SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

                        THE SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended December 31, 1999

                         Commission File Number 0-24312

                               VIRBAC CORPORATION

               (Exact name of registrant as specified in its charter)

                  Delaware                                    43-1648680
         (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                  Identification Number)

         3200 Meacham Blvd.
         Fort Worth, TX                                          76092
         (Address of principal executive offices)              (Zip Code)

         Registrant's telephone number, including area code: (817) 831-5030

         Securities registered pursuant to Section 12(b) of the Act:  None

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock, $.01
par value

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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  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. [ ]

         The  aggregate  market value of the  registrant's  Common Stock held by
non-affiliates  of the registrant as of April 25, 2000 (computed by reference to
the closing price of such stock on the NASDAQ/National  Market) was $17,161,706.

         As of April 25, 2000, there were 21,030,798  shares of the registrant's
Common Stock outstanding.

                    DOCUMENTS INCORPORATED BY REFERENCE

                                   None.




<PAGE>



                           Virbac Corporation

                                 FORM 10-K

                          Cross Reference Sheet

                                    Item Page

                                     Part I
<TABLE>
<CAPTION>

<S>          <C>                                                                                      <C>
     1        Business.........................................................................          1

     2        Properties.......................................................................          6

     3        Legal Proceedings................................................................          6

     4        Submission of Matters to a Vote of Security Holders..............................          7

     4A       Executive Officers of the Registrant.............................................          7



                                     Part II

     5        Market for Registrant's Common Equity and Related Stockholder Matters............          8

     6        Selected Financial Data .........................................................          8

     7        Management's Discussion and Analysis of Financial Condition and Results
                  of Operations................................................................          9

     8        Financial Statements.............................................................         16

     9        Changes in Disagreements With Accountants on Accounting and
                  Financial Disclosure.........................................................         16

                                    Part III

     10       Directors and Executive Officers of the Registrant...............................         17

     11       Executive Compensation...........................................................         18

     12       Security Ownership of Certain Beneficial Owners and Management...................         19

     13       Certain Relationships and Related Transactions...................................         20

                                     Part IV

     14       Exhibits, Financial Statement Schedules and Reports on Form 8-K..................         20

              Signatures.......................................................................         23

</TABLE>



<PAGE>









                                     Part I

Item 1.  Business

Business Overview

         Virbac  Corporation  ("Virbac" or "the Company"),  based in Fort Worth,
Texas,  develops,  manufactures,  markets,  distributes  and sells a variety  of
animal health  products,  focusing on  dermatological,  parasiticide  and dental
products.  Its PM Resources  division  ("PMR"),  based in St.  Louis,  Missouri,
formulates   products  under   private-label  and  under  third  party  contract
manufacturing for use in the animal health and specialty  chemicals  industries.
Virbac S.A.  ("VBSA") is a French  veterinary  pharmaceutical  manufacturer with
operations  throughout much of the world.  Interlab S.A.S., a French Corporation
and wholly-owned  subsidiary of VBSA ("VBSA Sub"), owns approximately 60% of the
outstanding common stock of the Company.  The Company  distributes and sells its
products  throughout  the United States and Canada,  and through a  distribution
agreement with VBSA, in foreign markets.

1999 Merger

         The Company is the result of the March 5, 1999 merger of Virbac,  Inc.,
a subsidiary of VBSA, and Agri-Nutrition Group Limited ("AGNU"), a publicly held
company whose common shares were traded on the NASDAQ National Market.  Pursuant
to the merger  agreement dated October 16, 1998, the merger was completed by the
following series of transactions:  (i) VBSA contributed a total of $15.7 million
to  Virbac,  Inc.  consisting  of $13.7  million  in cash and  $2.0  million  in
intercompany debt recapitalized as equity; (ii) AGNU issued 12,580,918 shares of
AGNU stock to VBSA Sub; and (iii) Virbac,  Inc. merged with AGNU with AGNU being
the  surviving  entity  and  VBSA  its  majority  shareholder.  The  name of the
surviving entity was then changed to Virbac Corporation.

Products and Product Development

         The  Company's  products  are used to promote the health and hygiene of
companion  animals - principally  dogs,  cats, and fish. The principal  products
manufactured by the Company include:

o    Dermatological   products   for  dogs  and   cats,   including   anti-itch,
     anti-microbial, and anti-inflammatory lotions and shampoos,
o    Oral  hygiene  products  for  dogs  and  cats,   including  toothpaste  and
     toothbrushes, sprays, and enzymatic rawhide chews,
o    Flea and tick products, including collars, shampoos, dip concentrates,  and
     sprays,
o    Ear cleaners, including anti-microbial and anti-inflammatory treatments,
o    Aquarium water conditioners and test strips,
o    Pest control products, including rodenticides,
o    Nutritional supplements to promote healthy coat and skin,
o    Anthelmetics,  or dewormers, to prevent gastrointestinal worms in livestock
     and in companion animals,
o    Gastrointestinal  products for dogs and cats,  including hairball remedies,
     and
o    Specialty chemicals


<PAGE>

Sales and Marketing

         The  Company  sells its  products  to  national  or  dominant  regional
companies serving the animal health markets, pet product distributors, specialty
pet  retail  stores  and  superstores,  mass  merchandisers,  and farm and fleet
distributors.  Sales are made through a combination  of full-time  sales persons
and independent sales  representatives,  utilizing direct sales,  telemarketing,
and other means.  Separate  sales forces are employed for each of its veterinary
and over-the-counter ("OTC") lines, as well as PMR.

         The   Company   distributes   its   veterinary   line  of  products  to
veterinarians through wholesale distributors. Its marketing and sales promotions
target veterinarians  through education and sampling to encourage  veterinarians
to  prescribe  and sell more of  Virbac's  products.  The  Company  markets  its
products  to  the   veterinarian   market   under  the   Allerderm(R)   line  of
dermatological  products,  the  C.E.T.(R),  line  of  dental  products,  and the
Preventic(R) line of tick collars.

         The  promotion of its OTC products is focused on obtaining  shelf space
in retail  outlets.  The Company  markets  its  products  under the St.  JON(R),
Zema(R), Mardel(R), and Francodex(R) lines of products.

         PMR's  products are primarily  contract  manufactured  for  significant
animal health and specialty  chemical  customers.  In addition,  PMR distributes
animal health products to Purina Mills' dealer distribution network.

Research and Development

         Virbac  maintains a research and  development  staff for the purpose of
developing  improved products.  Currently,  Virbac's product development efforts
are  focused on new  formulations  for  dermatology.  Virbac  believes  it is an
international  leader in pet  dermatology  product  development and a recognized
authority in insect growth regulator research.  Virbac does not produce chemical
compounds,  but  develops  formulas  adapted to the needs of  companion  animals
either from  generic  compounds  or original  compounds.  Virbac  currently  has
licenses for all original  compounds used in its manufacturing  process.  Virbac
believes that the loss of any such license  would not have a material  effect on
the business of Virbac as such licenses can be easily replaced.

         Virbac also has the  exclusive  North  American  rights to any products
developed by VBSA dedicated to companion  animals and equine and  food-producing
animals.  VBSA has a multi-million  dollar annual budget dedicated to developing
new products and improving current products. Beginning in 2001, the Company will
reimburse  VBSA for its past  research  and  development  efforts by paying a 3%
royalty on the  Company's  sales of new products  developed by VBSA and paying a
$500,000 annual flat fee to induce VBSA to continue its research and development
efforts.  In 1999 and 2000,  VBSA  reimbursed the Company  $300,000 and $400,000
respectively,  for  internal  costs  incurred by the  Company in  readying  VBSA
products for launch in North America.

         In developing new or improved  products,  Virbac considers a variety of
factors,  including (i) existing or potential  marketing  opportunities for such
products,  (ii) the  capability of Virbac to manufacture  such  products,  (iii)
whether  such  products  complement  existing  products of Virbac,  and (iv) the
opportunities  to leverage  such  products  with the  development  of additional
products.  During  1999,  the Company  spent  approximately  $1 million  (net of
reimbursement  from VBSA) on research and development,  including  approximately
$154,000 on clinical studies of products.  Virbac also conducts research on VBSA
products that have the potential to be distributed on a world-wide basis.

Registrations, Trademarks and Patents

         The Company has numerous EPA and FDA product registrations,  trademarks
and  patents.  Its EPA product  registrations  permit it to sell  pesticide  and
rodenticide  products,  as well as  ectoparasite  products for the  treatment of
fleas  and  ticks on dogs and  cats.  While  EPA  registrations  do not  expire,
registrants are required  periodically to reregister  certain  products with the
EPA.  Certain  of the  Company's  facilities  are  qualified  as EPA  registered
manufacturing  sites, which permits the Company to manufacture products not only
under its own EPA product  registrations,  but also under the  registrations  of
other companies.

         The Company's FDA new animal drug  applications  ("NADAs") permit it to
sell medicated  treatments,  anthelmetics,  feed additives and other animal drug
products.  NADAs do not expire, but are subject to modification or withdrawal by
the FDA based up on the related drugs'  performance  in the market.  The Company
also has FDA  manufacturing  site approvals  enabling the Company to manufacture
animal drugs covered by NADAs held by other companies.

         The Company's  numerous  trademarks  relate primarily to its veterinary
and OTC products which are marketed under the St.  JON(R),  Mardel (R),  Zema(R)
and Allerderm(R)  labels. The Company also has trademark  registrations  pending
for various additional companion animal products.

         The Company also has several patents covering pet toothbrushes,  tartar
remover, pet shampoo, and flea traps. In addition, the Company has the exclusive
right to use several patents owned by others,  most notably patents  relating to
enzyme generation  formulae for use in animal  toothpaste,  on rawhide chews, in
insect  regulators  and  VBSA's  Spherulite  technology,  which  enables  active
ingredients to be progressively discharged following application of the product.

Procurement of Raw Materials

         The active  ingredients in the Company's  products are not manufactured
by  the  Company,   but  are  generally   purchased  from  large  raw  materials
manufacturers.  The Company generally purchases materials on an as-needed basis,
as it is generally  unnecessary for the Company to maintain large inventories of
such materials in order to meet rapid delivery  requirements or assure itself of
adequate  supply.  The Company  purchases  certain raw  materials  from multiple
suppliers; some materials,  however, are proprietary,  and the Company's ability
to procure such materials is limited to suppliers with proprietary  rights.  The
Company  considers its  relationship  with its suppliers to be good. The Company
also purchases  certain raw materials,  the  availability of which is subject to
EPA, FDA or other regulatory approvals.  Some of the Company's customers provide
the Company with the raw materials used in the production of their products.

Competition

         The Company's  competitors  fall into roughly four  categories:  animal
health product distributors;  manufacturers,  formulators and blenders of animal
health  products;  pet care  product  producers  and  suppliers;  and  specialty
chemical  and  pest  control  manufacturers.  Each of  these  groups,  with  the
exception of pet care product producers and suppliers,  are comprised  primarily
of privately  owned  regional and local  companies,  although each also includes
national  companies  that produce or distribute  certain animal health and other
products.  The pet care  product  producer  and  supplier  group is comprised of
national and regional companies.

         Many of the Company's  competitors in specific market niches are larger
and have greater financial resources than the Company.  In addition,  regulatory
surveillance  and  enforcement  are  accelerating,  which is likely to result in
fewer competitors that have even greater  resources.  Much of the competition in
the markets served by the Company centers around price.  The Company is focusing
on the production of high-performance, value-added and branded products designed
to be marketed on the basis of quality as well as price.

Regulatory and Environmental Matters

         The Company's  operations  subject it to federal,  state and local laws
and regulations relating to environmental affairs, health and safety. These laws
and regulations are  administered by the EPA, the FDA, the  Occupational  Safety
and Health  Administration  ("OSHA"),  the  Department  of  Transportation,  and
various state and local regulatory agencies.  Governmental  authorities,  and in
some cases third parties,  have the power to enforce  compliance with health and
safety  laws  and  regulations,  and  violators  may be  subject  to  sanctions,
including  civil and  criminal  penalties  and  injunctions.  While the  Company
believes  that  the  procedures  currently  in  effect  at  its  facilities  are
consistent  with industry  standards and that it is in material  compliance with
applicable  health and safety laws and regulations,  failure to comply with such
laws and regulations could have a material adverse effect on the Company.

         The Company's operations also subject it to numerous environmental laws
and regulations administered by the EPA, including the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive  Environmental  Response,  Compensation
and Liability  Act, the Federal Water  Pollution  Control Act, the Federal Clean
Air Act, the Federal  Insecticide,  Fungicide and Rodenticide Act, and the Toxic
Substances  Control Act, as well as various  state and  municipal  environmental
laws and regulations.  See "Legal  Proceedings" for a description of a Notice of
Order to  Abate  Violations  and a Notice  of  Violations  issued  to PMR by the
Missouri Department of Natural Resources ("MDNR") relating to alleged violations
of Missouri's hazardous waste laws and regulations. PMR has discontinued the use
of underground storage tanks subject to RCRA and has submitted a closure plan to
the MDNR relating to closure of its permitted hazardous waste operations.

         Although  the  Company  believes  it is  in  material  compliance  with
applicable environmental laws, regulations and permits and has a policy designed
to ensure that it continues to operate in material compliance  therewith,  there
can be no  assurance  that  the  Company  will  not be  exposed  to  significant
environmental liability. The Company could be held liable for property damage or
personal  injury caused by the release,  spill,  or other discharge of hazardous
substances  or  materials  and  could be held  responsible  for  cleanup  of any
affected sites. In connection with the acquisitions of Zema, St. JON and Mardel,
the Company entered into agreements  pursuant to which the former owners of such
companies have agreed to indemnify the Company  against  liabilities,  including
certain environmental liabilities, relating to the use, condition, ownership, or
operation of the Company's facilities prior to the acquisitions.

         The   Company  has   environmental   compliance   programs   addressing
environmental and other regulatory compliance issues. Future developments,  such
as stricter  environmental  laws,  regulations  or enforcement  policies,  could
increase the Company's environmental  compliance costs. While the Company is not
aware of any pending legislation or proposed regulations that, if enacted, would
have a material  adverse  effect on the company,  there can be no assurance that
future legislation or regulation will not have such effect.

         The  federal  government  has  extensive  enforcement  powers  over the
activities of veterinary  pharmaceutical  manufacturers,  including authority to
withdraw  product  approvals,  commence  actions to seize and  prohibit  sale of
unapproved or non-complying  products,  and to halt manufacturing any operations
that are not in compliance with applicable laws and regulations.  Virbac has not
experienced  any  such   restrictions  or   prohibitions.   However,   any  such
restrictions  or  prohibitions  on sales or  withdrawal  of approval of products
marketed  by  Virbac  could  materially   adversely  affect  Virbac's  business,
financial condition and results to operation.

