PROFESSIONAL VETERINARY PRODUCTS LTD /MO/, POS AM, 2000-11-03

PROFESSIONAL VETERINARY PRODUCTS LTD /MO/
POS AM, 2000-11-03
AGRICULTURAL SERVICES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 2000.

REGISTRATION NO. 333-86629
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--------------------------------------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
------------------------

POST-EFFECTIVE AMENDMENT NO. 1
TO

FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------

PROFESSIONAL VETERINARY PRODUCTS, LTD.

(Exact name of registrant as specified in its charter)

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

10077 SOUTH 134TH STREET, OMAHA, NE 68138
(402) 331-4440

(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

LIONEL L. REILLY, D.V.M.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PROFESSIONAL VETERINARY PRODUCTS, LTD.
10077 SOUTH 134TH STREET, OMAHA, NE 68138
(402) 331-4440

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------

COPIES OF COMMUNICATIONS TO:
RICHARD E. PUTNAM, ESQ.
Baird, Holm, McEachen, Pedersen, Hamann & Strasheim LLP
1500 Woodmen Tower, Omaha, Nebraska 68102-2068
(402) 636-8254

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAYBE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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TABLE OF CONTENTS

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PAGE
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Prospectus Summary................... 1
Risk Factors......................... 3
Forward-Looking Statements........... 5
Use of Proceeds...................... 5
Dividend Policy...................... 6
Capitalization....................... 7
Dilution............................. 7
Selected Financial Data.............. 8
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 9
Business............................. 13
</TABLE>

<TABLE>
Management........................... 16
Principal Shareholders............... 21
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PAGE
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Description of Common Stock.......... 21
Shares are not Eligible for Future
Sale............................... 22
Subscription to Company Stock........ 22
Legal Matters........................ 23
Experts.............................. 23
Additional Information............... 23
Index to Financial Statements........ F-1
Exhibit A1 (Instructions to
Subscribers)....................... A1-1
Exhibit A2 (Purchaser
Questionnaire)..................... A2-1
Exhibit A3 (Subscription
Agreement)......................... A3-1
</TABLE>

<PAGE>
PROSPECTUS SUMMARY

Professional Veterinary Products, Ltd. was organized as a Missouri
corporation on August 2, 1982 with the sole purpose of acting as a wholesale
buyer of pharmaceuticals, vaccines, supplies, equipment and other items related
to the practice of veterinary medicine so that it might sell such items at a
reduced cost to its shareholders. Our Company was domesticated in Nebraska on
September 22, 1999.

Ownership of stock in our Company is limited to licensed, practicing
veterinarians (or businesses comprised of veterinarians such as a partnership or
corporation). Each veterinarian shareholder is limited to ownership of one share
of stock, which is purchased at the fixed price of $3,000. The share of stock
may not be sold or transferred, except back to the Company at the same $3,000
price.

Our business purpose has been to provide services and products to our
veterinarian shareholders at competitive prices to assist them in being more
competitive within their practice areas. As part of these cooperative efforts,
we annually provide rebates to our shareholders based on their purchases of
goods from the Company. Our shareholders place product orders with our offices
in Omaha, Nebraska, which are filled from our warehouse facilities in Omaha and
then promptly shipped to our customers. As a wholesaler, we acquire our products
from original manufacturers of the products.

We do not manufacture, relabel, or in any other manner alter packaged goods
or products. We sell and distribute nearly 18,000 different items designed to
meet nearly every veterinary practitioner's product needs. Both our
shareholders' business and our business continues to change. Continual
integration of the large food animal producers has changed the method of
distribution of animal health products. We are experiencing increasing interest
by companion animal veterinarians which has led to more shareholders in the
metropolitan areas.

We have never paid dividends on our stock, and we do not anticipate paying
any dividends in the near future. We will use the funds from our sale of shares
for working capital. There is no market for our shares.

Our Board of Directors is comprised of eight veterinarian shareholders who
are elected on staggered terms from eight geographic districts. Our Chief
Executive Officer, Dr. Lionel L. Reilly, is also our President and answers
directly to the Board of Directors. Dr. Reilly is not a shareholder of the
Company.

In 1996 the Company obtained a no-action letter from the Securities and
Exchange Commission (SEC) permitting the sale of our shares without registration
based on a number of factual representations concerning our company and common
stock. In obtaining this SEC no-action letter, we confirmed that we would not
deviate from our previous practice of selling our products primarily to
shareholders, limiting any economic benefit received from sales to
non-shareholders. While our efforts have continued to be focused on providing to
our shareholders products at the lowest possible cost to them, we have
determined that it will be beneficial to our shareholders to sell products not
only to them, but also to non-shareholders. It is principally this change--the
desired expansion of sales of products to non-shareholders which we believe will
enhance the benefit of owning our shares--that requires SEC registration.
However, even after this change, our shares will continue to have the following
unique characteristics:

- Our shares will continue to be sold for a fixed price of $3,000 per share.

- Our shares will continue to be redeemed for a fixed price of $3,000 per
share. Shareholders may only sell their shares back to the Company. They
cannot sell shares to other persons or entities.

- Only one class of stock will continue to be issued, and each shareholder
is limited to ownership of one share of stock.

- Shares will continue to be issued only to licensed individual
veterinarians/veterinary clinics.

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THE OFFERING

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Common Stock Offered................ 302 shares

Common Stock to be outstanding after
the offering...................... 1,688 shares, based on 1,386 shares outstanding as of October 1,
2000.

Price per Share..................... $3,000 per share, which is fixed in our Articles of Incorporation

Use of Proceeds..................... For working capital and general corporate purposes. See "Use of
Proceeds."

Dividend Policy..................... We do not anticipate paying cash dividends in the foreseeable
future. See "Dividend Policy."
</TABLE>

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RISK FACTORS

BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER
THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS.

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS. THESE STATEMENTS RELATE
TO FUTURE EVENTS OR FUTURE FINANCIAL PERFORMANCE. IN SOME CASES, YOU CAN
IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS "MAY," "WILL,"
"SHOULD," "COULD," "EXPECTS," "PLANS," "ANTICIPATES," "BELIEVES," "ESTIMATES,"
"PREDICTS," "POTENTIAL," OR "CONTINUE" OR THE NEGATIVE OF SUCH TERMS AND OTHER
COMPARABLE TERMINOLOGY. THESE STATEMENTS ARE ONLY PREDICTIONS. IN EVALUATING
THESE STATEMENTS, YOU SHOULD SPECIFICALLY CONSIDER VARIOUS FACTORS, INCLUDING
THE RISKS OUTLINED BELOW. THESE FACTORS MAY CAUSE OUR ACTUAL RESULTS TO DIFFER
MATERIALLY FROM ANY FORWARD-LOOKING STATEMENT.

FAILURE TO MANAGE GROWTH COULD IMPAIR OUR BUSINESS

Our business has grown rapidly. Our sales increased from $62.6 million in
fiscal 1995 to $174.8 million in fiscal 2000. During that same period we have
significantly expanded our operations in the United States. Our number of
employees increased by approximately 90 individuals during this period.

It is difficult to manage this rapid growth, and our future success depends
on our ability to implement and/or maintain:

- Sales and marketing programs

- Customer support programs

- Operational and financial control systems

- Recruitment and training of new personnel

- Technological support which equals or exceeds our competitors

Our ability to successfully offer products and services and implement our
business plan in a rapidly evolving market requires an effective planning and
management process. We expect that we will need to continue to improve our
financial and managerial controls, reporting systems and procedures and to
expand the training of our work force.

LOSS OF KEY PERSONNEL COULD HURT OUR BUSINESS

Our future success depends to a significant extent on the skills, experience
and efforts of Company President and Chief Executive Officer Dr. Lionel Reilly
and key members of his staff. The loss of any or all of these individuals could
damage our business. The Company has purchased two $250,000 life insurance
policies on the life of Dr. Reilly. The Company is the beneficiary of one of the
policies. The other policy is a split dollar policy and the estate of
Dr. Reilly is the ultimate beneficiary.

In addition, our products and services are specialized in nature. In general
only highly qualified and trained individuals have the necessary skills to
market our products and provide our services. We face intense competition for
the hiring of these professionals. Any failure on our part to hire, train and
retain a sufficient number of qualified professionals would damage our business.
We do not generally enter into employment agreements requiring these employees
to continue in our employment for any period of time.

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THERE IS NO MARKET FOR OUR STOCK AND THE VALUE OF THE STOCK WILL NOT INCREASE

There has been no market for our common stock prior to this offering, and
there will be no market after this offering. Sales are limited to licensed
veterinarians/veterinary practices--our common stock will not be sold to anyone
else. The price of each share is fixed at $3,000, as provided in our Articles of
Incorporation. A share will not increase in value. If a shareholder wishes to
redeem his/her share, the shareholder must sell it to the Company and will
receive only $3,000. Shares may not be transferred or sold by a shareholder to
anyone other than the Company.

IT IS UNLIKELY WE WILL PAY DIVIDENDS

Some investors favor companies that pay dividends, particularly in market
downturns. We have never declared or paid any cash dividends on our common
stock, and, in fact, our Articles of Incorporation and Bylaws have in the past
prohibited the payment of dividends. While the amendments to our Articles of
Incorporation and Bylaws approved by the Company shareholders at the Company's
1999 Annual Meeting do allow the payment of dividends, we currently intend to
retain any future earnings for funding growth of our business and therefore we
do not currently anticipate paying cash dividends on our common stock in the
foreseeable future.

WE RELY ON STRATEGIC RELATIONSHIPS TO GENERATE REVENUE

To be successful, we must establish and maintain strategic relationships
with leaders in the manufacturing industry. This is critical to our success
because we believe that these relationships will enable us to:

- Extend the reach of our distribution and services to the various
participants in the veterinary industry

- Obtain specialized expertise

- Generate revenue

Entering into strategic relationships is complicated because some of our
current and future partners may decide to compete with us. In addition, we may
not be able to establish relationships with key participants in the veterinary
distribution industry if we have established relationships with competitors of
these key participants. Consequently, it is important that we are perceived as
independent of any particular customer or partner.

Most of our agreements with manufacturers run for one year. We may not be
able to renew our existing agreements on favorable terms, or at all. If we lose
the right to distribute products under such agreements, we may lose access to
certain of our products and lose a competitive advantage. Potential competitors
could sell products from manufacturers that we fail to continue with and erode
our market share.

PERFORMANCE OR SECURITY PROBLEMS WITH OUR SYSTEMS COULD DAMAGE OUR BUSINESS

Our customer satisfaction and our business could be harmed if we or our
suppliers experience any system delays, failures or loss of data. We currently
process all our customer transactions and data at our facilities in Omaha,
Nebraska. Although we have safeguards for emergencies, the occurrence of a major
catastrophic event or other system failure at our Omaha facility could interrupt
data processing or result in the loss of stored data.

WE FACE SIGNIFICANT COMPETITION

The market for veterinary distribution services is intensely competitive,
rapidly evolving and subject to rapid technological change. Some of our
competitors have comparable product lines, technical

4
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experience and financial resources. These organizations may be better known and
have more customers than us. We may be unable to compete successfully against
these organizations.

Many of our competitors have distribution strategies that directly compete
with us. We have many competitors including:

- Walco International

- Lextron

- J. A. Webster, Inc.

- The Butler Company

In addition, we expect that companies and others specializing in the
veterinary products industry will offer competitive products. Some of our large
manufacturers/suppliers may also compete with us through direct marketing and
sales of their products.

CHANGES IN THE VETERINARY DISTRIBUTION INDUSTRY COULD ADVERSELY AFFECT OUR
BUSINESS

The veterinary distribution industry is subject to changing political,
economic and regulatory influences. These factors affect our purchasing
practices and operation of our business. Some of our competitors are
consolidating to create integrated delivery systems with greater market
presence. These competitors may try to use their market power to negotiate price
reductions with the manufacturers. If we were forced to reduce our prices, our
operating results would suffer. As the veterinary distribution industry
consolidates, competition for customers will become more intense and the
importance of acquiring each customer will become greater.

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus including the above risk factors
section, contains forward-looking statements that involve substantial risks and
uncertainties. You can identify these statements by forward-looking words such
as "may," "will," "expect," "anticipate," "believe," "estimate," "project," and
"continue" or similar words. You should read statements that contain these words
carefully because they:

- Discuss our future expectations

- Contain projections of our future results of operations or of our
financial condition

- State other "forward-looking" information

We believe it is important to communicate our expectations to our investors.
However, there may be events in the future that we are not able to predict
accurately or over which we have no control. The risk factors listed above, as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock you should be aware that the occurrence of the events
described in these risk factors and elsewhere in this prospectus could have a
material adverse effect on our business, operating results and financial
condition.

USE OF PROCEEDS

The net proceeds from the sale of the original offering of 500 shares of
common stock, after estimated offering expenses, and assuming the sale of all
shares, was estimated at $1,376,583. As of October 1, 2000, we have sold 198
shares of common stock and the estimated offering expenses have increased to
$166,417. Therefore, the net proceeds from the sale of 198 shares is $427,583.
We have

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and intend to continue to use the proceeds from the sale of shares of common
stock for the repayment of Company's indebtedness, including its obligations to
the U.S. Bank National Association pursuant to a Promissory Note. The Promissory
Note is renewed annually on December 1st of each year, and the maximum amount
which can be borrowed thereunder is six million dollars. The actual principal
amount outstanding varies as the Company borrows and repays its obligations
throughout the term of the loan. The interest rate on the Promissory Note is a
variable rate based on changes in the U.S. Bank N.A. Reference Rate. As of
July 31, 2000, the interest rate was 9.25%.

