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                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-K
 
  /X/    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
 
  / /    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 of incorporation)           (I.R.S. Employer Identification
                                                          No.)
 
           6701 SAN PABLO AVENUE
            OAKLAND, CALIFORNIA                           94608
  (Address of principal executive offices)             (Zip Code)
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (510) 547-2395
        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of class)
 
                            ------------------------
 
    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 / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes /X/  No / /
 
    Aggregate market value of Common Stock held by nonaffiliates as of March 9,
1999: $19,260,034
 
    Number of shares of Common Stock outstanding as of March 9, 1999: 23,588,031
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    Part III incorporates information by reference from the Registrant's
definitive proxy statement to be filed for its 1999 annual meeting of
stockholders.
 
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                               TABLE OF CONTENTS
 
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PART I....................................................................................................           3
  ITEM 1. BUSINESS........................................................................................           3
    Overview..............................................................................................           3
    Background............................................................................................           3
    Production............................................................................................           4
    Marketing and Distribution............................................................................           5
    Research and Development..............................................................................           5
    Technology Alliances and Acquisitions.................................................................           6
    Fresh Produce Proprietary Product Development.........................................................           7
    Proprietary Protection................................................................................           7
    Governmental Regulation...............................................................................           8
    Competition...........................................................................................           9
    Employees.............................................................................................          10
    Controlling Stockholder; Conflicts of Interest........................................................          10
  ITEM 2. PROPERTIES......................................................................................          10
  ITEM 3. LEGAL PROCEEDINGS...............................................................................          11
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................          14
  EXECUTIVE OFFICERS OF THE COMPANY.......................................................................          14
PART II...................................................................................................          15
  ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........................          15
  ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA............................................................          16
  ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........          17
    Overview..............................................................................................          17
    Results of Operations.................................................................................          17
    Capital Expenditures..................................................................................          20
    Liquidity and Capital Resources.......................................................................          20
    Year 2000 Update......................................................................................          21
    New Accounting Pronouncements.........................................................................          22
    Disclosure Regarding Forward Looking Statements.......................................................          22
  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....................................          26
  ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................................................          28
  ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...........................          60
PART III..................................................................................................          60
  ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY................................................          60
  ITEM 11. EXECUTIVE COMPENSATION.........................................................................          60
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................................          60
  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS...........................................          60
PART IV...................................................................................................          60
  ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K................................          60
</TABLE>
 
    FRESHWORLD FARMS-REGISTERED TRADEMARK-, ENDLESS
SUMMER-REGISTERED TRADEMARK-, AND TRANSWITCH-REGISTERED TRADEMARK- ARE
REGISTERED TRADEMARKS OF DNAP OR ITS SUBSIDIARIES. MASTER'S
TOUCH-REGISTERED TRADEMARK- IS A REGISTERED TRADEMARK OF CERTAIN SUBSIDIARIES OF
DNAP HOLDING. PREMIER SELECCION-REGISTERED TRADEMARK- IS A REGISTERED TRADEMARK
THAT HAS BEEN LICENSED TO CERTAIN SUBSIDIARIES BY AN AFFILIATE.
PETOSEED-REGISTERED TRADEMARK-, ASGROW-REGISTERED TRADEMARK-, AND ROYAL
SLUIS-REGISTERED TRADEMARK- ARE REGISTERED TRADEMARKS OF SEMINIS VEGETABLE
SEEDS, INC.
 
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                                     PART I
 
ITEM 1. BUSINESS
 
OVERVIEW
 
    DNAP Holding Corporation, a Delaware corporation (together with its
subsidiaries, unless the context requires otherwise, "DNAP Holding" or the
"Company"), was formed in January 1996, and acts as a holding company for (i)
Agricola Batiz, S.A. de C.V., a corporation organized under the laws of the
United Mexican States, of which the Company owns 80.0% ("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 from Bionova S.A. de C.V. ("Bionova Mexico"),
and on October 7, 1997, acquired all of the minority interests in IPHC and
increased its ownership interest in ABSA to 80.0%. 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. VPP was formed as a
wholly-owned subsidiary of the Company on August 18, 1997. Approximately 76.6%
of the outstanding common stock of the Company is indirectly owned by Savia,
S.A. de C.V., formerly known as Empresas La Moderna, S.A. de C.V. ("Savia").
 
