PETS is now at an entry point.

Used to own the stock back in Jan.  Sold the stock by EOM Mar for profit.  It's now time to jump back in.

Current Ratio 5-1.

Solid Balance Sheet and Income Statement.

Online Vet Supplies - B2C Focus with some wholesaling.  Company looking to increase B2C focus and decrease wholesale focus.

- Bill

Bill, I agree.  Pets has one of the strongest balance sheets and lowest P/E ratios that I have seen in a long time.  I also like the low number of O/S and the fact that the company could very easily pay all outstanding debt with cash on hand.

What is very surprising here is that PETS is trading very near it's 52 week low.

This morning I picked up 200 shares @ 9.63 just after posting this.

PETS is truly a remarkable company.

I spoke with one of my coworkers and he noted that he is a subscriber and even with shipping costs included he still saved over $10 on a single order.  

Further, I used to integrate automated, complex computerized shipping systems for the Vet and Medical Pharmacy Industry.  They have the single lowest operating costs for supply distribution in the industry.  Their barriers to entry can be quite significant as well.  This creates an economic moat around these companies.  

They use RFID technology to fill pick/pack bins that follow automated rolling tracks.  As an order traverses the track and nears a particular med station an RFID receiver detects the bin, containing the med bottles, and pushes the bin off the track to the loading station.  Once completed, the station operator places the bin back on the track where it continues moving to the final stations where pharmacists certify the bin content based on computer image/drug comparison (look, quantity, order size, etc.).  Meeting approval of the pharmacist, the bin is placed back on the track and it moves to the shipping stations where initial order information appears on a computer screen, packages are containerized, weighed, and shipping labels applied.  

1-800-PetMeds uses TV advertising to create demand and it certainly works.  They use TV ads for company and brand awareness and the number of subscribers continues to increase.  While TV ad placements continue to decrease I envision that PETS will move to increased use of Google and other online ads to increase brand awareness.

As long as there is an emotional connection for keeping your fifi healthy there will be Pharmacy services like PETS that fulfill this need.

Press Releases
http://www.1800petmeds.com/company.asp?con=pressroom

Testimonials
http://www.1800petmeds.com/testimonials.asp

- Bill

As expected, the stock is already starting to climb.

The stock really starts taking off toward late December when consumers start bulking up on prescription Heartworm medication through the months of January to EOM March 07.

-Bill

Geopolitical concerns

While PETS has several outstanding quarterly and annual balance sheets and income statements, geopolitical events could unravel the market rally as consumers turn pessimistic.

Not to worry.  One of the virtues of value investing is the companies with strong balance sheets are able to weather these types of events as opposed to those who can barely pay their monthly bills.

- Bill

Today is a good day for PETS.

Bought 500 shares at an average price of 9.82/sh up 1.39 to 11.21/sh a little over 14% gain in about a week.

- Bill

PETS is moving!

While it pulled back to 10.80 this is a good sign for investors wishing to jump in on a solid stock.  While the one year target is set at 16.00 PETS will continue to grow to 19-20/sh by EOM Mar 07.

- Bill

From the motley crew at the Motley Fool they call PETS a multi-bagger.

"It's said that history never repeats itself, but it sure does come close. Down trends like the one we're seeing now do not necessarily herald the end of a company. Similarly, up trends will not continue unabated. Whether the company you are interested in is a $33 billion giant like Honeywell International (NYSE: HON), a $1.9 billion small cap like Armor Holdings (NYSE: AH), or a $250 million micro cap like PetMedExpress (Nasdaq: PETS), the same rise-and-fall patterns will emerge, but generally they end up, well up. Over the long term, well-chosen companies will help you turn a relatively small investment into a huge fortune."

Source: http://www.fool.com/news/comme.....logvisit=y&npu=y

These guys are dead on with their analysis and I have to agree with them.  I'm a holder as well.

- Bill

I'm just about ready to buy more PETS.

It looked like it was going to breach its support line at the $10.00 mark but went back up.

I'll probably place an order tonight for execution tomorrow AM for 100 more shares.  Its still a great buy in this price range.

- Bill.

Here's a graph of the 1 year track.  The 52 week high was 19.55 and low was 9.63.  

Today its up to 11.75 almost 3 dollars/share with my average purchase price of 9.82/share.

It's still not too late to buy into this super strong profit generator.  I look for an exit point near 18.82/share or a $9.00/sh gain by 03/15/07.  This is about the time when hibernator's come out of their caves and pets too.

