{"url_path":"/sec/pets/10-k/2026/item-9a","section_key":"item-9a","section_title":"Item 9A CONTROLS AND PROCEDURES","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-02","source_url":"https://www.sec.gov/Archives/edgar/data/1040130/0001040130-26-000019-index.html","accession_number":"0001040130-26-000019","cik":"0001040130","ticker":"PETS","issuer_name":"PETMED EXPRESS INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1040130/0001040130-26-000019-index.html","primary_entity_key":"0001040130","primary_entity_name":"PETMED EXPRESS INC"},"word_count":2305,"has_tables":true,"body_markdown":"ITEM 9A. CONTROLS AND PROCEDURES\n\nEvaluation of Disclosure Controls and Procedures\n\nManagement maintains a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow for timely decisions regarding required disclosure.\n\nAn evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026, the end of the period covered by this report (the “Evaluation Date”) was performed under the supervision and with participation of management, including our Interim Chief Executive Officer and Interim Principal Financial Officer. Based upon that evaluation, our Interim Chief Executive Officer and Interim Principal Financial Officer concluded as of the Evaluation Date, that our disclosure controls and procedures were not effective as of March 31, 2026, due to the material weaknesses in internal control over financial reporting described below.\n\nManagement’s Report on Internal Control over Financial Reporting\n\nOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Interim Chief Executive Officer and Interim Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2026 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control — Integrated Framework, management concluded that our internal control over financial reporting was not effective, as of March 31, 2026, as a result of the material weaknesses described below.\n\nA material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.\n\nThis Annual Report on Form 10-K does not include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. Our auditors will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 until we are no longer a smaller reporting company with annual revenues of less than $100 million and a public float of less than $700 million.\n\nStatus of Previously Reported Material Weaknesses\n\nAs previously reported in our Annual Report on Form 10-K for the year ended March 31, 2025, we identified material weaknesses in the following areas:\n\n•Information Technology General Controls (“ITGCs”)\n\n•Income Taxes and Sales Taxes\n\n•Complex Accounting Matters\n\n•Tone at the Top\n\n•Revenue Recognition\n\n•Cooperative Advertising and Vendor Reimbursements\n\n75\n\n[Table of Contents](#i5612d35ddc704c22b6b8aabf807e450f_7)\n\nDuring fiscal 2026, management, under the oversight of the Audit Committee of our Board of Directors, continued to implement the remediation plans described in our Annual Report on Form 10-K for the year ended March 31, 2025. The status of those material weaknesses as of March 31, 2026 is described below.\n\nMaterial Weaknesses Remediated as of March 31, 2026\n\nIncome Taxes\n\nAs previously disclosed, this material weakness is related to the misapplication of Internal Revenue Code 162(m) which limits the deductibility of executive compensation in our consolidated financial statements and errors in the income tax provision related to our management review control.\n\nThe following actions and plans were initiated during fiscal 2025 and continued or were completed during fiscal 2026:\n\n•The Company engaged qualified third-party tax specialists to assist in income tax related matters\n\n•The Company implemented enhanced review controls over income tax provision\n\n•The Company provided additional training for personnel involved in tax accounting and financial reporting to enhance their understanding of the relevant accounting standards and requirements\n\n•The Company enhanced and retained documentation of tax positions and related accounting judgments to ensure they are adequately supported\n\nAs of March 31, 2026, the enhanced controls have operated for a sufficient period of time and management has completed testing of their operating effectiveness. Based on the results of such testing, management concluded that the material weakness related to Income Taxes was remediated.\n\nComplex Accounting Matters\n\nAs previously disclosed, this material weakness related to deficiencies in controls over impairment analyses, valuation assessments, and accounting for significant or non-routine transactions.\n\nThe following actions and plans were initiated during fiscal 2025 and continued or were completed during fiscal 2026:\n\n•The Company enhanced its policies, procedures and process level controls governing how it gathers and analyzes relevant facts and circumstances in connection with complex business transactions\n\n•The Company engaged qualified third-party specialists to assist with technical accounting analyses related to significant non-routine transactions, including impairment analysis matters\n\n•The Company provided additional training to personnel involved in accounting for complex accounting matters and financial reporting to enhance their understanding of the relevant accounting standards and requirements\n\nAs of March 31, 2026, the enhanced controls have operated for a sufficient period of time and management has completed testing of their operating effectiveness. Based on the results of such testing, management concluded that the material weakness related to Complex Accounting Matters was remediated.