<PAGE>

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

                                     Form 10-Q

 |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
            Act of 1934 For the quarterly period ended June 30, 1998

                                         or

     |_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 For the transition period from ________ to _________

                          Commission File Number: 0-12177

                              DNAP HOLDING CORPORATION
               (Exact name of registrant as specified in its charter)

                Delaware                                         75-2632242
      (State or other jurisdiction                            (I.R.S. Employer
    of incorporation or organization)                       Identification No.)

          6701 San Pablo Avenue
           Oakland, California                                      94608  
(Address of principal executive offices)                         (Zip Code)

                                   (510) 547-2395
                (Registrant's telephone number, including area code)

      Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports) and (2) has been subject to 
such filing requirements for the past 90 days.   Yes  X  No    
                                                     ---    ---

      As of August 12, 1998, 18,370,640 shares of common stock, par value 
$0.01 per share, of DNAP Holding Corporation were outstanding.

<PAGE>

                           PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                              DNAP HOLDING CORPORATION

                             CONSOLIDATED BALANCE SHEET
                             THOUSANDS OF U.S. DOLLARS
<TABLE>
                                                                         June 30,         December 31,
                                                                           1998               1997
                                                                        ----------        ------------
   <S>                                                                  <C>               <C>
                                                                        (unaudited)      
   ASSETS
   Current assets:
   Cash and cash equivalents..............................................$  7,351        $  6,600
   Accounts receivable....................................................  26,337          32,777
   Advances to growers....................................................  12,547           5,311
   Inventories............................................................   7,828          17,779
   Other current assets...................................................   1,474             618
                                                                          --------        --------
        Total current assets..............................................  55,537          63,085
                                                                          --------        --------
   Property, plant and equipment, net.....................................  33,465          36,520
   Patents and trademarks, net............................................  12,641          13,258
   Goodwill, net..........................................................  30,399          30,792
   Deferred income taxes..................................................   3,279           3,279
   Other assets...........................................................     515             315
                                                                          --------        --------
        Total assets......................................................$135,836        $147,249
                                                                          --------        --------
                                                                          --------        --------
   LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
   Short-term bank loans..................................................$ 32,420        $ 51,217
   Current portion of long-term debt......................................   2,388           2,588
   Accounts payable and accrued expenses..................................  20,014          28,915
   Accounts due to related parties........................................  47,213          21,949
   Deferred income taxes..................................................   4,739           4,715
                                                                          --------        --------
        Total current liabilities......................................... 106,774         109,384
   Long-term debt.........................................................   5,672           7,215
                                                                          --------        --------
        Total liabilities................................................. 112,446         116,599
                                                                          --------        --------
   Minority interest......................................................   1,051           2,294
                                                                          --------        --------
   Stockholders' equity:
   Preferred stock, $.01 par value, 5,000 shares authorized, no
     shares issued and outstanding........................................    --              --
   Common stock, $.01 par value, 25,000,000 shares authorized,
     18,370,640 shares issued and outstanding.............................     184             184
   Additional paid-in capital.............................................  78,720          78,720
   Accumulated deficit.................................................... (56,280)        (50,240)
   Cumulative other comprehensive income..................................    (285)           (308)
                                                                          --------        --------
   Total stockholders' equity.............................................  22,339          28,356
                                                                          --------        --------
   Total liabilities and stockholders' equity.............................$135,836        $147,249
                                                                          --------        --------
                                                                          --------        --------
     The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       -2-

<PAGE>

                              DNAP HOLDING CORPORATION

                   UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                             THOUSANDS OF U.S. DOLLARS
                             (EXCEPT PER SHARE AMOUNTS)
<TABLE>
                                                          Three Months Ended June 30, Six Months Ended June 30,
                                                          --------------------------- -------------------------
                                                               1998        1997         1998           1997    
                                                             --------    --------     ---------      --------- 
<S>                                                           <C>        <C>          <C>             <C>      
Total revenues..........................................     $ 77,020    $ 70,073     $ 147,503      $ 147,196
                                                             --------    --------     ---------      ---------
Cost of sales...........................................      (71,954)    (71,199)     (133,897)      (139,563)
Selling and administrative expenses.....................       (6,836)     (7,011)      (12,006)       (11,989)
Research and development expenses.......................       (1,430)     (1,195)       (2,801)        (2,361)
Amortization of goodwill, patents and trademarks........         (732)       (357)       (1,464)        (1,252)
                                                             --------    --------     ---------      ---------
                                                              (80,952)    (79,762)     (150,168)      (155,165)
                                                             --------    --------     ---------      ---------
Operating income (loss).................................       (3,932)     (9,689)       (2,665)        (7,969)
                                                             --------    --------     ---------      ---------
Interest expense........................................       (1,838)     (1,565)       (3,588)        (2,673)
Interest income.........................................          316         311           505            526 
Exchange gain (loss), net...............................       (1,150)        411          (964)           532 
Other non-operating income..............................           23          14            23            824 
                                                             --------    --------     ---------      ---------
                                                               (2,649)       (829)       (4,024)          (791)
                                                             --------    --------     ---------      ---------
Income (loss) before income tax.........................       (6,581)    (10,518)       (6,689)        (8,760)

Income tax benefit (expense)............................           89         413          (190)          (596)
                                                             --------    --------     ---------      ---------
Net income (loss) before minority interest..............       (6,492)    (10,105)       (6,879)        (9,356)

Minority interest in net loss (income) of subsidiaries..        1,152       3,858           839          2,013
                                                             --------    --------     ---------      ---------
Net income (loss) ......................................     $ (5,340)   $ (6,247)    $  (6,040)     $  (7,343)