DIVIDEND POLICY

The Company shareholders approved Amended and Restated Articles of
Incorporation and Bylaws at the Company's Annual Meeting held in August, 1999 to
permit the Company to pay dividends. Any such payment of dividends would be
solely in the discretion of the Board of Directors, and at this time, we do not
anticipate that a dividend will be paid in the foreseeable future. We intend to
retain future earnings, if any, to finance the expansion of our business.

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CAPITALIZATION

The following table sets forth our capitalization as of July 31, 2000 and as
adjusted to reflect the sale of 500 shares of common stock we are offering and
application of the estimated net proceeds from the offering. This table should
be read in conjunction with our financial statements and notes thereto appearing
elsewhere in this prospectus.

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<CAPTION>
AT JULY 31, 2000
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ACTUAL AS ADJUSTED
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Short-term debt (including current portion of long term
debt)..................................................... $ 8,216,400 $ 6,716,400
Long-term debt (excluding current portion).................. 6,013,631 6,013,631
Stockholders' equity:
Common stock, $1 par value per share authorized 30,000
shares, 1381 shares issued and outstanding; and shares
issued and outstanding adjusted........................... 1,381 1,881
Paid in capital............................................. 4,070,619 5,570,119
Retained earnings........................................... 1,516,823 1,516,823
Total stockholders' equity.................................. 5,588,823 7,088,823
Total capitalization........................................ 19,818,854 19,818,854
</TABLE>

DILUTION

The price for a share of Company common stock is set in our Articles of
Incorporation at $3,000 per share, or such lesser amount as determined by the
Board of Directors in its discretion. Therefore, unless the Board of Directors
lowers the future price of common stock, an event which we do not currently
anticipate occurring, the price will remain at $3,000 per share and there will
be no dilution of existing shareholders' interests. The book value per share as
of July 31, 2000 was $4,046. This value was derived by dividing the $5,588,823
stockholders' equity as of July 31, 2000 by the 1,381 shares outstanding as of
July 31, 2000. The price for a share of common stock may not be increased
without an amendment to our Articles of Incorporation.

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SELECTED FINANCIAL DATA

The following table presents selected financial data for the Company for
each of the years in the five-year period ended July 31, 2000. The historical
selected financial data are derived from the Company's Financial Statements
included elsewhere in this prospectus and should be read in conjunction with
those financial statements and notes thereto. These financial statements have
been audited by Marvin E. Jewell & Co., P.C. independent public accountants,
whose report with respect thereto appears elsewhere in this prospectus.

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FISCAL YEARS
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1996 1997 1998 1999 2000
STATED IN DOLLARS ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF DATA
Revenues.................... $67,999,340 $80,938,835 $94,245,375 $122,253,200 $178,547,153
Cost of goods sold.......... 62,103,482 73,701,533 85,261,574 111,875,873 161,934,155
Gross profit................ 5,895,858 7,237,302 8,983,801 10,377,327 16,612,978
Operating, general and
administrative expenses... 5,794,348 7,077,385 8,725,912 10,366,843 15,202,927
Operating income............ 101,510 159,917 257,889 10,484 1,410,051
Other income................ 120,787 125,256 161,205 486,355 372,795
Other expenses.............. (148,291) (208,407) (244,111) 263,198 905,880
Income before income
taxes..................... 74,006 76,766 174,983 233,641 876,966
Income taxes................ 28,469 30,736 73,440 92,907 320,367
----------- ----------- ----------- ------------ ------------
Net income.................. $ 45,537 $ 46,030 $ 101,543 $ 140,734 $ 556,599
=========== =========== =========== ============ ============
Net income per share:
Basic earnings per share.... $ 50.30 $ 47.65 $ 96.89 $ 118.46 $ 403.04
Basic common shares
outstanding used in the
calculation............... 906 966 1,048 1,188 1,381

SUPPLEMENTAL OPERATING DATA
Net cash provided by (used
in) operating
activities................ $ (320,149) $ (647,441) $(2,115,978) $ 1,863,413 $ (5,691,783)
Net cash provided by (used
in) investing
activities................ (610,821) (194,181) (442,604) (1,033,443) (6,676,998)
Net cash provided by (used
in) financing
activities................ 745,938 721,767 1,317,233 1,372,564 10,877,188
</TABLE>

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<CAPTION>
FISCAL YEARS
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1996 1997 1998 1999 2000
STATED IN DOLLARS ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital............... $ 2,106,023 $ 2,456,944 $ 2,698,906 $ 1,052,710 $ 1,975,467
Total Assets.................. 12,859,118 14,175,862 20,007,753 28,358,152 59,700,070
Total long-term obligations... 1,364,594 1,301,609 1,225,089 0 6,013,631
**Total short-term
borrowings.................. 557,726 1,062,985 3,285,273 4,413,238 8,216,400
Shareholder equity............ 3,136,917 3,542,947 3,891,490 4,453,224 5,588,823
</TABLE>

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY FROM THOSE
INDICATED IN SUCH FORWARD-LOOKING STATEMENTS. THE FOLLOWING DISCUSSION OF THE
FINANCIAL CONDITION AND RESULTS OF OUR OPERATIONS SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED ELSEWHERE IN
THIS PROSPECTUS.

OVERVIEW

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

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

The Company's sales have increased from $62.6 million in fiscal year 1995 to
$174.8 million in fiscal year 2000, and we expect this trend of increases in
sales to continue. We will continue our strategy of supporting the food animal
veterinarian with a broad range of products and value-added services. However,
sales in the food animal sector are subject to very low margins. In view of the
increasing maturity of the food animal market the Company must continue to look
for future growth in the companion animal sector.

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

There are two major types of transactions that affect the flow of products
to the Company's customers. Traditional "buy/sell" transactions account for
approximately ninety percent of the Company's business. In this type of
transaction the customer places an order with the Company, which is then picked,
packed, shipped, invoiced to the customer, followed by payment from the customer
to the Company. There are several product lines where the Company provides all
transactional activities described above, except that the manufacturer retains
title to the product.

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

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

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

RESULTS OF OPERATIONS

The following discussion is based on the historical results of operations
for fiscal 1998, 1999 and 2000.

FISCAL 1998 COMPARED TO FISCAL 1997:

Net sales for the year ending July 31, 1998 increased by 15.7% or
$12.3 million for the year. Sales for the year totaled $90.6 million compared to
$78.3 million for the previous fiscal year. The growth was attributable to
increased sales to existing veterinary shareholders and also the addition of new
shareholders. During the year 82 veterinary practices became shareholders of the
Company. On July 31, 1998 there were 1,048 shareholders of the Company.

Gross profit increased by $1.8 million to $9.0 million compared to
$7.2 million for the previous fiscal year. Gross profit as a percentage of total
revenues were 9.5% in fiscal 1998 compared to 9.0% in fiscal 1997.

Operating, general and administrative expenses increased by $1.6 million to
$8.7 million compared to $7.1 million for the previous fiscal year. Such
operating, general and administrative expenses as a percentage of total revenues
fiscal 1998 was 9.3% vs. 8.7% in fiscal 1997.

FISCAL 1999 COMPARED TO FISCAL 1998:

Net sales for the fiscal year ending July 31, 1999 increased by 31.0% or
$28.1 million. Sales for the 1999 fiscal year totaled $118.7 million compared to
$90.6 million for the previous fiscal year. The growth was attributable to
increased sales to existing veterinary shareholders and also the addition of new
shareholders. During the year 140 veterinary practices became shareholders of
the Company. On July 31, 1999 there were 1,188 shareholders of the Company.

Gross profit increased by $1.4 million to $10.4 million compared to
$9.0 million for the previous fiscal year. Gross profit as a percentage of total
revenues was 8.5% in fiscal 1999 compared to 9.5% in fiscal 1998.

Operating, general and administrative expenses increased by $1.6 million to
$10.3 million in fiscal year 1999 compared to $8.7 million for the previous
year. Such operating, general and administrative expenses as a percentage of
total revenues fiscal 1999 was 8.5% vs. 9.3% in fiscal 1998.

FISCAL 2000 COMPARED TO FISCAL 1999:

Net sales for the fiscal year ending July 31, 2000 increased by 47.2% or
$56.0 million. Sales for the 2000 fiscal year totaled $174.8 million compared to
$118.8 million for the previous fiscal year. The growth was attributable to
increased sales to existing veterinary shareholders and also the addition of new
shareholders. During the year 193 veterinary practices became shareholders of
the Company. On July 31, 2000 there were 1,381 shareholders of the Company.

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<PAGE>

Gross profit increased by $6.2 million to $16.6 million compared to
$10.4 million for the previous fiscal year. Gross profit as a percentage of
total revenues was 9.3% in fiscal 2000 compared to 8.5% in fiscal 1999.

Operating, general and administrative expenses increased by $4.8 million to
$15.2 million in fiscal year 2000 compared to $10.4 million for the previous
year. Such operating, general and administrative expenses as a percentage of
total revenues fiscal 2000 was 8.5% vs. 8.5% in fiscal 1999.

SEASONALITY IN OPERATING RESULTS

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

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

LIQUIDITY AND CAPITAL RESOURCES

Our capital requirements relate primarily to working capital, the expansion
of our operations to accommodate sales growth. The Company maintains significant
inventory levels to fulfill our operating commitment to its customers.
Historically, the Company has financed its cash requirements primarily from
short-term bank borrowings and cash from operations.

For the fiscal year ending July 1997, net cash used by operating activities
of $647,441 was primarily attributable to increases of $525,777 in accounts
receivable and $1,207,904 in inventories. These were partially offset by an
increase of $492,484 in accounts payable. Net cash used by operating activities
of $2,115,978 in fiscal year ending July 1998 was primarily attributable to
increases of $1,493,853 in accounts receivable and $4,473,791 in inventories.
These were partially offset by an increase of $2,594,480 in accounts payable.
Net cash provided by operating activities of $1,863,413 in fiscal year ending
July 1999 was primarily attributable to an increase of $6,631,793 in accounts
receivable. It was partially offset by increases of $418,081 in inventories and
$7,736,556 in accounts payable. In the fiscal year ending July 2000, net cash
used by operating activities of $5,691,783 was primarily attributable to
increases of $10,430,441 in accounts receivable and $15,839,475 in inventories.
These were partially offset by an increase of $19,058,909 in accounts payable.

Net cash used by investing activities of $194,181 in fiscal year ending
July 1997 was primarily attributable to investments in property and equipment.
In the fiscal year ending July 1998, net cash used by investing activities of
$442,604 was primarily attributable to investments in property and equipment.
Net cash used by investing activities of $1,033,443 in fiscal year ending
July 1999 was primarily attributable to investments in property and equipment.
Net cash used by investing activities of $6,676,998 in fiscal year ending
July 2000 was primarily attributable to investments in property and equipment.

In the fiscal year ending July 1997, net cash provided by financing
activities of $721,767 was primarily attributable to increases of $500,000 in
loan proceeds and $279,493 from net proceeds from issuance of common stock. Net
cash provided by financing activities of $1,317,233 in fiscal year ending
July 1998 was primarily attributable to increases of $1,035,913 in loan proceeds
and $281,320 from net proceeds from issuance of common stock. Net cash provided
by financing activities of $1,372,564 in fiscal year ending July 1999 was
primarily attributable to increases of $1,012,731 in loan proceeds and

11
<PAGE>

$359,833 from net proceeds from issuance of common stock. In the fiscal year
ending July 2000, net cash provided by financing activities of $10,877,188 was
primarily attributable to increases of $10,236,396 in loan proceeds and $640,792
from net proceeds from issuance of common stock.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The interest payable on the Company's revolving line of credit is based on
variable interest rates and is therefore affected by changes in market interest
rates. If interest rates on variable rate debt rose .925 percentage points (a
10% change from the interest rate as of July, 31, 2000), assuming no change in
the Company's outstanding balance under the line of credit (approximately
$8,216,400 as of July 31, 2000), the Company's annualized income before taxes
and cash flows from operating activities would decline by approximately $76,002.

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<PAGE>
BUSINESS

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

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

As of July 31, 2000, the Company had 1,381 shareholder veterinary clinics.
These shareholders are principally located from the Rocky Mountains to the
Atlantic Seaboard with some presence in the South. No shareholder/customer
represented more than 1% of the Company's total revenues during the past fiscal
year.

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

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

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

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

VALUE-ADDED SERVICES

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

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

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

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<PAGE>
REBATES TO SHAREHOLDERS

The Company and its shareholders are in a contractual relationship evidenced
in the Company's Articles of Incorporation which requires that all sales of
Company products to Company shareholders be at no more than 5% over the cost of
the Company as determined by the Company's certified public accountant. Based on
this requirement, the Company's certified public accounting firm annually makes
a determination of the Company's product costs. This valuation of product costs
is then multiplied by 105% and compared to the Company's product sales. Amounts
in excess of the 105% computation are overcharges which are then rebated back to
shareholders by credit memo. Such rebates are made on a pro rata basis to
shareholders, based on the aggregate amount of products purchased by each
shareholder during the year for which the rebate is made. Rebates are included
in the Company's financial statements and are netted against sales on the
Company's income statement/balance sheet.

THE ANIMAL HEALTH INDUSTRY

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

The U.S. animal health manufacturer sales of biologicals, pharmaceuticals,
insecticides and other packaged goods was over $4.0 billion for 1999. This
segment of business in which the Company participates is intended to meet the
product and supply needs of the private clinical practice.

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

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

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

The companion animal market is experiencing considerable growth. Several new
therapeutic and preventative products have contributed to most of this increased
sales volume. Nutraceuticals (nutritional pharmaceuticals) have an increasing
presence in the companion animal market. During the past five years companion
animal product sales have grown from 25% to 40% of the total U.S. market.

