<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 September 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)

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                 Delaware                             75-2632242
      (State or other jurisdiction                 (I.R.S. Employer
          of incorporation or                     Identification No.)
             organization)
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         6701 San Pablo Avenue
          Oakland, California                            94608
 (Address of principal executive offices)              (Zip Code)
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                                    (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 November 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

                                                  September 30,    December 31,
                                                       1997            1996
                                                  -------------    ------------
                                                   (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                             $  5,349       $ 10,735
Accounts receivable                                     16,729         30,941
Notes receivable from related parties                    2,719            ---
Advances to growers                                      6,684          5,381
Inventories                                             15,482         20,139
Other current assets                                       943          1,158
                                                      --------       --------
     Total current assets                               47,906         68,354
                                                      --------       --------
Property, plant and equipment, net                      35,002         34,573
Patents and trademarks, net                             13,566         14,492
Goodwill, net                                           18,613         19,323
Deferred income taxes                                    2,851          2,850
Advances to related parties towards
 purchase of shares                                      5,000            ---
Other assets                                             1,634          1,545
                                                      --------       --------
     Total assets                                    $ 124,572      $ 141,137
                                                      --------       --------
                                                      --------       --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans                                 $ 44,953       $ 32,110
Current portion of long-term debt                          440          9,104
Accounts payable and accrued expenses                   19,657         30,773
Accounts due to related parties                         12,493          5,548
Deferred income taxes                                    3,404          3,404
                                                      --------       --------
     Total current liabilities                          80,947         80,939
Long-term debt                                           2,489          2,423
                                                      --------       --------
     Total liabilities                                  83,436         83,362
                                                      --------       --------
Minority interest                                        6,024          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                              78,720         78,535
Accumulated deficit                                    (43,665)      ( 29,928)
Cumulative translation adjustment                         (127)         ( 101)
                                                      --------       --------
Total stockholders' equity                              35,112         48,690
                                                      --------       --------
     Total liabilities and stockholders' equity       $124,572      $ 141,137
                                                      --------       --------
                                                      --------       --------

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

                                       -1-

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                               DNAP HOLDING CORPORATION

                    UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
                              Thousands of U.S. Dollars
                              (except per share amounts)

                                        Three Months Ended   Nine Months Ended
                                          September 30,        September 30,
                                       -------------------  -------------------
                                         1997       1996      1997       1996
                                       --------   --------  --------   --------

Total revenues                         $ 57,091   $ 31,944  $204,288   $136,245
                                       --------   --------  --------   --------
Cost of sales                           (52,138)   (31,478) (191,701)  (123,780)
Selling and administrative expenses      (5,991)    (2,636)  (17,980)    (9,989)
Research and development expenses        (1,336)        --    (3,697)       --
Purchased research and development       (2,813)   (12,900)   (2,813)   (12,900)
Amortization of goodwill, patents and
trademarks                                 (598)      (136)   (1,850)      (405)
                                       --------   --------  --------   --------
                                        (62,876)   (47,150) (218,041)  (147,074)
                                       --------   --------  --------   --------
Operating income (loss)                  (5,785)   (15,206)  (13,753)   (10,829)
                                       --------   --------  --------   --------
Interest expense                         (1,177)    (1,240)   (3,850)    (4,186)
Interest income                             243        150       769      1,100
Exchange gain (loss), net                  (159)      (898)      373       (308)
Other non-operating income (expense)       (177)       136       647        136
                                       --------   --------  --------   --------
                                         (1,270)    (1,852)   (2,061)    (3,258)
                                       --------   --------  --------   --------
Income (loss) before income tax          (7,055)   (17,058)  (15,814)   (14,087)
Income tax benefit (expense)               (387)       284      (984)    (1,026)
                                       --------   --------  --------   --------
Net income (loss) before minority
interest                                 (7,442)   (16,774)  (16,798)   (15,113)
Minority interest in net loss
(income) of subsidiaries                  1,048      1,538     3,061        241
                                       --------   --------  --------   --------
Net income (loss)                       $(6,394)  $(15,236) $(13,737)  $(14,872)
                                       --------   --------  --------   --------
                                       --------   --------  --------   --------
Net income (loss) per share             $ (0.35)             $ (0.75)
                                       --------              --------
                                       --------              --------

