<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, 1997

                                       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                      Identification No.)
             organization)

         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, 1997, 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>
<CAPTION>
                                                               June 30,     December 31,
                                                                 1997          1996
                                                             -----------    -----------
                                                             (unaudited)
<S>                                                           <C>           <C>
ASSETS
Current assets:
Cash and cash equivalents                                     $   5,812     $  10,735
Accounts receivable                                              30,054        30,941
Advances to growers                                               8,375         5,381
Inventories                                                      11,630        20,139
Other current assets                                              1,048         1,158
                                                              ---------     ---------
     Total current assets                                        56,919        68,354
                                                              ---------     ---------
Property, plant and equipment, net                               35,544        34,573
Patents and trademarks, net                                      13,894        14,492
Goodwill, net                                                    18,669        19,323
Deferred income taxes                                             2,851         2,850
Other assets                                                      2,413         1,545
                                                              ---------     ---------
     Total assets                                             $ 130,290     $ 141,137
                                                              =========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans                                         $  40,964     $  32,110
Current portion of long-term debt                                   475         9,104
Accounts payable and accrued expenses                            30,041        30,773
Accounts due to related parties                                   4,581         5,548
Deferred income taxes                                             3,404         3,404
                                                              ---------     ---------
     Total current liabilities                                   79,465        80,939
Long-term debt                                                    2,440         2,423
                                                              ---------     ---------
     Total liabilities                                           81,905        83,362
                                                              ---------     ---------
Minority interest                                                 7,072         9,085
                                                              ---------     ---------
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                                       78,535        78,535
Accumulated deficit                                             (37,271)      (29,928)
Cumulative translation adjustment                                  (135)         (101)
                                                              ---------     ---------
Total stockholders' equity                                       41,313        48,690
                                                              ---------     ---------
     Total liabilities and stockholders' equity               $ 130,290     $ 141,137
                                                              =========     =========
</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>
<CAPTION>
                                          Three Months Ended June 30,   Six Months Ended June 30,
                                          ---------------------------   -------------------------
                                              1997          1996           1997          1996
                                            --------     ---------       ---------     ---------

<S>                                         <C>          <C>             <C>           <C>      
Total revenues                              $ 70,073     $  52,942       $ 147,196     $ 104,301
                                            --------     ---------       ---------     ---------
                                                                                       
Cost of sales                                (71,199)      (47,419)       (139,563)      (91,885)
Selling and administrative expenses           (7,011)       (4,714)        (11,989)       (7,773)
Research and development expenses             (1,195)           --          (2,361)           --
Amortization of goodwill, patents and                                                  
  trademarks                                    (357)         (134)         (1,252)         (269)
                                            --------     ---------       ---------     ---------
                                             (79,762)      (52,267)       (155,165)      (99,927)
                                            --------     ---------       ---------     ---------
                                                                                       
Operating income (loss)                       (9,689)          675          (7,969)        4,374
                                            --------     ---------       ---------     ---------
                                                                                       
Interest expense                              (1,565)       (1,288)         (2,673)       (2,946)
Interest income                                  311           440             526           950
Exchange gain (loss), net                        411         1,858             532           590
Other non-operating income                        14            --             824            --
                                            --------     ---------       ---------     ---------
                                                (829)        1,010            (791)       (1,406)
                                            --------     ---------       ---------     ---------
                                                                                       
Income (loss) before income tax              (10,518)        1,685          (8,760)        2,968
                                                                                       
Income tax benefit (expense)                     413          (216)           (596)       (1,309)
                                            --------     ---------       ---------     ---------
                                                                                       
Net income (loss) before minority interest   (10,105)        1,469          (9,356)        1,659
                                                                                       
Minority interest in net loss (income) of                                              
subsidiaries                                   3,858        (1,143)          2,013        (1,297)
                                            --------     ---------       ---------     ---------
                                                                                       
Net income (loss)                           $ (6,247)    $     326       $  (7,343)    $     362
                                            ========     =========       =========     =========
                                                                                       
Net income (loss) per share                 $   (0.34)                   $   (0.40)
                                            =========                    =========
</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

