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, 2000
                        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 26,  2001, was  $9,205,000.   (This figure  was
 computed on the  basis of  the closing  price of  such stock  on the  NASDAQ
 National Market on March 26 2001, 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:
 9,734,087 shares of Common Stock, par value $.01 per share, were outstanding
                              on March 26, 2001.

                     DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Registrant's proxy statement for its annual meeting of
  shareholders to be held on May 17, 2001 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 Thirteen to the consolidated  financial
 statements in  this  Annual Report  for  financial information  about  these
 business divisions.   The  Company  sells 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, alternate care facilities, cancer  centers
 and the home  health care market.   The Company's  products are designed  to
 provide patients with the highest quality  of care. Carrington products  are
 used in a wide range  of acute and chronic  wounds, for skin conditions  and
 incontinence care.   The primary marketing  emphasis for Carrington's  wound
 and  skin  care  products  is  directed  toward  hospitals,  nursing  homes,
 alternate care facilities,  cancer centers, home  health care providers  and
 managed care organizations.  The wound and skin care product lines are being
 promoted primarily to  physicians and specialty  nurses, e.g.,  enterostomal
 therapists.

 In response to changing market conditions,  the Company decided during  2000
 to redirect the distribution of its Medical Services products from  multiple
 distributors to a  single, sole-source  distributor.   As a  result of  this
 decision, the  Company entered  into an  exclusive Distributor  and  License
 Agreement  effective  December  1,   2000  with  Medline  Industries,   Inc.
 ("Medline").  Medline  is now responsible  for all sales  and marketing  and
 distribution efforts for  Carrington's  wound  and  skin care product lines.
 The Company has a Supply Agreement  with  Medline that allows the Company to
 manufacture specific products where the Company can meet or reduce Medline's
 current purchase price.

 Medline currently has  45 employees solely  dedicated to  Carrington/Medline
 advanced wound care products, 38 home care representatives, 298 general line
 representatives  and  4  Wound  Care  Specialists  (Enterostomal  Therapist)
 engaged  in  the sales  and marketing  of  Medline/Carrington products.   In
 addition to this field  sales force, Medline  employs 71 telemarketers,  who
 focus on alternative care facilities and the home health care market, and 62
 employees in customer service.
<PAGE>
 Prior to the agreement with Medline, the Company sold its products primarily
 through a network of distributors.   Two of the largest distributors in  the
 hospital market are McKesson  HBOC/General Medical("McKesson"), and Owens  &
 Minor. During  fiscal 1998,  1999 and  2000, sales  of wound  and skin  care
 products to  McKesson  represented 11%,  5%  and 6%,  respectively,  of  the
 Company's total net sales.  Sales to  Owens & Minor represented 10%, 9%  and
 10%, respectively, of total net sales during the same periods.

 The Company maintains control of over 200 national pricing agreements  which
 cover hospitals, alternate  care facilities, home  health care agencies  and
 cancer centers.  These pricing  agreements allow Medline representatives  to
 make presentations in member facilities throughout the country.

 In February  2000,  the Company  announced  the extension  of  its  existing
 purchase agreement with  the Veterans  Administration ("VA")  for wound  and
 skin cleansers.   In March 2000,  the Company received  the award  of a  new
 purchase agreement with  the VA for  its amorphous hydrogel  products.   The
 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 has several distribution and  licensing agreements for the  sale
 of its  products into  international markets.  In 2000, total  international
 sales of wound care  products were $539,000.  The Company  also sells  wound
 care products into international markets  on a non-contract, purchase  order
 basis.  In  2000, total non-contract,  international wound  care sales  were
 $417,000  and  included  sales  into  Argentina,   Colombia,   Puerto  Rico,
 Costa  Rica  and  the  United  Arab Emirates.  Opportunities  in the growing
 Internet  market are  also  addressed   through  the   Company's   websites,
 www.carringtonlabs.com. and www.woundcare.com.

 The Company also markets Acemannan Immunostimulant[TM] , an adjuvant therapy
 for  certain  cancers  in  dogs  and  cats,  and several wound and skin care
 products  to  the  veterinary  market.   Acemannan  Immunostimulant[TM]  was
 conditionally approved  by  the  United  States  Department  of  Agriculture
 ("USDA")  in  November 1991,  for  use  in  conjunction with  surgery 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" status of the license  was removed  in July 2000  with the
 product receiving full license.

 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[TM].  The  CarraVet[R]
 product line currently consists of four products.
<PAGE>

                               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  www.AloeVera.com.  In  the  fourth  quarter  of  2000, Caraloe
 introduced  a  new   raw  material,  Hydrapol[TM],   for  use  by   cosmetic
 manufacturers.  Caraloe also offers  contract manufacturing services to  the
 nutritional and skin care market.

 In August 1997, Caraloe signed a non-exclusive supply agreement with a major
 customer to supply Manapol[R]  powder.  This  agreement was renewed  through
 July 2002 and contains monthly minimum purchase requirements.  During  1998,
 1999 and 2000, sales of Manapol[R] powder to this customer represented  23%,
 41% and 38%,  respectively,  of the  Company's total consolidated net sales.
 Subsequent to December 31, 2000, the Company agreed to a modification in the
 contract requirements that resulted  in lower minimum purchase  requirements
 for this customer.

 Caraloe also sells  products into international  markets on a  non-contract,
 purchase order basis.  In 2000,  total international sales for Caraloe  were
 $804,000.

                           Research and Development

                                   General

 Carrington has developed proprietary processes for obtaining materials  from
 Aloe vera L.   The Company  intends to seek  approval of the  Food and  Drug
 Administration (the "FDA")  and other regulatory  agencies to sell  products
 containing materials obtained from Aloe vera L. 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 $2,589,000, $5,300,000 and $3,602,000  on
 research and  development in  fiscal  1998,  1999  and  2000,  respectively.
 Expenditures for 1999 increased 105% over  1998 as a result of returning  to
 the clinic for the Phase III  trial in  ulcerative colitis,  which accounted
 for approximately 17.3% of the 2000 expenditures.
<PAGE>

 Following completion  of  the clinical  trial  in  March 2000  with  a  non-
 significant  result, the Company's Research and Development  group refocused
 its efforts toward current business  support  and the  establishment of  new
 opportunities  for the  Company  through  a strong basic research program to
 advance  product  leads for  the future, primarily  in  the  areas  of  drug
 delivery and neutropenia.

                        Basic and Preclinical Research


 The Company believes that its products' functionality and/or pharmacological
 activity  make  them  potential   candidates  for  further  development   as
 pharmaceutical or  therapeutic agents.   The  Company's preclinical  efforts
 will continue to  focus on supporting  existing business through  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  product applications  and  mechanisms  of
 action.  Pursuant  to this arrangement,  the Company has  access to  leading
 authorities in  immunology  and cell  biology,  as well  as  facilities  and
 equipment to engage in  experimentation and analysis  at the basic  research
 level.

 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[TM]. The product was conditionally
 approved based on safety and efficacy  studies.  The Company was  successful
 in meeting USDA's requirements for removal of the conditional status, and an
 unrestricted license was issued in July 2000.

 In 1998, a new  and unique complex carbohydrate  (CR1013) was isolated  from
 Aloe vera  L.   Basic "proof  of  concept" research  is continuing  on  this
 material.  Pilot scale production has been accomplished.  The technology has
 varied utility, but the  primary focus of  research is in  the area of  drug
 delivery.  Two patent applications covering this invention have been  filed.
 The composition and process patent was issued in 1999.

 Basic  research  studies  also  continued  at  the  University  of  Nebraska
 evaluating the ability of one of the Company's research products to  reverse
 the neutropenia effects of  radiation treatment.   Further proof of  concept
 studies are planned in 2001 to better understand the mechanism of action and
 product dose effects.

 In 1999,  the Company,  in conjunction  with  Baylor College  of  Dentistry,
 completed  a  series  of  ex  vivo  studies  evaluating  the  adherence   of
 Carrington's Oral Wound  Rinse to  epithelial cells  and keratin  associated
 with  the  mouth in  support  of  a pain  reduction claim  for the  product.
 Studies continued in 2000  and showed that  a fluorescent labeled  Acemannan
 Hydrogel[TM] compounded into the  Oral Wound Rinse  adheres to both  keratin
 and epithelial cells,  demonstrating the coating  and protecting effects  of
 the product.
<PAGE>

                            Human Clinical Studies

 Evaluation of Aliminase[TM] 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  reformulated  the
 product into a  single unit  dose powder  for reconstitution.   The  Company
 initiated a  Phase III  trial of  the  new dosage  form  in April  1999  and
 completed the study in March 2000.  No significant differences were found to
 support a therapeutic drug effect.  The program has been discontinued.

