<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934. For the fiscal year ended July 31, 2002; or
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934. For the transition period from ___________ to
     ____________.

                        Commission file number: 000-26326

                     PROFESSIONAL VETERINARY PRODUCTS, LTD.
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                               <C>                            <C>
           Nebraska                           5047                   37-1119387
(State or other jurisdiction of   (Primary Standard Industrial      (IRS Employer
Incorporation or organization)     Classification Code Number)   Identification No.)
</TABLE>

                            10077 South 134th Street
                              Omaha, Nebraska 68138
                                 (402) 331-4440
   (Address and telephone number of Registrant's principal executive offices)

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None
           Securities Registered Pursuant to Section 12(g) of the Act:
                     Common Stock, par value $1.00 per share
                                (Title of Class)

     Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

     Yes |X|   No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulations S-K (ss. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |X|

     As of September 30, 2002, the aggregate market value of the voting and
non-voting Common Stock held by non-affiliates of the Registrant was $5,003,000.
Shares of Common Stock held by each executive officer and director of the
Registrant have been excluded in that such persons may be deemed to be
affiliates of the Registrant. This determination of affiliate status is not
necessarily a conclusive determination for other purposes. As of September 30,
2002, 1,691 shares of the Registrant's Common Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
     Portions of the definitive Proxy Statement for the Registrant's 2002 Annual
Meeting of Stockholders to be filed within 120 days of the fiscal year ended
July 31, 2002 are incorporated by reference in Items 10, 11, 12 and 13 of Part
III of this Annual Report on Form 10-K.

<PAGE>

                     PROFESSIONAL VETERINARY PRODUCTS, LTD.
                          INDEX TO 10-K FOR THE ANNUAL
                           PERIOD ENDED JULY 31, 2002

<TABLE>
<S>      <C>         <C>                                                        <C>
PART I
         ITEM 1.     BUSINESS ............................................         1

         ITEM 2.     PROPERTIES ..........................................         4

         ITEM 3.     LEGAL PROCEEDINGS ...................................         4

         ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .         4

PART II
         ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                     STOCKHOLDER MATTERS .................................         4

         ITEM 6.     SELECTED FINANCIAL DATA .............................         5

         ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATION ..................         7

         ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                     RISK ................................................        11

         ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .........        11

         ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND
                     FINANCIAL DISCLOSURE ................................        11

PART III
         ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT ......        12

         ITEM 11.    EXECUTIVE COMPENSATION ..............................        12

         ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                     MANAGEMENT ..........................................        12

         ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ......        13

PART IV
         ITEM 14.    FINANCIAL STATEMENT SCHEDULES .......................        13

                     EXHIBITS REPORTS ON FORM 8-K ........................      II-1

                     REPORTS ON FORM 8-K .................................      II-2

         SIGNATURES ......................................................      II-2
</TABLE>

<PAGE>


                                     PART I

ITEM 1. BUSINESS

     The Company is a leading wholesale distributor of animal health products to
practicing veterinarians. We also offer a broad array of prescription,
non-prescription and sundry items to assist veterinarians in their practice. The
Company does not sell pet foods. A small quantity of feed additive type products
are sold by the Company.

     The Company distributes approximately 18,000 different items including
biologicals, pharmaceuticals, parasiticides, instruments and equipment.
Routinely some 11,000 items are inventoried for immediate shipment. The balance
of items are either drop-shipped from the manufacturer to the customer or are
special order items.

     As of July 31, 2002, the Company had 1,544 shareholder veterinary clinics.
These shareholders are principally located from the Rocky Mountains to the
Atlantic Seaboard with some presence in the South.

     Due to the geographical location of the majority of its shareholders,
nearly 65% of the Company's gross sales are related to products used for the
treatment and/or prevention of diseases in food animals. The balance of product
sales are for the treatment and/or prevention of diseases in companion animals
and equine.

     The Company primarily sells branded products as marketed by the major
animal health manufacturers and suppliers. The Company does not currently
private label any products, but would consider a private label product agreement
if there was a decisive competitive advantage for doing such.

     The Company's business strategy is to be the leading supplier of animal
health products to veterinary clinics by offering a complete assortment of items
at competitive prices which are supported by superior levels of customer
service. The Company believes that this strategy provides it with a competitive
advantage by combining the broad product selection with everyday low prices and
support from very efficient operations. The shareholder veterinary clinics are
able to lower their product acquisition costs which both increases profitability
and gives them a competitive market advantage.

     The Company has heavily invested in electronic information systems to
maximize efficiencies. All phases of the transactional process are
electronically driven. The Company believes this advanced electronic technology
will assist in earlier adoption of electronic commerce through the internet by
both its customers and suppliers.

Value-Added Services

     The Company offers its customers and suppliers a comprehensive menu of
value-added services. These services allow individual customers various
selections based on their individual needs. The Company manages a database of
all transactions so that its customers may maximize their participation in
promotions frequently offered by suppliers. The customer is periodically
apprised, either by phone or mailings, of their level of participation in these
promotions. This promotional tracking service gives the customer the option to
maximize their participation in a promotion which can ultimately increase their
profitability and allow them to more effectively compete in certain markets.

     The Company has developed a multi-day inventory management and purchasing
techniques seminar for its customers. This seminar is held at the Company's
headquarters. The customer is trained to better use the Company's resources and
also be increasingly efficient in managing their product and inventory
activities.

<PAGE>

     The Company has Electronic Data Interchange (EDI) capability which provides
the supplier with product sales and movement. The supplier is able to monitor
sales activities, advertising effectiveness and market trends in an efficient
manner. The Company also assists the manufacturer in the design of effective
promotions. The historical transactional database and the promotional tracking
service are unique tools to assist the manufacturer in tailoring effective
promotions.

Rebates to Shareholders

     The Company and its shareholders are in a contractual relationship
evidenced in the Company's Articles of Incorporation which requires that all
sales of Company products to Company shareholders be at no more than 5% over the
cost of the Company as determined by a certified public accountant. Based on
this requirement, a certified public accounting firm (not the same firm who was
appointed auditors of the Company) annually makes a determination of the
Company's product costs. This valuation of product costs is then multiplied by
105% and compared to the Company's product sales. Amounts in excess of the 105%
computation are overcharges which are then rebated back to shareholders by
credit memo. Such rebates are made on a pro rata basis to shareholders, based on
the aggregate amount of products purchased by each shareholder during the year
for which the rebate is made. Rebates are included in the Company's financial
statements and are netted against sales and accounts receivable on the Company's
financial statements.

The Animal Health Industry

     A national veterinary organization lists over 22,000 veterinary practices
in the United States. There are some 45,000 veterinarians practicing in the
various disciplines of veterinary medicine. This survey indicated nearly 71% of
the veterinarians in private clinical practice predominately specialize in
companion animal medicine.

     We believe, based on industry sources, the U.S. animal health manufacturer
sales of biologicals, pharmaceuticals, insecticides and other packaged goods was
over $4.2 billion for 2001. This segment of business in which the Company
participates is intended to meet the product and supply needs of the private
clinical practice.

     Sundry items such as collars, leashes, cages, books, aquatic supplies and
equine tack are primarily sold through retail pet supply outlets. These products
typically are not purchased from veterinary practices. The Company makes a few
of these items available; however, annual sales are very minimal.

     Consolidation is a primary force reshaping the animal health industry. We
believe, based on industry sources, sales by the top ten animal health product
manufacturers account for over 75% of the U.S. market. At this time, the top
five U.S. animal health product companies have a market share that exceeds 50%
of the total animal health business.

     Livestock production continues the consolidation trend that started a
number of years ago. Agribusiness integrators continue to build larger livestock
raising facilities. Improved management systems coupled with new preventative
products have resulted in an ongoing reduction in food producing animal product
sales for the past several years. There also has been a loss of market share in
several key product groups due to generic competition. The generic products
generally sell for lower prices which causes a pricing deflation in the market.

     The companion animal market is experiencing considerable growth. Several
new therapeutic and preventative products have contributed to most of this
increased sales volume. Nutraceuticals (nutritional pharmaceuticals) have an
increasing presence in the companion animal market. We believe, based on
industry sources, during the past five years companion animal product sales have
grown to nearly 50% of the total U.S. market.

                                       2

<PAGE>

Competition

     Distribution of animal health products is characterized by either "ethical"
or "OTC" channels of product movement. Ethical distribution is defined as those
sales of goods to licensed veterinarians for use in their professional practice.
Many of these products are prescription and must only be sold to a licensed
professional. OTC (over-the-counter) distribution is the movement of
non-prescription goods to the animal owner and the end user. Many of these
products will also be purchased by the licensed veterinarian for professional
use or for resale to their client.

     There are numerous ethical distribution companies operating in the same
geographical regions as the Company and competition in this distribution
industry is intense. Most of the competitors generally offer a similar range of
products at prices often comparable to the Company's. The Company seeks to
distinguish itself from its competitors by offering a higher level of customer
service as well as having its principal customers also as its
shareholders/owners. In addition to competition from other distributors, the
Company also faces existing and potentially increased competition from
manufacturers and suppliers who distribute some percentage of their products
directly to veterinarians. Although the Company competes against direct sales by
manufacturers and suppliers, it is often able to compete with such direct sales
by adding new value-added services and pricing differentiation.

     The Company's customers, licensed practicing veterinarians, compete with
the OTC distributors for the sale of products to the animal owner. Several large
OTC distributors sell products directly to the large agribusiness integrator or
the livestock owner. Pet food and supplies are sold by a highly fragmented
industry which includes supermarkets, discount stores and other mass
merchandisers, specialty pet stores, direct mail houses and veterinarians. The
Company does not sell products directly to the animal owner and therefore does
not compete with its customer for the sale of such product.

     The role of the animal health distributor has changed dramatically during
the last decade. Successful distributors have shifted from a selling mentality
to providing products and services in a consultative environment. Declining
profit margins typify current financial trends. Currently there is an over
capacity in the animal health distribution network, although there have been few
animal health distributor mergers or acquisitions. We believe the Company must
continue to add value to the distribution channel, and reduce the redundancies
that exist, while removing unnecessary costs associated with product movement.

