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

                              Form 10-K

            Annual Report Pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934

             For the fiscal year ended December 31, 1999
                   Commission File Number 0-11997

                    Carrington Laboratories, Inc.
         ----------------------------------------------------
        (Exact name of Registrant as specified in its charter)

               Texas                            75-1435663
       ----------------------              -------------------
      (State of Incorporation)            (IRS Employer ID No.)

             2001 Walnut Hill Lane, Irving, Texas 75038
             ------------------------------------------
              (Address of principal executive offices)

  Registrant's telephone number, including area code:  (972) 518-1300

     Securities registered pursuant to Section 12(b) of the Act:

       Title of each class      Name of exchange on which registered
               None

     Securities registered pursuant to Section 12(g) of the Act:


                        Common Stock ($.01 par value)
                                (Title of class)

                       Preferred Share Purchase Rights
                                (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 preceding  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 Regulation S-K is not contained herein, and will not  be
  contained, to the  best of  the 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.  [   ]
<PAGE>
       The aggregate  market  value of  the  Common Stock  held  by  non-
  affiliates of the Registrant on March 24, 2000, was $31,187,000.  (This
  figure was computed on the basis of the closing price of such stock  on
  the NASDAQ  National  Market on March 24,  2000,  using  the  aggregate
  number of  shares  held  on that  date  by,  or in  nominee  name  for,
  shareholders who are not officers, directors  or record holders of  10%
  or  more  of   the  Registrant's   outstanding  voting   stock.     The
  characterization of such  officers, directors and  10% shareholders  as
  affiliates is for purposes of this  computation only and should not  be
  construed as  an admission  for  any other  purpose  that any  of  such
  persons are, in fact, affiliates of the Registrant.)

       Indicate  the  number  of  shares  outstanding  of  each  of   the
  Registrant's classes  of common  stock, as  of the  latest  practicable
  date:  9,516,923 shares of Common Stock, par value $.01 per share, were
  outstanding on March 24, 2000.

                 DOCUMENTS INCORPORATED BY REFERENCE

       Portions of  the  Registrant's  proxy  statement  for  its  annual
  meeting of shareholders to be held on May 18, 2000 are incorporated  by
  reference into Part III hereof, to the extent indicated herein.
<PAGE>

                               PART I

  ITEM 1. BUSINESS.

                               General

  Carrington Laboratories,  Inc. ("Carrington"  or  the "Company")  is  a
  research-based biopharmaceutical, medical device and raw materials  and
  nutraceutical company  engaged in  the development,  manufacturing  and
  marketing of naturally-derived complex carbohydrates and other  natural
  product therapeutics for the treatment of major illnesses, the dressing
  and management of wounds and nutritional  supplements.  The Company  is
  comprised  of  two  business  segments.    See  Note  Fourteen  to  the
  consolidated financial statements in  this Annual Report for  financial
  information about these business divisions.  The Company sells, using a
  network of  distributors, prescription  and nonprescription  human  and
  veterinary products through its Medical Services Division and  consumer
  and  bulk  raw   material  products  through   its  consumer   products
  subsidiary, Caraloe, Inc.  The Company's research and product portfolio
  are based primarily  on complex  carbohydrates isolated  from the  Aloe
  vera L. plant.

  The  Company was  incorporated in Texas  in 1973 as Ava Cosmetics, Inc.
  In 1986,  the  Company sold  the  direct  sales business  it  was  then
  operating and changed its name to Carrington Laboratories, Inc.


                      Medical Services Division

  Carrington's Medical Services Division  offers a comprehensive line  of
  wound management products to hospitals, nursing homes, alternative care
  facilities and the home health care market.  The Company's products are
  designed to maintain a moist wound  environment which aids the  healing
  process  and  to  maintain  the integrity  of contiguous  healthy skin.
  Carrington products are used in a wide range of acute and chronic wound
  and skin conditions and for incontinence and ostomy care.

  The Company's primary marketing  emphasis for its  wound and skin  care
  business is directed toward hospitals and nursing homes, alternate care
  facilities, home health care providers and managed care  organizations,
  with  wound  and  skin  care  products  being  promoted  primarily   to
  physicians and specialty nurses,  e.g., enterostomal therapists.   Many
  of these organizations enter into  pricing agreements with the  Company
  based upon purchase  volumes or member  enrollments.  These  agreements
  allow the Company to promote its products to the group on an  exclusive
  or non-exclusive basis.  As some segments of the market shift from home
  health care  to  nursing  homes,  the  Company  has  developed  and  is
  marketing a  specialized educational  and training  program to  nursing
  homes.   Opportunities  in  the  growing  Internet  market   are   also
  addressed  through the Company's  websites,  www.carringtonlabs.com.and
  www.woundcare.com.
<PAGE>
  The Company currently has 48 employees and independent  representatives
  engaged in the  sales and  marketing of  the Company's  products.   The
  Company's field sales force currently employs 16 sales representatives,
  each assigned to  a specific geographic  area in the  United States,  4
  regional sales  managers, 1  representative in  Puerto  Rico and  1  in
  Belgium.  The Company also uses 6 independent sales companies employing
  13 sales representatives  to  sell its  products on a commission basis.
  In addition to this  field sales force,  the medical services  division
  employs 2 telemarketers, who focus  on alternative care facilities  and
  the home  health care  market, and  11 employees  in customer  service,
  administrative support and executive management.

  The  Company's  products  are  primarily  sold  through  a  network  of
  distributors.   Three  of the  Company's  largest distributors  in  the
  hospital market are McKesson HBOC/General Medical("McKesson"), Owens  &
  Minor and Bergen Brunswig.  During fiscal 1997, 1998 and 1999, sales of
  wound and skin care products to McKesson represented 12%, 11%, and  5%,
  respectively, of the Company's total net sales.  Sales to Owens & Minor
  represented 11%, 10%, and 9%, respectively,  of total net sales  during
  the same periods.  Sales to Bergen Brunswig represented 9%, 5%, and 4%,
  respectively, of total net sales during the same periods.

  The Company has over  200 pricing agreements in  effect as of  December
  31, 1999.  Many of these are for small purchasing groups, managed  care
  organizations  or facilities or are  for  a limited number of products.
  The Company also has  over 30 national  pricing agreements which  allow
  its  representatives  to  make   presentations  in  member   facilities
  throughout the country.   In February 2000,  the Company announced  the
  extension  of  it's  existing  purchase  agreement  with  the  Veterans
  Administration ("VA") for wound and skin cleansers.  In March 2000, the
  Company announced the award of two new purchase agreements with the VA,
  one for it's amorphous hydrogel products and one for it's full line  of
  incontinence products.  All  three agreements are for  a period of  two
  years and all are sole-source contracts.  The Company also announced in
  March 2000 that  it was  awarded two  non-exclusive national  contracts
  with Novation,  a  supply  cost management  company  which  serves  the
  purchasing  needs of  over 6,600  health care organizations nationwide.
  One agreement is for wound care products and the other for incontinence
  and skin care products.   Both agreements are  for three year  periods,
  effective May 1, 2000.

  The Company currently has 20 distribution and licensing agreements  for
  the promotion and sale of its products.  In November 1995, the  Company
  signed a Sales  Distribution Agreement with  Laboratorios PiSA S.A.  de
  C.V., a Mexican corporation, for  the exclusive distribution rights  to
  sell the Company's wound care products in Mexico, Guatemala, Nicaragua,
  Panama, El Salvador  and the Dominican  Republic for a  period of  five
  years.  On May 15, 1998,  the Sales Distribution Agreement was  amended
  to delete the Dominican  Republic from the  territories covered by  the
  agreement.

  On September 3,  1996, the Company  signed an  exclusive contract  with
  Faulding Pharmaceuticals  ("Faulding") to  market the  Company's  wound
  care products  in Australia  and New  Zealand.   On January  12,  1998,
  Faulding and Carrington executed Amendment  Number One to the  existing
  Distribution Agreement between  the parties.   This Amendment adds  the
  following countries to  the territories covered  under that  Agreement:
  Thailand, Vietnam,  Singapore,  the  Philippines, Malaysia and Myanmar.
  Pursuant to the Amendment, products are being shipped on order.
<PAGE>
  In December  1996, the  Company entered  into  an agreement  with  Suco
  International Corp.  ("Suco") whereby  the  Company appointed  Suco  as
  exclusive distributor of  certain of the  Company's products in  Haiti,
  Columbia, Venezuela, Uruguay, Bolivia, Peru, Paraguay and Ecuador for a
  five-year  term,   subject   to   early   termination   under   certain
  circumstances.  The  agreement requires Suco  to register the  products
  covered by the agreement in each of those countries.  On May 15,  1998,
  the agreement  was  amended to  include  the Dominican  Republic  as  a
  territory and to extend the agreement's term for an additional two  (2)
  years.

  In December 1996,  the Company and  Darrow Laboratories S/A  ("Darrow")
  entered  into  a  Sales  Distribution  Agreement  whereby  the  Company
  appointed Darrow  as  a marketer  and  distributor of  certain  of  the
  Company's wound care products for a term of ten years (subject to early
  termination under  certain circumstances)  in  Brazil, with  a  limited
  right of  first  refusal to  distribute  those products  in  Argentina,
  Uruguay, Paraguay,  and  Chile.    The  agreement  requires  Darrow  to
  register in the Company's  name such of the  Company's products as  the
  Company directs, at  the Company's expense,  in Brazil  and each  other
  country where Darrow is authorized to distribute such products.  As  of
  December 31, 1999, these registrations were still pending completion.

  In December 1996, the Company and  its Belgian subsidiary entered  into
  an agreement  with Recordati  Industria Chimica  & Farmaceutica  S.P.A.
  ("Recordati") whereby the  Company and its  subsidiary jointly  granted
  exclusive distribution rights to Recordati for certain of the Company's
  products in Italy, Vatican City and San Marino for a term of ten years,
  subject to automatic renewal for an additional two years unless  either
  party elects to terminate the agreement at the end of the initial term,
  and subject  to  early termination  under  certain circumstances.    In
  return for the grant of the  distribution rights, Recordati made  three
  initial payments  to the  Company, the  first  when the  agreement  was
  signed, the second when  the products to be  sold were registered,  and
  the third  when  the  products were  initially  launched.    Under  the
  agreement, the Company applied for, and  was granted in February  1998,
  the CE  mark, a  quality certification  recognized  by members  of  the
  European Economic Community and certain other countries.

  In January 1998, the Company signed a Sales Distribution Agreement with
  Henry Schein UK Holdings, Ltd. ("Schein"),  a British company, for  the
  exclusive distribution rights  to sell The  Carrington[R] Patch in  the
  United Kingdom and Ireland for a  period of ten years.  Schein  markets
  the product under the name UlcerEze[TM].

  In January 1998, the Company signed a Sales Distribution Agreement with
  Saude  2000  ("Saude"),  a   Portuguese  company,  for  the   exclusive
  distribution rights to sell The Carrington[R]  Patch in Portugal for  a
  period of  five  years.   Saude  markets  the product  under  the  name
  PazAftas[TM].  In June 1998, the Company also signed a letter of intent
  granting Saude the exclusive distribution rights to sell the  Company's
  wound care products,  including the  DiaB[TM] product  line, under  the
  terms of the initial agreement.  Pricing for the wound care products is
  subject to negotiation.
<PAGE>
  In March 1998, the Company signed  a Sales Distribution Agreement  with
  Hemofarm, GmbH, a German company, for the exclusive distribution rights
  to  sell  the  Company's   wound  and  skin   care  products  and   The
  Carrington[R] Patch in Yugoslavia for a period of five years.

  In March  1998,  the Company  signed  an Exclusive  Sales  Distribution
  Agreement with Vincula  International Trade Company  for the  exclusive
  distribution rights to sell the Company's wound and skin care  products
  and The Carrington[R] Patch  in Oman and Saudi  Arabia for a period  of
  five years, with options for other  countries in the Middle East to  be
  negotiated in the future.

  In April  1998, the  Company signed  an Agency  and Sales  Distribution
  Agreement with  Egyptian  American  Medical Industries,  Inc.  for  the
  exclusive distribution rights to sell the Company's wound and skin care
  products and The  Carrington[R] Patch  in Egypt  for a  period of  five
  years.

  In April 1998, the Company signed  a Sales Distribution Agreement  with
  CSC Pharmaceuticals,  Ltd.,  an  Austrian company,  for  the  exclusive
  distribution rights to sell  the Company's DiaB[TM], RadiaCare[TM]  and
  CarraKlenz[TM]  products  in  Austria,  Croatia,  Hungary,  the   Czech
  Republic, the Slovak Republic,  Romania, Bulgaria, Slovenia and  Poland
  for a period of ten years. In May  1999, an amendment was made to  this
  agreement  modifying  certain  performance  requirements  and   product
  registration provisions.  In February 2000, a second amendment was made
  to this agreement modifying certain trademark provisions.

  In October 1999, the Company signed a Sales Distribution Agreement with
  E-Wha  International,  Inc.,  a  Korean  company,  for  the   exclusive
  distribution rights  to sell  the Company's  RadiaCare[TM] products  in
  Korea for a period of three years.

  In  1999,  total  international  sales  of  wound  care  products  were
  $1,160,000,  of  which  $631,000  were related  to the  above-mentioned
  international agreements.  The Company presently estimates the expected
  sales  associated with  these agreements in 2000 to be between $800,000
  and  $1,000,000.  The company  also  sells  wound  care  products  into
  international markets on a non-contract, purchase order basis. In 1999,
  total  non-contract,  international  wound care sales were $529,000 and
  included  sales  into Argentina,  Jamaica, Puerto Rico,  Singapore  and
  United Arab Emirates.

  The Company also markets Acemannan Immunostimulant, a vaccine adjuvant,
  and several wound  and  skin  care  products to the  veterinary market.
  Acemannan Immunostimulant  was  conditionally approved  by  the  United
  States Department of Agriculture ("USDA") in November 1991, for use  as
  an aid in the  treatment of canine and  feline fibrosarcoma, a form  of
  soft tissue cancer that affects dogs and cats.  A conditional  approval
  means  that the  Company  can  market  the product in limited areas but
  additional work must be done.  The "conditional" aspect of the approval
  is renewed on an annual basis and will be  removed upon completion  and
  acceptance by the USDA of additional potency testing.  A submission was
  made  in  December  1998 for  this  purpose and as of the date  of this
  report a final response from the USDA has not been received.   However,
  there can  be no assurance that these tests will result in the  removal
  of the conditional  restriction  on  the  USDA's approval of  Acemannan
  Immunostimulant.
<PAGE>
  In September  1990,  the Company  granted  Solvay Animal  Health,  Inc.
  ("Solvay") an exclusive, world-wide license to use and sell an adjuvant
  processed from Aloe  vera L.  for poultry  disease.   In January  1992,
  Solvay  received   approval  from   the   USDA  to   market   Acemannan
  Immunostimulant as  an adjuvant  to a  vaccine for  Marek's disease,  a
  virus infection that  kills chickens or  renders them  unfit for  human
  consumption.  On March 1, 1997, Fort Dodge Animal Health("Fort Dodge"),
  a division of American Home Products Corporation, acquired the business
  and assets of Solvay, including  the License Agreement dated  September
  20, 1990 and an Addendum thereto between Carrington and Solvay granting
  Solvay an exclusive  world-wide field of  use license to  use and  sell
  Acemannan  Immunostimulant  as  a  component/adjuvant  to  enhance  the
  performance of poultry vaccines.  Fort Dodge notified Carrington in the
  summer of 1997 that, as successor in interest to Solvay, it intended to
  terminate  the  License  Agreement.    This  agreement  was  terminated
  effective February 1, 1999. All sales of this product are now on a non-
  exclusive basis.

  In March 1996, the Company signed  an agreement with Farnam  Companies,
  Inc., a leading veterinary marketing company,  to promote and sell  the
  CarraVet[R] product  line, including  Acemannan Immunostimulant.    The
  CarraVet[R] product line currently consists of eight products.


                           Consumer Health

  Caraloe, Inc.,  a subsidiary  of the  Company ("Caraloe"),  markets  or
  licenses  consumer  products  and  bulk  raw  materials  utilizing  the
  Company's patented complex  carbohydrate technology  into the  consumer
  health and nutritional products markets.  Caraloe's premier product  is
  Manapol[R] powder,  a bulk raw material rich  in complex carbohydrates.
  Manapol[R] powder is marketed to manufacturers of nutritional  products
  who desire quality complex carbohydrate ingredients for their  finished
  products. Caraloe also markets finished products containing  Manapol[R]
  powder into the health and nutritional products markets through  health
  food stores and over the Internet at AloeVera.com.  Caraloe also offers
  contract manufacturing  services  to  the  nutritional  and  skin  care
  market.

  In February  1996, Caraloe  signed an  agreement with  Mannatech,  Inc.
  ("Mannatech") granting it an exclusive license in the United States for
  Manapol[R]  powder.    This  agreement,  including  the  grant  of  the
  exclusive license,  was terminated  by  Mannatech effective  March  31,
  1997, and Caraloe began to market Manapol[R] powder to third parties as
  well as use it in Caraloe's products.  In August 1997, Caraloe signed a
  new, nonexclusive supply agreement with Mannatech to supply  Manapol[R]
  powder.  This  agreement is effective  through July  2000 and  contains
  monthly minimum  purchase  requirements.   On  January  12,  2000,  the
  agreement was extended through August 14, 2002.  During 1997, 1998  and
  1999, sales of Manapol[R] powder to Mannatech represented 15%, 23%  and
  41%, respectively, of the Company's total consolidated net sales.

  In December 1997, Caraloe signed a supply agreement with Met-Trim, Inc.
  ("Met-Trim"), for the  sale of Manapol[R]  powder.   The agreement  was
  terminated on January 11, 1999 due  to the failure of Met-Trim to  meet
  first year minimum requirements.
<PAGE>
  In October  1996, Caraloe  made a  $200,000 equity  investment in  Aloe
  Commodities International,  Inc. ("ACI").   In  February 1997,  Caraloe
  entered into  a Supply  Agreement with  ACI  for a  term of  ten  years
  (subject to  early  termination  under  certain  circumstances).    The
  agreement contemplates  that  ACI will  purchase  from Caraloe  all  of
  certain raw  materials that  ACI needs  for drinks  and other  consumer
  products.    In  December  1997,  Caraloe  made  an  additional  equity
  investment of $400,000 in  ACI.  Carrington owns  less than 10% of  the
  total outstanding shares of ACI and the entire investment was  reserved
  in 1998.

  In February 1997, Caraloe  entered into a  Supply Agreement with  Light
  Resources Unlimited ("LRU"),  and effective March  1, 1997,  Carrington
  entered into a related Trademark License Agreement with LRU.  The terms
  of the Supply Agreement and the Trademark License Agreement end on  May
  12, 2002, and May 4, 2002, respectively, and the term of each agreement
  is subject  to  early termination  under  certain circumstances.    The
  Supply Agreement provides that LRU will purchase from Caraloe  annually
  at least the minimum quantities of  Manapol[R] powder specified in  the
  agreement.  The  Supply Agreement also  contemplates that  LRU will  be
  Caraloe's sole distributor of Manapol[R] powder to natural health  care
  practitioners in the  United States  and Canada,  subject to  Caraloe's
  right to sell  "simple purchase bulk  product" to  natural health  care
  practitioners in quantities  exceeding certain specified  limits.   The
  Trademark License Agreement grants LRU  a non-exclusive license to  use
  the trademarks AVMP[R] powder and Manapol[R] powder in connection  with
  the advertising and sale of the LRU brand (Manapol[R] Gold[TM]  powder)
  to the targeted group.  Sales to LRU in 1998 under this agreement  were
  $197,000. Sales in 1999 were $110,200, a decrease of 44% from 1998.

  In October  1998, Caraloe  signed a  Supply Agreement  and a  Trademark
  License Agreement with One Family, Inc. ("One Family"), a direct  sales
  company with  headquarters located  in Colorado.   One  Family will  be
  marketing Manapol[R] powder in capsule form.  No sales were made  under
  this agreement in 1999.

  In December  1998,  Caraloe signed  a  supply agreement  and  trademark
  license agreement  with Eventus  International, Inc.  ("Eventus"),  the
  consumer health subsidiary  of BeautiControl.   Eventus  will market  a
  variety of products containing Manapol[R] powder to promote a  natural,
  healthy lifestyle.  Sales under this agreement in 1999 were $271,000.

  In March 1999, Caraloe signed a Supply Agreement and Trademark  License
  Agreement with  For Your  Health, Inc.  ("For Your  Health"), a  direct
  sales company  with  headquarters in  Seattle,  Washington.   For  Your
  Health will be marketing Manapol[R] powder in capsule form.

  In  April  1999,  Caraloe  signed  an  Exclusive  Sales  Representative
  Agreement  with  Classic  Distributing   Company  ("Classic")  of   San
  Fernando, California.  Classic will  be acting as Caraloe's  exclusive,
  independent marketing representative in the state of California.