Other comprehensive income (expense) net of tax:
    Foreign currency translation adjustments............           25         (64)           23            (34)
                                                             --------    --------     ---------      ---------
Comprehensive income (loss).............................     $ (5,315)   $ (6,311)    $  (6,017)     $  (7,377)
                                                             --------    --------     ---------      ---------
                                                             --------    --------     ---------      ---------
Net income (loss) per share - basic and diluted.........     $  (0.29)   $  (0.34)    $   (0.33)     $   (0.40)
                                                             --------    --------     ---------      ---------
                                                             --------    --------     ---------      ---------

     The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       -3-
<PAGE>

                              DNAP HOLDING CORPORATION

                   UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                             THOUSANDS OF U.S. DOLLARS
<TABLE>
                                                                      Six Months Ended June 30,
                                                                      -------------------------
                                                                         1998          1997
                                                                      ---------      ----------
<S>                                                                    <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................................................     $ (6,040)     $ (7,343)
Items not affecting cash:
  Minority interest...............................................         (839)       (2,013)
  Depreciation ...................................................        1,815         1,697
  Amortization of goodwill, patents and trademarks................        1,464         1,252
  Deferred income taxes...........................................           24            --
  Gain from sale of property, plant and equipment.................           --          (321)
Net changes (exclusive of subsidiaries acquired or divested) in:
  Accounts receivable and advances to growers, net................       (8,329)       (4,252)
  Inventories.....................................................        9,709        10,654
  Accounts payable and accrued expenses...........................       (2,757)         (732)
  Other assets....................................................         (189)         (481)
                                                                       --------      -------- 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES...............       (5,142)       (1,539)
                                                                       --------      -------- 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment........................       (1,943)       (3,302)
Proceeds from sale of property, plant and equipment...............           --           920
Proceeds from divestiture of Van Namen, net of cash divested......          637            --
Payment for purchase of companies.................................         (476)         (277)
                                                                       --------      -------- 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES...............       (1,782)       (2,659)
                                                                       --------      -------- 
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings...............................      (17,477)          225
Repayments of long-term debt......................................         (112)           17
Accounts due to related parties...................................       25,264          (967)
                                                                       --------      -------- 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES...............        7,675          (725)
                                                                       --------      -------- 
Net increase (decrease) in cash and cash equivalents..............          751        (4,923)
Cash at beginning of year   ......................................        6,600        10,735
                                                                       --------      -------- 
Cash at end of period.............................................     $  7,351       $ 5,812
                                                                       --------      -------- 
                                                                       --------      -------- 

     The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       -4-

<PAGE>

                              DNAP HOLDING CORPORATION

                NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                   JUNE 30, 1998

NOTE 1 - BASIS OF PRESENTATION

DNAP Holding Corporation (together with its subsidiaries, "DNAP Holding" or 
the "Company"), a subsidiary of Bionova, S.A. de C.V., a Mexican corporation 
("Bionova Mexico"), was formed on January 12, 1996 and originally named 
Bionova U.S. Inc., to be the holding company of a consolidated group, which 
includes certain former subsidiaries of Bionova Mexico (the "Bionova 
Subsidiaries") and, after consummation of a merger effective September 26, 
1996, DNA Plant Technology Corporation, a Delaware corporation ("DNAP"), and 
its subsidiaries. Today, the Company acts as a holding company for (i) 
Agricola Batiz, S.A. de C.V., of which the Company owns 80% ("ABSA"), (ii) 
International Produce Holding Company, of which the Company owns 100% 
("IPHC"), (iii) DNA Plant Technology Corporation, of which the Company owns 
100% ("DNAP"), and (iv) VPP Corporation, of which the Company owns 100% 
("VPP").

NOTE 2 - NET LOSS PER COMMON SHARE
     
The weighted average number of common shares outstanding during the three 
months ended June 30, 1997 and 1998 and for the first six months ended June 
30, 1997 and 1998 was 18,370,640.

NOTE 3 - INVENTORIES

Inventories consist of the following:
<TABLE>
                                                               June 30,   December 31,
                                                                 1998         1997
                                                               --------   ------------
     <S>                                                        <C>        <C>
     Finished produce...................................        $2,381       $ 1,815
     Growing crops .....................................         1,080         9,974
     Advances to suppliers..............................           294           316
     Spare parts and materials .........................         3,816         4,821
     Merchandise in transit and other...................           338           980
                                                                ------       -------
                                                                 7,909        17,906
     Allowance for slow moving inventories .............           (81)         (127)
                                                                ------       -------
                                                                $7,828       $17,779
                                                                ------       -------
                                                                ------       -------
</TABLE>

NOTE 4 - CASH FLOWS

Cash flows for the first six months of 1998 reflect the elimination of the 
Royal Van Namen account balances, which were still recorded on DNAP Holding's 
balance sheet as of December 31, 1997.

NOTE 5 - RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current 
year presentation.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
        RESULTS OF OPERATIONS

THE COMPANY

     DNAP Holding Corporation, a Delaware corporation (together with its 
subsidiaries, unless the context requires otherwise, "DNAP Holding" or the 
"Company"), was formed in January 1996, and acts as a holding company for (i) 
Agricola Batiz, S.A. de C.V., a corporation organized under the laws of the 
United Mexican States, of which the Company owns 80% ("ABSA"), (ii) 
International Produce Holding Company, a Delaware corporation, of which the 
Company owns 100% ("IPHC"), (iii) DNA Plant Technology Corporation, a 
Delaware corporation, of which the Company owns 100% ("DNAP"), and (iv) VPP 
Corporation, a Delaware corporation, of which the Company owns 100% ("VPP").  
The Company acquired majority interests in ABSA and IPHC on July 1, 1996, by 
means of a capital 

                                       -5-

<PAGE>

contribution from Bionova S.A. de C.V. ("Bionova Mexico"), and on October 7, 
1997, acquired all of the minority interests in IPHC and increased its 
ownership interest in ABSA to 80%.  DNAP became a wholly-owned subsidiary of 
the Company on September 26, 1996, as a result of the merger (the "Merger") 
of Bionova Acquisition, Inc., a Delaware corporation that was a wholly-owned 
subsidiary of the Company, with and into DNAP.  VPP was formed as a 
wholly-owned subsidiary of the Company on August 18, 1997.  Approximately 70% 
of the outstanding common stock of the Company is indirectly owned by 
Empresas La Moderna, S.A. de C.V. ("ELM").