This stock is definitely a run away in May (i.e., March) and come back to play again in Aug/Sep time frame.  Good seasonal pattern!

- Bill.

What graphong program do you use?

I use Scottrade.

To open a brokerage account you need $500.  It takes about 2 days from the time the money is deposited for the account to be activated.  $7.00 trades so in total entry/exit on a stock is $14.

For penny stocks and OTCBB stocks it's $7+1/2 of 1% of the value purchased.  They have good tools and good customer service.  For an extra $10/month they'll turn on Level II quotes.

I especially like their charting tools and various studies MACD, RSI, MFI, Volume, EMA, SMA, etc plus various time periods.

I like PETS and I've been a shareholder until Mar 06, exited, now recently bought back in at the 52 week low.  So between now and Mar 07 look for the stock to climb back up to near the 52 week high...then repeat.

How easy is that?

- Bill.

I ahve money to invest right now I just find im doing too much research and am getting to scared about any stocks. Im doing charts and contests and setting up fake accounts but im kind of too paranoid.

I also only use yahoo to view stocks and scotiamcleaod to trade. The buy in and out fees here are $26.95 each time which is so high. I need to find a way to cut back my buy ins as I only have 2500 to invest.

What do you think?

I also live in canada and scottrade is in the states

Paranoia comes from purchasing speculative stocks where the valuation is based on future earnings potential where none existed previously and strictly on PR News Releases.  This type of investing is based on hope and emotion rather than using solid fact-based financial research.   I've attached a spreadsheet that I use to evaluate whether I should purchase a stock or not using the "Intelligent Investor" guidelines.

What I would do is shutdown your account with "scotiamcleaod" and go with a reputable online broker to reduce your entry/exit commissions.  High commissions mean you have to hold your stocks longer to make-up the loss in commissions.

One of the best books you can read is "Intelligent Investor" by Benjamin Graham - while dated the concepts still apply today.

Ben and Warren Buffett both went to college together and after graduating formed a managed fund that skyrocketed.  Their principles were based on "defensive investing."

They still use the same principles as explained in the book and they apply well to both PETS and DHI - D.R. Horton (Homebuilder).

The book explains how to spot undervalued companies that are primed for growth and revenue and have little downside.  Two keys to investing are

1) knowing when to buy into a stock - when the listed price is below the value.
2) knowing when to exit a stock - when the listed price exceeds the value.

Buying defensively means that you don't have to watch the stock every day as a trader would, you have less stress and concern about daily market fluctuations, that your investment is protected from losses because the company is sufficiently capitalized to weather downturns in the market, and that the stock is ready to climb.

For example with PETS I bought into it at near its 52 week low.  Reviewed the company earnings since inception, reviewed the companies future earnings potential, the growth in their online subscriber base, their annual and quarterly reports, and the direction of their business plans.  They have been very successful executing the business plans and it is demonstrated in their earnings, revenue, subscriber base, etc.

Just my two cents.  In the end - be aggressive with your research, be conservative in your approach, and above all base your decisions on fact-based financial evaluation (i.e., do your homework well).  Last - always keep some of your asset allocations in cash to take advantage of irrational market downturns.

- Bill

Thank you that is very good advice. The other problem I have is that I dont know how to picka stock or which ones to research. All I really do is look at the graph and the company spreadsheet and then choose. Its very primitive and I have a hard time making money.

How much is your yearly percentage if you dont mind me asking. And is there a way that I can seee when you buy and sell something. Do you keep a Blog of when to you buy or sell?.

Also what online brokerage can I trust. Could you give me some sites?

Thanks a lot

JonathanO

Here is the general method I use to pick a stock for further analysis:

1) Use finance.yahoo.com - their java based stock screener
2) Place the parameters from the "Intelligent Investor Valuation" spreadsheet in the screener
3) Display the output or download the output to a csv file (i.e., spreadsheet)
4) Perform a cursory review of the financials to understand the best alternatives
5) Select about 5 stocks for detailed analysis using the "Intelligent Investor Valuation" spreadsheet

6) Use finance.yahoo.com to read the company's Annual Report - Management discussion and analysis  under the SEC Filings link - because this provides their long-term strategy and growth plans (i.e., its all about future potential given the projected markets)

7) Use finance.yahoo.com to read the company's Quarterly Reports - Management discussion and analysis under the SEC Filings link - because this provides information about whether they are on plan to meeting their Annual Targets.