                                                     Six Months Ended June 30,
                                                     -------------------------
                                                         1997        1996
                                                      ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                     $ (7,343)    $    362
Items not affecting cash:
  Minority interest                                     (2,013)       1,297
  Depreciation                                           1,697        1,209
  Amortization of goodwill, patents and trademarks       1,252          269
  Deferred income taxes                                     --           80
  Gain from sale of property, plant and equipment         (321)          --
Net changes (exclusive of subsidiaries acquired) in:
  Accounts receivable and advances to growers, net      (2,107)        (784)
  Inventories                                            8,509        4,747
  Accounts payable and accrued expenses                   (732)       2,505
  Other assets                                            (758)         411
                                                      --------     --------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES                                              (1,816)      10,096
                                                      --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES 
Purchases of property, plant and equipment              (3,302)      (3,185)
Proceeds from sales of property, plant and equipment       920           --
Notes receivable from DNAP                                  --       (5,000)
                                                      --------     --------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES     (2,382)      (8,185)
                                                      --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES
Net changes in short-term borrowings                       225       (7,695)
Repayments of long-term debt                                17           --
Accounts due to related parties                           (967)         609
Investment by Bionova, S.A. de C.V                          --        5,025
                                                      --------     --------

NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES                                                (725)      (2,061)
                                                      --------     --------
Net increase (decrease) in cash and cash equivalents    (4,923)        (150)
Cash at beginning of year                               10,735        1,580
                                                      --------     --------
Cash at end of period                                 $  5,812     $  1,430
                                                      ========     ========

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


                                       -4-
<PAGE>

                            DNAP HOLDING CORPORATION

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1997

Note 1  -  Basis of presentation

DNAP Holding Corporation (together with its subsidiaries, 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. The Bionova
Subsidiaries consist of majority interests in Agricola Batiz, S.A. de C.V., a
Mexican corporation ("ABSA"), International Produce Holding Company, a Delaware
corporation ("IPHC"), and their respective subsidiaries.

Note 2  -  Net loss per common share

The weighted average number of common shares outstanding during the second
quarter of 1997 was 18,370,640.

Note 3  -  Inventories

Inventories consist of the following:

                                              June 30,    December 31,
                                               1997           1996
                                             ---------     ---------
                                             Thousands     Thousands

     Finished produce                         $ 2,158        $2,047
     Growing crops                              2,135        11,317
     Advances to suppliers                        880         1,274
     Spare parts and materials                  5,279         5,301
     Merchandise in transit and other           1,542           752
                                              -------       -------
                                               11,994        20,691
     Allowance for slow moving inventories       (364)         (552)
                                              -------       -------
                                              $11,630       $20,139
                                              =======       =======

Note 4  -  Potential Acquisitions and Financing

The Company is continuing to work toward the completion of the acquisition of
all of the intellectual property assets of United Agricorp, Inc. ("UAC"). UAC's
intellectual property assets include all of UAC's rights to and under
technology, issued patents, trademarks, trade secrets, know-how and all similar
rights. DNAP has been performing work under a research agreement with UAC since
1995 in the area of genetic modifications of strawberries to improve various
traits. This transaction is now expected to close during the third quarter of
1997.

On August 12, 1997, the Company entered into definitive agreements to acquire
the minority interests held by the Batiz family in ABSA and IPHC. In
negotiations prior to execution of the agreements, the price for acquiring these
interests was renegotiated and the transaction was restructured. The new price
is $19.0 million, down from the initial price of $23.75 million. Due to a
provision in Mexican law that restricts foreign ownership of companies that own
agricultural land in Mexico, Bionova Mexico will purchase a 20.5% interest in
ABSA and the Company will own the other 79.5% of ABSA. Accordingly, Bionova 
Mexico will pay $4.3 million of the total purchase price and the Company will 
pay $14.7 


                                       -5-
<PAGE>

million. This transaction is expected to close during the fourth quarter of
1997. The Company is seeking bank debt to finance its portion of the purchase
price.

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 (together with its consolidated 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 50.004% ("ABSA"), (ii) International Produce
Holding Company, a Delaware corporation, of which the Company owns 57.7%
("IPHC"), and (iii) DNA Plant Technology Corporation, a Delaware corporation
("DNAP"). The Company acquired its 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"). 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. As described below under "Liquidity and Capital Resources," on August
12, 1997, the Company entered into definitive agreements to acquire the minority
interests in ABSA and IPHC. Approximately 70% of the outstanding common stock of
the Company is owned by Bionova International, Inc., an indirect wholly-owned
subsidiary of 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 in the United States, Canada, Europe,
the Middle East and the Far East, 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.