         While Virbac  believes that all of its current  pharmaceuticals  are in
compliance  with all  applicable  FDA  regulations  or have  received  requisite
government  approvals for  manufacture  and sale,  such  marketing  authority is
subject to  revocation  by the  applicable  government  agencies.  In  addition,
modifications  or  enhancements of approved  products are in many  circumstances
subject  to  additional  FDA  approvals  which  may  be  subject  to  a  lengthy
application  process and may  ultimately  be  rejected.  Virbac's  manufacturing
facilities are continually subject to inspection by such government agencies and
manufacturing  operations  could be interrupted or halted in any such facilities
if such inspections prove unsatisfactory.

         The  product   development  and  approval  process  within   applicable
regulatory  frameworks may take a number of years to  successfully  complete and
involves  the  expenditure  of  substantial  resources.   Additional  government
regulation may be established that could prevent or delay regulatory approval of
any one or  more  of  Virbac's  products.  Delays  or  rejections  in  obtaining
regulatory  approvals would adversely  affect Virbac's  ability to commercialize
any product Virbac develops and Virbac's  ability to receive product revenues or
royalties.  If  regulatory  approval of a product is granted,  the  approval may
include limitations on the indicated uses for which the product may be marketed.

Employees

         The  Company  has  approximately  307  full-time  employees,  of  which
approximately  202 are engaged in  manufacturing  activities and 72 in sales and
marketing  activities.  Forty-five  of the  full-time  employees  located at the
Bridgeton, Missouri facility are represented by the International Longshoremen's
Association,  and seven are  represented  by the  International  Brotherhood  of
Electrical  Workers.   Such  employees'  wages  and  benefits  are  governed  by
collective  bargaining  agreements negotiated with the unions, which will expire
in the fourth quarter of 2001. In 1999, the unionized workers conducted a strike
which  lasted one month.  The Company  does not  believe  that this strike had a
material  adverse impact on the Company's  operations.  The Company also employs
workers on a temporary  basis, the number of which fluctuates on an annual basis
because demand for the Company's products is seasonal. The Company considers its
employees and union relations to be good.


<PAGE>



Item 2.  Properties.

         The Company  owns the Fort  Worth,  Texas and the  Bridgeton,  Missouri
manufacturing  facilities where most of the Company's products are produced. The
Fort Worth  facility is a 118,000  square foot  manufacturing,  warehousing  and
office  facility.   Most  of  the  Company's  non-EPA  regulated   products  are
manufactured at this facility. The Bridgeton facility, at which PMR's operations
are conducted and most EPA regulated  products are  manufactured,  consists of a
176,000 square foot manufacturing and warehousing building.

         The  Company  also  leases a  manufacturing,  warehousing,  and  office
facility  near Los Angeles,  California.  During  1999,  the  production  of the
majority of products  manufactured  at this facility was transferred to the Fort
Worth facility,  with only  specialized  product  manufacturing  remaining.  The
remaining  manufacturing  is located in a facility leased under a non-cancelable
operating lease that expires August 2000,  with a five year renewal option;  the
Company intends to exercise the renewal option.  The Company also leases certain
equipment under non-cancelable operating leases.

         Management  believes  that the  Company's  facilities  are adequate and
suitable for its current operations.

Item 3.  Legal Proceedings.

         On  November  27,  1994,  the MDNR  issued  a Notice  of Order to Abate
Violations to the Company relating to alleged  violations of Missouri's laws and
regulations  relating  to the  storage  of  hazardous  waste  at  the  Bridgeton
facility.   The  order  alleges  that  the  Company  had  not  remedied  certain
deficiencies  relating to the storage of hazardous waste cited in inspections by
the MDNR in May 1993 and March 1994, and directs remedial action.

         On December 21,  1995,  the MDNR issued a Notice of  Violations  to the
Company relating to  contamination in the vicinity of an underground  collection
system that was removed from the Bridgeton  facility in 1994. The notice alleges
that the collection system should have been included in the Company's  hazardous
waste storage  permit,  states that the collection  system was classified by the
MDNR as a leaking underground storage tank, and directs remedial action.

         The  Company is  currently  in  negotiations  with the MDNR  related to
certain  issues raised in the November 1994 Notice of Order to Abate  Violations
and the December 1995 Notice of Violations  issued by the MDNR.  Management does
not believe that either of the matters pose a  significant  risk to human health
or the  environment,  or that the resolution of either of the claims made by the
MDNR will have a material adverse affect on the Company's  financial position or
results of operations.

         The Company is aware of various  disputes and potential claims and is a
party to certain litigation involving claims against the Company. Based on facts
currently known to the Company, it believes that the ultimate liability, if any,
which may result from these  disputes,  claims and  litigation  would not have a
material adverse affect on the Company's  consolidated  financial position,  its
results  of  operations  or its cash  flows  with or  without  consideration  of
insurance  coverage.  See  Note  13 to  the  Consolidated  Financial  Statements
included as part of this Annual Report.


<PAGE>



Item 4.  Submission of Matters to a Vote of Security Holders.

        No matters were submitted to a vote of the  stockholders  of the Company
during the quarter ended December 31, 1999.

Item 4A.  Executive Officers of the Registrant.

         The  following  table  sets forth  certain  information  regarding  the
Company's executive officers:

     Name              Age      Position

     Thomas L. Bell    41       President and Chief Executive Officer
     Bruce G. Baker    56       Executive Vice President - Business Development
     Henry B. Haley    40       Vice President and Chief Financial Officer

         Thomas L. Bell has been  President and Chief  Executive  Officer of the
Company since May 1999. Mr. Bell held various  management  positions  during the
previous  13  years  with  Fort  Dodge  Animal   Health/American   Cyanamid,  an
international  manufacturer and distributor of animal health pharmaceuticals and
biologicals,  and a  subsidiary  of American  Home  Products.  Mr. Bell was most
recently  vice-president  for the  International  Animal  Health  and  Nutrition
division, where he was responsible for 26 world-wide profit centers.

         Bruce G. Baker has been Executive Vice President - Business Development
of the Company  since March 1999.  Previously,  he served as President and Chief
Executive Officer of  Agri-Nutrition  Group Limited from November 1996 until its
merger with Virbac,  Inc. in March 1999. From March 1994 through October 1996 he
was Vice  President and Deputy Chief  Executive,  and has been a director of the
Company since August 1993.

         Henry B.  Haley has been Vice  President  and Chief  Financial  Officer
since May 1999. Mr. Haley held various financial management positions during the
previous 12 years with Lafarge S.A., the  international  construction  materials
company.  Most  recently,  he was  Vice-President  of Finance  of  Lafarge  Road
Markings,   Inc.  from  March  1998  until  he  joined  the  Company,   and  was
Vice-President  of  Finance of Lafarge  Monolithiques  from 1996 until  February
1998.  He was a manager in the  corporate  financial  analysis  department  from
October 1991 until February 1996. Mr. Haley is a Certified Public Accountant.



<PAGE>



                                     Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

         The  Company's  Common  Stock is traded on the NASDAQ  National  Market
under the symbol VBAC.  The following  table sets forth the  quarterly  range of
high and low  closing  sale  prices  per share for the Common  Stock  during the
period indicated.

                                                              High        Low
Fiscal year ended December 31, 1997
         First Quarter........................................1.75        1.13
         Second Quarter.......................................1.50        1.06
         Third Quarter........................................1.59        1.06
         Fourth Quarter.......................................1.69        1.19

Fiscal year ended December 31, 1998
         First Quarter........................................1.44        1.06
         Second Quarter.......................................1.31        1.00
         Third Quarter........................................1.31        0.81
         Fourth Quarter.......................................1.50        0.94

Fiscal year ended December 31, 1999
         First Quarter........................................1.56        1.00
         Second Quarter.......................................1.75        1.03
         Third Quarter........................................1.50        1.13
         Fourth Quarter.......................................3.00        1.25

         The  Company  has never  paid any  dividends  on its Common  Stock.  It
presently  intends to retain its  earnings  for use in its business and does not
anticipate  paying  any  cash  dividends  in the  foreseeable  future.  Further,
pursuant to the  September 7, 1999 credit  facility,  the Company is  prohibited
from paying dividends  without the consent of the Company's  lender. As of March
6, 2000, the Company had a total of approximately 1,542 stockholders,  including
242 stockholders of record and  approximately  1,300 persons or entities holding
Common Stock in nominee name.

         In March 1999,  AGNU issued  12,580,918  shares of common stock to VBSA
Sub in connection  with the merger  described  under Item 1. Business - History.
The  transaction was exempt from  registration  under the Securities Act of 1933
pursuant  to  Section  4(2)  of the Act  because  it did not  involve  a  public
offering.

Item 6.  Selected Financial Data.

         The following  table presents  selected  financial data for each of the
five years in the period ended  December 31, 1999 for the Company.  The selected
financial  data for the three years in the period  ended  December  31, 1998 are
derived from the  Consolidated  Financial  Statements of Virbac,  Inc.,  each of
which has been audited by Arthur Andersen LLP,  independent public  accountants.
The  selected  financial  data for the year ended  December 31, 1999 are derived
from the  Consolidated  Financial  Statements  of the  Company,  which  has been
audited by PricewaterhouseCoopers, LLC, independent accountants. The data should
be read  in  conjunction  with  the  Consolidated  Financial  Statements  of the
Company, and the related notes thereto, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and other financial  information
included elsewhere in this report.

<TABLE>
<CAPTION>

                                                                Fiscal Year Ended December 31,
                                         ------------------------------------------------------------------------------
                                              1999 (1)        1998 (2)        1997 (2)        1996 (2)       1995 (2)
                                                                                                           (unaudited)
<S>                                      <C>             <C>             <C>            <C>             <C>
STATEMENT OF OPERATIONS DATA
Net revenues.............................$   43,717,824  $   15,051,090  $   16,235,284  $  17,493,683  $   18,659,499

Income (loss) from operations............        33,174     (1,238,523)       (730,820)      (889,354)       (986,857)

Net loss ................................     (543,776)     (1,821,386)     (1,255,207)    (1,387,248)     (1,095,590)

Loss per common share....................        (0.03)          (0.14)          (0.10)         (0.11)          (0.09)

Weighted average number of common            19,677,053      12,580,918      12,580,918     12,580,918      12,580,918

BALANCE SHEET DATA
     Cash................................$      231,297  $      412,378  $       84,047  $     124,203  $       16,965
     Working capital (deficit)...........    12,260,232       (854,656)       2,426,916      (166,950)       1,387,132
     Total assets........................    43,633,018      12,680,651      13,391,178     13,792,535      16,123,540
     Current portion of notes payable....     1,564,080       3,200,000         400,000        400,000         800,000
     Long-term obligations, less
         current maturities..............     9,347,993       4,000,000       6,650,000      3,450,000       4,250,000
     Stockholders' equity................    25,640,949       1,890,700       3,712,086      4,967,293       6,290,626
</TABLE>


----------------------------------------

(1)  The results for the year ended  December 31, 1999 include the operations of
     Virbac, Inc. plus the results of Agri-Nutrition since March 5, 1999.

(2)  Earnings per share for the periods ending December 31, 1998, 1997, 1996 and
     1995 have been restated to reflect the number of equivalent shares received
     by  Virbac,  Inc.  in  connection  with  the  March  5,  1999  Purchase  of
     Agri-Nutrition Group Limited.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

Overview

         The  Company  manufactures  and  distributes  companion  animal  health
products.  The Company is a leader in  dermatological  and oral hygiene products
for  companion  animals,  or pets,  and  provides a broad  array of health  care
products to its  customers  under the C.E.T.,  Allerderm,  St.  JON,  Zema,  and
Francodex brand names.

         On March 5, 1999,  the Company,  formerly  named  Agri-Nutrition  Group
Limited,  merged  with  Virbac,  Inc.,  with the  Company  being  the  surviving
corporation.  Virbac SA, the parent of Virbac,  Inc., received 60% of the voting
equity of the Company; therefore,  Virbac, Inc. is considered to be the acquirer
for financial statement purposes. Accordingly, the merger has been accounted for
as a purchase of Agri-Nutrition Group Limited by Virbac, Inc.

         In conjunction with the merger,  the Company  assessed,  formulated and
announced plans to consolidate its  manufacturing  and distribution  operations.
Under  the  plan,  which was  completed  prior to the end of the  year,  all pet
product  distribution  operations  have been  transferred  from AGNU's  Chicago,
Illinois,  and Los Angeles,  California  facilities to the Company's larger Fort
Worth, Texas facility.  All manufacturing and distribution  operations which had
been carried out at the Chicago facility  ceased,  and such operations have been
transferred to other existing Company facilities. In addition, manufacturing and
distribution  operations related to the majority of products previously produced
at the Los Angeles  facility have been  transferred to the Fort Worth  facility,
with only certain production and marketing activities remaining in California.

         The Management's  Discussion and Analysis that follows contains forward
looking  information made pursuant to the safe harbor  provisions of the Private
Securities Litigation Reform Act of 1995. These  forward-looking  statements may
be  affected  by certain  risks and  uncertainties  described  in the  Company's
filings with the Securities and Exchange Commission. Projections of gross margin
improvements   anticipated  due  to  the   consolidation  of  manufacturing  and
distribution facilities and of expense reductions that should result from actual
or  planned  headcount  reductions  may not be  achieved  if  management  is not
vigilant  in  executing  its  plans  or if  assumptions  made in the  plans  are
inaccurate. Forward-looking statements regarding future sales may be affected by
new  competitive  or  technological  entries  into  the  market  or by  lack  of
acceptance of the  Company's  products by the market.  Therefore,  the Company's
actual results could differ materially from such forward-looking statements.

Results of Operations

         The  results of  operations  for the year ended  December  31,  1999 as
presented in the  Consolidated  Statements of Operations  include the results of
operations of Virbac,  Inc. for the entire year and the results of operations of
Agri-Nutrition  since  March 5, 1999.  The results of  operations  for the years
ended  December  1998 and 1997 as presented in the  Consolidated  Statements  of
Operations include only the operations of Virbac, Inc.

         Because  Agri-Nutrition's  operations  were  significantly  larger than
those of Virbac,  Inc.,  substantially  all of the increase in each component of
the  Consolidated  Statements  of  Operations  from  1998  to 1999 is due to the
acquisition of Agri-Nutrition.  For the year ended December 31, 1999 as compared
to December 31, 1998,  the  acquisition  accounts for  approximately  94% of the
increase in revenues,  approximately 88% of the increase in gross profit and all
of the increase in operating expenses.

         For  comparative  purposes,  management  believes  that an  as-adjusted
analysis  upon which 1998 results are presented on a basis that is equivalent to
1999 will provide a more meaningful discussion of the results of operations.  To
that  end, the actual results for the period ending  December 31, 1998 have been
adjusted to include the results of  Agri-Nutrition  since March 1998 in order to
be comparable with the actual results of 1999. The 1998 as-adjusted amounts have
also been adjusted to reflect the effects of the merger,  primarily  adjustments
to reduce interest expense  reflecting the repayment of debt in conjunction with
the merger and adjustments to depreciation and  amortization  related to certain
purchase accounting adjustments.  Management believes the amounts and discussion
below  provide  a  more  meaningful  comparison  of  the  Company's  results  of
operations.  The  analysis of the 1998  results  compared to 1997 are based upon
actual Virbac,  Inc. results and do not include  Agri-Nutrition's  Results since
these periods are prior to the purchase of Agri-Nutrition by the Company.