    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. ABSA also owns 98.0% of Siembra Cultivo y Cosecha del Noroeste, S.A. de
C.V., a corporation organized under the laws of the United Mexican States
("Siembra"), which provides labor and administrative services to ABSA. IPHC is a
holding company whose subsidiaries are in the business of marketing and
distributing fresh produce primarily in the United States and Canada, including
fruits and vegetables produced by ABSA. DNAP is an agribusiness biotechnology
company focused on the development and application of genetic engineering and
transformation technologies in plants and, together with its subsidiaries
(including FreshWorld Farms, Inc.), the development and marketing of premium,
differentiated, fresh and processed, branded fruits and vegetables. VPP, 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.
 
    Financial information relating to each of the Company's industry segments is
set forth in Note 15 to the Company's financial statements contained in this
report. Financial information relating to foreign and domestic operations and
export sales is set forth in Note 15 to the Company's financial statements.
 
    The corporate headquarters of the Company are located at 6701 San Pablo
Avenue, Oakland, California 94608, and the telephone number is (510) 547-2395.
 
BACKGROUND
 
    Savia, the Company's indirect 76.6% owner, is a holding company. Savia owns
88% of Seminis, Inc. ("Seminis"), the leading vegetable seed company in the
world. Savia's subsidiary, Empaques Ponderosa, S.A. de C.V., is the leading
producer of folding boxboard and folding and flexible packaging in Mexico. Savia
recently acquired a majority interest in Seguros Comercial America, S.A. de
C.V., the largest insurance company in Mexico.
 
    Through its Bionova Mexico subsidiary, Savia entered the fresh produce
industry in 1993 by agreeing to a series of business relationships with Raul
Batiz Echavarria and members of his family (the "Batiz
 
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Family"). In February 1993, Bionova Mexico and the Batiz Family established
ABSA, to which the Batiz Family transferred land and other assets used for
growing and packing fresh produce. Bionova Mexico and the Batiz Family then
negotiated the structure of their joint ownership of the Batiz Family's fresh
produce distribution business. In December 1994, this relationship was
formalized with the organization of IPHC. In 1997, DNAP Holding purchased all of
the minority interests held by the Batiz family in IPHC, and together with
Bionova Mexico, acquired the Batiz family interests in ABSA.
 
    Significant market developments over the past five years have included the
continuation of market deregulation in Mexico, the passage of the North American
Free Trade Agreement which codifies low tariff levels for certain goods traded
among Mexico, the United States and Canada, the Suspension Agreement adopted in
1996 and revised in August, 1998 that sets a floor price on tomatoes entering
the United States at $5.17 per box (20.68 cents per pound) for the months of
November through June and $4.61 per box for the months of July through October,
a growing market for fresh produce in the United States, and beginning in 1999
the ability for Mexican trucks to travel through the United States to their
final destinations. The Company believes that the deregulation in Mexico, the
North American Free Trade Agreement, the Suspension Agreement, and the freedom
for Mexican trucks to travel in the United States all have been, or will be of
benefit to the Company's strategic direction and operations. The Company further
believes there is potential for growth in the U.S. market both for commodity
fresh produce and for branded produce that can command a premium price on a
sustained basis, provided it consistently meets consumer expectations for taste,
appearance, texture, freshness and quality. Product and regional diversification
have enabled the Company to establish a strong commercial offering of quality
year-round supply under the "Master's Touch" and "Premier Seleccion" trademarks.
 
PRODUCTION
 
    ABSA is a leading grower of fresh produce in Mexico, primarily tomatoes and
peppers, and, to a lesser extent, melons, cucumbers, grapes and other fruits and
vegetables. Most of ABSA's farming operations are located in the Mexican states
of Sinaloa, Sonora and Baja California. Advanced technology is used to ensure
consistent quality and yields, including special hybrid varieties, integrated
pest management control, and computerized drip irrigation. ABSA's produce is
distributed in the United States, Mexico and Canada under the "Master's Touch"
and "Premier Seleccion" brands as well as other labels, depending on produce
grades.
 
    ABSA's supply derives from (i) produce grown on land owned or leased by
ABSA, (ii) produce grown by producers with whom ABSA enters into a distribution
contract and (iii) produce grown by producers with whom ABSA enters into both a
production association agreement and a distribution contract. When ABSA enters
into a distribution contract only, it agrees to provide the grower limited
financial assistance for harvesting and packing in exchange for exclusive
distribution rights. ABSA does not share any of the growing risk under these
distribution contracts. When ABSA enters into a production association
agreement, ABSA finances up to 100% of the production cost in a joint venture
with the grower. ABSA provides technical support and agrees to handle the
distribution. Net proceeds are shared according to the terms of the association
agreement after ABSA recoups its investment.
 