Government Regulation

     Both state and federal government agencies regulate the distribution of
certain animal health products. The Company is subject, either directly or
indirectly, to regulation by the US Department of Agriculture and the Drug
Enforcement Administration. Our suppliers are subject to regulation by the
Department of Agriculture, the Food and Drug Administration, the Environmental
Protection Agency, and several state agencies. Several states and the Drug
Enforcement Administration require the Company to be registered or otherwise
keep a current permit or license to handle controlled substances. Manufacturers
of vaccines are required by the Department of Agriculture to comply with various
storage and shipping criteria and requirements for the vaccines. To the extent
Company distributes such vaccines, Company must comply with the same Department
of Agriculture storage and shipping requirements.

     Several State Boards of Pharmacy require the Company to be licensed in
their state for the sale of animal health products with their jurisdiction. Each
state (as well as certain cities and counties) requires the Company to collect
sales taxes/use taxes on differing types of animal health products.

     The Company is subject to laws governing its relationship with employees,
including minimum wage requirements, overtime, working conditions and
citizenship requirements.

                                       3

<PAGE>

Environmental Considerations

     The Company does not manufacture, re-label or in any way alter the
composition or packaging of products. All products are distributed in compliance
with the relevant rules and regulations as approved by various State and Federal
regulatory agencies. The Company's distribution business practices create no or
minimal impact on the environment.

Employees

     As of July 31, 2002 the Company had 244 employees. We are not subject to
any collective bargaining agreements and have not experienced any work
stoppages. We consider our relationship with our employees to be good.

ITEM 2. PROPERTIES

     The Company owns its building, which contains nearly 100,000 square feet of
open warehouse space and 30,000 square feet of finished office area. The
building is a facility the Company constructed and completed in late 1999 and is
located on 9.6 acres of land in a newly developed industrial subdivision of
Omaha, Nebraska. The latest in technology was incorporated into the design of
the new facility to maximize distribution efficiencies. The building is subject
to a first and second mortgage held by US Bank. The Company signed a lease
agreement in March 2002 with Kinsley Equities II Limited Partnership for 70,000
square feet of warehouse space in York, Pennsylvania. The initial term of the
lease is five years. The Company uses this facility to ship products to its
customers in that geographical area of the United States.

ITEM 3. LEGAL PROCEEDINGS

     The Company has not been informed of any legal matters that would have a
material adverse effect on its financial condition, results of operation or cash
flow.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the quarter
ended July 31, 2002.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no established public trading market for the Company's common
stock. Ownership of the Company's stock is limited to licensed, practicing
veterinarians (or businesses comprised of veterinarians such as a partnership or
corporation). Each veterinarian shareholder is limited to ownership of one share
of stock, which is purchased at the fixed price of $3,000. The share of stock
may not be sold or transferred, except back to the Company at the same $3,000
price. On July 31, 2002, there were 1,544 record holders of the Company's common
stock.

     The Company has never declared or paid any cash dividends on the common
stock. The Company intends to retain any future earnings for funding growth of
the Company's business and therefore does not currently anticipate paying cash
dividends in the foreseeable future.

                                       4

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

     The historical selected financial data set forth below for the five years
ended July 31, 2002 are derived from the Company's Financial Statements included
elsewhere in this report and should be read in conjunction with those financial
statements and notes thereto. The financial data for the periods ended July 31,
2002 and July 31, 2001 is consolidated and includes accounts of Exact Logistics,
LLC and ProConn, LLC from December 6, 2000, the date the Company became the sole
member of Exact Logistics, LLC and ProConn, LLC. All amounts are in thousands
except per share data. No cash dividends were declared.

<TABLE>
<CAPTION>
                                                                   At the Year Ended July 31,
                                                  1998          1999         2000          2001          2002
                                                             (Restated)   (Restated)    (Restated)

     For the Year:
     -------------
     <S>                                        <C>          <C>         <C>            <C>          <C>
     Net sales and other revenues .......       94,245       120,536      176,275       197,523       239,922

     Operating income ...................          258            11        1,410         1,320         2,143
     Net income .........................          102           141          547           387         1,109
     Basic income per share:
        Operating income ................       257.63          9.57     1,109.40        912.08      1,386.42
        Net Income ......................       101.44        128.52       430.55        267.58        717.14
     Basic common shares
        outstanding used in the
         calculation ....................        1,001         1,095        1,271         1,447         1,546
</TABLE>

<TABLE>
<CAPTION>
     At Year End:
     ------------
     <S>                                          <C>           <C>          <C>           <C>           <C>
     Total assets .......................         20,008        28,358       59,612        50,737        68,634
     Total long-term obligations ........          1,225             -        6,013         5,565         5,076
</TABLE>



                                       5

<PAGE>

     The following table presents selected financial data for the Company for
each of the quarters in the two-year period ended July 31, 2002. The financial
data for the periods ended July 31, 2002 and July 31, 2001 is consolidated and
includes accounts of Exact Logistics, LLC and ProConn, LLC from December 6,
2000, the date the Company became the sole member of Exact Logistics, LLC and
ProConn, LLC. The historical selected financial data are derived from the
Company's Financial Statements included elsewhere in this report and should be
read in conjunction with those financial statements and notes thereto. All
amounts are in thousands except per share data.

<TABLE>
<CAPTION>
                                                          Quarters  Ended                                         Year Ended
                              October 31, 2000    January 31, 2001      April 30, 2001       July 31, 2001       July 31, 2001
                                 (Restated)          (Restated)           (Restated)          (Restated)           (Restated)
<S>                           <C>                 <C>                   <C>                  <C>                 <C>
Revenues ...........               $    49,755              46,345              50,774              50,648             197,523
Gross profit .......                     3,500               3,698               3,751               4,915              15,863
Operating income ...                       697                  19                (120)                724               1,320
Net income .........                       254                (148)                (82)                363                 387
Net income per share               $    183.00             (104.39)             (56.33)             240.23              267.58
Weighted average
    common shares
    outstanding ....                     1,388               1,420               1,465               1,515               1,447
</TABLE>


<TABLE>
<CAPTION>
                                                          Quarters  Ended                                          Year Ended
                              October 31, 2001    January 31, 2002      April 30, 2002       July 31, 2002       July 31, 2002

<S>                          <C>                  <C>                   <C>                  <C>                  <C>
Revenues ...........               $    59,153         $    55,483         $    63,131            $ 62,156         $   239,923
Gross profit .......                     4,336               4,308               6,425               5,002              20,071
Operating income...                        738                 418               1,643                (656)              2,143
Net income .........                       342                 110               1,111                (454)              1,109
Net income per share               $    222.40         $     70.43         $    717.93            $(293.83)        $    717.14
Weighted average
    common shares
    outstanding ....                     1,536               1,557               1,548               1,544               1,546
</TABLE>




                                        6

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     This report contains forward-looking statements that involve risks and
uncertainties. Actual events or results may differ materially from those
indicated in such forward-looking statements. The following discussion of the
financial conditions and results of operations should be read in conjunction
with the Financial Statements and related notes thereto included elsewhere in
this report.

Overview

     The Company was chartered on August 2, 1982 as a Missouri corporation.
Since January 1, 1983 the Company has operated from various facilities in Omaha,
Nebraska. The Company shareholders approved Amended and Restated Articles of
Incorporation at the Company's Annual Meeting held in August, 1999 to permit the
Company to become a Nebraska corporation. The Company surrendered its Missouri
charter and became a Nebraska corporation on September 22, 1999. The Company's
fiscal year begins on August 1 and concludes on July 31 of the following year.

     The Company is one of the largest distributors of animal health products to
veterinarians who practice food producing animal medicine in the United States.
The Company was founded in 1982 by veterinarians whose primary interests were
"food animal" related. The changing trends of veterinary medicine has resulted
in a gradual shift toward the sale of more "companion animal" products.

     The Company's revenues have increased from $63.5 million in fiscal year
1995 to $239.9 million in fiscal year 2002. To date, sales to non-shareholders
have had a minimal impact on the Company's net income.

     We expect the trend of increases in sales to continue as we continue to
increase the number and type of customer accounts. We will continue our strategy
of supporting the food producing animal veterinarian with a broad range of
products and value-added services. However, sales in the food producing animal
sector are subject to very low margins. In view of the increasing maturity of
the food producing animal market the Company must continue to look for future
growth in the companion animal sector.

     Historically companion animal product related transactions have enjoyed
higher margins than sales of food producing animal products. However, as
competition increases in the companion animal sector it is likely that margins
will begin to erode. We believe there is likely to be consolidation of the many
small privately owned veterinary clinics, which will result in an increasing
number of larger veterinary practice business units. As a result, the larger
veterinary practices will have increased purchasing leverage and will negotiate
for lower product costs which will reduce margins at the distribution level and
impact Company revenue and net income.

     There are two major types of transactions that affect the flow of products
to the Company's customers. Traditional "buy/sell" transactions account for
approximately ninety percent of the Company's business. In this type of
transaction the customer places an order with the Company, which is then picked,
packed, shipped, invoiced to the customer, followed by payment from the customer
to the Company. In most traditional buy/sell transactions the Company, rather
than the manufacturer, sets the price of the products. There are a few product
lines where the Company provides all transactional activities described above,
except that the manufacturer retains title to the product. The manufacturer
retains title in accordance with the distribution agreements for these products.
Within these agreements the manufacturer determines if any promotional funds or
rebates will be given to the Company. Animal health manufacturers create and
implement sales promotions for the products they manufacture for the
veterinarian. These promotions reward the veterinarian for their purchase of
certain products or volume of products. The Company submits the relevant
purchase data to the manufacturer. The Company is paid or reimbursed by the
manufacturer, and the veterinarian receives value pursuant to the terms of the


                                       7

<PAGE>

promotion. The "consignment" transactions account for approximately five percent
of the Company's business. The Company inventories these products for the
manufacturer but does not pay the manufacturer until the product is sold to the
customer and reported to the manufacturer. The Company is responsible for
maintaining insurance on the products but the value of the product is not
included in the inventory for accounting purposes.

     A second transaction model used by the Company is termed the "agency
agreement". Under this approach, the Company receives orders for products from
its customer. The Company transmits the order to the manufacturer who then
picks, packs, ships, invoices and collects payment from the customer. The
Company receives a commission payment for soliciting the order as well as other
customer service activities. The Company's operating expenses associated with
this type of sale may be lower than the traditional buy/sell transaction. Agency
selling allows the manufacturer and the Company to immediately react to market
conditions. This arrangement allows the manufacturer to establish and
standardize price of its products in the market. This current information often
is used by the Company and the various manufacturers to develop data based
marketing programs.