Review the industry's growth potential - Is the company in an industry that's growing given the current B2C and B2B demand for products and services?

9) Compare the company's competitors with the company you are analyzing.  How does it compare with the others - use finance.yahoo.com, select the Industry Link for the stock you're evaluating.

10) Review "Key statistics" link for the company you are analyzing and note YOY (Year Over Year) and Quarterly mrq (Most Recent Quarter) statistics.

11) Review the Dividend Yield and Rate section of the Key Statistics page.

12) Select the best "Low priced" stock because this will provide the most upside for every increase in share price.

The "Resources Tab" in the "Intelligent Investors" spreadsheet describes where you can find the information to perform your stock evaluation.

Hope that helps.

- Bill

I use Scottrade.com

- Bill

Would you explain in more detail all except 1 6 7. I dont mean to be a bother but this is really helping me.

Also please post this in the
"New Investor's Blog JonathanO" in Miscelaneous. Others will want to see this information as well.

Thanks

JonathanO

JonathonO,

It's up to the readers now to download the spreadsheet and perform their analyses using the instructions found in the threads and in the various tabs of the spreadsheet.

If you have a specific question I'll be happy to respond.

- Bill  

The retailer behind the 1-800-PetMeds ads is growing fast and its stock is a bargain.
By Katie Benner, Fortune reporter
October 19 2006: 2:01 PM EDT


(Fortune) -- In a world where pets are treated to designer duds, gourmet meals, luxury hotel rooms, and high-end cab services, people's devotion to animals has unleashed a giant opportunity for PetMed Express (Charts).

The Pompano Beach, Fla.-based retailer - which sells pet medications, gifts and other products by phone, online and snail mail - has gone from being a penny stock in 2000 to a fast-growth company whose shares trade in the double digits. And we think this puppy has more room to grow.

Americans are expected to spend about $38.4 billion this year on their pets, up 35 percent from 2001, according to the American Pet Products Manufacturers Association. PetMed dominates a lucrative specialty - prescription animal drugs sold outside the traditional veterinarian's office channel. Because these medications are tightly controlled, they're not available in brick-and-mortar stores. And buyers increasingly are taking the mail-order approach: Five years ago, less than 1 percent of owners whose pets take medication bought it outside a vet's office, according to the company. Now up to 9 percent do, and even better, PetMed says it has more than half of that market.

PetMed has used prescription medication as a way to break into the competitive, fragmented pet-supply market - creating a convenient, aggressively priced, one-stop shop for pet owners. Owners who want, say, a doggy bed no longer have to trek to big retailers like Wal-Mart (Charts), Costco (Charts) or Target (Charts), and then to a small local pet shop to buy Kitty's vitamins.

Customers seem to like the convenience. The company posted annual sales of $137.6 million for the fiscal year ending March 2006, up 27% from the previous year. And quarterly sales continue to show double-digit growth. No wonder, then, that many high-growth, small-cap and emerging companies mutual funds, including those offered by Vanguard, Allianz CCM and American Century, have PetMed in their portfolios.

But shares now are trading at around $11, close to their 52-week low, and almost half their 52-week high of $20.20. Why? Wall Street is worried mostly about rising advertising costs and disappointing new-customer numbers. With PetMed set to report quarterly earnings Monday, will its stock find a way out of the doghouse?

Pet peeves
PetMed began its retreat from $20 this April, and analysts say the sag was due in large part to concerns that election-year TV spots are making their signature 1-800-PetMeds ads very expensive. Avondale Partners lowered its rating on the stock to "market perform" from "market outperform" at the end of March and JMP Securities downgraded the company to "market outperform" from "strong buy" early this September. Both companies cited advertising costs.

While the company understands investors' worries about ad costs, TV spots are the company's "bread and butter" when it comes to attracting new customers, said PetMed CFO Bruce S. Rosenbloom. Meanwhile, existing customers are proving as loyal as man's best friend, with return business soaring 30 percent in the last quarter, beating expectations.

"More of our marketing activities are being directed at our existing base through e-mails and mailings," said Rosenbloom, which could help keep costs down at a time when TV ads are expensive.

And if need be, the company would consider raising prices, company executives told investors at a conference hosted by Wedbush Morgan Securities in September.