 Evaluation  of  RadiaGel[TM]  for  Pain  Associated  with  Radiation-Induced
 Dermatitis.  RadiaGel[TM] is  cleared to market for  relief of pain and  the
 management of radiation-induced  skin reactions.   In  2000, a  multi-center
 post-marketing  study  of  40  patients  was  conducted  to  determine   the
 effectiveness of topical application  of the gel on  skin pain for  patients
 undergoing external beam radiation therapy.   After one or more days of  use
 of the product, all evaluable patients reported significant improvements  in
 their skin pain severity.  Most of the patients indicated that the skin pain
 was better after  use of  the product,  and all  reported that  the gel  was
 better or much better  than similar products they  previously used to  treat
 their skin pain.

 Evaluation of  Carrington[R]  Oral  Wound Rinse  for  Pain  Associated  with
 Mucositis.  In  March 1997,  the FDA cleared  Carrington to  market an  Oral
 Wound Rinse for the management and relief of pain associated with  mucositis
 and all  types  of oral  wounds.   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 the  use of the  product.  A  multi-center
 post-marketing study of  40 additional patients  is in  progress to  further
 determine the  effectiveness of  Oral Wound  Rinse on  pain associated  with
 mucositis induced by radiation or chemotherapy.

 Evaluation of Carrington[R]  Oral  Wound  Rinse  for Prevention of Mucositis
 In 2000, the Company co-sponsored a pilot study of 30 patients in a placebo-
 controlled, double-blind trial  of Carrington[R]  Oral Wound  Rinse for  the
 prevention of  radiation-induced  mucositis.   The  trial results  were  not
 significant between groups in prevention of mucositis.

 Evaluation  of  Manapol[R]  on  the  Reduction  of  Cholesterol  Levels   in
 Volunteers.

 In  a  study  conducted  in   2000,  twenty-three  patients  with   moderate
 hypercholesterolemia were  given  either 160  mg  or 320  mg  of  Manapol[R]
 Classic daily for 6 weeks.  Manapol[R] produced a favorable effect on  blood
 lipids, particularly  in reducing  LDL  levels among  non-diabetic  subjects
 after 3 weeks of using either 160  mg (decrease of 9.8%)or 320 mg  (decrease
 of 7.8%).
<PAGE>

 Evaluation of the SaliCept[TM] Oral Patch for Reduction in the Incidence  of
 Dry Socket.

 An independent  study  conducted in  2000  that compared  the  incidence  of
 alveolar osteitis (AO:dry socket) in patients treated with Gelfoam[R] soaked
 with an antibiotic or SaliCept[TM]  Patches. A retrospective evaluation  was
 performed of  587  records  of  GelfoamR  treated  patients  compared  to  a
 prospective trial of 608  patients treated with  SaliCept[TM]  Patches.  The
 SaliCept[TM] Patch significantly reduced the  incidence of AO when  compared
 to the antibiotic-soaked Gelfoam[R].

                       Research and Development Summary

 The following  table  outlines the  status  of the  products  and  potential
 indications  of  the   Company's  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, Surgical        Marketed
                            Wounds
   Cleansers                Wounds                           Marketed
   Anti-fungal              Cutaneous Fungal Infection       Marketed
   Hydrocolloids            Wounds                           Marketed
   Alginates                Wounds                           Marketed

 Oral
 ----
   Human
      Pain Reduction        Mucositis                        Marketed

   Dental
     Pain Reduction         Aphthous Ulcers, Oral Wounds     Marketed
     Post Extraction        Oral Surgery                     Clinical

 Wounds
 ------
 Injectable
   Human                    Neutropenia associated with      Preclinical
    Neutropenia             cancer

   CR1013                   Drug delivery                    Preclinical
    Veterinary
      Adjunct for cancer    Fibrosarcoma                     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  in  a particular  country  or  for
 specific indications.

 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  such   products
 effectively.  If the Company is unable to enter into such agreements, it may
 undertake marketing 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 mannans
 and freeze-dried aloe extract from the  central portion of the Aloe vera  L.
 leaf known as the gel.   A basic bulk mannan (acemannan),  in the form of  a
 hydrogel, is used  as an ingredient  in certain of  the Company's wound  and
 skin care products.

 The Company owns  a 405-acre farm  in the Guanacaste  province of  northwest
 Costa Rica which  currently has approximately  148 acres  planted with  Aloe
 vera L.  The Company is  currently performing a land reclamation project  on
 the farm to increase productive acreage.  Currently, the Company's 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.  The  Company  has  entered  into  several  supply
 agreements with  local  suppliers near  the  Company's farm.    The  Company
 anticipates that the local suppliers will be able to meet substantially  all
 of its requirements for leaves in 2001.   This should result in a  reduction
 in the overall cost  for leaves and a  greater certainty of  supply.  A  10%
 increase in Aloe vera L. leaf prices from other sources would result in a 1%
 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>

 The Company has a  31% ownership interest in  Aloe and Herbs  International,
 Inc., ("Aloe & Herbs"), a Panamanian  corporation formed for the purpose  of
 establishing an Aloe vera  L. farm in Costa  Rica.  The  Company has a  leaf
 supply agreement with Rancho Aloe, S.A., a wholly owned subsidiary of Aloe &
 Herbs, which has a 5,000 acre farm in close proximity to the Company's farm.
 The  agreement calls  for a nominal  price of $0.18  per kilogram of  leaves
 supplied.  The final price payable to Rancho Aloe is based upon the yield of
 the final product.  Under the yield adjustment formula, the price for leaves
 can vary from $0.17 to $0.20.

 In September 1999, the Company has  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 renewed the lease in 2000  for
 an additional year.  The Company also pays a monthly fee for the maintenance
 of the plot.

 As of December 31, 2000, Rancho Aloe was providing an average of 38% 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

 Since 1995, the Company's wound and skin care product manufacturing facility
 has been  located in  the  Company's headquarters  in  Irving,  Texas.   The
 Company believes that this manufacturing facility has sufficient capacity to
 provide for the present line of products and to 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.

 All of the Company's bulk pharmaceutical products 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."
<PAGE>

                                 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 the Company  is exploring.  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.

                           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, drug devices 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.
<PAGE>

 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.  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).   The
 Company currently markets seven (7) products which require a prescription as
 medical devices.

 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
 and USDA.

 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.

 The Dietary Supplement Health  and Education Act  of 1994 ("DSHEA")  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" which  includes  vitamins, minerals,  herbs,  amino
 acids and other  dietary  substances  for human use  to supplement the diet.
 DSHEA grandfathered, 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,  requires
 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 DSHEA.
<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,
 DSHEA  amended,  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").

 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
 Caraloe 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.

 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.
<PAGE>

                        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.

 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.
<PAGE>

 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).

 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.

 In addition, the Company obtained an  Australian Patent (Patent No.  718631,
 having an  Accepted Journal  Date of  April  20, 2000)  on Uses  of  Denture
 Adhesive Containing Aloe Extract.   On June 20,  2000 Singapore granted  the
 Company a patent on Bioactive Factors of Aloe Vera Plants (P-No. 51748).
<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.

 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],  Carrasyn[R],  and CarraGauze[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.

 In June 2000, the Company obtained registration in the United States of  its
 mark
 AloeCeuticals[R] for its skin care products.
<PAGE>

                                  Employees

 As of January 31, 2001,  the Company employed 270  persons, of whom 29  were
 engaged in the  operation and maintenance  of its  Irving, Texas  processing
 plant, 194 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, 75 were located  in Texas, 194  in Costa Rica  and one in  Puerto
 Rico. 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  a  stated
 maturity  date and 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  is  used  for  operating  needs,  as
 required.  As of  December 31, 2000,  there was a $763,000  balance  owed to
 Comerica under the terms of the financing agreement.


 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  approximately  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 as well as  the production of the injectable  dosage
 forms of Acemannan Immunostimulant[TM].  The  Company  has  leased  a 51,200
 square  foot  building  in close proximity to the Walnut Hill facility for a
 ten-year term to house its  Research  and  Development  Department,  Quality
 Assurance  and  Quality  Control  Department and Warehouse  and Distribution
 Center.  The Company plans to relocate those functions  to this newly-leased
 facility in the third quarter of 2001.
<PAGE>

 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.  Prior to the expiration of
 the lease, the  Warehouse and  Distribution Center  will be  moved into  the
 newly-leased facility  described under  "Properties B  Laboratory  Facility"
 above.

