<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 March 31, 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 May 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>
                                                       March 31,     December 31,
                                                         1998            1997
                                                     -----------     ------------
                                                     (unaudited)
 <S>                                                 <C>             <C>
 ASSETS
 Current assets:
 Cash and cash equivalents.......................     $  5,642        $  6,600 
 Accounts receivable.............................       27,548          32,777 
 Advances to growers.............................        7,321           5,311 
 Inventories.....................................       12,854          17,779 
 Other current assets............................          367             618 
                                                      --------        --------
      Total current assets.......................       53,732          63,085 
                                                      --------        --------
 Property, plant and equipment, net..............       33,416          36,520 
 Patents and trademarks, net.....................       12,950          13,258 
 Goodwill, net...................................       30,367          30,792 
 Deferred income taxes...........................        3,279           3,279 
 Other assets....................................          781             315 
                                                      --------        --------
      Total assets...............................     $134,525        $147,249 
                                                      --------        --------
                                                      --------        --------
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
 Short-term bank loans...........................     $ 46,030        $ 51,217 
 Current portion of long-term debt...............        2,399           2,588 
 Accounts payable and accrued expenses...........       21,482          28,915 
 Accounts due to related parties.................       25,444          21,949 
 Deferred income taxes...........................        4,739           4,715 
                                                      --------        --------
      Total current liabilities..................      100,094         109,384 
                                                      --------        --------
 Long-term debt..................................        5,750           7,215 
                                                      --------        --------
      Total liabilities..........................      105,844         116,599 
                                                      --------        --------
 Minority interest...............................        1,027           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                  184             184 
 outstanding.....................................
 Additional paid-in capital......................       78,720          78,720 
 Accumulated deficit.............................      (50,940)        (50,240)
 Cumulative translation adjustment...............         (310)           (308)
                                                      --------        --------
 Total stockholders' equity......................       27,654          28,356
                                                      --------        --------
 Total liabilities and stockholders' equity......     $134,525        $147,249
                                                      --------        --------
                                                      --------        --------
</TABLE>

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


                                         -2-

<PAGE>

                              DNAP HOLDING CORPORATION

                   UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                             THOUSANDS OF U.S. DOLLARS
                             (EXCEPT PER SHARE AMOUNTS)

<TABLE>
                                                          Three Months Ended
                                                               March 31,
                                                      ------------------------
                                                         1998            1997
                                                      --------        --------
 <S>                                                  <C>             <C>
 Total revenues..................................     $ 70,483        $ 77,123 
                                                      --------        --------
 Cost of sales...................................      (61,943)        (67,662)
 Selling and administrative expenses.............       (5,170)         (5,578)
 Research and development expenses...............       (1,371)         (1,268)
 Amortization of goodwill, patents and
  trademarks.....................................         (732)           (895)
                                                      --------        --------
                                                       (69,216)        (75,403)
                                                      --------        --------

 Operating income (loss).........................        1,267           1,720 
                                                      --------        --------

 Interest expense................................       (1,750)         (1,108)
 Interest income.................................          189             215
 Exchange gain (loss), net.......................          186             121 
 Other non-operating income......................           --             810 
                                                      --------        --------
                                                        (1,375)             38
                                                      --------        --------

 Income (loss) before income tax.................         (108)          1,758 

 Income tax benefit (expense)....................         (279)         (1,009)
                                                      --------        --------

 Net income (loss) before minority interest......         (387)            749 

 Minority interest in net loss (income) of
  subsidiaries...................................         (313)         (1,845) 
                                                      --------        --------

 Net income (loss)...............................     $   (700)       $ (1,096)
                                                      --------        --------
                                                      --------        --------

 Net income (loss) per share - basic and
  diluted........................................     $  (0.04)       $  (0.06)
                                                      --------        --------
                                                      --------        --------
</TABLE>

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


                                     -3-

<PAGE>

                          DNAP HOLDING CORPORATION

               UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                         THOUSANDS OF U.S. DOLLARS