Meanwhile, some investors and analysts worry that PetMed could face inventory shortfalls because it cannot source its drugs directly from manufacturers like a veterinarian can. Due to competitive reasons, the company will not disclose who exactly they buy from, but this network includes other wholesalers and distributors and some smaller, secondary manufacturers. However, Rosenbloom says that with 100 to 150 active supply sources the company is unlikely to run out of products.

Some investors may also be nervous about a pending lawsuit. Co-founder Yali Golan is suing former president and chairman and fellow co-founder Marc Puleo in a pay dispute. The original suit, which seeks unspecified damages, included only the two men when it was filed in 2003, but PetMed was added as a defendant in 2006. Neither of the men are still with the company. Michael Friedman, an analyst with Noble Financial Group, says the suit doesn't relate to company performance and Wall Street seems unfazed by the litigation.

Warm and fuzzy outlook
Despite some potential shakiness in the near term, we think PetMed is a smart company and a long-term buy. As more animal lovers discover the company, its market is likely to increase. PetMed stock trades at a reasonable P/E of 15.5 (compared with an average 29 for other drug delivery stocks) and the company has become the biggest name in the pet medication space.

When earnings are released Monday, the stock may sink if the company's ad or sales numbers don't meet analysts' lowered expectations. So we recommend waiting to see how the stock reacts to earnings; it could become an even better bargain buy. Give it some time, and the stock may just become the pet of your portfolio.

The analysts interviewed for this story do not own stock in the companies mentioned here.

Monday October 23, 8:00 am ET


POMPANO BEACH, Fla.--(BUSINESS WIRE)--PetMed Express, Inc. (NASDAQETS - News) today announced its financial results for the quarter ended September 30, 2006. Net income was $3.3 million, or $0.14 diluted per share, for the quarter ended September 30, 2006, compared to net income of $2.7 million, or $0.11 diluted per share, for the quarter ended September 30, 2005, an increase to net income of 22%. Net sales for the quarter ended September 30, 2006 were $43.8 million, compared to $38.7 million for the quarter ended September 30, 2005, an increase of 13%. Net income was $8.1 million, or $0.33 diluted per share, for the six months ended September 30, 2006, compared to net income of $6.3 million, or $0.26 diluted per share, for the six months ended September 30, 2005, an increase to net income of 29%. Net sales for the six months ended September 30, 2006 were $94.5 million, compared to $82.3 million for the six months ended September 30, 2005, an increase of 15%. Approximately 62% of all sales were placed on the Company's website for the second quarter, compared to 55% for the same quarter in the prior year.
ADVERTISEMENT



Menderes Akdag, CEO and President, commented: "We are pleased to report that our retail reorder sales increased by 23%, from $22.9 million to $28.1 million for the quarters ended September 30, 2005 and 2006, respectively. For the six months ended September 30, 2006 our retail reorder sales increased by 28% to $62.0 million from $48.6 million for the six months ended September 30, 2005. We are currently focused on optimizing our advertising campaigns and improving our current service levels to capture additional market share. We are also pleased to report that net cash provided by operating activities increased by $1.5 million, from $12.7 million for the six months ended September 30, 2005 to $14.2 million for the six months ended September 30, 2006."

This morning at 8:30 A.M. Eastern Time, Mr. Akdag will host a conference call to review the quarter's financial results. To access the call which is open to the public, dial (88 455-1758 (toll free) or (312) 470-7365. Callers will be required to supply PETMEDS as the passcode. For those unable to participate in the live event, the call will be available for replay from 10 A.M. on October 23, 2006 until November 6, 2006 at 10:59 P.M. To access the replay, call (866) 422-8069 (toll free) or (203) 369-0828, and enter passcode 5500.



Source: http://biz.yahoo.com/bw/061023/20061023005635.html?.v=1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported) October 23, 2006

PETMED EXPRESS, INC.
(Exact name of registrant as specified in its charter)


         Florida               000-28827            65-0680967
----------------------------------------------------------------------
(State or other jurisdiction  (Commission         (IRS Employer
     of incorporation)        File Number)     Identification No.)

    1441 S.W. 29th Avenue, Pompano Beach, Florida       33069
----------------------------------------------------------------------
     (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code  (954) 979-5995
                                                   ----------------

   -----------------------------------------------------------
   (Former name or former address, if changed since last report)




Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


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

Item 7.01 Regulation FD Disclosure

Item 8.01 Other Events

On October 23, 2006, PetMed Express, Inc. discussed its financial results for the quarter ended September 30, 2006. A copy of the conference call transcript is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

99.1 Conference call transcript by PetMed Express, Inc. on October 23, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PETMED EXPRESS, INC.