     ABSA engages in the business of growing fresh fruits and vegetables, 
primarily tomatoes and peppers, in Mexico and exporting fresh produce to the 
United States and other markets.  ABSA owns a 50.01% interest in Interfruver 
de Mexico, S.A. de C.V., a corporation organized under the laws of the United 
Mexican States ("Interfruver"), which engages in the business of marketing 
and distributing fresh produce in Mexico, including fruits and vegetables 
produced by ABSA.  IPHC is a holding company whose subsidiaries are in the 
business of marketing and distributing fresh produce primarily in the United 
States and Canada, including fruits and vegetables produced by ABSA.  DNAP is 
an agribusiness biotechnology company focused on the development and 
application of genetic engineering and transformation technologies in plants 
and, together with its subsidiaries (including FreshWorld Farms, Inc.), the 
development and marketing of premium, differentiated, fresh and processed, 
branded fruits and vegetables.  VPP is an agribusiness biotechnology company 
focused on the development and application of genetic engineering and 
transformation technologies in vegetatively propagated plants.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 
1997

     Revenues increased from $70.1 million in the second quarter of 1997 to 
$77.0 million in the second quarter of 1998.  The largest contributor to this 
increase was the U.S. distribution companies, which recorded an increase of 
$18.5 million for the quarter (59% higher than prior year), which was due to 
greater availability of product during the quarter.  Sales also increased 
significantly during the second quarter of 1998 in Canada and Mexico as 
compared with the same quarter in 1997 ($2.7 and $3.8 million, respectively, 
representing percentage gains of 45% and 26%).  These gains were partially 
offset by the divestiture of Royal Van Namen ("RVN") during the first quarter 
of 1998, which recorded $18.1 million of sales during the second quarter of 
1997.

     Gross profit (sales less cost of sales) improved from a loss of $1.1 
million in the second quarter of 1997 to a profit of $5.1 million in the same 
quarter of 1998.  While ABSA experienced a negative gross profit of $2.7 
million in the second quarter of 1998, this represented an improvement of 
$4.0 million over the same quarter in 1997.  This improvement came about by 
the elimination of $2.7 million in write offs taken during the second quarter 
of 1997, and the higher level of production that resulted from better weather 
conditions during the second quarter of 1998 as compared with 1997.  In 
conjunction with the higher sales levels and some reduction in expenses in 
the U.S., Canadian, and Mexican distribution companies, the gross profit of 
these companies increased by $3.0 million during the second quarter of 1998 
as compared to the same quarter of 1997.  The divestiture of RVN resulted in 
a reduction of gross profit between the first quarters of 1997 and 1998 of 
$0.8 million.

     Selling and administrative expenses declined from $7.0 million in the 
second quarter of 1997 to $6.8 million in the second quarter of 1998.  This 
$0.2 million decline was due primarily to the divestiture of RVN during the 
first quarter of 1998 and a consequential reduction in selling and 
administrative expenses in this quarter of $0.6 million, offset in part by a 
$0.4 million increase in corporate overhead expenses.

     The non-cash charge for amortization of goodwill, patents and trademarks 
was $0.7 million in the second quarter of 1998, emanating from the goodwill 
and patents relating to the DNAP merger, and the purchase of the IPHC and 
ABSA minority interests.
     
     Research and development expenses increased from $1.2 million in the 
second quarter of 1997 to $1.4 million in the same quarter of 1998, which was 
due to the increased level of activity at DNAP.

     Interest expense increased by $0.3 million in the second quarter of 1998 
as compared with the same quarter of 1997 due to the increase in the average 
level of debt outstanding.

                                       -6-

<PAGE>

     In the second quarter of 1998, DNAP Holding experienced a net foreign 
exchange loss of $1.2 million as compared to a gain of $0.4 million in the 
same quarter of 1997.  This exchange loss in the second quarter of 1998 
occurred in conjunction with the volatility of the international currency 
markets.  As a consequence, an exchange loss was experienced by ABSA, whose 
functional currency is the U.S. dollar, due to its net peso monetary position.
     
     The Company recorded an income tax benefit of $0.1 million in the second 
quarter of 1998 as compared with a benefit of $0.4 million for the same 
quarter in 1997.  This change was attributable to the lower earnings of the 
Mexican subsidiaries and the elimination of the R.B. Packing companies' tax 
liability (R.B. Packing, Inc., R.B. Packing of California, Inc., and R.B. 
Packing of Texas, Inc.) due to their consolidation for tax purposes into DNAP 
Holding beginning in the fourth quarter of 1997, following the Company's 
acquisition of the minority interests in IPHC.

     During the second quarter of 1998, the share of losses allocable to 
minority interests was $1.2 million as compared with $3.9 million for the same 
quarter in 1997.  The 1998 and 1997 allocations of losses are consistent with 
the minority positions held across the operating subsidiaries of the Company 
and were affected significantly by the increase in the Company's interests in 
ABSA and IPHC and the divestiture of its entire interest in RVN. 

