Shares

PetMed Express, Inc.

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PROSPECTUS

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August 12, 2002