  In April 1999,  Caraloe also signed  an Exclusive Sales  Representative
  Agreement with Glenn  Corporation ("Glenn")  of  St.  Paul,  Minnesota.
  Glenn will be acting as Caraloe's exclusive, independent representative
  in 24 states in the central and northern portions of the country.
<PAGE>
  In June 1999, Caraloe  signed a Sales  and Trademark License  Agreement
  with  Nutra  Vine   ("Nutra  Vine"),  a   direct  sales  company   with
  headquarters in Spring, Texas.  Nutra Vine will be marketing Manapol[R]
  powder in capsule form.

  Caraloe  also  sells  products  into  international  markets  on a non-
  contract, purchase order basis.  In 1999, total international sales for
  Caraloe were  $266,000  and  included  sales  into Australia, Japan and
  South Africa


                         Research and Development

                                  General

  Carrington has developed a proprietary process for purifying a material
  that has  been designated  bulk pharmaceutical  mannan ("BPM").    This
  material is a natural product mixture which contains a high  percentage
  of complex carbohydrates.  The Company intends to seek approval of  the
  Food and Drug Administration (the "FDA") and other regulatory  agencies
  to sell drugs and/or medical  devices derived from BPM-based  materials
  in  the  United  States  and  in   foreign  countries.    For  a   more
  comprehensive listing of  the type, indication  and status of  products
  currently  under  development  by   the  Company,  see  "Research   and
  Development - Summary " below.   The regulatory approval process,  both
  domestically and internationally, can be protracted and expensive,  and
  there is no assurance that the Company will obtain approval to sell its
  products for  any  treatment  or  use  (see  "Governmental  Regulation"
  below).

  The  Company   expended   approximately  $3,006,000,   $2,589,000   and
  $5,300,000 on research and development in fiscal 1997, 1998, and  1999,
  respectively.   The  Company has  adopted  a focused  approach  to  its
  research and development efforts.  The  Company returned to the  clinic
  in April 1999 to conduct a  Phase III trial in ulcerative colitis,  and
  as a result expenditures for fiscal 1999 were increased 105% over 1998.

  The Company continued in  1999 with its  efforts to structure  research
  and development to meet the challenges and demands for drug development
  in the 21st century.  In  addition to establishing a strong nucleus  or
  infrastructure  for  chemistry,   assay  development  and   formulation
  development, with  outsourcing  capabilities for  high-throughput  drug
  screening, and preclinical  and clinical drug  and device  development,
  the  Company  also   strengthened  its  documentation   and     product
  development activities.    This  approach is  intended  to  enable  the
  Company to maximize  its opportunities in  a timely and  cost-effective
  manner.  Currently, the Company's research staff comprises 14 full-time
  employees.  Dr. Robert A. Fildes, a director of the Company,  continues
  to  serve  as   part-time  Executive  Vice   President,  Research   and
  Development as he has since October 1, 1997.  Dr. Kenneth (Bill)  Yates
  was promoted to  Vice President,  Research and  Development in  January
  1999.

                           Preclinical Research

  The Company's main preclinical  research and development objective  for
  1999 was to initiate and support  the ulcerative colitis program.   The
  Company returned  to the clinic in  April  1999, treating patients with
  a  new dosage  form of  Aliminase[TM]  as a powder  for reconstitution.
  Patient  treatment was completed  in February 2000.  Final results were
  announced at the end of March 2000  and no significant differences were
  found to support a therapeutic drug effect.
<PAGE>
  Other preclinical studies conducted  in the Company's laboratories  and
  in outside  laboratories  have  shown that  certain  of  the  Company's
  complex carbohydrates  enhance  macrophages  and other  cell  types  to
  produce cytokines, which regulate other cells.  In addition, laboratory
  experiments conducted by  the Company  have shown  that some  compounds
  from Aloe vera L.  have pro- or anti-inflammatory  actions as shown  in
  animal models of wound healing and in inflammation of the lung,  colon,
  joint and ear.  The Company believes that its products' pharmacological
  actions and lack of toxicity make them excellent candidates for further
  development as therapeutic agents for the treatments and uses for which
  the Company  intends  to  seek  regulatory  approvals.  The preclinical
  efforts  for the  future will focus  on  supporting  existing  business
  developing  "proof  of  concept"   data  for  potential  pharmaceutical
  partners.  There is no assurance,  however,  that  the  Company will be
  successful in its efforts.

  The Company sponsors a research and development laboratory at Texas A&M
  University in association  with the College  of Veterinary Medicine  to
  expand preclinical research in  various wound healing applications  and
  mechanisms of action.   Pursuant to this  arrangement, the Company  has
  access to leading authorities in immunology, as well as facilities  and
  equipment to  engage  in  experimentation and  analysis  at  the  basic
  research level.

  Further processed BPM, including CarraVex[TM] injectable (formerly CARN
  750), are immunomodulating agents that have the potential to be used in
  the treatment  of neutropenia  or as  an adjunct  in the  treatment  of
  cancer.

  In 1991, the USDA granted the Company conditional approval to market an
  injectable form of a complex carbohydrate  as an aid to surgery in  the
  treatment of  canine and  feline fibrosarcoma,  a form  of soft  tissue
  cancer, under  the name  Acemannan Immunostimulant.   The  product  was
  conditionally approved  based  on safety  and  efficacy studies.    The
  Company continues  to work  on  developing a  suitable,  cost-effective
  potency assay  that will  meet USDA  requirements  for the  purpose  of
  removal of the conditional status.   A submission was made in  December
  1998  for this purpose  and  as  of the  date  of  this  report a final
  response from the USDA  has not been received.   Of course,  there  can
  be  no  assurance as  to  whether  or when  the  USDA  will remove  the
  conditional restriction on its approval of this product.

  An extensive series of animal studies  was initiated in 1997 to  assess
  the  direct  and   adjunct  effects  of   CarraVex[TM]  and   Acemannan
  Immunostimulant.  The primary purpose of these studies was to  identify
  a suitable  model  to evaluate  new  product formulations  (see  "Human
  Studies" below).   These studies were  completed successfully in  1998,
  and models have been identified to assess future drug candidates.

  In 1998, a new  and unique pectin  (complex carbohydrate) was  isolated
  from the cell walls of the inner gel of Aloe vera L.  Basic research is
  continuing on this material.  Pilot  scale production of this  material
  was postponed in 1999 to allow  for additional efforts to be placed  in
  support of ulcerative colitis.  The product has near-term utility as  a
  product to  be  used  in wound  healing,  and  other  future  potential
  applications are being explored.  Two patent applications covering this
  invention were filed in July 1998, and the first of the two resulted in
  the issuance of a patent in July 1999.
<PAGE>
  In 1999, the Company, in conjunction with Baylor College of  Dentistry,
  completed a  series of  ex vivo  studies  evaluating the  adherence  of
  Radiacare[TM] and Salicept[TM] Oral Wound Rinse to epithelial cells and
  keratin associated with the mouth in support of a pain reduction  claim
  for the products.  A florescent labeled material was applied to mucosal
  scrapings and then examined microscopically.  Adherence to both keratin
  and  epithelial  cells  was   shown,  demonstrating  the  coating   and
  protecting effects of the product.

                               Human Studies

  Evaluation of Aliminase[TM]  (formerly CARN 1000)  in the Treatment  of
  Ulcerative Colitis.  In  late 1996,  the  Company placed  on  hold  its
  testing of Aliminase[TM] oral capsules for the treatment of  ulcerative
  colitis.  The Company has reformulated  the product into a single  unit
  dose powder for reconstitution.  (See "Preclinical Research" above  and
  "Management's  Discussion  and  Analysis  of  Financial  Condition  and
  Results of Operations" below.)  The Company initiated a Phase III trial
  of the new  dosage form, with  the treatment of  patients beginning  on
  April 5, 1999.   Patient enrollment was  completed  in  December  1999,
  and  final  results  were  announced  at the  end  of  March  2000  and
  no  significant  differences  were  found to support a therapeutic drug
  effect.  The program will be discountinued.

  Evaluation of  CarraVex[TM]  Injectable  (formerly  CARN  750)  in  the
  Treatment of Solid Tumors in Humans.  In 1993, the Company completed  a
  Phase I safety study in normal volunteers using CarraVex[TM], which led
  to  a Phase  I clinical  trial  in disease patients  using CarraVex[TM]
  injectable in certain solid tumor indications.  The trial began in  the
  United States  in late  1995 and  continued until  mid-1997.   Eighteen
  patients completed  the study,  with no  safety  concerns noted.    The
  product required filtration at the bedside, which the Company  believes
  is not the  best delivery  approach for  CarraVex[TM].   A program  for
  improving the  formulation is  in progress,  and a  decision on  future
  clinical trials will be made once a suitable formulation is developed.

  Evaluation of Carrasyn[R]  Freeze-Dried Gel (CarraSorb[TM] M) in  Wound
  Healing.  Following the submission of a 510(k)  pre-market notification
  for  a  preservative-free,  freeze-dried  gel for  wound care,  the FDA
  cleared Carrington to market CarraSorb[TM]  M, and  it was  launched in
  early 1996.  The Company  sponsored  a  small  pilot clinical  study at
  the  University of  Wales to evaluate the effect  of CarraSorb[TM] M on
  wound macrophages.  The results of this  study showed that seven out of
  nine  patients with previously non-healing wounds showed some degree of
  wound closure, with two wounds progressing to near or complete healing.
  An association between the healing effects and  macrophage activity was
  not established.

  Evaluation of RadiaCare[TM] Oral Wound Rinse.   In March 1997, the  FDA
  cleared Carrington to  market RadiaCare[TM]  Oral Wound  Rinse for  the
  management and relief of pain associated  with mucositis and all  types
  of oral wounds.  The Company is sponsoring individual case studies  and
  co-sponsoring a pilot  study of  50 patients  in a  placebo-controlled,
  double-blind  trial  in  radiation-induced   mucositis.    This   trial
  continues, and results should be known by the end of 2000.  Two  market
  studies evaluating patient acceptance  and pain relief associated  with
  use of the  product were completed  in August 1999.   In these  trials,
  which involved 28  patients, 93% reported  some pain relief  associated
  with its use of the product.
<PAGE>
  Summary.  The following table outlines  the status of the products  and
  potential indications of the  Company's aloe-based products  developed,
  planned or  under development.   There  is no  assurance of  successful
  development, completion or regulatory approval  of any product not  yet
  on the market.
<TABLE>

               PRODUCTS AND POTENTIAL INDICATIONS DEVELOPED,
                       PLANNED OR UNDER DEVELOPMENT

  PRODUCT OR                 POTENTIAL
  POTENTIAL INDICATION       MARKET APPLICATIONS             STATUS
  --------------------       -------------------             ------
  <S>                        <C>                             <C>
  Topical
  -------
    Dressings                Pressure and Vascular Ulcers    Marketed
    Dressings                Diabetic Ulcers                 Marketed
    Cleansers                Wounds                          Marketed
    Anti-fungal              Cutaneous Fungal Infection      Marketed
    Hydrocolloids            Wounds                          Marketed
    Alginates                Wounds                          Marketed
    Skin Protectants         Incontinence Care               Marketed

  Oral
  ----
    Human
       Anti-inflammatory     Ulcerative Colitis              Discontinued
       Pain Reduction        Mucositis                       Marketed

    Dental
       Pain Reduction        Aphthous Ulcers, Oral Wounds    Marketed

  Injectable
  ----------
    Human
       Adjunct for cancer    Neutropenia associated with     Preclinical
       Neutropenia           cancer                          and
                                                             Formulation
                                                             Development
                                                             Underway
     Veterinary
       Adjunct for cancer    Fibrosarcoma                    Marketed

  Vaccine Adjuvant
  ----------------
     Veterinary
       Poultry Vaccines      Marek's Disease                 Marketed

</TABLE>
<PAGE>
                            Licensing Strategy

  The  Company   expects   that  prescription   pharmaceutical   products
  containing certain defined drug  substances will require a  substantial
  degree of development effort and expense.  Before governmental approval
  to market any such product is  obtained, the Company may license  these
  products for certain indications  to other pharmaceutical companies  in
  the United States or  foreign countries and  require such licensees  to
  undertake the steps necessary to obtain marketing approval for specific
  indications or in a particular country.

  Similarly, the  Company  intends to  license  third parties  to  market
  products  containing  defined  chemical  entities  for  certain   human
  indications when  it  lacks the  expertise  or financial  resources  to
  market effectively.   If  the  Company is  unable  to enter  into  such
  agreements, it may  undertake to market  the products  itself for  such
  indications.   The  Company's  ability to  market  these  products  for
  specific indications will depend largely on its financial condition  at
  the time  and the  results of  related clinical  trials.   There is  no
  assurance that  the Company  will be  able to  enter into  any  license
  agreements with third parties or that,  if such license agreements  are
  concluded, they will contribute to the Company's overall profits.


                    Raw Materials and Processing

  The principal raw material used by the Company in its operations is the
  leaf of the plant Aloe barbadensis Miller, popularly known as Aloe vera
  L.     Through   patented   processes,  the   Company   produces   bulk
  pharmaceutical and  injectable mannans  and freeze-dried  aloe  extract
  from the central portion of the Aloe vera L. leaf known as the gel.   A
  basic  bulk  pharmaceutical  mannan  (acemannan),  in  the  form  of  a
  hydrogel, is used as  an ingredient in certain  of the Company's  wound
  and skin care  products.  Through  additional processing, bulk  mannans
  may be produced in both oral and injectable dosage forms.

  In May 1990, the  Company purchased a 405-acre  farm in the  Guanacaste
  province of northwest Costa Rica which currently has approximately  125
  acres planted with Aloe vera L.  The Company's current need for  leaves
  exceeds the  supply  of harvestable  leaves  from the  Company's  farm,
  requiring the  purchase of  leaves from  other sources  in Central  and
  South America  at considerably  higher prices.    Due to  economic  and
  political instability in  the Central  American region,  the supply  of
  imported leaves cannot be guaranteed.   A 10% increase in Aloe vera  L.
  leaf prices from  other sources would  result in a  2% decrease in  the
  Company's gross  profit.   The Company's  sensitivity analysis  of  the
  effects of changes in leaf prices does not factor in a potential change
  in sales levels or a change in the percentage of leaves purchased  from
  other sources.  The Company has been exploring other options to  obtain
  leaves to meet its projected requirements at lower costs.
<PAGE>
  In May 1998,  Aloe and Herbs  International, Inc. ("Aloe  & Herbs"),  a
  Panamanian corporation was formed for  the purpose of purchasing  5,000
  acres of land in Costa Rica and establishing an Aloe vera L. farm.  The
  Company received 1.5 million  shares of Aloe &  Herbs common stock  for
  agreeing to make certain loans to Aloe & Herbs, arranging for Aloe vera
  L. plants to be supplied to the farm and providing know-how in  farming
  Aloe vera L.  plants.   Aloe & Herbs  formed a  Costa Rica  subsidiary,
  Rancho Aloe (C.R.), S.A. ("Rancho Aloe"),  which owns and operates  the
  farm.  The Company purchased the initial plants for the farm on  behalf
  of Rancho Aloe in exchange for unsecured notes and accounts receivable.

  In March  1998,  prior  to  the incorporation  of  Aloe  &  Herbs,  the
  Company's Caraloe subsidiary signed a letter of intent with one of  the
  organizers of Aloe & Herbs to enter into a supply agreement with Aloe &
  Herbs to purchase, at  mutually agreeable, locally competitive  prices,
  all of the Aloe vera  L. leaves that Caraloe  needs, to the extent  its
  needs exceed the leaves  available from the Company's  farm plus up  to
  200,000 kilograms of leaves  per month from another  local source.   At
  the date of this report, no  such supply agreement has been  negotiated
  or entered  into,  but  in March  1999,  the  Company  began  receiving
  approximately eight percent of its monthly requirements of leaves  from
  Rancho Aloe.

  In September 1999, the Company leased approximately 17.6 acres of  land
  from Rancho Aloe for one year with provisions for automatic renewal  in
  one-year increments unless  terminated by the  Company or Rancho  Aloe,
  and planted its own Aloe vera L. plants  on the leased plot due to  the
  lack of additional productive land on  its own farm.  The Company  also
  pays a monthly fee for the maintenance of the plot.

  As of December 31, 1999, Rancho Aloe was providing an average of 52% of
  the  Company's  monthly  requirement  of  leaves.    See  "Management's
  Discussion  and  Analysis  of   Financial  Condition  and  Results   of
  Operations - Liquidity  and  Capital  Resources"  and Note  Six to  the
  consolidated financial statements for further information regarding the
  Company's relationship with Aloe & Herbs.


                            Manufacturing

  During the last quarter of 1994  and the first three quarters of  1995,
  the Company  moved  its  wound  and  skin  care  product  manufacturing
  operations from a  leased facility in  Dallas, Texas  to the  Company's
  headquarters in  Irving, Texas.   In  connection  with this  move,  the
  Company upgraded and expanded its manufacturing capacity by  installing
  higher capacity  equipment and  upgraded  its capabilities  to  produce
  injectable-grade pharmaceutical products.   The  Company believes  that
  the plant's capacity will provide  sufficient capacity for the  present
  line of products and accommodate new products and sales growth.   Final
  packaging of certain of the Company's wound care products is  completed
  by  outside  vendors.     The  Company's   calcium  alginates,   films,
  hydrocolloids, foam  dressings,  gel  sheets,  tablets,  capsules,  and
  freeze-dried products are being  provided by third  parties.  In  1998,
  the Company engaged Elemco, a consulting firm, to review and  modernize
  the Company's  manufacturing and  quality  control processes  and  make
  recommendations  for  process  improvements.     During  1999,   Elemco
  consultants made a  number of recommendations  which were  implemented,
  resulting in increased factory throughput and reduced product cost.
<PAGE>
  All of  the  Company's  bulk pharmaceutical  mannans,  bulk  injectable
  mannans and  freeze-dried Aloe  vera L.  extracts are  produced in  its
  processing plant  in Costa  Rica.   This facility  has the  ability  to
  supply the  bulk  aloe  raw materials  requirements  of  the  Company's
  current product lines and bulk  material contracts for the  foreseeable
  future.  A process improvement program  was initiated in late 1998  and
  continued through 1999 to further meet  requirements for a "product  by
  process."  Finished oral and injectable  dosage forms of products  will
  be produced  by  outside  vendors  until  in-house  production  becomes
  economically justified.

                             Competition

  Research and Development.  The  biopharmaceutical field is expected  to
  continue  to   undergo  rapid  and  significant  technological  change.
  Potential competitors in  the United  States are  numerous and  include
  pharmaceutical, chemical and  biotechnology companies.   Many of  these
  companies have substantially  greater capital  resources, research  and
  development  staffs,  facilities  and  expertise  (in  areas  including
  research and development, manufacturing, testing, obtaining  regulatory
  approvals and marketing)  than the Company.   This  competition can  be
  expected  to  become  more  intense  as  commercial  applications   for
  biotechnology and  pharmaceutical products  increase.   Some  of  these
  companies may  be better  able than  the  Company to  develop,  refine,
  manufacture and  market products  which have  application to  the  same
  indications as bulk pharmaceutical mannans and bulk injectable mannans.
  The  Company understands that certain of  these competitors are in  the
  process  of  conducting  human  clinical  trials  of,  or  have   filed
  applications with government agencies  for approval to market,  certain
  products that  will compete  with the  Company's products  both in  its
  present wound care market and in  markets associated with products  the
  Company currently has under development.

  Medical Services  Division  and Caraloe,  Inc.   The  Company  competes
  against many companies  that sell products  which are competitive  with
  the Company's  products,  with  many  of  its  competitors  using  very
  aggressive marketing efforts.   Many of  the Company's competitors  are
  substantially  larger  than   the  Company  in   terms  of  sales   and
  distribution networks  and  have substantially  greater  financial  and
  other resources.    The  Company's ability  to  compete  against  these
  companies will depend in part on the expansion of the marketing network
  for its products.  The Company believes that the principal  competitive
  factors in the marketing  of its products are  their quality, and  that
  they are naturally based and competitively priced.

<PAGE>
                          Governmental Regulation

  The production  and  marketing  of  the  Company's  products,  and  the
  Company's  research  and   development  activities,   are  subject   to
  regulation for safety,  efficacy and quality  by numerous  governmental
  authorities in the United  States and other countries.   In the  United
  States,  drugs for human  use  are subject to  rigorous FDA regulation.
  The Federal Food, Drug and Cosmetic  Act, as amended,(the "FFDC  Act"),
  the regulations  promulgated thereunder,  and other  federal and  state
  statutes and  regulations  govern,  among other  things,  the  testing,
  manufacture, safety, effectiveness, labeling, storage, record  keeping,
  approval, advertising and  promotion of  the Company's  products.   For
  marketing outside the United States, the Company is subject to  foreign
  regulatory requirements governing human  clinical trials and  marketing
  approval for drugs and devices.  The requirements governing the conduct
  of clinical trials,  product licensing, pricing  and reimbursement  may
  vary widely from country to country.