     The mode of selling products to veterinarians is dictated by the
manufacturer. There has been a recent slight shift away from agency agreements
returning to the traditional buy/sell transactional business model.

     Product returns from our customers and to our suppliers occur in the
ordinary course of business. The Company extends to its customers the same
return of goods policies as extended to the Company by the various
manufacturers. The Company does not believe its operations will be adversely
impacted due to the return of products.

     The Company has two direct subsidiaries: Exact Logistics, LLC and ProConn,
LLC. Exact Logistics, LLC was organized in the State of Nebraska on December 6,
2000. The limited liability company is a single member entity and is 100% owned
by the Company. The purpose of Exact Logistics, LLC is to act as a contract
logistics partner to warehouse and ship products.

     ProConn, LLC was organized in the State of Nebraska on December 6, 2000.
The limited liability company is a single member entity and is 100% owned by the
Company. The purpose of ProConn, LLC is to act as a supplier of animal health
products to the producer and/or consumer.

Results of Operations

     The following discussion is based on the historical results of operations
for fiscal 2000, 2001 and 2002.

Fiscal 2000 Compared to Fiscal 1999:
------------------------------------

     Net sales and other revenue for the fiscal year ending July 31, 2000
increased by 46.2% or $55.8 million. Net sales and other revenue for the 2000
fiscal year totaled $176.3 million compared to $120.5 million for the previous
fiscal year. The growth was principally attributable to increased sales to
existing customers of $37.0 million and to new customers of $18.8 million.
During the year the number of total shareholders increased by 193 veterinary
practices. On July 31, 2000 there were 1,381 shareholders of the Company.

     Gross profit increased by $5.6 million to $14.3 million compared to $8.7
million for the previous fiscal year. This increase was primarily due to
the increase in revenue. Gross profit as a percentage of total revenue was 8.1%
for fiscal 2000 compared to 7.2% for fiscal 1999. This increase in percentage
was primarily due to higher vendor rebates.


                                       8

<PAGE>

     Operating, general and administrative expenses increased by $4.2 million to
$12.9 million for fiscal year 2000 compared to $8.7 million for the previous
year. This increase was primarily due to support the increase in revenue. Such
operating, general and administrative expenses as a percentage of total revenue
for fiscal 2000 was 7.3% vs. 7.2% in fiscal 1999.

     Operating income increased by $1.4 million to $1.4 million for fiscal year
2000 compared to $11 thousand for the previous year. This increase is primarily
attributable to the increase in gross profit as a percentage of total revenue
while maintaining the percentage of operating, general and administrative
expenses.

     For fiscal year 2000, other income (expense) was $542 thousand of expenses
as compared to $223 thousand of income for the previous year. Principally as a
result of an increase in a higher average balance on the revolving line of
credit and debt resulting from the Company's new facility, interest expense for
the period ending July 31, 2000 was $862 thousand as compared to $263 thousand
for the same period the previous fiscal year. In addition, as a result of an
increase in the amount of monthly financial charges on past due account
receivable balances, interest income increased by $124 thousand.

Fiscal 2001 Compared to Fiscal 2000:
------------------------------------

     Net sales and other revenue for the fiscal year ending July 31, 2001
increased by 12.1% or $21.2 million. Net sales and other revenue for the 2001
fiscal year totaled $197.5 million compared to $176.3 million for the previous
fiscal year. The growth was principally attributable to increased sales to
existing customers of $13.6 million and to new customers of $7.6 million. During
the year the number of total shareholders increased by 153 veterinary practices.
On July 31, 2001 there were 1,534 shareholders of the Company.

     Gross profit increased by $1.6 million to $15.9 million compared to $14.3
million for the previous fiscal year. This increase was primarily due to the
increase in revenue. Gross profit as a percentage of total revenue was 8.0% for
fiscal 2001 compared to 8.1% for fiscal 2000. This decrease in percentage was
primarily due to higher freight costs.

     Operating, general and administrative expenses increased by $1.6 million to
$14.5 million for fiscal year 2001 compared to $12.9 million for the previous
year. This increase was primarily due to support the increase in revenue. Such
operating, general and administrative expenses as a percentage of total revenue
for fiscal 2001 was 7.4% vs. 7.3% for fiscal 2000.

     Operating income decreased by $90 thousand to $1.3 million for fiscal year
2001 compared to $1.4 million for the previous year. This decrease is primarily
attributable to the decrease in gross profit as a percentage of total revenue
while also decreasing the percentage of operating, general and administrative
expenses.

     Company's other income (expense) was $626 thousand (expense) for fiscal
year 2001 as compared to $542 thousand (expense) for the previous year. In
addition, interest expense for the period ending July 31, 2001 increased to $1.0
million as compared to $862 thousand for the same period of the previous year -
an increase of $144 thousand. The increase was due to increased borrowing on the
Company's revolving line of credit. These increased expenses were partially
offset by an increase in interest income of $131 thousand which was due
principally to a greater amount of monthly finance charges on past due accounts
receivable balances.

Fiscal 2002 Compared to Fiscal 2001:
------------------------------------

     Net sales and other revenue for the fiscal year ending July 31, 2002
increased by 21.5% or $42.4 million. Net sales and other revenue for the 2002
fiscal year totaled $239.9 million compared to $197.5

9

<PAGE>

million for the previous fiscal year. The growth was principally attributable to
increased sales to existing customers of $27.1 million and to new customers of
$15.3 million.

     Gross profit increased by $4.2 million to $20.1 million compared to $15.9
million for the previous fiscal year. This increase was primarily due to the
increase in revenue. Gross profit as a percentage of total revenue was 8.4% for
fiscal 2002 compared to 8.0% for fiscal 2001.

     Operating, general and administrative expenses increased by $3.4 million to
$17.9 million for fiscal year 2002 compared to $14.5 million for the previous
year. This increase was primarily due to support the increase in revenue. Such
operating, general and administrative expenses as a percentage of total revenue
for fiscal 2002 was 7.4% vs. 7.4% for fiscal 2001.

     Operating income increased by $823 thousand to $2.1 million for fiscal year
2002 compared to $1.3 million for the previous year. This increase is primarily
attributable to the increase in gross profit as a percentage of total revenue
while maintaining the percentage of operating, general and administrative
expenses.

     Company's other income (expense) was $395 thousand (expense) for fiscal
year 2002 as compared to $626 thousand (expense) for the previous year. In
addition, interest expense for the period ending July 31, 2002 decreased to $850
thousand as compared to $1.0 million for the same period of the previous year -
a decrease of $156 thousand. The reduction was due to a decrease in the interest
rate charged on the Company's revolving line of credit.

Seasonality in Operating Results

     The Company's quarterly sales and operating results have varied
significantly in the past and will likely continue to do so in the future.
Historically, the Company's sales are seasonal with peak sales in the late
spring and early fall. The cyclical nature is directly tied to the significant
amount of business the Company does in the livestock sector. Product use cycles
are directly related to certain medical procedures performed by veterinarians on
livestock during the late spring and early fall.

     In the last few years the Company has been selling more companion animal
related products. These products tend to have a seasonal nature which minimally
overlaps the livestock business cycles. The net result is a reduction of the
cyclical seasonal nature of the business. Minimizing the cyclical nature of the
Company's business has allowed for more efficient utilization of all resources.

Liquidity and Capital Resources

     The Company expends capital primarily to fund day-to-day operations and
expand those operations to accommodate sales growth. It is necessary for the
Company to expend necessary funds to maintain significant inventory levels in
order to fulfill its commitment to its customers. Historically, the Company has
financed its cash requirements primarily from short term bank borrowings and
cash from operations. The short term bank borrowings are accomplished through a
fifteen million dollar revolving line of credit at U.S. Bank, Omaha, Nebraska.
At the year end, July 31, 2002, there were no additional material commitments
for capital expenditures. There was however discussion to purchase approximately
10 acres of land adjoining the current building in Omaha.

     Net cash provided by operating activities of $1.9 million in fiscal year
ending July 1999 was primarily attributable to an increase of $6.6 million in
accounts receivable. It was partially offset by increases of $418 thousand in
inventories and $7.7 million in accounts payable. In the fiscal year ending July
2000, net cash used by operating activities of $5.7 million was primarily
attributable to increases of $10.2 million in accounts receivable and $15.8
million in inventories. These were partially offset by an increase of $19.1
million in accounts payable. For the fiscal year ending July 2001, net cash
provided by operating activities of $5.3 million was primarily attributable to
decreases of $2.4 million in accounts


                                       10

<PAGE>

receivable and $6.1 million in inventories. These were partially offset by a
decrease of $4.8 million in accounts payable. For the fiscal year ending July
2002, net cash provided by operating activities of $219 thousand was primarily
attributable to increases of $1.4 million in accounts receivable and $14.6
million in inventories. These were partially offset by an increase of $13.2
million in accounts payable.

     Net cash used by investing activities of $1.0 million in fiscal year ending
July 1999 was primarily attributable to investments in property, which included
the purchase of land for future construction of the building, and investments in
equipment, such as the purchase of computer equipment. Net cash used by
investing activities of $6.7 million in fiscal year ending July 2000 was
primarily attributable to investments in property, including the construction of
our new building, and investments in equipment, such as the purchase of office
and warehouse equipment for use in the new building. Net cash used by investing
activities of $287 thousand in fiscal year ending July 2001 was primarily
attributable to investments in equipment, including the purchase of office,
warehouse and computer equipment. Net cash used by investing activities of $1.8
million in fiscal year ending July 2002 was primarily attributable to
investments in equipment, including the purchase of office, warehouse and
computer equipment. These investments in equipment were mainly in the new
distribution center in York, Pennsylvania.

