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Restatement of Previously Issued Financial Statements
 3 Months Ended
Jun. 30, 2023
Accounting Changes and Error Corrections [Abstract]  
Restatement of Previously Issued Financial Statements Restatement of Previously Issued Financial Statements
The unaudited quarterly financial statements for the quarters ended June 30, 2023 and 2022 (collectively, the "Affected Periods") have been restated to account for material misstatements related to the collection of sales taxes on sales of products and services to customers as further described below and the accounting treatment related to the deferred tax asset associated with the Company’s acquisition of PetCareRx in April 2023 (collectively, the "Misstatements"). The Company also restated all amounts impacted within the notes to the financial statements in this Amendment. A description of the adjustments and their impacts on the previously issued financial statements are included below.
Description of restatement adjustments
In the third quarter of fiscal year 2024, the Company reviewed the accounting treatment related to its previously reported sales tax accruals as well as the accounting treatment related to the valuation of the deferred tax asset associated with the Company’s acquisition of PetCareRx in April 2023. As a result of this review, management determined that the Company incorrectly applied GAAP as it relates to the sales tax liability included in our consolidated financial statements for each of the Affected Periods, and that it improperly valued the deferred tax asset and goodwill reported in the first and second quarter of fiscal year 2024.
The restated sales tax accrual amounts assume that (i) customers who have not yet provided certificates or other documentation of exemption from sales tax are taxable, (ii) total potential interest and penalty assessments may be imposed, and (iii) the Company will not receive waivers of interest and penalties or other benefits under agreements it may obtain with jurisdictions from its outreach with voluntary disclosures. The Company expects to make adjustments to the sales tax liability in future periods as and if it obtains any waivers of interest and penalties or other benefits from its voluntary disclosures and as and if it obtains additional documentation from customers supporting exemption from sales tax.
In addition, the Company has corrected its deferred tax asset recognized in connection with its acquisition of PetCareRx on April 3, 2023 (the “Acquisition”). In the accounting for the Acquisition, it was determined that the Company incorrectly valued deferred tax assets associated with loss carryforwards of PetCareRx under section 382 of the Internal Revenue Code. As a result of this error, the amount of deferred tax assets disclosed in the Original Report was overstated by $5.9 million and the amount of goodwill by was understated by $5.9 million.
A summary of the impact of the adjustments described above relating to the Misstatements for the quarters ended June 30, 2023 and 2022, is as follows:
Three Months Ended
June 30, 2023June 30, 2022
(in thousands)As previously reportedAs restatedAs previously reportedAs restated
Sales$78,244 $78,244 $70,187 $70,042 
Gross profit$22,526 $22,526 $19,943 $19,798 
(Loss) income from operations$(2,128)$(2,128)$3,490 $3,311 
Net (loss) income$(887)$(1,136)$2,775 $2,687 
Three Months Ended
June 30, 2023June 30, 2022
As previously reportedAs restatedAs previously reportedAs restated
Net (loss) income (numerator):
Net (loss) income$(887)$(1,136)$2,775 $2,687 
Shares (denominator):
Weighted average number of common shares outstanding used in basic computation20,33320,33320,20820,208
Common shares issuable upon vesting of restricted stock——7373
Common shares issuable upon conversion of preferred shares——1010
Shares used in diluted computation20,33320,33320,29120,291
Net (loss) income per common share:
Basic$(0.04)$(0.06)$0.14 $0.13 
Diluted$(0.04)$(0.06)$0.14 $0.13 

The restated unaudited interim financial information for the relevant unaudited interim financial statements for the quarterly periods ended June 30, 2023 and 2022 is also included below.
The categories of restatement adjustments and their impacts on previously reported financial statements are described below and identified in the Restatement Reconciliation Tables in the column entitled "Reference":
a.Sales Tax – Sales tax on sales of products and services to customers who were subject to sales tax, inclusive of maximum penalties and interest, that was not previously accrued by the Company is corrected by an increase to sales tax liabilities on the consolidated balance sheets. The effect of the adjustments on the consolidated statements of operations were recorded as a reduction to sales for the amount of tax, an increase to general and administrative expenses for accrued penalties and interest is included in other interest(expense) on the consolidated statements of operations.
b.Tax provision / accrual – Tax provisions, deferred tax assets and liabilities were adjusted based on restated net income and restated deferred assets valuation in connection with the acquisition of PetCareRx.
c.Deferred tax asset adjustment - Deferred tax asset recognized in connection with the acquisition of PetCareRx on April 3, 2023.