  Food and Drug Administration.   The contents, labeling and  advertising
  of many  of the  Company's products  are  regulated by  the FDA.    The
  Company is  required to  obtain FDA  approval before  it can  study  or
  market any proposed prescription  drugs and may  be required to  obtain
  such approval for  proposed nonprescription products.   This  procedure
  involves extensive clinical  research, and separate  FDA approvals  are
  required at  various  stages  of product  development.    The  approval
  process requires,  among  other  things,  presentation  of  substantial
  evidence to the FDA,  based on clinical studies,  as to the safety  and
  efficacy of the proposed product.

  In order  to initiate  human clinical  trials on  a product,  extensive
  basic research and development information must be submitted to the FDA
  in  an  investigational  new  drug   ("IND")  application.    The   IND
  application contains  a general  investigational plan,  a copy  of  the
  investigator's brochure (a comprehensive document provided by the  drug
  manufacturer), copies of the  initial protocol for  the first study,  a
  review of the chemistry, manufacturing and controls information for the
  drug, pharmacology  and  toxicology  information,  any  previous  human
  experience with the drug, results of preclinical studies and any  other
  information requested by the FDA.

  If permission is obtained  to proceed to clinical  trials based on  the
  IND application, initial  trials, usually categorized  as Phase I,  are
  instituted.   The  initial or  Phase  I trials  typically  involve  the
  administration of small, increasing  doses of the investigational  drug
  to healthy volunteers,  and sometimes patients,  in order to  determine
  the  general  overall  safety  profile  of  the  drug  and  how  it  is
  metabolized.

  Once the safety  of the drug  has been established,  Phase II  efficacy
  trials are conducted  in which the  expected therapeutic  doses of  the
  drug are administered to patients having the disease for which the drug
  is indicated, and a therapeutic response  is sought as compared to  the
  expected progression  of  the  underlying  disease  or  compared  to  a
  competitive product  or placebo.   Information  also is  sought on  any
  possible short-term side effects of the drug.
<PAGE>
  If efficacy and safety are observed  in the Phase II trials, Phase  III
  trials (usually  two trials)  are undertaken  on an  expanded group  in
  which the patients receiving the drug are compared to a different group
  receiving either a placebo or some form of accepted therapy in order to
  establish the relative  safety and efficacy  of the  new drug  compared
  with the control group.  Data are also collected to provide an adequate
  basis for future physician prescribing information.

  If Phases I through III are successfully completed, the data from these
  trials are compiled into a new drug application ("NDA"), which is filed
  with the FDA in an effort to obtain marketing approval.  In general, an
  NDA will include a summary of the components of the IND application,  a
  clinical data section  reviewing in detail  the studies  from Phases  I
  through III and  the proposed description  of the  benefits, risks  and
  uses, or labeling,  of the drug,  and how both  the drug substance  and
  drug product will be manufactured and controlled.

  In general,  a  more comprehensive  NDA  and a  more  prolonged  review
  process are required for drugs not previously approved for marketing by
  the FDA.   If a second  indication for an  already approved product  is
  sought, since many  of the  components of  the review  process are  the
  same,  a  shortened  review  process   generally  can  be  anticipated.
  However, the FDA gives  high priority to  novel drugs providing  unique
  therapeutic benefits  and a  correspondingly  lower priority  to  drugs
  similar to or providing  comparable benefits to  others already on  the
  market.

  In addition  to  submitting  safety  and  efficacy  data  derived  from
  clinical  trials   for  FDA   approval,  NDA   approval  requires   the
  manufacturer of the drug to demonstrate the identity, potency,  quality
  and purity  of the  active ingredients  of  the product  involved,  the
  stability of  these ingredients  and  compliance of  the  manufacturing
  facilities, processes and quality control  with the FDA's current  Good
  Manufacturing Practices  regulations.   After  approval,  manufacturers
  must continue  to  expend time,  money  and effort  in  production  and
  quality control to  assure continual compliance  with the current  Good
  Manufacturing Practices regulations.  Also,  under the new program  for
  harmonization  between  Europe   and  the   U.S.  and   the  ISO   9001
  Certification Program, a company can, under certain circumstances after
  application, have  a  new  drug  approved  under  a  process  known  as
  centralization rather than  having to go  through a  country-by-country
  approval in the European Union.

  Certain of the Company's  wound and skin  care products are  registered
  with the FDA  as "devices" pursuant  to the  regulations under  Section
  510(k) of the  FFDC Act as amended.  A  device is a product used for  a
  particular medical purpose, such as to  cover a wound, with respect  to
  which no  pharmacological  claim  can  be made.    A  device  which  is
  "substantially equivalent"  to another  device existing  in the  market
  prior to May 1976 can be  registered with the FDA under Section  510(k)
  and  marketed  without  further  testing.    A  device  which  is   not
  "substantially equivalent"  is  subject  to  an  FDA  approval  process
  similar  to  that  required   for  a  new   drug,  beginning  with   an
  Investigational  Device  Exemption  and  culminating  in  a   Premarket
  Approval.  The Company has sought and obtained all its device approvals
  under Section 510(k).   With respect to certain  of its wound and  skin
  care products, the Company intends to develop claims for which IND  and
  NDA submissions will be required.  The Company currently markets  seven
  (7) products which require a prescription as medical devices.
<PAGE>
  Department of Agriculture.   Certain  products being  developed by  the
  Company  for animal  health  indications must be approved  by the USDA.
  The procedure involves extensive clinical research, and USDA  approvals
  are required at various  stages of product  development.  The  approval
  process requires,  among  other  things,  presentation  of  substantial
  evidence to the  USDA as  to the safety  and efficacy  of the  proposed
  product.  Furthermore, even if approval to test a product is  obtained,
  there is no assurance that ultimate approval for marketing the  product
  will be granted.  USDA approval procedures can be protracted.

  Other Regulatory  Authorities.   The  Company's advertising  and  sales
  practices are subject  to regulation  by the  Federal Trade  Commission
  (the "FTC"), the FDA and state agencies.  The Company's processing  and
  manufacturing plants are subject to federal, state and foreign laws and
  to regulation by  the Bureau of  Alcohol, Tobacco and  Firearms of  the
  Department of the Treasury and  by the Environmental Protection  Agency
  (the "EPA"), as well as the FDA.

  The Company  believes that  it is  in substantial  compliance with  all
  applicable laws and regulations relating  to its operations, but  there
  is  no  assurance that  such laws and regulations  will not be changed.
  Any such change  may have a  material adverse effect  on the  Company's
  operations.

  The manufacturing,  processing,  formulating, packaging,  labeling  and
  advertising of products of the Company's subsidiary, Caraloe, are  also
  subject to regulation by  one or more  federal agencies, including  the
  FDA, the  FTC,  the  USDA and  the  EPA.   These  activities  are  also
  regulated by various  agencies of  the states,  localities and  foreign
  countries to  which Caraloe's  products are  distributed and  in  which
  Caraloe's products are  sold.  The  FDA, in  particular, regulates  the
  formulation, manufacture and labeling of vitamin and other  nutritional
  supplements.

  On October  25,  1994,  the  President  signed  into  law  the  Dietary
  Supplement Health and Education  Act of 1994 ("DSHEA").   This new  law
  revised the provisions of the FFDC  Act concerning the composition  and
  labeling of dietary supplements and, in the judgment of the Company, is
  favorable to the dietary supplement industry.  The legislation  created
  a new statutory class of "dietary supplement."  This new class includes
  vitamins, minerals, herbs, amino acids and other dietary substances for
  human use to  supplement the  diet, and  the legislation  grandfathers,
  with certain  limitations, dietary  ingredients  on the  market  before
  October 15, 1994.   A dietary supplement which  contains a new  dietary
  ingredient, one not on the market before October 15, 1994, will require
  evidence of a history of use  or other evidence of safety  establishing
  that it will reasonably be  expected to be safe.   The majority of  the
  products marketed  by Caraloe  are  classified as  dietary  supplements
  under the FFDC Act.
<PAGE>
  Both foods  and  dietary  supplements  are  subject  to  the  Nutrition
  Labeling and Education Act  of 1990 (the  "NLEA"), which prohibits  the
  use of  any  health claim  for  foods, including  dietary  supplements,
  unless  the  health  claim  is  supported  by  significant   scientific
  agreement and  is either  pre-approved by  the FDA  or the  subject  of
  substantial government scientific  publications and  a notification  to
  the FDA.  To date, the FDA has approved the use of only limited  health
  claims for dietary supplements.  However, among other things, the DSHEA
  amends, for dietary supplements, the NLEA by providing that "statements
  of nutritional support" may be used in labeling for dietary supplements
  without FDA preapproval  if certain  requirements, including  prominent
  disclosure on  the label  of the  lack of  FDA review  of the  relevant
  statement, possession by  the marketer of  substantiating evidence  for
  the statement and  post-use notification  to the  FDA, are  met.   Such
  statements may describe how  particular nutritional supplements  affect
  the structure,  function  or  general well-being  of  the  body  (e.g.,
  "promotes cardiovascular health").

  The FDA issued  final dietary supplement  labeling regulations in  1997
  that required Caraloe to revise most of its product labels by 1999, and
  Caraloe completed  the revisions  required  for compliance  with  these
  regulations in January  1999.   In compliance  with these  regulations,
  Caraloe maintains supporting documentation  on file for its  "statement
  of nutritional support."

  Advertising and label claims  for dietary supplements and  conventional
  foods have  been regulated  by state  and federal  authorities under  a
  number of disparate regulatory schemes.  There can be no assurance that
  a state will not interpret claims presumptively valid under federal law
  as  illegal  under  that  state's  regulations,  or  that  future   FDA
  regulations or FTC decisions will not restrict the permissible scope of
  such claims.

  Governmental regulations in  foreign countries where  Caraloe plans  to
  commence or expand sales may prevent or delay entry into the  market or
  prevent or delay  the introduction,  or require  the reformulation,  of
  certain  of  Caraloe's   products.    Compliance   with  such   foreign
  governmental regulations is generally  the responsibility of  Caraloe's
  distributors for those countries.   These distributors are  independent
  contractors over which the Company has limited control.

  As a result of Caraloe's efforts to comply with applicable statutes and
  regulations, Caraloe has from time to time reformulated, eliminated  or
  relabeled certain of its products and revised certain provisions of its
  sales and marketing program.  Caraloe cannot predict the nature of  any
  future laws, regulations, interpretations  or applications, nor can  it
  determine  what   effect   additional   governmental   regulations   or
  administrative orders,  when  and if  promulgated,  would have  on  its
  business in the future.  They could, however, require the reformulation
  of certain products to meet new standards, the recall or discontinuance
  of certain  products not  capable of  reformulation, additional  record
  keeping, expanded documentation of the properties of certain  products,
  expanded or different labeling, and/or scientific substantiation.   Any
  or all of such requirements could have a material adverse effect on the
  Company's results of operations and financial condition.
<PAGE>
  Compliance  with   the  provisions   of  national,   state  and   local
  environmental laws  and  regulations has  not  had a  material  adverse
  effect upon  the capital  expenditures, earnings,  financial  position,
  liquidity or competitive position of the Company.


                   Patents and Proprietary Rights

  As is industry  practice, the Company  has a policy  of using  patents,
  trademarks and trade secrets to protect the results of its research and
  development activities  and,  to the  extent  it may  be  necessary  or
  advisable,  to  exclude   others  from   appropriating  the   Company's
  proprietary  technology.     The   Company's  policy   is  to   protect
  aggressively  its  proprietary  technology  by  seeking  and  enforcing
  patents in a worldwide program.

  The Company has obtained  patents or filed  patent applications in  the
  United States  and approximately  26 other  countries in  three  series
  regarding  the  compositions  of  acetylated  mannan  derivatives,  the
  processes by which they are produced and the methods of their use.  The
  first series of  patent applications, relating  to the compositions  of
  acetylated mannan  derivatives and  certain  basic processes  of  their
  production, was filed in a chain  of United States patent  applications
  and its  counterparts in  the other  26 countries.   The  first  United
  States  patent  application   in  this  first   series,  covering   the
  composition claims  of  acetylated  mannan  derivatives,  matured  into
  United States Patent No. 4,735,935 (the "935 Patent"), which was issued
  on April  5,  1988.   United  States  Patent  No. 4,917,890  (the  "890
  Patent") was  issued on April 17, 1990 from a divisional application to
  the 935 Patent.   This divisional application pertains  to most of  the
  remaining claims in  the original application  not covered  by the  935
  Patent.  The  890 Patent generally  relates to the  basic processes  of
  producing acetylated mannan derivatives,  to certain specific  examples
  of such  processes and  to certain  formulations of  acetylated  mannan
  derivatives.  Two other divisional applications covering the  remaining
  claims not covered by the 890 Patent matured into patents, the first on
  September 25,  1990, as  United States  Patent No. 4,959,214,  and  the
  second  on  October  30, 1990, as  United States  Patent No. 4,966,892.
  Foreign patents that  are counterparts to  the foregoing United  States
  patents have been granted in some of the member states of the  European
  Economic Community and several other countries.

  The second series of patent applications related to preferred processes
  for the  production of  acetylated mannan  derivatives.   One  of  them
  matured into United  States Patent No. 4,851,224,  which was issued  on
  July 25, 1989.   This patent  is the  subject of  a Patent  Cooperation
  Treaty  application  and  national  foreign  applications  in   several
  countries.   An additional  United States  patent based  on the  second
  series was  issued  on September  18,  1990, as  United  States  Patent
  No. 4,957,907.
<PAGE>
  The third  series  of patent  applications,  relating to  the  uses  of
  acetylated mannan  derivatives,  was  filed subsequent  to  the  second
  series.     Three   of  them   matured   into  United   States   Patent
  Nos. 5,106,616, issued on April 21, 1992, 5,118,673, issued on  June 2,
  1992, and 5,308,838, issued  on May 3, 1994.   The Company has filed  a
  number of divisional applications to  these patents, each dealing  with
  specific uses  of acetylated  mannan derivatives.   Patent  Cooperation
  Treaty applications based on the parent United States applications have
  been  filed  designating  a  number  of  foreign  countries  where  the
  applications are pending.  In addition, the Company has also obtained a
  patent in the United States relating  to a wound cleanser, U.S.  Patent
  No. 5,284,833, issued on February 8, 1994.

  The Company has obtained  a patent in the  United States relating to  a
  therapeutic device made from freeze-dried complex carbohydrate hydrogel
  (U.S. Patent  No. 5,409,703,  issued  on April  25,  1995).   A  Patent
  Cooperation Treaty  application  based  on  the  parent  United  States
  application has been  filed designating a  number of foreign  countries
  where the applications are pending.

  The Company has obtained patents in the United States (U.S. Patent  No.
  5,760,102, issued on June 2, 1998) and Taiwan (Taiwan Patent No. 89390,
  issued on August 21,  1997) related to the  uses of a denture  adhesive
  and also a  patent in  the United States  relating to  methods for  the
  prevention and  treatment of  infections in  animals (U.S.  Patent  No.
  5,703,060, issued on December 30, 1997).

  Additional patents concerning various areas of interest were issued  in
  1999.

  The Company  obtained  a  patent in  the  United  States  (U.S.  Patent
  No.5,902,796, issued  on  May 11,  1999)  related to  the  process  for
  obtaining bioactive material from Aloe vera L.

  The Company obtained an  additional patent in  the United States  (U.S.
  Patent  No.  5,929,051,  issued  on  July  27,  1999)  related  to  the
  composition  and  process  for  a  new  complex  carbohydrate  (pectin)
  isolated from Aloe vera  L.  Also obtained  was a United States  patent
  (U.S. Patent No.  5,925,357, issued on  July 20, 1999)  related to  the
  process for  a new  Aloe vera  L. product  that maintains  the  complex
  carbohydrates with the addition  of other substances normally  provided
  by "Whole Leaf Aloe."

  Additionally, the Company  obtained a  Japanese letters-patent  (Patent
  No. 2888249, having a  Patent Registration Date  of February 19,  1999)
  for the use  of acemannan (a)  in a vaccine  product; (b) in  enhancing
  natural kill cell activity and in  enhancing specific tumor cell  lysis
  by white cells and/or antibodies;  (c) in correcting malabsorption  and
  mucosal cell  maturation  syndromes  in man  or  animals;  and  (d)  in
  reducing symptoms associated with multiple sclerosis.

  The Company  also received  the grant  of European  Patent  Application
  under No. 0611304, having  the date of publication  and mention of  the
  grant of  the patent  of September  15, 1999.   This  European  Letters
  Patent claims the use of acetylated mannan for the regulation of  blood
  cholesterol levels and for the removal of plaque in blood vessels.
<PAGE>
  The Company  has filed  and intends  to file  patent applications  with
  respect to subsequent  developments and improvements  when it  believes
  such protection is in the best  interest of the Company.  Although  the
  scope of protection which ultimately may be afforded by the patents and
  patent applications  of  the  Company is  difficult  to  quantify,  the
  Company believes its patents will afford adequate protection to conduct
  the business  operations of  the Company.   However,  there can  be  no
  assurance that (i) any additional patents will be issued to the Company
  in any or all  appropriate jurisdictions, (ii)  litigation will not  be
  commenced seeking to challenge the Company's patent protection or  such
  challenges will not be successful, (iii)  processes or products of  the
  Company do not or will not  infringe upon the patents of third  parties
  or (iv) the scope  of patents issued to  the Company will  successfully
  prevent third parties from developing similar and competitive products.
  It  is not possible  to predict how any  patent litigation will  affect
  the Company's efforts to develop, manufacture or market its products.

  The Company also  relies upon, and  intends to continue  to rely  upon,
  trade  secrets,   unpatented   proprietary  know-how   and   continuing
  technological  innovation  to  develop  and  maintain  its  competitive
  position.  The Company typically enters into confidentiality agreements
  with its scientific consultants, and  the Company's key employees  have
  entered into agreements  with the Company  requiring that they  forbear
  from disclosing confidential information of  the Company and assign  to
  the Company all rights  in any inventions made  while in the  Company's
  employ relating to the Company's activities.  Accordingly, the  Company
  believes that  its valuable  trade secrets  and unpatented  proprietary
  know-how are adequately protected.

  The technology  applicable  to  the Company's  products  is  developing
  rapidly.  A  substantial number of  patents have been  issued to  other
  biopharmaceutical companies.    In  addition,  competitors  have  filed
  applications  for,  or  have  been  issued,  patents  and  may   obtain
  additional patents  and  proprietary  rights relating  to  products  or
  processes competitive  with those  of the  Company.   To the  Company's
  knowledge, acetylated  mannan derivatives  do not  infringe any  valid,
  enforceable United  States patents.   A  number  of patents  have  been
  issued to others with respect to  various extracts of the Aloe vera  L.
  plant and their uses and formulations, particularly in respect to  skin
  care and cosmetic uses.  While the Company is not aware of any existing
  patents  which  conflict   with  its  current   and  planned   business
  activities, there can be no assurance  that holders of such other  Aloe
  vera L.-based patents will not  claim that particular formulations  and
  uses  of  acetylated  mannan  derivatives  in  combination  with  other
  ingredients or  compounds infringe,  in some  respect, on  these  other
  patents.  In addition,  others may have  filed patent applications  and
  may have  been issued  patents relating  to products  and  technologies
  potentially useful to  the Company  or necessary  to commercialize  its
  products or achieve their business goals.   There is no assurance  that
  the Company  will  be  able  to obtain  licenses  of  such  patents  on
  acceptable terms.
<PAGE>
  The Company has  given the  trade name  Carrasyn[R] to  certain of  its
  products containing  acetylated  mannans.   The  Company  has  filed  a
  selected series of domestic and foreign trademark applications for  the
  marks Manapol[R]  powder, Carrisyn[R]  and Carrasyn[R].   Further,  the
  Company has registered the trademark AVMP[R] Powder and the trade  name
  Carrington[R] in the United States.  In 1999, the Company obtained four
  additional registered trademarks in Brazil.  The Company believes  that
  its trademarks and trade names are valuable assets.

  The Company has  filed a  petition with  the United  States Patent  and
  Trademark Office to cancel the registration  of the mark CURAKLENSE  by
  The Kendall Company of Mansfield, Massachusetts.


                              Employees

  As of January 31,  2000, the Company employed  336 persons, of whom  29
  were engaged  in the  operation and  maintenance of  its Irving,  Texas
  processing plant, 221 were employed at the Company's facility in  Costa
  Rica and  the remainder  were executive,  research, quality  assurance,
  manufacturing, administrative, sales, and  clerical personnel.  Of  the
  total number of employees,  95 were located in Texas, 221 in Costa Rica
  and one in Puerto Rico.   In addition, 19 sales personnel were  located
  in 15 other states.  The Company considers relations with its employees
  to be good.  The employees are not represented by a labor union.