COMPETITION

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

There are numerous ethical distribution companies operating in the same
geographical regions as the Company and competition in this distribution
industry is intense. Most of the competitors generally offer a similar range of
products at prices often comparable to the Company's. The Company seeks to
distinguish itself from its competitors by offering a higher level of customer
service as well as having its

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<PAGE>
principal customers also as its shareholders/owners. In addition to competition
from other distributors, the Company also faces existing and potentially
increased competition from manufacturers and suppliers who distribute some
percentage of their products directly to veterinarians. Although the Company
competes against direct sales by manufacturers and suppliers, it is often able
to compete with such direct sales by adding new value-added services and pricing
differentiation.

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

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

GOVERNMENT REGULATION

Both state and federal government agencies regulate the distribution of
certain animal health products. The Company is subject to regulation by the US
Department of Agriculture, the Food and Drug Administration and the Drug
Enforcement Administration. Several State Boards of Pharmacy require the Company
to be licensed in their state for the sale of animal health products with their
jurisdiction. Each state (as well as certain cities and counties) requires the
Company to collect sales taxes/use taxes on differing types of animal health
products.

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

ENVIRONMENTAL CONSIDERATIONS

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

EMPLOYEES

As of September 30, 2000 the Company had 173 employees. We are not subject
to any collective bargaining agreements and have not experienced any work
stoppages. We consider our relationship with our employees to be good.

PROPERTIES

The Company owns its building, which contains nearly 100,000 square feet of
open warehouse space and 30,000 square feet of finished office area. The
building is a new facility the Company constructed and completed in late 1999
and is located on 9.6 acres of land in a newly developed industrial subdivision
of Omaha, Nebraska. The latest in technology was incorporated into the design of
the new facility to maximize distribution efficiencies. The building is subject
to a first and second mortgage held by US Bank.

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<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's day-to-day affairs are managed by its executive officers who
are appointed by the Board of Directors for a one-year term. Our Board of
Directors is composed of eight (8) shareholders who are elected for 3-year
staggered terms from eight geographic districts. All directors are practicing
veterinarians, and are not eligible to continue on the Board beyond their
initial three-year term, unless they have been off the Board for at least one
year. Each director, or the practice of which he is a member, owns one share of
Company common stock.

Each director's professional practice must be located in the district in
which he or she is elected from at the time of the election. Under our Bylaws,
our Board of Directors, at its discretion, and no more frequently than annually,
may alter the boundaries of each geographic district to more accurately
represent an equitable number of shareholders.

Our Board of Directors is divided into three staggered classes of directors.
The appropriate class of directors is elected at each annual meeting of our
shareholders.

<TABLE>
<CAPTION>
NAME AGE POSITION DISTRICT CLASS
---- -------- ---------------------------------- -------- --------
<S> <C> <C> <C> <C>
Lionel L. Reilly, D.V.M.............. 57 President, CEO, non-voting
Director
Neal B. Soderquist................... 44 Controller
Eric R. Phillips..................... 51 Director of Logistics and Product
Management
Kenneth R. Liska, D.V.M.............. 56 Director 1 II
Wayne E. Rychnovsky, D.V.M........... 43 Director 2 II
Russ R. Weston, D.V.M................ 50 Chairman, Director 3 I
Raymond C. Ebert II, D.V.M........... 54 Director 4 III
Michael L. Whitehair, D.V.M.......... 50 Director 5 III
Mark A. Basinger, D.V.M.............. 52 Director 6 II
Timothy P. Trayer, D.V.M............. 47 Secretary, Director 7 I
Fred G. Garrison, D.V.M.............. 55 Vice-Chairman, Director 8 III
</TABLE>

Class I directors currently serve until the 2000 annual meeting of
shareholders, which will be held on December 8, 2000; Class II directors serve
until the 2001 annual meeting of shareholders; and Class III directors serve
until the 2002 annual meeting.

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<PAGE>
The following map illustrates the geographic breakdown of the eight
districts.

[LOGO]

Lionel L. Reilly, D.V.M., has served as President and CEO of the Company
since 1994. Prior to that he was Vice President, Business Operations and
functioned as the CEO. He has been with the Company since 1983, shortly after
its founding. Dr. Reilly spent several years as a military veterinarian, over
five years in private clinical veterinary practice and five years in industry as
a researcher and technical services veterinarian. He has a degree from Kansas
Wesleyan University in Sauna, Kansas. Dr. Reilly graduated in 1970 from the
College of Veterinary Medicine, Kansas State University, Manhattan, Kansas. The
Company and Dr. Reilly have entered into an employment contract. See "Employment
Contract".

Neal B. Soderquist was appointed Controller in 1994. From 1989 to 1994 he
served in that position as well as managed much of the human resources
functions. For the previous 14 years Mr. Soderquist was controller/officer
manager for Lincoln Lumber Co., Lincoln, NE. In 1975 he received an Associates
Degree from Lincoln School of Commerce, Lincoln, Nebraska.

Eric R. Phillips has served as Director of Logistics and Product Management
of the Company since July, 1999. Prior to that he was the part owner of Olson
Phillips Wassinger Financial Services, where he was responsible for insurance
and mutual funds investments.

Kenneth R. Liska, D.V.M., has served as a Director of the Company since
1997. He is the owner of a veterinary clinic located in Wayne, Nebraska.
Dr. Liska received a Doctor of Veterinary Medicine degree from Iowa State
University in 1969.

Wayne E. Rychnovsky, D.V.M., has served as a Director of the Company since
1998. He is the owner of a three person veterinary practice in Southwest Iowa.
Dr. Rychnovsky has a degree in Animal Science from Iowa State University. In
1978 he graduated with a Doctor of Veterinary Medicine degree, also from Iowa
State University.

Russ R. Weston, D.V.M., has served as Chairman since 1999 and has been a
member of the Company's Board of Directors since 1997. He is the
secretary-treasurer of a mixed animal veterinary clinic in Stephenson County,
Illinois. Dr. Weston received a Doctor of Veterinary Medicine degree from Iowa
State University in 1973.

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<PAGE>
Raymond C. Ebert II, D.V.M., has served as a Director of the Company since
1999. He is the owner of an animal clinic located in Pleasant Hill, Missouri.
Dr. Ebert received a Doctor of Veterinary Medicine degree from the University of
Missouri in 1970.

Michael L. Whitehair, D.V.M., has served as a Director of the Company since
1999. He is a partner of an animal hospital located in Abilene, Kansas.
Dr. Whitehair received a Doctor of Veterinary Medicine degree from Kansas State
University in 1974.

Mark A. Basinger, D.V.M., has served as a Director of the Company since
1997. He is the owner of a veterinary clinic located in Ottawa, Ohio.
Dr. Basinger has a degree in Agriculture from Ohio State University. In 1973 he
graduated with a Doctor of Veterinary Medicine degree, also from Ohio State
University.

Timothy P. Trayer, D.V.M., has served as Secretary since 1998 and has been a
member of the Company's Board of Directors since 1997. He is the founder and
partner of a five person food animal practice located in Denver, Pennsylvania.
Dr. Trayer has a degree in Biology Chemistry from Wilmington College and
graduated in 1979 with a Doctor of Veterinary Medicine degree from Ohio State
Veterinary College.

Fred G. Garrison, D.V.M., has served as Vice-Chairman since 1999 and has
been a Director of the Company since 1998. He is the president of a three person
veterinary clinic located in Centreville, Virginia. Dr. Garrison received a
degree in Animal Science from Pennsylvania State University. He graduated from
Cornell University in 1971 with a Doctor of Veterinary Medicine degree.

The Executive Committee, which among other duties is actually involved in
long-range planning and the formulation of corporate policies, also makes
recommendations to the Board concerning salaries and incentive compensation for
our officers and employees, is comprised of Dr. Garrison, Dr. Liska and
Dr. Weston. The Audit Committee is comprised of Dr. Garrison, Dr. Rychnovsky and
Dr. Whitehair. This Committee serves as a direct link between the Board and the
auditors, and regularly meets with the auditor to review the audit function. The
Nominating Committee is comprised of Dr. Trayer, Dr. Basinger and Dr. Ebert. Its
specific responsibility is to devise criteria for Board membership and to
identify specific individuals for nomination.

COMPENSATION

Directors are paid $500 per day for attendance at the Company's Mid-Year and
Annual Meetings, and any specially-called Board meetings where attendance is
required. In addition, directors are reimbursed for their expenses, including
meeting related travel and lodging at the meeting location. Directors are paid
$750 annually for participation in Board teleconference meetings and $250 for
attendance at designated meetings they attend. No other compensation is paid to
directors without further action by the Board.

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<PAGE>

The following table represents the cash compensation paid by the Company to
the named executive officers for the fiscal years 1998 through 2000 whose
compensation from the Company exceeded $100,000 for these years.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION
--------------------------- ----------- -------- -------- ------------
<S> <C> <C> <C> <C>
Lionel L. Reilly.................. 2000 $236,760 $72,070 $20,661(1)
President and Chief Executive 1999 197,000 29,000 18,100(1)
Officer And Non-Voting 1998 186,000 8,300 20,200(1)
Director

Neal B. Soderquist................ 2000 74,887 14,459 10,722(2)
Chief Financial Officer
</TABLE>

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

(1) These amounts represent contributions by the Company to Dr. Reilly's 401(k)
Plan and profit-sharing Plan.

(2) These amounts represent contributions by the Company to Mr. Soderquist's
401(k) Plan and profit-sharing Plan.

EMPLOYMENT CONTRACT

The Company and Dr. Lionel L. Reilly have entered into an employment
contract pursuant to which Dr. Reilly will act as President and Chief Executive
Officer of the Company. The contract provides that Dr. Reilly shall devote his
full-time professional energy, skill, efforts and attention to the business of
the Company. The contract automatically renews for successive one year periods
unless terminated by either party. If the Company terminates the contract
without cause, Dr. Reilly will remain employed by the Company for a one-year
consulting period, during which period he will be paid his base salary at the
level in effect upon termination. During the period of his employment,
Dr. Reilly is entitled to a base salary of not less than $240,000 per year, to
be increased in each year thereafter by an amount equal to not less than the
percentage increase in the consumer price index over the previous year.
Dr. Reilly is also entitled to an annual bonus equal to one percent of the net
income based on the Company's audited financial statement. Under the contract,
Dr. Reilly is bound by confidentiality provisions and covenants not to compete
with us for a one year period after ceasing to be employed by the Company.

The Company has purchased two $250,000 life insurance policies on the life
of Dr. Reilly. The Company is the beneficiary of one of the policies. The other
policy is a split dollar policy and the estate of Dr. Reilly is the ultimate
beneficiary.

CERTAIN TRANSACTIONS

We have not made loans to, loan guarantees on behalf of, or engaged in
material transactions with the Company officers, directors or shareholders. The
directors, acting in their capacity as shareholders, have purchased items
related to the practice of veterinary medicine from the Company on the same
terms and conditions as every other shareholder. As a matter of policy, all
future material transactions between the Company and any of its officers,
directors, or shareholders will be approved by a majority of the independent and
disinterested members of the Board of Directors, will be on terms no less
favorable to the Company than could be obtained from unaffiliated third parties
and will be in connection with bona fide business purposes of the Company.

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<PAGE>
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the Nebraska Business Corporation Act, the Company's
Articles of Incorporation provide that no director will be personally liable to
the Company or its shareholders for monetary damages for any action taken, or
for any failure to take action as a director except for liability

- for the amount of a financial benefit received by a director to which
he or she is not entitled

- for intentional infliction of harm on the Company or its shareholders

- for a violation of Section 21-2096 of the Nebraska Business Corporation
Act

- for an intentional violation of criminal law

The Company's Articles of Incorporation provide that the Company must
indemnify its directors, officers, employee or agent to the fullest extent
permitted by law. Generally under Nebraska law, a director or officer may be
indemnified if that individual acted in good faith and had reasonable basis to
believe that (1) in the case of conduct in the individual's official capacity
with the company, that the individual's conduct was in the company's best
interests; (2) in all other cases, that the individual's conduct was at least
not opposed to the Company's best interest; and (3) regarding any criminal
proceedings, the individual had no reasonable cause to believe the individual's
conduct was unlawful.

There is no pending litigation or proceeding involving a director, officer,
employee or agent of the Company as to which indemnification is being sought.
The Company is not aware of any other threatened litigation that may result in
claims for indemnification by any director, officer, employee or agent.

20
<PAGE>
PRINCIPAL SHAREHOLDERS

The Company's Articles and Bylaws specifically provide that each shareholder
is entitled to own only a single share of stock. Thus, there is no shareholder
that has more than one share currently or will own more than one share in the
future and no shareholder owns less than or a fractional portion of the single
share. No single shareholder owns more than 5 percent of the outstanding common
stock. Each director is also a holder of one share of stock. None of the
executive officers are shareholders.

DESCRIPTION OF COMMON STOCK

The Company has total authorized capital stock of 30,000 shares of common
stock, with a par value of $1.00 per share. Our shareholders approved the change
from no par value at the Annual Meeting held on August 20, 1999. As of July 31,
2000, 1,381 shares of common stock were outstanding held by 1,381 shareholders.

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. The holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the board out of funds legally available therefor. The
Company does not anticipate paying dividends on the common stock in the
foreseeable future. See "Dividend Policy."

In the event of a liquidation, dissolution or winding up of the Company, the
holders of common stock are entitled to share ratably in all assets remaining
after payment of liabilities. Holders of common stock have no preemptive rights
or rights to convert their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock. All shares
of common stock are, and the share of common stock to be outstanding upon
completion of this offering will be, fully paid and non-assessable. The Company
does not have any preferred stock authorized, and has not issued any stock
options, stock option plans, warrants, or other outstanding rights or
entitlements to common stock.