Date:  October 25, 2006          By:/s/ Menderes Akdag
                                    -------------------------------------
                                    Menderes Akdag,
                                    Chief Executive Officer and President

                                 By:/s/ Bruce S. Rosenbloom
                                    -------------------------------------
                                    Bruce S. Rosenbloom,
                                    Chief Financial Officer





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

EXHIBIT INDEX

Exhibit No. Description

99.1 Conference call transcript by PetMed Express, Inc. on October 23, 2006


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


EXHIBIT 99.1

PETMED EXPRESS, INC.
QUARTER ENDED SEPTEMBER 30, 2006
CONFERENCE CALL TRANSCRIPT
OCTOBER 23, 2006 AT 8:30 A.M. EDT

Coordinator: Welcome to the PetMed Express Inc. doing business as 1-800-PetMeds conference call, to review the financial results for the second fiscal quarter ended on September 30, 2006. At the request of the company, this conference call is being recorded. Founded in 1996, 1-800- PetMeds is America's Largest Pet Pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs, cats and horses direct to the consumer. 1-800- PetMeds markets its products through national television, on-line, direct mail and print advertising campaigns, which direct consumers to order by phone or on the Internet, and aim to increase the recognition of the "1-800-PetMeds" brand name. 1-800-PetMeds provides an attractive alternative for obtaining pet medications in terms of convenience, price, ease of ordering, and rapid home delivery. At this time I would now like to turn the call over to the company's Chief Financial Officer, Mr. Bruce Rosenbloom.

Bruce Rosenbloom: Thank you. I'd like to welcome everybody here today. Before I turn the call over to Mendo Akdag, our Chief Executive Officer and President, I would like to remind everyone that the first portion of this conference call will be listen- only, until the question and answer session, which will be later in the call.

Also certain information that will be included in this press conference may include forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, or the Securities and Exchange Commission that may involve a number of risks and uncertainties.

These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions.

Actual future results may vary significantly based on a number of factors that may cause the actual results or events to be materially different from future results, performance, or achievements expressed or implied by these statements.

We have identified various risk factors associated with our operations in our most recent annual report and other filings of the Securities and Exchange Commission.

Now let me introduce today's speaker, Mendo Akdag, the Chief Executive Officer and President of 1-800-PetMeds. Mendo.

Mendo Akdag: Thank you, Bruce. Welcome everyone, and thank you for joining us. Today we'll review the highlights of our financial results. We'll compare our second fiscal quarter and six months ended on September 30, 2006, to last year's quarter and six months ended on September 30, 2005.

Exhibit 99.1 Page 1 - 7


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

For the second fiscal quarter ended on September 30, 2006, our sales were $43.8 million compared to sales of $38.7 million for the same period the prior year - an increase of 13%.

For the six months ended on September 30, 2006, sales were $94.5 million compared to sales of $82.3 million for the six months the prior year
- an increase of 15%. The increase was primarily due to increased retail reorders, offset by decreased wholesale sales.

For the second fiscal quarter, net income was $3.3 million, or 14 cents diluted per share, compared to $2.7 million or 11 cents diluted per share for the same quarter the prior year - an increase to net income of 22%.

For the six months, net income was $8.1 million, or 33 cents diluted per share, compared to $6.3 million, or 26 cents diluted per share a year ago - an increase to net income of 29%.

Retail reorder sales increased by 23% to $28.1 million for the quarter, compared to retail reorder sales of $22.9 million for the same quarter the prior year. For the six months, the reorder sales increased by 28% to $62 million, compared to $48.6 million for the same period

last year.

Retail  new order sales increased by 6% to  $15.5
million  for  the  quarter,  compared  to   $14.7




million for the same period the prior year. For the six months, the new order sales increased by 3% to $32 million, compared to $31.1 million for the same period last year.

The slowdown in retail new order sales growth may be attributable to increased advertising costs to acquire new customers, and increased price competition.

Wholesale sales were approximately $200,000 for the quarter compared to $1.1 million for the same quarter the prior year. For the six months, wholesale sales were approximately $500,000 compared to $2.5 million for the same period a year ago. The decrease was due to our decision to limit wholesale sales to focus on retail business.