                              Financing

  In November 1997, the Company entered into a financing arrangement with
  Comerica Bank-Texas  ("Comerica").   The agreement  was composed  of  a
  $3,000,000  line  of  credit  structured  as  a  demand  note   without
  expiration with an interest rate equal to the Comerica prime rate.  The
  line of credit is collateralized  by the Company's accounts  receivable
  and inventory.  This credit facility will be used for operating  needs,
  as required, and is currently being  used to secure a letter of  credit
  in the amount  of $1,100,000.   As of December  31, 1999,  there was  a
  $200,000 balance  owed to  Comerica under  the terms  of the  financing
  agreement.   See "Management's  Discussion  and Analysis  of  Financial
  Condition and Results of Operations - Liquidity and Capital  Resources"
  for information regarding  a supply agreement  between the Company  and
  its supplier of  freeze-dried products  that obligates  the Company  to
  purchase more of such products than  it is currently able to sell,  and
  the use of the above-mentioned letter of credit to secure the Company's
  obligations under that agreement.


                             Year 2000 Issues

  See "Management's Discussion  and Analysis of  Financial Condition  and
  Results of Operations - Year 2000 Issues" for information regarding the
  Company's efforts to assess, and to deal with the effects of, the types
  of Year 2000 issues described in that discussion.

<PAGE>
  ITEM 2. PROPERTIES.

  The Company believes that all  its farming property, manufacturing  and
  laboratory  facilities,  as   described  below,   and  material   farm,
  manufacturing and laboratory  equipment are  in satisfactory  condition
  and are adequate for the purposes for which they are used, although the
  farm is not adequate to supply all of the Company's needs for Aloe vera
  L. leaves.   (See "Management's  Discussion and  Analysis of  Financial
  Condition and Results of Operations" for more information regarding the
  Company's arrangements to purchase Aloe vera L. leaves.)

  Walnut  Hill  Facility.    The  Company's  corporate  headquarters  and
  principal U.S. manufacturing facility occupy  all of the 35,000  square
  foot office and  manufacturing building (the  "Walnut Hill  Facility"),
  which is situated on an approximate  6.6 acre tract of land located  in
  the Las Colinas area of Irving, Texas.   The Company owns the land  and
  the building.  The manufacturing operations occupy approximately 19,000
  square  feet  of  the  facility,  and  administrative  offices   occupy
  approximately 16,000 square feet.

  Laboratory Facility.  The Company leases 24,000 square feet of  office,
  manufacturing and  laboratory  space  (the  "Laboratory  Facility")  in
  Irving, Texas  pursuant to  a lease  that expires  in July  2001.   The
  Company's in-house  research  and  development  and  quality  assurance
  activities are conducted at the Laboratory Facility for the  production
  of injectable dosage forms of  Acemannan Immunostimulant.  The  Company
  is currently evaluating alternative facility sites.

  Warehouse  and  Distribution  Facility.    Since  September  1994,  the
  Company's warehouse  and  distribution center  has  been located  in  a
  35,050 square foot facility that the  Company leases in Irving,  Texas,
  near the Walnut Hill Facility.   The warehouse and distribution  center
  occupies approximately 27,000 square feet  of the leased facility,  and
  the remaining space is used for offices.  The lease expires in  October
  2001.

  Costa Rica Facility.  The Company owns approximately 405 acres of  land
  in the Guanacaste province of northwest Costa Rica.  This land is being
  used for the farming of Aloe vera L. plants and for a processing  plant
  to produce bulk pharmaceutical and injectable mannans and  freeze-dried
  extracts   from   Aloe  vera  L.  used  in  the  Company's  operations.
  Construction of the  processing plant was  completed during the  second
  quarter of 1993,  and the plant  became operational in  June 1993.   In
  1994, the  Company upgraded  the production  plant to  meet  regulatory
  requirements  for  the  production  of  bulk  pharmaceutical  oral  and
  injectable mannans as required for INDs.  This project was completed in
  the fourth quarter of 1994.  In order to meet demand for new  products,
  a new compounding area and high-speed filling line were constructed  as
  an addition to the  Costa Rica facility during  1998.  Also, other  new
  equipment was installed in January 1999 to refine the BPM manufacturing
  process.

<PAGE>
  ITEM 3. LEGAL PROCEEDINGS.

  In October 1998, the  Company was served with  a Summons and Notice  by
  the Chapter  7 Trustee  for the  estates  of FoxMeyer  Corporation  and
  certain related  companies  ("FoxMeyer"),  in Case  Nos.  96-1329  (SB)
  through 96-1334 (HSB) in the U.S. Bankruptcy Court for the District  of
  Delaware, regarding an alleged claim of $28,159.69.  In July 1998,  the
  Company's counsel advised FoxMeyer that  the Company believed that  the
  October 1998 claim had been settled in the July 1998 settlement.  As of
  the date of this  report, FoxMeyer has  not contradicted the  Company's
  position, nor  has  it formally  confirmed  that it  will  release  the
  October 1998 claim.  If FoxMeyer fails to acknowledge that the  October
  1998 claim  was previously  settled, or  if FoxMeyer  asserts that  the
  October 1998 claim  was not covered  by the July  1998 settlement,  the
  Company intends to vigorously defend the October 1998 claim.


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

  The Company did  not submit any  matter to a  vote of security  holders
  during the fourth  quarter of the  fiscal year covered  by this  Annual
  Report.

<PAGE>
                                  PART II


  ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY  AND RELATED STOCKHOLDER
          MATTERS.
<TABLE>
  The Common Stock of the Company is traded on the NASDAQ National Market
  under the symbol "CARN."  The  following table sets forth the high  and
  low sales prices per share of the Common Stock for each of the  periods
  indicated.


  Fiscal 1998                            High          Low
  -----------                            ----         -----
  <S>                                   <C>           <C>
  First Quarter                         $5 1/2        $4

  Second Quarter                         6 7/16        4

  Third Quarter                          5 3/8         2 1/2

  Fourth Quarter                         3 5/8         2


  Fiscal 1999                            High          Low
  -----------                            ----         -----
  First Quarter                         $4 1/4        $2  1/8

  Second Quarter                         3 3/16        2  1/2

  Third Quarter                          3             1 13/16

  Fourth Quarter                         2 3/4         1  1/2

</TABLE>

  At March, 16,  there were 946  holders of  record (including  brokerage
  firms) of Common Stock.

  The Company has  not paid any  cash dividends on  the Common Stock  and
  presently intends to retain  all earnings  for use  in its  operations.
  Any decision  by the  Board of  Directors of  the Company  to pay  cash
  dividends in  the future  will depend  upon, among  other factors,  the
  Company's earnings, financial condition and capital requirements.


  ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.

  The selected  consolidated  financial  data below  should  be  read  in
  conjunction with the consolidated  financial statements of the  Company
  and notes thereto and "Item 7, Management's Discussion and Analysis  of
  Financial  Condition  and  Results   of  Operations."    The   selected
  consolidated financial information  for the five  years ended  December
  31, 1999, is derived from the consolidated financial statements of  the
  Company, of which the years 1995 and 1996, have been audited by  Arthur
  Andersen LLP,  independent  public  accountants,  and  the  years  1997
  through 1999 have been audited by Ernst & Young LLP, independent public
  accountants.
<PAGE>
<TABLE>
                                                Years ended December 31,
  (Dollars and numbers of shares in     ----------------------------------------
  thousands except per share amounts)   1995     1996     1997     1998     1999
  -------------------------------------------------------------------------------
  OPERATIONS STATEMENT INFORMATION:
   <S>                                <C>      <C>      <C>      <C>      <C>
   Net sales                          $24,374  $21,286  $23,559  $23,625  $28,128
   Costs and expenses:
     Cost of sales                      7,944   10,327    9,530   10,870   13,640
     Selling, general and
       administrative                  12,442   10,771   10,814   10,254   10,346
     Research and development           4,662    3,762    3,006    2,589    2,434
     Research and development,
       Aliminase[TM] clinical trial
         expenses                         708    2,165       -        -     2,866
     Charges related to ACI and
       Aloe & Herbs                        -        -        -     1,750       -
     Charges related to Oregon
       Freeze Dry, Inc.                    -        -        -        -     1,042
     Interest expense (income), net       115     (304)     (37)    (233)    (105)
     Other income                          -        -        -        -       (62)
                                       ------   ------    -----   ------   ------
   Income (loss) before income taxes   (1,497)  (5,435)     246   (1,605)  (2,033)
       Provision for income taxes         131       88       20       10        -
                                       ------   ------    -----   ------   ------
   Net income (loss)                  $(1,628) $(5,523)  $  226  $(1,615) $(2,033)
                                       ======   ======    =====   ======   ======
   Net income (loss) per common
     share - basic and diluted(1)     $ (0.22) $ (0.74)  $ 0.02  $ (0.17) $ (0.22)
                                       ======   ======    =====   ======   ======
   Weighted average shares used in
     per share computations             7,933    8,798    8,953    9,320    9,376


  BALANCE SHEET INFORMATION
    (as of December 31):

   Working capital                    $ 9,095  $13,910  $ 9,484  $ 9,716  $ 7,911
   Total assets                        27,934   31,202   25,796   24,247   23,493
   Long-term debt, net of current
     portion                               88       -        -        -        -
   Total shareholders' investment     $22,399  $27,757  $22,826  $21,363  $19,504


  (1)  For a description of the calculation of basic and diluted net income
       (loss) per share, see Note Thirteen to  the  consolidated  financial
       statements.
</TABLE>
<PAGE>

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


  Background

  The Company is a research-based biopharmaceutical, medical device,  raw
  materials  and  nutraceutical  company  engaged  in  the   development,
  manufacturing and marketing  of naturally-derived complex carbohydrates
  and other  natural  product therapeutics  for  the treatment  of  major
  illnesses, the  dressing  and  management  of  wounds  and  nutritional
  supplements.  The Company is comprised  of two business segments.   See
  Note Fourteen to  the consolidated financial  statements for  financial
  information about these business segments.  The Company sells, using  a
  network of  distributors, prescription  and nonprescription  human  and
  veterinary products through its Medical Services Division and  consumer
  and  bulk  raw   material  products  through   its  consumer   products
  subsidiary, Caraloe, Inc.  The Company's research and product portfolio
  are based primarily  on complex  carbohydrates isolated  from the  Aloe
  vera L. plant.


  Liquidity and Capital Resources

  At December  31,  1999  and  1998,  the  Company  held  cash  and  cash
  equivalents of $2,453,000 and  $3,931,000, respectively, a decrease  of
  $1,478,000.   Net  cash  used  by  operating  activities  in  1999  was
  $889,000, as compared to cash provided by operating activities in  1998
  of  $1,065,000.    Significant  cash  outflows  during  1999   included
  investments in property and equipment of $963,000 and expenses  related
  to the  Aliminase[TM] clinical  trial of  $2,866,000.   Customers  with
  significant accounts  receivable balances at the  end of 1999  included
  Mannatech, Inc. ($1,144,000) and  McKesson/General Medical  ($571,000);
  and of these  amounts, $1,533,000  had been  collected as  of March  8,
  2000.
<PAGE>
  As  of  December  31,  1999,  the  Company  had  no  material   capital
  commitments other than its  leases and agreements  with suppliers.   In
  March 1998, the  Company, with four  other investors,  formed Aloe  and
  Herbs International,  Inc., a  Panamanian  corporation, with  the  sole
  intent of acquiring a 5,000-acre tract of land in Costa Rica to be used
  for the production of Aloe vera L. leaves to be sold to the Company  at
  competitive, local market rates.  This would allow the Company to  save
  approximately 50% on the per-kilogram cost of leaves as compared to the
  cost  of  importing  leaves  from  other  Central  and  South  American
  countries.  Aloe & Herbs subsequently formed a wholly-owned subsidiary,
  Rancho Aloe (C.R.), S.A., a Costa Rica corporation, which acquired  the
  land in April 1998.   The Company received  1,500,000 shares of Aloe  &
  Herbs common stock, which represents a 19.3% ownership position,  which
  was increased to 28.2% in 1999, in exchange for providing expertise  in
  farming aloe plants and providing a  cash advance to Rancho Aloe to  be
  used for the purchase of aloe plants.  This cash advance of $187,000 is
  evidenced by a note receivable, payable in installments, with the final
  payment due in June 2000.  The Company also advanced $300,000 to Aloe &
  Herbs in November 1998 for the  acquisition of an irrigation system  to
  improve production  on the  farm and  allow harvesting  of leaves year-
  round.   This advance  was  evidenced by  a  note receivable  which  is
  payable in full in May 2000.  The Company was also granted a  five-year
  warrant to purchase 300,000 shares of common stock of Aloe & Herbs.  In
  the fourth quarter of 1998, the Company fully reserved all amounts owed
  to it by  Aloe & Herbs,  in the total  amount of $487,000,  due to  the
  start-up nature  of  the  business.   In  1999,  the  Company  received
  payments totaling  $18,000  from  Aloe & Herbs against  the amount due.
  The first shipment of  leaves from Rancho Aloe to the Company was  made
  in March 1999  and the Company  purchased a total  of $364,000 of  Aloe
  vera L. leaves from Rancho Aloe during the remainder of the year.

  In November 1997, the Company entered  into an agreement with  Comerica
  Bank-Texas for  a  $3,000,000  line  of  credit,  secured  by  accounts
  receivable and  inventory.   This credit  facility had  an  outstanding
  balance of $200,000  at December 31,  1999 to fund  operating needs and
  is being  used to secure the  letter of credit  described below.

  In November  1995, the  Company signed  a  licensing agreement  with  a
  supplier of calcium alginates and other wound care products.  Under the
  agreement, the Company has exclusive marketing rights for ten years  to
  advanced calcium alginate products for North  and South America and  in
  the People's Republic of China.  Under the agreement, the Company  made
  an up-front payment to the supplier  of $500,000 in November 1995.   In
  July 1997  and  October  1997,  additional  payments  of  $166,000  and
  $167,000, respectively, were paid to this supplier upon delivery of the
  CarraSmart[TM] Hydrocolloid, a product launched in the third quarter of
  1997.  These payments  resulted in an increase  to other assets of  the
  Company.  As of December 31, 1999, the net book value of this agreement
  was $528,000.  Additional payments totaling $167,000 are to be made  to
  the supplier as new products are delivered.
<PAGE>
  In February  1995, the  Company entered  into a  supply agreement  with
  Oregon Freeze Dry, Inc. ("OFD"), its supplier of freeze-dried products.
  The  agreement required that the Company  establish a letter of  credit
  equal to  60% of  the minimum  purchase commitment  of $2,500,000,  but
  allowed for the amount of the letter of credit to be reduced by 60%  of
  the purchases made under the agreement.   As of December 31, 1999,  the
  letter  of  credit  was  $1,100,000.     OFD  currently  produces   the
  CarraSorb[TM] M Freeze-Dried Gel and The Carrington[R] (Aphthous Ulcer)
  Patch for the Company.  Both of these products represent new technology
  and are in the early phase of marketing.  The Company had approximately
  $364,000 of CarraSorb[TM]  M and Carrington[R]  (Aphthous Ulcer)  Patch
  inventory on hand as of December 31, 1999.

  The supply agreement also required the Company to make minimum  monthly
  purchases of  $30,000.   In February  1998,  the supply  agreement  was
  amended to allow for unmet monthly minimum purchase requirements to  be
  met by  prepayments,  to  be applied  to  future  purchases  under  the
  agreement, which  allows  the  Company  to  keep  inventory  at  levels
  appropriate for sales demand.   In December 1999,  OFD agreed to add  a
  freeze-dried gel product as a listed product under the agreement.   The
  Company is continuing its effort to develop the market for its  freeze-
  dried products.  Due  to the unique technology  of these products,  the
  effort has taken longer than was initially expected.

  The current agreement expires  in August 2000.   The Company no  longer
  believes that it can satisfy the minimum purchase requirements of  this
  agreement and  has established  a reserve  of $1,042,000  to cover  its
  estimated liability  to  OFD  under the  agreement.    The  Company  is
  currently negotiating with OFD  regarding purchase arrangements  beyond
  the term of the current agreement.

  The Company believes  that its  available cash  resources and  expected
  cash flows from operations will provide the funds necessary to  finance
  its current operations. However, the Company  does not expect that  its
  current cash  resources  will be  sufficient  to finance  future  major
  clinical studies and costs of filing new drug applications necessary to
  develop its products  to their full  commercial potential.   Additional
  funds, therefore,  may  need to  be  raised through  equity  offerings,
  borrowings, licensing  arrangements or  other means,  and there  is  no
  assurance that  the  Company will  be  able  to obtain  such  funds  on
  satisfactory terms when they are needed.

  The  Company  is  subject   to  regulation  by  numerous   governmental
  authorities in the United States and  other countries.  Certain of  the
  Company's proposed products will require governmental approval prior to
  commercial use.    The  approval  process  applicable  to  prescription
  pharmaceutical products  usually  takes  several  years  and  typically
  requires substantial expenditures.  The  Company and any licensees  may
  encounter significant  delays or  excessive costs  in their  respective
  efforts to secure necessary approvals.  Future United States or foreign
  legislative  or  administrative  acts  could  also  prevent  or   delay
  regulatory  approval  of  the  Company's  or  any licensees'  products.
  Failure to obtain requisite governmental approvals or failure to obtain
  approvals of the scope requested could delay or preclude the Company or
  any licensees  from  marketing  their  products,  or  could  limit  the
  commercial use of  the products, and  thereby have  a material  adverse
  effect on the Company's liquidity and financial condition.
<PAGE>

  Impact of Inflation

  The Company does not believe that  inflation has had a material  impact
  on its results of operations.


  Fiscal 1999 Compared to Fiscal 1998

  Net sales were $28,128,000 in 1999, compared with $23,625,000 in  1998.
  Sales  of  Manapol[R] by  Caraloe  in the  form  of raw  materials  and
  consumer nutritional products, increased 77.3%, from $7,187,000 in 1998
  to $12,739,000 in 1999.  This increase in Caraloe sales was offset by a
  decrease in wound  care sales of  6.4%.  Total  sales of the  Company's
  wound and skin care  products in 1999 were  $15,389,000 as compared  to
  $16,438,000 in 1998.

  Of  the  1999  total  Manapol[R]  sales,  $11,982,000  was  related  to
  the sale  of  bulk Manapol[R]  powder.   Caraloe  currently  sells bulk
  Manapol[R]  powder  to  Mannatech  under  a  three-year,  non-exclusive
  supply  and licensing agreement.  The current  agreement, which expires
  in August 2000,  was extended in January 2000 to August 2002.  Sales to
  Mannatech increased from $5,508,000 in 1998 to $11,422,000 in 1999.

  In March 1999, Caraloe signed a  supply and license agreement with  For
  Your Health,  Inc., allowing  For Your  Health to  purchase  Manapol[R]
  powder and market it in capsule form.   In June 1999, Caraloe signed  a
  sales and license agreement with Nutra Vine also allowing Nutra Vine to
  purchase Manapol[R] powder and market it in capsule form.  In  December
  1998,  Caraloe  signed  supply  and  license  agreements  with  Eventus
  International, Inc., allowing Eventus to  market a variety of  products
  containing  Manapol[R]  powder to promote a natural, healthy lifestyle.
  Sales to Eventus during the first year of this agreement were $271,000.

  In July 1999,  Caraloe  launched  its  new   AloeCeuticals[TM]  line of
  immune enhancing dietary supplements containing Manapol[R],  which  are
  available  in liquid  capsule  and tablet  forms.  These  products will
  be   sold  directly   to   health  and   nutrition  stores  or  through
  broker/distributors.  They will  also  be  sold  through  the Company's
  Internet  sites.  Sales of these products in 1999 totaled $131,000.

  Caraloe also continued to  develop its contract manufacturing  business
  during 1999.  In September 1998, Caraloe began to manufacture  products
  on a contract  manufacturing basis  for SkinCeuticals,  Inc., a  direct
  sales   company   selling   skin   care   products   through   licensed
  professionals.  Products manufactured include gels and creams utilizing
  formulas developed by SkinCeuticals.  In September 1999, Caraloe  began
  to produce  nutritional beverages  for  NuSkin International,  Inc.,  a
  direct sales company selling nutritional products through a multi-level
  sales organization.  Total contract  manufacturing sales in 1999  under
  the agreements with SkinCeuticals and NuSkin were $292,000.
<PAGE>
  The Company's wound and skin care products are marketed domestically to
  hospitals, nursing  homes, home  health care  agencies and  acute  care
  providers.  This market has continued to be very competitive and  price
  sensitive as a result of pressures to control health care costs and has
  become increasingly commodity  oriented.   In addition,  the market  is
  heavily influenced  by government  reimbursement  programs.   The  home
  health care segment of the market again experienced significant turmoil
  in 1999 as many of the Company's customers either went out of  business
  or  postponed   buying  decisions   due   to  changes   in   government
  reimbursement programs.  This  had a negative  impact on the  Company's
  wound care sales to that segment.  Nursing homes were also impacted  by
  government regulations  in 1999,  as government-mandated  reimbursement
  changes due to go into effect in January 1999 were postponed until  the
  year 2000.   Many nursing home  facilities and the  dealers who  supply
  them  postponed   buying   decisions  and   liquidated   inventory   in
  anticipation of the regulations  taking effect.   In response to  these
  market trends, the Company  pursued a strategy to  move its wound  care
  line of products toward value-added specialty products which focus more
  on  product  performance   rather  than  price   alone,  such  as   the
  RadiaCare[TM] line of products for the  management of the side  effects
  of cancer therapy.