<PAGE>


Year Ended December 31, 1999 Compared to As Adjusted Year Ended December 31,
1998

                                                         For the year ended
                                                            December 31,
                                                  -----------------------------
                                                    (in thousands of dollars)
                                                                       1998
                                                      1999         (as adjusted)

     Net Revenues                                 $    43,717    $       42,065
     Gross Profit                                      17,944            16,931
     Gross Profit %                                       41%               40%
     Operating Expenses                                17,911            18,208
     Interest and other expenses                          577               583
     Net loss                                     $      (544)   $       (1,860)

         The results of operations  for the year ended December 31, 1999 include
the  operations  of Virbac,  Inc.  for the  entire  year and the  operations  of
Agri-Nutrition since the date of the merger, March 5, 1999. For purposes of this
Management's  Discussion and Analysis, 1999 amounts are compared to 1998 amounts
adjusted to include  Agri-Nutrition for the same period as 1999. See "Results of
Operations" above.

         Sales of $43.7 million in 1999 increased $1.7 million or 4% compared to
the prior year. Positive factors impacting sales were:

o    Increased volumes of the Company's PreventicR tick collar.

o    The introduction of advanced  formula and patent  protected  Spherulites to
     the Company's dermatological line, which management believes have led to an
     increase in market share in the dermatological line.

o    Increased volumes of Bromethalin(TM)rodenticides.

         These positive factors were partially offset by the following  negative
factors:

o    A  disruption  to  the  dental  line's  marketing  efforts  caused  by  the
     relocation of the line's  marketing  staff from  California to Texas;  this
     relocation is now complete and is not expected to have an adverse impact on
     future sales.

o    Increased competition in the OTC distribution channel, particularly for the
     insecticides.

o    A shift in the  Company's  focus in the product  lines sold through the OTC
     distribution  channel.  As the Company integrates the Francodex business of
     Virbac, Inc. with the St. JON business of Agri-Nutrition, it is focusing on
     the more profitable products as it eliminates  duplication,  thus impacting
     sales.

o    Distribution  disruptions in the fourth quarter caused by the consolidation
     of the Company's  production and distribution  facilities in California and
     Illinois into its Fort Worth facility.


<PAGE>



         The  increase in gross  profit  percentage  (41.0% in 1999  compared to
40.2% in 1998)  primarily  reflects  fixed  overhead  charges being  absorbed by
higher sales.  Somewhat  offsetting the positive  impact of the increased  sales
were  approximately  $750,000 of inventory  write-offs taken in conjunction with
the consolidation of the Company's production and distribution facilities during
the fourth  quarter.  These  write-offs  reduced the gross profit  percentage by
approximately 1.7 percentage points.

         The  Company's  operating  expenses  of $17.9  million  decreased  $0.3
million in 1999 compared to 1998.  Operating  expenses include expenses incurred
related  to  sales  and  marketing,  research  and  development,  warehouse  and
distribution,  as well as general and administrative costs. The decrease in 1999
was primarily  attributable to actions taken by Agri-Nutrition in 1998 to reduce
costs and to cost  cutting  measures  taken in the  second  quarter  1999 by the
Company to consolidate  certain commercial and administrative  functions.  These
measures include a 17% reduction in commercial and administrative personnel that
reduced  related  costs.  Partially  offsetting  these expense  reductions  were
expected  increases  in  variable  costs  related  to the  increase  in sales as
discussed  above,  and  approximately  $0.3  million of  non-recurring  expenses
incurred in connection with the operations of Virbac,  Inc.,  including  certain
severance payments to Virbac, Inc. employees,  including the former president of
the Company.  As a percent of sales,  operating expenses decreased from 43.3% of
sales in 1998 to 40.9% in 1999, reflecting the cost reductions discussed above.

         The Company did not record an income tax benefit in connection with its
operating loss in 1999,  nor in 1998.  The aggregate  amount of the deferred tax
asset valuation  allowance at December 31, 1999 was approximately  $2.4 million.
This valuation allowance reflects  management's view that it is more likely than
not that tax benefits  related to the Company's  deferred tax assets will not be
realized.  The primary factor affecting  managements' view in this regard is the
Company's losses from operations in prior years.

         Net loss in 1999 of $0.5 million  improved by $1.3 million  compared to
the net loss in 1998 based on the various factors described above.

Fourth Quarter Results

         The Company  reported a net loss of $1.9  million,  or $0.09 per share,
for the  fourth  quarter  of 1999.  The  results  for the  fourth  quarter  were
adversely  affected by inventory  write-offs,  lower sales, and costs associated
with the consolidation of the Company's  production and distribution  facilities
during the fourth  quarter.  The  Company  wrote-off  approximately  $750,000 of
inventory in conjunction with the consolidation.  Revenues,  which are typically
lower in the fourth quarter compared to the rest of the year due to seasonality,
were further  unfavorably  impacted by  disruptions  to shipments  caused by the
consolidation process. Net revenues during the fourth quarter were approximately
$4.0 million lower than in the third quarter of 1999. This decrease  resulted in
a decrease in gross profit of $1.6 million.


<PAGE>



Year Ended December 31, 1998 Compared to Year Ended December 31, 1997


                                                       For the year ended
                                                           December 31,
                                                 -------------------------------
                                                    (in thousands of dollars)
                                                       1998             1997

    Net Revenues                                 $      15,051    $      16,235
    Gross Profit                                         9,486           10,326
    Gross Profit %                                         63%              64%
    Operating Expenses                                  10,725           11,056
    Interest and other expenses                            583              524
    Net loss                                     $      (1,821)   $      (1,255)

         Net revenues  decreased  $1.2  million,  or 7%,  primarily due to heavy
competition in the pesticide  market that  negatively  affected  business in the
veterinary  and  OTC  markets.   In  addition,   distributors   carried  forward
significant  inventories  of the  PreventicR  tick collar at year-end  1997 that
resulted  in lower than  expected  sales of these  products in the first half of
1998.

         Gross margin as a percentage of revenues  decreased slightly from 63.6%
to 63.0% due to a shift in sales mix and the  outsourcing  of  manufacturing  of
some new products launched in 1997, including Nutraceuticals and Spot Ons.

         Operating  expenses  decreased $0.3 million,  or 3%, in 1998. Sales and
marketing  expenses  remained  constant but as percentage of revenues  increased
from 35% to 38% due to  higher  percentage  of  marketing  dollars  spent on the
PreventicR  tick collars and new product  launches.  General and  administrative
expenses  remained  constant  despite  increased  professional  fees incurred in
pursuing   acquisitions  and  increased   insurance   expenses.   Warehouse  and
distribution  expenses  remained  constant  but  as  a  percentage  of  revenues
increased  from 8% to 9% due to  increased  freight  rates of  common  carriers.
Research and development  expense decreased $0.4 million, or 29% due to the lack
of a research and development director from March through September 1998.

         Interest expense increased $0.1 million due to increased  borrowings in
1998.

         The Company did not record an income tax benefit in connection with its
operating loss in 1998,  nor in 1997.  The aggregate  amount of the deferred tax
asset valuation  allowance at December 31, 1998 was approximately  $1.4 million.
This valuation allowance reflects  management's view that it is more likely than
not that tax benefits  related to the Company's  deferred tax assets will not be
realized.  The primary factor affecting management's view in this regard are the
Company's losses from operations in prior years.

         The net loss in 1998 of $1.8 million was $0.5  million  higher than the
net loss of $1.3 million in 1997 based on the various factors described above.

Liquidity and Capital Resources

         The Company's  primary  sources of liquidity  have been cash flows from
operations,  proceeds from bank borrowings and cash infusion from VBSA. Although
$1.0 million was generated by the Company's  operations before  depreciation and
amortization,  operating  activities  used  $3.2  million  of cash  in 1999  due
primarily  to an  increase  in  inventory  and a  reduction  to trade  payables.
Inventory increased for several reasons:  (1) the build-up in inventory prior to
commencing the consolidation of the manufacturing and distribution facilities to
reduce the interruption of service to customers;  (2) low levels of inventory at
the beginning of the year which had created a significant  back-order  position;
and (3) the  build-up  of  inventory  by PMR to serve the Purina  Mills'  dealer
distribution  network. In addition,  accounts payable decreased by approximately
$1.0 million reflecting more timely payments to vendors and suppliers.

         Cash flows used in  investing  activities  in 1999  include  cash costs
related to the merger and capital  improvements  at the  Company's Bridgeton and
Fort Worth  facilities,  and  acquisition  fees related to the  in-licensing  of
certain products.

         Cash flows from  financing  activities  in 1999 reflect  primarily  the
merger with  Agri-Nutrition  Group. In conjunction with the merger,  Virbac S.A.
invested  approximately  $13.7 million of cash in the Company.  These funds were
used to pay down  debt  and to  repurchase  1,000,000  shares  of the  Company's
outstanding  common  stock at $3.00  per  share in April  1999  pursuant  to the
mandatory  tender  offer  required  under the  merger  agreement.  In  addition,
borrowing  under a credit  facility  increased to fund working capital needs and
the investments described above.

         On September  7, 1999,  the Company  replaced all of its  then-existing
credit facilities with a three-year $10 million facility.  In December 1999, the
Company obtained a temporary $2.5 million increase to its line of credit to fund
acquisition fees related to its acquisition of certain product manufacturing and
distribution  rights  discussed  below  and to fund  working  capital  increases
related  to the  consolidation  of the  Company's  production  facilities.  This
temporary  increase is to be repaid in installments  from February to July 2000.
Of the remaining $10 million, $7 million is subject to a borrowing formula based
upon eligible  accounts  receivable and inventory and serves as a revolving line
of credit.  The  availability  of the  remaining  $3 million  will be reduced by
$150,000 per quarter.  The interest  rate and fees vary based upon the financial
performance  of the  Company  as  measured  by the ratio of  EBITDA to  interest
expense paid and current maturities due. Interest rates can vary from prime plus
25 basis  points to prime minus 75 basis  points.  At  December  31,  1999,  the
Company was paying prime minus 75 basis points (7.75%).

         The revolving credit facility contains financial  covenants,  including
but not  limited  to,  tangible  net worth and  interest  coverage  ratios,  and
restricts the payment of dividends. At December 31, 1999, the Company was not in
compliance  with these  covenants.  However,  the  lending  bank has waived such
non-compliance  for periods  through April 30, 2000. On May 1, 2000, the Company
and the bank amended the  revolving  credit  facility and the Company would have
been in compliance with such amended covenants at December 31, 1999. At December
31, 1999, $1.7 million was available under the credit facility, as amended.

         The Company has no current plans to significantly  increase capacity of
any of its plant facilities or to expend significant  capital in modifying them.
At  the  end  of  1999,  the  Company  consolidated  certain  manufacturing  and
distribution   operations  that  had  been  carried  out  at  several  different
facilities;  this consolidation  required expenditures of approximately $600,000
for plant closing costs and minor upgrades to remaining facilities.

         In  1999,  the  Company   acquired  the  rights  to   manufacture   and
distribution  products currently in development by a third party for a period of
15 years.  In December 1999,  the Company paid  $1,000,000 at signing in partial
payment for these rights,  and,  depending upon the third party reaching certain
registration milestones, the Company is committed to paying in fiscal 2000, 2001
and 2002 approximately $1.7 million, $750,000 and $700,000, respectively.

         The  Company   expects  to  be  able  to  fund  its  fiscal  2000  cash
requirements through cash flows from operations, initial payments to be received
in connection with the licensing of certain products and availability  under the
credit  agreement.  In addition,  currently the Company has  approximately  $1.7
million available under its credit agreement at December 31, 1999. Together with
the availability  under the credit facility,  licensing fees and cash flows from
operations,  the Company's  current debt maturity  requirements,  licensing fees
commitments and capital expenditure needs are expected to be met.

         The Company is committed  to conduct a public  tender offer to purchase
up to 1,395,000 of the  Company's  outstanding  Common Stock at a price of $3.00
per share if, prior to the second  anniversary  of the merger (March 2001),  the
closing sale price of the Company's Common Stock has not reached $3.00 per share
for a period of 40 consecutive  trading days.  Pursuant to the merger agreement,
such tender offer,  if necessary,  will be funded by Virbac SA's direct purchase
from the Company of 1,395,000 shares of Common Stock at $3.00 per share.

         The  Company  has no  plans to pay  dividends  to  stockholders  in the
foreseeable future.

Quarterly Effects and Seasonality

         The results of operations of certain products in the veterinary product
line, including Virbac's flea and tick collars,  have been seasonal with a lower
volume of its sales and earnings being generated  during the Company's first and
fourth fiscal  quarters.  The results of operations of the Company's OTC segment
have also been seasonal with a relatively lower volume of its sales and earnings
being generated  during the Company's  fourth quarter.  Seasonal  patterns of PM
Resources' operations are highly dependent on weather, feeding economics and the
timing of customer orders.

         In  addition,  consolidation  of certain  manufacturing,  distribution,
commercial and  administrative  functions  between AGNU and Virbac,  Inc. during
1999 will impact the comparative  results of the Company between quarters and in
future periods.

New Accounting Standards

         In June 1998,  the FASB  issued  FAS 133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  FAS  133  establishes   accounting  and
reporting  standards for derivative  instruments and for hedging  activities and
requires  recognition  of all  derivatives on the balance sheet measured at fair
value. The original  implementation  date of FAS 133 has been extended and it is
now effective for all fiscal  quarters of all fiscal years  beginning after June
15, 2000.  The Company  believes that the adoption of this new standard will not
have  a  material  impact  on  the  Company's  financial  position,  results  of
operations, or related disclosures.

Year 2000 Compliance

         The Year 2000 issue  arose as a result of computer  programs  that were
written  using  two  digits  rather  than four to define  the  applicable  year.
Consequently,  these computer programs may contain time-sensitive software which
recognizes  a date using "00" as the year 1900  rather  than the year 2000.  The
impact of the Year 2000 issue extended beyond traditional  computer hardware and
software systems and could have potentially impacted telephone systems, building
facilities systems, security systems and systems utilized by outside vendors and
customers.  Failure  to  effectively  address  the Year 2000  issue  could  have
resulted in a disruption of operations and the inability to process transactions
or to perform other normal business activities.

         The  Company  reviewed  its  key  hardware  and  software  systems  for
compliance.  Those  systems that were not in  compliance  have been  repaired or
updated to support Year 2000 compliance. Less critical systems, such as personal
computers,  have also been  evaluated and upgraded.  The cost of the repairs and
upgrades to the key  hardware  and  software  systems  and to the less  critical
systems have not been material to the Company's financial statements.

         The Company also evaluated its mission  critical vendors and suppliers.
The Company recognized that business could have been interrupted because of Year
2000  problems  at one or more of its  business  partners  such  as  vendors  or
customers.