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1997

     Revenues increased slightly from $147.2 million during the first six 
months of 1997 to $147.5 million during the same period in 1998.  The U.S. 
distribution companies recorded an increase of $16.0 million for the first 
six months (22% higher than prior year), which was due to greater 
availability of product during the second quarter.  Sales also increased 
significantly during the first six months of 1998 in Canada and Mexico as 
compared with the same period in 1997 ($6.1 and $6.9 million, respectively, 
representing percentage gains of 56% and 23%).  These gains were partially 
offset by the divestiture of Royal Van Namen ("RVN") during the first quarter 
of 1998, which recorded $29.7 million of sales during the first six months of 
1997.  The Company's revenues were also benefited by a $1.0 million increase 
in royalties at DNAP during the first six months of 1998 as compared with the 
same period in 1997. 

     Gross profit (sales less cost of sales) improved from $7.6 million 
during the first six months of 1997 to $13.6 million during the same period 
in 1998. While ABSA experienced a negative gross profit of $1.2 million 
during the first six months of 1998, this represented an improvement of $3.0 
million over the same period in 1997.  This improvement came about by the 
elimination of $2.7 million in write offs taken during the second quarter of 
1997, and the higher level of production that resulted from better weather 
conditions during the second quarter of 1998 as compared with 1997.  In 
conjunction with the higher sales levels and some reduction in expenses in 
the U.S., Canadian, and Mexican distribution companies, the gross profit of 
these companies increased by $3.8 million during the first six months of 1998 
as compared to the same period of 1997.  The divestiture of RVN resulted in 
a reduction of gross profit between the first six months of 1997 and 1998 of 
$1.8 million.  The Company's gross profit also benefited by the $1.0 million 
increase in royalties at DNAP during the first six months of 1998 as compared 
with the same period in 1997.

     Selling and administrative expenses remained flat at $12.0 million for 
the first six months of 1997 and 1998. The reduction in selling and 
administrative expenses of $1.2 million associated with the divestiture of 
RVN during the first six months of 1998 was offset by an increase in 
corporate overhead expenses of $1.2 million during the same period.
     
     Research and development expenses increased from $2.4 million during the 
first six months of 1997 to $2.8 million for the same period of 1998, which 
was due to the increased level of activity at DNAP.

     The non-cash charge for amortization of goodwill, patents and trademarks 
was $1.5 million for the first six months of 1998, emanating from the 
goodwill and patents relating to the DNAP merger, and the purchase of the 
IPHC and ABSA minority interest.
     
     Interest expense increased by $0.9 million during the first six months 
of 1998 as compared with the same period of 1997 due to the increase in the 
average level of debt outstanding.
     
     During the first six months of 1998, DNAP Holding experienced a net 
foreign exchange loss of $1.0 million as compared to a gain of $0.5 million 
in the same quarter of 1997.  This entire exchange loss occurred in the 
second quarter of 1998 in conjunction with the volatility of the 
international currency markets. As a consequence, an exchange loss was 
experienced by ABSA, whose functional currency is the U.S. dollar, due to its 
net peso monetary position.

                                       -7-

<PAGE>

     The Company recorded an income tax expense of $0.2 million for the first 
six months of 1998 as compared with an expense of $0.6 million for the same 
period in 1997.  This variance was attributable to the lower earnings of the 
Mexican subsidiaries and the elimination of the R.B. Packing companies' tax 
liability (R.B. Packing, Inc., R.B. Packing of California, Inc., and R.B. 
Packing of Texas, Inc.) due to their consolidation for tax purposes into DNAP 
Holding beginning in the fourth quarter of 1997, following the Company's 
acquisition of the minority interests in IPHC.

     During the first six months of 1998, the share of losses allocable to 
minority interests was $0.8 million as compared with $2.0 million for the same
period in 1997.  The 1998 and 1997 allocations of losses are consistent with 
the minority positions held across the operating subsidiaries of the Company 
and were affected significantly by the increase in the Company's interest in 
ABSA and IPHC and the divestiture of its entire interest in RVN. 

CAPITAL EXPENDITURES

     During the first six months of 1998, the Company made capital 
investments of $1.9 million in property, plant and equipment.  The majority 
of the funds were spent on two investment projects at ABSA  --  the 
installation of new irrigation systems on agricultural land owned by the ABSA 
and additional cooling room capacity required for product quality.

LIQUIDITY AND CAPITAL RESOURCES

     For the six  months ended June 30, 1998, the Company used $5.1 million 
in cash in operating activities.  Cash used in the results of operations 
amounted to $3.6 million (i.e., net income, minority interest, depreciation, 
amortization, deferred income taxes, and gain from sale of property, plant, 
and equipment).  Working capital requirements increased by $1.6 million 
during the first six months of 1998.  Accounts receivable and advances to 
growers increased by $8.3 million in the first six months of 1998 as $7.2 
million of financing was provided to joint ventures with growers for the 
1998-1999 growing season and customer receivables increased by $1.1 million, 
which was consistent with the sales of the distribution companies during the 
last two months of the second quarter.  Inventories and accounts payable 
declined by $9.7 million and $2.8 million, respectively, as the harvest 
season in Culiacan and Baja California Sur in Mexico came to an end.

     In addition to the $1.9 million invested in purchases of property, plant 
and equipment, cash flows used in investing activities reflected $0.9 million 
of cash received on the divestiture of RVN during the first quarter of 1998, 
reduced by the 1997 year-end cash balance of $0.3 million in the accounts of 
RVN; and an earn-out payment made to the minority owners of Interfruver 
associated with that company's performance in 1997.