Our stock has several ownership restrictions. Under Article V of our
Articles of Incorporation, unless otherwise approved by our Board of Directors,
the Company can sell shares of stock only to: 1) individual licensed
veterinarians; or 2) any lawful form of business entity established to deliver
veterinary services and/or products in which all medical decisions are made by
licensed veterinarians. Additionally, the Company may also sell shares to
veterinary practices which are locally operated but owned by a non-local entity.
No solo practitioner nor practice with multiple veterinarians may own more than
one share and veterinarians involved in a multiple veterinary practice may not
own stock if the practice itself already owns one share or if any of that
veterinarian's fellow practitioners own a share.

In the event that a shareholder is no longer qualified to own the Company
stock, the shareholder must sell the share of stock back to the Company, which
will repurchase the share at the price paid by the shareholder for such share of
stock. The Company also has the option, for a period of six months after the due
date of the debt, to repurchase its stock if a shareholder owes money to the
Company and fails to make payments by the due date, at the price the shareholder
paid for the stock.

As a shareholder you are not permitted to sell, assign, or otherwise
transfer (including through any pledge or hypothecation) your share of stock
except in compliance with the Company's Articles and Bylaws, which permit a sale
only back to the Company. The shareholder must give the Company written notice
of the proposed sale and the Company will repurchase the share of stock within
ninety (90) days of receiving such written notice, at a price of $3,000.00. The
Company must also repurchase the share of stock in the event of the death of a
shareholder, at the price the deceased shareholder paid for such share of stock.

21
<PAGE>
Our Board of Directors is composed of eight (8) shareholders who are elected
for 3-year staggered terms from eight geographic districts. Each director's
professional practice must be located in the district in which he or she is
elected from at the time of the election. Under our Bylaws, our Board of
Directors, at its discretion, and no more frequently than annually, may alter
the boundaries of each geographic district to more accurately represent an
equitable number of shareholders.

Our Board of Directors is divided into three staggered classes of directors.
The appropriate class of directors is elected at each annual meeting of our
shareholders. Each director serves a three year term and cannot be re-elected
unless that director has been off the Board for at least one year.

Our Articles of Incorporation may be amended by the affirmative vote of more
than 60% of the members of the Board of Directors unless either one of the
following is applicable: 1) if half or more of the seats of the Board of
Directors are vacant, then 75% or more affirmative vote of the remaining sitting
members shall be required; or 2) the Nebraska Business Corporation Act requires
otherwise. Under the Nebraska Business Corporation Act, the Board of Directors
may adopt the following amendments without shareholder action: 1) to extend the
duration of the Company; 2) to delete the names and addresses of the initial
directors; 3) to delete the name and address of the initial registered agent or
registered office; 4) to change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the Company has only
shares of that class outstanding; 5) to change the Company name by substituting
the word corporation, incorporated, company, or limited, or the abbreviation
corp., inc., co., or ltd., for a similar word or abbreviation in the name, or by
adding, deleting, or changing a geographical attribution for the name; or 6) to
make any other change expressly permitted by the Nebraska Business Corporation
Act to be made without shareholder action. Otherwise, an amendment must be
approved by a majority of shareholder votes entitled to be cast unless the
amendment would create dissenters' rights, in which case a two-thirds majority
of the votes entitled to be cast on the amendment is required.

Our Articles and Bylaws prevent a change in control of the Company, as they
specifically provide that each shareholder is entitled to own only a single
share of stock. Therefore, there is no shareholder that has more than one share
or can own more than one share.

SHARES ARE NOT ELIGIBLE FOR FUTURE SALE

In the event that a shareholder is no longer qualified to own the Company
stock, the shareholder must sell the share of stock back to the Company, which
will repurchase the share at the price paid by the shareholder for such share of
stock. We also have the option, for a period of six months after the due date of
the debt, to repurchase our stock if a shareholder owes money to us and fails to
make payments by the due date, at the price the shareholder paid for the stock.

SUBSCRIPTION TO COMPANY STOCK

PLAN OF DISTRIBUTION

The Company intends to offer the stock directly by the Company, and no
underwriting fees, finder's fees or commissions will be paid in connection with
such offers and sales.

22
<PAGE>
METHOD OF SUBSCRIBING

Subscription to the share of Company Common Stock offered hereby may be
exercised by completing and signing the attached Subscription Agreement (Exhibit
A3) and related Exhibit A documents in accordance with the accompanying
Instruction Packet (Exhibit Al) and this Prospectus, and mailing or delivering
such Subscription Agreement and related documents together with payment to the
Company as designated in the Instruction Packet.

An investor may choose from three payment plans: (1) one payment for the
full $3000 cost of the share; (2) three installments of $1000 each, with the
second and third installments due thirty and sixty days after the first
installment is paid; and (3) an initial payment of $500 with the $2500 balance
paid on a 12 month installment payment schedule with 8% interest. Under the
third payment plan, each month the Company will send an invoice to you
reflecting the principal and interest of $217.43 due. Payment is due 10 days
following the date of such invoice and the Company's stated finance charge is
assessed for any payments received thereafter. There is no prepayment penalty.
The second and third payment plans are not available to investors located in
Nebraska or Louisiana.

By executing and submitting the Subscription Agreement, each subscriber
agrees to be bound by all the terms and conditions thereof.

All Subscription Agreements are subject to acceptance by the Company and may
be rejected by the Company in its sole discretion.

LEGAL MATTERS

The validity of the shares of common stock being offered by the Company will
be passed upon for the Company by Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim LLP, which has acted as counsel to the Company in connection with this
offering.

EXPERTS

The financial statements of the Company as of July 31, 1998, July 31, 1999
and July 31, 2000 included in this prospectus have been audited by Marvin E.
Jewell & Co., P.C. as stated in the report appearing herein and have been so
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.

ADDITIONAL INFORMATION

With respect to the shares of common stock offered hereby, the Company has
filed with the Securities and Exchange Commission a registration statement on
Form S-1 under the Securities Act, a Pre-effective Amendment No. 1 and this
Post-effective Amendment No. 1. This prospectus does not contain all of the
information set forth in the registration statement and the amendments and
exhibits thereto. For further information with respect to Professional
Veterinary Products, Ltd. and the common stock offered hereby, reference is made
to the registration statement and the amendments and exhibits thereto.
Statements contained in this prospectus regarding the contents of any contract
or any other document to which reference is made are not necessarily complete,
and, in each instance where a copy of such contract or other document has been
filed as an exhibit to the registration statement or subsequent amendments,
reference is made to the copy so filed, each such statement being qualified in
all respects by such reference. A copy of the registration statement and the
amendments and exhibits thereto may be inspected without charge at the Public
Reference Room of the Commission at Judiciary Plaza, 450 Fifth Street, N.W,
Washington, D.C. 20549, and copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Commission
upon the payment of the fees prescribed by the Commission. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission also maintains

23
<PAGE>

a Web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.

We intend to provide our shareholders with annual reports containing
financial statements audited by an independent accounting firm and make
available upon request quarterly reports containing unaudited financial data for
the first three quarters of each fiscal year.

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is an offer to sell, or a
solicitation of offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or any sale of common stock.

24
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditor's Reports............................... F-2
Balance Sheets at July 31, 2000 and July 31, 1999........... F-4
Statements of Income for the year ended July 31, 2000
July 31, 1999 and July 31, 1998........................... F-5
Statements of Retained Earnings for the year ended July 31,
2000, July 31, 1999 and July 31, 1998..................... F-6
Statements of Cash Flow for the year ended July 31, 2000,
July 31, 1999 and July 31, 1998........................... F-7
Notes to Financial Statements............................... F-8
Schedule of Operating, General and Administrative
Expenses.................................................. F-14
</TABLE>

F-1
<PAGE>
[MARVIN E. JEWELL & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

Tothe Board of Directors
Professional Veterinary Products, Ltd.
Omaha, Nebraska

We have audited the accompanying balance sheets of Professional Veterinary
Products, Ltd., a Nebraska corporation, as of July 31, 2000 and 1999, and the
related statements of income, retained earnings, cash flows and accompanying
schedule for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion of these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 Professional Veterinary
Products, Ltd. as of July 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Marvin E. Jewell & Co., P.C.

Lincoln, Nebraska
September 20, 2000

F-2
<PAGE>
[MARVIN E. JEWELL & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
LETTERHEAD]

INDEPENDENT AUDITOR'S REPORT

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

We have audited the accompanying balance sheets of Professional Veterinary
Products, Ltd., a Nebraska corporation, as of July 31, 1999 and 1998, and the
related statements of income, retained earnings, cash flows and accompanying
schedule for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion of these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Professional Veterinary
Products, Ltd. as of July 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Marvin E. Jewell & Co., P.C.

Lincoln, Nebraska
September 22, 1999

F-3
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.

BALANCE SHEETS

JULY 31, 2000 AND 1999

<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................ $ -- $ 1,092,679
Accounts receivable, trade, less allowance for doubtful
accounts (0).............................................. 26,749,894 14,839,192
Accounts receivable, rebate................................. (6,114,343) (4,889,037)
Accounts receivable, stock.................................. 77,709 139,501
Accounts receivable, other.................................. 933,116 1,188,071
Inventory................................................... 28,426,707 12,587,232
----------- -----------
Total current assets.................................. 50,073,083 24,957,638
----------- -----------
Property and equipment...................................... 8,640,410 4,640,831
Less accumulated depreciation............................. 896,198 1,604,504
----------- -----------
7,744,212 3,036,327
----------- -----------
Other assets:
Organization expense less
Accumulated amortization $45,444 (2000), $30,322
(1999)................................................ 181,354 196,476
Loan origination fee less
Accumulated amortization $2,833 (2000), $833 (1999)..... 17,167 19,167
Trademark, less accumulated
Amortization $639 (2000), $306 (1999)................... 4,361 4,694
Investments............................................... 1,643,850 143,850
Cash value life insurance................................. 30,077 --
Deferred income tax....................................... 5,966 --
----------- -----------
1,882,775 364,187
----------- -----------
$59,700,070 $28,358,152
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft............................................ $ 398,914 $ --
Notes payable, bank....................................... 8,216,400 4,319,388
Notes payable, other...................................... -- 93,850
Current portion of long-term debt......................... 419,603 --
Accounts payable, trade................................... 37,235,692 18,176,783
Accrued interest.......................................... 110,611 22,613
Accrued expenses.......................................... 525,505 547,887
Accrued wages............................................. 611,097 484,462
Accrued profit-sharing.................................... 347,861 242,038
Accrued income taxes...................................... 231,933 17,907
----------- -----------
Total current liabilities............................. 48,097,616 23,904,928
----------- -----------
Long-term debt.............................................. 6,013,631 --
----------- -----------
Stockholders' equity:
Common stock, $1 par value per share.
Authorized 30,000 shares; issued and Outstanding 1,381
shares (2000), 1,188 shares (1999).................... 1,381 1,188
Paid-in capital........................................... 4,070,619 3,491,812
Retained earnings......................................... 1,516,823 960,224
----------- -----------
5,588,823 4,453,224
----------- -----------
$59,700,070 $28,358,152
=========== ===========
</TABLE>

See accompanying notes to financial statements and independent auditor's report.

F-4
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.

STATEMENTS OF INCOME

JULY 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
AMOUNT PERCENT
----------------------------------------- ------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------ ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gross sales....................... $180,905,421 $123,649,623 $94,206,241 101.32 101.14 99.96
Less Rebate....................... (6,114,343) (4,889,037) (3,565,009) (3.42) (4.00) (3.78)
------------ ------------ ----------- ------ ------ ------
Net Sales......................... 174,791,078 118,760,595 90,641,232 97.90 97.14 96.18
Shipping.......................... 119,373 101,435 82,252 .07 .08 .09
Commissions....................... 1,325,276 1,630,808 1,778,811 .74 1.33 1.89
Sales promotion................... 2,272,181 1,716,677 1,699,629 1.27 1.41 1.80
Annual meeting reimbursement...... -- 16,609 12,055 -- .02 .01
Miscellaneous..................... 39,245 27,076 31,399 .02 .02 .03
------------ ------------ ----------- ------ ------ ------

178,547,153 122,253,200 94,245,375 100.00 100.00 100.00
------------ ------------ ----------- ------ ------ ------

Cost of sales:
Net purchases..................... 168,625,655 114,061,177 86,689,358 94.45 93.30 91.98
Freight out....................... 3,627,670 2,451,266 1,974,411 2.03 2.00 2.09
Less vendor rebates............... (10,319,150) (4,636,570) (3,402,195) (5.78) (3.79) (3.60)
------------ ------------ ----------- ------ ------ ------

161,934,175 111,875,873 85,261,574 90.70 91.51 90.47
------------ ------------ ----------- ------ ------ ------
Gross profit................ 16,612,978 10,377,327 8,983,801 9.30 8.49 9.53

Operating, general and
administrative expenses
(Schedule)........................ 15,202,927 10,366,843 8,725,912 8.51 8.48 9.26
------------ ------------ ----------- ------ ------ ------
Operating income............ 1,410,051 10,484 257,889 .79 .01 .27
------------ ------------ ----------- ------ ------ ------

Other income (expense):
Interest income................... 372,795 249,143 161,205 .21 .20 .17
Interest expense.................. (862,420) (263,198) (244,111) (.49) (.22) (.25)
Gain (loss) on sale of Property
and equipment................... (43,460) 237,212 -- (.02) .20 --
------------ ------------ ----------- ------ ------ ------
(533,085) 223,157 174,983 (.03) .18 .19
------------ ------------ ----------- ------ ------ ------

Income before income taxes........ 876,966 233,641 174,983 .49 .19 .19

Income taxes........................ 320,367 92,907 73,440 .18 .08 .08
------------ ------------ ----------- ------ ------ ------

Net income.................. $ 556,599 $ 140,734 $ 101,543 .31 .11 .11
============ ============ =========== ====== ====== ======
</TABLE>

See accompanying notes to financial statements and independent auditor's report.