         The Company believes that the Year 2000 issues did not pose significant
operational problems for the Company because of its preparedness and because the
Company's  operations are not driven by systems  technology.  In addition,  Year
2000 problems at the  Company's  business  partners,  if any, did not impact the
Company's business.

Item 8.  Financial Statements.

         The financial statements prepared in accordance with Regulation S-X are
included  in a  separate  section  of this  report.  See the index to  Financial
Statements at Item 14(a)(1) and (2) of this report.

Item 9.  Changes In and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         None.


<PAGE>



                                    Part III

Item 10.  Directors and Executive Officers of the Registrant.

Directors and Nominees

         Name                       Age   Position

         Pascal Boissy              57    Chairman
         Eric Maree                 47    Director
         Pierre Pages, D.V.M.       48    Director
         Alec L. Poitevint, II      52    Director
         Bruce G. Baker             56    Director and Executive Vice President-
                                           Business Development

         Pascal  Boissy has served as the Company's  Chairman  since March 1999.
Mr.  Boissy  served as President of Virbac S.A.  from April 1992 until  December
1999.  Virbac  S.A.  is a French  veterinary  pharmaceutical  manufacturer  that
indirectly owns approximately 60% of the Company's  outstanding common stock. He
served on Virbac S.A.'s Board of Directors from 1989 through 1999, and served as
President  and  Chairman of the Board of Directors  of various  subsidiaries  of
Virbac S.A. Mr. Boissy serves as a Rotarian  Member of the Advisory Board of the
Banque de France  in Nice and as an  Advisor  for  Foreign  Trade to the  French
Government.

         Eric Maree was  appointed by the Board of Directors on January 25, 2000
to complete the unexpired Class 2 term, which became vacant upon the resignation
of Dr.  Brian  Crook.  Mr.  Maree  joined  Virbac S.A.  in October  1999 and was
appointed its President  effective December 15, 1999.  Previously,  he was Chief
Executive  Officer of  Laboratories  Roche  Nicholas  and Vice  President  Roche
Consumer Health, two subsidiaries of Hoffman La Roche, from 1994 through 1999.

         Pierre Pages,  D.V.M.  has been a Director  since March 1999. Dr. Pages
has served as Executive  Vice  President of Virbac S.A. and has been a member of
the Directory Board in charge of Operations,  Production,  and Quality Assurance
since January 1997. Prior to becoming Executive Vice President, Dr. Pages served
as Director of International Operations from 1995 through 1997.

         Alec L.  Poitevint,  II has been a Director  since  January  1996,  and
previously served as the Company's Chairman from February 1997 until March 1999.
Mr. Poitevint has been Chairman and President of Southeastern Minerals, Inc. and
its affiliated companies since 1981 and 1976,  respectively.  Since May 1991, he
has served as Director of the American  Feed  Industry  Insurance  Company,  Des
Moines,  Iowa,  and from May 1994 to April  1995,  he served as  Chairman of the
American Feed  Industry  Association  ("AFIA").  He is a director of the Georgia
Agribusiness  Council and a life member of the Poultry Leader Round Table of the
Georgia  Poultry  Federation,  and in 1988 and 1989 he served as Chairman of the
National Feed Ingredients Association.  He also has served in various capacities
relating  to  Eastern  European   agricultural  trade  and  market  development,
including Director of the International  Republican  Institute since March 1992.
In addition,  Mr.  Poitevint  currently  serves as  Treasurer of the  Republican
National  Committee and as Treasurer of the Republican  National  Convention,  a
member of the RNC Budget  Committee,  and Republican  National  Committeeman for
Georgia.  He has served as the Vice  Chairman  and a director  of the First Port
City  Bank,   Bainbridge,   Georgia  since  January  1994  and  February   1989,
respectively.

         Bruce G. Baker has been Executive Vice President,  Business Development
of the Company  since March 1999.  Previously,  he served as President and Chief
Executive  Officer of  Agri-Nutrition  Group Limited from November 1, 1996 until
its merger with  Virbac,  Inc. in March 1999.  From March 1994  through  October
1996,  he was Vice  President  and  Deputy  Chief  Executive,  and he has been a
Director since August 1993.

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's  executive  officers and  Directors,  and persons who own
more  than ten  percent  of the  Company's  Common  Stock,  to file  reports  of
ownership and changes in ownership with the Securities and Exchange  Commission.
The  Company   believes  that  each  such  person   complied  with  such  filing
requirements during the fiscal year ended December 31, 1999.

         See  Item 4A of  this  report  on  Form  10-K  for  information  on the
Executive Officers of the Registrant.

Item 11.  Executive Compensation

         The following table sets forth  compensation for the fiscal years ended
December 31, 1999, 1998, and 1997 earned by the Chief Executive Officer and each
of the most highly compensated executive officers whose individual  remuneration
on an annual basis exceeded $100,000 during 1999 (the "Named Executives").

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                                    Long-Term
                                                     Annual Compensation          Compensation
                                                                                Shares Underlying
          Name and               Year Ended                                          Options            All Other
     Principal Position          December 31        Salary          Bonus                              Compensation
<S>                        <C>                 <C>             <C>                <C>              <C>
Thomas L. Bell                1999               $    105,000   $      40,000          50,000       $        7,000
   President and Chief
   Executive Officer(1)

Bruce G. Baker                1999               $    178,333   $      16,667           8,000               12,000
   Executive Vice
   President - Business
   Development (2)

   President and Chief        1998               $    195,000              --              --               22,437
      Executive Officer (2)   1997               $    195,000              --              --               25,291
</TABLE>

-----------------------------

(1)  Mr. Bell joined the Company as its  President and Chief  Executive  Officer
     effective May 6, 1999.
(2)  Mr.  Baker   resigned  as  President   and  Chief   Executive   Officer  of
     Agri-Nutrition  Group  Limited  and took the  position  of  Executive  Vice
     President - Business Development effective March 5, 1999.


<PAGE>



Item 12.  Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth certain information regarding beneficial
ownership of the  Company's  Common Stock as of March 6, 2000 by (i) each person
who is known by the Company to be the beneficial owner of more than five percent
of the Company's outstanding Common Stock, (ii) each Director of the Company and
each Nominee,  (iii) each Named Executive,  and (iv) all Directors and executive
officers of the Company as a group. Except as otherwise  indicated,  the Company
believes  that the  beneficial  owners  of the  Common  Stock  listed,  based on
information furnished by such owners, have sole investment and voting power with
respect to such shares,  subject to community  property  laws where  applicable.
Unless  otherwise  indicated,  the  address of each  stockholder  is: c/o Virbac
Corporation, 3200 Meacham Boulevard, Fort Worth, Texas 76137.

<TABLE>
<CAPTION>

     Beneficial Owner                            Shares Beneficially Owned (1)         Percentage Ownership (1)
<S>                                                <C>                                     <C>
     Interlab S.A.S. (2)                                        12,580,918                          60.1
     Durvet/PMR, L.P. (3)                                        1,094,021                           5.2
     Pascal Boissy                                                  36,429                           0.2
     Bruce G. Baker (4)                                            557,275                           2.7
     Eric Maree                                                          -                             -
     Pierre Pages                                                    4,212                             -
     Alec L. Poitevint, II (5)                                     379,297                           1.8
     Thomas L. Bell                                                  6,000                             -
     Directors  and  Executive  Officers  as  a
       Group (7 persons) (6)                                       983,213                           4.7
</TABLE>

-------------------------------------------

(1)  Includes  shares issuable upon the exercise of options that are exercisable
     within 60 days of the date of this Form 10-K.  The shares  underlying  such
     option are  deemed to be  outstanding  for the  purpose  of  computing  the
     percentage of outstanding  stock owned by such persons  individually and by
     each group of which they are a member, but are not deemed to be outstanding
     for the purpose of computing the percentage ownership of any other person.
(2)  Interlab S.A.S. is a wholly-owned  subsidiary of Virbac S.A. Its address is
     13 emme rue - L.I.D., 06517 Carros Cedex, France.
(3)  The address of  Durvet/PMR,  L.P. is P.O. Box 279, 100 S.E. Magellan Drive,
     Blue Springs,  Missouri 64014.  The general partner of Durvet/PMR,  L.P. is
     Durvet,  Inc.,  and the limited  partners  of  Durvet/PMR  L.P.  are the 25
     stockholders  of Durvet,  Inc.,  each of which has a 3.2%  interest  in the
     partnership.
(4)  Includes options to purchase 100,000 shares of Common Stock and shares held
     by Mr.  Baker's  spouse.  Excludes  37,200  shares  held by an  independent
     trustee for the benefit of three adult  children and 12,000  shares held by
     such children.
(5)  Mr. Poitevint's address is Southeastern Minerals, Inc., P.O. Box 1866, 1100
     Dothan Road, Bainbridge,  Georgia 31718. Includes options to purchase 5,000
     shares of Common  Stock.  Also  includes  147,252  shares  held by Marshall
     Minerals,  Inc.  and 162,339  shares held by Mineral  Associates,  Inc. Mr.
     Poitevint is  president  and  chairman of both  corporations,  but is not a
     controlling  shareholder of either  corporation,  and disclaims  beneficial
     ownership  of such  shares.  Also  includes  20,000  shares  held by  adult
     children, for which Mr. Poitevint disclaims beneficial ownership.
(6)  Includes options to purchase 100,000 shares of Common Stock.



<PAGE>



Item 13.  Certain Relationships and Related Transactions.

         The  Company  has  adopted a policy  that any  transaction  between the
Company  and  any of its  officers,  Directors,  or  holders  of as much as five
percent of any class of its capital stock is required (i) to be on terms no less
favorable than those that could be obtained from  unaffiliated  parties and (ii)
to be approved by a majority of disinterested Directors.

         During 1999 the  Company  purchased  $1,843,470  of raw  materials  and
finished  goods  from,  and sold  $234,723  of  finished  goods to, VBSA and its
affiliates.   VBSA  also  reimbursed  the  Company  $315,477  for  research  and
development costs incurred on its behalf.

         In addition,  during 1999 the Company  entered  into an agreement  with
VBSA,  giving the Company the exclusive U.S. and Canadian  rights to manufacture
and distribute  products  currently in development  and previously  developed by
VBSA.  VBSA also agreed to reimburse  the Company  $400,000 in 2000 for internal
costs  incurred in assisting  VBSA obtain U.S.  registration  for VBSA  products
currently in development. Beginning in 2001, the Company will pay VBSA a royalty
of 3% on  VBSA-developed  products  sold by the  Company.  The  Company has also
agreed to pay VBSA an anual fee of $500,000 for a period of four years beginning
in 2001 in order to induce VBSA to continue  research  and  development  efforts
that may benefit the Company.

         In 1999,  the Company  entered into an agreement  with VBSA  appointing
VBSA as its exclusive  distributor  for its pet health care products  outside of
the U.S. and Canada.  Under the  agreement,  VBSA  guarantees a minimum  overall
annual gross  profit  through  2004,  which is based upon an annual 10% increase
from the gross profit realized by the Company on its 1998 export sales.


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)             (1) List of Financial Statements. The following is a list of the
                financial  statements included at pages F-1 through F-28 in this
                Report on Form 10-K:

                Report of Independent Accountants
                Report of Independent Public Accountants
                Consolidated Statements of Operations for the Years Ended
                    December 31, 1999, 1998 and 1997
                Consolidated Balance Sheets as of December 31, 1999 and 1998
                Consolidated Statements of Cash Flows for the Years Ended
                    December 31, 1999, 1998 and 1997
                Consolidated Statements of Shareholder's Equity for
                    Years Ended December 31, 1999, 1998 and 1997
                Notes to Consolidated Financial Statements

             (2) List of Financial Statement Schedules.  Schedule II - Valuation
                 of  Qualifying  Accounts and Reserves is  furnished.  All other
                 schedules  have  been  omitted  because  they  are  either  not
                 applicable  or not  required,  or the required  information  is
                 provided in the financial statements or notes thereto.

(b)          Reports on Form 8-K. The  following  reports on Form 8-K were filed
             during the fiscal quarter ended December 31, 1999:

                  None.

(c)  List of Exhibits. The following is a list of exhibits furnished.  Copies of
     exhibits will be furnished  upon written  request of any  stockholder  at a
     charge of $.25 per page plus postage.

2.4(a) Warehousing and Distribution  Agreement between Purina Mills, Inc. and PM
     Resources, Inc. dated September 9, 1993

2.5(a) Indemnity  agreement  between Purina Mills,  Inc. and PM Resources,  Inc.
     dated September 9, 1993

2.11(i)  Agreement  and Plan of Merger,  dated  October 16,  1998,  by and among
     Agri-Nutrition Group Limited, Virbac, S.A. and Virbac, Inc.

3.1(b) Restated Certificate of Incorporation

3.2(b) Amended and Restated By-Laws

4(a) Specimen stock certificate


<PAGE>




10.2(f)  Fourth  Restated  Employment  Agreement  between  Agri-Nutrition  Group
     Limited and Bruce G. Baker dated as of November 1, 1996

10.10(a) Form of Indemnification Agreement

10.11(a) 1994 Incentive Stock Plan

10.13(c) Reload Option and Exchange Exercise Plan

10.14(d) 1995 Incentive Stock Plan

10.15(e) 1996 Incentive Stock Plan

10.24(g) Credit  Agreement  by and  between  Agri-Nutrition  Group  Limited,  PM
     Resources,  Inc., St. JON Laboratories,  Inc. and First Bank, dated May 14,
     1998

10.25(h) Amended Credit Agreement by and between  Agri-Nutrition  Group Limited,
     PM Resources, Inc., St. JON Laboratories,  Inc. and First Bank dated August
     6, 1998

10.26(k)Second Amendment to Credit Agreement by and between Agri-Nutrition Group
     Limited, PM Resources, Inc., and St. JON Laboratories, Inc., and First Bank
     dated October 2, 1998.

10.27+Second Amendment to Credit Agreement by and between Virbac Corporation, PM
     Resources, Inc., St. JON Laboratories,  Inc., Francodex Laboratories, Inc.,
     and Virbac AH, Inc. and First Bank dated May 1, 2000.

21(k)List of subsidiaries

23+  Consent of PricewaterhouseCoopers LLP

     Consent of Arthur Andersen LLP

27+  Financial data schedule


99(j) Press Release of the Company dated October 19, 1998.



+    Filed herewith.