 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 further meet regulatory requirements for the  production
 of bulk materials.   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 1999  to
 improve production.
<PAGE>


 ITEM 3. LEGAL PROCEEDINGS.

 The  Company  marketed a line  of  wound care  products for the treatment of
 radiation induced dermatitis using the   name RadiaCare[TM]. On  October 16,
 2000,  the  Company  received  notice from attorneys  for Bionix Development
 Corporation ("Bionix") claiming that Bionix  is the  owner  of  a registered
 trademark  for  RadiaCare  covering  certain  radiation  therapy  equipment,
 alleging  that  the  Company's  use  of  its RadiaCare[TM]  mark constitutes
 trademark infringement,  and demanding  that  the  Company cease  using that
 mark.  The  Company  has ceased  using the mark and will  continue to market
 the products without using the  name RadiaCare.  The Company and Bionix  are
 currently attempting to negotiate an amicable resolution of this dispute.

 On September 12, 2000,  Nutraceutical Solutions, Inc.,  a company formed  in
 March 2000 (the  "Plaintiff") filed a  lawsuit (Cause No.  00-4973-A in  the
 28th Judicial District Court  of Nueces County,  Texas) against the  Company
 and one  of its  employees (the  "Defendants") alleging  numerous causes  of
 action relating to the  Company's manufacturing and  marketing of a  product
 known as B-Complete[TM].   The Plaintiff alleges,  among other things,  that
 the Defendants began to market  B-Complete[TM], which the Plaintiff  alleges
 is identical to a product it acquired in May 2000 as part of its purchase of
 assets from  a  separate company  in  bankruptcy proceedings  and  infringes
 intellectual property  rights that  the Plaintiff  acquired as  part of  the
 asset purchase.

 In addition to seeking to recover  unspecified damages from the  Defendants,
 the lawsuit sought a temporary restraining order and temporary and permanent
 injunctions  prohibiting  the  Defendants  from  selling,  distributing   or
 marketing B-Complete[TM]  and  from  contacting the  existing  clientele  of
 Plaintiff, whose first  sale of  the product  it acquired  occurred in  June
 2000.   A temporary  restraining order  to  that effect  was served  on  the
 Defendants on  September  14,  2000,  and was  lifted  by  an  Agreed  Order
 Dissolving Temporary  Restraining  Order which was signed December 12, 2000.
 In a hearing held March 15, 2001, most causes of action aganist the  Company
 were dismissed.

 The Company believes the Plaintiff's remaining causes of action  are without
 merit and intends to defend the lawsuit vigorously.


 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 1999                             High         Low
 -----------                             ----         ----
 <S>                                    <C>          <C>
 First Quarter                          $4.25        $2.13

 Second Quarter                          3.19         2.50

 Third Quarter                           3.00         1.81

 Fourth Quarter                          2.75         1.50


 Fiscal 2000                             High         Low
 -----------                             ----         ----
 First Quarter                          $9.75        $2.00

 Second Quarter                          3.56         1.72

 Third Quarter                           2.38         1.63

 Fourth Quarter                          1.63         1.00

</TABLE>

 At March 26,  2001, there were  960 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.

 At a  meeting on  March 22,  2001,  the Board  of Directors  authorized  the
 repurchase of  up  to  1,000,000 shares,  or  approximately  10.3%.  of  the
 Company's outstanding Common Stock, dependent  on market conditions.   Under
 the authorization, purchases of Common Stock may be made on the open  market
 or through privately negotiated transactions at such times and prices as are
 determined jointly by  the Chairman of  the Board and  the President of  the
 Company.  The Board  authorized the repurchase program  based on its  belief
 that the Company's  stock is undervalued  in light of  the Company's  future
 prospects and that it would be in the  best interest of the Company and  its
 shareholders to repurchase some of its outstanding shares.  As of March  30,
 2001, the Company had not repurchased any of its outstanding Common Stock
<PAGE>


 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,  2000, is derived  from the  consolidated
 financial statements of the Company, of  which the Statements for  year 1996
 were audited by Arthur Andersen LLP, independent public accountants, and the
 Statements for years 1997  through 2000 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)  1996     1997     1998     1999     2000
 -------------------------------------------------------------------------------
 OPERATIONS STATEMENT INFORMATION:
 <S>                                <C>      <C>      <C>      <C>      <C>
 Net sales                          $21,286  $23,559  $23,625  $28,128  $23,103
 Costs and expenses:
   Cost of sales                     10,327    9,530   10,870   13,640   12,782
   Selling, general and
     administrative                  10,771   10,814   10,254   10,346   10,162
   Research and development           3,762    3,006    2,589    2,434    2,979
   Research and development,
     Aliminase[TM] clinical
     trial expenses                   2,165        -        -    2,866      623
   Charges related to ACI and
     Aloe & Herbs                         -        -    1,750        -        -
   Charges related to Oregon
     Freeze Dry, Inc.                     -        -        -    1,042      223
   Interest income, net                (304)     (37)    (233)    (105)     (80)
   Other income                           -        -        -      (62)    (110)
                                     ------   ------   ------   ------   ------
 Income (loss) before income taxes   (5,435)     246   (1,605)  (2,033)  (3,476)
     Provision for income taxes          88       20       10       -         -
                                     ------   ------   ------   ------   ------
 Net income (loss)                   (5,523)     226   (1,615)  (2,033)  (3,476)
 Dividends and income attributed
   to preferred shareholders         (1,023)     (70)        -       -        -
                                     ------   ------   ------   ------   ------
 Net income (loss) available to
   common shareholders              $(6,546) $   156  $(1,615) $(2,033) $(3,476)
                                     ======   ======   ======   ======   ======
 Net income (loss) per common
   share - basic and diluted(1)     $ (0.74) $  0.02  $ (0.17) $ (0.22) $ (0.36)
                                     ======   ======   ======   ======   ======
 Weighted average shares used in
   per share computations             8,798    8,953    9,320    9,376    9,545


 BALANCE SHEET INFORMATION
  (as of December 31):

 Working capital                    $13,910  $ 9,484  $ 9,716  $ 7,911  $ 6,275
 Total assets                        31,202   25,796   24,247   23,493   20,702
 Total shareholders' investment     $27,757  $22,826  $21,363  $19,504  $16,440

</TABLE>
 (1)  For a description of the calculation of  basic and  diluted net  income
      (loss) per share,  see  Note  Twelve  to  the  consolidated   financial
      statements.
<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  Thirteen  to   the
 consolidated financial  statements  for financial  information  about  these
 business segments.  The Company sells 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, 2000 and 1999, the Company held cash and cash equivalents of
 $3,200,000 and $2,453,000, respectively, an increase of $747,000.  Net  cash
 provided by operating activities in 2000  was $217,000, as compared to  cash
 used in operating activities in 1999 of $889,000.  The  Company received the
 first $875,000 installment under its licensing agreement with Medline in the
 fourth quarter  of 2000.   See Part  I  for discussions regarding agreements
 with Medline.  Significant  cash outflows  during 2000  included investments
 in  property  and  equipment  of  $445,000   and  expenses  related  to  the
 Aliminase[TM]  clinical  trial  of  $623,000.   Customers  with  significant
 accounts receivable balances  at the end  of 2000  included Mannatech,  Inc.
 ($665,500), Allegiance Health Care ($191,000), Owens & Minor ($202,000)  and
 Medline Industries ($124,000),  and of  these amounts,  $1,145,000 has  been
 collected as of March 8, 2001.

 As of December  31, 2000, 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 provided a cash  advance
 of $187,000, which is evidenced by  a note receivable, due in  installments,
 with payments being made monthly based upon farm production.
<PAGE>

 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.    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 2000, the Company received payments
 totaling $27,000  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 $417,000 of  Aloe vera L. leaves  from
 Rancho Aloe 2000.  The Company's interest  in  Aloe & Herbs  at December 31,
 2000 is approximately 31%.

 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 $763,000  at
 December 31, 2000 to fund operating needs.

 In February 1995, the  Company entered into a  supply agreement with  Oregon
 Freeze Dry,  Inc.  ("OFD"),  its  supplier  of freeze-dried  products.   The
 agreement  contained  a  minimum  purchase  commitment  of  $2,500,000.  The
 agreement expired in  August 2000.   The  Company established  a reserve  of
 $1,042,000 in  1999 and  increased the  reserve by  $223,000 in  the  second
 quarter of 2000  to cover its  liability to OFD  under the  agreement.   The
 Company is currently  negotiating with OFD  regarding purchase  arrangements
 beyond the term of the agreement, but no agreement has been finalized as  of
 March 31, 2001.