We acquired 212,000 new customers in our second fiscal quarter compared to 208,000 for the same period the prior year, and we acquired 419,000 new customers in the six months compared to 425,000 for the same period a year ago.

Our average retail order was approximately $77 for the quarter compared to $74 for the same quarter the prior year, and approximately 62% of our sales were generated on our web site for the quarter compared to 55% for the same period the prior year.

The seasonality in our business is due to the proportion of flea, tick, and heartworm medications in our product mix. Spring and summer are considered peak seasons, with fall and winter being the off seasons.

Exhibit 99.1 Page 2 - 7


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

For the second fiscal quarter our gross profit as a percent of sales was 38.6% compared to 38.4% for the same period a year ago. For the six months, our gross profit as a percent of sales was 39.2% compared to 38.5% for the six months a year ago.

The percentage increase can mainly be attributed to decreases in wholesale sales, which have lower gross profit margins. Our general and administrative expenses as a percent of sales were approximately 9.9% for both the second fiscal quarter and for the same quarter the prior year, and the G&A expenses as a percent of sales were 9.3% for both the six months and the September 30, 2006, and for the same six months the prior year.

The company adapted financial accounting standard 123R on April 1, 2006, resulting in approximately $223,000 of stock option compensation expense for the quarter, and $446,000 for the six months, which increased the G&A as a percent of sales by 1/2% for the quarter and the six months.

For the quarter we spent $7.7 million in advertising compared to $6.9 million for the same quarter the prior year - an increase of 11%. For the six months we spent $16 million in advertising compared to $14.5 million a year ago
- an increase of 10%.

Advertising cost of acquiring a customer for the quarter was $36 compared to $33 for the same quarter the prior year, and for the six months it was $38 compared to $34 for the same period a year ago. Our working capital increased by $8.9 million to $43.9 million since March 31, 2006. The increase can mainly be attributed to cash flow generated from operations.

We had $37.7 million in cash and $9.9 million in inventory, with no debt as of September 30, 2006. Net cash from operations for the six months was $14.2 million compared to $12.7 million for the same period the prior year - an increase of $1.5 million.

Capital expenditures for the six months were approximately $300,000. This ends the financial review. Operator, we are ready to take questions.

Coordinator: All right, very good now. We will now begin the question and answer session. If anybody would like to ask a question, please press star 1 on your telephone keypad. To cancel your request, press star 2. If you're on speakerphone equipment, you may need to lift your telephone receiver before making your selection. One moment please for the first question to queue up.

Our first question comes from Frank Gristina of Avondale. Go ahead with your question please.

Frank Gristina: Good morning Mendo, Bruce.

Mendo Akdag: Good morning, Frank.

Exhibit 99.1 Page 3 - 7


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

Frank Gristina: Bruce, I was hoping you could break out the different revenue lines, new reorder, wholesales, just so - cause on the surface it seems like maybe the new order business was down, but it's actually the wholesale business that caused the year-over-year decline in the, I guess, the delta between total revenue and reorder revenue?

Bruce Rosenbloom: On total sales for the quarter?

Frank Gristina: Yes please.

Bruce Rosenbloom: The new orders were $15.5 million, reorders $28.1, wholesale was approximately $200,000.

Frank Gristina: Two hundred thousand. And then in terms of - can you give us an update what's going on in the advertising environment? Do you feel like you felt - I mean $36 CAC [customer acquisition cost], 8% inflation is not too bad. Do you feel like you saw some political pressure there or how did you manage to, I guess, keep that inflation down to single digits?

Mendo Akdag: It was really not as bad as we anticipated, the bottom line answer is.

Frank Gristina: And is it dissipating now, or I guess through November we'll see, I guess, what pressure an ad...

Mendo Akdag: It was not bad the first two weeks of October, obviously we have two more weeks to go. So it may tighten up a little bit.

Frank Gristina: Okay.

Mendo Akdag: But bear in mind that it's our off season.

Frank Gristina: Okay, and the last thing is what's the driver of retail reorder sales, so up 23%? Is it new products in the basket, is it some pricing? What's driving that strong number?

Mendo Akdag: Continuous communication with our database.

Frank Gristina: Do a lot of direct marketing via email?

Mendo Akdag: Refills, upsells, and cross-selling, and through both emails and direct mail.

Frank Gristina: And cross-selling, what exactly - does that mean you were getting them to buy a new product, something they didn't buy before so they're going from Frontline and Heartgard to a bone and joint medicine? Is that cross-selling?