Condensed Consolidated Financial Statements - Restatement Reconciliation Tables
In light of the foregoing, in accordance with ASC 250, Accounting Changes and Error Corrections, we are restating the previously issued unaudited condensed consolidated financial statements as of June 30, 2023 and March 31, 2023, and for the three months ended June 30, 2023 and 2022, to reflect the effects of the restatement adjustments and to make certain corresponding disclosures. In the following tables, we have presented a reconciliation of our consolidated balance sheets, statements of operations, and cash flows as previously reported for these prior periods to the restated and revised amounts.
Summary of Restatement - Consolidated Balance Sheets
June 30, 2023March 31, 2023
As Previously ReportedRestatement AdjustmentsRefer-enceAs RestatedAs Previously ReportedRestatement AdjustmentsRefer-enceAs Restated
ASSETS
Current assets:
Cash and cash equivalents$61,534 $— $61,534 $104,086 $— $104,086 
Accounts receivable, less allowance for doubtful accounts of $38 and $35, respectively
1,894 — 1,894 1,740 — 1,740 
Inventories - finished goods32,324 — 32,324 19,023 — 19,023 
Prepaid expenses and other current assets8,530 — 8,530 4,719 4,719 
Prepaid income taxes1,548 (1,020)
b
528 1,883 (1,020)b863 
Total current assets105,830 (1,020)104,810 131,451 (1,020)130,431 
Noncurrent assets:
Property and equipment, net27,207 — 27,207 26,178 — 26,178 
Intangible and other assets17,671 — 17,671 5,860 — 5,860 
Goodwill20,735 5,922 c26,657 — — — 
Operating lease right-of-use assets, net2,024 – 2,024 — – – 
Deferred tax assets, net7,270 (1,364)b, c5,906 628 4,381 b5,009 
Total noncurrent assets74,907 4,558 79,465 32,666 4,381 37,047 
Total assets$180,737 $3,538 $184,275 $164,117 $3,361 $167,478 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable$40,037 $— $40,037 $25,208 $— $25,208 
Sales tax payable— 26,614 a26,614 — 26,113 a26,113 
Accrued expenses and other current liabilities13,240 (5,173)a8,067 11,289 (5,098)a6,191 
Current lease liabilities799 — 799 — — — 
Deferred revenue3,246 — 3,246 — — — 
Total current liabilities57,322 21,441 78,763 36,497 21,015 57,512 
Deferred tax liabilities— — — — — — 
Long-term lease liabilities1,268 — 1,268 — — — 
Other long-term liabilities3,825 (3,825)
a
— 3,825 (3,825)
a
— 
Total liabilities62,415 17,616 80,031 40,322 17,190 57,512 
Commitments and contingencies— — — — — — 
Shareholders' equity:
Preferred stock, $.001 par value, 5,000 shares authorized; 3 convertible shares issued and outstanding with a liquidation preference of $4 per share
9 — 9 9 — 9 
Common stock, $.001 par value, 40,000 shares authorized; 21,170 and 21,084 shares issued and outstanding, respectively
21 — 21 21 — 21 
Additional paid-in capital20,037 — 20,037 18,277 — 18,277 
Retained earnings98,255 (14,078)a, b, c84,177 105,488 (13,829)a, b91,659 
Total shareholders' equity118,322 (14,078)104,244 123,795 (13,829)109,966 
Total liabilities and shareholders' equity$180,737 $3,538 $184,275 $164,117 $3,361 $167,478 
Summary of Restatement - Consolidated Statements of Operations
Three Months Ended June 30, 2023Three Months Ended June 30, 2022
As Previously ReportedRestatement AdjustmentsRefer-enceAs RestatedAs Previously ReportedRestatement AdjustmentsRefer-enceAs Restated