Results of Operations

Three Months ended June 30, 1997 Compared to Three Months ended June 30, 1996

      Revenues increased from $52.9 million in the second quarter of 1996 to
$70.1 million in the same quarter of 1997. Contributing most significantly to
this change was the inclusion of $30.1 million in revenues generated by Royal
Van Namen ("RVN") and by DNAP and its fresh produce subsidiary, FreshWorld Farms
("FWF"), all of which joined the Company in the fourth quarter of 1996. This
increase was partially offset by a $12.9 million decline in revenues in the
Company's North American distribution businesses, exclusive of FWF, due to lower
average selling prices and product shortages caused by lower than expected
production from ABSA's operations.

      Gross profit (sales less cost of sales) decreased from $5.5 million in the
second quarter of 1996 to a negative gross profit of $1.1 million for the same
period of 1997. This decrease resulted primarily from late plantings and adverse
weather conditions that severely affected crop yields at ABSA's Baja California
and Culiacan operations and lower margins emanating from ABSA's joint venture
farming activities, which negatively affected both ABSA's sales and unit cost of
sales. Gross profit was further affected by a $2.7 million write down of certain
inventories, receivables, and fixed assets during the second quarter of 1997.


                                       -6-
<PAGE>

      Selling and administrative expenses increased from $4.7 million in the
second quarter of 1996 to $7.0 million in the same quarter of 1997. This
increase was primarily associated with expenses incurred by DNAP, FWF, RVN 
and DNAP Holding during the second quarter of 1997.

      Research and development expenses appeared in the Company's results of
operations for the first time in the fourth quarter of 1996 after the merger
with DNAP. This $1.2 million expense reflects DNAP's research and product
development overhead costs recorded in the second quarter of 1997.

      The non-cash charge for amortization of goodwill, patents and trademarks
increased by $0.2 million in 1997 as a result of additional goodwill and patents
related to the DNAP merger and the RVN acquisition.

      Interest expense increased by $0.3 million in the second quarter of 1997
as compared with the same quarter in 1996 due to a higher average level of debt
outstanding during the second quarter of 1997.

      Interest income decreased by $0.1 million in the second quarter of 1997 as
compared with the same quarter of 1996 due to a lower rate of interest generated
by ABSA on its short-term investments and a lower level of advances to growers.

      The Company recorded an income tax benefit of $0.4 million in the second
quarter of 1997 as compared with an expense of $0.2 million in the same quarter
of 1996. This benefit was derived primarily from the losses at ABSA during the
second quarter of 1997.

      During the second quarter of 1997, the share of losses allocable to
minority interests was $3.9 million as compared with a profit of $1.1 million in
1996. These allocations of losses and profits for the second quarters of 1997
and 1996, respectively, were consistent with the minority positions held across
the operating subsidiaries of the Company.

Six Months ended June 30, 1997 Compared to the Six Months ended June 30, 1996

      Revenues for the six months ended June 30, 1997 increased by 41%, or $42.9
million, as compared with the same period in 1996. The inclusion of $52.2
million in revenues generated by RVN, DNAP and FWF, which were not part of the
Company in the first half of 1996, more than offset a $9.3 million decline in
the revenues of the Company's North American distribution businesses, exclusive
of FWF. Revenues of the North American distribution businesses were down during
the first half of 1997 due to the second quarter production problems that ABSA
experienced.

      Gross profit (sales less cost of sales) declined from $12.4 million 
during the first six months of 1996 to $7.6 million during the same period in 
1997. The Company's newer subsidiaries, DNAP, FWF and RVN, contributed $5.2 
million to gross profit; however, the North American distribution business' 
gross profit declined by $4.2 million due primarily to ABSA's production 
shortfalls. ABSA's gross margin declined by $5.8 million due to its poor second
quarter operating results and the write down of inventories, receivables and 
fixed assets.

      Selling and administrative expenses increased from $7.7 million in the
first six months of 1996 to $12.0 million for the same period of 1997. This
increase was primarily associated with expenses incurred by DNAP, FWF, RVN and
DNAP Holding during the first six months of 1997.

      Research and development expenses appeared in the Company's results of
operations for the first time in the fourth quarter of 1996 after the merger
with DNAP. This $2.4 million expense reflects DNAP's research and product
development overhead costs recorded for the first six months of 1997.

      The non-cash charge for amortization of goodwill, patents and trademarks
increased by $1.1 million in 1997 as a result of additional goodwill and patents
related to the DNAP merger and the RVN acquisition.


                                       -7-
<PAGE>

      Interest expense decreased by $0.3 million for the first six months of
1997 as compared with the same period of 1996 due to a lower rate of interest,
offset to some extent by a higher average level of debt outstanding during the
second quarter of 1997.