     Cash generated from financing activities during the first six months of 
1998 was $7.7 million.  ELM financed the retirement of certain bank debt and 
certain requirements of ABSA's joint ventures for the 1998-99 growing season.
     
     The Company recently received an investment proposal from Bionova 
International, Inc., a subsidiary of Bionova Mexico, its controlling 
stockholder, to invest up to $50 million in DNAP Holding.  The cash 
contributed by Bionova International, Inc. would be used to retire a portion 
of the Company's debt, including amounts owed to ELM and/or other creditors.  
In conjunction with this proposed capitalization, the Company has entered 
into discussions with financial institutions to obtain as much as $100 
million in long-term debt and credit lines which will enable it to 
restructure the balance of its debt.  The Company is continuing to receive 
short-term financial support from ELM in anticipation of completing these 
transactions.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
     
     This report on Form 10-Q includes "forward-looking" statements within 
the meaning of Section 27A of the Securities Act of 1933, as amended, and 
Section 21E of the Securities Exchange Act of 1934, as amended.  All 
statements other than statements of historical facts included in this Form 
10-Q, including without limitation statements contained in this "Management's 
Discussion and Analysis of Financial Condition and Results of Operations" 
regarding the Company's financial position, business strategy,  prospects, 
plans and objectives of management of the Company for future operations, and 
industry conditions, are forward-looking statements.  Although the Company 
believes that the expectations reflected in such forward-looking statements 
are reasonable, it can give no assurance that such expectations 

                                       -8-
<PAGE>

will prove to be correct. In addition to important factors described 
elsewhere in this report, the following significant factors, among others, 
sometimes have affected, and in the future could affect, the Company's actual 
results and could cause such results during 1998, and beyond, to differ 
materially from those expressed in any forward-looking statements made by or 
on behalf of the Company:

     MANAGEMENT INFORMATION SYSTEMS AND CONTROLS.  The Company's business has 
undergone rapid growth. As a result of this rapid growth, significant strains 
have been placed on the management, operations and financial resources of the 
Company's subsidiaries.  The realization of the business strategy for the 
Company and its subsidiaries will be dependent upon, among other things, the 
ability of the Company to adapt management information systems and controls 
and to hire, train and retain qualified employees to allow the operations 
thereof to be effectively managed.  The geographic separation of the 
operations of the Company's subsidiaries exacerbates these issues.

     HISTORICAL LOSSES AND ACCUMULATED DEFICITS.  DNAP Holding sustained 
losses in 1996, 1997. and the first six months of 1998.  There is no 
assurance that some of the factors that caused these historical losses will 
not be present in future periods or that the Company will be profitable in 
the future.

     POSSIBLE NEED FOR ADDITIONAL FINANCING. The projected cash flows from 
operations and existing capital resources of the Company, including existing 
credit lines, may not be sufficient to permit the Company to pursue proposed 
business strategies to acquire additional producers, distributors, marketers 
and additional rights to technologies.  Therefore, the ability to pursue such 
acquisitions may be dependent upon the Company's ability to obtain additional 
capital, which could result in the incurrence of additional debt or 
potentially dilutive issuances of additional equity securities.  There can be 
no assurance that the Company will be successful in obtaining such capital 
and, as a result, may be restricted in its pursuit of its future growth and 
acquisition strategies.

     RISKS ASSOCIATED WITH OWNERSHIP OF RURAL LAND IN MEXICO.  ABSA owns a 
substantial amount of rural land in Mexico.  Historically, the ownership of 
rural land in Mexico has been subject to legal limitations and claims by 
residents of rural communities, which in some cases could lead to the owner 
being forced to surrender such land.  Though ABSA is in compliance with all 
applicable legal limitations, ABSA has been, and continues to be, involved in 
such proceedings as part of its ordinary course of business.  ABSA has not 
lost any land as a result of such proceedings.

     GOVERNMENTAL AND ECONOMIC RISKS ASSOCIATED WITH FOREIGN OPERATIONS. 
Nearly all of the growing and approximately 25% of the Company's sales occur 
in Mexico. Nearly 7% of the Company's sales occurs in Canada.  Foreign 
operations such as those conducted by the Company, especially in countries 
with volatile economies, are subject to political and economic risks, 
including political instability, currency controls, currency devaluations, 
exchange rate fluctuations, increased credit risks, inflation, foreign tax 
laws, changes in import/export or other regulations and tariff and freight 
rates. Political and other factors beyond the Company's control, including 
without limitation those factors discussed below, could have a materially 
adverse effect on the Company's operations.

     CURRENCY FLUCTUATIONS AND INFLATION.  The currency exchange rates in 
Mexico have historically been volatile.  For example, in December 1994, the 
Mexican government announced its intention to float the Mexican peso against 
the United States dollar and, as a result, the peso devalued over 40% 
relative to the dollar during that month.  Such exchange rate fluctuations 
impact the business of the Company's subsidiaries. If the value of the peso 
decreases relative to the value of the dollar, then (i) imports of produce 
into Mexico for distribution by the Company's subsidiaries become more 
expensive in peso terms and therefore more difficult to sell in the Mexican 
market and (ii) inflation that generally accompanies reductions in the value 
of the peso reduces the purchasing power of Mexican consumers, which reduces 
the demand for all products including produce and, in particular, imported, 
branded or other premium-quality produce.  Conversely, if the value of the 
peso increases relative to the value of the dollar, Mexican production costs 
increase in dollar terms, which results in lower margins or higher prices 
with respect to produce grown in Mexico and sold in the United States and 
Canada.