  The Company  also  sells  its  wound  care  products  to  international
  distributors, primarily  in  Italy, Australia,  Singapore,  Mexico  and
  Argentina, with lesser sales to a number of Central and South  American
  countries.   Total  international  sales   in  1999   were  $1,423,000.
  Included in  this  amount  were  sales  of  $1,160,000  of  wound  care
  products, which was an increase of $475,000 over 1998.

  Sales of the Company's oral technology products increased from $278,000
  in 1998 to $374,000 in  1999.  Included in  this line are products  for
  the management  of  oral  mucositis/stomatitis  and  oral  lesions  and
  ulcers.   Sales of  the Company's  veterinary products  decreased  from
  $146,000 in 1998 to $47,000 in  1999.  These products were marketed  on
  behalf of the  Company in  1999 by  Farnam Companies,  Inc., a  leading
  marketer of veterinary products.

  Cost of sales increased from $10,870,000 to $13,640,000, or 25.5%.   As
  a percentage of sales,  cost of  sales  increased  from 46.0% to 48.5%.
  The increase in cost of goods sold was largely attributable to  product
  mix, as sales in 1999 of Caraloe products were a greater percentage  of
  total sales than in 1998, 45.3% as compared to 30.4%.  Caraloe products
  have historically had a higher cost as a percentage of sales than wound
  care products.

  Selling, general  and administrative  expenses ("SG&&A")  increased  to
  $10,346,000 from  $10,254,000, or  .9%.   Selling expenses  related  to
  wound care sales in 1999 were  trimmed by $354,000 from the 1998  level
  as the Company reduced expenditures in response to the changing  market
  conditions.  Partially offsetting the decrease  was an increase in  the
  selling and marketing expenses for Caraloe products of $297,000.   This
  increase  primarily  represents  the  costs  for  the  development   of
  marketing materials  supporting  the launch  of  the  AloeCeuticals[TM]
  brand of Manapol[R] immune enhancing products.
<PAGE>
  Research and development ("R&D") expenses increased to $5,300,000  from
  $2,589,000, or 104.7%.  This increase  was primarily the result of  the
  expenditure of $2,866,000 for  the unsuccessful Aliminase[TM]  clinical
  trial.   The Company  continued its  efforts in  basic research  during
  1999, including work on  a new and  unique pectin in  the inner gel  of
  Aloe vera L. which has potential  near-term utility as a product to  be
  used in  wound healing.   Also  included in  the total  R&D  activities
  during 1999 were various small clinical trials designed to collect data
  in support of the Company's products.

  In the fourth quarter of 1999, the Company determined that it could  no
  longer satisfy the minimum purchase requirements of its agreement  with
  Oregon Freeze Dry, Inc. and thus established a reserve of $1,042,000 to
  cover its estimated liability to OFD.

  In 1998, the Company  established a reserve  of $1,250,000 against  its
  investment in  and notes and accounts receivable from ACI.  In December
  1999, ACI transferred  to the Company  700,000 shares of  Aloe &  Herbs
  common stock, previously pledged by ACI  to secure one of its notes  to
  the Company, in satisfaction  of the balance  of $695,000 of  principal
  and interest owed on that note.  In 1998, the Company also  established
  a reserve of $500,000 against its loans to Aloe & Herbs.  During  1999,
  the  Company  received  $18,000  in   repayment  of  these  loans   and
  established a repayment program with Aloe & Herbs for the repayment  of
  the entire debt.  See Note Six to the consolidated financial statements
  for additional discussion of the ACI and Aloe & Herbs transactions.

  Net interest income of $105,000 was  realized in 1999, versus  $233,000
  in 1998, with  the variance  primarily due  to lower  cash balances  in
  1999.

  There was no provision for income taxes in 1999 as compared to  $10,000
  in 1998.  A tax benefit was not recognized in 1999 due to the Company's
  recording an offsetting  deferred tax asset  valuation allowance.   The
  Company has provided  a valuation  allowance against  all  deferred tax
  asset balances  at  December  31, 1999  and  1998  due  to  uncertainty
  regarding realization of the asset.

  The Company's net loss  for 1999 was $2,033,000,  versus a net loss  of
  $1,615,000 for  1998.   The 1999  net  loss was  primarily due  to  the
  $2,866,000 of  costs  for the  Aliminase[TM]  clinical trial  plus  the
  effect of reserving $1,042,000 for the OFD contract.  The 1998 net loss
  was primarily due to the $1,750,000 in charges related to ACI and  Aloe
  & Herbs.  The net loss  per share was $.22 in  1999, compared to a  net
  loss per share of $.17 in 1998.  Excluding the clinical trial  expenses
  in 1999 and reserves in 1999 and 1998, the net income for 1999 was $1.9
  million, or $.20  per share, as  compared to a  net income  in 1998  of
  $135,000, or $.01 per share.

<PAGE>
  Fiscal 1998 Compared to Fiscal 1997

  Net sales were $23,625,000 in 1998, compared with $23,559,000 in  1997.
  Sales  of consumer nutritional products by Caraloe, Inc., the Company's
  consumer products subsidiary, increased 32.0%, from $5,444,000 in  1997
  to $7,187,000 in 1998.  This increase in Caraloe sales was offset by  a
  decrease in wound  care sales of  9.4%.  Total  sales of the  Company's
  wound and skin care  products in 1998 were  $16,292,000 as compared  to
  $17,990,000 in 1997.  Sales to  Mannatech increased from  $3,547,000 in
  1997 to $5,508,000 in 1998.

  Sales of the Company's oral technology products, which were launched in
  late 1997, were $278,000 in 1998.   Included in this line are  products
  for the management  of oral mucositis/stomatitis  and oral lesions  and
  ulcers.   Sales of  the Company's  veterinary products  increased  from
  $125,000 in 1997 to $146,000 in 1998.  These products were marketed  on
  behalf of the  Company in  1998 by  Farnam Companies,  Inc., a  leading
  marketer of veterinary products.

  Cost of sales increased from $9,530,000 to $10,870,000, or 14.1%.  As a
  percentage of sales, cost of sales increased from 40.5% to 46.0%.   The
  increase in cost of goods sold was largely attributable to product mix,
  as sales in 1998 of Caraloe products were a greater percentage of total
  sales than in 1997,  30.4% as compared to  23.1%, and Caraloe  products
  have a higher cost as a percentage of sales than wound care products.

  SG&A expenses  decreased to  $10,254,000  from  $10,814,000,  or  5.2%.
  Selling expenses related to  wound care sales in  1998 were trimmed  by
  $753,000 from the  1997 level as  the Company  reduced  expenditures in
  response to the changing market  conditions.  Partially offsetting  the
  decrease was an increase in Caraloe  selling and marketing expenses  of
  $310,000. This  increase  primarily represented  costs  for  additional
  personnel for sales and formulation development in support of Caraloe's
  raw material and contract manufacturing efforts.

  R&D expenses decreased to $2,589,000 from  $3,006,000, or 13.9%.   This
  decrease was primarily the  result of the  completion of the  Company's
  preclinical pharmacology studies in early 1998.  Included in the  total
  R&D activities during 1998 were various small clinical trials  designed
  to collect data  in support of  the Company's  products, including  the
  reformulation of Aliminase[TM].

  In 1998, the Company  established a reserve  of $1,250,000 against  its
  investment in and notes and accounts receivable from ACI and a  reserve
  of $500,000 against its  loans to Aloe &  Herbs.  See  Note Six to  the
  consolidated financial statements for additional discussion of the  ACI
  and Aloe & Herbs transactions.

  Net interest income of $233,000 was realized in 1998, versus $37,000 in
  1997, with the variance primarily due to the costs associated with  the
  repurchase of the Series E Preferred Stock in 1997.

  Provision for income taxes was $10,000  in 1998 as compared to  $20,000
  in 1997.  A tax benefit was not recognized in 1998 due to the Company's
  recording an offsetting  deferred tax asset  valuation allowance.   The
  Company had provided  a valuation  allowance against  all deferred  tax
  asset balances  at  December  31, 1998  and  1997  due  to  uncertainty
  regarding realization of the asset.
<PAGE>
  The Company's net loss  for 1998 was $1,615,000,  versus net income  of
  $226,000 for 1997.   This change  was primarily the  result of  charges
  related to ACI and Aloe & Herbs  in the amount of $1,750,000. Net  loss
  per share was $.17 in 1998, compared to net income per share of $.02 in
  1997.  Net income per share  in 1998, excluding the charges related  to
  ACI and Aloe & Herbs, was $.01.


  Year 2000 Issues

  Like many organizations, the Company faced  the prospect of what  would
  happen to computers and other microprocessor-controlled equipment using
  two-digit data fields when they encountered the Year 2000, which  could
  be  mistaken  as the Year 1900.  This was known as the Year 2000 issue.
  With  respect to this  issue,  the  Company undertook efforts to assess
  the  impact  on  its information  technology  systems,  non-information
  technology systems, such  as production and  laboratory equipment,  and
  third-party business  partners  such as  vendors  and customers.    The
  results of  this assessment,  which  included analysis  and  compliance
  testing, showed that virtually all  of the Company's internal  systems,
  as well as the systems of almost all of its vendors and customers, were
  prepared to handle the Year 2000 issue without interruption of sales or
  service.  Nevertheless, the Company prepared an assessment of its  most
  reasonably likely  worst-case  scenario  for  dealing  with  Year  2000
  related disruptions  and estimated  that it  would spend  approximately
  $100,000  on  equipment  and  software  remediation  and  approximately
  $500,000 on a buildup of inventory.

  The Company did find several minor instances of software programs which
  needed upgrading, and several equipment items which needed upgrading or
  replacing, in  order  to  be  Year  2000  ready.   The   Company  spent
  approximately $34,000 on the upgrading or replacement of such  programs
  and equipment.

  The Company  spent  approximately  $500,000 on  its  inventory  buildup
  program, but did not experience any  unusual levels of order demand  in
  the fourth quarter of 1999 relating to Year 2000 concerns.  The Company
  has subsequently been reducing its inventory to normal levels excluding
  this buildup.

  The Company  did  not experience  any  significant disruptions  to  its
  business systems or equipment as a result of Year 2000 issues, nor does
  it expect to  experience any  such disruptions  to its  systems  in the
  future.  The  Company also did  not experience any  disruptions in  the
  delivery of products or services obtained from its vendors as a  result
  of Year 2000 issues.

<PAGE>
  Forward Looking Statements

  All statements other  than statements of  historical fact contained  in
  this  report,  including  but  not   limited  to  statements  in   this
  Management's Discussion and Analysis of Financial Condition and Results
  of Operations  (and  similar  statements  contained  in  the  Notes  to
  Consolidated Financial Statements)  concerning the Company's  financial
  position, liquidity, capital resources  and results of operations,  its
  prospects  for  the  future  and  other  matters,  are  forward-looking
  statements.    Forward-looking  statements  in  this  report  generally
  include or are  accompanied by words  such as "anticipate",  "believe",
  "estimate", "expect",  "intend"  or  words of  similar  import.    Such
  forward-looking statements include, but are not limited to,  statements
  regarding the Company's plan or ability to achieve growth in demand for
  or sales of products,  to reduce expenses  and manufacturing costs  and
  increase gross  margin  on existing  sales,  to initiate,  continue  or
  complete clinical and other research programs, to obtain financing when
  it is needed, to fund its  operations from revenue and other  available
  cash resources,  to enter  into licensing  agreements, to  develop  and
  market new products and increase sales of existing products, to  obtain
  government approval to market new products, to sell all of the  freeze-
  dried, calcium alginate and certain other  wound care products that  it
  is  required  to  purchase  under  its  existing  agreements  with  the
  suppliers of those  products, to purchase  sufficient supplies of  Aloe
  vera L.  leaves  at  reasonable prices,  and  to  properly  assess  its
  situation with  respect to  Year 2000  issues  and avoid  any  material
  adverse effects of  the Year  2000 problem,  as well  as various  other
  matters.

  Although the Company  believes that the  expectations reflected in  its
  forward-looking statements are  reasonable, no assurance  can be  given
  that such expectations will  prove correct.   Factors that could  cause
  the Company's results to differ  materially from the results  discussed
  in such forward-looking statements include but  are not limited to  the
  possibilities that the Company may be unable to obtain the funds needed
  to carry  out  large  scale clinical  trials  and  other  research  and
  development projects, that the results of the Company's clinical trials
  may not be sufficiently positive  to warrant continued development  and
  marketing of the  products tested, that  new products  may not  receive
  required approvals by  the appropriate government  agencies or may  not
  meet with adequate  customer acceptance, that  the Company  may not  be
  able to obtain financing when needed, that the Company may not be  able
  to obtain appropriate licensing agreements for products that it  wishes
  to market or products that it needs assistance in developing, that  the
  Company's efforts to improve its sales and reduce its costs may not  be
  sufficient to enable it to fund  its operating costs from revenues  and
  available cash resources, that  one or more of  the customers that  the
  Company expects to purchase significant quantities of products from the
  Company or Caraloe may  fail to do so,  that competitive pressures  may
  require the Company to lower the prices of or increase the discounts on
  its products, that the Company's sales of products it is  contractually
  obligated to purchase from  suppliers may not  be sufficient to  enable
  and justify its fulfillment of those contractual purchase  obligations,
  that other parties who owe the Company substantial amounts of money may
  be unable to pay what they owe the Company, that the Company may suffer
  adverse effects from Year  2000 problems affecting  the Company or  its
  vendors (including  utility  companies)  or  customers,  and  that  the
  Company may  be  unable  to produce  or  obtain,  or may  have  to  pay
  excessive prices for, the raw materials or products it needs.
<PAGE>
  All forward-looking statements in  this report are expressly  qualified
  in their entirety by the cautionary  statements in the two  immediately
  preceding paragraphs.


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


  Foreign Currency

  The Company's manufacturing operation in  Costa Rica accounted for  62%
  of cost of sales for the  year ended December 31,  1999.  As a  result,
  the Company's  financial results  could  be significantly  affected  by
  factors such as changes in foreign currency exchange rates or  economic
  conditions in Costa Rica.  When the U.S. Dollar strengthens against the
  Costa Rica  Colon,  the  cost of  sales  decreases.  During  1999,  the
  exchange rate from U.S. Dollars to Costa Rica Colones increased  by 10%
  to 297  at  December  31,  1999.   The  effect  of  an  additional  10%
  strengthening in the  value of the  U.S. Dollar relative  to the  Costa
  Rica Colones would result in an increase of $315,000  in gross  profit.
  The Company's sensitivity analysis of the effects of changes in foreign
  currency rates does not factor in a potential change in sales levels or
  local currency prices.

  Sales  of  products to foreign markets  comprised 5% of sales for 1999.
  These sales are  generally denominated in  U.S. Dollars.   The  Company
  does not believe  that changes in  foreign currency  exchange rates  or
  weak economic  conditions  in  foreign markets  in  which  the  Company
  distributes its product  would have a  significant effect on  operating
  results.  If sales to foreign  markets increase in future periods,  the
  effects could become significant.

  For quantitative and qualitative disclosures about market risk  related
  to the supply of Aloe vera L. leaves, see "Business."


  ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  The response to Item 8 is submitted as a separate section of this  Form
  10-K.  See Item 14.


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

  There  were  no  changes  in   or  disagreements  with  the   Company's
  independent public  accountants  on  accounting  matters  or  financial
  disclosure during 1998,  1999 or 2000  (to the date  of filing of  this
  report).
<PAGE>

                                 PART III

  ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

  The information required by Item 10 of Form 10-K is hereby incorporated
  by  reference  from  the  information  appearing  under  the   captions
  "Election  of  Directors,"  "Executive  Officers"  and  "Section  16(a)
  Beneficial Ownership Reporting Compliance" in the Company's  definitive
  Proxy Statement relating  to its 2000  annual meeting of  shareholders,
  which will be filed  pursuant to Regulation 14A  within 120 days  after
  the Company's fiscal year ended December 31, 1999.


  ITEM 11.  EXECUTIVE COMPENSATION.

  The information required by Item 11 of Form 10-K is hereby incorporated
  by  reference  from  the   information  appearing  under  the   caption
  "Executive Compensation" in  the Company's  definitive Proxy  Statement
  relating to  its 2000  annual meeting  of shareholders,  which will  be
  filed pursuant to Regulation  14A within 120  days after the  Company's
  fiscal year ended December 31, 1999.


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

  The information required by Item 12 of Form 10-K is hereby incorporated
  by  reference  from  the  information  appearing  under  the   captions
  "Security Ownership of Management" and "Principal Shareholders" in  the
  Company's definitive  Proxy  Statement  relating  to  its  2000  annual
  meeting of shareholders, which will be filed pursuant to Regulation 14A
  within 120  days after  the Company's  fiscal year  ended December  31,
  1999.


  ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

  The information required by Item 13 of Form 10-K is hereby incorporated
  by reference from the information appearing under the caption  "Certain
  Transactions" in the Company's  definitive Proxy Statement relating  to
  its 2000 annual meeting of shareholders,  which will be filed  pursuant
  to Regulation 14A within 120 days after the Company's fiscal year ended
  December 31, 1999.

<PAGE>
                                  PART IV

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

  (a)(1)    Financial Statements.

            Reference is made to the index on page F-1 for a list of  all
            financial statements filed as a part of this Annual Report.
            Other schedules  have been  omitted because  the  information
            required to  be set  forth therein  is not  applicable or  is
            shown in the financial statements or notes thereto.

     (2)    Financial Statement Schedules.

            Reference is made to the index on page F-1 for a list of  all
            financial statement schedules filed as a part of this  Annual
            Report.

     (3)    Exhibits.

            Reference is  made to  the Index  to  Exhibits on  pages  E-1
            through  E-9 for a  list of all exhibits  filed as a part  of
            this Annual Report.

  (b)       Reports on Form 8-K.

            The Company  filed no  reports on  Form 8-K  during the  last
            quarter of its fiscal year ended December 31, 1999.
<PAGE>

                       CARRINGTON LABORATORIES, INC.
         INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES


  Consolidated Financial Statements of the Company:


     Consolidated Balance Sheets - December 31, 1998 and 1999      F  - 2

     Consolidated Statements of Operations - years ended
       December 31, 1997, 1998 and 1999                            F  - 3

     Consolidated Statements of Shareholders' Investment - years
       ended December 31, 1997, 1998 and 1999                      F  - 4

     Consolidated Statements of Cash Flows - years ended
       December 31, 1997, 1998 and 1999                            F  - 5

     Notes to Consolidated Financial Statements                    F  - 6

     Financial Statement Schedule Valuation and
       Qualifying Accounts                                         F  - 18

     Report of Ernst & Young LLP, Independent Public               F  - 19
       Accountants

<PAGE>
<TABLE>
  Consolidated Balance Sheets
  (Amounts in thousands, except share amounts)

                                                            December 31,
                                                           1998      1999
                                                         -------   -------
  <S>                                                   <C>       <C>
  ASSETS:
  Current Assets:
       Cash and cash equivalents                        $  3,931  $  2,453
         Accounts receivable, net of allowance
         for doubtful accounts of $922 and $304
         in 1998 and 1999, respectively                    2,961     3,690
       Inventories                                         4,969     5,184
       Prepaid expenses                                      739       573
                                                         -------   -------
  Total current assets                                    12,600    11,900

  Property, plant and equipment, net                      11,050    10,985
  Other assets                                               597       608
                                                         -------   -------
  Total assets                                          $ 24,247  $ 23,493
                                                         =======   =======

  LIABILITIES AND SHAREHOLDERS' INVESTMENT
  Current Liabilities:
       Note payable                                     $    -    $    200
       Accounts payable                                    1,369     1,871
       Accrued liabilities                                 1,515     1,918
                                                         -------   -------
  Total current liabilities                                2,884     3,989

  Commitments and contingencies

  SHAREHOLDERS' INVESTMENT:
       Common stock, $.01 par value, 30,000,000
       shares authorized, 9,350,064 and 9,440,921
       shares issued and outstanding at December
       31, 1998 and 1999, respectively                        94        94
  Capital in excess of par value                          51,736    51,910
  Deficit                                                (30,467)  (32,500)
                                                         -------   -------
  Total shareholders' investment                          21,363    19,504
                                                         -------   -------
  Total liabilities and shareholders' investment        $ 24,247  $ 23,493
                                                         =======   =======

  The accompanying notes are an integral part of these balance sheets.