     Net cash provided by financing activities of $263 thousand in fiscal year
ending July 1999 was primarily attributable to increases of $1.0 million in loan
proceeds and $360 thousand from net proceeds from issuance of common stock less
$1.1 million from bank overdraft. In the fiscal year ending July 2000, net cash
provided by financing activities of $11.3 million was primarily attributable to
increases of $10.2 million in loan proceeds and $641 thousand from net proceeds
from issuance of common stock. In the fiscal year ending July 2001, net cash
used by financing activities of $4.3 million was primarily attributable to a
decrease of $4.3 million in loan proceeds, a bank overdraft of $399 thousand,
and an increase of $422 thousand from net proceeds from issuance of common
stock. In the fiscal year ending July 2002, net cash provided by financing
activities of $2.3 million was primarily attributable to an increase of $2.2
million in loan proceeds, and $132 thousand from net proceeds from issuance of
common stock.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to market risks primarily from changes in U.S.
interest rates. The Company does not engage in financial transactions for
trading or speculative purposes.

     The interest payable on the Company's revolving line of credit is based on
variable interest rates and is therefore affected by changes in market interest
rates. If interest rates on variable rate debt rose .45 percentage points (a 10%
change from the interest rate as of July 31, 2002), assuming no change in the
Company's outstanding balance under the line of credit (approximately $6.9
million as of July 31, 2002), the Company's annualized income before taxes and
cash flows from operating activities would decline by approximately $31
thousand.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See "Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K" for the Company's Financial Statements, and the notes thereto,
Supplementary Data, and the financial statement schedules filed as part of this
report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     On March 20, 2002, Marvin E. Jewell & Co., P.C. resigned as the Company's
independent auditor. This action was approved by the Company's Audit Committee.
During its tenure, Marvin E. Jewell & Co., P.C. did not issue a report on the
Company's financial statements that either contained an adverse opinion or
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or


                                       11

<PAGE>

accounting principles. There were no disagreements with Marvin E. Jewell & Co.,
P.C. on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which disagreements, if not resolved
to the satisfaction of Marvin E. Jewell & Co., P.C., would have caused Marvin E.
Jewell & Co., P.C. to make reference to the subject matter of the disagreement
in connection with their report.

         Effective March 20, 2002, Quick & McFarlin, P.C. was retained as
independent auditor of the Company for the fiscal year ending July 31, 2002, and
Quick & McFarlin, P.C. accepted the appointment. Prior to the engagement, the
Company did not consult with Quick & McFarlin, P.C. regarding any of the matters
or events set forth in Item 304 (a)(2)(i) or (ii) of Regulation S-K.

                                    PART III

         Incorporated by reference in Items 10 to 13 below are certain sections
of the Company's definitive proxy statement, to be filed pursuant to Regulation
14A within 120 days after July 31, 2002.

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

         Incorporated by reference in this Annual Report is the information
required by this Item 10 contained in the sections entitled "Proposal: Election
of Directors", "Information About Directors and Executive Officers" and "Section
16(b) Beneficial Ownership Reporting Compliance" of the Company's definitive
proxy statement, to be filed pursuant to Regulation 14A with the SEC within 120
days after July 31, 2002.

ITEM 11.          EXECUTIVE COMPENSATION

         Incorporated by reference in this Annual Report is the information
required by this Item 11 contained in the section entitled "Information About
Directors and Executive Officers - Executive Compensation", of the Company's
definitive proxy statement, to be filed pursuant to Regulation 14A with the SEC
within 120 days after July 31, 2002.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The Company's Articles and Bylaws specifically provide that each
shareholder is entitled to own only a single share of stock. Thus, there is no
shareholder that has more than one share currently or will own more than one
share in the future and no shareholder owns less than or a fractional portion of
the single share. No single shareholder owns more than 5 percent of the
outstanding common stock. As described below, each director, except Dr. Lionel
Reilly, is a holder of one share of stock.

<TABLE>
<CAPTION>

           Name of Beneficial Owner      Shares           Nature of Beneficial Ownership    Percentage of
                                      Beneficially                                              Class
                                          Owned
      <S>                             <C>             <C>                                   <C>
      Dr. Buddy D. Ray                      1         By Mayfield Veterinary Clinic               *
      Dr. Steven E. Wright                  1         By Millard Veterinary Clinic                *
      Dr. Chester L. Rawson                 1         By Veterinary Associates                    *
      Dr. Raymond C. Ebert II               1         By Pleasant Hill Animal Clinic, Inc.        *
      Dr. Michael L. Whitehair              1         By Abilene Animal Hospital                  *
      Dr. Michael B. Davis                  1         By Carroll Veterinary Clinic, P.C.          *
      Dr. Amy Lynne Hinton                  1         By Best Friends Animal Hospital             *
      Dr. Fred G. Garrison                  1         By Fred G. Garrison                         *
</TABLE>

         * Less than one percent



                                       12

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated by reference in this Annual Report is the information
required by this Item 13 contained in the section entitled the "Information
About Directors and Executive Officers--Certain Transactions" of the Company's
definitive proxy statement, to be filed pursuant to Regulation 14A with the SEC
within 120 days after July 31, 2002.


                                     PART IV
                                     -------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

      (a)(1)         Financial Statements
      (a)(3)         Exhibits
      (b)            Reports on Form 8-K

(a)   (1)   Financial Statements
            --------------------

<TABLE>
<CAPTION>
            The following financial statements are filed as part of this report:
            <S>                                                                                <C>
            Independent Auditor's Report                                                       F-1
            Consolidated Balance Sheets as of July 31, 2002 and July 31,
                     2001 (Restated)                                                           F-2
            Consolidated Statements of Income years ended July 31, 2002,
                     2001 (Restated) and 2000 (Restated)                                       F-3
            Consolidated Statements of Stockholders' Equity years ended July 31,
                     2002, 2001 (Restated) and 2000 (Restated)                                 F-4
            Consolidated Statements of Cash Flows years ended July 31, 2002,
                     2001 (Restated) and 2000 (Restated)                                       F-5
            Notes to Financial Statements                                                      F-6
</TABLE>


                                       13

<PAGE>


                             QUICK & MCFARLIN, P.C.
                     Certified Public Accountants Letterhead


                          Independent Auditor's Report

To the Board of Directors and Stockholders
Professional Veterinary Products, Ltd.
Omaha, Nebraska


     We have audited the accompanying consolidated balance sheets of
Professional Veterinary Products, Ltd. and subsidiaries as of July 31, 2002 and
2001, and the related consolidated statements of income, stockholders' equity,
and cash flows for the three years ended July 31, 2002. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Professional
Veterinary Products, Ltd. and subsidiaries as of July 31, 2002 and 2001, and the
results of their operations and their cash flows for the three years ended July
31, 2002, in conformity with accounting principles generally accepted in the
United States of America.

     As discussed in Note 14 to the financial statements, these consolidated
financial statements for the periods ended July 31, 2001 and 2000 have been
restated for the change in accounting for the investment in an affiliate, for
stock subscriptions receivable, and for certain reclassifications relating to
sales promotion revenue.

                                                      /s/ Quick & McFarlin, P.C.


Omaha, Nebraska
October 14, 2002


                                      F-1

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                          Consolidated Balance Sheets
                As of July 31, 2002 and July 31, 2001 (Restated)
                       (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                  (Restated)
                                                                                     July 31,      July 31,
                                                                                       2002          2001
                                                                                     --------     ----------
<S>                                                                                  <C>          <C>
                                                          ASSETS

 CURRENT ASSETS
   Cash                                                                              $ 1,324        $   657
   Accounts receivable, trade - net of allowance for doubtful
     accounts of $353 in 2002 and $0 in 2001                                          16,817         15,783
   Accounts receivable, related parties                                                2,875          2,490
   Inventory                                                                          36,991         22,342
   Deferred tax asset                                                                    146             37
   Prepaid expenses and other current assets                                              36            251
                                                                                     --------       -------
         Total Current Assets                                                         58,189         41,560
                                                                                     --------       -------

 NET PROPERTY AND EQUIPMENT                                                            8,719          7,483
                                                                                     --------       -------

 OTHER ASSETS
   Intangible assets - net of accumulated amortization
     of $83 in 2002 and $66 in 2001                                                      168            185
   Investment in unconsolidated affiliates                                             1,491          1,513
   Cash value life insurance                                                              67             33
                                                                                     --------       -------
         Total Other Assets                                                            1,726          1,731
                                                                                     --------       -------
 TOTAL ASSETS                                                                        $68,634        $50,774
                                                                                     ========       =======

                                           LIABILITIES AND STOCKHOLDERS' EQUITY
 CURRENT LIABILITIES
   Notes payable, bank                                                               $ 6,897        $ 4,294
   Current portion of long-term debt                                                     496            456
   Accounts payable, trade                                                            44,007         31,950
   Accounts payable, related parties                                                   1,680            535
   Other current liabilites                                                            2,583          1,532
                                                                                     --------       -------
         Total Current Liabilities                                                    55,663         38,767
                                                                                     --------       -------

 LONG-TERM LIABILITIES
   Long-term debt                                                                      5,076          5,565
   Deferred tax liability                                                                343            131
                                                                                     --------       -------
         Total Long-Term Liabilities                                                   5,419          5,696
                                                                                     --------       -------
         Total Liabilities                                                            61,082         44,463
                                                                                     --------       -------

 STOCKHOLDERS' EQUITY

   Common stock, $1 par value; authorized 30,000 shares; issued
     and outstanding 1,544 shares in 2002 and 1,534 shares in 2001                         2              2
   Paid-in capital                                                                     4,547          4,415
   Retained earnings                                                                   3,003          1,894
                                                                                     --------       -------
         Total Stockholders' Equity                                                    7,552          6,311
                                                                                     --------       -------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                          $68,634        $50,774
                                                                                     ========       =======
</TABLE>


                                      F-2

See accompanying notes to consolidated financial statements.