\n\nTone at the Top\n\nAs previously disclosed, this material weakness is related to deficiencies in our control environment, including governance oversight, risk assessment processes, and internal communication mechanisms.\n\nDuring fiscal 2026, the Company enhanced its executive leadership structure and Board oversight. As previously disclosed in our Annual Report on Form 10-K for the year ended March 31, 2025, following the August 2025 resignations of CEO Sandra Campos and CFO Robyn D’Elia, the Board appointed Leslie C.G. Campbell as interim Chief Executive Officer and Douglas Krulik as interim Principal Financial Officer, reporting directly to the interim CEO and the Audit Committee. In August 2025, Leah Solivan was appointed Chair of the Compensation and Human Capital Committee. Following the resignation of Diana Purcel in July 2025, Peter Batushansky served as Chair of the Audit Committee. Subsequently, on October 19, 2025, the Board appointed James LaCamp to the Board. Mr. LaCamp assumed the role of\n\n76\n\n[Table of Contents](#i5612d35ddc704c22b6b8aabf807e450f_7)\n\nAudit Committee Chair effective October 30, 2025, and continued in that role as of the issuance of the audited financial statements, further enhancing financial expertise and independent oversight.\n\nIn addition to the executive leadership transitions, the Company implemented enhanced entity-level controls during fiscal 2026 designed to address the previously identified deficiencies, including:\n\n•Implementation of a formal Disclosure Committee with defined responsibilities and documented review procedures\n\n•Implementation of enhanced whistleblower escalation and communication protocols to facilitate timely reporting of financial reporting matters to executive leadership and the Audit Committee\n\n•Implementation of a continuous risk assessment process involving executive leadership, conducted on a regular cadence, to identify and evaluate financial reporting, operational and compliance risks, including fraud risks and management override considerations; such process includes documented discussions, assignment of risk owners, monitoring of mitigation actions, periodic reassessment of risks and presentation of results to the Audit Committee\n\n•Implementation of a company-wide Code of Conduct recertification process, together with enhanced employee compliance initiatives, requiring personnel, including executive leadership, to review and formally acknowledge adherence to the Company’s ethical standards, applicable laws and regulations and Company policies, reinforcing emphasis on integrity in financial reporting and transparency\n\n•Under the supervision of the Board, executive leadership reinforced expectations regarding integrity, ethical conduct, compliance with applicable laws and regulations and adherence to the Company’s internal control over financial reporting framework and accounting policies\n\nAs of March 31, 2026, the enhanced controls have operated for a sufficient period of time and management has completed testing of their operating effectiveness. Based on the results of such testing, management concluded that the material weakness related to Tone at the Top was remediated.\n\nMaterial Weaknesses Not Yet Remediated\n\nSales Taxes\n\nWe continue to remediate the material weakness related to sales taxes. The following actions and plans were initiated during fiscal 2025 and continued during fiscal 2026:\n\n•The Company continues to engage qualified third-party tax specialists to assist in sales tax related matters\n\n•The Company continues to implement enhanced review controls over sales tax calculations\n\n•The Company provided additional training for personnel involved in tax accounting and financial reporting to enhance their understanding of the relevant accounting standards and requirements\n\n•The Company is working with a qualified third-party tax specialist to perform a comprehensive review of product-level taxability across its inventory to validate the appropriate application of sales tax based on jurisdictional requirements in tandem with the implementation of an enhanced, sales tax determination and compliance solution\n\nAlthough remediation efforts have substantially progressed, certain remediation activities remain in progress or have not yet operated for a sufficient period of time to allow management to conclude that they are operating effectively. The Company will continue to implement and evaluate both the design and operating effectiveness of these controls. This material weakness has not yet been fully remediated as of March 31, 2026.