(a)  Filed as Exhibit of same number to the Registrant's  Registration Statement
     on Form S-1, File No. 33-78646, and incorporated herein by reference.
(b)  Filed as  Exhibit  of same  number  to the  Registrant's  Form 10-Q for the
     Quarterly  Period  ended  January  31,  1996,  and  incorporated  herein by
     reference.
(c)  Filed as Exhibit 4.2 to the  Registrant's  Registration  Statement  on Form
     S-8, File No. 33-86892, and incorporated herein by reference.
(d)  Filed as Exhibit 4.1 to the  Registrant's  Registration  Statement  on Form
     S-8, File No. 33-93340, and incorporated herein by reference.
(e)  Filed  as  exhibit  of the same  number  to the  Registrant's  Registration
     Statement  on Form  S-8,  File No.  33-3192,  and  incorporated  herein  by
     reference.
(f)  Filed as  exhibit  of same  number  to the  Registrant's  Form 10-K for the
     Fiscal Year ended October 31, 1997, and incorporated herein by reference.
(g)  Filed as exhibit of the same number to the  Registrant's  Form 10-Q for the
     Quarterly  Period  ended  April  30,  1998,  and  incorporated   herein  by
     reference.
(h)  Filed as exhibit of the same number to the  Registrant's  Form 10-Q for the
     Quarterly Period ended July 31, 1998, and incorporated herein by reference.
(i)  Filed as Exhibit 2.1 to the Registrant's  Current Report on Form 8-K, filed
     November 17, 1998, and incorporated herein by reference.
(j)  Filed as exhibit of the same number to the  Registrant's  Current Report on
     Form 8-K, filed November 17, 1998, and incorporated herein by reference.
(k)  Filed as  exhibit  of same  number  to the  Registrant's  Form 10-K for the
     Fiscal Year ended October 31, 1998, and incorporated herein by reference.


<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.

                                      VIRBAC CORPORATION




                                    By: /s/ THOMAS L. BELL
                                           Thomas L. Bell
                                         President and Chief Executive Officer



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

Signature                       Title                                  Date

/s/ Thomas L. Bell              President, Chief Executive
Thomas L. Bell                  Officer, and Director
                                (Principal Executive Officer)

/s/ Henry B. Haley              Vice President and Chief
Henry B. Haley                  Financial Officer
                                (Principal Accounting Officer)

/s/ Pascal Boissy               Chairman of the Board
Pascal Boissy

/s/ Bruce G. Baker              Director
Bruce G. Baker

/s/ Eric Maree                  Director
Eric Maree

/s/ Alec L. Poitevint, II       Director
Alec L. Poitevint, II

/s/ Pierre Pages                Director
Pierre Pages


<PAGE>






                          INDEX TO FINANCIAL STATEMENTS

                             Virbac Corporation Page

Report of Independent Accountants........................................   F-2

Report of Independent Public Accountants.................................   F-3

Consolidated Balance Sheets as of December 31, 1999 and 1998.............   F-4

Consolidated Statements of Operations for Each of the Three Years Ended
      December 31, 1999..................................................   F-5

Consolidated Statements of Cash Flows for Each of the Three Years Ended
      December 31, 1999..................................................   F-6

Consolidated Statements of Shareholders' Equity for Each of the Three
      Years Ended December 31, 1999......................................   F-8

Notes to Consolidated Financial Statements...............................   F-9



<PAGE>




                        Report of Independent Accountants

To Board of Directors and
Shareholders of Virbac Corporation:

In our opinion,  the accompanying  consolidated balance sheet as of December 31,
1999  and the  related  consolidated  statements  of  operations,  shareholders'
equity, and cash flows present fairly, in all material  respects,  the financial
position of Virbac  Corporation  and its  subsidiaries at December 31, 1999, and
the results of their  operations and their cash flows for the year then ended in
conformity with accounting  principles  generally accepted in the United States.
These financial  statements are the responsibility of the Company's  management;
our responsibility is to express an opinion on these financial  statements based
on our audit.  We conducted our audit of these  statements  in  accordance  with
auditing standards  generally accepted in the United States,  which 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,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for the opinion  expressed above. The financial  statements of the Company as of
December  31,  1998 and for the two  years  then  ended  were  audited  by other
independent  accountants  whose  report  dated  January  20, 1999  expressed  an
unqualified opinion on those statements.

     PricewaterhouseCoopers LLP
     Fort Worth, Texas
     May 1, 2000


<PAGE>




                    REPORT OF INDEENDENT PUBLIC ACCOUNTANTSs

To the Stockholders of
Virbac, Inc. and Subsidiaries:

We have audited the accompanying  consolidated balance sheet of Virbac, Inc.  (a
Delaware  corporation) and Subsidiaries as of December 31, 1998, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the two years in the period ended  December 31,  1998.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of Virbac,  Inc. and Subsidiaries
as of December  31,  1998,  and the results of their  operations  and their cash
flows  for each of the two  years  in the  period  ended  December  31,  1998 in
conformity with accounting principles generally accepted in the United States.

                                         ARTHUR ANDERSEN LLP





Fort Worth, Texas
     January 20, 1999


<PAGE>

<TABLE>
<CAPTION>


                               VIRBAC CORPORATION

                           Consolidated Balance Sheets

--------------------------------------------------------------------------------
                                                                                          December 31,
                                                                                   1999                  1998
<S>                                                                     <C>                    <C>
Assets
Current assets:

   Cash and cash equivalents                                                 $       231,297       $       412,378
   Accounts receivable, net                                                        5,555,363             1,230,361
   Accounts receivable - Virbac SA                                                   424,931                91,212
   Inventories, net                                                               13,773,605             3,355,504
   Prepaid expenses and other assets                                                 919,112               845,840
                                                                           -----------------      ----------------
                                                                                  20,904,308             5,935,295

Property, plant and equipment, net                                                12,765,120             4,904,520
Goodwill   and other intangible assets, net                                        9,953,120             1,804,885
Other assets                                                                          10,470                35,951
                                                                           -----------------      ----------------
   Total Assets                                                            $      43,633,018     $      12,680,651
                                                                           =================      ================

Liabilities and Shareholders' Equity
Current liabilities:

   Bank overdraft                                                          $       1,059,584     $              --
   Current portion of long-term debt and notes payable                             1,564,080             3,200,000
   Advance from Virbac S.A.                                                               --             2,000,000
   Accounts payable
      Trade                                                                        2,520,238               503,724
      Virbac S.A.                                                                    776,586               262,487
   Accrued expenses                                                                2,723,588               823,740
                                                                           -----------------      ----------------
                                                                                   8,644,076             6,789,951

Long-term debt and notes payable                                                   9,347,993             4,000,000

Commitments and contingencies (Notes 2 and 13)

Shareholders' equity:
   Common stock ($.01 par value; 38,000,000 shares authorized;
       20,975,747 and 12,580,918 issued, respectively)                               209,757               125,809
   Additional paid-in capital                                                     33,998,794             8,284,453
   Accumulated deficit                                                            (8,470,021)           (6,519,562)
                                                                           -----------------      ----------------
                                                                                  25,738,530             1,890,700
   Less:  Treasury stock at cost (42,949 and 0 shares, respectively)                 (97,581)                   --
                                                                           -----------------      ----------------
                                                                                  25,640,949             1,890,700
                                                                           -----------------      ----------------
   Total Liabilities and Shareholders' Equity                                $    43,633,018       $    12,680,651
                                                                           =================      ================
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>



                               VIRBAC CORPORATION

                      Consolidated Statements of Operations

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                           For the Years Ended December 31,
                                                                -------------------------------------------------------
                                                                      1999               1998              1997
<S>                                                             <C>               <C>                <C>
Net revenues                                                    $     43,717,824   $     15,051,090  $     16,235,284
Cost of goods sold                                                    25,774,014          5,564,757         5,909,671
                                                                ----------------   ----------------  ----------------
  Gross profit                                                        17,943,810          9,486,333        10,325,613

Operating expenses

   Sales and marketing                                                 8,272,404          5,768,218         5,737,787
   General and administrative                                          6,833,286          2,682,332         2,665,945
   Research and development, net of                                      999,402            985,313         1,388,903
   Warehouse and distribution                                          1,805,544          1,288,993         1,263,798
                                                                ----------------   ----------------  ----------------
      Income (loss) from operations                                       33,174        (1,238,523)        (730,820)

Other income (expense)
   Interest expense                                                    (576,950)          (582,611)         (525,342)
   Other                                                                      --              (252)               955
                                                                ----------------   ----------------  ----------------

Loss before income taxes                                               (543,776)        (1,821,386)       (1,255,207)

Income tax benefit                                                            --                 --                --
                                                                ----------------   ----------------  ----------------
Net loss                                                        $      (543,776)   $    (1,821,386)  $    (1,255,207)
                                                                ================   ================  ================
Basic and diluted loss per share                                $          (.03)   $          (.14)  $          (.10)
                                                                ================   ================  ================
Basic and diluted shares outstanding                                  19,677,053         12,580,918        12,580,918
                                                                ================   ================  ================

</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.




<PAGE>



                               VIRBAC CORPORATION

                      Consolidated Statements of Cash Flows

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                For the Years Ended December 31,
                                                                   ------------------------------------------------------------
                                                                          1999                 1998                1997

<S>                                                                <C>                 <C>                 <C>
Operating activities:
Net loss                                                           $      (543,776)     $    (1,821,386)    $    (1,255,207)

Adjustments to reconcile net loss to net
  cash used in operating activities:
      Depreciation and amortization                                       1,508,908              846,208             889,031
      (Gain) loss on disposal of assets                                       7,547                9,140             (4,360)
      Changes in operating assets and liabilities,
         net of the effects of the Merger:
      (Increase) decrease in accounts receivable, net                     (440,236)              206,774             485,425
      (Increase) decrease in inventories, net                           (3,091,174)              129,968           (746,102)
      (Increase) decrease in prepaid expenses and other                     353,224            (487,707)            (27,195)
      Increase (decrease) in accounts payable                           (1,047,973)             (54,025)             631,037
      Increase in accrued expenses                                           12,256               14,893              22,813
                                                                    ---------------     ----------------     ---------------
Net cash used in operating activities                                   (3,241,224)          (1,156,135)             (4,558)
                                                                    ---------------     ----------------     ---------------
Purchase of property, plant and equipment                                 (504,720)             (59,455)           (148,591)
Purchase of Agri-Nutrition Group Limited, net
   of cash acquired (see Note 1)                                          (643,979)                   --                  --
Acquisition of licensing rights (see Note 13)                           (1,000,000)                   --                  --
Other                                                                      (70,420)             (56,079)            (87,007)
                                                                    ---------------     ----------------     ---------------
Net cash used in investing activities                                   (2,219,119)            (115,534)           (235,598)
                                                                    ---------------     ----------------     ---------------
Financing activities:
Proceeds from long-term debt and notes payable                            2,500,000            1,000,000           6,700,000
Repayment of long-term debt and notes payable                           (8,783,443)            (400,000)         (2,500,000)
Increase in bank overdraft                                                1,059,584                   --                  --
Advance from (reimbursement to) Virbac S.A.                                      --            1,000,000         (4,000,000)
Cash infusion by Virbac S.A. in connection with
   the Purchase of Agri-Nutrition Group Limited
   (see Note 1)                                                          13,749,897                   --                  --
Purchase and retirement of shares (see Note 2)                          (3,246,776)                   --                  --
                                                                    ---------------     ----------------     ---------------
Net cash provided by financing activities                                 5,279,262            1,600,000             200,000
                                                                    ---------------     ----------------     ---------------
Increase (decrease) in cash and cash equivalents                          (181,081)              328,331            (40,156)
Cash and cash equivalents, beginning of period                              412,378               84,047             124,203
                                                                    ---------------     ----------------     ---------------
Cash and cash equivalents, end of period                           $        231,297     $        412,378    $         84,047
                                                                    ===============     ================     ===============
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>

<TABLE>
<CAPTION>


                               VIRBAC CORPORATION

                Consolidated Statements of Cash Flows (Continued)

--------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:

                                                                        For the Years Ended December 31,
                                                           -----------------------------------------------------------
                                                                  1999                1998                1997
<S>                                                       <C>                  <C>                <C>
Cash paid for interest                                     $      592,806      $      623,534      $      470,573
Cash paid for income taxes                                             --                  --                  --
</TABLE>


Supplemental disclosure of non-cash investing and financing activities:

         On March 5, 1999,  Agri-Nutrition  Group Limited ("AGNU") consummated a
merger with Virbac,  Inc., a Delaware  corporation  and indirect  subsidiary  of
Virbac SA, a French corporation ("VBSA"),  pursuant to which (i) Virbac received
a cash infusion from VBSA of approximately  $13.7 million plus a contribution of
$2.0  million of  intercompany  debt that was  recapitalized  to Virbac,  Inc.'s
equity,  (ii) AGNU issued  12,580,918 shares of its Common Stock to a subsidiary
of VBSA and (iii)  Virbac  was merged  with and into  AGNU,  with AGNU being the
surviving  entity and VBSA its  controlling  stockholder  (see Note 1).  Because
VBSA,  the parent of Virbac,  received 60% of the voting  equity of the Company,
Virbac is  considered  to be the  acquirer  for  financial  statement  purposes.
Therefore,  the Merger has been  accounted  for as a purchase of AGNU by Virbac.
See Notes 1 and 2 for further discussion.

         In September  1999, the Company repaid debt in the amount of $51,000 by
issuing 37,051 shares of the Company's common stock.

         See Note 7 for information  regarding the transfer of 1998  outstanding
debt to the September 7, 1999 new, three-year, $10 million facility.









The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>



                               VIRBAC CORPORATION

                 Consolidated Statements of Shareholders' Equity

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                     Common Stock                                               Treasury Stock
                             ----------------------------                                ----------------------------
                                                            Additional
                                Number          Par          Paid In       Accumulated      Number
                               of Shares       Value         Capital         Deficit      of Shares       Amount          Total
<S>                            <C>          <C>          <C>            <C>            <C>            <C>            <C>
Balance,
December 31, 1996              12,580,918   $    125,809  $  8,284,453    $ (3,442,969)            --  $         --   $  4,967,293

Net loss                               --             --            --     (1,255,207)             --            --     (1,255,207)

Balance
December 31, 1997              12,580,918        125,809     8,284,453     (4,698,176)             --            --      3,712,086

Net loss                               --             --            --     (1,821,386)             --            --     (1,821,386)

Balance
December 31, 1998              12,580,918        125,809     8,284,453     (6,519,562)             --            --      1,890,700

Cash infusion by VBSA                                       13,749,897                                                  13,749,897
in connection with the
Merger (see Note 1)

Debt payable to Virbac                                       2,000,000                                                   2,000,000
S.A. recapitalized as
equity (see Note 1)

Purchase of Agri-Nutrition
  Group Limited
   (see Note 1)                 9,387,279         93,873    11,637,538                                                  11,731,411

Issuance of shares to
directors                           7,550             75         8,418                                                       8,493

Purchase and retirement
of shares pursuant to
Mandatory Tender
Offer (see Note 2)            (1,000,000)       (10,000)   (1,620,000)     (1,406,683)                                  (3,036,683)

Purchase of treasury
shares                                                                                         80,000      (210,093)      (210,093)

Issuance of treasury
shares to retire debt                                          (61,512)                       (37,051)       112,512         51,000

Net loss                                                                     (543,776)                                    (543,776)

Balance,
December 31, 1999              20,975,747   $    209,757  $ 33,998,794    $(8,470,021)         42,949  $   (97,581)   $ 25,640,949
</TABLE>





The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>



                               VIRBAC CORPORATION

                   Notes to Consolidated Financial Statements


1.       Nature of Operations and Basis of Presentation

         Virbac  Corporation  (the  "Company"  or  "Virbac")   manufactures  and
distributes  a wide  variety  of  health,  grooming,  dental  and  parasiticidal
products for pets and other companion animals under the C.E.T.,  Allerderm,  St.
JON, Zema, and Francodex brand names.