     INTEREST RATES.  Historically, interest rates in Mexico have been 
volatile, particularly in times of economic unrest and uncertainty.  High 
interest rates restrict the availability and raise the cost of capital for 
the Company's subsidiaries that are Mexican companies and for growers and 
other Mexican parties with whom they do business, both for borrowings 
denominated in pesos and for borrowings denominated in dollars.  Costs of 
operations for these Mexican entities are higher as a result.

                                       -9-

<PAGE>

     TRADE SANCTIONS.  Notwithstanding the enactment of the North American 
Free Trade Agreement, Mexico and the United States from time to time are 
involved in trade disputes.  On occasion, the United States has imposed 
tariffs, quotas, and importation bans on products produced in Mexico.  Such 
actions, if taken, could subject the Company to an additional financial 
burden, some or all of which may not be able to be passed on to consumers.

     AGRIBUSINESS RISKS.  A variety of risks are inherent in the agribusiness 
industry, including, without limitation, the following:

     SUPPLY AND DEMAND.  The fresh produce business is particularly sensitive 
to fluctuations in supply and demand.  When the supply of produce in the 
market exceeds the demand for such products, the market price for fresh 
produce may be driven down significantly, in some instances below the cost of 
harvesting and packing.  In such situations it may be uneconomical to harvest 
a crop, resulting in a total loss of the costs incurred in growing such crop. 
Even when market prices are sufficient to permit recovery of direct 
harvesting and packing costs, prices may not be high enough to permit 
recovery of growing costs and/or overhead and other indirect costs. In 
addition, oversupply can affect the prices obtained for premium quality 
produce.  Oversupply can result from, among other reasons, an increase in the 
number of growers, an increase in the acreage allocated by growers to a 
particular crop, unusually favorable growing conditions or increased supply 
from foreign competitors (which could be caused by a variety of economic and 
climatic factors in such competitors' home countries).

     LIMITED BARRIERS TO ENTRY.  The relatively low capital requirements for 
farming and produce distribution permit relatively easy entrance into the 
fresh produce business, which in turn can result in oversupply.

     WEATHER.  Weather conditions greatly affect the amount of fresh produce 
that is brought to market, and, accordingly, the prices received for such 
produce.  Storms, frosts, droughts, and particularly floods, can destroy a 
crop and less severe weather conditions, such as excess precipitation, cold 
weather and heat, can kill or damage significant portions of a crop, 
rendering much of it unpackable and unsalable.  Conversely, unusually 
favorable weather conditions can result in oversupply that drives down the 
prices realized by producers, including ABSA.

     CROP DISEASE AND PESTILENCE.  Crop disease and pestilence can be 
unpredictable and can have a devastating effect on crops, rendering them 
unsalable and resulting in the loss of all or a portion of the crop for that 
harvest season.  Even when only a portion of the crop is damaged, the profits 
a grower could have made on the crop will be severely affected because the 
costs to plant and cultivate the entire crop will have been incurred although 
only a portion of it can be sold.

     LABOR SHORTAGES AND UNION ACTIVITY.  The production of fresh produce is 
heavily dependent upon the availability of a large labor force to harvest 
crops. The turnover rate among the labor force is high due to the strenuous 
work, long hours, necessary relocation and relatively low pay.  To the extent 
it becomes necessary to pay more to attract labor to farm work, labor costs 
can be expected to increase.

     The Mexican farm work force retained by ABSA is unionized.  If the union 
attempted to disrupt production and were successful on a large scale, labor 
costs would likely increase and there could be work stoppages, which would be 
particularly damaging in an industry where harvesting crops at peak times and 
getting them to market on a timely basis is critical.

     The majority of fresh produce is shipped by truck.  In Mexico, truck 
deliveries are sometimes less reliable than in the United States due to, 
among other factors, the unreliability of some Mexican trucking companies and 
drivers to make deliveries on schedule, poorer quality and maintenance of the 
trucks used by Mexican trucking companies and poor road conditions in some 
areas.  In the United States and in Mexico, the trucking industry is largely 
unionized and therefore susceptible to labor disturbances.  Delivery delays 
caused by labor disturbances in the trucking industry or any other reason 
limit the ability to get fresh produce to market before it spoils.

     AVAILABILITY OF SUPPLY.  ABSA relies on agricultural land leased from 
others and production associations with other growers for a large part of its 
supply.  If the other parties to these leases and other arrangements were to 
choose not to renew their agreements with ABSA, ABSA would be required to 
locate alternate sources of supply and/or land or, in some cases, to pay 
increased rents for land.  In addition to increased rental rates, increases 
in land costs could result from increases in water charges, property taxes 
and related expenses.

                                       -10-

<PAGE>

     DEPENDENCE ON ONE SUPPLIER.  One grower in Baja California, Santa Cruz 
Empacadora, S. de R.L. de C.V., accounted in 1997 for approximately 11% of 
the consolidated sales of the Company's subsidiaries.  ABSA has entered into 
one-year production association agreements with this grower for each of the 
past two years and expects to continue to do so, but there can be no 
assurance that the grower will continue to be willing to enter into such 
agreements with ABSA on terms satisfactory to ABSA.

     GOVERNMENTAL REGULATION.  The U.S. activities of the Company's 
subsidiaries are subject to extensive regulation by the Food and Drug 
Administration, the United States Department of Agriculture, the 
Environmental Protection Agency, and other federal and state regulatory 
agencies in the United States. Similarly, the Mexican activities of the 
Company's subsidiaries are subject to extensive regulation by the Secretaria 
de Agricultura, Ganaderia y Desarrollo Rural, the Secretaria de Salud, and 
other federal and state regulatory agencies in Mexico.  Also, certain of the 
Company's products may require regulatory approval or notification in the 
United States or in other countries in which they are tested, used or sold.  
The regulatory process may delay research, development, production, or 
marketing and require more costly and time-consuming procedures, and there 
can be no assurance that requisite regulatory approvals or registration of 
certain of its current or future genetically engineered products will be 
granted on a timely basis.