<PAGE>

             PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                        Consolidated Statements of Income
          Years ended July 31, 2002, 2001 (Restated) - 2000 (Restated)
                    (in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                  (Restated)        (Restated)
                                                   July 31,        July 31,          July 31,
                                                     2002            2001              2000
                                                  ---------       ----------        ----------

<S>                                               <C>             <C>               <C>
NET SALES AND OTHER REVENUE                       $239,922         $197,523          $176,275

COST OF SALES                                      219,851          181,660           161,934
                                                  ---------        ---------         ---------

Gross profit                                        20,071           15,863            14,341

OPERATING, GENERAL AND
    ADMINISTRATIVE EXPENSES                         17,928           14,543            12,931
                                                  ---------        ---------         ---------

Operating income                                     2,143            1,320             1,410
                                                  ---------        ---------         ---------

OTHER INCOME (EXPENSE)
    Interest income                                    477              504               373
    Interest expense                                  (850)          (1,006)             (862)
    Other                                                -               (3)              (44)
    Equity in loss of affiliate                        (22)            (121)               (9)
                                                  ---------        ---------         ---------
    Total other income (expense)                      (395)            (626)             (542)
                                                  ---------        ---------         ---------

Income before taxes                                  1,748              694               868

Income tax expense                                     639              307               321
                                                  ---------        ---------         ---------

NET INCOME                                        $  1,109         $    387          $    547
                                                  =========        =========         =========

NET EARNINGS PER SHARE
    OF COMMON STOCK                               $ 717.14         $ 267.58          $ 430.55
                                                  =========        =========         =========

Weighted average common
    shares outstanding                               1,546            1,447             1,271
                                                  =========        =========         =========
</TABLE>



                                      F-3

See accompanying notes to consolidated financial statements.

<PAGE>

             PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                   (in thousands, except Common Shares Issued)


<TABLE>
<CAPTION>
                                              Common                  Additional
                                              Shares      Common        Paid-in       Retained
                                              Issued       Stock        Capital       Earnings       Total
                                              ------      ------      ----------      --------      -------

<S>                                           <C>         <C>         <C>             <C>           <C>
BALANCE AT JULY 31, 1999                      1,188           $1        $3,352         $  960       $4,313

Issuance of stock                               211            -           633              -          633
Redemption of stock                             (18)           -           (54)             -          (54)
Net change in
    Accounts receivable, stock                    -            -            62              -           62
Net income                                        -            -             -            547          547
                                              ------      ------      ----------      --------      -------

BALANCE AT JULY 31, 2000                      1,381            1         3,993          1,507        5,501
    (Restated)
Issuance of stock                               172            1           515              -          516
Redemption of stock                             (19)           -           (57)             -          (57)
Net change in
    Accounts receivable, stock                    -            -           (36)             -          (36)
Net income                                        -            -             -            387          387
                                              ------      ------      ----------      --------      -------

BALANCE AT JULY 31, 2001                      1,534            2         4,415          1,894        6,311
    (Restated)
Issuance of stock                                36            -           108              -          108
Redemption of stock                             (26)           -           (77)             -          (77)
Net change in
    Accounts receivable, stock                    -            -           101              -          101
Net income                                        -            -             -          1,109        1,109
                                              ------      ------      ----------      --------      -------

BALANCE AT JULY 31, 2002                      1,544           $2        $4,547         $3,003       $7,552
                                              ======      ======      ==========      ========      =======
</TABLE>


                                      F-4

See accompanying notes to consolidated financial statements.

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                     (Restated)       (Restated)
                                                                      July 31,        July 31,         July 31,
                                                                        2002            2001             2000
                                                                      --------       ----------       ----------
<S>                                                                   <C>            <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                          $ 1,109          $   387         $    547
                                                                      --------       ----------       ----------
  Adjustments to reconcile net income to net cash
    from operating activities:
      Depreciation and amortization                                       619              563              443
      Loss on sale of property                                              -                3               43
      Equity in loss of affiliate                                          22              121                9
      (Increase) decrease in:
          Receivables                                                  (1,419)           2,362          (10,175)
          Inventories                                                 (14,649)           6,084          (15,839)
          Prepaid expenses and other                                      215              805             (255)
          Deferred tax asset                                             (109)             (37)               -
          Cash value life insurance                                       (34)              (2)             (30)
      Increase (decrease) in:
          Accounts payable                                             13,202           (4,751)          19,059
          Other current liabilities                                     1,051             (416)             512
          Deferred tax liability                                          212              137               (6)
                                                                      --------       ----------       ----------
              Total adjustments                                          (890)           4,869           (6,239)
                                                                      --------       ----------       ----------
              Net cash from operating activities                          219            5,256           (5,692)
                                                                      --------       ----------       ----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                                   (1,839)            (287)          (5,292)
  Purchase of investments                                                   -                -           (1,500)
  Proceeds from sale of property                                            -                -              115
                                                                      --------       ----------       ----------
              Net cash from investing activities                       (1,839)            (287)          (6,677)
                                                                      --------       ----------       ----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net loan proceeds (reduction)                                         2,155           (4,335)          10,236
  Bank overdraft                                                            -             (399)             399
  Net proceeds from issuance of
    common stock                                                          132              422              641
                                                                      --------       ----------       ----------
              Net cash from financing activities                        2,287           (4,312)          11,276
                                                                      --------       ----------       ----------

Net increase (decrease) in cash                                           667              657           (1,093)
Cash at beginning of year                                                 657                -            1,093
                                                                      --------       ----------       ----------
Cash at end of year                                                   $ 1,324          $   657         $      -
                                                                      ========       ==========       ==========

Supplemental disclosure of cash flow information:
  Interest paid                                                       $   859          $ 1,052         $    774
                                                                      ========       ==========       ==========
  Income taxes paid                                                   $    86          $   560         $    106
                                                                      ========       ==========       ==========
</TABLE>


                                      F-5

See accompanying notes to consolidated financial statements.

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)

(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Organization

     Professional Veterinary Products, Ltd. was incorporated in the State of
     Missouri in 1982. The corporation was domesticated in Nebraska on September
     22, 1999. The corporation was formed to buy, sell, and warehouse
     pharmaceuticals and other veterinary related items. The purpose of the
     corporation is to act as a wholesale distributor primarily to shareholders.
     Shareholders are limited to the ownership of one share of stock and must be
     a licensed veterinarian or business entity comprised of licensed
     veterinarians.

     Exact Logistics, LLC was organized in the State of Nebraska on December 6,
     2000. This limited liability company is 100% owned by Professional
     Veterinary Products, Ltd. The purpose of the LLC is to act as a logistics
     partner for warehousing and shipping products to other distributors.

     ProConn, LLC was organized in the State of Nebraska on December 6, 2000.
     This limited liability company is 100% owned by Professional Veterinary
     Products, Ltd. The purpose of the LLC is to act as a supplier of animal
     health products to the producer or consumer.

     Professional Veterinary Products, Ltd., Exact Logistics, LLC and ProConn,
     LLC are presented as consolidated financial statements because they are
     related through common ownership and control. Their accounting policies
     follow generally accepted accounting principles and conform to the common
     practices of the industry in which they are engaged. Exact Logistics, LLC
     and ProConn, LLC are single member limited liability companies with
     Professional Veterinary Products, Ltd. as their only corporate member. They
     have elected to be treated as an unincorporated branch of the parent entity
     for financial and income tax purposes. All income taxes of the
     unincorporated branches are reflected on these financial statements and are
     the responsibility of the parent entity.

     Summary of significant accounting policies:

     (a) Principles of consolidation:
                The consolidated financial statements include the accounts of
                Professional Veterinary Products, Ltd. and its wholly owned
                subsidiaries. The term "Company" used herein means Professional
                Veterinary Products, Ltd. and its subsidiaries, unless otherwise
                indicated by the context. All material intercompany accounts and
                transactions have been eliminated in consolidation. Investments
                in companies in which the Company exercises significant
                influence, but not control, are accounted for using the equity
                method of accounting. Investments in companies in which the
                Company has less than a 20% ownership interest, and does not
                exercise significant influence, are accounted for at cost.

     (b) Use of estimates:
                The preparation of 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, the disclosure of contingent assets
                and liabilities at the date of the financial statements and the
                reported amounts of revenues and expenses during the reporting
                periods. While actual results could differ from these estimates,
                management believes these estimates are reasonable.

     (c) Concentration of cash balances:
                The Company's cash funds are located in a single financial
                institution. The bank accounts, at times, exceeded the $100,000
                federally insured limit.


                                      F-6

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)



(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
     (d)  Accounts receivable:
                Accounts receivable are reported net of an allowance for
                doubtful accounts. The allowance is based on management's
                estimate of the amount of receivables that will actually be
                collected. The Company writes off an account when it is
                considered to be uncollectible. The allowance for doubtful
                accounts was $353 and $0 at July 31, 2002 and 2001,
                respectively.

     (e)  Inventory:
                Inventories are stated at the lower of cost or market using the
                first-in, first-out (FIFO) method of valuation. All products
                included in inventory are finished goods held for resale.

     (f)  Property, equipment and depreciation:
                Property and equipment are stated at cost. Depreciation expense
                was $604, $537, and $426 for the years ended July 31, 2002,
                2001, and 2000, respectively. Depreciation has been calculated
                using primarily the straight-line method over the estimated
                useful lives of the respective classes of assets as follows:

<TABLE>
<CAPTION>
                   <S>                                         <C>
                   Building                                    40 years
                   Furniture, Fixtures and Equipment            7 years
                   Computer Equipment                           5 years
                   Software                                     3 years
</TABLE>

                Leasehold improvements are amortized over the shorter of the
                remaining term of the lease or the useful life of the
                improvement utilizing the straight-line method.

                Major additions and betterments that extend the useful lives of
                property and equipment are capitalized and depreciated over
                their estimated useful lives. Expenditures for maintenance and
                repairs are charged to expense as incurred. Property, plant and
                equipment are reviewed annually for impairment in accordance
                with SFAS No. 121.

     (g)  Cash and cash equivalents:
                The corporation considers all highly liquid investments with a
                maturity of three months or less when purchased to be cash
                equivalents.

     (h)  Intangible assets and goodwill:
                Amortization expense for goodwill and other intangibles was $84,
                $87, and $25 for 2002, 2001 and 2000, respectively. Management
                periodically evaluates the recoverability of goodwill and other
                intangible assets which would be adjusted for a permanent
                decline in value, if any, as measured by the recoverability from
                projected future cash flows from the acquired businesses. These
                analyses necessarily involve significant management judgment.
                Amortization has been computed on intangible assets as follows:

<TABLE>
<CAPTION>
                  <S>                                         <C>
                  Goodwill                                    15 and 20 years, straight-line
                  Loan fees                                   term of the related note, straight-line (amortized
                                                              expense is included in interest)
                  Trademark                                   15 years, straight-line
</TABLE>

                                      F-7

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)




(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
     (i)  Income taxes:
                Income taxes are provided for the tax effects of transactions
                reported in the financial statements and consist of taxes
                currently due plus deferred taxes. Deferred taxes are recognized
                for differences between the basis of assets and liabilities for
                financial statement and income tax purposes. The differences
                relate primarily to depreciable assets (use of different
                depreciation methods and lives for financial statement and
                income tax purposes), and the Uniform Capitalization Rules of
                IRS Code Sec. 263A (capitalization of direct and indirect costs
                associated with resale activities). The deferred tax asset and
                liability represent the future tax return consequences of those
                differences, which will either be deductible or taxable when the
                assets and liabilities are recovered or settled.