         The Company is the result of the March 5, 1999 merger of Virbac,  Inc.,
a  subsidiary  of Virbac  SA, a French  veterinary  pharmaceutical  manufacturer
("VBSA"),  and Agri-Nutrition  Group Limited ("AGNU"),  a publicly held company.
Pursuant  to  the  merger   agreement   dated  October  16,  1998  (the  "Merger
Agreement"),  the merger was completed by the following  series of transactions:
(i) VBSA  contributed  a total of $15.7  million to Virbac,  Inc.  consisting of
$13.7  million in cash and $2  million in  intercompany  debt  recapitalized  as
equity;  (ii) AGNU issued  12,580,918 shares of AGNU stock to Interlab S.A.S., a
wholly owned subsidiary of VBSA ("VBSA Sub"); and (iii) Virbac, Inc. merged with
AGNU with AGNU being the surviving entity and VBSA its majority stockholder. The
name of the surviving entity was then changed to Virbac Corporation.

         For financial statement reporting purposes,  the merger is considered a
purchase  of AGNU by  Virbac,  Inc.  Accordingly,  the 1998  and 1997  financial
statements  reflect  the  operations  Virbac,  Inc.  Earnings  per share for the
periods  ending  December  31,  1998 and 1997 have been  restated to reflect the
number of equivalent shares received by Virbac, Inc.

2.       The Merger

         As discussed in Note 1, the Company is the combination of Virbac,  Inc.
and AGNU,  the merger of which has been  accounted  for as a purchase of AGNU by
Virbac,  Inc. The purchase price of $13.0 million assigned to the transaction is
the market value of the  outstanding  Common Stock shares of AGNU at the time of
the merger  announcement  (9,387,279 shares of AGNU at $1.25 per share, or $11.7
million) plus the direct acquisition cost incurred by Virbac,  Inc. The purchase
price  has been  allocated  to the  acquired  assets  and  liabilities  based on
estimated fair market values as follows ($000's).

         Working Capital                                         $       (2,970)

         Fixed Assets                                                     8,413

         Identifiable Intangible Assets                                     223

         Goodwill                                                         7,295
                                                                 --------------
                                                                 $       12,961
                                                                 ==============
         Goodwill is being amortized over twenty years.

         The  acquisition was accounted for as a purchase and the results of the
operations of AGNU have been included in the  Company's  consolidated  financial
statements  only  since the date of the  Merger,  March 5, 1999.  The  unaudited
consolidated  statements  of operation  data is  presented  below on a pro forma
basis as though the Merger had occurred as of the beginning of


<PAGE>



                               VIRBAC CORPORATION

             Notes to Consolidated Financial Statements (Continued)

--------------------------------------------------------------------------------

1998. Adjustments to net loss include a reduction in interest expense to reflect
a  contribution  of $15.7 million from Virbac S.A.,  which was primarily used to
reduce debt.

                               Pro Forma Information
                (unaudited, and in thousands except per share data)

                                               For the Years Ended December 31,
                                           -------------------------------------
                                                1999                     1998

         Net sales                          $      48,906       $      47,982
         Net loss                                   1,043               1,718
         Basic and diluted loss per share             .05                 .08

         Also,  pursuant  to the Merger  Agreement,  in April  1999 the  Company
commenced a public  tender offer to purchase  1,000,000  shares of the Company's
outstanding Common Stock for $3.00 per share (the "Mandatory Tender Offer"). The
shares  issued to VBSA Sub as part of the merger were  excluded from this tender
offer.  Although these treasury shares were not formally retired by the Board of
Directors  until  January  2000,  they are  deemed to have  been  constructively
retired when  purchased.  Following  the Mandatory  tender Offer,  VBSA controls
approximately 60% of the outstanding  Common Stock of the Company.  In addition,
if, prior to the second anniversary of the Merger, the closing sale price of the
Company's  Common  Stock has not  reached  $3.00  per  share for 40  consecutive
trading days,  the Company will conduct  another public tender offer to purchase
up to 1,395,000 shares of the Company's  outstanding  Common Stock at a price of
$3.00 per share.  Pursuant to the Merger  Agreement,  such tender  offer will be
funded by  VBSA's  direct  purchase  from the  Company  of  1,395,000  shares of
unissued Common Stock at a price of $3.00 per share.

3.       Summary of Significant Accounting Policies

Principals of consolidation

         The  consolidated  financial  statements  include  the  accounts of the
Company and its  subsidiaries.  All significant  intercompany  transactions have
been eliminated.

Estimates

         The  preparation of financial  statements in conformity with accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  revenues and expenses and the disclosure of contingent  assets and
liabilities. Actual results could differ from those estimates.


<PAGE>



Revenue recognition

         Revenue is  generally  recognized  upon  shipment  of  orders.  Revenue
related  to  certain  contract  manufacturing  customers,  for whom the  Company
provides warehousing and/or distribution  services, is contractually  recognized
upon the completion of the manufacturing  process. For certain private label and
contract manufacturing customers, the Company provides various services, such as
laboratory  services,  regulatory  consulting,  etc. Such services are generally
performed  prior to shipment,  included in the cost of the related  products and
billed at the time the related products are shipped.

         Accounts receivable consists of the amounts estimated to be collectible
on  sales,  after  allowance  for  uncollectible  amounts  based  on  historical
experience.  At December  31, 1999 and 1998,  the  allowance  for  uncollectible
accounts was $170,606 and $64,639, respectively.

Cash and cash equivalents

         For purposes of the  consolidated  statement of cash flows, the Company
considers  all highly  liquid  investments  with an  original  maturity of three
months or less to be cash equivalents.

Concentration of credit risk

         Financial   instruments  which  potentially   subject  the  Company  to
significant  concentrations  of credit risk as defined by Statement of Financial
Accounting  Standards  No.  105,  "Disclosure  of  Information  about  Financial
Instruments  with   Off-Balance-Sheet   Risk  and  Financial   Instruments  with
Concentrations of Credit Risk," consist primarily of accounts receivable.

         The Company  sells its products to  customers in the animal  health and
specialty chemical business throughout the United States and abroad.  Members of
one veterinary  buying group represent the Company's  largest group of customers
and  accounted  for  approximately  11% of net sales in 1999.  In 1998,  another
customer  represented 15% of net sales. No customer  accounted for more than 10%
of net  sales  in  1997.  The  Company  does  not  require  collateral  from its
customers.

Relationship with suppliers

         The  Company  purchases   certain  chemical   materials  from  multiple
suppliers  including  VBSA (see Note 15), for which  alternative  suppliers also
exist and are adequate.  However,  certain chemical materials are proprietary in
nature,  and the Company's ability to procure such chemical materials is limited
to  those  suppliers  with  proprietary   rights.   The  Company  considers  its
relationships with its primary suppliers to be strong.


<PAGE>



Fair value of financial instruments

         For purposes of financial  reporting,  the Company has determined  that
the fair value of the  Company's  debt  approximates  book value at December 31,
1999 and 1998,  based on terms  currently  available to the Company in financial
markets.

Inventories

         Inventories  are stated at the lower of average  cost or market,  which
approximates  the  first-in,   first-out  method.  Inventoriable  costs  include
materials,  direct labor and manufacturing overhead.  Inventories are stated net
of a reserve for estimated excess and obsolete inventory.

Property, plant and equipment

         Property,  plant and equipment are recorded at cost.  Expenditures  for
maintenance  and repairs are charged to  operations  as incurred;  acquisitions,
major renewals,  and betterments  are  capitalized.  When property is retired or
otherwise disposed of, the related cost and accumulated depreciation are removed
from the accounts, and any profit or loss on dispositions credited or charged to
income.

         The Company provides for depreciation by charging amounts sufficient to
amortize the cost of the  properties  over their  estimated  useful  lives.  The
straight-line  method of  depreciation is utilized for  substantially  all asset
categories.

         A summary of estimated useful lives used in computing  depreciation for
financial statement reporting is as follows:

                                                         Estimated
                                                         Useful life

Building and leasehold improvements                      5-30 years
Machinery and equipment                                  8-12 years
Furniture and fixtures                                    5-7 years
Vehicles                                                    5 years

Goodwill and other intangible assets

         Goodwill represents the excess of purchase price over the fair value of
net assets acquired in business combinations and is capitalized and amortized on
a straight-line  basis over 20 years.  Other  intangible  assets,  which consist
primarily of licenses, patents, and trademarks, are amortized on a straight-line
basis  over the lives of the  related  assets,  which  range  from one to twenty
years.

         The carrying value of goodwill and other intangible  assets is assessed
for  recoverability  by  management  based on an  analysis  of  future  expected
undiscounted  cash flows from the underlying  operations of the Company.  To the
extent expected future discounted cash flows are less than the carrying value of
goodwill  and  other  intangible  assets,  a  writedown  to the  extent  of such
shortfall  may be  recognized.  Management  believes  that  there  has  been  no
impairment as of December 31, 1999.

Long-lived assets

         Pursuant to Statement of Financial  Accounting  Standards  ("SFAS") No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed of" the Company's management continually evaluates whether
events and  circumstances  indicate that the remaining  estimated useful life of
intangible  assets  may  warrant  revisions  or that the  remaining  balance  of
intangibles  or other  long-lived  assets may not be  recoverable,  based on the
undiscounted  cash flows of operations over the remaining  amortization  period,
then the carrying  value of the asset will be reduced to fair value.  Management
believes that its long-lived and intangible assets are fully recoverable.

Advertising expense

         Advertising  costs are  expensed the first time the  advertising  takes
place.  Advertising  expense  for  fiscal  1999,  1998 and 1997 was  $1,759,086,
$1,504,926 and $1,948,727, respectively.

Research and development expenses

         Research and development costs are charged to expense when incurred. In
1999,  the Company  entered  into a contract  with VBSA to perform  research and
development  services for specific products to be launched in 2001. In 1999, the
Company was reimbursed  $300,000 by VBSA for services  performed in fiscal 1999.
See also Note 15.

Income taxes

         The Company uses the liability method of accounting for income taxes as
mandated by Statement  of  Financial  Accounting  Standards  No. 109.  Under the
liability  method,  deferred taxes are  recognized for the estimated  future tax
effects attributable to temporary  differences between the book and tax bases of
assets and  liabilities  as well as  carryforward  items.  These tax effects are
measured based on provisions of enacted tax laws. The  classification of any net
deferred tax assets and/or  liabilities,  i.e., current or non-current,  will be
based  primarily on the  classification  of the related assets and  liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management,  it is more likely than not that some portion or all of the deferred
tax assets will not be realized.

Earnings (loss) per share

         The Company has adopted Statement of Financial Accounting Standards No.
128,  "Earnings  Per Share,"  which  requires the  computation  of Basic EPS and
Diluted EPS.  Basic EPS is based on the weighted  average  number of outstanding
common shares during the period,  but does not consider dilution for potentially
dilutive  securities.  Diluted EPS reflects  dilutive  potentil  common  shares.
Dilutive  potential  common shares arising from the effect of outstanding  stock
options are computed using the treasury stock method, if dilutive.

         For fiscal 1999,  1998 and 1997, the number of weighted  average shares
and potential common shares is as follows:

<TABLE>
<CAPTION>

                                                                              Year Ended December 31,
                                                                ----------------------------------------------------
                                                                      1999             1998              1997
<S>                                                             <C>                 <C>              <C>
Weighted average shares - basic                                     19,677,053        12,580,918       12,580,918
Potential common shares
       Stock options                                                    16,632                --               --
       Debt payable in stock                                            63,273                --               --
Total weighted average common and
      Potential common shares - diluted                             19,756,958        12,580,918       12,580,918
</TABLE>



         The potential  common shares have not been included in the  computation
of diluted EPS because to do so would have been anti-dilutive for 1999, 1998 and
1997.  Weighted  average shares for the period ending December 31, 1998 and 1997
have been  restated  to reflect  the number of  equivalent  shares  received  by
Virbac, Inc. in conjunction with the March 1999 purchase of Agri-Nutrition Group
Limited.

Preferred stock

         The  Company's  Board of  Directors  may,  without  further  action  by
stockholders,  from  time-to-time  direct the  issuances  of shares of preferred
stock in series and may, at time of issuance,  determine the rights, preferences
and limitations of each series. No shares of preferred stock have been issued as
of December 31, 1999.

Environmental policy

         Environmental  expenditures  that  relate  to  current  operations  are
expensed or capitalized as appropriate.  Expenditures that relate to an existing
condition caused by past  operations,  and which do not contribute to current or
future  revenue  generation,   are  expensed.   Liabilities  are  recorded  when
environmental assessments and/or remedial efforts are probable and the costs can
be reasonably estimated.

         The former  owners of PM Resources,  Zema and St. JON have  indemnified
the  Company  from  environmental  claims  resulting  from  any  liabilities  or
obligations  arising from events  occurring  prior to the  acquisitions of these
three companies which the Company did not expressly assume. The Company has been
notified by certain  state  agencies of  non-compliance  with certain  state and
federal  environmental  regulations.   However,  management  believes  that  the
resolution  of these  issues  will  have no  material  effect  on the  Company's
financial position, cash flows or results of operations.

Employee stock-based compensation

         Statement of Financial  Accounting  Standard No. 123,  "Accounting  for
Stock-Based  Compensation"  (FAS 123),  allows  companies  to use the fair value
method defined in the statement or to continue use of the intrinsic value method
as outlined in APB Opinion No. 25,  "Accounting  for Stock Issued to Employees,"
(APB  25).  The  Company  will  continue  to  use  the  provision  of  APB 25 in
determining net income. See Note 10 for the pro forma impact on the net loss and
loss per share for the years ended December 31, 1999, 1998 and 1997.

New Accounting Standards

         In June 1998,  the FASB  issued  FAS 133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  FAS  133  establishes   accounting  and
reporting  standards for derivative  instruments and for hedging  activities and
requires  recognition  of all  derivatives on the balance sheet measured at fair
value. The original  implementation  date of FAS 133 has been extended and it is
now effective for all fiscal  quarters of all fiscal years  beginning after June
15, 2000.  The Company  believes that the adoption of this new standard will not
have  a  material  impact  on  the  Company's  financial  position,  results  of
operations, or related disclosures.