                                    F-2
</TABLE>
<PAGE>
<TABLE>

  Consolidated Statements of Operations
  (Amounts in thousands, except per share amounts)


                                                   Years Ended December 31,
                                                1997         1998        1999
                                              -------      -------     -------
  <S>                                        <C>          <C>         <C>
  Net sales                                  $ 23,559     $ 23,625    $ 28,128
  Costs and expenses:
    Cost of sales                               9,530       10,870      13,640
    Selling, general and administrative        10,814       10,254      10,346
    Research and development                    3,006        2,589       2,434
    Research and development,
       Aliminase[TM] clinical trial expenses      -            -         2,866
    Charges related to ACI and Aloe & Herbs       -          1,750         -
    Charges related to Oregon Freeze Dry, Inc.    -            -         1,042
    Interest income, net                          (37)        (233)       (105)
    Other income                                  -            -           (62)
                                              -------      -------     -------
  Income (loss) before income taxes               246       (1,605)     (2,033)
  Provision for income taxes                       20           10         -
                                              -------      -------     -------
  Net income (loss)                               226       (1,615)     (2,033)

  Dividends and income attributed to
    preferred shareholders                       (70)          -           -
  Net income (loss) available to common
    shareholders                             $    156    $  (1,615)    $(2,033)
                                              =======      =======     =======
  Net income (loss) available to common
    shareholders per share - basic and
    diluted                                  $   0.02    $   (0.17)    $ (0.22)
                                              =======      =======     =======

  The accompanying notes are an integral part of these statements.

                                    F-3
</TABLE>
<PAGE>
<TABLE>

 Consolidated Statements of Shareholders' Investment
 For the Years Ended December 31, 1997, 1998 and 1999
 (Amounts in thousands)

                                                             Capital in                Total
                                  Preferred      Common       Excess of             Shareholders'
                                    Stock          Stock      Par Value    Deficit   Investment
                                Shares Amount  Shares Amount
                                ------ ------  ------ ------  ---------    -------   ----------
 <S>                              <C>   <C>     <C>    <C>     <C>        <C>          <C>
 Balance,
   January 1, 1997                 1    $ 66    8,870  $ 89    $56,680    $(29,078)    $27,757
 Issuance of common stock for
   employee stock purchase plan    -       -       21     -        153           -         153
 Sale of common stock net of
   issuance costs of $21           -       -      415     4      2,471           -       2,475
 Repurchase of convertible
   preferred stock (Series E),
   $100 Par                       (1)    (66)       -     -     (7,719)          -      (7,785)
 Net income and comprehensive
   income                          -       -        -     -          -         226         226
 ---------------------------------------------------------------------------------------------
 Balance,
   December 31, 1997               -       -    9,306    93     51,585     (28,852)     22,826
 Issuance of common stock for
   employee stock purchase plan    -       -       44     1        151           -         152
 Net loss and comprehensive
   loss                            -       -        -     -          -      (1,615)     (1,615)
 ---------------------------------------------------------------------------------------------
 Balance,
   December 31, 1998               -       -    9,350    94     51,736     (30,467)     21,363
 Issuance of common stock for
   employee stock purchase plan    -       -       81     -        149           -         149
 Issuance of common stock for
   employee stock option plan      -       -       10     -         25           -          25
 Net loss and comprehensive
   loss                            -       -        -     -          -      (2,033)     (2,033)
 ---------------------------------------------------------------------------------------------
 Balance,
   December 31, 1999               -    $  -    9,441  $ 94    $51,910    $(32,500)    $19,504


 The accompanying notes are an integral part of these statements.

                                    F-4
</TABLE>
<PAGE>
<TABLE>

 Consolidated Statements of Cash Flows
 (Amounts in thousands)
                                             Years Ended December 31,
                                                    1997       1998      1999
                                                   ------     ------    ------
 <S>                                              <C>        <C>       <C>
 Cash flows provided by (used in)
  operating activities:
   Net income (loss)                              $   226    $(1,615)  $(2,033)
   Adjustments to reconcile income (loss)
      to net cash provided by (used in)
        operating activities:
      Depreciation and amortization                 1,196      1,043     1,028
      Charge related to ACI investment                  -        600         -
      Charge related to Oregon Freeze Dry, Inc.         -          -     1,042
      Provision for inventory obsolescence            523         53         -
   Changes in assets and liabilities:
      Accounts receivable, net                     (1,545)       129      (729)
      Inventories                                  (1,903)       (19)     (215)
      Prepaid expenses                                 40       (411)     (177)
      Other assets                                   (360)     1,340       (11)
      Accounts payable and accrued liabilities        (76)       (55)      206
                                                   ------     ------    ------
   Net cash provided by (used in)
     operating activities                          (1,899)     1,065      (889)
 Cash flows used in investing activities:
   Purchases of property, plant and equipment        (295)    (1,278)     (963)
                                                   ------     ------    ------
      Net cash used in investing activities          (295)    (1,278)     (963)
 Cash flows provided by (used in)
   financing activities:
   Issuances of common stock                        2,628        152       174
   Retirement of preferred stock                   (7,785)         -         -
   Proceeds of short-term debt                          -          -       200
   Principal payments of capital lease
      obligations                                     (32)       (31)        -
                                                   ------     ------    ------
      Net cash provided by (used in) financing
        activities                                 (5,189)       121       374
                                                   ------     ------    ------
 Net decrease in cash and cash
   equivalents                                     (7,383)       (92)   (1,478)
 Cash and cash equivalents at beginning of year    11,406      4,023     3,931
                                                   ------     ------    ------
 Cash and cash equivalents at end of year         $ 4,023    $ 3,931   $ 2,453
                                                   ======     ======    ======
 Supplemental Disclosure of Cash Flow
   Information
   Cash paid during the year for interest         $    10    $     3   $     7
   Cash paid during the year for income taxes           -         44         -


 The accompanying notes are an integral part of these statements.

                                    F-5
</TABLE>
<PAGE>

               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


  NOTE ONE. BUSINESS

  Carrington  Laboratories,  Inc.  (the  "Company")  is  a   research-based
  biopharmaceutical,  medical  device,  raw  materials  and   nutraceutical
  company engaged  in  the  development,  manufacturing  and  marketing  of
  naturally-derived  complex  carbohydrates   and  other  natural   product
  therapeutics for  the  treatment of  major  illnesses, the  dressing  and
  management of wounds, and nutritional supplements.

  The Company's Medical  Services Division offers  a comprehensive line  of
  human wound management products to hospitals, nursing homes,  alternative
  care facilities and the home health care market and also offers  vaccines
  and wound and  skin care products  to the veterinary  market.  Sales  are
  primarily in the United States through a network of distributors.

  Caraloe, Inc., a  subsidiary, markets or  licenses consumer products  and
  bulk raw material products.  Principal  sales of Caraloe, Inc., are  bulk
  raw material products which are sold  to United States manufacturers  who
  include the high  quality extracts from  Aloe vera L.  in their  finished
  products.

  The Company's products are produced at its plants in Irving, Texas and in
  Costa Rica.  A portion of the Aloe vera L. leaves used  for manufacturing
  the  Company's products are  grown on a Company-owned farm in Costa Rica.
  The remaining leaves are purchased from producers in Costa Rica,  Mexico,
  Venezuela and Central America.

  NOTE TWO. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  PRINCIPLES OF CONSOLIDATION       The  consolidated financial  statements
  include  the  accounts   of  Carrington  Laboratories,   Inc.,  and   its
  subsidiaries, all of which are wholly  owned.  All intercompany  accounts
  and transactions have been eliminated in consolidation.

  CASH EQUIVALENTS    The  Company's  policy  is  that  all  highly  liquid
  investments purchased with a maturity of three months or less at date  of
  acquisition are  considered  to  be  cash  equivalents  unless  otherwise
  restricted.

  INVENTORY Inventories are recorded at the lower of cost (first-in, first-
  out) or market.

  PROPERTY, PLANT AND EQUIPMENT     Property,   plant  and  equipment   are
  recorded at  cost  less  accumulated depreciation.    Land  improvements,
  buildings and  improvements, furniture  and  fixtures and  machinery  and
  equipment  are  depreciated  on  the  straight-line  method  over   their
  estimated useful  lives.    Leasehold improvements  and  equipment  under
  capital leases are amortized over the terms of the respective leases.

  LONG-LIVED ASSETS       The Company regularly  reviews long-lived  assets
  for impairment whenever events or changes in circumstances indicate  that
  the  carrying  amounts   of  the   assets  may  not   be  recoverable.
  Recoverability is  based on  whether the  carrying  amount of  the  asset
  exceeds the current  and anticipated undiscounted  cash flows related  to
  the asset.
<PAGE>
  TRANSLATION  OF  FOREIGN  CURRENCIES   The   functional   currency    for
  international  operations  (primarily Costa  Rica) is  the  U.S.  Dollar.
  Accordingly,  such  foreign  entities   translate  monetary  assets   and
  liabilities at  year-end exchange  rates,  while  non-monetary  items are
  translated at  historical  rates.    Revenue  and  expense  accounts  are
  translated at the  average rates in  effect during the  year,  except for
  depreciation and cost of sales, which are translated at historical rates.
  Translation adjustments and  transaction  gains or losses are  recognized
  in the consolidated statement of operations in the year of occurrence.

  REVENUE RECOGNITION   The Company recognizes  revenue when  title  to the
  goods  transfers  and collectability  is  reasonably  assured.   For  the
  majority  of  the Company's  sales, this occurs at  the time of shipment.
  The  Company has rebate  arrangements with  certain  distributors.  These
  rebates are estimated and recorded at the time of sale.

  FEDERAL INCOME TAXES     Deferred income taxes reflect the tax effect  of
  temporary differences  between  the  amount  of  assets  and  liabilities
  recognized for  financial reporting  and tax  purposes.   These  deferred
  taxes are measured by applying currently enacted tax laws.  The effect on
  deferred income tax assets  and liabilities of a  change in tax rates  is
  recognized in  income  in the  period  that includes the  enactment date.
  Valuation allowances are  provided against  net deferred  tax assets when
  realization is not reasonably assured.

  RESEARCH AND DEVELOPMENT Research and development  costs are expensed  as
  incurred.   Certain  laboratory and  test  equipment determined  to  have
  alternative future uses in other research and development activities  has
  been capitalized and is depreciated  as research and development  expense
  over the life of the equipment.

  ADVERTISING         Advertising expense is charged  to operations in  the
  year in which such costs are incurred.  Advertising expense has not  been
  significant for 1997, 1998 or 1999.

  STOCK-BASED COMPENSATION The Company has  elected to  follow APB  Opinion
  No. 25,  "Accounting  for Stock  Issued  to Employees",  in  the  primary
  financial statements and to provide supplementary disclosures required by
  FASB Statement No.  123, "Accounting for  Stock-Based Compensation"  (see
  Note Nine).

  NET INCOME (LOSS) PER SHARE   Basic net income (loss) per share is  based
  on the  weighted average  number of  shares of  common stock  outstanding
  during the year and  excludes any dilutive  effects of options,  warrants
  and convertible securities.  Diluted net income (loss) per share includes
  the effects of  options, warrants and  convertible securities unless  the
  effect is antidilutive.

  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 at  the date  of the  financial statements  and the  reported
  amounts of revenues  and expenses  during the reporting  period.   Actual
  results could differ from those estimates.
<PAGE>

  NOTE THREE.    INVENTORIES

  The following summarizes the components of inventory at December 31, 1998
  and 1999, in thousands:


                                                  1998        1999
  ------------------------------------------------------------------
  Raw materials and supplies                     $1,135       $2,011
  Work-in-process                                 1,182          673
  Finished goods                                  2,652        2,500
  ------------------------------------------------------------------
  Total                                          $4,969       $5,184
  ------------------------------------------------------------------

  The inventory balances are net of  $525,000 and $430,000 of reserves  for
  obsolete and  slow  moving  inventory at  December  31,  1998  and  1999,
  respectively.

  NOTE FOUR.     PROPERTY, PLANT AND EQUIPMENT
<TABLE>
  Property, plant and equipment consisted of the following at December  31,
  1998 and 1999, in thousands:

                                                          Estimated
                                     1998       1999      Useful Lives
  --------------------------------------------------------------------
  <S>                            <C>         <C>         <C>
  Land and improvements          $ 1,389     $ 1,389
  Buildings and improvements       8,862       8,692     7 to 25 years
  Furniture and fixtures             930         873     4 to 8 years
  Machinery and equipment          8,165       9,505     3 to 10 years
  Leasehold improvements             928         349     1 to 3 years
  Equipment under capital leases     150         150     4 years
  --------------------------------------------------------------------
  Total                           20,424      20,958
  Less accumulated depreciation
    and amortization               9,374       9,973
  --------------------------------------------------------------------
  Property, plant and
   equipment, net                $11,050     $10,985
                                  ======      ======
</TABLE>

  The Company's net investment  in property, plant  and equipment in  Costa
  Rica at  December  31,  1998 and  1999  was  $4,310,000  and  $4,518,000,
  respectively.
<PAGE>

  NOTE FIVE.     ACCRUED LIABILITIES

  The following summarizes significant components of accrued liabilities at
  December 31, 1998 and 1999, in thousands:

                                              1998           1999
  ---------------------------------------------------------------
  Accrued payroll                           $  213         $  231
  Accrued sales commissions                    185             36
  Accrued taxes                                377            200
  Oregon Freeze Dry Reserve (see Note Ten)       -            698
  Other                                        740            753
  ---------------------------------------------------------------
  Total                                     $1,515         $1,918
  ---------------------------------------------------------------

  NOTE SIX. CHARGES RELATED TO ACI AND ALOE & HERBS

  The Company had reserved approximately $0.1 million at December 31,  1997
  to cover potential exposures on approximately $1.1 million of  investment
  in and  notes and  accounts receivable  from ACI.  In 1998,  the  Company
  increased the  reserves against  its investment  and notes  and  accounts
  receivable balances related to ACI by approximately $1.2 million to fully
  reserve all amounts related to ACI.  During 1999, ACI paid $40,000 on its
  obligations to the Company.  Additionally, in 1999, ACI assigned  700,000
  shares in Aloe & Herbs in repayment of $695,000 of principal and interest
  on its obligations to the Company.

  Beginning in 1998,  the Company  invested a total  of approximately  $0.5
  million in  Aloe &  Herbs and  its subsidiary  Rancho Aloe  (collectively
  "Aloe & Herbs"),  an aloe farm  close to the  Company's existing farm  in
  Costa Rica. The Company obtained a 19.3% equity interest in Aloe &  Herbs
  in return for agreeing to provide farming expertise, working capital  and
  Aloe vera  L.  plants.  The  Company's ownership  in  Aloe  &  Herbs  was
  increased to 28.2% through the assignment of shares by ACI.  The  Company
  accounts for its investment in the Common Stock of Aloe & Herbs under the
  equity method, however,  as of  December 31, 1999  Aloe &  Herbs had  not
  generated net income and thus the  investment remains at a zero  carrying
  amount (see below).

  Aloe & Herbs faced substantial capital requirements during 1999 and  2000
  for debt payments, ongoing investments in  aloe plants and other  general
  start-up costs. Consequently, in 1998 the Company fully reserved the $0.5
  million in notes and accounts receivable due from Aloe & Herbs due to the
  risk and uncertainty of  Aloe & Herbs' ability  to repay the amounts  due
  the Company.    Aloe  &  Herbs successfully  met  the  third  party  debt
  obligations that it owed in 1999,  and is currently seeking to  refinance
  its  remaining  third  party  debt  obligation.    The  Company  received
  repayments of $18,000 during  1999 for amounts due  from Rancho Aloe  and
  has established a repayment program with  Aloe & Herbs for the  repayment
  of the entire debt.
<PAGE>
  NOTE SEVEN.    LINE OF CREDIT

  The Company has an agreement with a bank for a $3 million line of credit,
  collateralized  by  accounts  receivable  and  inventory.    This  credit
  facility is available for operating needs and was used to issue a  letter
  of  credit  in  the  amount  of   $1.1  million  at  December  31,   1999
  collateralizing a supply agreement with the Company's supplier of freeze-
  dried products (see Note Ten).  The interest rate on this credit facility
  is equal to the  bank's prime rate.   As of December  31, 1999 there  was
  $200,000  outstanding  on  the  credit  line.    There  was  no   balance
  outstanding at December 31, 1998.

  NOTE EIGHT.    PREFERRED STOCK

  SERIES E SHARES     The Series  E Shares,  issued in  October 1996,  were
  convertible into  shares  of  the Company's  common  stock  beginning  on
  December 20, 1996, and prior to  October 21, 1999, at a conversion  price
  per share equal  to the lower  of $25.20  (120% of the  market price  per
  share of the Company's common stock as determined at the time of issuance
  of the Series E Shares) or 87% of the market price immediately  preceding
  the conversion date.   In early  1997, the Company's  Board of  Directors
  concluded that  it  was in  the  best interest  of  the Company  and  its
  shareholders that the Company repurchase the  Series E Shares.  In  March
  1997, the Company completed  a repurchase of 50%  of the Series E  Shares
  for $3,832,000, a premium  of 13% over the  original purchase price.   In
  May 1997, the Company  repurchased the remaining shares  of its Series  E
  Shares for  a  total  cash  purchase  price  of  $3,852,000.    For  both
  transactions, amounts paid  to preferred  shareholders in  excess of  par
  totaled $70,000  more  than  the embedded  deemed  dividend  of  $986,000
  recognized in 1996.  This additional deemed dividend was used in the  net
  income (loss)  per  share  calculation  in  1997  to  reduce  net  income
  available to common shareholders.

  NOTE NINE.     COMMON STOCK

  PRIVATE PLACEMENT OF COMMON STOCK  In June 1997, the Company sold 415,000
  shares of common stock at  a price of $6.00  per share.  Total  proceeds,
  net of issuance costs, were $2,454,000.

  SHARE PURCHASE RIGHTS PLAN    The Company  has  a share  purchase  rights
  plan which provides, among other rights, for the purchase of common stock
  by certain  existing  common  stockholders  at  significantly  discounted
  amounts in the event a person  or group acquires or announces the  intent
  to acquire 20% or more of the Company's common stock.  The  rights expire
  in 2001 and may  be redeemed at any  time at the option  of the Board  of
  Directors for $.01 per right.