      Interest income decreased by $0.4 million for the first six months of 1997
as compared with the same period of 1996 due to a lower interest rate generated
by ABSA on its short-term investments and a lower level of advances to growers.

      Other non-operating income for the first six months 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.

      Income tax expense declined from $1.3 million during the first six months
of 1996 to $0.6 million during the same period of 1997 due primarily to the
losses recorded at ABSA in 1997.

      For the first six months of 1997, the share of losses allocable to
minority interests was $2.0 million as compared with a minority interest profit
of $1.3 million in the first half 1996. These allocations of losses and profits
for the first six months of 1997 and 1996, respectively, were consistent with
the minority positions held across the operating subsidiaries of the Company.

Capital Expenditures

      During the six months ended June 30, 1997, the Company made capital
investments of $3.3 million in property, plant and equipment. The majority of
the funds were spent to complete investment projects that ABSA initiated in 1996
in temperature-controlled storage space and equipment to reduce spoilage and
enhance the quality of its products.

Liquidity and Capital Resources

      For the six months ended June 30, 1997, the Company used $1.8 million 
in cash from operations. This use of cash resulted from the loss from 
operations and advances to growers, offset in part by a decline in 
inventories. The decline in inventories is consistent with the end of ABSA's 
growing season and the write down of certain inventories in the second 
quarter. Advances to growers increased by $3.0 million in the first half of 
1997 and reflects an investment of $6.1 million for the 1997-1998 growing 
season, partially offset by the liquidation of various grower accounts 
consistent with the end of the 1996-1997 growing season.

      Cash used in financing activities during the first six months of 1997 was
$0.7 million due to the payment of $1.0 million of an outstanding account
payable to a related party.

      The Company is continuing to work towards the completion of the
acquisition of all of the intellectual property assets of United Agricorp, Inc.
("UAC"). A cash payment of $1.6 million is required to close this transaction,
which is now expected to be completed during the third quarter of 1997.

      On August 12, 1997, the Company entered into definitive agreements to
acquire the minority interests held by the Batiz family in ABSA and IPHC. In
negotiations prior to execution of the agreements, the price for acquiring these
interests was renegotiated and the transaction was restructured. The new price
is $19.0 million, down from the initial price of $23.75 million. Due to a
provision in Mexican law that restricts foreign ownership of companies that own
agricultural land in Mexico, Bionova Mexico will purchase a 20.5% interest in
ABSA and DNAP Holding will own the other 79.5% of ABSA. Accordingly, DNAP
Holding's share of the total purchase price will be $14.7 million, which will be
offset by approximately $1.9 million of adjustments to be made at the closing.
Of the net purchase price, $5 million has been paid, $.5 million will be paid at
the closing, and the remainder will be paid over the following three years. The
Company has borrowed $4.0 million from ELM to assist in financing this
transaction. The transaction is expected to close during the fourth quarter of
1997.


                                       -8-
<PAGE>

      The Company borrowed $4.5 million from banks in July 1997, and will 
require up to an additional $11 million in cash over the next six months, due 
to the losses ABSA experienced in the second quarter and for working capital 
to finance the start up of ABSA's new growing season and other Company 
operations. The Company is seeking to arrange bank debt to finance the 
acquisitions and the balance of its needs.

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" and under "Notes to
Unaudited Consolidated Financial Statements" located elsewhere herein regarding
the Company's financial position, business strategy, 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 the remainder
of 1997, 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 is
undergoing 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 and their traditionally decentralized, family-based
management teams exacerbate these issues.

      HISTORICAL LOSSES AND ACCUMULATED DEFICITS. IPHC and ABSA sustained losses
in 1994, 1995 and 1996. DNAP sustained losses in each year since its
incorporation in 1981. 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 or marketers
and related businesses. 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.
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 


                                       -9-
<PAGE>

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 Chilean and other 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:

      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.


                                      -10-
<PAGE>

      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 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 1996 for approximately 10% of the
consolidated sales of the Company's subsidiaries (excluding DNAP). 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, 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 


                                      -11-
<PAGE>

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.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

        Not Applicable


                                      -12-
<PAGE>

                           PART II - OTHER INFORMATION

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.


                                      -13-
<PAGE>

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

      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


                                      -14-
<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 14, 1997              By:   /s/ ARTHUR H. FINNEL
                                          -------------------------------------
                                          Arthur H. Finnel,
                                          Treasurer and Chief Financial Officer


                                      -15-
<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.


                                      -16-