<TABLE>
                                                           Three Months Ended
                                                                March 31,
                                                        ------------------------
                                                          1998            1997
                                                        --------      ----------
<S>                                                     <C>           <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
 Net income (loss)...............................      $  (700)        $(1,096)
 Items not affecting cash:
   Minority interest.............................          313           1,845 
   Depreciation..................................          858             770 
   Amortization of goodwill, patents and
    trademarks...................................          732             588 
   Deferred income taxes.........................           24             459 
   Gain from sale of property, plant and
    equipment....................................           --            (324) 
   Net changes (exclusive of subsidiaries acquired
    or divested) in:
     Accounts receivable and advances to growers,
      net........................................       (3,077)         (8,157)
     Inventories.................................        4,682           7,453 
     Accounts payable and accrued expenses.......       (2,488)             (2)
     Other assets................................         (224)           (632)
                                                       -------         -------
 NET CASH PROVIDED BY (USED IN) OPERATING
 ACTIVITIES                                                120             904 
                                                       -------         -------
 CASH FLOWS FROM INVESTING ACTIVITIES
 Purchases of property, plant and equipment......       (1,318)         (1,555)
 Proceeds from sale of property, plant and
  equipment......................................           --             906 
 Proceeds from divestiture of Van Namen, 
  net of divested cash...........................          637              -- 
                                                       -------         -------
 NET CASH PROVIDED BY (USED IN) INVESTING
 ACTIVITIES                                               (681)           (649)
                                                       -------         -------
 CASH FLOWS FROM FINANCING ACTIVITIES
 Net change in short-term borrowings.............       (3,857)            422
 Repayments of long-term debt....................          (34)           (209)
 Accounts due to related parties.................        3,494          (2,834)
                                                       -------         -------
 NET CASH PROVIDED BY (USED IN) FINANCING
 ACTIVITIES                                               (397)         (2,621)
                                                       -------         -------
 Net increase (decrease) in cash and cash
  equivalents....................................         (958)         (2,366)
 Cash at beginning of period.....................        6,600          10,735 
                                                       -------         -------
 Cash at end of period...........................     $  5,642        $  8,369 
                                                       -------         -------
                                                       -------         -------
</TABLE>

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


                                      -4-

<PAGE>

                           DNAP HOLDING CORPORATION
                                       
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                MARCH 31, 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 Corporation, 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 first 
quarters of 1997 and 1998 was 18,370,640.

NOTE 3 - INVENTORIES

Inventories consist of the following:

<TABLE>
                                                     March 31,      December 31,
                                                        1998            1997
                                                     ---------      ------------
<S>                                                  <C>            <C>
      Finished produce...........................       $2,833        $ 1,815
      Growing crops..............................        4,137          9,974
      Advances to suppliers......................          358            316
      Spare parts and materials..................        4,808          4,821
      Merchandise in transit and other...........          781            980
                                                       -------        -------
                                                        12,917         17,906
      Allowance for slow moving inventories......          (63)          (127)
                                                       -------        -------
                                                       $12,854        $17,779
                                                       -------        -------
                                                       -------        -------
</TABLE>

NOTE 4 - CASH FLOWS

Cash flows for the first quarter 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 - REPORTING OF COMPREHENSIVE INCOME

Per Financial Accounting Standard No. 130, "Reporting Comprehensive Income," 
DNAP Holding's Comprehensive Income for the first quarters of 1997 and 1998 
was as follows:

<TABLE>
                                                         1998       1997
                                                        ------    --------
     <S>                                                <C>       <C>
     Net income (loss)............................      $(700)    $(1,096)
     Foreign currency translation adjustments.....         (2)         30
                                                        -----     -------
     Comprehensive income (loss)..................      $(702)    $(1,066)
                                                        -----     -------
                                                        -----     -------
</TABLE>

NOTE 6 - 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% 


                                      -5-
<PAGE>

("VPP").   The Company acquired majority interests in ABSA and IPHC on July 1,
1996, by means of a capital 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 MARCH 31, 1998 COMPARED TO THE THREE MONTHS ENDED MARCH 
31, 1997 

     Revenues decreased from $77.1 million in the first quarter of 1997 to 
$70.5 million in the first quarter of 1998. Contributing most significantly 
to these changes were a $3.2 million increase in the sales of Interfruver and 
a decrease of $11.6 million in revenues from Royal Van Namen ("RVN"), which 
was divested during this first quarter of 1998.  Interfruver's sales were up 
by 21% in the first quarter of 1998 versus the same quarter in 1997 due to 
higher volumes and selling prices.  Canadian sales were up significantly, but 
U.S. sales were down almost 10% due to product availability shortages caused 
by weather-related effects on farm outputs both in Mexico and Florida and 
lower prices.  ABSA's revenues, most of which were intercompany sales and 
eliminated in consolidation, were down 18% to $26.6 million in the first 
quarter of 1998 as compared with the $32.5 million for the same quarter in 
1997.  The decrease in ABSA's revenues was attributable to an 8% decline in 
production and the lower selling prices that prevailed in the U.S. markets 
during the last weeks of the quarter.