     (j)  Revenue recognition:
                In accordance with generally accepted accounting principles,
                revenue is recognized when the transaction is both realized or
                realizable and earned. The Company recognizes revenue when the
                customer receives the product. Shipping terms are generally FOB
                customer. The Company and/or its shipper have the risk of loss
                until delivery to the customer. Upon receipt of the product by
                the customer, title and risk of loss passes to that customer.
                The Company sells animal health products which constitute all of
                its gross sales.

                There are two major types of transactions that affect the flow
                of products to the Company's customers. Traditional "buy/sell"
                transactions account for approximately ninety percent of the
                Company's business. In this type of transaction the customer
                places an order with the Company, which is then picked, packed,
                shipped, and invoiced to the customer, followed by payment from
                the customer to the Company. In most traditional "buy/sell"
                transactions the Company, rather than the manufacturer, sets the
                price of the products.

                There are a few product lines where the Company provides all
                transactional activities described above, except that the
                manufacturer retains title to the product. The manufacturer
                retains title in accordance with the distribution agreements for
                these products. Within these agreements the manufacturer
                determines if any promotional funds or rebates will be given to
                the Company. These "consignment" transactions account for
                approximately five percent of the Company's business. The
                Company inventories these products for the manufacturer but does
                not pay the manufacturer until the product is sold to the
                customer and reported to the manufacturer. The Company is
                responsible for maintaining insurance on the products, but the
                value of the product is not included in the inventory for
                accounting purposes.

     (k)  Advertising:
                The Company expenses advertising costs as incurred. Advertising
                expense was $32, $30 and $25 for the years ended 2002, 2001 and
                2000, respectively.

                                      F-8

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)




(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
     (l)  Direct shipping and handling costs:
                Freight and other direct shipping costs are included in "Cost of
                sales" on the Consolidated Statements of Income. Direct handling
                costs are reflected in "Operating, general and administrative
                expenses." Such costs represent direct compensation costs of
                employees who pick, pack, and otherwise prepare merchandise for
                shipment to the Company's customers.

     (m)  Fair value of financial instruments:
                The carrying amounts reported on the balance sheets approximate
                the fair value for cash, short-term borrowings, and all other
                variable rate debt (including borrowings under credit
                agreements). The carrying amounts reported for long-term debt
                approximate fair value because the interest approximates current
                market rates for financial instruments with similar maturities
                and terms.

     (n)  Assets - Recognition and measurement of impairment:
                The Company's policy is to recognize an impairment loss in
                accordance with SFAS No. 121 if the sum of the expected future
                cash flows (undiscounted and without interest charges) is less
                than the carrying amount of the asset. The Company reviews
                long-lived assets and identifiable intangibles to be held and
                used for impairment whenever events or changes in circumstances
                indicated that the carrying amount of an asset may not be
                recoverable. An impairment loss recognized would be measured as
                the amount by which the carrying amount of the asset exceeds the
                fair value of the asset. No current impairment exists and none
                have been recognized.

     (o)  Earnings per share:
                Financial Accounting Standards Board Statement No. 128, Earnings
                per Share ("SFAS No. 128") promulgates accounting standards for
                the computation and manner of presentation of the Company's
                earnings per share data. Under SFAS No. 128 the Company is
                required to present basic and diluted earnings per share. Basic
                earnings per share is computed by dividing net income available
                to common stockholders by the weighted-average number of common
                shares outstanding for the period. Diluted earnings per share
                reflect the potential dilution that could occur if securities or
                other contracts to issue common stock were exercised or
                converted into common stock. There are no securities that are
                convertible to common stock that would cause further dilution.
                The weighted average number of common shares outstanding was
                1,546, 1,447 and 1,271 at July 31, 2002, 2001 and 2000,
                respectively.

     (p)  Reclassifications:
                Certain prior year amounts have been reclassified to conform to
                the July 31, 2002 presentation.


                                      F-9

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)



(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
(q)  New accounting pronouncements:
               In June 2001, the Financial Accounting Standards Board issued
               FASB Statement No. 142, Goodwill and Other Intangible Assets
               ("SFAS No.142"). SFAS No.142 requires, among other things, that
               companies no longer amortize goodwill, but instead test goodwill
               for impairment at least annually. In addition, SFAS No. 142
               requires that the Company identify reporting units for the
               purposes of assessing potential future impairments of goodwill,
               reassess the useful lives of other existing recognized
               intangible assets, and cease amortization of intangible assets
               with an indefinite useful life. An intangible asset with an
               indefinite useful life should be tested for impairment in
               accordance with the guidance in SFAS No. 142. SFAS No. 142 is
               required to be applied in fiscal years beginning after December
               15, 2001 to all goodwill and other intangible assets recognized
               at that date, regardless of when those assets were initially
               recognized. SFAS No. 142 also requires the Company to complete a
               transitional goodwill impairment test within six months from the
               date of adoption. The Company is also required to reassess the
               useful lives of other intangible assets within the first interim
               quarter after adoption of SFAS No. 142. The Company will adopt
               SFAS No. 142 in the first quarter of the fiscal year ending July
               31, 2003. The Company believes that the adoption of SFAS No.142
               will not have a material impact on the Company's financial
               position or results of operation.

               In August 2001, the Financial Accounting Standards Board issued
               FASB Statement No. 144, Accounting for the Impairment or Disposal
               of Long-Lived Assets ("SFAS No. 144"). This statement superceded
               FASB Statement No. 121, Accounting for the Impairment of
               Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
               ("SFAS No. 121") and amends Accounting Principles Board Opinion
               No. 30, Reporting Results of Operations - Reporting the Effects
               of Disposal of a Segment of a Business, and Extraordinary,
               Unusual and Infrequently Occurring Events and Transactions. SFAS
               No. 144 retains the fundamental provisions of SFAS No. 121 for
               recognition and measurement of impairment, but amends the
               accounting and reporting standards for segments of a business to
               be disposed of. SFAS No. 144 is effective for fiscal years
               beginning after December 15, 2001, and interim periods within
               those fiscal years, with early application encouraged. The
               provisions of SFAS No. 144 generally are to be applied
               prospectively. The Company will adopt SFAS No. 144 in the first
               quarter of the fiscal year ending July 31, 2003. The Company
               believes that the adoption of SFAS No. 144 will not have a
               material impact on the Company's financial position or results of
               operations.

(2)  CONCENTRATION OF CREDIT RISK:
     Financial instruments, which potentially subject the Company to
     concentrations of credit risk, include trade receivables. There were no
     significant individual receivables at July 31, 2002. One customer
     comprised 12.5% of the Company's receivables at July 31, 2001.

(3)  REBATES:
     At each fiscal year end, the Company nets rebates due to stockholders
     against accounts receivable. Rebates are paid in the form of credits
     against future purchases, never in cash. The Company offsets accounts
     receivable for overcharges on sales in excess of an agreed upon profit
     margin as follows:

<TABLE>
<CAPTION>
                                                                     2002              2001
                                                                 --------            --------
                     <S>                                         <C>                 <C>
                     Accounts receivable, net allowance
                        for doubtful accounts                    $ 26,712            $ 23,141
                     Less rebates                                  (7,020)             (4,868)
                                                                 --------            --------
                     Accounts receivable, net                    $ 19,692            $ 18,273
                                                                 ========            ========
</TABLE>


                                      F-10

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)




(3)  REBATES (continued):
     Net sales and other revenue reported on the Consolidated Statements of
     Income were reduced by rebates as follows:

<TABLE>
<CAPTION>
                                                2002            2001           2000
                                              --------        --------       --------
      <S>                                     <C>             <C>            <C>
      Gross sales and other revenue           $246,942        $202,391       $182,389
      Less rebates                              (7,020)         (4,868)        (6,114)
                                              --------        --------       --------

      Net sales and other revenue             $239,922        $197,523       $176,275
                                              ========        ========       ========
</TABLE>


(4)  PROPERTY AND EQUIPMENT:
     Major classes of property and equipment consist of the following:

<TABLE>
<CAPTION>
                                               2002                2001
                                             --------            --------
       <S>                                   <C>                 <C>
       Land                                  $    954            $    954
       Building                                 4,715               4,715
       Leasehold improvements                     167                 -
       Equipment                                4,920               3,247
                                             --------            --------
                                               10,756               8,916
       Less - Accumulated
         depreciation                          (2,037)             (1,433)
                                             --------            --------
       Net property and equipment            $  8,719            $  7,483
                                             ========            ========
</TABLE>


(5)  INVESTMENT IN UNCONSOLIDATED AFFILIATES:
     The Company purchased a 20% interest in AAHA Services Corp. in June,
     2000 for $1,500. The remaining 80% is owned by American Animal Hospital
     Association (AAHA). The Company determined that it has significant
     influence over AAHA Services Corp. and accordingly should account for
     its 20% ownership interest using the "equity method" of accounting for
     investments. The excess of purchase price over underlying equity in the
     amount of $1,500 (which represents goodwill) is being amortized by the
     straight-line method over 20 years. The Company purchased less than a
     5% interest in Agri-Laboratories, Ltd., which is carried at cost. The
     amounts presented on the balance sheet consisted of:

<TABLE>
<CAPTION>
                                                                           2002          2001
                                                                        -------        -------
      <S>                                                               <C>            <C>
      Investment in AAHA Services Corp (equity method),
       net of amortization and 20% equity method profit or loss         $ 1,347        $ 1,369
      Investment in Agri-Laboratories, Ltd. (cost method)                   144            144
                                                                        -------        -------

                                                                        $ 1,491        $ 1,513
                                                                        =======        =======
</TABLE>


(6)  COMMON STOCK:
     The Company is authorized to issue 30,000 shares of common stock with a
     par value of $1.00. Issued and outstanding shares amounted to 1,544 at
     July 31, 2002 and 1,534 at July 31, 2001. Holders of common stock are
     entitled to a) one vote for each share held on matters submitted to a
     vote of stockholders, b) a ratable share of dividends declared and c)
     in the event of liquidation or dissolution, a ratable share of earnings
     after liabilities. Shareholders are not permitted to dispose of their
     stock except by a sale back to the Company. The shareholder must give
     the Company written notice of the proposed sale and the Company must
     redeem for cash the share of stock within ninety days of receiving such
     notice, at the price the shareholder paid for the share.