 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 Board of Directors recently authorized  the Company to repurchase up  to
 one million  shares  of its  outstanding  Common  Stock.   See  "Market  for
 Registrant's Common  Equity and  Related Stockholder  Matters" above.    The
 Company believes  it has  the financial  resources necessary  to  repurchase
 shares from time to time pursuant to the Board's repurchase authorization.

 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 2000 Compared to Fiscal 1999

 Net sales were  $23,103,000 in  2000, compared  with  $28,128,000  in  1999.
 Sales of Manapol[R]  by Caraloe in  the form of  raw materials and  consumer
 nutritional  products,  decreased  14.7%,   from  $12,739,000  in  1999   to
 $10,862,000 in  2000.   Total sales  of the  Company's wound  and skin  care
 products  in  2000  were  $12,241,000  as  compared  to $15,389,000 in 1999,
 primarily due to  a  significant  reduction  in  pricing to  maintain market
 competitiveness.  While wound care sales declined  21.9%  versus  the  prior
 year, unit volumes declined only 5%.

 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 2000 as  many
 of the  Company's  customers  either  went  out  of  business  or  purchased
 commodity products.  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 late  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  Radia[TM] line of products  for  the management  of  the  side
 effects of cancer therapy.
<PAGE>

 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 2000  were $1,343,000 as compared
 to  $1,423,000 in 1999.  Included  in the 2000 amount were sales of $539,000
 of wound care products, which was a decrease of $621,000 from 1999.

 Sales of the Company's oral technology  products decreased from $374,000  in
 1999 to $68,000 in 2000 because of significantly lower sales of the  product
 to an international customer.   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  $47,000 in  1999  to
 $130,000 in 2000.  These products were marketed on behalf of the Company  in
 2000 by Farnam Companies, Inc., a leading marketer of veterinary products.
<PAGE>

 Of the 2000 total  Manapol[R] sales, $9,470,000 was  related to the sale  of
 bulk Manapol[R] powder.  Caraloe currently sells  bulk Manapol[R] powder  to
 one major customer  under a three-year,  non-exclusive supply and  licensing
 agreement.  The current  agreement, expires in August  2002.  Sales to  this
 customer  decreased  from  $11,422,000   in  1999  to  $8,794,000  in  2000.
 Subsequent to December 31, 2000, the Company has agreed to a modification in
 the contract requirements that reduced minimum purchase requirements by this
 customer.

 In July  1999, Caraloe  launched its  new AloeCeuticals[R]  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 and 2000 totaled $131,000 and $446,000, respectively.

 Caraloe also continued to develop its contract manufacturing business during
 2000.   In  September 1998,  Caraloe  began  to manufacture  products  on  a
 contract manufacturing basis for  a direct sales  company selling skin  care
 products through licensed professionals.  Products manufactured include gels
 and creams  utilizing formulas  developed by  this customer.   In  September
 1999, Caraloe  began to  produce nutritional  beverages for  a direct  sales
 company  selling   nutritional   products  through   a   multi-level   sales
 organization.    Total  contract  manufacturing  sales  in  2000  under  the
 agreements with  these customers  were $779,000  compared with  $292,000  in
 1999.

 Cost of sales decreased from $13,640,000 in 1999 to $12,782,000 in 2000,  or
 6.3%.  As  a percentage  of sales,  cost of  sales increased  from 48.5%  to
 55.3%.  The  increase  in the  cost  of goods  sold percentage  was  largely
 attributable to lower sales  as a result of product mix and downward pricing
 pressures.

 Selling,  general  and   administrative  expenses   ("SG&A")  decreased   to
 $10,162,000 from $10,364,000,  or 1.9%.   Partially offsetting the  decrease
 was an increase in the selling  and marketing expenses for Caraloe  products
 of $296,000.  This  increase primarily represented  the costs for  increased
 advertising  and  marketing  support  of  the  AloeCeuticals[R]   brand   of
 Manapol[R] immune  enhancing  products.   The  decrease  in  SG&A  costs  as
 compared to 1999 is  partially attributable to  lower costs associated  with
 the provisions of the  contract with Medline  Industries, whereby the  wound
 and skin care sales force was  transferred to Medline effective December  1,
 2000.  Additionally,  distribution  costs were  lower  by $115,000  in  2000
 compared  to  1999.  This was  due to  slightly lower  volumes and  improved
 freight rates.

 Research and development  ("R&D") expenses decreased  to $3,602,000 in  2000
 from $5,300,000 in 1999, or 32.0%.   This decrease was primarily the  result
 of  a  reduction  of  $2,243,000   in  expenditures  for  the   unsuccessful
 Aliminase[TM]  clinical  trial  offset  by  an  increase in  basic  research
 costs  of approximately  $550,000.   The Company  continued  its efforts  in
 basic research  during 2000,  including  work  on  a  new and unique complex
 carbohydrate  (CR1013)  which has potential near-term utility in the area of
 drug delivery.  Also  included in the total R&D activities  during 2000 were
 various  small clinical  trials  designed to collect data in  support of the
 Company's products.
<PAGE>

 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.  The Company increased the reserve  by
 $223,000 in the second quarter of 2000.

 Net interest income  of $80,000  was realized  in 2000,  versus $105,000  in
 1999, with the variance primarily due to higher amounts drawn on the line of
 credit.

 Royalty income of $208,000 related to  the licensing agreement with  Medline
 is included in other income for 2000.

 There was no  provision for income  taxes in 2000.   A tax  benefit was  not
 recognized in 2000 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, 2000 and 1999 due to
 uncertainty regarding realization of the asset.

 The Company's  net  loss for  2000  was $3,476,000,  versus  a net  loss  of
 $2,033,000 for 1999.   The loss in 2000  is primarily attributable to  lower
 selling  prices  for wound  care  products  and  lower volumes of Manapol[R]
 sales.  The  1999  loss was due to  the $2,866,000 in  costs related to  the
 Aliminase[TM]  Clinical  Trial  and  the  $1,042,000  reserve  for  the  OFD
 contract.   The net loss per share was $.36 in  2000, compared to a net loss
 per share of $.22 in 1999.


 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
 a  major  customer  under a three-year,  non-exclusive supply and  licensing
 agreement.  The current agreement, which  expires in August 2002.  Sales  to
 this customer increased from $5,508,000 in 1998 to $11,422,000 in 1999.

 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.
<PAGE>

 Selling, general and administrative  expenses 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  changing market  conditions.  Partially
 offsetting  the  decrease  was  an  increase  of  $297,000  in  the  selling
 and marketing  expenses  for  Caraloe  products.  This  increase   primarily
 represented the costs for the development  of marketing materials supporting
 the  launch of  the AloeCeuticals[R]  brand of  Manapol[R] immune  enhancing
 products.

 Research and development 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 and 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  Aloe  Commodities
 International, Inc.  ("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  2000,
 ACI transferred 200,000  shares in Aloe  & Herbs to  the Company's  complete
 satisfaction of  another 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>

 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", "will",  "would",  "should"  or
 words of similar import.  Such  forward-looking statements include, but  are
 not limited to, statements regarding the ability of local suppliers of  Aloe
 vera L. leaves in Costa Rica  to supply the Company's  need for leaves at  a
 lower cost and with a greater  certainty of supply; the condition,  capacity
 and adequacy of  the Company's manufacturing  and laboratory facilities  and
 equipment; the adequacy of the protection that the Company's patents provide
 to the conduct  of its business  operations; the adequacy  of the  Company's
 protection of its  trade secrets  and unpatented  proprietary know-how;  the
 Company's belief that the claims of the Plaintiff identified under Item 3 of
 Part I of this report are without merit; the adequacy of the Company's  cash
 resources and cash flow from operations  to finance its current  operations;
 and the  Company's  intention,  plan  or  ability  to  repurchase shares  of
 its outstanding common stock, 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 file  additional  patent  applications,  to  rely
 on  trade  secrets,  unpatented  proprietary  know-how   and   technological
 innovation, to reach  satisfactory resolutions  of its  disputes with  third
 parties, to reach a satisfactory agreement with its supplier of freeze-dried
 products, to acquire sufficient quantities of Aloe vera L. leaves from local
 suppliers at significant savings, to collect  the amounts owed to it by  its
 distributors, customers and  other third parties,  and to use  its tax  loss
 carryforwards before they expire, as well as various other matters.
<PAGE>

 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's patents may not provide the Company
 with adequate protection, that the Company's manufacturing facilities may be
 inadequate to meet demand, that the Company's distributors may be unable  to
 market the Company's products successfully, that the Company may not be able
 to resolve its disputes  with third parties in  a satisfactory manner,  that
 the Company  may  be unable  to  reach  a satisfactory  agreement  with  its
 supplier of freeze-dried  products or with  other important suppliers,  that
 the  Company  may  not  be  able  to  use its  tax loss carryforwards before
 they  expire, that the Company  may not have sufficient financial  resources
 necessary to repurchase shares of its outstanding common stock, 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.