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

                                       -2-

<PAGE>

                               DNAP HOLDING CORPORATION

                    UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                              Thousands of U.S. Dollars

                                                          Nine Months Ended
                                                            September 30,
                                                        ---------------------
                                                         1997          1996
                                                       ---------     ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                      $ (13,737)    $ (14,872)
Items not affecting cash:
     Minority interest                                    (3,061)         (241)
     Depreciation                                          2,496         1,248
     Amortization of goodwill, patents and
      trademarks                                           1,850           405
     Purchased research and development                    2,813       (12,900)
     Deferred income taxes                                    --           577
     Loss (gain) from sale of property, plant and
      equipment                                             (321)           --
Net changes (exclusive of subsidiaries acquired) in:
     Accounts receivable and advances to growers, net     12,909         7,633
     Notes receivable from related parties                (2,719)           --
     Inventories                                           4,657         1,761
     Accounts payable and accrued expenses               (11,116)       (2,534)
     Other assets                                            (70)        1,477)
                                                        --------      --------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES                                                (6,159)        8,354
                                                        --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of intellectual property                      (2,813)           --
Acquisition of subsidiaries, net of cash acquired             --        (6,664)
Advances to related parties towards purchase of shares     5,000            --
Purchases of property, plant and equipment                (3,252)       (3,721)
Proceeds from sales of property, plant and equipment         648            --
                                                        --------      --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES      (10,417)      (10,385)
                                                        --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net changes in short-term borrowings                       4,179        (3,857)
Net changes in long-term debt                                 66            --
Accounts due to related parties                            6,945           493
Investment by Bionova, S.A. de C.V.                           --        18,305
                                                        --------      --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES       11,190        14,941
                                                        --------      --------

Net increase (decrease) in cash and cash equivalents      (5,386)       12,910
Cash at beginning of year                                 10,735         1,580
                                                        --------      --------
Cash at end of period                                    $ 5,349      $ 14,490
                                                        --------      --------
                                                        --------      --------

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

                                       -3-

<PAGE>

                           DNAP HOLDING CORPORATION

                 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  September 30, 1997

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. 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
subsidiaries.

NOTE 2  -  NET LOSS PER COMMON SHARE

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

NOTE 3  -  INVENTORIES

     Inventories consist of the following:

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

       Finished produce                                $ 1,883        $ 2,047
       Growing crops                                     7,341         11,317
       Advances to suppliers                               725          1,274
       Spare parts and materials                         4,564          5,301
       Merchandise in transit and other                    992            752
                                                   -------------  ------------
                                                        15,505         20,691
       Allowance for slow moving inventories               (23)          (552)
                                                   -------------  ------------
                                                      $ 15,482       $ 20,139
                                                   -------------  ------------
                                                   -------------  ------------

NOTE 4  -  ACQUISITIONS AND FINANCING

     In August 1997, the Company, through its recently formed, wholly owned
subsidiary, VPP Corporation ("VPP"), completed its transaction with United
Agricorp, Inc., a Delaware corporation ("UAC"), and thereby acquired all of
UAC's existing intellectual property assets, including all of UAC's rights to
and under technology, issued patents, trademarks, trade secrets, know-how and
all similar rights.  DNAP had been performing work under a research agreement
with UAC since 1995 in the area of genetic modifications of strawberries to
improve various traits.  The purchase price for UAC's technology assets was
$2.8 million.  In connection with  the transaction, in consideration for
certain non-competition and indemnification commitments made by UAC's major
stockholder, the Company issued to him at the closing options to purchase
100,000 shares of the Company's common stock.   The exercise price of these
options was the market price of the common stock on August 27, 1997.