     PRODUCT LIABILITY.  Certain of the products being marketed and developed 
by the Company entail a risk of product liability.  While the Company has 
taken what it believes are adequate precautions, there can be no assurance 
that it will avoid significant product liability exposure.

     NUMEROUS COMPETITORS.  The fresh produce industry in general, and the 
tomato industry in particular, are characterized by a large number of 
competitors at both the production and distribution levels.  In the past some 
of these competitors have sought to limit the importation of Mexican-grown 
tomatoes and peppers into the United States.  DNAP is one of many companies 
engaged in research and product development activities based on agricultural 
biotechnology. Competitors include specialized biotechnology firms, as well 
as major pharmaceutical, food and chemical companies, many of which have 
substantial financial, technical and marketing resources.

     MARKETING OF PREMIUM QUALITY PRODUCE.  The Company's subsidiaries are 
currently producing and distributing premium quality fresh fruits and 
vegetables.  The success of these and future products depends on many 
variables, including the ability to produce and make available to the market 
consistent, premium quality fruits and vegetables on a year-round basis, 
consumers' willingness to pay higher prices for premium quality fruits and 
vegetables, and retailers' willingness to carry such fruits and vegetables.

     NO ASSURANCE OF COMMERCIAL SUCCESS OF PRODUCTS BEING DEVELOPED AND 
MARKETED.  Marketing of several products currently developed by DNAP is in 
the early stages, and there can be no assurance that any of these products 
will be successful or will produce significant revenues or profits.  In 
addition, a number of DNAP's product development projects are in the early 
stages, and there can be no assurance that these projects will be successful 
or that any resulting products will be commercially successful or profitable. 
In particular, although DNAP has produced and sold a limited amount of its 
products, there can be no assurance that it will be able to produce or market 
such products on a larger scale.

     NO ASSURANCE OF PUBLIC ACCEPTANCE OF GENETICALLY ENGINEERED PRODUCTS. 
DNAP's second generation products are being developed through the use of 
genetic engineering.  The commercial success of these products will depend in 
part on public acceptance of the cultivation and consumption of genetically 
engineered products.  There can be no assurance that such products will gain 
sufficient public acceptance to be profitable, even if such products obtain 
the required regulatory approvals.

     POSSIBLE DEVELOPMENT OF SUPERIOR TECHNOLOGY BY COMPETITORS.  The 
application of recombinant DNA and related technologies to plants is complex 
and subject to rapid change.  A number of companies are engaged in research 
related to plant biotechnology, including companies that rely on the use of 
recombinant DNA as a principal scientific strategy and companies that rely on 
other technologies.  Technological advances by others could render the 
Company's products less competitive.  Some of these companies, as well as 
competitors that supply non-genetically-engineered products, have substantial 
resources.

     PROPRIETARY PROTECTION.  The Company's success will depend, in part, on 
its ability to obtain patents, maintain trade secret protection, and conduct 
its business without infringing the proprietary rights of others.  There can 
be no assurance that others will not develop competing technologies and 
market competing products or that DNAP will 

                                       -11-

<PAGE>

be able to enforce the patents which it currently possesses or will be able 
otherwise to obtain or enforce any patents for which it has filed an 
application. DNAP also relies upon unpatented proprietary and trade secret 
technology.

     All subsequent written and oral forward-looking statements attributable 
to the Company or persons acting on its behalf are expressly qualified in 
their entirety by the cautionary statements disclosed in this section and 
otherwise in this report.

                            PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     As described in the Company's Form 10-Q for the quarter ended March 31, 
1998, DNA Plant Technology Corporation, a wholly-owned subsidiary of the 
Company ("DNAP"), was named as a defendant in a lawsuit brought by U.A. Local 
No. 467 Health and Welfare Trust Fund in the Superior Court of the State of 
California, County of San Mateo.  Since March 31, 1998, DNAP has been named 
as a defendant in twenty-two additional cases brought on behalf of union 
trust funds in the California state courts.  All of these cases have been 
brought against numerous defendants including DNAP and various manufacturers 
and distributors of tobacco products.  In each of the cases, the plaintiff 
alleges that the defendants engaged in improper business and advertising 
practices, committed fraud and deceit, made negligent misrepresentations, and 
violated California's anti-trust laws in the course of manufacturing, 
marketing, and distributing cigarettes. DNAP's involvement in these suits 
arises from allegations regarding research it performed for a major tobacco 
company from 1983 through 1994.  The plaintiffs are seeking economic damages 
and injunctive relief.  DNAP denies any wrongdoing or liability in these 
cases and intends to vigorously contest these lawsuits.

     On May 19, 1998, Patricia Henley filed a lawsuit in the Superior Court 
of the State of California, County of San Francisco, against six tobacco 
companies and certain other defendants, including DNAP.  In this lawsuit, the 
plaintiff alleges that the defendants engaged in improper business and 
advertising practices, committed fraud and deceit, and made negligent 
misrepresentations in the course of manufacturing, marketing, and 
distributing cigarettes.  DNAP's involvement in this suit arises from 
allegations regarding research it performed for a major tobacco company from 
1983 through 1994.  The plaintiff is seeking economic damages and injunctive 
relief.  On June 22, 1998, DNAP filed a demurrer (a motion to dismiss all of 
the claims against it) and on July 22 the court sustained the demurrer, but 
gave the plaintiff leave to amend her complaint. DNAP denies any wrongdoing 
or liability in this matter and intends to vigorously contest this lawsuit.