 All forward-looking statements  in this  report are  expressly qualified  in
 their entirety by the cautionary statements in the two immediately preceding
 paragraphs.
<PAGE>


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

 Foreign Currency

 The Company's manufacturing  operation in Costa  Rica accounted  for 52%  of
 cost of  sales for  the year  ended December  31, 2000.   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 2000,  the  exchange rate  from  U.S.
 Dollars to Costa Rica Colones  increased  by 6% to 318 at December 31, 2000.
 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
 $333,000 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 6% of sales for 2000.   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  products
 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
 1999, 2000 or 2001 (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 2001 annual meeting of shareholders, which will be filed pursuant  to
 Regulation 14A  within  120  days after  the  Company's  fiscal  year  ended
 December 31, 2000.


 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
 2001 annual  meeting  of  shareholders, which  will  be  filed  pursuant  to
 Regulation 14A  within  120  days after  the  Company's  fiscal  year  ended
 December 31, 2000.


 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  2001  annual  meeting   of
 shareholders, which will be filed pursuant to Regulation 14A within 120 days
 after the Company's fiscal year ended December 31, 2000.


 ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

 The information,  if  any,  required by  Item  13  of Form  10-K  is  hereby
 incorporated by reference from the  information appearing under the  caption
 "Certain Transactions", if any, in the Company's definitive Proxy  Statement
 relating to its  2001 annual meeting  of shareholders, which  will be  filed
 pursuant to Regulation 14A within 120  days after the Company's fiscal  year
 ended December 31, 2000.
<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.

    (2)    Financial Statement Schedules.

           Reference is made  to the  index on  page F-1  for a  list of  one
           financial statement  schedule  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 to this 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, 2000.

<PAGE>

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


 Consolidated Financial Statements of the Company:

      Consolidated Balance Sheets --
           December 31, 1999 and 2000                           F  -  2

      Consolidated Statements of Operations -- years ended
           December 31, 1998, 1999 and 2000                     F  -  3

      Consolidated Statements of Shareholders' Investment --
           years ended December 31, 1998, 1999 and 2000         F  -  4

      Consolidated Statements of Cash Flows -- years ended
           December 31, 1998, 1999 and 2000                     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,
                                                     1999         2000
                                                    -------      -------
 <S>                                               <C>          <C>
 ASSETS:
 Current Assets:
      Cash and cash equivalents                    $  2,453     $  3,200
      Accounts receivable, net of allowance
        for doubtful accounts of $304 and
        $98 in 1999 and 2000, respectively            3,690        2,181
      Inventories                                     5,184        4,723
      Prepaid expenses                                  573          183
                                                    -------      -------
 Total current assets                                11,900       10,287


 Property, plant and equipment, net                  10,985       10,322
 Other assets                                           608           93
                                                    -------      -------
 Total assets                                      $ 23,493     $ 20,702
                                                    =======      =======

 LIABILITIES AND SHAREHOLDERS' INVESTMENT
 Current Liabilities:
      Note payable                                 $    200     $    763
      Accounts payable                                1,871        1,764
      Accrued liabilities                             1,918        1,068
      Deferred revenue                                  -            417
                                                    -------      -------
 Total current liabilities                            3,989        4,012

 Deferred revenue, long-term                            -            250

 Commitments and contingencies

 SHAREHOLDERS' INVESTMENT:
 Common stock, $.01 par value, 30,000,000 shares
      authorized, 9,395,064 and 9,659,087 shares
      issued and outstanding at December 31,
      1999 and 2000, respectively                        94           97
 Capital in excess of par value                      51,910       52,319
 Deficit                                            (32,500)     (35,976)
                                                    -------      -------
 Total shareholders' investment                      19,504       16,440
                                                    -------      -------
 Total liabilities and shareholders' investment    $ 23,493     $ 20,702
                                                    =======      =======


 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,
                                              -------------------------------
                                               1998         1999        2000
                                              ------       ------      ------
 <S>                                         <C>          <C>         <C>
 Net sales                                   $23,625      $28,128     $23,103
 Costs and expenses:
   Cost of sales                              10,870       13,640      12,782
   Selling, general and administrative        10,254       10,346      10,162
   Research and development                    2,589        2,434       2,979
   Research and development, Aliminase[TM]
      clinical trial expenses                      -        2,866         623
   Charges related to ACI and Aloe & Herbs     1,750            -           -
   Charges related to Oregon Freeze Dry, Inc.      -        1,042         223
   Interest income, net                         (233)        (105)        (80)
   Other income                                    -          (62)       (110)
                                              ------       ------      ------
 Loss before income taxes                     (1,605)      (2,033)     (3,476)
 Provision for income taxes                       10            -           -
                                              ------       ------      ------
 Net loss                                    $(1,615)     $(2,033)    $(3,476)
                                              ======       ======      ======

 Net loss per share - basic and diluted      $ (0.17)     $ (0.22)    $ (0.36)
                                              ======       ======      ======


 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, 1998, 1999 and 2000
 (Amounts in thousands)



                                            Capital in               Total
                                            Excess of             Shareholders'
                              Common Stock  Par Value   Deficit    Investment
                              ------------  ---------   -------    ----------
                              Shares Amount
 ----------------------------------------------------------------------------
 <S>                           <C>    <C>    <C>       <C>           <C>
 Balance,
   January 1, 1998             9,306  $ 93   $51,585   $(28,852)     $22,826
 Issuance of common stock for
   employee stock purchase
   plan                           44     1       151          -          152
 Issuance of common stock for
   stock option plan               -     -         -          -            -
 Net 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                           35     -       149          -          149
 Issuance of common stock for
   stock option plan              10     -        25          -           25
 Net loss                          -     -         -     (2,033)      (2,033)
 ----------------------------------------------------------------------------
 Balance,
   December 31, 1999           9,395    94    51,910    (32,500)      19,504
 Issuance of common stock for
   employee stock purchase
   plan                          170     2       173          -          175
 Issuance of common stock for
   stock option plan              94     1       236          -          237
 Net loss                          -     -         -     (3,476)      (3,476)
 ----------------------------------------------------------------------------
 Balance,
   December 31, 2000           9,659  $ 97   $52,319   $(35,976)     $16,440
                               =====   ===    ======    =======       ======



 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,
                                                   ---------------------------
                                                    1998       1999      2000
                                                   ------     ------    ------
 <S>                                              <C>        <C>       <C>
 Cash flows provided by (used in)
  operating activities:
   Net loss                                       $(1,615)   $(2,033)  $(3,476)
   Adjustments to reconcile loss
        to net cash provided by (used in)
        operating activities:
      Depreciation and amortization                 1,043      1,028     1,043
      Loss on disposal of assets                        -          -        65
      Charge related to ACI investment                600          -         -
      Charge related to Oregon Freeze Dry, Inc.         -      1,042       223
      Provision for inventory obsolescence             53          -       316
   Changes in operating assets and liabilities:
      Accounts receivable, net                        129       (729)    1,508
      Inventories                                     (19)      (215)      294
      Prepaid expenses                               (411)      (177)      390
      Other assets                                  1,340        (11)      515
      Accounts payable and accrued liabilities        (55)       206    (1,328)
      Deferred revenue                                  -          -       667
                                                   ------     ------    ------
   Net cash provided by (used in)
     operating activities                           1,065       (889)      217
 Cash flows used in investing activities:
   Purchases of property, plant and equipment      (1,278)      (963)     (445)
                                                   ------     ------    ------
      Net cash used in investing activities        (1,278)      (963)     (445)
 Cash flows provided by financing activities:
   Issuances of common stock                          152        174       412
   Retirement of preferred stock                        -          -         -
   Proceeds of short-term debt                          -        200       563
   Principal payments of capital lease
      obligations                                     (31)         -         -
                                                   ------     ------    ------
      Net cash provided by financing
        activities                                    121        374       975
                                                   ------     ------    ------
 Net increase (decrease) in cash and cash
   equivalents                                        (92)    (1,478)      747
 Cash and cash equivalents at beginning of year     4,023      3,931     2,453
                                                   ------     ------    ------
 Cash and cash equivalents at end of year         $ 3,931    $ 2,453   $ 3,200
                                                   ======     ======    ======
 Supplemental Disclosure of Cash Flow
   Information
   Cash paid during the year for interest         $     3    $     7   $    40
   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  (see  Medline
 Agreement below).