4.       Inventories

         Inventories consist of the following:
<TABLE>
<CAPTION>

                                                                                          December 31,
                                                                            --------------------------------------
                                                                                   1999                  1998
<S>                                                                          <C>                 <C>
         Raw materials                                                       $       6,340,906   $         799,848
         Packaging                                                                   2,276,927             855,305
         Finished goods                                                              6,069,769           1,756,137
                                                                             -----------------   -----------------
                                                                                    14,687,602           3,411,290
         Less - Reserve for excess and obsolete inventories                           (913,997)            (55,786)
                                                                             -----------------   -----------------
                                                                             $      13,773,605   $       3,355,504
                                                                             =================   =================
</TABLE>

5.       Property, plant and equipment

         Property, plant and equipment consist of the following:

                                                           December 31,
                                               ---------------------------------
                                                    1999                1998

         Land                                   $   3,405,072     $     642,072
         Building and improvements                  6,919,081         4,555,262
         Production equipment                       4,813,438         1,373,647
         Furniture and fixtures                       545,862           548,728
         Computer equipment and software              601,427           487,716
                                                -------------    --------------
                                                   16,284,880         7,607,425
         Less-Accumulated depreciation             (3,519,760)       (2,702,905)
                                                -------------    --------------
                                                $  12,765,120     $   4,904,520
                                                =============    ==============

In 1999,  1998 and 1997,  depreciation  expense  was  approximately  $1,068,908,
$500,000, and $547,000, respectively.

6.       Goodwill and other intangible assets

         Goodwill and other intangible assets consist of the following:
<TABLE>
<CAPTION>

                                                                                      December 31,
                                                                         ----------------------------------------
                                                                                 1999                1998
<S>                                                                      <C>                   <C>
         Goodwill                                                        $      10,653,334     $    3,367,553
         Patents, licenses, trademarks and other                                 1,835,745            482,144
                                                                         -----------------     --------------
                                                                                12,489,079          3,849,697

         Less-Accumulated amortization                                          (2,535,959)        (2,044,812)
                                                                         -----------------     --------------
                                                                         $       9,953,120     $    1,804,885
                                                                         =================     ==============
</TABLE>

         See Note 13 for discussion of the  acquisition  of licensing  rights in
1999. In 1999, 1998 and 1997,  amortization expense was approximately  $440,000,
$346,000, and $342,000, respectively.

7.       Long-Term Debt and Notes Payable

         The Company has a revolving  credit facility of $12,350,000 at December
31, 1999. Long-term debt and notes payable consist of the following:
<TABLE>
<CAPTION>

                                                                                              December 31,
                                                                                 -------------------------------------
                                                                                    1999                    1998
<S>                                                                          <C>                    <C>
         Revolving credit facility with a financial institution up to $12.350
         million based upon specified percentages of qualified accounts
         receivable and inventory, collateralized by accounts receivable,
         inventory, equipment, intangibles, and certain real estate, with
         interest varying based upon financial
         performance (7.75%, as of December 31, 1999).                        $  10,616,090          $          --

         Note payable dated September 25, 1997,  interest at prime, due
         in annual installments of $97,991, plus accrued interest,
         maturity September 25, 2001                                                195,983                     --

         Note payable dated  September  1997, due in 2000, with $49,000
         payable in cash, plus interest at prime, and $51,000 of
         the Company's common stock                                                 100,000                     --

         Revolving line of credit with a financial institution up to $1,000,000,
         interest paid quarterly at LIBOR +.95%,
         uncollateralized and guaranteed by Virbac, SA. paid in full.                    --              1,000,000

         Revolving  line of credit with a financial  institution  up to
         $4,000,000,  with interest paid  quarterly at LIBOR plus .75%,
         guaranteed by Virbac, SA., paid in full.                                        --              4,000,000

         Note payable to a financial institution, dated July 6, 1994,
         with interest paid quarterly from the date of initial advance
         at LIBOR plus .95%, uncollateralized and guaranteed by
         Virbac, S.A., paid in full                                                     --               2,200,000
                                                                              -------------    -------------------
                                                                                 10,912,073              7,200,000
         Less current portion                                                    (1,564,080)            (3,200,000)
                                                                              -------------    -------------------
                                                                              $   9,347,993     $        4,000,000
                                                                              =============    ===================
</TABLE>



         On September  7, 1999,  the Company  replaced all of its  then-existing
credit facilities with a three-year $10 million  facility.  The outstanding debt
associated with the then-outstanding facilities, approximately $3.2 million, was
transferred to the new three-year,  $10 million facility.  In December 1999, the
Company obtained a temporary $2.5 million increase to its line of credit to fund
acquisition  fees related to its  acquisition of certain  product  manufacturing
rights  (see  Note 13) and to fund  working  capital  increases  related  to the
consolidation of the Company's production facilities. This temporary increase is
to be repaid in  installments  from  February to July 2000. Of the remaining $10
million,  $7  million  is subject to a  borrowing  formula  based upon  eligible
accounts  receivable and inventory and serves as a revolving line of credit. The
availability  of the  remaining  $3  million  will be reduced  by  $150,000  per
quarter.  At December 31,  1999,  $1.7  million was  available  under the credit
facility.  The interest rate and fees vary based upon the financial  performance
of the Company as measured by the ratio of EBITDA to interest  expense  paid and
current  maturities due. Interest rates can vary from prime plus 25 basis points
to prime minus 75 basis  points.  At December  31,  1999,  the Company is paying
prime minus 75 basis  points  (7.75%).  A commitment  fee,  ranging from .25% to
1.25%, is calculated on the unused portion of the facility to be paid quarterly.
In addition,  a letter of credit commitment fee, ranging from 1% to 1.375%,  per
annum, based upon financial  performance  ratios, are calculated for all letters
of credit issued up to and including October 31, 1999, and thereafter.

         The revolving credit facility contains financial  covenants,  including
but not  limited  to,  tangible  net worth and  interest  coverage  ratios,  and
restricts the payment of dividends. At December 31, 1999, the Company was not in
compliance  with these  covenants.  However,  the  lending  bank has waived such
non-compliance  for the periods  through  April 30,  2000.  On May 1, 2000,  the
Company and the bank amended the revolving credit facility and the Company would
have been in compliance with such amended covenants at December 31, 1999.

<PAGE>



8.       Financial Results

         The Company  reported a net loss of $1.9 million for the fourth quarter
of 1999. The results for the fourth quarter were adversely affected by inventory
write-offs,  lower sales,  and costs  associated with the  consolidation  of the
Company's  production and  distribution  facilities  during the fourth  quarter.
During the fourth quarter of 1999, the Company wrote-off  approximately $750,000
of  inventory  in  conjunction  with  the  consolidation.  Revenues,  which  are
typically  lower in the fourth  quarter  compared to the rest of the year due to
seasonality,  were  further  unfavorably  impacted by  disruptions  to shipments
caused by the consolidation process. Net revenues during the fourth quarter were
approximately  $4.0  million  lower  than in the  third  quarter  of 1999.  This
decrease resulted in a decrease in gross profit of $1.6 million.

9.       Common Stock Transactions

         During  the  year  ended  December  31,  1999,  the  Company  purchased
1,000,000 shares of its common stock for constructive retirement pursuant to the
Mandatory  Tender Offer at an aggregate cost of $3,036,683.  See Note 2. In June
1999, the Board of Directors  authorized,  under the Stock  Repurchase Plan, the
Company to purchase in the open  market up to $250,000 of the  Company's  common
stock. As of December 31, 1999 the Company had repurchased  approximately 80,000
shares at an aggregate cost of $210,093. These shares were purchased to satisfy,
in part, future  distributions of stock under stock compensation plans and under
an agreement to retire certain debt.  During the year, 37,051 shares of treasury
stock were reissued to retire $51,000 of debt.

10.      Stock Options

         The Company has a Reload Option and Exchange  Exercise Plan (the Reload
Plan) which permits employees holding options to elect, in accordance with terms
of the Reload Plan,  to pay the exercise  price of such options by  surrendering
shares of the Company's  common stock already owned by the employee.  The shares
surrendered  are valued at the reported  closing  market price of the  Company's
common  stock on the date that the  employee  provides  the  notice of intent to
exercise the option and surrenders the shares in payment of the exercise  price.
The Reload Plan also  provides  for the issuance to the employee of a new option
to acquire the number of shares of the Company's common stock surrendered in the
option  exercise  with an  exercise  price  per  share  equal  to the  per-share
valuation  applicable  to the  shares  surrendered.  There  are  200,000  shares
reserved  for issuance  under the Reload  Plan;  no options have been granted to
date under this plan.

         Under terms of the Company's Incentive Stock Option Plans, officers and
certain other employees may be granted options to purchase the Company's  common
stock at the  closing  market  price on the date  that the  option  is  granted.
Options generally vest over three years and have a maximum term of ten years. At
December 31, 1999, a total of 1,655,000  shares were reserved for issuance under
the plans.

         A summary of the incentive  plans' stock option  activity for the years
shown is as follows:

                                                                Weighted Average
                                               Options           Exercise Price

Balance, December 31, 1998 and 1997                     0          $     --

AGNU options from merger                        1,949,500              1.41
Granted                                           245,000              1.32
Forfeited                                        (217,500)             1.53
Expired                                          (945,500)             1.12
Balance, December 31, 1999                      1,031,500           $  1.64

         The Company has adopted FAS 123, which  addresses  accounting for stock
options and warrant  plans and selected the  "intrinsic  value based method" for
valuing stock options granted to employees. Had compensation cost for all of the
Company's  stock option plans been  determined  based upon the fair value at the
grant dates consistent with the methodology prescribed in FAS 123, the Company's
net income  (loss) and net income (loss) per share would have changed to the pro
forma amounts listed below using the weighted average fair values indicated.

<TABLE>
<CAPTION>

                                                                               December 31,
                                                            ---------------------------------------------------
                                                                 1999              1998             1997
<S>                                                         <C>            <C>                 <C>
Net loss as reported                                        $     (543,776)  $    (1,821,386)  $   (1,255,207)
Pro forma net loss                                                (596,653)       (1,821,386)      (1,255,207)

Basic and diluted loss per share as reported                         (0.03)            (0.14)           (0.10)
Pro forma loss per share                                             (0.03)            (0.14)           (0.10)

Weighted average fair value of options granted                  $      0.68  $            --   $            --
</TABLE>


         The fair value of each option  grant is  estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions:  For grants in fiscal 1999, a weighted  average risk free  interest
rate of 5.88%; weighted average expected volatility of 51.85%; no dividends, and
an expected life of five years. FAS 123 does not require pro forma disclosure of
the effect of options and warrants  granted in years prior to fiscal  1996.  The
pro forma effect of compensation costs using the fair value based method are not
indicative of future  amounts when the new method will apply to all  outstanding
option and warrant grants.

The following table  summarizes  information  for stock options  outstanding and
exercisable at December 31, 1999:

<TABLE>
<CAPTION>

                                                Weighted Average                          Exercisable
 Range of Exercise         Number                                               Number           Weighted Average
       Price            Outstanding     Remaining Life    Exercise Price      Outstanding         Exercise Price
<S>                     <C>                <C>          <C>                     <C>               <C>
$1.25 - $2.00                966,500         7.3 years   $         1.50           710,200           $   1.55
$2.01 - $4.25                 65,000         5.5 years             3.78            65,000               3.78

$1.25 - $4.25              1,031,500         7.2 years   $         1.64           775,200           $   1.74
</TABLE>


11.      Income Taxes

         Due to the Company's net losses in 1999,  1998 and 1997, and due to the
lack of any loss  carryback  opportunities,  the Company has no taxes  currently
payable or refundable  during 1999.  The effective  income tax rate differs from
the statutory federal income tax rate,  principally as a result of the valuation
allowance related to the net operating loss carryforward.

         The  following  table  summarizes  the net  deferred  tax  assets as of
December 31, 1999 and 1998:

                                                  December 31,
                                     ----------------------------------------
                                             1999                1998
 Asset reserves                      $         366,000     $       41,000
 Nondeductible liabilities                     117,000            122,000
 Net operating loss carryforward             2,078,000            983,000
 Depreciation and amortization                (368,000)           256,000
 Other                                         229,000             43,000
                                     -----------------     --------------
                                             2,422,000          1,455,000

 Valuation allowance                        (2,422,000)        (1,445,000)
                                     -----------------     --------------
 Deferred income tax, net            $              --     $           --
                                     ==================    ==============

         Management  has  concluded  that,  based on the  Company's  history  of
losses,  it is currently  more likely than not that the Company will not realize
its net  deferred  tax  assets.  Therefore,  the  Company  has  provided  a 100%
valuation  allowance  on its  net  deferred  tax  assets.  Of the  $2.4  million
valuation  allowance at December 31, 1999,  approximately $.7 million relates to
the  Company's  purchase  of  Agri-Nutrition   Group  Limited.  If  the  Company
subsequently  recognizes tax benefits associated with this valuation  allowance,
the benefit will be a reduction of goodwill.

         The Company's tax net operating  loss  carryforwards  of  approximately
$6,111,000  will begin to expire in the year 2010.  The Company has available an
unused tax credit  carryforward of $58,000 which may be available against future
taxable income and expire beginning the year 2008.


<PAGE>



12.      Employee Savings Plan

         The Company  sponsors  three 401(k)  savings plans (the Plans).  Former
employees of Virbac, Inc. participate in one plan, non-union former employees of
AGNU participate in a separate plan, and union employees of PMR participate in a
third plan. Substantially all employees of the Company may participate in one of
the Plans, subject to certain eligibility and entry requirements.  Contributions
to the Plans result primarily from voluntary contributions from employees in the
form of deferrals of up to 15% or 20% of the employees' salaries, depending upon
the  Plan.   The  Plans  permit   various   employer   contributions.   Employer
contributions  were  $175,000,  $19,000,  and $22,000 for 1999,  1998, and 1997,
respectively.

13.      Commitments and Contingencies:

Operating Leases

         The   Company   leases   facilities   and   certain   machinery   under
non-cancelable  operating  leases that expire at various dates through  December
2004 and have renewal options  ranging from 1 to 5 years.  See Note 15 regarding
the lease with a related  party.  Future  lease  payments  under  non-cancelable
operating leases as of December 31, 1999, are as follows:

         2000                                                $      283,749
         2001                                                       141,118
         2002                                                        39,086
         2003                                                        24,513
         2004                                                        18,780
         Total minimum lease payments                        $      507,246

         Total rent expense under  operating  leases was  $163,301,  $39,944 and
$42,438,  in fiscal years 1999, 1998, and 1997,  respectively.  Subtenant rental
income  was  $37,510  in 1999 and zero in 1998 and  1997,  respectively.  Future
minimum lease payments have not been reduced by future minimum, subtenant rental
income of $90,024.

Acquisition of Licensing Rights

         In 1999,  the  Company  acquired  the  rights to  manufacture  and sell
products  currently in development by a third party for a period of 15 years. In
December  1999,  the Company paid  $1,000,000 at signing in partial  payment for
these rights, and, depending upon the third party reaching certain  registration
milestones,  the Company is committed  to paying in fiscal  2000,  2001 and 2002
approximately $1.7 million, $750,000 and $700,000, respectively.

Litigation

         The Company is subject to certain  litigation and claims arising out of
the conduct of its business.  While the final outcome of any litigation or claim
cannot be determined with certainty,  management believes that the final outcome
of any current  litigation or claim will not have a material  adverse  effect on
the Company's financial position, cash flows or results of operations.