ITEM 5.  OTHER INFORMATION

CAPITALIZATION PROPOSAL

On July 16, 1998, the Company received a capitalization proposal from its 
controlling stockholder, Bionova International, Inc.  Bionova International 
is an indirect wholly-owned subsidiary of Empresas La Moderna, S.A. de C.V. 
("ELM").  The Company has appointed a committee of independent directors to 
review and evaluate Bionova International's proposal.  The committee has 
retained Piper Jaffray Inc. as its financial advisors and Proskauer Rose as 
its legal counsel.

In the proposal, Bionova International offers to invest up to $50 million in 
the Company in exchange for 3,800,000 shares of common stock and shares of 
preferred stock convertible into an additional 6,200,000 shares of common 
stock, subject to certain conditions.  Assuming all of the preferred shares 
are converted into common shares, the price Bionova International is paying 
for the common stock is $5.00 per share.  If the capitalization is 
consummated on these terms, Bionova International's ownership interest in the 
Company would increase from 70% to 80.6% (assuming conversion of its 
preferred stock).  The cash contributed by Bionova International would be 
used by the Company to retire a portion of the Company's debt, including 
amounts owed to ELM and/or other creditors, and to provide funds for 
operations and future acquisitions.

Consummation of the proposed capitalization also would enable the Company to 
come back into compliance with the criteria for continued listing of its 
shares on the Nasdaq National Market.  Earlier this year, the Company was 
advised by 

                                       -12-

<PAGE>

the Nasdaq Stock Market, Inc. it had fallen out of compliance with such 
criteria and that its shares could be delisted from the Nasdaq National 
Market unless it corrected its deficiency.

CONTROLLING STOCKHOLDER; CONFLICTS OF INTEREST

     Approximately 70% of the outstanding shares of common stock of the 
Company are owned of record by Bionova International, Inc., an indirect, 
wholly-owned subsidiary of ELM.  Pursuant to a Governance Agreement dated as 
of September 26, 1996, between ELM and the Company, ELM (together with its 
affiliates) may acquire additional shares of common stock of the Company so 
long as their aggregate beneficial ownership of the Company's common stock 
does not exceed 80.1%, subject to applicable law. Also, pursuant to the 
Governance Agreement, ELM has the power to elect a majority of the Company's 
board of directors and to determine the outcome of any action requiring the 
approval of the holders of the Company's common stock. This ownership and 
management structure will inhibit the taking of any action by the Company 
which is not acceptable to the controlling stockholder.

     Certain of the Company's directors and executive officers are also 
currently serving as board members or executive officers of ELM or companies 
related to ELM, and it is expected that each will continue to do so. Such 
management interrelationships and intercorporate relationships may lead to 
possible conflicts of interest.

     The Company and other entities that may be deemed to be controlled by or 
affiliated with ELM sometimes engage in (i) intercorporate transactions such 
as guarantees, management and expense sharing arrangements, shared fee 
arrangements, joint ventures, partnerships, loans, options, advances of funds 
on open account and sales, leases and exchanges of assets, including 
securities issued by both related and unrelated parties and (ii) common 
investment and acquisition strategies, business combinations, 
reorganizations, recapitalizations, securities repurchases and purchases and 
sales (and other acquisitions and dispositions) of subsidiaries, divisions or 
other business units, which transactions have involved both related and 
unrelated parties. The Company continuously considers, reviews and evaluates, 
and understands that ELM and related entities consider, review and evaluate, 
transactions of the type described above. Depending upon the business, tax 
and other objectives then relevant, it is possible that the Company might be 
a party to one or more of such transactions in the future in addition to 
those currently in force, such as the Long Term Funded Research Agreement 
dated September 26, 1996 between ELM and DNAP. In connection with these 
activities the Company might consider issuing additional equity securities or 
incurring additional indebtedness.  The Company's acquisition activities may 
in the future include participation in the acquisition or restructuring 
activities conducted by other companies that may be deemed to be controlled 
by ELM.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits
<TABLE>
    <S>    <C>
     3.1*  Certificate of Incorporation of the Company

     3.2** Certificate of Amendment to the Certificate of Incorporation of the
           Company

     3.3*  Bylaws of the Company

    27.1   Financial Data Schedule
</TABLE>
----------

*    Filed as an exhibit to the Company's Registration Statement on Form
     S-4 (No. 333-09975) and incorporated herein by reference.

**   Filed as an exhibit to the Company's quarterly report on Form 10-Q for
     the quarterly period ended June 30, 1996 and incorporated herein by
     reference.

(b)  Reports on Form 8-K

     None

                                       -13-

<PAGE>

                                     SIGNATURES

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

                                      DNAP HOLDING CORPORATION


          Date:  August 12, 1998      By:          /s/ ARTHUR H. FINNEL
                                          -------------------------------------
                                                    Arthur H. Finnel,
                                                Executive Vice President,
                                          Treasurer and Chief Financial Officer

                                       -14-

<PAGE>


                                 INDEX TO EXHIBITS
<TABLE>
            <S>   <C>
            3.1*  Certificate of Incorporation of the Company

            3.2** Certificate of Amendment to the Certificate of Incorporation
                  of the Company

            3.3*  Bylaws of the Company

            27.1  Financial Data Schedule
</TABLE>
            ----------

            *    Filed as an exhibit to the Company's Registration Statement on
                 Form S-4 (No. 333-09975) and incorporated herein by reference.

            **  Filed as an exhibit to the Company's quarterly report on Form
                10-Q for the quarterly period ended June 30, 1996 and
                incorporated herein by reference.


                                       -15-