F-5
<PAGE>
PROFESSIONAL VETERINARY PRODUCT, LTD.

STATEMENTS OF RETAINED EARNINGS

FISCAL YEAR ENDED JULY 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
2000 1999 1998
---------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year................ $ 960,224 $819,490 $717,947
Net income.................................. 556,599 140,734 101,543
---------- -------- --------
Balance at end of year...................... $1,516,823 $960,224 $819,490
========== ======== ========
</TABLE>

See accompanying notes to financial statements and independent auditor's report.

F-6
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.

STATEMENTS OF CASH FLOWS

FISCAL YEAR ENDED JULY 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
2000 1999 1998
-------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................. $ 556,599 $ 140,734 $ 101,543
Adjustments to reconcile net income to net
cash provided (used) by operating
activities:
Depreciation and amortization............ $ 443,108 287,814 412,543
Gain (loss) on sale of property.......... 43,460 (237,212) --
Adjustments for working capital
Changes:
(Increases) decrease in:
Receivables.......................... (10,430,441) (6,631,793) (1,493,853)
Inventories.......................... (15,839,475) 418,081 (4,472,791)
Cash value life insurance............ (30,077) -- --
Deferred income tax.................. (5,966) --
Increase (decrease) in:
Accounts payable....................... 19,058,909 7,736,566 2,594,480
Accrued expenses....................... 298,074 173,766 701,196
Income taxes........................... 214,026 (24,533) 41,904
------------ ----------- -----------
Total adjustments.................... (6,248,382) 1,722,679 (2,217,521)
----------- ----------- -----------
Net cash provided (used) by
operating activities............. (5,691,783) 1,863,413 (2,115,978)
Cash flows from investing activities:
Purchase of property and equipment......... (5,292,415) (2,762,815) (442,604)
Purchase of trademark...................... -- (5,000) --
Purchase of investments.................... (1,500,000) (143,850) --
Proceeds from sale of property............. 115,417 1,878,222 --
------------ ----------- -----------
Net cash provided (used) by investing
activities........................... (6,676,998) (1,033,433) (442,604)
Cash flows from financing activities:
Net loan proceeds (reduction).............. 10,236,396 1,012,731 1,035,913
Net proceeds from issuance of Common
stock.................................... 640,792 359,833 281,320
------------ ----------- -----------
Net cash provided by Financing
activities........................... 10,877,188 1,372,564 1,317,233
----------- ----------- -----------
Net increase (decrease) in cash............ (1,491,593) 2,202,534 (1,241,349)
Cash (deficit) at beginning of period...... 1,092,679 (1,109,855) 131,494
----------- ----------- -----------
Cash (deficit) at end of period............ $ (398,914) $ 1,092,679 $(1,109,855)
=========== =========== ===========
Supplementary disclosures of cash flow
information:
Interest paid.......................... $ 774,421 $ 257,725 $ 238,851
=========== =========== ===========
Income taxes paid...................... $ 106,162 $ 117,440 $ 31,536
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements and independent auditor's report.

F-7
<PAGE>

PROFESSIONAL VETERINARY PRODUCTS, LTD.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JULY 31, 2000 AND 1999)

(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ORGANIZATION:

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of accounting:

The corporation uses the accrual method of accounting for financial
statement and income tax purposes.

(b) Concentration of cash balances:

The Company's cash funds are located in a single financial
institution. The amount on deposit at July 31, 2000 and 1999 exceeded
the $100,000 federally insured limit.

Management considers accounts receivable to be fully collectible,
accordingly, no allowance for doubtful accounts is required.

(d) Inventory:

Inventory is valued at the lower of cost or market on the first-in,
first-out basis.

(e) Property and equipment depreciation:

Property and equipment are stated at cost. Major additions are
capitalized and depreciated over their estimated useful lives. For
financial reporting purposes, the Company uses the straight-line
method and for income tax purposes, the Company uses accelerated
depreciation methods.

(f) Cash and cash equivalents:

The corporation considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.

(g) Amortization:

Organizational costs are being amortized over sixty months on a
straight-line basis.

Financing costs are being amortized over the term of the note on a
straight-line basis. This amortization is included in interest
expense in the income statement.

The intangible costs are being amortized over fifteen years on a
straight-line basis.

See independent auditor's report.

F-8
<PAGE>

PROFESSIONAL VETERINARY PRODUCTS, LTD.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JULY 31, 2000 AND 1999) (CONTINUED)

(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

(h) Use of estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

(i) Income taxes:

Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently
due plus deferred taxes. Deferred taxes are recognized for
differences between the basis of assets and liabilities for financial
statement and income tax purposes. The differences related primarily
to depreciable assets (use of difference depreciation methods and
lives for financial statement and income tax purposes), and Uniform
Capitalization Rules Code Sec. 263A (capitalization of direct and
indirect costs associated with resale activities). The deferred tax
assets and liabilities represent the future tax return consequences
of those differences, which will either be deductible or taxable when
the assets and liabilities are recovered or settled. Deferred taxes
are also recognized for operating losses and tax credits that are
available to offset future taxable income.

(2) For the fiscal year ending July 31, 2000, the Company recognized
liabilities for overcharges on sales in excess of an agreed to profit margin of
5% totaling $6,114,343 (2000), $4,889,037 (1999).

(3) PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
BOOK VALUE
ACCUMULATED -----------------------
COST DEPRECIATION 2000 1999
---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Land.......................... $ 953,780 $ -- $ 953,780 $ 953,780
Buildings..................... 4,715,527 78,175 4,637,352 1,684,221
Equipment..................... 2,971,103 818,023 2,153,080 398,326
---------- -------- ---------- ----------
$8,640,410 $896,198 $7,744,212 $3,036,327
========== ======== ========== ==========
</TABLE>

(4) INVESTMENTS--NON MARKETABLE:

The Company has invested in AAHA Services Corp., of which they own 20%. The
remaining 80% is owned by American Animal Hospital Association (AAHA). AAHA
operates AAHA Services Corp. without regard to the views of Professional
Veterinary Products, Ltd. The investment is, therefore, carried at cost.

See independent auditor's report.

F-9
<PAGE>

PROFESSIONAL VETERINARY PRODUCTS, LTD.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JULY 31, 2000 AND 1999) (CONTINUED)

(4) INVESTMENTS--NON MARKETABLE: (CONTINUED)

The Company has invested in Agri-Laboritories, Ltd., of which they own 5%.
The investment is carried at cost.

<TABLE>
<CAPTION>
2000 1999
---------- --------
<S> <C> <C>
Investment in AAHA Services Corp...................... $1,500,000 $ --
Investment in Agri-Laboratories, Inc.................. 143,850 143,850
---------- --------
$1,643,850 $143,850
========== ========
</TABLE>

(5) CASH SURRENDER VALUE OF LIFE INSURANCE:

The Company owns insurance policies on the Chief Executive Officer. The
total face value of the policies on the life of the Chief Executive Officer was
$385,000 at July 31, 2000 and 1999.

(6) INCOME TAXES:

The Company's total noncurrent deferred tax asset and noncurrent deferred
tax liabilities at July 31 are as follows (computed at the statutory rate 34%):

<TABLE>
<CAPTION>
2000
--------
<S> <C>
Noncurrent deferred tax asset--
Inventory overhead costs Capitalized for tax purposes..... $ 47,600
Noncurrent deferred tax liability--
Accumulated depreciation.................................. (41,634)
--------
Net noncurrent deferred tax asset
Per financials............................................ $ 5,966
========
Reconciliation:
Taxes currently payable................................... $326,333
Net noncurrent deferred tax asset......................... (5,966)
--------
Income tax provision per financials....................... $320,367
========
</TABLE>

(7) LONG-TERM DEBT:

<TABLE>
<CAPTION>
2000 1999
---------- -----------------
<S> <C> <C>
Note payable, bank, 7.42% interest........................ $3,950,442 --
Note payable, bank, 9.10% interest........................ 1,192,534 --
Note payable, bank, 8.66% interest........................ 1,290,258 --
---------- -----------------
6,433,234 --
Less current portion due within one year................ (419,603) --
---------- -----------------
$6,013,631 --
========== =================
</TABLE>

See independent auditor's report.

F-10
<PAGE>

PROFESSIONAL VETERINARY PRODUCTS, LTD.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JULY 31, 2000 AND 1999) (CONTINUED)

(7) LONG-TERM DEBT: (CONTINUED)

Note payable, bank, 7.42% interest:

Monthly installments of principal and interest of $32,028 commencing
January 1, 2000 with final installment and entire unpaid principal
balance due on June 1, 2009. Loan is collateralized by land and building.

Note payable, bank, 9.10% interest:

Monthly installments of principal and interest of $15,352 commencing
July 1, 2000 with a final installment and entire unpaid principal balance
due on June 1, 2005. Loan is collateralized by land and building.

Note payable, bank, 8.66% interest:

Monthly installments of principal and interest of $29,032 commencing
February 1, 2000 with a final installment and entire unpaid principal
balance due on January 1, 2005. Loan is collateralized by all business
assets.

Total yearly payments of long-term debt are due as follows:

<TABLE>
<CAPTION>
NOTE PAYABLE BANK, NOTE PAYABLE BANK, NOTE PAYABLE BANK,
7.42% INTEREST 9.10% INTEREST 8.66% INTEREST TOTAL
------------------ ------------------ ------------------ ----------
<S> <C> <C> <C> <C>
2001................. $ 94,384 $ 78,945 $ 246,274 $ 419,603
2002................. 101,631 86,437 268,469 456,537
2003................. 109,434 94,639 292,663 496,736
2004................. 117,836 103,620 319,038 540,494
2005................. 126,883 828,893 163,814 1,119,590
2006 - 2020.......... 3,400,274 -- -- 3,400,274
---------- ---------- ---------- ----------
$3,950,442 $1,192,534 $1,290,258 $6,433,234
========== ========== ========== ==========
</TABLE>

The maximum amount available on the revolving line of credit is $15,000,000.
The balances due on this line of credit were $8,216,400 and $2,000,000 for 2000
and 1999 respectively. The interest rate as of July 31, 2000 was 9.25% or .25%
under the Index.

All the above loan agreements are with US Bank. These loans are
collateralized by substantially all of the assets of the Company.

These loan agreements contain certain covenants to related financial ratios.
Covenant relating interest bearing debt to tangible net worth has been waived by
the bank for July 31, 2000.

(8) COMMITMENTS AND CONTINGENT LIABILITIES--LEASES:

On July 28, 1997, the company entered into a lease with IBM Credit
Corporation for the purpose of leasing related computer hardware. The lease
minimum rentals are $6,541 per month. The lease expires July 30, 2002.

On February 18, 1998, the company entered into a lease with Nebraska Leasing
Services, Inc. for the purpose of leasing a truck. The lease minimum rentals are
$451.13 per month for a term of 36 months with a final rental installment of
$12,000. The lease expires January 18, 2001.

See independent auditor's report.

F-11
<PAGE>

PROFESSIONAL VETERINARY PRODUCTS, LTD.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JULY 31, 2000 AND 1999) (CONTINUED)

(8) COMMITMENTS AND CONTINGENT LIABILITIES--LEASES: (CONTINUED)

On August 14, 1998, the company entered into a lease with IBM Credit
Corporation for the purpose of leasing related computer hardware. The lease
minimum rentals are $3,107 per month for a term of 48 months. The lease expires
August 14, 2002.

On August 31, 1999, the company entered into a lease with IOS Capital for
the purpose of leasing two copiers. The lease minimum rentals are $1,216 per
month for a term of 48 months. The lease expires August 31, 2003.

On September 1, 1999, the company entered into a lease with US Bancorp
Leasing & Financial for the purpose of leasing two forklifts. The lease minimum
rentals are $1,189 per month for a term of 48 months. The lease expires
August 1, 2003.

On October 7, 1999, the company entered into a lease with Neopost Leasing
for the purpose of leasing a postage meter. The lease minimum rentals are $687
per quarter for a term of 5 years. The lease expires February 7, 2005.

On October 10, 1999, the company entered into a lease with US Bancorp
Leasing for the purpose of leasing 50 scanners. The lease minimum rentals are
$6,255 per month for a term of 36 months. The lease expires September 10, 2002.

On November 10, 1999, the company entered into a lease with U.S. Bancorp
Leasing for the purpose of leasing a floor scrubber. The lease minimum rentals
are $306 per month for a term of 48 months. The lease expires October 10, 2003.

On November 30, 1999, the company entered into a lease with IBM Credit Corp
for the purpose of leasing IBM Service Suite Maintenance. The lease minimum
lease rentals are $1,675 per month for a term of 36 months. The lease expires
November 30, 2002.

On November 30, 1999, the company entered into a lease with IOS Capital for
the purpose of leasing related copier parts. The lease minimum lease rentals are
$164 per month for a term of 60 months. The lease expires November 30, 2004.

On February 15, 2000, the company entered into a lease with Chrysler
Financial for the purpose of leasing a van. The lease minimum lease payments are
$416 per month for a term of 36 months. The lease expires February 15, 2003.

On March 6, 2000, the company entered into a lease with IBM Credit Corp for
the purpose of leasing computer hardware. The lease minimum rentals are $6,193
per month for a term of 36 months. The lease expires February 6, 2003.

On March 1, 2000, the company entered into a lease with P & L Capital Corp
for the purpose of leasing 11 laptop computers. The lease minimum lease payments
are $1,627 per month for a term of 24 months. The lease expires February 1,
2002.

On April 27, 2000, the company entered into a lease with Chrysler Financial
for the purpose of leasing a vehicle. The lease minimum rentals are $669 per
month for a term of 36 months. The lease expires April 27, 2003.

See independent auditor's report.