Sales$78,244 $— $78,244 $70,187 $(145)a$70,042 
Cost of sales55,718 — 55,718 50,244 — 50,244 
Gross profit22,526 — 22,526 19,943 (145)19,798 
Operating expenses:
General and administrative15,711 — 15,711 9,351 34 a9,385 
Advertising7,265 — 7,265 6,349 — 6,349 
Depreciation and amortization1,678 — 1,678 753 — 753 
Total operating expenses24,654 — 24,654 16,453 34 16,487 
(Loss) income from operations(2,128)— (2,128)3,490 (179)3,311 
Other income (expense):
Interest income (expense), net620 (426)a194 117 (391)a(274)
Other, net506 — 506 198 — 198 
Total other income (loss)1,126 (426)700 315 (391)(76)
(Loss) income before (benefit) provision for income taxes(1,002)(426)(1,428)3,805 (570)3,235 
(Benefit) provision for income taxes(115)(177)b(292)1,030 (482)b548 
Net (loss) income$(887)$(249)$(1,136)$2,775 $(88)$2,687 
Net (loss) income per common share:
Basic$(0.04)$(0.02)$(0.06)$0.14 $(0.01)$0.13 
Diluted$(0.04)$(0.02)$(0.06)$0.14 $(0.01)$0.13 
Weighted average number of common shares outstanding:
Basic20,333 — 20,333 20,208 — 20,208 
Diluted20,333 — 20,333 20,291 — 20,291 
Cash dividends declared per common share$0.30 $— $0.30 $0.30 $— $0.30 

Summary of Restatement - Consolidated Cash Flow Statement
Three Months Ended June 30, 2023Three Months Ended June 30, 2022
As Previously ReportedRestatement AdjustmentsRefer-enceAs RestatedAs Previously ReportedRestatement AdjustmentsRefer-enceAs Restated
Cash flows from operating activities:
Net (loss) income$(887)$(249)a$(1,136)$2,775 $(88)a$2,687 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization1,678 — 1,678 753 — 753 
Share based compensation1,760 — 1,760 1,536 — 1,536 
Deferred income taxes(450)(177)b(627)(294)(482)b(776)
Bad debt expense19 — 19 45 — 45 
(Increase) decrease in operating assets and increase (decrease) in liabilities:
Accounts receivable(46)— (46)86 — 86 
Inventories - finished goods(10,185)— (10,185)9,880 — 9,880 
Prepaid income taxes335 — 335 681 — 681 
Prepaid expenses and other current assets(2,390)— (2,390)451 — 451 
Operating lease right-of-use assets, net196 — 196 — — — 
Accounts payable9,115 — 9,115 (10,469)— (10,469)
Sales tax payable— 500 a500 — 498 a498 
Accrued expenses and other current liabilities1,369 (74)a1,295 97 72 a169 
Lease liabilities(205)— (205)— — — 
Deferred revenue253 — 253 — — — 
Income taxes payable— — — 839 — 839 
Net cash provided by operating activities$562 $— $562 $6,380 $— $6,380 
Cash flows from investing activities:
Purchase of minority interest investment in Vetster— — — (5,000)— (5,000)
Acquisition of PetCareRx, net of cash acquired(35,859)— (35,859)— — — 
Purchases of property and equipment(1,153)— (1,153)(982)— (982)
Net cash used in investing activities$(37,012)$— $(37,012)$(5,982)$— $(5,982)
Cash flows from financing activities:
Dividends paid(6,102)— (6,102)(6,064)— (6,064)
Net cash used in financing activities$(6,102)$— $(6,102)$(6,064)$— $(6,064)
Net (decrease) increase in cash and cash equivalents(42,552)— (42,552)(5,666)— (5,666)
Cash and cash equivalents, at beginning of year104,086 — 104,086 111,080 — 111,080 
Cash and cash equivalents, at end of year$61,534 $— $61,534 $105,414 $— $105,414 
Supplemental disclosure of cash flow information:
Dividends payable in accrued expenses$1,507 $— $1,507 $791 $— $791