On February 1, 2005, the plaintiffs filed a notice of voluntary dismissal, and on February 11, 2005, the Court entered the Order of Dismissal signed by Judge Kenneth L. Ryskamp affirming the notice of voluntary dismissal. The case was dismissed without prejudice.
On November 8, 2004, the Court entered the Order granting the motion of the Levin Group for consolidation, appointment as lead plaintiff, and approval of selection of lead counsel.
The complaint was filed charging PetMed Express Inc. and certain of its officers and directors with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company's business model enabled the company to experience sustained financial growth since the model shifted costs to veterinarians (who are the Company's competitors), (2) that the business model made the Company dependent on the cooperation of veterinarians to fill prescriptions, (3) that the defendants could not guarantee the quality, safety or efficacy of PetMed drugs because, as an unauthorized reseller of many products, the Company had to obtain such products through unauthorized channels, prompting veterinarians to refuse refilling prescriptions through PetMed, and (4) that as a result, the Company's financial results were not sustainable, causing the stock to trade at artificially high prices. During the class period while PetMed's stock price was inflated, Defendants and Company insiders sold almost $65 million in privately held PetMed's stock.
On July 26, 2004, defendants shocked the market when they belatedly disclosed that the Company was operating well below defendants' previous guidance and that PetMed revenues and earnings were well below plan. News of this shocked the market. Shares of PetMed fell $2.07 per share or 29.70 percent to close at $4.90 per share.