F-12
<PAGE>

PROFESSIONAL VETERINARY PRODUCTS, LTD.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO JULY 31, 2000 AND 1999) (CONTINUED)

(8) COMMITMENTS AND CONTINGENT LIABILITIES--LEASES: (CONTINUED)

Minimum future obligations on operating leases in effect on July 31, 2000
are:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31,
2001 2002 2003 TOTALS
---------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Computer hardware expense........................... $ 78,492 $ 78,792 $ -- $156,984
Vehicle lease expense............................... 14,707 -- -- 14,707
Computer hardware expense........................... 37,284 37,284 3,108 77,676
Copier lease expense................................ 14,592 14,592 14,592 43,776
Forklift lease expense.............................. 14,268 14,268 14,268 42,804
Postage meter lease expense......................... 2,748 2,748 2,748 8,244
Scanner lease expense............................... 75,060 75,060 12,510 162,630
Equipment lease expense............................. 3,672 3,672 3,672 11,016
Computer maintenance expense........................ 20,100 20,100 6,700 46,900
Copier lease expense................................ 1,968 1,968 1,968 5,904
Vehicle lease expense............................... 4,992 4,992 2,912 12,896
Computer hardware expense........................... 74,316 74,316 43,351 191,983
Computer hardware expense........................... 19,524 11,389 -- 30,913
Vehicle lease expense............................... 8,028 8,028 6,021 22,077
-------- -------- -------- --------
$369,751 $346,909 $111,850 $828,510
======== ======== ======== ========
</TABLE>

(9) TRANSACTIONS BETWEEN BOARD OF DIRECTORS, KEY EMPLOYEES AND THE COMPANY.

Professional Veterinary Products, Ltd. had sales to the Board of Directors
and key employees for the period ended July 31 as follows:

<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Members of the Board of Directors.................... $3,237,383 $2,843,718
Key employees........................................ 9,172 5,563
---------- ----------
$3,246,555 $2,849,281
========== ==========
</TABLE>

(10) PROFIT-SHARING AND 401-K RETIREMENT PLANS:

The Company provides a non-contributory profit-sharing plan covering all
full-time employees who qualify as to age and length of service. It has been the
Company's policy to make contributions to the plan as provided annually by the
Board of Directors. The total provision for the contribution to the plan was
$347,861 for 2000 and $242,038 for 1999.

The Company also provides a contributory 401-K retirement plan covering all
full-time employees who qualify as to age and length of service. It is the
Company's policy to match a maximum 15% employee contribution with a 3%
contribution. The total provision to the plan was $114,593 and $88,849 for the
years ended July 31, 2000 and 1999, respectively.

See independent auditor's report.

F-13
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.

SCHEDULE OF OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES

YEARS ENDED JULY 31, 2000, 1999 AND 1998

<TABLE>
<CAPTION>
AMOUNT PERCENT
-------------------------------------- ------------------------------
YEARS ENDED JULY 31, YEARS ENDED JULY 31,
-------------------------------------- ------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Salaries.............................. $ 6,646,651 $ 4,745,347 $4,107,946 3.72 3.88 4.36
Directors' fees....................... 47,750 $ 34,250 $ 30,750 .03 .03 .03
Annual meeting........................ 13,980 $ 44,940 $ 39,582 .01 .04 .04
Convention and seminars............... 84,293 $ 89,557 $ 53,377 .05 .07 .07
Insurance............................. 554,694 $ 393,077 $ 291,761 .31 .32 .30
Life Insurance........................ 12,065 $ 15,681 $ 15,875 .01 .01 .02
Office supplies and expense........... 835,752 $ 325,345 $ 289,608 .47 .27 .30
Operating supplies.................... 1,126,498 $ 815,023 $ 545,764 .63 .67 .58
Equipment rent........................ 356,213 $ 234,983 $ 192,541 .20 .19 .20
Telephone............................. 285,714 $ 212,562 $ 155,783 .16 .17 .17
Utilities............................. 91,524 $ 50,988 $ 49,743 .05 .04 .05
Accounting fees....................... 43,451 $ 33,330 $ 28,770 .02 .03 .03
Legal fees............................ 100,089 $ 94,326 $ 46,524 .06 .08 .05
Taxes, payroll........................ 437,242 $ 316,736 $ 261,996 .24 .26 .28
Taxes, general........................ 150,433 $ 51,397 $ 46,748 .08 .04 .05
Repairs and maintenance............... 373,436 $ 252,345 $ 101,492 .21 .21 .11
Depreciation.......................... 425,653 $ 269,760 $ 395,758 .24 .22 .42
Amortization.......................... 15,453 $ 15,440 $ 15,134 .01 .01 .02
Contract labor........................ 125,237 $ 23,515 $ 44,903 .07 .02 .05
Advertising........................... 9,050 $ 5,754 $ 7,764 .01 .01 .01
Postage............................... 71,671 $ 51,345 $ 35,447 .04 .04 .04
Travel and promotion.................. 393,054 $ 347,062 $ 272,043 .22 .28 .29
Dues and subscriptions................ 41,377 $ 26,014 $ 19,456 .02 .02 .02
Profit sharing and pension
contribution........................ 462,454 $ 330,887 $ 318,670 .26 .27 .34
Sales promotion....................... 1,522,922 $ 993,836 $ 936,201 .85 .81 .99
Bank fees............................. 587,184 $ 402,980 $ 297,323 .33 .33 .32
Equipment maintenance................. 217,533 $ 52,227 $ 45,559 .11 .04 .05
Bad debts............................. 14,586 $ 3,784 $ -- .01 .01 --
Miscellaneous......................... 156,968 $ 134,352 $ 79,394 .09 .11 .07
----------- ----------- ---------- ---- ---- ----
$15,202,927 $10,366,843 $8,725,912 8.51 8.48 9.26
=========== =========== ========== ==== ==== ====
</TABLE>

See accompanying notes to financial statements and independent auditor's report.

F-14
<PAGE>
EXHIBIT A1
INSTRUCTIONS TO SUBSCRIBERS

Qualified persons wishing to subscribe for one share of Common Stock (the
"Stock"), par value $1.00, of Professional Veterinary Products, Ltd. (the
"Company"), are required to complete the documents in this Subscription Booklet.
PLEASE DO NOT REMOVE ANY OF THE DOCUMENTS. An additional copy of the documents
in this Subscription Booklet is included with the Prospectus of the Company
delivered to you.

1. PURCHASER QUESTIONNAIRE. (Exhibit A2) Please provide all information
requested on the Purchaser Questionnaire.

2. SUBSCRIPTION AGREEMENT. (Exhibit A3) Please complete the Subscription
Agreement in the following manner:

a. Complete the appropriate signature page.

b. If the subscriber is a partnership, corporation, or other business
entity the appropriate signature page in the Subscription Agreement
should be completed. Special procedures are required for execution
and additional documentation may be required as set forth in the
Subscription Agreement.

3. DELIVERY INSTRUCTIONS. After you have completed the Purchaser
Questionnaire and Subscription Agreement, please deliver or mail this entire
Subscription Booklet to:

Professional Veterinary Products, Ltd.
10077 South 134th Street
Omaha, Nebraska 68138
Attn: Jill Meehan

If you have any questions concerning completion of the documentation, please
call Jill Meehan at (402) 331-4440.

A1-1
<PAGE>
EXHIBIT A2
PURCHASER QUESTIONNAIRE

1. The Name of the Practice is: ______________________________________________.

2. The Practice is a: ___ Sole Proprietorship; __ Partnership; __ Corporation

3. If the Practice is a Sole Proprietorship, the Doctor's name is: ___________.

4. If the Practice is a Partnership, the partners names are: _________________.

___________________________________________________________________________.

5. If the Practice is a Partnership, the managing partner with whom
Professional Veterinary Products, Ltd. is to communicate: _________________.

6. If the Practice if a Corporation, the President's name is: ________________.

7. The mailing address of the Practice for correspondence and product delivery
is:

Practice name: __________________________________________________________

Address: ________________________________________________________________

City, State Zip Code: ___________________________________________________

Phone Number: ___________________________________________________________

Fax Number: _____________________________________________________________

Federal Employer I.D. Number: ___________________________________________

or Social Security Number: __________________________________________

Please attach a copy of your Federal D.E.A. Certificate.

Computer System: Hardware: _________ Software: _________

Names of persons placing orders with PVPL: ______________________________

________________________________________________________________________.

Names of veterinarians (other than partners listed above) in the
practice:

________________________________________________________________________.

8. Bank name and address: ____________________________________________________.

Bank phone number: _____________________________

Contact person at the Bank: ________________________

9. Exact name of Individual, Partnership, or Corporation to whom stock
certificate is to be issued:

___________________________________________________________________________.

A2-1
<PAGE>
EXHIBIT A3
SUBSCRIPTION AGREEMENT
PROFESSIONAL VETERINARY PRODUCTS, LTD.

Professional Veterinary Products, Ltd.
10077 South 134th Street
Omaha, Nebraska 68138

Ladies and Gentlemen:

1. SUBSCRIPTION. Subject to acceptance by the Company, the undersigned
hereby subscribes to purchase one share of Common Stock (the "Stock"), par value
$1.00, indicated below in accordance with the terms of this Agreement, and the
Prospectus of the Company dated October 31, 2000, relating to the Stock.

THIS SUBSCRIPTION MAY BE REJECTED BY THE COMPANY IN ITS SOLE DISCRETION.

2. REPRESENTATIONS AND WARRANTIES. The undersigned represents and warrants
to the Company as follows:

(a) The undersigned has received the Prospectus.

(b) The undersigned is: ______ an individual licensed veterinarian; or
______ any lawful form of business entity established to deliver veterinary
services and/or products in which all medical decisions are made by licensed
veterinarians. (Please check appropriate status).

3. MISCELLANEOUS.

(a) The undersigned agrees not to transfer or assign this Agreement, or
any of the undersigned's interest herein, and further agrees that the
transfer or assignment of the Stock acquired pursuant hereto shall be made
only in accordance with the Prospectus and all applicable laws.

(b) Notwithstanding any of the representations, warranties,
acknowledgments, or agreements made herein by the undersigned, the
undersigned does not thereby or in any other manner waive any rights granted
to the undersigned under federal or state securities laws.

(c) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and may be amended only by
a writing executed by all parties.

(d) This Agreement shall be enforced, governed, and construed in all
respects in accordance with the laws of the State of Nebraska without regard
to its conflicts of laws provisions.

(e) Upon request from the Company, the undersigned agrees to provide
such information and to execute and deliver such documents as reasonably may
be necessary to comply with any and all laws and ordinances to which the
Company is subject.

4. SUBSCRIPTION AND METHOD OF PAYMENT. There are three payment plans from
which to choose, please check the appropriate plan. The second and third payment
plans are not available to investors located in Nebraska or Louisiana. The
undersigned hereby subscribes for the Stock as follows:

Plan 1: ______ One payment for the full $3000 cost of the share.

Plan 2: ______ Three installments of $1000 each, with the second and third
installments due thirty and sixty days after the first installment is paid.

Plan 3: ______ An initial payment of $500 with the $2500 balance paid on a
12 month installment payment schedule with 8% interest. Each month the Company
will send an invoice reflecting the principal and interest of $217.43 due.
Payment is due 10 days following the date of such invoice and the Company's
stated finance charge will be accessed for any payments received thereafter.
There is no prepayment penalty.

ALL SUBSCRIPTIONS ARE SUBJECT TO ACCEPTANCE BY THE COMPANY AND MAY BE
REJECTED BY THE COMPANY IN ITS SOLE DISCRETION.

A3-1
<PAGE>
TYPE OF OWNERSHIP
(Check One)

<TABLE>
<S> <C>
Individual (One signature required)
----
Limited Liability Company
----
Corporation
----
Partnership
----
Other--please designate below.
----

------------------------------------------------
Please print here the exact name (registration)
investor desires for Stock.
</TABLE>

A3-2
<PAGE>
SIGNATURE PAGE
FOR INDIVIDUAL INVESTORS

<TABLE>
<S> <C>
Signature

Social Security Number

Print or Type Name

Residence Address:
Executed at:

City

State

this day of , 20.
Mailing Address:
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------

SUBSCRIPTION ACCEPTED:

PROFESSIONAL VETERINARY PRODUCTS, LTD.

By:
------------------------
Lionel L. Reilly, President

Date:
</TABLE>

A3-3
<PAGE>
SIGNATURE PAGE
FOR PARTNERSHIP, CORPORATE OR OTHER BUSINESS ENTITY NVESTORS

Name of partnership, corporation or other business entity (please print or type)

By:_____________________________________________________________________________
(Signature of authorized agent)

Title:__________________________________________________________________________

Taxpayer Identification No.: ___________________________________________________

Address of Principal Partnership,

Corporate or Business Office: ___________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________

Mailing Address, if different:

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

Attention:_______________________________________________________________

Executed at ____________ effective this __ day of __________, 20__.

SUBSCRIPTION ACCEPTED:

PROFESSIONAL VETERINARY PRODUCTS, LTD.

By:
------------------------

Lionel L. Reilly, President

Date:
----------------------

A3-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 417.00
Legal fees and expenses..................................... $ 65,000.00
Blue Sky filing fees........................................ $ 29,000.00
Printing expenses........................................... $ 70,000.00
Miscellaneous expenses...................................... $ 2,000.00
-----------
Total..................................................... $166,417.00
===========
</TABLE>

All of the above items except the registration fee are estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Directors, officers, employees and agents of Professional Veterinary
Products, Ltd. (the "Company") may be entitled to benefit from the
indemnification provisions contained in the Company's Articles of Incorporation
and the Nebraska Business Corporation Act. The general effect of these
provisions is summarized below:

The Articles of Incorporation provide that to the extent permitted by law,
the Company shall indemnify any director, officer, employee or agent who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative, including any action or suit by or in the
right of the Company to procure a judgment in its favor, by reason of the
fact that such person is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership,
joint venture or other enterprise or as a trustee, officer, employee or
agent of an employee benefit plan. Such indemnification shall be against
expenses, including attorney fees, and except for actions by or in the right
of the Company, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.