 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 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.

 The  Company  and  Medline  Industries,  Inc.  ("Medline")  entered  into  a
 Distributor and License Agreement  dated November 3,  2000, under which  the
 Company granted to Medline the  exclusive right, subject to  certain limited
 exceptions, to distribute all of the Company's wound and skin  care products
 (the "Products") in the  United States, Canada, Puerto  Rico and the  Virgin
 Islands for a term of five years  beginning December 1, 2000.  The agreement
 provides that Carrington will continue  to manufacture its existing  line of
 Products and sell  them to  Medline at the  specified  prices.  The  prices,
 which are generally firm for the  first two years of the contract  term, are
 thereafter subject to  adjustment not more  than once  each year to  reflect
 increases in manufacturing cost.

 The agreement also grants Medline a  nonexclusive license to use  certain of
 the Company's trademarks in connection with the marketing  of the  Products.
 In addition, it permits Medline, if it so elects, to use those trademarks in
 connection with the marketing of various Medline products and other products
 not manufactured by the Company (collectively, "Other Products").
<PAGE>

 The agreement requires Medline  to pay the Company  a base royalty  totaling
 $12,500,000 in quarterly installments that begin  on December 1, 2000.   The
 quarterly installments are $875,000 each during  the first year of  the term
 and decline  annually thereafter.    In addition  to  the base  royalty,  if
 Medline elects  to  market  any of  the  Other  Products under  any  of  the
 Company's trademarks, Medline must pay the Company a royalty of  between one
 percent and five  percent of  Medline's aggregate  annual net  sales of  the
 Products and the Other Products, depending  on the amount of the  net sales,
 except that the royalty  on certain high volume  commodity products will  be
 two percent.

 The agreement also calls for Medline to offer employment to such  members of
 the Company's sales staff as Medline determines.


 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.

 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  amortization,  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.
<PAGE>

 REVENUE RECOGNITION.  The Company recognizes revenue when title to the goods
 transfers and collectibility 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.

 DEFERRED REVENUE.   Deferred revenue is related to the licensing and royalty
 agreement  with  Medline  Industries.   Royalties  and  licensing  fees  are
 amortized on  a  straight-line basis  with  amounts  received in  excess  of
 amounts amortized reflected in the financial statements as deferred revenue.

 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 1998, 1999 or 2000.

 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
 Eight).

 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 in the United  States 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,  1999
 and 2000, in thousands:

                                                  1999        2000
 ------------------------------------------------------------------
 Raw materials and supplies                      $2,011       1,768
 Work-in-process                                    673         878
 Finished goods                                   2,500       2,077
 ------------------------------------------------------------------
 Total                                           $5,184      $4,723
 ------------------------------------------------------------------

 The inventory balances  are net  of $430,000  and $441,000  of reserves  for
 obsolete  and  slow  moving  inventory  at  December  31,  1999   and  2000,
 respectively.


 NOTE FOUR.     PROPERTY, PLANT AND EQUIPMENT

<TABLE>
 Property, plant and  equipment consisted  of the following  at December  31,
 1999 and 2000, in thousands:

                                                      Estimated
                                  1999       2000     Useful Lives
 ------------------------------------------------------------------
 <S>                            <C>         <C>
 Land and improvements          $ 1,389     $1,389
 Buildings and improvements       8,692      8,889    7 to 25 years
 Furniture and fixtures             873        589    4 to 8 years
 Machinery and equipment          9,505      6,982    3 to 10 years
 Leasehold improvements             349        214    1 to 3 years
 Equipment under capital leases     150        114    4 years
 ------------------------------------------------------------------
 Total                           20,958     18,177
 Less accumulated depreciation
   and amortization               9,973      7,855
 ------------------------------------------------------------------
 Property, plant and
   equipment, net               $10,985    $10,322
                                 ======     ======
</TABLE>

 The Company's net investment in property, plant and equipment in  Costa Rica
 at December 31, 1999 and 2000 was $4,518,000 and $4,251,000, respectively.
<PAGE>


 NOTE FIVE.     ACCRUED LIABILITIES

 The following summarizes  significant components  of accrued liabilities  at
 December 31, 1999 and 2000, in thousands:

                                               1999           2000
 ------------------------------------------------------------------
 Accrued payroll                              $  231         $  440
 Accrued sales commissions                        36             16
 Accrued taxes                                   200            249
 Oregon Freeze Dry Reserve (see Note Nine)       698              -
 Other                                           753            363
 ------------------------------------------------------------------
 Total                                        $1,918         $1,068
 ------------------------------------------------------------------

 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 Aloe  Commodities International,  Inc., ("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.   In 2000,  ACI
 assigned an additional 200,000  shares in Aloe &  Herbs in repayment of  the
 remaining $200,000 obligation to the Company.

 Beginning in  1998,  the Company  invested  a  total of  approximately  $0.5
 million in Aloe  & Herbs  International Inc., a Panamanian  corporation, 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
 interest in Aloe  & Herbs  was increased  to approximately  31% 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, 2000 Aloe  & Herbs had not  generated net income, and  thus the
 investment is carried at zero.

 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 and  $27,000
 during 1999 and 2000,  respectively, recorded as  other income, 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.  The interest rate is equal to  the bank's
 prime rate (9.5% at December 31, 2000).   As of December 31, 2000  there was
 $763,000 outstanding on  the credit line.  There was  $200,000 drawn on  the
 line of credit at December 31, 1999.


 NOTE EIGHT.    COMMON STOCK

 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, 2000,  a total of
 344,000 shares had been purchased by employees at prices ranging  from $0.85
 to $29.54 per share.

 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 must be  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 this plan.  As of December 31, 2000, options
 to purchase 195,000 shares were available for future grants under the plan.
<PAGE>

<TABLE>
 The following summarizes stock option activity  for each of the  three years
 ended December 31, 1998, 1999 and 2000 (shares in thousands):

                                                            Weighted
                                                            Average
                                                            Exercise
                                 Shares   Price Per Share   Price
 -------------------------------------------------------------------
 <S>                             <C>     <C>                  <C>
 Balance, January 1, 1998          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
    Granted                        263   $ 1.31 to $ 2.03      $1.35
    Lapsed or canceled            (333)  $ 2.06 to $28.75      $3.35
    Exercised                      (94)  $ 2.50 to $ 4.81      $2.58
 -------------------------------------------------------------------
 Balance, December 31, 2000      1,243   $ 1.31 to $28.75      $3.78
 -------------------------------------------------------------------
 Options exercisable at
    December 31, 1998             417    $ 2.50 to $28.75     $ 5.71
 -------------------------------------------------------------------
 Options exercisable at
    December 31, 1999             553    $ 2.50 to $28.75     $ 4.68
 -------------------------------------------------------------------
 Options exercisable at
    December 31, 2000             605    $ 2.03 to $28.75     $ 4.86
 -------------------------------------------------------------------

</TABLE>
<PAGE>
<TABLE>

 The following table summarizes  information about stock options  outstanding
 at December 31, 2000:


                         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>

  $1.31   $ 5.25    1,102    7.13 years   $3.13       487       $3.78
   6.00    28.75      141    5.64          8.85       118        9.29
  --------------    -----    ----------   -----       ---       -----
  $1.31   $28.75    1,243    6.96 years   $3.78       605       $4.86
  ==============    =====    ==========   =====       ===       =====

</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 loss  and diluted  net  loss available  to
 common shareholders  per  share would  have  been  the following  pro  forma
 amounts:

 -------------------------------------------------------------------
                                        1998       1999       2000
 -------------------------------------------------------------------
 Net loss (in thousands):
      As reported                     $(1,615)   $(2,033)   $(3,476)
      Pro forma                        (2,670)    (3,485)    (4,650)

 Diluted net loss available to
   common shareholders per share:
      As reported                     $ (0.17)   $ (0.22)   $ (0.36)
      Pro forma                         (0.29)     (0.37)     (0.49)
 -------------------------------------------------------------------

 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.
<PAGE>

 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  1998, 1999, and  2000,
 respectively: risk-free interest rates of  5.38%, 6.00% and 5.99%,  expected
 volatility of 79.3%, 74.0% and 89.3% and expected lives of 2.4, 2.9  and 3.0
 years.  The  Company  used the  following  weighted-average assumptions  for
 grants to directors in 1998, 1999  and 2000: expected dividend yields of  0%
 and expected  lives of  4.0 years.    The weighted  average fair  values  of
 options granted  were  $1.05, $0.64  and  $1.37  in 1998,  1999,  and  2000,
 respectively.