     In the third quarter the Company wrote off  $2.8 million of purchased
research and development associated with the intellectual property assets
acquired from UAC.  This one-time charge reflects the value of in-process

                                       -4-

<PAGE>

research and development programs ongoing at UAC at the time of the purchase.
These programs were considered in process since the products and technologies
were in various stages of development, have not been commercially introduced,
and require additional research and development before any products can be
produced and  introduced to the marketplace.  As well, at the current time,
the Company cannot identify alternative uses for the technology.
Accordingly, consistent with generally accepted accounting principles,
purchased research and development must be charged off immediately to current
income.

     On October 7, 1997 the Company completed the acquisition of the minority
interests held by the Batiz family in ABSA and IPHC.  With respect to ABSA,
due to a provision in Mexican law that restricts foreign ownership of
companies that own agricultural land in Mexico, the parent company of DNAP
Holding, Bionova Mexico, purchased a 20.0% interest in ABSA and DNAP Holding
increased its ownership interest to 80.0%.  The aggregate price paid for
acquiring the ABSA and IPHC interests was $19.0 million.  To finance this
transaction, Bionova Mexico paid $4.2 million in cash (total value of the
20.0% interest in ABSA), DNAP Holding paid $7.6 million in cash, and DNAP
Holding and ABSA issued promissory notes totaling $7.2 million payable over
the next three years.  DNAP Holding borrowed $7.6 million from its indirect
parent company, Empresas La Moderna, S.A. de C.V. ("ELM"), on an interim
basis to finance its portion of the purchase price.  DNAP Holding expects to
obtain bank financing to replace the financing provided by ELM.  It is
anticipated that ELM will guarantee DNAP Holding's obligations under such
bank financing.

     Based on negotiations that led to a revision of the purchase price and a
restructuring of the transaction between DNAP Holding and the Batiz family in
August, it was agreed between the parties that all profits and losses of ABSA
and IPHC would be borne henceforth by DNAP Holding and Bionova Mexico.
Consequently, the Company determined that, for accounting purposes, the
minority interest income (loss) calculation for  ABSA and IPHC would include
the participation of the Batiz family through July 31, 1997, and would exclude
the Batiz family after this date.  Minority interest income (loss) with
respect to ABSA's results was allocated to Bionova Mexico for the period
August 1, 1997 through September 30, 1997.

NOTE 5 - RECLASSIFICATIONS

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

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

THE COMPANY

     DNAP Holding Corporation (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 80.0% ("ABSA"), (ii) International Produce
Holding Company, a Delaware corporation, of which the Company owns 100.0%
("IPHC"), (iii) DNA Plant Technology Corporation, a Delaware corporation of
which the Company owns 100.0% ("DNAP"), and (iv) VPP Corporation, a Delaware
corporation of which the Company owns 100.0% ("VPP").   The Company acquired
majority interests in ABSA and IPHC on July 1, 1996, by means of a capital
contribution by Bionova, S.A. de C.V. ("Bionova Mexico"), and on October 7,
1997 acquired all of the minority interest in IPHC and increased its
ownership interest in ABSA to 80.0%.  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. Approximately 70% of the
outstanding common stock of the Company is 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

                                       -5-

<PAGE>

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 Fresh World Farms, Inc.), the development and
marketing of premium, differentiated, fresh and processed, branded fruits and
vegetables.  VPP, the Company's most recently formed subsidiary, 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 SEPTEMBER 30, 1997 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1996

     Revenues increased from $31.9 million in the third quarter of 1996 to
$57.1 million in the same quarter of 1997.  Revenues were positively affected
by Interfruver, the Company's Mexican distribution subsidiary, which more
than doubled its sales during the quarter from $12.0 million to $26.4
million.  The year-on-year comparison also was affected by the inclusion of
$17.0 million in revenues generated by DNAP and its fresh produce subsidiary,
Fresh World Farms (FWF), and Royal Van Namen (RVN), all of which joined DNAP
Holding in the fourth quarter of 1996.  Revenues from the Company's U.S. and
Canadian distribution businesses, excluding Fresh World Farms, declined by
$6.2 million.  This decline was due primarily to the fact that a greater
portion of the fresh produce from the Company's Mexican farming operations
that might otherwise have been exported to the United States and Canada was
sold in Mexico through Interfruver, due to the relatively higher fresh
produce prices that prevailed in Mexico during the third quarter.