Contingent Tender Offer

         As  described  in Note 2, if,  prior to the second  anniversary  of the
merger,  the closing price of the  Company's  Common Stock has not reached $3.00
per share for 40  consecutive  trading  days,  the Company will conduct a public
tender offer to purchase up to  1,395,000  shares of the  Company's  outstanding
Common  Stock at a price of $3.00 per share.  Pursuant to the Merger  Agreement,
each tender offer will be funded by VBSA's  direct  purchase from the Company of
1,395,000 shares of unissued Common Stock at a price of $3.00 per share.

Adjustment of the Merger Shares

         In order to maintain VBSA's 60% ownership interest in the Company until
the expiration, termination or exercise of all options to purchase the Company's
Common Stock  outstanding  as of the date of the merger and until the  Company's
last issuance of Common Stock  pursuant to the "Mardel  Merger  Agreement",  the
Company  will  contemporaneously,  with the  issuance  of Common  Stock upon the
exercise of pre-merger AGNU options or pursuant to the Mardel Merger  Agreement,
issue to VBSA a number of additional shares of Common Stock equal to the product
of (a) the  aggregate  number of shares of Common Stock issued upon the exercise
of such AGNU  options or pursuant to the Mardel  Merger  Agreement  and (b) 1.5.
Each such  post-Merger  adjustment  will  dilute  the  voting  power of  current
stockholders.   As  of  December  31,  1999,  808,000  pre-merger  options  were
outstanding;  no  pre-Merger  options were  exercised in 1999.  The Company will
issue  additional  shares of Common  Stock  with an  aggregate  value of $51,000
pursuant to the Mardel  Merger  Agreement in September  2000.  No shares will be
issued to VBSA in the event that  treasury  shares are reissued to satisfy these
pre-merger obligations.

14.      Facility Closures

         In conjunction with the Merger,  the Company  assessed,  formulated and
announced plans to consolidate its  manufacturing  and distribution  operations.
Under  the  plan,  which was  completed  prior to the end of the  year,  all pet
product  distribution  operations  have been  transferred  from AGNU's  Chicago,
Illinois,  and Los Angeles,  California  facilities to the Company's larger Fort
Worth, Texas facility. All manufacturing and distribution operations,  which had
been carried out at the Chicago facility,  ceased, and such operations have been
transferred to other existing Company facilities. In addition, manufacturing and
distribution  operations related to the majority of products previously produced
at the Los Angeles  facility have been  transferred to the Fort Worth  facility,
with only certain production and marketing activities remaining in California.

         The  cost  to  close  the  Chicago  facility,  which  mostly  comprises
severance costs and future lease  obligations,  and relocation costs for certain
key members of the manufacturing team were approximately $350,000. The severance
costs has been paid as of  December  31, 1999 and the lease  obligation  will be
paid in fiscal 2000.  These costs are included in the purchase price  allocation
of the Merger. See Note 2.

         In 1998,  the Company  closed its New  Castle,  Indiana  facility.  All
products that were  manufactured at that facility are now being  manufactured at
other Company  facilities or by third  parties.  All material  costs,  including
severance  costs of  approximately  $83,000,  associated  with the  transfer  of
operations were  recognized and paid in 1998.  During fiscal 1999, the Company's
management committed to dispose of the land and building in New Castle, Indiana.
The land and building's carrying value of approximately  $350,000 is held at the
Manufacturing and Administrative  segment.  Management expects to dispose of the
building during fiscal 2000. See Note 16.

15.      Related Party Transactions

         The Company  purchased raw  materials and finished  goods from VBSA and
its related affiliates in the amount of $1,843,470,  $233,837, and $2,468,816 in
1999,  1998,  and  1997,  respectively.  The  Company  had sales to VBSA and its
related  affiliates in the amount of $234,723,  $132,828,  and $102,344 in 1999,
1998, 1997, respectively.

         In 1999, the Company was  reimbursed  $315,477 by VBSA for internal and
external  research and  development  costs that were incurred on behalf of VBSA.
The reimbursement is included as an offset to research and development  expense.
During 1999, the Company entered into an agreement with VBSA, giving the Company
the  exclusive  U.S.  and  Canadian  rights  to  manufacture  and sell  products
currently in development and previously developed by VBSA. In addition, VBSA has
agreed to reimburse the Company  $400,000 in 2000 for internal costs incurred in
assisting  VBSA  obtain  U.S.  registration  for VBSA's  products  currently  in
development.  Beginning  in 2001,  the Company  will pay VBSA a royalty of 3% on
VBSA-developed  products sold by the Company. The Company has also agreed to pay
VBSA a flat fee of  $500,000  per year for a period of four years  beginning  in
2001 in order to induce VBSA to continue  research and development  efforts that
may benefit the Company.

         In 1999,  the Company  entered into an agreement  with VBSA  appointing
VBSA as its exclusive  distributor  for its pet health care products  outside of
the U.S. and Canada.  Under the  agreement,  VBSA  guarantees a minimum  overall
annual gross  profit  through  2004,  which is based upon an annual 10% increase
from the gross profit realized by the Company on its 1998 export sales.

         The Company rents the land and building at the  Company's  Harbor City,
California facility from the former owner of St. JON and the former president of
the Company's OTC Division. The lease, as amended,  expires in August 2000, with
an option to extend the term for an  additional  five years.  Rent expense under
this agreement was $139,417 in 1999.

         In 1997,  the Company was reimbursed  $400,000 by VBSA for  advertising
costs that were incurred on behalf of VBSA. The  reimbursement is included as an
offset to selling and marketing expense.

         In 1998,  the Company  transferred  a $450,000 note  receivable  from a
former employee and a corresponding $450,000 note payable mirroring the terms of
the note receivable to a wholly owned subsidiary of VBSA.

         At December  31,  1998,  the  Company  had an advance  from VBSA in the
amount of $2,000,000.  This advance was  recapitalized  as equity as part of the
merger agreement. See Note 1.

16. Segment and Related Information

         The Company  has three  reportable  segments.  The  veterinary  segment
distributes   pet  health  products   mainly  to   veterinarian   offices.   The
over-the-counter  (OTC) segment manufactures and distributes pet health products
to  pet  stores,  farm  and  feed  stores,  and  the  mass  retail  market.  PMR
manufactures and distributes animal health and specialty chemicals under private
label brands and for third parties.

         Manufacturing  of  veterinary  products  and  corporate  administration
activities  are  recorded at the  corporate  level.  The Company  also  performs
contract  manufacturing  for third parties from its Fort Worth  facility.  These
revenues  are  recorded  at the  corporate  level and are not  allocated  to the
reportable segments.

         The  accounting  policies of the  reportable  segments  are the same as
those  described in Note 3 - Summary of  Significant  Accounting  Policies.  The
Company evaluates  segment  performance based on profit or loss from operations.
All  intercompany  sales and transfers to the  reportable  segments are at cost.
Such sales are eliminated in consolidation.

         The  Company's   reportable  segments  utilize  different  channels  of
distribution.  They are managed  separately  because each  business  distributes
different products and each has different marketing strategies.

         The Company does not  allocate  interest  and other  expense/income  or
taxes to segments.  Amortization of goodwill is charged at the corporate  level.
Summarized financial information concerning the Company's reportable segments is
shown in the following table (dollars in thousands):


<PAGE>


<TABLE>
<CAPTION>


                                                                                         Manufacturing
                                                                                             and           Consolidated
                                     Veterinary           OTC               PMR         Administration         Total
<S>                               <C>              <C>               <C>              <C>               <C>
As of and for the year ended
December 31, 1999
Revenues from external
    customers                      $       20,365   $       11,697    $       11,445   $          211     $       43,718
Depreciation and  amortization                199              201               402              707              1,509
Income (loss) from
    operations                              5,039            (916)             1,044          (5,134)                 33
Interest and other expense                                                                                         (577)
Net Loss                                                                                                           (544)

Total assets                                6,484            9,433             9,904           17,812             43,633
Capital expenditures                           36               23               187            1,329              1,575

As of and for the year ended
December 31, 1998
Revenues from external
    customers                      $       12,665           $1,996    $           --   $          390     $       15,051
Depreciation and  amortization                218                1                --              627                846
Income (loss) from
   operations                               1,968             (428)               --           (2,778)            (1,238)
Interest and other expense                                                                                          (583)
Net Loss                                                                                                          (1,821)

Total assets                                4,225            1,039                --            7,417             12,681
Capital expenditures                           --               --                --               59                 59

As of and for the year ended
December 31, 1997
Revenues from external
   customers                       $       13,111   $        2,236    $           --   $          888     $       16,235
Depreciation and  amortization                221                3                --              665                889
Income (loss) from
    operations                              2,354             (331)               --           (2,754)              (731)
Interest and other expense                                                                                          (524)
Net loss                                                                                                          (1,255)

Total assets                                4,710              763                --            7,918             13,391
Capital expenditures                           19               --                --              130                149
</TABLE>



<PAGE>



         During  1999,  1998,  and 1997,  the Company  sold its  products in the
United States and Canada.  In addition,  as a result of the Merger,  the Company
recognized  export  sales,  primarily  to the United  Kingdom and  Germany.  All
property  owned by the Company is located in the United  States.  The  following
table presents revenue by country based on location of the customer.

                           1999              1998             1997

United States         $   41,599,735   $   14,216,206    $   15,450,982

Canada                     1,437,816          834,884           784,302

Export                       680,273               --                --
                      ---------------  --------------    --------------
Total revenue         $   43,717,824   $   15,051,090    $   16,235,284



         See Note 3 for disclosure of significant customers.


<PAGE>



Report of Independent Accountants on Financial Statement Schedule

To the Board of Directors and
Shareholders of Virbac Corporation

Our audit of the  consolidated  financial  statements  referred to in our report
dated May 1, 2000, appearing on page F-2 of this Annual Report on Form 10-K also
included an audit of the financial  statement  schedule  included on page S-3 of
this  Annual  Report on Form  10-K.  In our  opinion,  the  financial  statement
schedule  presents fairly, in all material  respects,  the information set forth
therein  when  read in  conjunction  with  the  related  consolidated  financial
statements.

     PricewaterhouseCoopers LLP
     Fort Worth, Texas
     May 1, 2000















<PAGE>

                          Report of Independent Public Accountants

To the Stockholders of
Virbac, Inc. and Subsidiaries:





We have audited, in accordance with auditing standards generally accepted in the
United States, the financial  statements of Virbac,  Inc. and Subsidiaries as of
December 31, 1998,  and for the two years in the period ended December 31, 1998,
and have issued our report  thereon dated  January 20, 1999.  Our audit was made
for the purpose of forming an opinion on those  statements taken as a whole. The
schedules of Valuation  of  Qualifying  Accounts and Reserves as of December 31,
1998  and  1997  are the  responsibility  of the  Company's  management  and are
presented  for  purposes  of  complying   with  the   Securities   and  Exchange
Commission's  rules and are not part of the basic  financial  statements.  These
schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly state in all material
respects the financial  data required to be set forth therein in relation to the
basic financial statements taken as a whole.

                                            ARTHUR ANDERSEN LLP





         Fort Worth, Texas
         January 20, 1999



<PAGE>



VIRBAC CORPORATION
SCHEDULE II - RULE 12-09
VALUATION OF QUALIFYING ACCOUNTS AND RESERVES
DECEMBER 31, 1999


<TABLE>
<CAPTION>

          COLUMN A            COLUMN B                        COLUMN C                          COLUMN D               COLUMN E
                                                              ADDITIONS
                                            -------------------------------------------
                             BALANCE AT                                                                               BALANCE AT
                             BEGINNING      CHARGED TO COSTS         CHARGED TO OTHER          DEDUCTIONS               END OF
        DESCRIPTION          OF PERIOD        AND EXPENSES         ACCOUNTS - DESCRIBE         - DESCRIBE               PERIOD
<S>                      <C>               <C>                    <C>                      <C>                     <C>
FAS 109 Valuation         $     1,445,000    $       193,639       $       783,361   (1)                --          $     2,422,000

Inventory Reserve         $        55,785    $       370,734       $       487,478   (1)                --          $       913,997

Allowance for             $        64,639                 --       $       246,125   (1)   $       140,158  (2)     $       170,606
   Doubtful Accounts
</TABLE>


(1)  The FAS 109  valuation  allowance,  inventory  reserve  and  allowance  for
     doubtful  account  allowances  were  increased by this amount in connection
     with the Company's purchase of Agri-Nutrition Group Limited in March 1999.

(2)  Net write-off of uncollectible accounts in the ordinary course of business.


<PAGE>



VIRBAC CORPORATION
SCHEDULE II - RULE 12-09
VALUATION OF QUALIFYING ACCOUNTS AND RESERVES
DECEMBER 31, 1998

<TABLE>
<CAPTION>


          COLUMN A           COLUMN B                          COLUMN C                           COLUMN D          COLUMN E
                                                              ADDITIONS
                                             --------------------------------------------
                            BALANCE AT                                                                              BALANCE AT
                            BEGINNING         CHARGED TO COSTS           CHARGED TO OTHER         DEDUCTIONS          END OF
        DESCRIPTION         OF PERIOD           AND EXPENSES           ACCOUNTS - DESCRIBE        - DESCRIBE          PERIOD

<S>                     <C>                  <C>                          <C>                   <C>              <C>
FAS 109 Valuation        $       904,000       $       541,000                      --                     --     $     1,445,000

Inventory Reserve        $        47,856       $        10,000                      --              $ 2,071(1)    $        55,785

Allowance for            $        46,395       $        42,849                      --              $24,605(2)    $        64,639
   Doubtful Accounts
</TABLE>



(1) Net write-off of obsolete inventory in the ordinary course of business.
(2) Net write-off of uncollectible accounts in the ordinary course of business.



<PAGE>




VIRBAC CORPORATION
SCHEDULE II - RULE 12-09
VALUATION OF QUALIFYING ACCOUNTS AND RESERVES
DECEMBER 31, 1997


<TABLE>
<CAPTION>

          COLUMN A            COLUMN B                        COLUMN C                          COLUMN D                 COLUMN E
                                                             ADDITIONS
                                              ----------------------------------------
                             BALANCE AT                                                                                   BALANCE AT
                             BEGINNING          CHARGED TO COSTS        CHARGED TO OTHER           DEDUCTIONS               END OF
        DESCRIPTION          OF PERIOD            AND EXPENSES        ACCOUNTS - DESCRIBE          - DESCRIBE               PERIOD
<S>                       <C>                  <C>                      <C>                   <C>                      <C>
FAS 109 Valuation         $       580,000        $       324,000                   --                       --          $   904,000

Inventory Reserve         $        65,728        $            --                   --          $        17,872 (1)      $    47,856

Allowance for             $        58,995        $        38,017                   --          $        50,617  (2)     $    46,395
   Doubtful Accounts
</TABLE>


(1)  Net write-off of obsolete inventory in the ordinary course of business.

(2)  Net write-off of uncollectible accounts in the ordinary course of business.