    In 1998, approximately 51% of ABSA's supply was sourced from production
associations with growers. The majority of these growers are located in the
states of Baja California Norte and Sonora. Almost 49% of ABSA's supply in 1998
came from land owned or leased by ABSA. ABSA owns approximately 3,041 acres in
Sinaloa and Sonora, and ABSA leases approximately 2,595 acres in Sinaloa and
Baja California Sur. During 1998, a very limited amount of produce was sourced
through distribution contracts.
 
    In 1998, approximately 54% of ABSA's sales was tomatoes, 30% was peppers, 6%
was cucumbers, 5% was grapes and the remaining 5% was melons and mixed
vegetables. In 1997 and 1996, respectively, ABSA's sales were allocated
approximately as follows: tomatoes--47% and 49%, peppers--32% and 26%,
 
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cucumbers--11% and 15%, and grapes, melons and mixed vegetables (including
eggplant and squash)-- 10% and 10%.
 
MARKETING AND DISTRIBUTION
 
    The Company's marketing and distribution activities are carried out by a
network of national and regional distributors. The Company's national
distributors are R.B. Packing in the United States (including R.B. Packing,
Inc., R.B. Packing of California, Inc. and R.B. Packing of Texas, Inc., each of
which is a wholly-owned subsidiary of IPHC, and referred to collectively as
"R.B. Packing"), and Interfruver in Mexico. The Company's regional distributors
are Tanimura Distributing, Inc. in Los Angeles, California ("TDI"), Premier
Fruits and Vegetables BBL Inc. in Montreal, Quebec ("Premier"), and FreshWorld
Farms, Inc. in Eddystone, Pennsylvania ("FWF").
 
    NATIONAL DISTRIBUTORS.  R.B. Packing had revenues of $71 million in 1998.
The majority of R.B. Packing's sales were made by R.B. Packing, Inc. which is
located in Nogales, Arizona, a major point of entry for Mexican produce into the
United States. Approximately 79% of the produce distributed by R.B. Packing,
Inc. is provided by ABSA (including produce grown by ABSA and produce grown by
growers with whom ABSA enters into distribution contracts and/or production
arrangements). No single customer accounted for more than 10% of R.B. Packing,
Inc.'s sales in 1998. In 1998, its sales were 36% to supermarkets, 39% to
wholesalers and 25% to brokers. Its main selling season is December through May.
 
    R.B. Packing of California, Inc. is located in San Diego, California and
distributes produce grown in California and the Mexican states of Baja
California Norte and Baja California Sur. In 1998, its sales were 29% to
supermarkets, 38% to wholesalers, and 33% to brokers. Its main selling season is
July through November. R.B. Packing of Texas, Inc. is a distributor located in
McAllen, Texas that began operations in the Fall of 1995. R.B. Packing of Texas,
Inc. distributes produce grown in Mexico and currently is concentrating on the
importation and distribution of mango, papaya, and melons.
 
    Interfruver is one of Mexico's largest fresh produce distributors. Based in
Guadalajara, Interfruver distributes produce from ABSA and other Mexican
producers. Interfruver also imports produce from the United States and other
countries. Approximately 77% of its sales is to wholesalers and other
intermediaries and 23% is to supermarkets. Interfruver's sales totaled $88
million in 1998.
 
    REGIONAL DISTRIBUTORS.  TDI is a 75%-owned subsidiary of IPHC. In 1998,
TDI's sales of $39 million were 61% to supermarkets, 12% to food service and 27%
to other wholesalers.
 
    Premier is an 80%-owned subsidiary of IPHC. Premier distributes produce
throughout eastern Canada and its sales were approximately 53% to supermarkets,
29% to independent retailers, and 18% to wholesalers in 1998. Sales in 1998 were
approximately U.S. $30 million.
 
    FWF, a wholly-owned subsidiary of DNAP, sources tomatoes and vegetables,
including its branded line of cherry tomatoes and peppers, from various growers
in the eastern United States. FWF also markets orange and yellow mini-peppers.
Its 1998 revenues were $22 million.
 