     Gross profit (sales less cost of sales) decreased from $9.4 million in 
the first quarter of 1997 to $8.5 million in the first quarter of 1998.  This 
decrease resulted from the exclusion of RVN ($1.0 million) and lower gross 
profit at ABSA ($0.6 million), partially offset by higher gross profit in the 
Mexican, United States, and Canadian distribution businesses ($0.4 million), 
and DNAP's ($0.3 million) increase in royalties.  ABSA's decline in gross 
profit was due primarily to additional costs incurred to minimize the 
weather-related effects of "El Nino" on harvest yields, and in turn caused 
cost of sales as a percentage of sales to increase from 88.6% in the first 
quarter of 1997 to 94.1% in the first quarter of 1998.

     Selling and administrative expenses decreased from $5.6 million in the 
first quarter of 1997 to $5.2 million in the first quarter of 1998.  This 
decrease was primarily associated with divestiture of RVN during the first 
quarter of 1998.

     The non-cash charge for amortization of goodwill, patents and trademarks 
was $0.7 million in 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 $0.7 million in the first quarter of 1998 
as compared with the same quarter of 1997 due to the increase in the average 
level of debt outstanding.

     Other non-operating income in the first quarter of 1997 included a gain 
on the sale of property, plant and equipment of $0.3 million and a subsidy of 
$0.4 million received in connection with a special incentive program 
sponsored by various Mexican government and banking institutions for 
companies in the agriculture, fishing and forestry industries.  This special 
incentive program was eliminated later in 1997.

                                      -6-
<PAGE>

     The Company recorded an income tax expense of $0.3 million in the first 
quarter of 1998 as compared with an expense of $1.0 million for the same 
quarter in 1997.  This change was attributable to the lower earnings of ABSA 
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 quarter of 1998, the share of profits allocable to 
minority interests was $0.3 million as compared with $1.8 million in 1997.  
The 1998 and 1997 allocations of profits 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 quarter of 1998, the Company made capital investments 
of $1.3 million in property, plant and equipment.  The majority of the funds 
were spent on investment projects for ABSA to install new irrigation systems 
on agricultural land owned by the Company.

LIQUIDITY AND CAPITAL RESOURCES

     For the three months ended March 31, 1998, the Company generated $0.1 
million in cash from operating activities.  Cash generated from the results 
of operations amounted to $1.2 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 
$1.1 million during the first quarter of 1998.  Accounts receivable and 
advances to growers increased by $3.1 million in the first quarter of 1998 
due to $2.0 million of financing provided to joint ventures with growers for 
the 1998-1999 growing season, and an increase in customer receivables of $1.1 
million, which was consistent with the sales of the distribution companies at 
the end of the first quarter.  Inventories and accounts payable declined by 
$4.7 million and $2.5 million, respectively, as the harvesting season in 
Culiacan, Mexico approached its normal seasonal end.

     In addition to the $1.3 million spent on purchases of property, plant 
and equipment, cash flows from investing activities reflected $0.9 million of 
cash received on the divestiture of RUN during the first quarter of 1998, 
reduced by the 1997 year-end cash balance of $0.3 million in the accounts of 
RUN.

     Cash used in financing activities during the first quarter of 1998 was 
$0.4 million, which reflected the financing of interest expense incurred 
during this quarter.

     The Company is continuing the process initiated in the fourth quarter of 
1997 of evaluating its short- and medium-term financial requirements, and is 
considering a variety of approaches to reduce its heavy level of debt and 
improve its equity position.  The Company continues to receive short-term 
financial support from ELM.

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-K, 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 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 

                                      -7-
<PAGE>

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 and 1997.  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.

     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:

                                      -8-
<PAGE>

     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.

     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.

                                      -9-
<PAGE>

     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 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.

                                     -10-
<PAGE>

                         PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     In a complaint filed on March 31, 1998, in the Superior Court of the 
State of California, County of San Mateo, U.A. Local No. 467 Health and 
Welfare Trust Fund sued numerous defendants including the Company and various 
manufacturers and distributors of tobacco products.  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. The Company's involvement in the 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.  The Company denies any wrongdoing or liability in this matter and 
intends to vigorously contest this lawsuit.

ITEM 5.  OTHER INFORMATION

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

     3.1*  Certificate of Incorporation of the Company

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

                                      -11-
<PAGE>

     3.3*  Bylaws of the Company

     27.1  Financial Data Schedule

     ----------

     *    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 









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









                                     -13-
<PAGE>

                               INDEX TO EXHIBITS

            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

            ----------

            *     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.










                                     -14-