\n\nITGCs\n\nWe continue to remediate the material weakness related to ITGCs. During fiscal 2026, the following actions were implemented:\n\n•The Company continues to utilize third-party consultants with expertise in ITGCs, internal audit and risk management to assist management in assessing risks and designing and implementing enhanced ITGCs\n\n•The Company continues to implement enhanced change management governance, including formal change management procedures, review protocols and periodic review of system changes to ensure that changes to in-scope systems are appropriately authorized, tested and approved prior to deployment into the production environment\n\n77\n\n[Table of Contents](#i5612d35ddc704c22b6b8aabf807e450f_7)\n\n•The Company continues to implement enhanced controls over logical access to financially relevant systems, including formal approval procedures for granting and modifying user access, strengthened segregation of duties protocols and introduction of monitoring procedures to support periodic access reviews\n\n•The Company provided additional training to personnel involved in the execution of ITGCs to strengthen understanding ITGC requirements, including control documentation and evidence of control execution\n\n•The Company is in the process of deploying governance, risk and compliance software to enhance the tracking, monitoring and enforcement of controls and remediation activities\n\n•The Company is in the process of planning a transition to a modernized ERP and financial system which is expected to reduce reliance on certain legacy systems that contribute to the underlying ITGC deficiencies\n\nAlthough remediation efforts have substantially progressed, certain remediation activities remain in progress or have not yet operated for a sufficient period of time to allow management to conclude that they are operating effectively. The Company will continue to implement and evaluate both the design and operating effectiveness of these controls. This material weakness has not yet been fully remediated as of March 31, 2026.\n\nRevenue Recognition\n\nWe continue to remediate the material weakness related to revenue recognition controls. As part of these efforts, the Company has implemented the following actions:\n\n•The Company enhanced its risk assessment process to identify and analyze risks of financial misstatement related to revenue recognition, including risks arising from error or fraud and potential management override of controls. As part of this effort, management performed walkthroughs of the Company's revenue streams, including the AutoShip program, and began developing enhanced process documentation of the revenue process, key risks and associated controls\n\n•The Company enhanced its policies and procedures related to the review and approval of certain transactions and customer-facing program terms and conditions\n\n•The Company provided additional training to personnel involved in the execution of revenue-related controls to strengthen understanding of the Company’s internal control framework and financial reporting responsibilities\n\n•The Company continued to engage third-party advisors, as necessary, to assist management in evaluating the accounting treatment, financial reporting and disclosure of significant, complex or non-routine transactions\n\n•The Company enhanced cross-functional communication procedures, including structured management meetings, involving finance and operational leadership, designed to ensure that changes in business operations, programs or systems that could impact revenue recognition are identified and evaluated on a timely basis\n\nAlthough remediation efforts have substantially progressed, certain remediation activities remain in progress or have not yet operated for a sufficient period of time to allow management to conclude that they are operating effectively. The Company will continue to implement and evaluate both the design and operating effectiveness of these controls. This material weakness has not yet been fully remediated as of March 31, 2026.\n\nCooperative Advertising and Vendor Reimbursements\n\nWe enhanced review controls and policy governance procedures related to vendor reimbursement and cooperative advertising arrangements. Although remediation efforts have progressed, certain remediation activities remain in progress or have not yet operated for a sufficient period of time for management to evaluate and conclude that the related controls are operating effectively. The Company will continue to implement and monitor these controls and evaluate their design and operating effectiveness. Accordingly, this material weakness has not yet been fully remediated as of March 31, 2026.\n\nChanges in Internal Control over Financial Reporting\n\nOther than as described above, there were no changes in our internal control over financial reporting during the fourth quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.\n\n78\n\n[Table of Contents](#i5612d35ddc704c22b6b8aabf807e450f_7)\n\nInherent Limitations on Effectiveness of Controls\n\nIn designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design and disclosure controls and procedures must reflect the fact that there are resource constraints, and that Management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their cost."}