Generally under Nebraska law, any individual who is made a party to a
proceeding because the individual is or was a director may be indemnified if
the individual acted in good faith and had reasonable basis to believe that
(1) in the case of conduct in the individual's official capacity with the
Company, that the individual's conduct was in the Company's best interests;
(2) in all other cases, that the individual's conduct was at least not
opposed to the Company's best interest; and (3) regarding any criminal
proceedings, the individual had no reasonable cause to believe the
individual's conduct was unlawful. Nebraska law also extends such
indemnification to officers of the Company and provides that the Company may
advance expenses to a director or officer of the Company. Further, Nebraska
law provides that neither a director or officer is liable for any action
taken as a director or officer, or any failure to take any action, as long
as the individual discharged his or her duties (1) in good faith, (2) with
the care of an ordinarily prudent person in a like position would exercise
under similar circumstances, and (3) in a manner the individual reasonably
believes to be in the best interests of the Company.

The Articles of Incorporation also provide that to the extent permitted by
law, the Company has the power to purchase and maintain insurance on behalf
of any person who is or was a director,

II-1
<PAGE>
officer, employee or agent of the Company against any liability asserted
against such person while acting in such capacity or arising out of his or
her status as such, whether or not the Company would have the power to
indemnify him or her against such liability. Nebraska law provides that the
Company may purchase and maintain insurance on behalf of an individual who
is or was a director or officer of the Company, or who, while a director or
officer of the Company, serves at the Company's request as a director,
officer, member of a limited liability company, partner, trustee, employee,
or agent of another domestic or foreign corporation, limited liability
company, partnership, joint venture, trust, employee benefit plan, or other
entity, against liability asserted against or incurred by that individual in
that capacity or arising from the individual's status as a director or
officer, whether or not the Company would have the power to indemnify or
advance expenses under Nebraska law.

The Articles of Incorporation provide that the indemnity provided for in the
Articles of Incorporation shall not be deemed to be exclusive of any other
rights to which those indemnified may be otherwise entitled, nor shall the
provisions of the Articles of Incorporation be deemed to prohibit the
Company from extending its indemnification to cover other persons or
activities to the extent permitted by law or pursuant to any provisions in
the Articles of Incorporation. Under the Nebraska Business Corporation Act,
the Company may provide indemnification or advance expenses to a director or
officer only as permitted under Nebraska law; however, the Company may, by a
provision in its articles of incorporation or bylaws, or in a resolution
adopted or a contract approved by its board of directors or shareholders,
obligate itself in advance of the act or omission giving rise to a
proceeding to provide indemnification or advance funds under Nebraska law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In 1996, the Company sought and received from the Securities and Exchange
Commission a no-action letter, a copy of which was previously filed as
Exhibit 99.1 to the registration statement filed September 7, 1999. As reflected
in the no-action letter, the SEC agreed to take a no-action position that
Company shares at that time did not have the characteristics of a security which
needed to be registered. Among the factors leading to that conclusion were the
fact that the Company has operated exclusively as a cooperative for its
shareholder members. A shareholder has historically joined the Company so it
could purchase goods at lower prices. With minor limitations, all sales of
products were made to the shareholders. Therefore, there has been no economic
benefit other than is received by the shareholders through purchase of lower
priced products.

Since 1996, the Company has been provided opportunities to sell products to
persons or entities other than shareholders, but has been unable to do so
because of the structure described above and the representations made to the
Securities and Exchange Commission. It is now the Company's desire to sell such
products to persons or entities other than shareholders and, as a result, has
decided to register its shares. The following sales of Company common stock made
by the Company within the past three years have been made in reliance upon, and
in compliance with, the Company's SEC no-action letter.

II-2
<PAGE>

<TABLE>
<CAPTION>
DISCOUNTS
OR
TITLE AMT DATE PRICE COMMISSIONS
----------------------------------------------------- -------- --------- -------- ------------
<S> <C> <C> <C> <C>
Dr W.R. Sumrall, Henderson, TN....................... 1 Nov-97 $3000 $0
Belton Animal Clinic, Belton, MO..................... 1 Nov-97 $3000 $0
Dr Jack Gochenour, Mo Valley, IA..................... 1 Nov-97 $3000 $0
Stockmans Vet Hosp, Elk City, OK..................... 1 Nov-97 $3000 $0
Town & Country VC, Marietta, GA...................... 1 Nov-97 $3000 $0
Douglas County AH, Douglasville, GA.................. 1 Nov-97 $3000 $0
Ani Amour Vet Med, Lovejoy, GA....................... 1 Nov-97 $3000 $0
Loving Hands Ani Cl, Roswell, GA..................... 1 Nov-97 $3000 $0
Dr. Val Frazier, Roswell, GA......................... 1 Nov-97 $3000 $0
Coweta Vet Assoc., Newnan, GA........................ 1 Nov-97 $3000 $0
North Cobb Ani Cl, Kennesaw, GA...................... 1 Nov-97 $3000 $0
Lake Harbin AH, Morrow, GA........................... 1 Nov-97 $3000 $0
Sprayberry AH, Marietta, GA.......................... 1 Nov-97 $3000 $0
Dr Rod Hardee, Alpharetta, GA........................ 1 Nov-97 $3000 $0
Arcadia AH, Arcadia, FL.............................. 1 Nov-97 $3000 $0
Jana Vet Corp, Lilburn, GA........................... 1 Nov-97 $3000 $0
T Heirigs Twin Lakes, Madison, SD.................... 1 Dec-97 $3000 $0
Prof Vet Services, Scott City, KS.................... 1 Dec-97 $3000 $0
Belle Isle Ani Cl, Atlanta, GA....................... 1 Dec-97 $3000 $0
C Dean Bertholf, Anthony, KS......................... 1 Dec-97 $3000 $0
Paul Tharp, Lee's Summit, MO......................... 1 Dec-97 $3000 $0
Wade Bullock, Williston, FL.......................... 1 Dec-97 $3000 $0
Marceline VC, Marceline, MO.......................... 1 Dec-97 $3000 $0
TJ Vogelweid, Moberly, MO............................ 1 Dec-97 $3000 $0
Max/Frances Mann, Quinter, KS........................ 1 Dec-97 $3000 $0
A-4 Animal Hospital, Lincoln, NE..................... 1 Dec-97 $3000 $0
Gentle Doctor AH, Brookings, SD...................... 1 Dec-97 $3000 $0
Berryville VC, Berryville, AR........................ 1 Jan-98 $3000 $0
A Evans/Boone County, Harrison, AR................... 1 Jan-98 $3000 $0
Butler Vet Assoc, Butler, PA......................... 1 Jan-98 $3000 $0
J Bonham/Clinton AH, Clinton, OK..................... 1 Jan-98 $3000 $0
J Droese/Conneaut AH, Conneaut, OH................... 1 Jan-98 $3000 $0
D Carder/Hoyt Ani, Hoyt, KS.......................... 1 Jan-98 $3000 $0
Stoney Creek, Farmland, IN........................... 1 Jan-98 $3000 $0
Volga VC, Volga, SD.................................. 1 Feb-98 $3000 $0
Baldwin Hilltop AHC, Baldwin C, KS................... 1 Feb-98 $3000 $0
Byergo/Countryside AH, Nevada, MO.................... 1 Feb-98 $3000 $0
Big Valley AH, Reedsville, PA........................ 1 Feb-98 $3000 $0
Karrenbrock VC, Okarche, OK.......................... 1 Mar-98 $3000 $0
Ani Emergency Clinic, Cary, NC....................... 1 Mar-98 $3000 $0
Hyannis VS, Hyannis, NE.............................. 1 Mar-98 $3000 $0
Dr Woodward, Richmond, IN............................ 1 Mar-98 $3000 $0
Companion AH, Fort Calhoun, NE....................... 1 Mar-98 $3000 $0
Dr Wakefield, Lewisburg, TN.......................... 1 Mar-98 $3000 $0
Postville VC, Postville, IA.......................... 1 Mar-98 $3000 $0
Animal Med Care, Brookings, SD....................... 1 Apr-98 $3000 $0
Frog Creek VC, Waverly, KS........................... 1 Apr-98 $3000 $0
Greentown AH, Greentown, IN.......................... 1 Apr-98 $3000 $0
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
DISCOUNTS
OR
TITLE AMT DATE PRICE COMMISSIONS
----------------------------------------------------- -------- --------- -------- ------------
<S> <C> <C> <C> <C>
Guthrie County VS, Guthrie C, IA..................... 1 Apr-98 $3000 $0
Reston-Great Flls VC, Vienna, VA..................... 1 Apr-98 $3000 $0
No Platte VC, No Platte, NE.......................... 1 Apr-98 $3000 $0
Pallone VH, Rose Bud, AR............................. 1 Apr-98 $3000 $0
Quail Valley VC, Jefferson City, MO.................. 1 Apr-98 $3000 $0
Rushville VC, Rushville, NE.......................... 1 Apr-98 $3000 $0
Tri-County VS, Tompkinsville, KY..................... 1 Apr-98 $3000 $0
Vilonia AC, Vilonia, AR.............................. 1 Apr-98 $3000 $0
Oakwood VS, Colona, IL............................... 1 Apr-98 $3000 $0
AgriMed VC, Palmyra, MO.............................. 1 May-98 $3000 $0
Schweikhardt/Buck Crk, Knightstwn, IN................ 1 May-98 $3000 $0
Greenwood VH, Durham, NC............................. 1 May-98 $3000 $0
Hebron VC, Hebron, ND................................ 1 May-98 $3000 $0
Honey Creek VH, Trenton, MO.......................... 1 May-98 $3000 $0
Meriden AH, Meriden, KS.............................. 1 May-98 $3000 $0
Brent Hall/RaphineAC, Raphine, VA.................... 1 May-98 $3000 $0
Steve Rumsey/So71VC,Willmar, MN...................... 1 May-98 $3000 $0
Twin Rivers VC, Columbus, NE......................... 1 May-98 $3000 $0
JH DBA Hackett AC, Manchester, TN.................... 1 Jun-98 $3000 $0
Tri-County VS, Bland, MO............................. 1 Jun-98 $3000 $0
JB DBA Soda Springs AC, Soda Springs, ID............. 1 Jun-98 $3000 $0
JM DBA Pickrell VC, Pickrell, NE..................... 1 Jun-98 $3000 $0
TS DBA Strathman VS, Rockford, IL.................... 1 Jun-98 $3000 $0
Cannon Valley VC, Northfield, MN..................... 1 Jun-98 $3000 $0
WF DBA Ferrell VC Hennessey, OK...................... 1 Jun-98 $3000 $0
Sylvania VH, Sylvania, OH............................ 1 Jun-98 $3000 $0
CM DBA AFB VS, Richmond, UT.......................... 1 Jun-98 $3000 $0
Wyoming VS, Wyoming, IA.............................. 1 Jun-98 $3000 $0
JH DBA B B VH, Warrensburg, MO....................... 1 Jun-98 $3000 $0
Roger Swenson, Blair, NE............................. 1 Jul-98 $3000 $0
Mitchell Vet Service, Massey, MD..................... 1 Jul-98 $3000 $0
K Heath DBA Vet Health, Norfolk, NE.................. 1 Jul-98 $3000 $0
Gill DBA, Gill VC, West Salem, IL.................... 1 Jul-98 $3000 $0
Bear Creek VS, Torrington, WY........................ 1 Jul-98 $3000 $0
Stout DBA Farm VS, Coshocton, OH..................... 1 Jul-98 $3000 $0
Dr Corsiglia Plantation, Waco, TX.................... 1 Jul-98 $3000 $0
Dyersville VC, Dyersville, IA........................ 1 Aug-98 $3000 $0
Ani Med Clinic of Quincy, Qunicy, IL................. 1 Aug-98 $3000 $0
Van Roekel & Ass, Alva, FL........................... 1 Aug-98 $3000 $0
Faulkner Cty VC, Greenbrier, AR...................... 1 Aug-98 $3000 $0
Dr Lou Scott Jetmore VS, Jetmore, KS................. 1 Aug-98 $3000 $0
Dr Terry Coonradt Northview AH, Canton, IL........... 1 Aug-98 $3000 $0
Country Road VS, Apple Creek, OH..................... 1 Aug-98 $3000 $0
Dr K Lacy DBA Starr VS, Miltonvale, KS............... 1 Sep-98 $3000 $0
Coldwater Animal Clinic, Coldwater, OH............... 1 Sep-98 $3000 $0
All Creatures AH, Wauchula, FL....................... 1 Sep-98 $3000 $0
Dr W Lovett Jr DBA Hardee AC, Wauchula, FL........... 1 Sep-98 $3000 $0
Risinger VS, Terrell, TX............................. 1 Sep-98 $3000 $0
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
DISCOUNTS
OR
TITLE AMT DATE PRICE COMMISSIONS
----------------------------------------------------- -------- --------- -------- ------------
<S> <C> <C> <C> <C>
Dr BC Taylor DBA Taylor VC, Houston, MO.............. 1 Sep-98 $3000 $0
Dr Karen Sherman DBA Oak View AC, Pea Ridge, AR...... 1 Sep-98 $3000 $0
Dr Alice Groner DBA Woodland AH, Jefferson City, MO.. 1 Sep-98 $3000 $0
Dairy Pharm, Chandler, AZ............................ 1 Sep-98 $3000 $0
Vet Specialities Inc DBA Outback AH, Polk City, FL... 1 Sep-98 $3000 $0
Dr Ben Mays, Clinton, AR............................. 1 Oct-98 $3000 $0
Dr Joe E Dawson, Quitman, TX......................... 1 Oct-98 $3000 $0
Wasbasha V/S, Wabasha, MN............................ 1 Oct-98 $3000 $0
Dr Mark Roozen, Roozen VH, Millersburg, KY........... 1 Oct-98 $3000 $0
Dr Gary T Old DBA Boulevard SA Clinic, Texarkana,
AR................................................. 1 Oct-98 $3000 $0
Stockmans VC, North Platte, NE....................... 1 Nov-98 $3000 $0
Town & Country VH, Winona, MN........................ 1 Nov-98 $3000 $0
The Animal Hospital, Plainville, KS.................. 1 Nov-98 $3000 $0
Morningside Veterinary Hospital, Sioux City, IA...... 1 Dec-98 $3000 $0
Kyle Animal Clinic PC, Carthage, TX.................. 1 Dec-98 $3000 $0
Dr Warner, Meredith Warner AC, Lewisburg, TN......... 1 Dec-98 $3000 $0
Dr Mandel, Mandel VH, Wickliffe, OH.................. 1 Dec-98 $3000 $0
Dr George Copeland, Clinton, SC...................... 1 Dec-98 $3000 $0
Gateway Equine Veterinary Clinic, Wentzville, MO..... 1 Dec-98 $3000 $0
Dr Richter, Cayuga Bovine Service, Auburn, NY........ 1 Dec-98 $3000 $0
Suburban AH, Fort Myers, FL.......................... 1 Dec-98 $3000 $0
Dr Chalfant, Great Plains VS, Hinton, OK............. 1 Dec-98 $3000 $0
Portland VC, Portland, IN............................ 1 Dec-98 $3000 $0
Swine Service Unlimited Inc, Morris, MN.............. 1 Dec-98 $3000 $0
Dr Lenington, Bluestem VC, Cedar Vale, KS............ 1 Dec-98 $3000 $0
The Barkemeyer Co PC, Helena, MT..................... 1 Dec-98 $3000 $0
Verona Pet Hospital, Verona, PA...................... 1 Jan-99 $3000 $0
Lyne Enterprises Inc, Chester, VA.................... 1 Jan-99 $3000 $0
L-W Veterinary Asc, Washington, IA................... 1 Jan-99 $3000 $0
K Wade DVM DBA Appalachian AH, Piney Flats, TN....... 1 Jan-99 $3000 $0
K Gochenor DVM DBA Ani House Mobl VC, Logan, IA...... 1 Jan-99 $3000 $0
K Kackley DVM DBA Mt Sterling VC, Mt Sterling, IL.... 1 Jan-99 $3000 $0
J McMahon Woodward DBA Kings Park VH, Springfield,
VA................................................. 1 Jan-99 $3000 $0
Riverdale VC, Muscoda, WI............................ 1 Jan-99 $3000 $0
W Armon DBA High Ridge Animal Hospital, High Ridge,
MO................................................. 1 Feb-99 $3000 $0
Wiggins Animal Hospital, Springdale, AR.............. 1 Feb-99 $3000 $0
Stevens Point Animal Hospital, Stevens Point, WI..... 1 Feb-99 $3000 $0
Argyle Veterinary Service, Argyle, WI................ 1 Feb-99 $3000 $0
All Creatures Veterinary Clinic, Omaha, NE........... 1 Mar-99 $3000 $0
Nolan Rubin DVM dba Montrose Ani Health, Fairfax,
VA................................................. 1 Mar-99 $3000 $0
Janet Hill DVM dba West Lake AH, Springfield, IL..... 1 Mar-99 $3000 $0
John Niebruegge DVM dba Kirksville SA Hosp,
Kirksville, MO..................................... 1 Mar-99 $3000 $0
Valley Veterinary Clinic, Rock Valley, IA............ 1 Mar-99 $3000 $0
5th Ave AH, Lebanon, PA.............................. 1 Mar-99 $3000 $0
John Weiner DVM dba Dairy Performance, Elkland, PA... 1 Mar-99 $3000 $0
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
DISCOUNTS
OR
TITLE AMT DATE PRICE COMMISSIONS
----------------------------------------------------- -------- --------- -------- ------------
<S> <C> <C> <C> <C>
Falls Church Animal Hospital, Falls Church, VA....... 1 Mar-99 $3000 $0
Kentwood Veterinary Clinic, Kentwood, LA............. 1 Mar-99 $3000 $0
DG Jennings DVM dba Lawrenceburg AH, Lawrenceburg,
TN................................................. 1 Mar-99 $3000 $0
Renee Nodine VMD, Jonestown, PA...................... 1 Mar-99 $3000 $0
Carolyn Woodruff DVM dba Knife River VC, Beulah, ND.. 1 Mar-99 $3000 $0
Matthew Stolzenburg DVM dba Cloud County VC,
Concordia, KS...................................... 1 Mar-99 $3000 $0
All Creatures VS, Big Timber, MT..................... 1 Apr-99 $3000 $0
Dr Lias Interstate VC, Brandon, SD................... 1 Apr-99 $3000 $0
Blaine County VS, Chinook, MT........................ 1 Apr-99 $3000 $0
Odon VC, Odon, IN.................................... 1 Apr-99 $3000 $0
Ellis VC, Ellis, KS.................................. 1 Apr-99 $3000 $0
Panhandle VC, Chadron, NE............................ 1 Apr-99 $3000 $0
Dr Causey Citrus AC, Lake Placid, FL................. 1 Apr-99 $3000 $0
North Main AH, O'Fallon, MO.......................... 1 Apr-99 $3000 $0
Dr Stephanie Benner, Sellersville, PA................ 1 Apr-99 $3000 $0
Livestock Veterinary Services, Kinston, NC........... 1 May-99 $3000 $0
Dr RL Kutter, Wichita, KS............................ 1 May-99 $3000 $0
Dr Dixson DBA Tri-State Vet Serv & Supply, Atwood,
KS................................................. 1 May-99 $3000 $0
Sugarcreek VC, Sugarcreek, OH........................ 1 May-99 $3000 $0
Rockwall Equine Center, Terrell, TX.................. 1 May-99 $3000 $0
Burr Oak VS, Fremont, WI............................. 1 May-99 $3000 $0
Hermann, Ott VC, Lakeville, MN....................... 1 May-99 $3000 $0
Caring Hands Animal Hospital, Centrevile, VA......... 1 May-99 $3000 $0
Harlowton VC, Harlowton, MT.......................... 1 May-99 $3000 $0
Dr Cotterill DBA Cherryvale VC, Cherryvale, KS....... 1 May-99 $3000 $0
Dr Callaway DBA The Pet Clinic, Athens, TN........... 1 May-99 $3000 $0
Dr Garrity DBA Bluff City VS, Natchez, MS............ 1 May-99 $3000 $0
Dr King DBA Red Barn VC, Columbia, KY................ 1 May-99 $3000 $0
Amite AC, Amite, LA.................................. 1 June-99 $3000 $0
Dr Salava DBA Salava VC, Clay Center, KS............. 1 June-99 $3000 $0
Jacksonville Vet Hospital, Phoenix, MD............... 1 June-99 $3000 $0
Hansford County VH, Spearman, TX..................... 1 June-99 $3000 $0
William Crank, Henderson, WV......................... 1 June-99 $3000 $0
Dr Cain DBA Centeral Nebraska VS, Broken Bow......... 1 June-99 $3000 $0
Dr Woolsey DBA Green County Veterinary Medicine...... 1 June-99 $3000 $0
Animal House VC, Clarksville, TN..................... 1 June-99 $3000 $0
Dr Randall Baker, Lewisburg, TN...................... 1 June-99 $3000 $0
Wittenberg VC, Wittenberg, WI........................ 1 June-99 $3000 $0
Dr Taylor-Keilholz DBA Osage Reginal VC.............. 1 June-99 $3000 $0
Large Animal Services, Greeneville, TN............... 1 June-99 $3000 $0
Heartland VC, Harrisonburg, VA....................... 1 June-99 $3000 $0
Laketown Animal Hospital, Springfield, IL............ 1 June-99 $3000 $0
Stow Kent Animal Hospital, Kent, OH.................. 1 June-99 $3000 $0
Rolling Hills Veterinary Services, Cascade, IA....... 1 June-99 $3000 $0
Dr Westbrook DBA Westbrook AC, Little Rock, AR....... 1 June-99 $3000 $0
</TABLE>