Mendo Akdag: I would say so, but more vitamins, nutritional supplements, toys, shampoo, conditioner, skin care.

Frank Gristina: Great. Well thanks a lot. I'll get back in the queue.

Exhibit 99.1 Page 4 - 7


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

Mendo Akdag: Okay.

Coordinator: Next question comes from Marcos Kaminis of Kaminis Capital.

Marcos Kaminis: Hi, I have a couple - two questions. First question is regarding the wholesale business. I'm sorry I missed the prior year number for that.

Mendo Akdag: The prior year for the quarter was $1.1 million, and the current September quarter was $200,000.

Marcos Kaminis: Okay. So is this a run rate, this $200,000 level that you're going to probably stick with? And when will the comp number start to reflect the - when will this be out of your comps?

Mendo Akdag: I think by next fiscal year it should be out of the comps.

Marcos Kaminis: You've now - let's see. It affected last quarter, it affected this quarter, is it going to affect the coming quarter?

Mendo Akdag: Hold on one second. Possibly yes. It will.

Marcos Kaminis: Okay so, I mean when did you start it?

Mendo Akdag: As of the end of the March quarter. So we have two more quarters to go that it will impact it. After that it will be...

Marcos Kaminis: That's helpful. I mean I feel like it's an economic value ad anyway, in the long run. The other question I have now is what are your plans for the use of cash? You have a nice cash store building up.

You have a share repurchase plan - pretty large share repurchase plan passed through the Board. And are you thinking you might acquire smaller competitors, or are you going to buy back

               shares? What's your plan?

Mendo Akdag:   We  do not have a stock buy-back plan approved by
               the Board.

Marcos Kaminis: You don't?

Mendo Akdag:    That's not us.

Marcos Kaminis: Would you consider buying back shares?  Are  you
               planning  to  maybe  buy  up some lists  of  some
               smaller competitors?

Mendo Akdag:   The  board  is considering all options, including
               stock buy-back,  dividends  and  acquisitions, so
               when   and  if  the  board  makes  the  decision,
               obviously we'll let the public know.

Marcos Kaminis: Right,  but, you know, what do you view  as more
               valuable?

Mendo Akdag:   To me, personally?




Exhibit 99.1 Page 5 - 7


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Marcos Kaminis: Yes.

Mendo Akdag: Probably stock buy-back.

Marcos Kaminis:Okay, thank you.

Mendo Akdag: You're welcome.

Coordinator: Next question comes from Anthony Lebczinski of Sidoti and Company.

Anthony Lebczinski: Good morning, a couple of questions. Have you made any changes to the advertising strategy, and also is the mix of cable TV commercials still the same, or are you doing a little bit more of perhaps online advertising?

Mendo Akdag: We are probably doing a little bit more online advertising. We really have not made any strategic changes except probably our creatives. We're coming out with new creatives which will probably start running in January that we're excited about. Other than that, we track all our advertising and whatever is obviously paying off we'll continue with that.

Anthony Lebczinski: Um, hmmm. And as far as the gross margin, you had mentioned that the bulk of it, that the gross margin expansion was because of the wholesale revenue coming down and now as you strip out the wholesale component, what was the gross margin then?

Mendo Akdag: It was very similar to last year, probably a .1% difference.

Anthony Lebczinski: Okay, and lastly, as far as the average order size, it did increase this quarter versus last year. What would you attribute that to?

Mendo Akdag: I would say about 60% is due to price increases, passing the cost increases to the consumer, and the other 40% upselling and cross-selling.

Anthony Lebczinski: Okay, thank you.

Mendo Akdag: You're welcome.

Coordinator: Once again, if anybody would like to ask a question, that's star 1 on your telephone keypad. Star 1 on your telephone keypad if you'd like to ask a question. Our next question comes from Kristine Koerber of JMP. Go ahead please.

Kristine Koerber: Yeah, hi. Can you give us a little more color on pricing? I know you said you were competitive on pricing during the quarter, what you're seeing out there, and what you saw in the environment during the quarter. Are we seeing more competitors heating up the discounting?

Mendo Akdag: We really look at veterinarians. The market share is coming from the veterinarians so we compare ourselves to veterinarians and they have been more price-competitive.

Exhibit 99.1 Page 6 - 7


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Kristine Koerber: Has it been a lot? Are we talking 5%, 10%? How much more aggressive were you during th