     Gross profit (sales less cost of sales) increased from $0.5 million in
the third quarter of 1996 to $5.0 million in the same quarter of 1997.  This
increase was due to the inclusion of RVN, DNAP, and DNAP's fresh produce
subsidiary, FWF, which together contributed $2.1 million to gross profit and
a $3.1 million improvement in the gross profit of Interfuver, offset in part
by declines in the contribution to gross profit of the U.S. and Canadian
distribution businesses.

     Selling and administrative expenses increased from $2.6 million in the
third quarter of 1996 to $6.0 million in the same quarter of 1997.  This
increase was primarily associated with expenses incurred by DNAP Holding,
DNAP, FWF and RVN during the third 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 $1.3 million expense reflects DNAP's research and product
development overhead recorded in the third quarter of 1997.

     In the third quarter of 1997 the Company wrote off $2.8 million of
purchased research and development in connection with the acquisition of the
intellectual property assets of UAC, while in the same quarter of 1996 the
Company wrote off $12.9 million of purchased research and development
resulting from the merger with DNAP.  These one-time charges reflect the
value of in-process research and development programs ongoing at the time of
the acquisitions.  These programs were considered in process since the
products and technologies were in various stages of development, had not been
commercially introduced, and required additional research and development
before any products could be produced and  introduced to the marketplace.  As
well, the Company could not identify alternative uses for the technologies.
Accordingly, consistent with generally accepted accounting principles,
purchased research and development was charged off immediately to current
income.

     The non-cash charge for amortization of goodwill, patents and trademarks
increased by $0.5 million in 1997 as a result of additional goodwill and
patents related to the DNAP merger and the RVN acquisition.

     Interest expense decreased $0.1 million in the third quarter of 1997 as
compared to the same quarter in 1996 due to lower interest rates on short-
term borrowings

                                       -6-

<PAGE>

     Interest income increased by $0.1 million in the third quarter of 1997
as compared with the same quarter of 1996 due to a higher level of advances
to growers.

     The Company recorded an income tax expense of  $0.4 million in the third
quarter of 1997 as compared with a benefit of $0.3 million in the same
quarter of 1996.  The expense in the third quarter of 1997 was due primarily
to the relatively higher level of profit at Interfruver in 1997 as compared
with the same quarter in 1996.

     During the third quarter of 1997, the share of losses allocable to
minority interests was $1.0 million as compared with a loss of $1.5 million
in the same quarter of 1996.  These allocations of losses for the third
quarters of 1997 and 1996, respectively, are consistent with the minority
positions held across the operating subsidiaries of the Company.  The
minority interest loss in 1997 includes an allocation of a portion of ABSA's
and IPHC's results through July 31, 1997 to the Batiz family, and of ABSA's
results from August 1, 1997 through September 30, 1997 to Bionova Mexico.

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1996

     Revenues for the nine months ended September 30, 1997 increased by 50%,
or $68.0 million, as compared with the same period in 1996.  Contributing
most significantly to this increase were $68.9 million in revenues generated
by the inclusion of DNAP, FWF and RVN, which were not part of the Company
during this same period of 1996.  Revenues also were positively affected by
Interfruver, the Company's Mexican distribution subsidiary, which increased
its revenues from $43.2 million in 1996 to $56.1 million in 1997.  Revenues
in the Company's U.S. and Canadian distribution businesses, excluding FWF,
declined by $13.8 million. This decline in U.S. and Canadian sales was due
primarily to two factors - (i) weather and insect infestation problems
severely affected ABSA's production during the second and third quarters of
1997 and (ii) a greater portion of the fresh produce from the Company's
Mexican farming operations that might otherwise have been exported to the
United States and Canada was sold in Mexico through Interfruver in the third
quarter of 1997 due to the relatively higher fresh produce prices that
prevailed in Mexico in the third quarter of 1997.