                                      F-11

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)




(7)  INCOME TAXES:
     Significant components of income tax expense are as follows:

<TABLE>
<CAPTION>
                                             2002     2001     2000
                                            -----    -----    -----
  <S>                                       <C>      <C>      <C>
  Current
      Federal                               $ 498    $ 198    $ 315
      State                                    38        9       12
                                            -----    -----    -----
                                              536      207      327
                                            -----    -----    -----
  Deferred
      Federal                                  96       96       (6)
      State                                     7        4        -
                                            -----    -----    -----
                                              103      100       (6)
                                            -----    -----    -----
  Total                                     $ 639    $ 307    $ 321
                                            =====    =====    =====
</TABLE>

     A reconciliation of income tax expense computed using the U.S. federal
     statutory income tax rate of 34% of income before income taxes to the
     actual provision for income taxes is as follows:

<TABLE>
<CAPTION>
                                           2002            2001         2000
                                          -----           -----        -----
   <S>                                    <C>             <C>          <C>
   Expected tax at U.S.
       statutory rate                     $ 594           $ 236        $ 296
   State taxes, net of federal effect        26               6            8
   Amortization of goodwill                  22              24            3
   Nondeductible and other items             (3)             41           14
                                          -----           -----        -----
   Total                                  $ 639           $ 307        $ 321
                                          =====           =====        =====
</TABLE>

     Deferred tax assets and liabilities reflect the future tax consequences of
     events that have already been recognized in the consolidated financial
     statements or income tax returns. At July 31, the deferred tax asset and
     liability consisted of the following:

<TABLE>
<CAPTION>
                                                     2002             2001
                                                    ------           -----
    <S>                                             <C>              <C>
    Current deferred tax asset:
        Uniform capitalization                       $ 146            $ 37
    Noncurrent deferred tax liability:
        Excess of tax over book depreciation          (343)           (131)
                                                    ------           -----
    Deferred tax liability, net                     $ (197)          $ (94)
                                                    ======           =====
</TABLE>


                                      F-12

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)




(8)  LONG-TERM DEBT:
     Long-term debt at July 31 is summarized as follows:

<TABLE>
<CAPTION>
                                                           2002                2001
                                                         -------             -------
   <S>                                                   <C>                 <C>
   Note payable, maturing in 2009, secured
       by certain assets, 7.42% interest                 $ 3,764             $ 3,860
   Note payable, maturing in 2005, secured
       by certain assets, 9.10% interest                   1,030               1,115
   Note payable, maturing in 2005, secured
       by certain assets, 8.66% interest                     778               1,046
                                                         -------             -------
                                                           5,572               6,021
   Less current portion                                     (496)               (456)
                                                         -------             -------
                                                         $ 5,076             $ 5,565
                                                         =======             =======
</TABLE>

     The aggregate scheduled maturities of long-term debt obligations for the
     five years subsequent to July 31, 2002 are as follows:

<TABLE>
<CAPTION>
                          <S>                         <C>
                          2003                        $    496
                          2004                             538
                          2005                           1,126
                          2006                             136
                          2007                             146
                          Thereafter                     3,130
                                                      --------
                                                      $  5,572
                                                      ========
</TABLE>

     At July 31, 2002, the Company had in place a revolving line of credit that
     provides for borrowings up to $15,000. This agreement is scheduled to
     expire in December 2002. The short-term borrowing amounts outstanding under
     this credit facility were $6,897 and $4,294 at July 31, 2002 and 2001,
     respectively. Interest is payable at .25% under the U.S. Bank National
     Association Reference Rate. The weighted average interest rates of
     borrowings outstanding under the revolving credit agreement were 5.00% and
     8.35% for 2002 and 2001, respectively. The line of credit is secured by
     substantially all of the Company's assets.

     Under these debt and credit agreements, the Company is required to maintain
     certain net worth and leverage ratios. The Company was in compliance with
     all covenants under the borrowing agreements at July 31, 2002 and 2001.

(9)  COMMITMENTS AND CONTINGENT LIABILITIES - LEASES:
     The Company has operating leases covering certain property, equipment,
     and computer hardware and software expiring at various dates through
     2007. The following is a schedule of future minimum rental payments
     required under non-cancelable operating leases at July 31, 2002:

<TABLE>
<CAPTION>
                          <S>                         <C>
                          2003                        $    544
                          2004                             447
                          2005                             420
                          2006                             380
                          2007                             382
                                                       -------
                                                       $ 2,173
                                                       =======
</TABLE>

         Total lease expense was $443, $399 and $275 for 2002, 2001 and 2000,
respectively.

                                      F-13

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)




(10) COMMITMENTS AND CONTINGENT LIABILITIES - OTHER:
     The Company is required by its Articles of Incorporation to repurchase
     stock within 90 days of receiving written notice from the shareholder
     requesting redemption of their stock. The redemption amount is the
     original purchase price of the stock paid by the shareholder. The
     Company was contingently liable for $4.5 million as of July 31, 2002.

     The Company is subject to claims and other actions arising in the
     ordinary course of business. Some of these claims and actions have
     resulted in lawsuits where the Company is a defendant. Management
     believes that the ultimate obligations if any, which may result from
     unfavorable outcomes of such lawsuits, will not have a material adverse
     effect on the financial position, results of operations or cash flows
     of the Company and that such obligations, if any, would be adequately
     covered by insurance.

(11) RELATED PARTY TRANSACTIONS:
     In the normal course of business the Company sells to its affiliate,
     board of directors, and key employees under normal terms and
     conditions. Accounts receivable, related parties on the balance sheet
     include amounts receivable on demand as of July 31 from the following:

<TABLE>
<CAPTION>
                                                             2002              2001
                                                           -------           -------
            <S>                                            <C>               <C>
            Affiliate (AAHA)                               $ 2,683           $ 2,286
            Board of Directors                                 189               197
            Officer and employees                                3                 7
                                                           -------           -------
                                                           $ 2,875           $ 2,490
                                                           =======           =======
</TABLE>

     Net sales on the Consolidated Statements of Income include sales to related
     parties as follows:

<TABLE>
<CAPTION>
                                                       2002           2001          2000
                                                     --------       --------      -------
             <S>                                     <C>            <C>           <C>
             Affiliate (AAHA)                        $ 14,433       $  8,761      $ 4,080
             Board of Directors                         3,292          2,857        3,238
             Officer and employees                         57            103           25
                                                     --------       --------      -------
                                                     $ 17,782       $ 11,721      $ 7,343
                                                     ========       ========      =======
</TABLE>

     Accounts payable, related parties on the balance sheet consist of $1,680
     and $535 due to Agri-Laboratories as of July 31, 2002 and 2001,
     respectively. Purchases from Agri-Laboratories were $14,890, $10,518, and
     $6,894 for 2002, 2001, and 2000, respectively.

(12) PROFIT-SHARING AND 401(K) RETIREMENT PLAN:

     The Company provides a non-contributory profit-sharing plan covering all
     full-time employees who qualify as to age and length of service. It has
     been the Company's policy to make contributions to the plan as provided
     annually by the Board of Directors. The total provision for the
     contribution to the plan was $490, $341 and $348 for 2002, 2001 and 2000,
     respectively.

     The Company also provides a contributory 401(k) retirement plan covering
     all full-time employees who qualify as to age and length of service. It is
     the Company's policy to match a maximum 15% employee contribution with a 3%
     contribution. The total provision to the plan was $94, $142 and $115 for
     the years ended July 31, 2002, 2001 and 2000, respectively.

                                      F-14

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)

(13) SEGMENT INFORMATION:
     The Company has one reportable segment which buys, sells, and warehouses
     animal health related items. The Company does not have separate strategic
     business units that offer different products or services. The Company did
     not receive over 10% of revenues from any single external customer.

(14) RESTATEMENT OF FINANCIAL STATEMENTS:
     Subsequent to the issuance of the Company's 2001 consolidated financial
     statements and the filing of its 2001 Annual Report on Form 10-K with the
     SEC, the Company's management determined that the accounting related to the
     equity method investment in AAHA Services Corp. and the accounting for
     sales promotion monies received from various manufacturers would require
     restatement of the financial statements.

     The Company's restatement reflects the change of accounting for the
     investment in AAHA Services Corp. from the cost method to the equity
     method. It also reflects the reclassification of promotion monies received
     from manufacturers. Formerly, the Company had recorded promotion monies as
     revenue. The restatement reflects the change to record promotion monies as
     a reduction of operating, general and administrative expenses. The
     restatement of promotion monies had no effect on operating income or net
     income for the periods presented.