  EMPLOYEE STOCK PURCHASE PLAN  The Company has an Employee Stock  Purchase
  Plan under which employees may purchase common stock at a price equal  to
  the lesser of 85% of  the market price of  the Company's common stock  on
  the last business day preceding the  enrollment date (defined as  January
  1, April 1, July 1 or  October 1 of any plan year)  or 85% of the  market
  price on the  last business  day  of each month.   A  maximum of  500,000
  shares of common stock was reserved for purchase under this Plan.   As of
  December 31,  1999,  a  total  of 222,226  shares had  been purchased  by
  employees at prices ranging from $1.65 to $29.54 per share.
<PAGE>
  STOCK OPTIONS  The Company has an incentive  stock option plan which  was
  approved by the shareholders in 1995 under which incentive stock  options
  and nonqualified stock options may  be granted to employees,  consultants
  and non-employee directors.  Options are granted at a price no less  than
  the market value  of the  shares on  the date  of the  grant, except  for
  incentive options to employees who own more than 10% of the total  voting
  power of the Company's common stock, which are granted at a price no less
  than 110% of the market value.  Employee options are normally granted for
  terms of  10 years.   Options  granted prior  to December  1998  normally
  vested at the rate of 25% per year beginning on the first  anniversary of
  the grant  date.   Options  granted in  or  subsequent to  December  1998
  normally vest at  the rate  of 33-1/3% per  year beginning  on the  first
  anniversary of the grant  date, but certain  options granted in  December
  1998 and 1999 were 25%, 50%  or 100% vested on  the grant date, with  the
  remainder of  each option  vesting in  equal installments  on the  first,
  second and  third anniversaries  of  the grant  date.   Options  to  non-
  employee directors have terms  of four years and  are 100% vested on  the
  grant date.  The  Company has reserved 1,500,000  shares of common  stock
  for issuance under  the this  Plan. As of  December 31,  1999 options  to
  purchase  114,926 shares were available for future grants under the Plan.
<TABLE>
  The following  summarizes  stock  option activity for  each of the  three
  years ended December 31, 1997, 1998 and 1999 (shares in thousands):

                                                              Weighted
                                                              Average
                                                              Exercise
                                  Shares   Price Per Share     Price
  -------------------------------------------------------------------
  <S>                             <C>     <C>                  <C>
  Balance, Janurary 1, 1997        667    $ 6.25 to $47.75     $21.99
     Granted                       470    $ 5.31 to $ 7.50     $ 6.84
     Lapsed or canceled           (178)   $ 7.50 to $47.75     $18.38
  -------------------------------------------------------------------
  Balance, December 31, 1997       959    $ 5.31 to $47.75     $15.19
     Granted                       678    $ 2.50 to $13.13     $ 3.26
     Lapsed or canceled           (249)   $ 4.63 to $35.25     $11.02
  -------------------------------------------------------------------
  Balance, December 31, 1998     1,388    $ 2.50 to $28.75     $ 4.58
     Granted                       345    $ 2.06 to $ 3.63     $ 2.41
     Lapsed or canceled            316    $ 2.50 to $27.00     $ 4.71
     Exercised                      10    $ 2.50 to $ 2.50     $ 2.50
  -------------------------------------------------------------------
  Balance, December 31, 1999     1,407    $ 2.06 to $28.75     $ 4.05
  -------------------------------------------------------------------
  Options exercisable at
     December 31, 1999             553    $ 2.50 to $28.75     $ 4.68
  -------------------------------------------------------------------
  Options exercisable at
     December 31, 1998             417    $ 2.50 to $28.75     $ 5.71
  -------------------------------------------------------------------
  Options exercisable at
     December 31, 1997             314    $ 7.50 to $47.75     $20.87
  -------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
  The  following   table  summarizes   information  about   stock   options
  outstanding at December 31, 1999:

                         Options Outstanding        Options Exercisable
                    ------------------------------  -------------------
                             Weighted
                             Average      Weighted            Weighted
                             Remaining    Average             Average
     Range of                Contractual  Exercise            Exercise
  Exercise Prices   Shares   Life         Price     Shares    Price
  ---------------------------------------------------------------------
  <S>               <C>      <C>          <C>         <C>       <C>
  $2.06   $ 5.25    1,258    8.83 years   $3.48       455       $3.60
   6.00    28.75      149    6.61          8.94        98        9.67
  ---------------------------------------------------------------------
  $2.06   $28.75    1,407    8.60 years   $4.05       553       $4.68
  ---------------------------------------------------------------------
</TABLE>

  The Company accounts  for employee stock-based  compensation under  APB
  Opinion  No. 25, under which no compensation cost has been  recognized.
  Had compensation  cost  been determined  based  on the  fair  value  of
  options at their grant dates consistent with the method of Statement of
  Financial Accounting  Standards No.  123, "Accounting  for  Stock-Based
  Compensation" ("SFAS 123"), the Company's net income (loss) and diluted
  net income (loss) available to common shareholders per share would have
  been the following pro forma amounts:

  -------------------------------------------------------------------
                                          1997      1998       1999
  -------------------------------------------------------------------
  Net income (loss)
    (in thousands):
       As reported                      $   226   $(1,615)   $(2,033)
       Pro forma                         (2,199)   (4,155)    (3,411)

  Diluted net income (loss) available
    to common shareholders per share:
       As reported                      $  0.02   $ (0.17)     (0.22)

       Pro forma                          (0.25)    (0.96)     (0.36)
  -------------------------------------------------------------------

  Because the  SFAS 123  method of  accounting has  not  been applied  to
  options granted prior to  January 1, 1995,  the pro forma  compensation
  cost may not be representative of the pro forma cost to be  expected in
  future years.

  The fair value of each option granted was estimated on the date  of the
  grant using the Black-Scholes option  pricing model with the  following
  weighted-average assumptions  used for  grants  to employees  in  1997,
  1998, and 1999, respectively: risk-free interest rates of  6.13%, 5.38%
  and 6.00%, expected volatility of 57.0%,  54.7% and 29.8% and  expected
  lives of  5.0, 2.4  and 2.9  years.   The  Company used  the  following
  weighted-average assumptions for grants to directors in 1997,  1998 and
  1999:  expected dividend yields of 0% and expected lives of 4.0  years.
  The weighted average fair values of options granted were   $6.84, $1.05
  and $0.64 in 1997, 1998, and 1999, respectively.
<PAGE>
  STOCK WARRANTS  From  time to time, the Company has granted warrants to
  purchase  common stock to the Company's research consultants  and other
  persons rendering  services  to  the  Company.  The  exercise price  of
  such  warrants  was normally  the market  price  or  in  excess of  the
  market  price of the common stock at date of issuance.   The  following
  summarizes  warrant activity for each  of the  periods ending  December
  31, 1997, 1998, and 1999 (shares in thousands):

                                                             Weighted
                                                             Average
                               Shares    Price Per Share     Exercise
                                                              Price
  -------------------------------------------------------------------
  Balance, January 1, 1997        51     $ 9.75 to $20.13     $15.03
  -------------------------------------------------------------------
  Balance, December 31, 1997      51     $ 9.75 to $20.13     $15.03
    Lapsed or canceled            10     $ 9.75               $ 9.75
  -------------------------------------------------------------------
  Balance, December 31, 1998      41     $13.00 to $20.13     $16.32
    Issued                        50     $ 3.50               $ 3.50
    Lapsed or canceled           (26)    $16.00 to $19.75     $16.87
  -------------------------------------------------------------------
  Balance, December 31, 1999      65     $ 3.50 to $20.13     $ 6.24
  -------------------------------------------------------------------
  Warrants exercisable at
    December 31, 1999             65     $ 3.50 to $20.13     $ 6.24

  Warrants outstanding  at  December  31, 1999  had  a  weighted  average
  remaining contractual life of 3.88 years.

  COMMON STOCK RESERVED    At December 31, 1999 the Company  had reserved
  a total of 1,864,892 common shares for future issuance relating  to the
  employee stock purchase  plan, stock option  plans and stock  warrants,
  disclosed above.

  NOTE TEN. COMMITMENTS AND CONTINGENCIES

  The Company conducts a  significant portion of  its operations from  an
  office/  warehouse/distribution  facility   and  an   office/laboratory
  facility  under  operating  leases  that expire in 2001.  In  addition,
  the Company leases certain office equipment under operating leases that
  expire over  the next  three years.   The  Company's commitments  under
  noncancellable operating leases as of December 31, 1999 are as follows,
  in thousands:

  Years Ending December 31,
  -------------------------------------------------------------------
  2000                                                $  654
  2001                                                   467
  2002                                                    53
  2003                                                    53
  -------------------------------------------------------------------
  Total minimum lease payments                        $1,227
  -------------------------------------------------------------------

  Total  rental  expense  under operating  leases was $465,000,  $451,000
  and $455,000 for  the years  ended December  31, 1997,  1998 and  1999,
  respectively.
<PAGE>
  In February 1995,  the Company  entered into a  commitment to  purchase
  $2.5 million  of freeze-dried  products from  Oregon  Freeze Dry,  Inc.
  ("OFD") over a 66-month period ending in August 2000.   The commitment,
  which also provides for  monthly minimum purchases,  is required to  be
  supported to the extent of 60% of the remaining commitment by  a letter
  of credit from  a bank or  a pledged certificate  of deposit (see  Note
  Seven). The Company has made purchases  pursuant to this commitment  of
  $245,000, $95,000 and $54,000 in 1997, 1998 and 1999, respectively.  At
  December 31, 1999, the Company had made prepayments of  $672,000 toward
  future deliveries under the commitment.

  In the fourth quarter of 1999, the Company determined that it  could no
  longer satisfy the minimum purchase  requirements of the agreement  and
  thus the Company has established a reserve of $1,042,000  for estimated
  losses under  this contract.  Of this  amount, $698,000  is recorded in
  accrued   liabilities   and   $344,000   offsets   the   aforementioned
  prepayments.  The Company is  currently negotiating with OFD  regarding
  purchase arrangements beyond the term of the current agreement.

  NOTE ELEVEN.   INCOME TAXES
<TABLE>
  The tax effects of temporary differences that gave rise to deferred tax
  assets and deferred tax liabilities at December 31, 1998 and  1999 were
  as follows, in thousands:

                                              1998          1999
  ---------------------------------------------------------------
  <S>                                      <C>           <C>
  Net operating loss carryforward          $ 14,391      $ 14,090
  Research and development
     and other credits                          867           748
  Property, plant and equipment                 259           307
  Patents                                       285           270
  Inventory                                     401           368
  Other, net                                    244           600
  Bad debt reserve                              568           549
  Oregon Freeze Dry reserve                      -            354
  Less - Valuation allowance                (17,015)      (17,286)
                                            -------       -------
                                           $      0      $      0
                                            =======       =======
</TABLE>
  The Company  has  provided a  valuation  allowance against  the  entire
  deferred tax asset at December 31, 1998 and 1999 due to the uncertainty
  as to the realization of the asset.
<PAGE>
<TABLE>
  The provisions for income taxes for the years ended December  31, 1997,
  1998 and 1999 consisted of the following, in thousands:


                                            1997      1998      1999
 -------------------------------------------------------------------
  <S>                                       <C>       <C>        <C>
  Current provision                         $ 20      $ 10       $ -
  Deferred provision, net                      -         -         -
 -------------------------------------------------------------------
  Total provision                           $ 20      $ 10       $ -
 -------------------------------------------------------------------

  The differences (expressed as a percentage  of pre-tax income or  loss)
  between the statutory and effective income tax rates are as follows:


                                            1997      1998      1999
 -------------------------------------------------------------------
  <S>                                       <C>       <C>        <C>
  Statutory tax rate                        34.0%    (34.0%)   (34.0%)
  Unrecognized deferred tax
   benefit/change in valuation allowance   (20.8)     34.0      34.0
  Other                                     (4.9)        -         -
 -------------------------------------------------------------------
  Effective tax rate                         8.3%      0.0%      0.0%
 -------------------------------------------------------------------
</TABLE>

  At December 31, 1999, the Company had net operating  loss carryforwards
  of approximately $41.4 million for  federal income tax purposes,  which
  began to  expire  in 1999,  and  research and  development  tax  credit
  carryforwards of approximately $748,000, which began to expire in 1999,
  all of which are available to offset federal income taxes due in future
  periods.  The Company had a $6 million net operating  loss carryforward
  expire during the year ended December 31, 1999.   Additionally, $15,000
  in research and development  tax credits expired  in 1999.  The Company
  has approximately $28,000 in alternative  minimum tax credits which  do
  not expire.

  NOTE TWELVE.   CONCENTRATIONS OF CREDIT RISK

  Financial  instruments   that  potentially   expose  the   Company   to
  concentrations of  credit  risk  consist primarily  of  trade  accounts
  receivable.   The  Company's  customers are  not  concentrated  in  any
  specific geographic  region but  are concentrated  in  the health  care
  industry.  Significant sales  were made to  three customers.   McKesson
  HBOC/General Medical accounted for 12%, 11%  and 5%; and Owens &  Minor
  accounted for 11%,  10% and 9%;  of  the Company's  net sales in  1997,
  1998 and 1999, respectively.  Sales  to Mannatech, Inc., accounted  for
  15%, 23% and 41%  of the Company's  net sales in  1997, 1998 and  1999,
  respectively.  Accounts  receivable from Mannatech  represented 28%  of
  gross accounts receivable at December 31,  1999.  The Company  performs
  ongoing credit evaluations  of its customers'  financial condition  and
  establishes  an  allowance  for  doubtful  accounts  based  on  factors
  surrounding the credit risk of specific customers and historical trends
  and other information.
<PAGE>
  NOTE THIRTEEN. NET INCOME (LOSS) PER SHARE

  Basic net income (loss) available to common shareholders per  share was
  computed by dividing net income (loss) available to common shareholders
  by  the  weighted  average  number  of  common  shares  outstanding  of
  8,953,000,  9,320,000   and  9,376,000   in  1997,   1998,  and   1999,
  respectively.

  In calculating the  diluted net loss  available to common  shareholders
  per share for 1998 and 1999,  no effect was given to options,  warrants
  or convertible  securities,  because  the  effect  of  including  these
  securities would have been antidilutive.   In 1997, diluted net  income
  available to common shareholders per share  was also based only on  the
  weighted average number  of common  shares outstanding.   There was  no
  additional dilution related to options whose exercise price  was  below
  the average market price due to  the application of the treasury  stock
  method.  Remaining options and warrants  to purchase 885,000 shares  at
  an average exercise  price of  $16.84 per share  were excluded  because
  their exercise  price  exceeded  the average  market  price  and  were,
  therefore, antidilutive.
<PAGE>
  NOTE FOURTEEN. REPORTABLE SEGMENTS

  The Company operates in two  reportable segments: human and  veterinary
  products sold through its Medical Services Division and  Caraloe, Inc.,
  a  consumer  products  subsidiary,  which  sells  bulk  raw  materials,
  consumer beverages, and nutritional and skin care products.

  The Company  evaluates performance  and  allocates resources  based  on
  profit or loss  from operations  before income taxes.   The  accounting
  policies of the reportable segments are the same as those  described in
  the Summary of Significant Accounting Policies (Note Two).

  Corporate Income Before Income Taxes set  forth in the following  table
  includes research and  development expenses which  were related to  the
  development  of  pharmaceutical  products   not  associated  with   the
  reporting segments.  Assets which are used in more than one segment are
  reported in  the  segment  where  the  predominant  use  occurs.    The
  Company's production  facility  in  Costa  Rica,  which  provides  bulk
  ingredients for  all  segments, and  total  cash for  the  Company  are
  included in the Corporate Assets figure.
<TABLE>
  Reportable Segments (in thousands)

                            Medical  Caraloe,
  1998                     Services    Inc.    Corporate     Total
  -----------------------------------------------------------------
  <S>                       <C>       <C>       <C>         >C>
  Sales to unaffiliated
    customers               $16,438   $7,187    $   -       $23,625
  Income(loss) before
    income taxes              1,023      854     (3,482)     (1,605)
  Identifiable assets        14,319    1,923      8,005      24,247
  Capital expenditures          344       -         934       1,278
  Depreciation and
    amortization                737       -         306       1,043
  -----------------------------------------------------------------
  1999
  -----------------------------------------------------------------
  Sales to unaffiliated
    customers               $15,389  $12,739    $   -       $28,128
  Income(loss) before
    income taxes               (775)   3,247     (4,505)     (2,033)
  Identifiable assets        12,623    2,019      8,851      23,493
  Capital expenditures          405       -         558         963
  Depreciation and
    amortization                679       -         349       1,028
  -----------------------------------------------------------------
</TABLE>
<PAGE>

  NOTE FIFTEEN.  UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
  The unaudited  selected quarterly  financial data  below reflect  the fiscal  year
  ended December 31, 1998 and 1999, respectively.

  (Dollar amounts in thousands, except shares and per share amounts)

   --------------------------------------------------------------------------
   1998                    1st Quarter  2nd Quarter  3rd Quarter  4th Quarter
   --------------------------------------------------------------------------
   <S>                      <C>          <C>          <C>          <C>
   Net sales                $   5,788    $   6,027    $   6,003    $   5,807
   Gross profit                 3,208        3,428        3,237        2,882
   Net income (loss)              152           60          101       (1,928)(1)
   Diluted income (loss)
     available to common
     shareholders per share $     .02    $     .00    $     .01    $    (.21)
   Weighted average
     common shares          9,306,000    9,315,000    9,330,000    9,343,000


   --------------------------------------------------------------------------
   1999                    1st Quarter  2nd Quarter  3rd Quarter  4th Quarter
   --------------------------------------------------------------------------
   <S>                      <C>          <C>          <C>          <C>
   Net sales                $   6,898    $   6,750    $   7,224    $   7,256
   Gross profit                 3,287        3,380        3,949        3,872
   Net income (loss)           (1,005)        (394)         145         (779)(2)
   Diluted income (loss)
     available to common
     shareholders per share $   (0.11)   $   (0.04)   $    0.02    $   (0.08)
   Weighted average
     common shares          9,351,000    9,358,000    9,368,000    9,424,000


  (1)  After a charge of $1,750,000 for ACI and Aloe & Herbs as described
       in  Note Six.

  (2)  After a charge of $1,042,000 for OFD as described in Note Ten.
</TABLE>
<PAGE>
<TABLE>
  Financial Statement Schedule
  Valuation and Qualifying Accounts
  (In thousands)

  Description                           Additions
                                     ----------------
                           Balance   Charged  Charged
                             at         to      to                   Balance
                          Beginning  Cost and  Other                 at End
                          of Period  Expenses Accounts  Deductions  of Period
  ---------------------------------------------------------------------------
  1997
  ---------------------------------------------------------------------------
  <S>                      <C>      <C>        <C>        <C>        <C>
  Bad debt reserve         $  213   $  280     $  -       $   15     $  478
  Inventory reserve           322      523        -          329        516
  Rebates                     136      331        -          125        342
  ---------------------------------------------------------------------------
  1998
  ---------------------------------------------------------------------------
  Bad debt reserve         $  478   $  564     $  -       $  120     $  922
  Inventory reserve           516       53        -           44        525
  Rebates                     342    3,499        -        3,437        404
  ACI and Aloe & Herbs
    non-current notes and
    investments included
    in other assets             -    1,350        -            -      1,350
  ---------------------------------------------------------------------------
  1999
  ---------------------------------------------------------------------------
  Bad debt reserve         $  922   $  107     $  -       $  726     $  303
  Inventory reserve           525        -        -           95        430
  Rebates                     404    2,058        -        2,122        340
  ACI and Aloe & Herbs
    non-current notes and
    investments included
    in other assets         1,350        -        -           58      1,292
  Oregon Freeze Dry, Inc.       -    1,042      (343)          -        699

</TABLE>
<PAGE>


                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


  Shareholders and Board of Directors
    Carrington Laboratories, Inc.

  We  have  audited  the  accompanying  consolidated  balance  sheets  of
  Carrington Laboratories, Inc. and subsidiaries as of December  31, 1999
  and  1998  and  the  related  consolidated  statements  of  operations,
  shareholders' investment and cash flows for each of the three  years in
  the  period ended  December  31,  1999.   Our audits also  included the
  financial  statement  schedule  listed in the  Index at  item 14(a) for
  the same  periods.  These financial  statements  and  schedule  are the
  responsibility  of the Company's management.  Our responsibility is  to
  express an opinion  on these financial statements and schedule based on
  our audit.

  We conducted our audits in accordance with auditing standards generally
  accepted in the United  States.  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 consolidated  financial
  position of  Carrington  Laboratories,  Inc.  and  subsidiaries  as  of
  December 31,  1999 and  1998, and  the  consolidated results  of  their
  operations and  their cash  flows for each  of  the three  years in the
  period ended December 31, 1999 in conformity with accounting principles
  generally accepted in  the United States.   Also,  in our opinion,  the
  related  financial  statement  schedule, when considered in relation to
  the basic financial statements taken as  a  whole,  presents  fairly in
  all material respects the information set forth therein.


                                          Ernst & Young LLP



  Dallas, Texas
  February 21, 2000

<PAGE>
                                SIGNATURES

       Pursuant  to  the  requirements  of  Section 13 or 15(d) of the
  Securities Exchange Act of 1934, the registrant has duly caused this
  report to be signed on its behalf by the undersigned, thereunto duly
  authorized.

                                     CARRINGTON LABORATORIES, INC.



  Date:  March 29, 2000         By: /s/ Carlton E. Turner
                                    ---------------------
                                Carlton E. Turner, Ph.D.,D.Sc. President

       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.



          Signatures                    Title                      Date
  -------------------------   -----------------------------   --------------

  /s/ Carlton E. Turner       President, Chief Executive      March 29, 2000
  Carlton E. Turner, Ph.D.,   Officer and Director
    D.Sc.                      (principal executive officer)



  /s/ Robert W. Schnitzius    Chief Financial Officer         March 29, 2000
  Robert W. Schnitzius         (principal financial and
                               accounting officer)



  /s/ R. Dale Bowerman        Director                        March 29, 2000
  R. Dale Bowerman



  /s/ George DeMott           Director                        March 29, 2000
  George DeMott



  /s/ Robert A. Fildes, Ph.D. Director                        March 29, 2000
  Robert A. Fildes, Ph.D.



  /s/ Thomas J. Marquez       Director                        March 29, 2000
  Thomas J. Marquez



  /s/ Selvi Vescovi           Director                        March 29, 2000
  Selvi Vescovi
<PAGE>

                          INDEX TO EXHIBITS


  Exhibit                                                       Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  3.1*     Restated Articles of Incorporation of Carrington
           Laboratories, Inc.

  3.2*     Statement of Change of Registered Office and
           Registered Agent of Carrington Laboratories, Inc.

  3.3*     Statement of Resolution Establishing Series D
           Preferred Stock of Carrington Laboratories, Inc.

  3.4      Bylaws of Carrington Laboratories, Inc., as amended
           through March 3, 1998 (incorporated herein by
           reference to Exhibit 3.8 to Carrington's 1997
           Annual Report on Form 10-K).