     Gross profit (sales less cost of sales) during the first nine months of
1997 at $12.6 million was virtually unchanged from the $12.5 million recorded
during the same period of 1996.  The Company's newer subsidiaries, DNAP, FWF
and RVN, contributed $7.3 million to gross profit.  Interfruver's gross
profit increased by $0.5 million, while the gross profit of the U.S. and
Canadian distribution businesses declined by $2.3 million due primarily to
ABSA's production shortfalls. ABSA's decline of $5.4 million stemmed from
weather related problems during the first half of 1997 and the write down of
inventories, receivables and fixed assets recorded during the second quarter
of 1997.

     Selling and administrative expenses increased from $10.0 million in the
first nine months of 1996 to $18.0 million for the same period of 1997.  This
increase was primarily associated with expenses incurred by DNAP Holding,
DNAP, FWF and RVN.

     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 $3.7 million charge reflects DNAP's research and product
development overhead recorded for the first nine months of 1997.

     During the first nine months of 1997 the Company wrote off $2.8 million
of purchased research and development in connection with the acquisition of
the intellectual property assets of UAC, while in the same period  of 1996
the Company wrote off $12.9 million of purchased research and development
resulting from the merger with DNAP. The basis for these write offs is
provided in Note 4 to the Financial Statements and the three months results
discussed above.

     The non-cash charge for amortization of goodwill, patents and trademarks
increased by $1.4 million in 1997 as a result of additional goodwill and
patents related to the DNAP merger and the RVN acquisition.

     Interest expense decreased by $0.3 million for the first nine 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 first nine months of 1997.

                                       -7-

<PAGE>

     Interest income decreased by $0.3 million for the first nine 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 nine months of 1997 included a
gain on the sale of 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.

     For the first nine months of 1997, the share of losses allocable to
minority interests was $3.1 million as compared with minority interest losses
of $0.2 million in 1996.  These allocations of losses for the first nine
months of 1997 and 1996, respectively, were consistent with the minority
positions held across the operating subsidiaries of the Company.  The
minority interest loss in 1997 includes an allocation of a portion of ABSA's
and IPHC's results through July 31, 1997 to the Batiz family, and of ABSA's
results from August 1, 1997 through September 30, 1997 to  Bionova Mexico.

CAPITAL EXPENDITURES

     During the nine months ended September 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 nine months ended September 30, 1997, the Company used $6.2
million of cash in operating activities.  This cash usage was a consequence of
the majority and minority net losses of $13.7 million and $3.1 million,
respectively, and the gain on the sale of assets of $0.3 million, offset in
part by $2.5 million of depreciation, $1.9 million of amortization of
goodwill, patents and trademarks, and $2.8 million associated with the
non-cash charge for purchased research and development.

     The reduction in accounts receivable and advances to growers and the
reduction in inventories of $12.9 million and $4.7 million, respectively, were
consistent with the seasonality of the Company's fresh produce businesses.
Related party receivables of $2.7 million reflected a set of receivables, most
of which were associated with ABSA and IPHC subsidiaries and were collected in
conjunction with the transaction between the Batiz family and DNAP Holding.
Accounts payable declined by $11.1 million, which was largely a result of ABSA
paying off a related party payable and non-related party accounts that had
carried over from its prior growing season and had been extended due to the
losses it incurred during the first half of 1997.

     Cash used in investing activities totaled $10.4 million.  Of this amount
$2.8 million was used to purchase the intellectual property assets of UAC,
$5.0 million was advanced to the Batiz family towards the purchase of their
minority interests in IPHC, and $3.3 million was used for capital
expenditures, offset in part by $0.6 million in proceeds generated from the
sale of equipment.

     Cash provided by financing activities totaled $11.2 million.  Of this
amount $6.9 million was borrowed from ELM to support ABSA's operations and to
make the advances of $5.0 million to the Batiz family towards the acquisition
of their minority interests in IPHC.  An additional $4.2 million was borrowed
from banks, with supporting guarantees from ELM, to make payments to ABSA's
suppliers.