     The effect on net income from these restatements is shown in the following
     table:
<TABLE>
<CAPTION>
                                                        2001       2000
                                                        -----      ----
<S>                                                     <C>        <C>
          Net income as previously reported             $ 509      $556
          Impact of restatement for
            equity in loss of affiliate                  (122)       (9)
                                                        -----      ----
          Net income as restated                        $ 387      $547
                                                        =====      ====
</TABLE>

     The principal effect of these items on the accompanying financial
     statements is set forth below:
<TABLE>
<CAPTION>
                                                         Consolidated Statements of Income
                                     ------------------------------------------------------------------------------
                                           Year Ended July 31, 2001                  Year Ended July 31, 2000
                                           ------------------------                  ------------------------
                                     Previously     Effect of        As       Previously     Effect of        As
                                      Reported     Restatement    Restated     Reported     Restatement    Restated
                                     ----------    -----------    --------    ----------    -----------    --------
<S>                                  <C>           <C>            <C>         <C>           <C>            <C>
Net sales and other revenue           $199,340       $(1,817)     $197,523     $178,547       $(2,272)     $176,275
Cost of sales                          181,660             -       181,660      161,934             -       161,934
                                      --------       -------      --------     --------       -------      --------
Gross profit                            17,680        (1,817)       15,863       16,613        (2,272)       14,341
Operating, general &
  administrative expenses               16,360        (1,817)       14,543       15,203        (2,272)       12,931
                                      --------       -------      --------     --------       -------      --------
Operating income                         1,320             -         1,320        1,410             -         1,410
Other income                              (504)            -          (504)        (533)            -          (533)
Equity in loss of affiliate                  -          (122)         (122)           -            (9)           (9)
                                      --------       -------      --------     --------       -------      --------
Income before taxes                        816          (122)          694          877            (9)          868
Income tax expense                         307             -           307          321             -           321
                                      --------       -------      --------     --------       -------      --------
Net Income                            $    509       $  (122)     $    387     $    556       $    (9)     $    547
                                      ========       =======      ========     ========       =======      ========
Net income per share                  $ 351.55       $(83.97)     $ 267.58     $ 437.93       $ (7.38)     $ 430.55
                                      ========       =======      ========     ========       =======      ========
</TABLE>

                                      F-15

<PAGE>

            PROFESSIONAL VETERINARY PRODUCTS, LTD. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
         Years ended July 31, 2002, 2001 (Restated) and 2000 (Restated)
                       (in thousands, except share data)

(14) RESTATEMENT OF FINANCIAL STATEMENTS (continued):

     For the fiscal year ended 2001, accounts receivable - stock was
     reclassified to paid-in capital.
<TABLE>
<CAPTION>
                                                Consolidated Balance Sheet
                                                   As of July 31, 2001
                                                --------------------------
                                                Previously
                                                 Reported       As Restated
                                                ----------      -----------
<S>                                             <C>             <C>
         Investments in
         unconsolidated affiliate                $ 1,644         $ 1,513
         Total assets                             50,982          50,737
         Paid-in capital                           4,529           4,415
         Retained earnings                         2,025           1,894
         Total stockholders' equity                6,557           6,311
</TABLE>

(15) SELECTED QUARTERLY FINANCIAL DATA:

     The following presents certain unaudited quarterly financial data and
     certain audited, restated year-end financial data:

<TABLE>
<CAPTION>
                                                                Quarters ended                                         Year ended
                              October 31, 2000        January 31, 2001       April 30, 2001       July 31, 2001      July 31, 2001
                                 (Restated)              (Restated)            (Restated)          (Restated)          (Restated)
                              ----------------        ----------------       --------------       -------------      -------------
<S>                           <C>                     <C>                    <C>                  <C>                <C>
Revenues                           $49,755                $ 46,345              $50,774             $ 50,648           $197,523
Gross profit                         3,500                   3,698                3,751                4,914             15,863
Operating income                       697                      19                 (120)                 724              1,320
Net income                             254                    (148)                 (82)                 363                387
Net income per share               $183.00                $(104.39)             $(56.33)            $ 240.23           $ 267.58
Weighted average common
  shares outstanding                 1,388                   1,420                1,465                1,515              1,447

<CAPTION>
                                                                Quarters ended
                              October 31, 2001        January 31, 2002                                                Year ended
                                 (Restated)              (Restated)          April 30, 2002       July 31, 2002      July 31, 2002
                              ----------------        ----------------       --------------       -------------      -------------
<S>                           <C>                     <C>                    <C>                  <C>                <C>
Revenues                           $59,153                 $55,483              $63,131             $ 62,156           $239,923
Gross profit                         4,336                   4,308                6,425                5,002             20,071
Operating income                       738                     418                1,643                 (656)             2,143
Net income                             342                     110                1,111                 (454)             1,109
Net income per share               $222.40                 $ 70.43              $717.93             $(293.83)          $ 717.14
Weighted average common
  shares outstanding                 1,536                   1,557                1,548                1,544              1,546
</TABLE>

                                      F-16

<PAGE>


(a)  (3)  Exhibits

<TABLE>
<CAPTION>
          Regulation S-K                                       Document
          Exhibit Number
<C>                           <S>
                3.1           Articles of Incorporation of Professional Veterinary Products, Ltd. (1)
                3.2           Bylaws of Professional Veterinary Products, Ltd. (1)
                4.1           Certificate of Professional Veterinary Products, Ltd. (1)
                4.2           Article V of the Articles of Incorporation of Professional Veterinary
                              Products, Ltd., which defines the rights of holders of the securities
                              being registered (1)
                4.3           Article II of the Bylaws of Professional Veterinary Products, Ltd., which
                              defines the rights of holders of the securities being registered (1)
                5.1           Form of Opinion of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim LLP
                              (6)
               10.1           Warranty Deed for real estate at 10100 J Street, Omaha, Nebraska from
                              Professional Veterinary Products, Ltd. to Duane E. and Barbara G. Miller
                              (1)
               10.2           Warranty Deed for real estate at 10077 South 134th Street, Omaha,
                              Nebraska from Hilltop Industrial Park to Professional Veterinary Products,
                              Ltd. (1).
               10.3           Lease of building located at 10100 J Street, Omaha, Nebraska between
                              Professional Veterinary Products, Ltd. and Duane E. and Barbara G. Miller
                              (1).
               10.4           Construction Agreement for building at 10077 South 134th Street, Omaha,
                              Nebraska between Professional Veterinary Products, Ltd. and Mudra
                              Construction, Ltd. (1).
               10.5           Sales Agency Agreement between Professional Veterinary Products, Ltd. and
                              Bayer Corporation (1).*
               10.6           Sales Agency Agreement between Professional Veterinary Products, Ltd. and
                              Merial LLC (1).*
               10.7           Select Distributors Marketing Agreement between Professional Veterinary
                              Products, Ltd. and the Animal Health Group of Pfizer, Inc. (1).*
               10.8           Supply and Distribution Agreement between Professional Veterinary
                              Products, Ltd. and Schering-Plough Animal Health Corporation (1).*
               10.9           Distributor Agreement between Professional Veterinary Products, Ltd. and
                              The Upjohn Company (1).*
               10.10          Distribution Agreement between Professional Veterinary Products, Ltd. and
                              Fort Dodge Animal Health (1).
               10.11          Purchase and Sale Agreement between Professional Veterinary Products,
                              Ltd., AAHA Services Corporation and American Animal Hospital Association
                              (3).
               10.12          Lease of building located in York, Pennsylvania between Professional
                              Veterinary Products, Ltd. and Kinsley Equities II Limited Partnership (8).
               11.1           Statement re Computation of Per Share Earnings (8).
               15.1           Letter re Unaudited Interim Financial Information (1).
               16             Letter dated March 20, 2002 from Marvin E. Jewell & Co., P.C. to the
                              Securities and Exchange Commission (5)
               21             Subsidiaries (4).
               23.1           Consent of Quick & McFarlin, P.C. (8).
               23.2           Form of consent of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim
                              (1).
</TABLE>

                                      II-1

<PAGE>

<TABLE>
<C>                           <S>
               24.1           Power of Attorney executed by Buddy D. Ray (8).
               24.2           Power of Attorney executed by Chester L. Rawson (8).
               24.3           Power of Attorney executed by Amy Lynne Hinton (8).
               24.4           Power of Attorney executed by Steven E. Wright(8).
               24.5           Power of Attorney executed by Michael B. Davis(8).
               24.6           Power of Attorney executed by Raymond Ebert II (8).
               24.7           Power of Attorney executed by Michael L. Whitehair(8).
               24.8           Power of Attorney executed by Fred Garrison (8).
               99.1           No Action letter issued by Securities and Exchange Commission on July 12,
                              1996 (1).
               99.2           Form 8-K filed March 26, 2002 (7).
               99.3           Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                              (8).
               99.4           Schedule of Allowances (8).
</TABLE>

     (1)  Previously filed as exhibits to the Form S-1 Registration Statement
          filed on September 7, 1999.
     (2)  Previously filed as exhibits to the Pre-Effective Amendment No. 1 to
          the Form S-1 Registration Statement filed on October 19, 1999.
     (3)  Previously filed as exhibits to the Post-Effective Amendment No. 1 to
          the Form S-1 Registration Statement No. 333-86629 filed on November 3,
          2000.
     (4)  Previously filed as exhibits to the Form S-1 Registration Statement
          No. 333-72962 filed on November 8, 2001.
     (5)  Previously filed as exhibits to the Pre-Effective Amendment No. 2 to
          the Form S-1 Registration Statement No. 333-72962 filed on June 5,
          2002.
     (6)  Previously filed as exhibits to the Pre-Effective Amendment No. 6 to
          the Form S-1 Registration Statement No. 333-72962 filed on
          September 9, 2002
     (7)  Incorporated by reference to the Form 8-K filed March 26, 2002.
     (8)  Filed herewith.
     (*)  Portions of these exhibits have been redacted pursuant to a request
          for confidential treatment which was granted by the Securities and
          Exchange Commission.

          All of such previously filed documents are hereby incorporated herein
     by reference in accordance with Item 601 of Regulation S-K.

(b)  Reports of Form 8-K

     No reports on Form 8-K were filed during the fourth quarter.

                                   SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

     Date:   October 29, 2002

                                       PROFESSIONAL VETERINARY PRODUCTS, LTD.


                                       By:    /s/ Dr. Lionel L. Reilly
                                           ----------------------------------
                                           Dr. Lionel L. Reilly

                                      II-2

<PAGE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                                     Capacity
---------                                     --------
<S>                                           <C>
/s/ Dr. Lionel L. Reilly                      President
------------------------------------
Dr. Lionel L. Reilly


/s/ Neal B. Soderquist                        Chief Financial Officer
------------------------------------
Neal B. Soderquist

         *
------------------------------------          Director
Dr. Buddy D. Ray

         *
------------------------------------          Director
Dr. Raymond C. Ebert II

         *
------------------------------------          Director
Dr. Fred G. Garrison

         *
------------------------------------          Director
Dr. Steven E. Wright

         *
------------------------------------          Director
Dr. Michael B. Davis

         *
------------------------------------          Director
Dr. Amy Lynne Hinton

         *
------------------------------------          Director
Dr. Chester L. Rawson

         *
------------------------------------          Director
Dr. Michael L. Whitehair

*By:     /s/ Dr. Lionel L. Reilly
      ------------------------------
      Dr. Lionel L. Reilly
      As: Attorney-in-fact
</TABLE>
                                      II-3