II-6
<PAGE>

All sales were exempt from registration pursuant to a no-action letter
issued by the Securities and Exchange Commission on July 12, 1996 (previously
filed as Exhibit 99.1 to the Form S-1 Registration Statement No. 333-86629 filed
on September 7, 1999).

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
3.1 Articles of Incorporation of Professional Veterinary
Products, Ltd.(1)

3.2 Bylaws of Professional Veterinary Products, Ltd.(1)

4.1 Certificate of Professional Veterinary Products, Ltd.(1)

4.2 Article V of the Articles of Incorporation of Professional
Veterinary Products, Ltd., which defines the rights of
holders of the securities being registered (included in
Exhibit 3.1 above)

4.3 Article II of the Bylaws of Professional Veterinary
Products, Ltd., which defines the rights of holders of the
securities being registered (included in Exhibit 3.2
above)

5.1 Form of Opinion of Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim(2)

10.1 Warranty Deed for real estate at 10100 J Street, Omaha,
Nebraska from Professional Veterinary Products, Ltd. to
Duane E. and Barbara G. Miller(1)

10.2 Warranty Deed for real estate at 10077 South 134th Street,
Omaha, Nebraska from Hilltop Industrial Park to
Professional Veterinary Products, Ltd.(1)

10.3 Lease of building located at 10100 J Street, Omaha, Nebraska
between Professional Veterinary Products, Ltd. and Duane
E. and Barbara G. Miller(1)

10.4 Construction Agreement for building at 10077 South 134th
Street, Omaha, Nebraska between Professional Veterinary
Products, Ltd. and Mudra Construction, Ltd.(1)

10.5 Sales Agency Agreement between Professional Veterinary
Products, Ltd. and Bayer Corporation(1)*

10.6 Sales Agency Agreement between Professional Veterinary
Products, Ltd. and Merial LLC(1)*

10.7 Select Distributors Marketing Agreement between Professional
Veterinary Products, Ltd. and the Animal Health Group of
Pfizer, Inc.(1)*

10.8 Supply and Distribution Agreement between Professional
Veterinary Products, Ltd. and Schering-Plough Animal
Health Corporation(1)*

10.9 Distributor Agreement between Professional Veterinary
Products, Ltd. and The Upjohn Company(1)*

10.10 Distribution Agreement between Professional Veterinary
Products, Ltd. and Fort Dodge Animal Health(1)

10.11 Purchase and Sale Agreement between Professional Veterinary
Products, Ltd., AAHA Services Corporation and American
Animal Hospital Association(3)**

11.1 Statement re Computation of Per Share Earnings(3)

12.1 Statement re Computation of Ratios(3)

15.1 Letter re Unaudited Interim Financial Information(1)

23.1 Consent of Marvin E. Jewell & Co., P.C.(3)
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
23.2 Form of consent of Baird, Holm, McEachen, Pedersen, Hamann &
Strasheim (included in Exhibit 5.1 above)

24.1 Power of Attorney executed by Michael Whitehair(1)

24.2 Power of Attorney executed by Russ Weston(1)

24.3 Power of Attorney executed by Timothy Trayer(1)

24.4 Power of Attorney executed by Kenneth Liska(1)

24.5 Power of Attorney executed by Wayne Rychnovsky(1)

24.6 Power of Attorney executed by Raymond Ebert II(1)

24.7 Power of Attorney executed by Mark Basinger(1)

24.8 Power of Attorney executed by Fred Garrison(1)

27.1 Financial Data Schedule(3)

99.1 No Action letter issued by Securities and Exchange
Commission on July 12, 1996(1)
</TABLE>

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

(1) Previously filed as exhibits to the Form S-1 Registration Statement
No. 333-86629 filed on September 7, 1999.

(2) Previously filed as exhibits to the Pre-Effective Amendment No. 1 to the
Form S-1 Registration Statement No. 333-86629 filed on October 19, 1999.

(3) Filed herewith.

(*) Portions of this exhibit have been redacted pursuant to a request for
confidential treatment which was granted by the Securities and Exchange
Commission.

(**) Portions of this exhibit have been redacted pursuant to a request for
confidential treatment which is currently being reviewed by the Securities
and Exchange Commission.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

II-8
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the registration statement is on Form S-3, Form 5-8 or
Form F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

II-9
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Post-Effective Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Omaha, State of Nebraska on this 3rd day of November,
2000.

<TABLE>
<S> <C> <C>
PROFESSIONAL VETERINARY PRODCUTS, LTD.

By: /s/ LIONEL L. REILLY
-----------------------------------------
Lionel L. Reilly
PRESIDENT
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities of Professional Veterinary
Products, Ltd. on the 3rd day of November, 2000.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S> <C>
/s/ LIONEL L. REILLY
------------------------------------------- President
Lionel L. Reilly

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

*
------------------------------------------- Director
Mark A. Basinger

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

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

*
------------------------------------------- Director
Kenneth R. Liska

*
------------------------------------------- Director
Wayne E. Rychnovsky
</TABLE>

II-10
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S> <C>
*
------------------------------------------- Director
Timothy P. Trayer

*
------------------------------------------- Director
Russ R. Weston

*
------------------------------------------- Director
Michael L. Whitehair
</TABLE>

<TABLE>
<S> <C> <C>
*By: /s/ LIONEL L. REILLY
--------------------------------------
Lionel L. Reilly
As: ATTORNEY-IN-FACT
</TABLE>

II-11
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ------------------------------------------------------------
<C> <S>
3.1 Articles of Incorporation of Professional Veterinary
Products, Ltd.(1)