     The Company borrowed $2.0 million from banks and $3.8 million from ELM
during October 1997, and will require up to $8.0 million in cash over the
next two months to fund its operations in the new growing season.  The
Company is seeking to arrange bank debt to finance its recent acquisitions
and the balance of its needs.
                                       -8-

<PAGE>

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 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

                                       -9-

<PAGE>

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.

     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

                                       -10-

<PAGE>

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 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

                                       -11-

<PAGE>

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 1.  LEGAL PROCEEDINGS

     On August 27, 1997, the court granted motions to dismiss all of the
claims pending against ELM, Bionova Mexico, the Company and DNAP in the case
styled GORDON K. AARON AND FAY H. AARON V. EMPRESAS LA MODERNA, S.A. DE C.V.,
BIONOVA, S.A. DE C.V., DNAP HOLDING CORPORATION, ROBERT SERENBETZ, GERALD
LAUBACH, EVELYN BEREZIN, DOUGLAS LUKE, JR., AND JAMES L. FERGUSON.
Previously, defendants Bionova International, Inc. and Mr. Alfonso Romo Garza
had been dismissed from the case.  The court also granted in part a motion to
dismiss the Plaintiffs' claims against the individual defendants, but denied
the motion to dismiss the claims of breach of the fiduciary duty of loyalty
against them.   The court also gave Plaintiffs leave to amend this complaint
against ELM, Bionova Mexico, and DNAP Holding as to aiding and abetting the
alleged breach of fiduciary duty of loyalty.  This lawsuit is described in
more detail in the Company's annual report on Form 10-K for the year ended
December 31, 1996.

     On August 13, 1997, a lawsuit styled GRACE BROTHERS, LTD. V. DNAP
HOLDING CORPORATION, DNA PLANT TECHNOLOGY CORPORATION AND DOES 1 THROUGH 20,
INCLUSIVE was filed in the United States District Court for the Northern
District of California. This claim arises out of the private placement of
common stock and warrants made by DNAP in August of 1995.  The Plaintiff
alleges that DNAP failed to disclose material non-public information relating
to DNAP's efforts to enter into a strategic relationship with a third party,
and that such failure constituted a violation of (i) Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, (ii)
Sections 25400-25401 of the California Corporations Code, and (iii) the terms
of the contract relating to the private placement.  The Plaintiff seeks
rescission of its purchase of common stock and warrants in the private
placement and damages of an unspecified amount.  The Company and DNAP believe
these claims are without merit and intend to vigorously defend against them.

     On August 29, 1997, a lawsuit styled GRACE BROTHERS, LTD. V. DNAP
HOLDING CORPORATION, DNA PLANT TECHNOLOGY CORPORATION AND DOES 1 THROUGH 20,
INCLUSIVE was filed in the Superior Court of the State of California, County
of Alameda. This claim arises out of the Merger on September 26, 1996 of DNAP
with a wholly-owned subsidiary of the Company.  In the Merger, shares of
DNAP's $2.25 Convertible Exchangeable Preferred Stock (the "Preferred Stock")
were converted into the right to receive shares of common stock of the
Company.  The Plaintiff alleges that it owned shares of Preferred Stock, that
it was entitled to special conversion privileges under the terms of the
Certificate of Designation that established the Preferred Stock and that DNAP
breached its contractual obligations to the Plaintiff by not providing those
special conversion privileges.  The Plaintiff also alleges that the former
holders of DNAP common stock were unjustly enriched by DNAP's alleged breach
of the terms of the Certificate of Designation.  The Plaintiff seeks damages
of an unspecified amount.  The Company and DNAP believe these claims are
without merit and intend to vigorously defend against them.

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.

                                       -13-

<PAGE>

     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.

                                       -14-

<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

     On October 21, 1997, the Company filed a report on Form 8-K dated October
     6, 1997 relating to the acquisition by the Company of all of the minority
     interests in IPHC and the increase in the Company's interest in ABSA to
     80%.


                                       -15-

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

                                       -16-

<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.

                                       -17-