 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, 1998, 1999, and  2000
 (shares in thousands):
                                                         Weighted
                                                         Average
                             Shares  Price Per Share     Exercise
                                                           Price
 ----------------------------------------------------------------
 Balance, January 1, 1998       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
   Lapsed or canceled          (10)  $13.00               $13.00
 ----------------------------------------------------------------
 Balance, December 31, 2000     55   $ 3.50 to $20.13     $ 5.01
 ----------------------------------------------------------------
 Warrants exercisable at
   December 31, 2000            55   $ 3.50 to $20.13     $ 5.01
 ----------------------------------------------------------------

 Warrants outstanding at December 31, 2000  had a weighted average  remaining
 contractual life of 3.8 years.

 COMMON STOCK RESERVED    At December  31, 2000  the Company  had reserved  a
 total of  1,649,095  common  shares  for future  issuance  relating  to  the
 employee stock purchase plan, stock option plan and stock warrants disclosed
 above.
<PAGE>


 NOTE NINE.     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, 2000 were as follows, in thousands:



 Years Ending December 31,
 -------------------------------------------------------------------
 2001                                                  $ 73
 2002                                                    63
 2003                                                    60
 -------------------------------------------------------------------
 Total minimum lease payments                          $196
 -------------------------------------------------------------------

 Total rental  expense  under operating  leases  was $451,000,  $455,000  and
 $661,000 for the years ended December 31, 1998, 1999 and 2000, respectively.
 On January 22, 2001, the Company  signed a lease that is effective  June 15,
 2001 for distribution,  quality control,  and research  facilities that  the
 Company will combine during 2001 in  a single building.  Rentals under  this
 lease range from  $20,800 to $54,000  per month.   The lease  period is  ten
 years.

 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  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 in  the 1999
 Balance Sheet.  In the second quarter of 2000, this reserve was increased by
 $223,000.   The Company  is currently  negotiating with  OFD  to extend  the
 production agreement.

 From time to time in the normal course of business, the Company  is party to
 various  matters  involving  claims  or  possible  litigation.    Management
 believes the ultimate resolution of these  matters will not have a  material
 adverse effect on the Company's financial position or results of operations.
<PAGE>


 NOTE TEN. INCOME TAXES

<TABLE>
 The tax effects  of temporary  differences that  gave rise  to deferred  tax
 assets and deferred tax  liabilities at December 31,  1999 and 2000 were  as
 follows, in thousands:

                                             1999          2000
 ---------------------------------------------------------------
 <S>                                       <C>           <C>

 Net operating loss carryforward           $14,090       $14,699
 Research and development
    and other credits                          748           661
 Property, plant and equipment                 307           282
 Patents                                       270           270
 Inventory                                     368           368
 Other, net                                    600           197
 Bad debt reserve                              549           467
 Royalty Income - Medline                        0         (227)
 ACI Stock Valuation                           204           204
 Oregon Freeze Dry reserve                     354            -
 Less - Valuation allowance                (17,286)      (16,921)
 ---------------------------------------------------------------
                                           $     0       $     0
                                            ======        ======
</TABLE>

 The Company has provided a valuation  allowance against the entire  deferred
 tax asset at December  31, 1999 and 2000  due to the  uncertainty as to  the
 realization of the asset.

 The provisions for income taxes for the years ended December 31,  1998, 1999
 and 2000 consisted of a $10,000 provision in 1998.  The benefit  which would
 be expected for losses incurred in each year was offset by increases  in the
 valuation reserve.

 At December 31, 2000,  the Company had net  operating loss carryforwards  of
 approximately $41.4 million for federal income tax purposes, which  begin to
 expire in 2001,  and research  and development tax  credit carryforwards  of
 approximately $660,000, which  begin to  expire in  2001, all  of which  are
 available to  offset federal  income taxes  due  in future  periods.   A  $6
 million net  operating  loss  carryforward expired  during  the  year  ended
 December 31, 2000.   Additionally, $87,000 in  research and development  tax
 credits  expired  in  2000.  The   Company  has  approximately  $28,000   in
 alternative minimum tax credits which do not expire.
<PAGE>


 NOTE ELEVEN.   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  11%,
 5% and 6% and Owens & Minor accounted  for 10%, 9% and 10% of  the Company's
 net sales in 1998, 1999 and  2000, respectively.  Sales to Mannatech,  Inc.,
 accounted for 23%, 41% and 38% of the Company's net sales in  1998, 1999 and
 2000, respectively.  Accounts receivable  from Mannatech represented 30%  of
 gross accounts  receivable  at December  31,  2000.   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.


 NOTE TWELVE.   NET LOSS PER SHARE

 Basic net loss available  to common shareholders per  share was computed  by
 dividing net loss available to common  shareholders by the weighted  average
 number of common shares outstanding of 9,320,000, 9,376,000 and 9,545,000 in
 1998, 1999 and 2000, respectively.

 In calculating the  diluted net  loss available to  common shareholders  per
 share for the  three years ended  2000, no  effect was given  to options  or
 warrants, because the effect of including  these securities would have  been
 antidilutive.


 NOTE THIRTEEN. 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 (loss) 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.

<PAGE>
<TABLE>

 Reportable Segments (in thousands)

                           Medical  Caraloe,
                          Services    Inc.     Corporate   Total
 ----------------------------------------------------------------
 1999
 ----------------------------------------------------------------
 <S>                       <C>      <C>       <C>         <C>
 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
 ----------------------------------------------------------------
 2000
 ----------------------------------------------------------------
 Sales to unaffiliated
   customers               $12,241  $10,862    $    -     $23,103
 Income(loss) before
   income taxes             (2,421)   2,007    (3,062)     (3,476)
 Identifiable assets        11,530    1,782     7,390      20,702
 Capital expenditures          246        -       199         445
 Depreciation and
   amortization                590        -       453       1,043
 ----------------------------------------------------------------
</TABLE>
<PAGE>


 NOTE FOURTEEN. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA

<TABLE>

 The unaudited selected  quarterly financial  data below  reflect the  fiscal
 years ended December 31, 1999 and 2000, respectively.

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

 --------------------------------------------------------------------------
 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)(1)
  Diluted income (loss)
    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

 --------------------------------------------------------------------------
 2000                    1st Quarter  2nd Quarter  3rd Quarter  4th Quarter
 --------------------------------------------------------------------------
  Net sales               $   7,125    $   5,463    $   4,997    $   5,518
  Gross profit                3,495        2,849        1,759        2,218
  Net loss                     (529)        (679)      (1,228)      (1,040)
  Loss per share          $   (0.06)   $   (0.07)   $   (0.13)   $   (0.11)
  Weighted average
    common shares         9,427,000    9,589,000    9,614,000    9,633,000


 (1)  After a charge of $1,042,000 for OFD as described in Note Nine.

</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
 --------------------------------------------------------------------------
 1998
 --------------------------------------------------------------------------
 <S>                      <C>      <C>        <C>      <C>        <C>
 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     $  -     $  725     $  304
 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
 --------------------------------------------------------------------------
 2000
 --------------------------------------------------------------------------
 Bad debt reserve         $  304   $  116    $   -     $  322     $   98
 Inventory reserve           430      316        -        304        441
 Rebates                     340    4,508        -      4,576        272
 ACI and Aloe & Herbs
   non-current notes and
   investments included
   in other assets         1,292        -        -         27      1,265
 Oregon Freeze Dry, Inc.     699      223        -        922          -

</TABLE>
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS


 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, 2000 and 1999 and the
 related consolidated statements of operations, shareholders'  investment and
 cash flows for  each of the  three years  in the period  ended December  31,
 2000.  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 audits.

 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, 2000 and  1999, and  the consolidated  results of  their operations  and
 their cash flows for each  of the three years  in the period ended  December
 31, 2000 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 20, 2001

<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 30, 2001              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          March 30, 2001
 Carlton E. Turner, Ph.D.,       Executive Officer and
 D.Sc.                                 Director
                                 (principal executive
                                       officer)

 /s/ Robert W. Schnitzius       Chief Financial Officer      March 30, 2001
 Robert W. Schnitzius          (principal financial and
                                  accounting officer)

 /s/ R. Dale Bowerman                  Director              March 30, 2001
 R. Dale Bowerman

 /s/ George DeMott                     Director              March 30, 2001
 George DeMott

 /s/ Robert A. Fildes, Ph.D.           Director              March 30, 2001
 Robert A. Fildes, Ph.D.