  4.1      Form of certificate for Common Stock of Carrington
           Laboratories, Inc. (incorporated herein by
           reference to Exhibit 4.5 to Carrington's
           Registration Statement on Form S-3 (No. 33-57360)
           filed with the Securities and Exchange Commission
           on January 25, 1993).

  4.2*     Rights Agreement dated as of September 19, 1991
           between Carrington Laboratories, Inc. and
           Ameritrust Company National Association.

  4.3      Amendment No. 1 to Rights Agreement dated October
           21, 1998 (incorporated herein by reference to
           Exhibit 4 to the Company's Form 8/A/A Post-
           Effective Amendment No. 1).

  10.1H    Retirement and Consulting Agreement dated August
           14, 1997 between Carrington Laboratories, Inc. and
           David Shand (incorporated herein by reference to
           Exhibit 4.1 to Carrington's quarterly report on
           Form 10-Q for the quarter ended September 30,
           1997).

  10.2H    First Amendment to Retirement and Consulting
           Agreement dated September 30, 1997 between
           Carrington Laboratories, Inc. and David G. Shand
           (incorporated herein by reference to Exhibit 4.2 to
           Carrington's quarterly report on Form 10-Q for the
           quarter ended September 30, 1997).
<PAGE>

  Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.3*    Contract Research Agreement dated as of August 8,
           1991 between Carrington Laboratories, Inc. and
           Texas Agriculture Experimental Station, as agent
           for the Texas A&M University System (incorporated
           herein by reference to Exhibit 10.55 to
           Carrington's 1991 Annual Report on Form 10-K).

  10.4*    Lease Agreement dated as of August 30, 1991 between
           Carrington Laboratories, Inc.  and Western Atlas
           International, Inc.

  10.5*    First Lease Amendment dated April 16, 1992 between
           Carrington laboratories, Inc. and Western Atlas
           International, Inc.

  10.6*    Second Lease Amendment dated September 23, 1993
           between Carrington Laboratories, Inc. and Western
           Atlas International, Inc.

  10.7*    Third Lease Amendment dated December 1, 1994
           between Carrington Laboratories, Inc. and Western
           Atlas International, Inc.

  10.8*    Fourth Lease Amendment dated August 31, 1999
           between Western Atlas International, Inc. and
           Carrington Laboratories, Inc.

  10.9H*   Employee Stock Purchase Plan of Carrington
           Laboratories, Inc., as amended through June 15,
           1995.

  10.10*   Common Stock Purchase Warrant dated September 14,
           1993 issued by Carrington Laboratories, Inc. to E.
           Don Lovelace.

  10.11*   Common Stock Purchase Warrant dated September 14,
           1993, issued by Carrington Laboratories, Inc., to
           Jerry L. Lovelace.

  10.12*   Lease Agreement dated June 15, 1994 between DFW
           Nine, a California limited partnership, and
           Carrington Laboratories, Inc.

  10.13*   Lease Amendment dated August 23, 1994 amending
           Lease Agreement listed as Exhibit 10.12.
<PAGE>

  Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.14*   Production Contract dated February 13, 1995 between
           Carrington Laboratories, Inc. and Oregon Freeze
           Dry, Inc.

  10.15*   Modification Number One dated February 19, 1996 to
           the Production Contract dated February 13, 1995
           between Carrington Laboratories, Inc. and Oregon
           Freeze Dry, Inc.

  10.16*   Modification Number Two dated November 11, 1996 to
           the Production Contract dated February 13, 1995
           between Carrington Laboratories, Inc. and Oregon
           Freeze Dry, Inc.

  10.17    Modification Number Three to the Production
           Contract dated February 13, 1995 between Carrington
           Laboratories, Inc. and Oregon Freeze Dry, Inc.
           (incorporated herein by reference to Exhibit 10.89
           to Carrington's 1998 Annual Report on Form 10-K).

  10.18H   1995 Management Compensation Plan (incorporated
           herein by reference to Exhibit 4.1 to Form S-8
           Registration Statement No. 33-64403 filed with the
           Commission on November 17, 1995).

  10.19    Trademark License Agreement dated August 14, 1997
           between Caraloe, Inc. and Mannatech, Inc.
           (incorporated herein by reference to Exhibit 10.2
           to Carrington's quarterly report on Form 10-Q for
           the quarter ended September 30, 1997).

  10.20    Supply Agreement dated August 14, 1997 between
           Caraloe, Inc. and Mannatech, Inc.(incorporated
           herein by reference to Exhibit 10.3 to Carrington's
           quarterly report on Form 10-Q for the quarter ended
           September 30, 1997).

  10.21*   Letter of Agreement dated January 12, 2000
           extending Trademark License Agreement and Supply
           Agreement between Caraloe, Inc. and Mannatech,
           Inc..

  10.22    Trademark License and Product Supply Agreement
           dated July 22, 1997 between Caraloe, Inc., and Nu
           Skin International, Inc. (incorporated herein by
           reference to Exhibit 10.1 to Carrington's quarterly
           report on Form 10-Q for the quarter ended September
           30, 1997).
<PAGE>
  Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.23    Non-exclusive Sales and Distribution Agreement
           dated August 22, 1995 between Innovative
           Technologies Limited and Carrington Laboratories,
           Inc. (incorporated herein by reference to Exhibit
           10.6 to Carrington's Third Quarter 1995 Report on
           Form 10-Q).

  10.24    Supplemental Agreement dated October 16, 1995 to
           Non-exclusive Sales and Distribution Agreement
           between Innovative Technologies Limited and
           Carrington Laboratories, Inc.(incorporated herein
           by reference to Exhibit 10.7 to Carrington's Third
           Quarter 1995 Report on Form 10-Q).

  10.25    Product Development and Exclusive Distribution
           Agreement dated November 10, 1995 between
           Innovative Technologies Limited and Carrington
           Laboratories, Inc.(incorporated herein by reference
           to Exhibit 10.8 to Carrington's Third Quarter 1995
           Report on Form 10-Q).

  10.26    Form of Stock Purchase Agreement dated April 5,
           1995 between Carrington Laboratories, Inc. and
           persons named in Annex I thereto (incorporated
           herein by reference to Exhibit 2.1 to Carrington's
           Registration Statement 33-60833 on Form S-3).

  10.27    Form of Registration Rights Agreement dated June
           20, 1995 between Carrington Laboratories, Inc. and
           persons named in Annex I thereto (incorporated
           herein by reference to Exhibit 2.2 to Carrington's
           Registration Statement 33-60833 on Form S-3).

  10.28    Supply and Distribution Agreement dated March 22,
           1996 between Farnam Companies, Inc. and Carrington
           Laboratories, Inc. (incorporated herein by
           reference to Exhibit 10.76 to Carrington's 1995
           Annual Report on Form 10-K).

  10.29    Distribution Agreement dated March 1, 1996 between
           Carrington Laboratories, Inc. and Ching Hwa
           Pharmaceutical Co., Ltd. (incorporated herein by
           reference to Exhibit 10.1 to Carrington's First
           Quarter 1996 Report on Form 10-Q).

  10.30H   Carrington Laboratories, Inc. 1995 Stock Option
           Plan, As Amended and Restated Effective January 15,
           1998 (incorporated herein by reference to Exhibit
           10.3 to Carrington's Quarterly Report on Form 10-Q
           for the quarter ended March 31, 1998).
<PAGE>
  Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.31H   Form of Nonqualified Stock Option Agreement with
           Outside Director, relating to the Registrant's 1995
           Stock Option Plan, as amended (incorporated herein
           by reference to Exhibit 10.3 to Carrington's
           Quarterly Report on Form 10-Q for the quarter ended
           June 30, 1998).

  10.32H   Form of Incentive Stock Option Agreement for
           Employees (incorporated herein by reference to
           Exhibit 4.4 to Carrington's Second Quarter 1996
           Report on Form 10-Q).

  10.33    Sales Distribution Agreement dated September 30,
           1996 between Faulding Pharmaceuticals Laboratories
           and Carrington Laboratories, Inc.(incorporated
           herein by reference to Exhibit 10.1 to Carrington's
           Third Quarter 1996 Report on Form 10-Q).

  10.34    Amendment Number One to Sales Distribution
           Agreement dated January 12, 1998 between Carrington
           Laboratories, Inc., and Faulding
           Pharmaceuticals/David Bull Laboratories
           (incorporated herein by reference to Exhibit 10.75
           to Carrington's 1997 Annual Report on Form 10-K).

  10.35    Sales Distribution Agreement dated December 1, 1996
           between Suco International Corp. and Carrington
           Laboratories, Inc. (incorporated by reference to
           Exhibit 10.54 to Carrington's 1996 Annual Report on
           Form 10-K).

  10.36    Sales Distribution Agreement dated December 20,
           1996 between Recordati, S.P.A. and Carrington
           Laboratories, Inc. and Carrington Laboratories
           Belgium N.V.(incorporated by reference to Exhibit
           10.55 to Carrington's 1996 Annual Report on Form
           10-K).

  10.37    Nonexclusive Distribution Agreement dated November
           15, 1996 between Polymedica Industries, Inc. and
           Carrington Laboratories, Inc. (incorporated by
           reference to Exhibit 10.56 to Carrington's 1996
           Annual Report on Form 10-K).

  10.38    Sales Distribution Agreement dated December 24,
           1996 between Gamida-Medequip Ltd. and Carrington
           Laboratories, Inc. (incorporated by reference to
<PAGE>

  Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
           Exhibit 10.57 to Carrington's 1996 Annual Report on
           Form 10-K).

  10.39    Sales Distribution Agreement dated December 24,
           1996 between Gamida For Life BV and Carrington
           Laboratories, Inc. (incorporated by reference to
           Exhibit 10.58 to Carrington's 1996 Annual Report on
           Form 10-K).

  10.40    Sales Distribution Agreement dated December 4, 1996
           between Darrow Laboratorios S/A and Carrington
           Laboratories, Inc. (incorporated by reference to
           Exhibit 10.59 to Carrington's 1996 Annual Report on
           Form 10-K).

  10.41*   Independent Sales Representative Agreement dated
           June 1, 1998 between Meares Medical Sales
           Associates and Carrington Laboratories, Inc..

  10.42    Supply Agreement dated February 13, 1997 between
           Aloe Commodities International, Inc. and Caraloe,
           Inc. (incorporated by reference to Exhibit 10.63 to
           Carrington's 1996 Annual Report on Form 10-K).

  10.43    Trademark License Agreement dated March 1, 1997
           between Light Resources Unlimited and Carrington
           Laboratories, Inc. (incorporated by reference to
           Exhibit 10.64 to Carrington's 1996 Annual Report on
           Form 10-K).

  10.44    Supply Agreement dated February 13, 1997 between
           Light Resources Unlimited and Caraloe, Inc.
           (incorporated by reference to Exhibit 10.65 to
           Carrington's 1996 Annual Report on Form 10-K).

  10.45    Sales Distribution Agreement dated December 27,
           1996 between Penta Farmaceutica, S.A. and
           Carrington Laboratories, Inc. (incorporated by
           reference to Exhibit 10.66 to Carrington's 1996
           Annual Report on Form 10-K).

  10.46    Sales Distribution Agreement dated November 1, 1995
           between Laboratories PiSA S.A. DE C.V. and
           Carrington Laboratories, Inc. (incorporated by
           reference to Exhibit 10.70 to Carrington's 1996
           Annual Report on Form 10-K).
<PAGE>

 Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.47    Sales Distribution Agreement dated January 1, 1998
           between Carrington Laboratories, Inc. and
           Carrington Laboratories Belgium N.V. and Henry
           Schein U.K. Holdings, Ltd., (incorporated herein by
           reference to Exhibit 10.1 to Carrington's Quarterly
           Report on Form 10-Q for the quarter ended March 31,
           1998).

  10.48    Sales Distribution Agreement dated January 5, 1998
           between Carrington Laboratories, Inc. and
           Carrington Laboratories Belgium N.V. and Saude 2000
           (incorporated herein by reference to Exhibit 10.2
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended March 31, 1998).

  10.49    Sales Distribution Agreement dated March 27, 1998
           between Carrington Laboratories, Inc. and
           Carrington Laboratories Belgium N.V. and Hemopharm
           GmbH (incorporated herein by reference to Exhibit
           10.4 to Carrington's Quarterly Report on Form 10-Q
           for the quarter ended March 31, 1998).

  10.50    Sales Distribution Agreement dated March 27, 1998
           between Carrington Laboratories, Inc. and
           Carrington Laboratories Belgium N.V. and Vincula
           International Trade Company (incorporated herein by
           reference to Exhibit 10.5 to Carrington's Quarterly
           Report on Form 10-Q for the quarter ended March 31,
           1998).

  10.51    Agency and Sales Distribution Agreement dated April
           13, 1998 between Carrington Laboratories, Inc. and
           Carrington Laboratories Belgium N.V. and Egyptian
           American Medical Industries, Inc. (incorporated
           herein by reference to Exhibit 10.1 to Carrington's
           Quarterly Report on Form 10-Q for the quarter ended
           June 30, 1998).

  10.52    Sales Distribution Agreement dated April 24, 1998
           between Carrington Laboratories, Inc. and
           Carrington Laboratories Belgium N.V. and CSC
           Pharmaceuticals Ltd. Dublin (incorporated herein by
           reference to Exhibit 10.2 to Carrington's Quarterly
           Report on Form 10-Q for the quarter ended June 30,
           1998).

  10.53    Amendment Number One dated May 27, 1999 to the
           Sales Distribution Agreement dated April 17, 1998
           between Carrington Laboratories, Inc. and
           Carrington Laboratories, Belgium, NV and CSC
           Pharmaceuticals, Ltd., Dublin (incorporated herein
           by reference to Exhibit 10.5 to Carrington's
<PAGE>

 Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
           Quarterly Report on Form 10-Q for the quarter ended
           June 30, 1999).

  10.54    Promissory Note of Aloe Commodities International,
           Inc.,dated June 17, 1998, payable to the order of
           the Registrant in the principal amount of $200,000
           (incorporated herein by reference to Exhibit 10.4
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended June 30, 1998).

  10.55    Letter agreements dated September 30, 1998 and
           November 4, 1998 between Aloe Commodities
           International, Inc. and the Registrant amending due
           date of Promissory Note dated June 17, 1998 from
           Aloe Commodities International, Inc. to the
           Registrant (incorporated herein by reference to
           Exhibit 10.2 to Carrington's Quarterly Report on
           Form 10-Q for the quarter ended September 30,
           1998).

  10.56    Letter Agreement dated February 4, 1999 between
           Aloe Commodities International, Inc. and the
           Registrant amending due date of Promissory Note
           dated June 17, 1998 from Aloe Commodities
           International, Inc. to the Registrant (incorporated
           herein by reference to Exhibit 10.98 to
           Carrington's 1998 Annual Report on Form 10-K).

  10.57    Promissory Note dated July 1, 1998 of Rancho Aloe,
           (C.R.) S.A. payable to the order of the Registrant
           in the principal amount of $186,655.00
           (incorporated herein by reference to Exhibit 10.1
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended September 30, 1998).

  10.58    Wound and Skin Care Purchase Agreement dated August
           27, 1998 between American Association for Homes &
           Services for the Aging and Carrington Laboratories,
           Inc. (incorporated herein by reference to Exhibit
           10.2 to Carrington's Quarterly Report on Form 10-Q
           for the quarter ended September 30, 1998).

  10.59    Purchase Agreement dated October 1, 1998 between
           Vencor, Inc. and Carrington Laboratories, Inc.
           (incorporated herein by reference to Exhibit 10.3
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended September 30, 1998).

  10.60    Supply Agreement dated October 12, 1998 between
           Caraloe, Inc. and One Family, Inc. (incorporated
           herein by reference to Exhibit 10.90 to
           Carrington's 1998 Annual Report on Form 10-K).

<PAGE>

 Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.61    Trademark License Agreement dated October 12, 1998
           between Caraloe, Inc.  and One Family, Inc.
           (incorporated herein by reference to Exhibit 10.91
           to Carrington's 1998 Annual Report on Form 10-K).

  10.62    Promissory Note of Aloe & Herbs International, Inc.
           dated November 23, 1998 payable to the order of the
           Registrant in the principal amount of $300,000
           (incorporated herein by reference to Exhibit 10.92
           to Carrington's 1998 Annual Report on Form 10-K).

  10.63    Supply Agreement dated December 3, 1998 between
           Caraloe, Inc. and Eventus International, Inc.
           (incorporated herein by reference to Exhibit 10.93
           to Carrington's 1998 Annual Report on Form 10-K).

  10.64    Trademark License Agreement dated December 3, 1998
           between Caraloe, Inc. and Eventus International,
           Inc. (incorporated herein by reference to Exhibit
           10.94 to Carrington's 1998 Annual Report on Form
           10-K).

  10.65    Amendment Number One dated December 3, 1998 to
           Supply Agreement between Caraloe, Inc. and Eventus
           International, Inc. (incorporated herein by
           reference to Exhibit 10.95 to Carrington's 1998
           Annual Report on Form 10-K).

  10.66    Clinical Services Agreement dated January 25, 1999
           between Carrington Laboratories, Inc. and PPD
           Pharmaco, Inc. (incorporated herein by reference to
           Exhibit 10.96 to Carrington's 1998 Annual Report on
           Form 10-K).

  10.67    Common Stock Purchase Warrant dated November 23,
           1998, issued by Aloe and Herbs International, Inc.
           to Carrington Laboratories, Inc. (incorporated
           herein by reference to Exhibit 10.99 to
           Carrington's 1998 Annual Report on Form 10-K).

  10.68    Supply Agreement dated March 5, 1999 between
           Caraloe, Inc. and For Your Health, Inc.
           (incorporated herein by reference to Exhibit 10.1
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended March 31, 1999).
<PAGE>

 Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.69    Trademark License Agreement dated March 5, 1999
           between Caraloe, Inc. and For Your Health, Inc.
           (incorporated herein by reference to Exhibit 10.2
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended March 31, 1999).

  10.70    Letter dated February 25, 1999 from Aloe
           Commodities, Inc. to  Carrington Laboratories, Inc.
           (incorporated herein by reference to Exhibit 10.3
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended March 31, 1999).

  10.71    Exclusive Sales Representative Agreement dated
           April 13, 1999, between Caraloe, Inc. and Classic
           Distributing Company (incorporated herein by
           reference to Exhibit 10.1 to Carrington's Quarterly
           Report on Form 10-Q for the quarter ended June 30,
           1999).

  10.72    Exclusive Sales Representative Agreement dated
           April 13, 1999, between Caraloe, Inc. and Glenn
           Corporation (incorporated herein by reference to
           Exhibit 10.2 to Carrington's Quarterly Report on
           Form 10-Q for the quarter ended June 30, 1999).

  10.73    Terms Sheet for Lease of Rancho Aloe Farm Land to
           Sabila Industrial dated April 20, 1999
           (incorporated herein by reference to Exhibit 10.3
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended June 30, 1999).

  10.74    Terms Sheet for Maintenance of Sabila Industrial
           Plants on Leased Land dated April 20, 1999
           (incorporated herein by reference to Exhibit 10.4
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended June 30, 1999).

  10.75    Exclusive Sales and Trademark Agreement dated June
           11, 1999, between Caraloe, Inc. and Nutra Vine
           (incorporated herein by reference to Exhibit 10.1
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended September 30, 1999).

  10.76    Lease Agreement dated September 23, 1999 between
           Rancho Aloe and Sabila Industrial, S.A.
           (incorporated herein by reference to Exhibit 10.2
           to Carrington's Quarterly Report on Form 10-Q for
           the quarter ended September 30, 1999).
<PAGE>

 Exhibit                                                        Sequentially
  Number                         Exhibit                        Numbered Page
  ------   ---------------------------------------------------  -------------
  10.77    Letter Agreement dated September 29, 1999 between
           Aloe Commodities International, Inc. and Carrington
           Laboratories, Inc. (incorporated herein by
           reference to Exhibit 10.3 to Carrington's Quarterly
           Report on Form 10-Q for the quarter ended September
           30, 1999).

  10.78*   Sales Distribution Agreement dated October 26,
           1999. between Carrington Laboratories, Inc. and E-
           Wha International, Inc.

  10.79*   Amendment Number Two dated February 14, 2000 to the
           Sales Distribution Agreement dated April 17, 1998
           between Carrington Laboratories, Inc. and
           Carrington Laboratories, Belgium, NV and CSC
           Pharmaceuticals, Ltd. Dublin.

  10.80*   Supplier Agreement dated August 6, 1999 between
           Novation, LLC and Carrington Laboratories, Inc.
           MS 91022

  10.81*   Supplier Agreement dated August 6, 1999 between
           Novation, LLC and Carrington Laboratories, Inc.
           MS 91032

  21.1*    Subsidiaries of Carrington.

  23.1*    Consent of Independent Public Accountants

  27.1*    Financial Data Schedule




  *    Filed herewith.
  H    Management contract or compensatory plan.