 /s/ Thomas J. Marquez                 Director              March 30, 2001
 Thomas J. Marquez

 /s/ Selvi Vescovi                     Director              March 30, 2001
 Selvi Vescovi

<PAGE>

                         INDEX TO EXHIBITS


  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------

    3.1   Restated  Articles of  Incorporation of  Carrington
          Laboratories,  Inc. (incorporated  by reference  to
          Exhibit 3.1  to Carrington's 1999 Annual  Report on
          Form 10-K).

    3.2   Statement  of  Change   of  Registered  Office  and
          Registered Agent  of Carrington  Laboratories, Inc.
          (incorporated  by  reference   to  Exhibit  3.2  to
          Carrington's 1999 Annual Report on Form 10-K).

    3.3   Statement  of  Resolution   Establishing  Series  D
          Preferred  Stock of  Carrington Laboratories,  Inc.
          (incorporated  by  reference   to  Exhibit  3.3  to
          Carrington's 1999 Annual Report on Form 10-K).

    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
          (incorporated  by  reference   to  Exhibit  4.2  to
          Carrington's 1999 Annual Report on Form 10-K).

    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).

   10.1+  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).
<PAGE>


  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   10.2+  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).

   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.  (incorporated by  reference to
          Exhibit 10.4 to Carrington's  1999 Annual Report on
          Form 10-K).

   10.5   First Lease Amendment dated  April 16, 1992 between
          Carrington  laboratories,  Inc. and  Western  Atlas
          International, Inc.  (incorporated by  reference to
          Exhibit 10.5 to Carrington's  1999 Annual Report on
          Form 10-K).

   10.6   Second  Lease Amendment  dated  September 23,  1993
          between Carrington  Laboratories, Inc.  and Western
          Atlas   International,    Inc.   (incorporated   by
          reference  to  Exhibit  10.6 to  Carrington's  1999
          Annual Report on Form 10-K).

   10.7   Third  Lease  Amendment   dated  December  1,  1994
          between Carrington  Laboratories, Inc.  and Western
          Atlas   International,    Inc.   (incorporated   by
          reference  to  Exhibit  10.7 to  Carrington's  1999
          Annual Report on Form 10-K).

   10.8   Fourth  Lease  Amendment   dated  August  31,  1999
          between  Western  Atlas   International,  Inc.  and
          Carrington  Laboratories,   Inc.  (incorporated  by
          reference  to  Exhibit  10.8 to  Carrington's  1999
          Annual Report on Form 10-K).

   10.9+  Employee   Stock   Purchase  Plan   of   Carrington
          Laboratories,  Inc., as  amended  through June  15,
          1995 (incorporated by reference  to Exhibit 10.9 to
          Carrington's 1999 Annual Report on Form 10-K).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   10.10  Common Stock  Purchase Warrant dated  September 14,
          1993 issued by Carrington  Laboratories, Inc. to E.
          Don Lovelace (incorporated  by reference to Exhibit
          10.10 to  Carrington's 1999  Annual Report  on Form
          10-K).

   10.11  Common Stock  Purchase Warrant dated  September 14,
          1993, issued  by Carrington Laboratories,  Inc., to
          Jerry  L. Lovelace  (incorporated  by reference  to
          Exhibit 10.11 to Carrington's 1999 Annual Report on
          Form 10-K).

   10.12  Lease  Agreement dated  June 15,  1994 between  DFW
          Nine,   a  California   limited  partnership,   and
          Carrington  Laboratories,   Inc.  (incorporated  by
          reference  to Exhibit  10.12  to Carrington's  1999
          Annual Report on Form 10-K).

   10.13  Lease  Amendment  dated  August 23,  1994  amending
          Lease   Agreement    listed   as    Exhibit   10.12
          (incorporated  by  reference  to Exhibit  10.13  to
          Carrington's 1999 Annual Report on Form 10-K).

   10.14  Production Contract dated February 13, 1995 between
          Carrington  Laboratories,  Inc. and  Oregon  Freeze
          Dry,  Inc. (incorporated  by  reference to  Exhibit
          10.14 to  Carrington's 1999  Annual Report  on Form
          10-K).

   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.  (incorporated by  reference  to
          Exhibit 10.15 to Carrington's 1999 Annual Report on
          Form 10-K).

   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.  (incorporated by  reference  to
          Exhibit 10.16 to Carrington's 1999 Annual Report on
          Form 10-K).

   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).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   10.18+ 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.
          (incorporated  by  reference  to Exhibit  10.21  to
          Carrington's 1999 Annual Report on Form 10-K).

   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).

   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).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   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).

   10.30+ 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).

   10.31+ 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).

   10.32+ 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).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   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
          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.
          (incorporated  by  reference  to Exhibit  10.41  to
          Carrington's 1999 Annual Report on Form 10-K).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   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).

   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).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   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
          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).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   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).

   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).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   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).

   10.69  Trademark  License 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).

   10.70  Letter   dated   February   25,  1999   from   Aloe
          Commodities, Inc. to  Carrington Laboratories, 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).

   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).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   10.72  Exclusive  Sales   Representative  Agreement  dated
          April  13, 1999,  between Caraloe,  Inc.  and Glenn
          Corporation  (incorporated herein  by reference  to
          Exhibit  10.1 to  Carrington's Quarterly  Report on
          Form 10-Q for the quarter ended June 30, 1999).

   10.73  Terms Sheet for  Lease of Rancho Aloe  Farm Land to
          Sabila    Industrial   dated    April   20,    1999
          (incorporated herein  by reference to  Exhibit 10.1
          to Carrington's  Quarterly Report on Form  10-Q for
          the quarter ended June 30, 1999).

   10.74  Terms  Sheet for  Maintenance of  Sabila Industrial
          Plants  on   Leased  Land  dated  April   20,  1999
          (incorporated herein  by reference to  Exhibit 10.1
          to Carrington's  Quarterly Report on Form  10-Q for
          the quarter ended June 30, 1999).

   10.75  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 10.1
          to Carrington's  Quarterly Report on Form  10-Q for
          the quarter ended September 30, 1999).

   10.77  Letter Agreement  dated September 29,  1999 between
          Aloe Commodities International, Inc. and Carrington
          Laboratories,   Inc.    (incorporated   herein   by
          reference to Exhibit 10.1 to Carrington's Quarterly
          Report on Form 10-Q for the quarter ended September
          30, 1999).

   10.78  Sales  Distribution  Agreement  dated  October  26,
          1999. between Carrington  Laboratories, Inc. and E-
          Wha International, Inc.  (incorporated by reference
          to Exhibit 10.78 to Carrington's 1999 Annual Report
          on Form 10-K).

   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   (incorporated  by
          reference  to Exhibit  10.79  to Carrington's  1999
          Annual Report on Form 10-K).

<PAGE>

  Exhibit                                                       Sequentially
  Number                       Exhibit                          Numbered Page
  ------   ---------------------------------------------------  -------------
   10.80  Supplier  Agreement dated  August  6, 1999  between
          Novation, LLC and  Carrington Laboratories, Inc. MS
          91022 (incorporated  by reference to  Exhibit 10.80
          to Carrington's 1999 Annual Report on Form 10-K).

   10.81  Supplier  Agreement dated  August  6, 1999  between
          Novation, LLC and  Carrington Laboratories, Inc. MS
          91032 (incorporated  by reference to  Exhibit 10.81
          to Carrington's 1999 Annual Report on Form 10-K).

   10.82  Distributor and License Agreement dated November 3,
          2000  between  Carrington  Laboratories,  Inc.  and
          Medline Industries, Inc.   (Exhibits A, B  and C to
          this  agreement have  been excluded  pursuant  to a
          request for confidential treatment submitted by the
          registrant   to   the   Securities   and   Exchange
          Commission)(incorporated  by  reference to  Exhibit
          10.82 to  Carrington's 1999  Annual Report  on Form
          10-K).

   10.83  Supply  Agreement dated  November  3, 2000  between
          Carrington    Laboratories,   Inc.    and   Medline
          Industries, Inc.  (Exhibit A  to this agreement has
          been   excluded   pursuant   to   a   request   for
          confidential treatment submitted  by the registrant
          to   the   Securities  and   Exchange   Commission,
          (incorporated  by  reference  to Exhibit  10.83  to
          Carrington's 1999 Annual Report on Form 10-K).

   10.84* Lease  Agreement  dated  January 22,  2001  between
          Plazamerica, Inc and Carrington Laboratories, Inc.

   21.1*  Subsidiaries of Carrington.

   23.1*  Consent of Independent Auditors


 *    Filed herewith.
 +    Management contract or compensatory plan.