RESEARCH AND DEVELOPMENT
 
    The Company's research and development activities are carried out by DNAP, a
wholly owned subsidiary acquired in September 1996 as a result of the Merger.
DNAP was incorporated in Delaware in 1981 and is an agribusiness biotechnology
company focused on the development and application of genetic engineering in
fruits and vegetables. Since the Merger the Company's research and development
activities have undergone significant realignment that reflects the investment
being made in new business initiatives. In 1998, the Company spent approximately
$2.7 million on Company-sponsored research and development
 
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activities and approximately $3.1 million on customer-sponsored research and
development activities. DNAP's major research activities are as follows:
 
    - Under a Long Term Funded Research Agreement between Seminis and DNAP,
      dated January 1, 1997, DNAP is conducting a series of research programs in
      support of product development at Seminis. The research program for
      Seminis includes plant genetic engineering developments in fungal disease,
      viral disease, nematode, and herbicide resistance. DNAP will receive
      royalties on sales of products by Seminis which are developed under the
      agreement using DNAP technology.
 
    - The Company is implementing a proprietary business based on biotechnology
      developments in certain vegetatively propagated crops. Through its new
      subsidiary, VPP, the objective is to build a global, value added and
      proprietary business based on the sale of starting plants of vegetatively
      propagated, commercial horticultural species differentiated through
      biotechnology inputs, including genetic engineering, advanced tissue
      culture and diagnostic methods. The initial business focus is on
      strawberries. Research and product development being conducted for VPP
      includes the development of fungal disease and nematode resistance.
 
    - DNAP maintains research and development activities in support of the
      Company's fresh produce business. Research includes the development of
      fruits and vegetables which retain freshness longer through genetic
      engineering focused on ripening or softening control. DNAP scientists are
      also working on the retention of freshness and color in cut leafy
      vegetables.
 
    - DNAP continues to pursue research contracts with third party companies,
      particularly when the knowledge gained from these activities will create
      opportunities in internal strategic research and development programs.
 
    DNAPs research and development facility is located in Oakland, California.
The research team of 47 full-time scientists, including 23 with Ph.D. degrees,
and support staff includes scientists in the fields of cell biology, plant
genetic engineering, plant genetics, biochemistry, agronomy, plant pathology and
food science. DNAP's scientists have published over 300 articles in
peer-reviewed scientific literature and are named inventors on more than fifty
United States patents owned by DNAP or FWF.
 
TECHNOLOGY ALLIANCES AND ACQUISITIONS
 
    To meet the technical challenges of new product development in these areas,
DNAP has benefited from certain collaborative and licensing arrangements, both
at the DNAP and the Savia level. A collaborative agreement between Savia and
Monsanto Company provides the Company with access to enabling technology
important in the genetic transformation of plants and "trait" technology in the
areas of viral and fungal disease resistance, herbicide resistance and insect
resistance. The acquisition of the technology assets of United Agricorp, Inc.
("UAC") has provided VPP with rights to improve University of California
strawberry germplasm and trait technology involved in sweetness and texture
enhancement of fruits. An agreement with the John Innes Center in the United
Kingdom provides DNAP with broad testing rights to a range of trait
technologies, including disease resistance and flowering manipulation, and a
range of enabling technologies. The Company has entered into licensing
agreements with other research institutes, companies and universities to broaden
its technical strength in the areas of nematode resistance, viral disease in
grape and certain aspects of fruit quality.
 
    Consistent with the Company's strategy to build a global business in the
development and sale of vegetatively propagated fruit species, including berries
differentiated through transgenic technology, on December 30, 1998, DNAP
Holding, through its subsidiary, VPP, acquired Monsanto Company's strawberry
development program. The program includes exclusive rights to most of Monsanto's
genetic and gene technology for berry development, and a non-exclusive right to
future Monsanto berry technology, including strawberries, cranberries,
raspberries, blackberries, boysenberries, and blueberries. The package includes
a breeding program with a strawberry variety expected to be commercially
available in the United
 
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States in 1999 as well as multiple strawberry varieties planned for commercial
introduction over the next few years.
 
FRESH PRODUCE PROPRIETARY PRODUCT DEVELOPMENT
 
    The Companys strategy in the fresh produce area is to focus its research and
development efforts on products which meet identified consumer needs not
satisfied by existing products. The Company will seek to deliver consistently
superior products, thereby building brand name awareness, and which are expected
to sell at premium prices.
 
    The Company is currently marketing two products it developed through
advanced biotechnological techniques to distributors, supermarkets and food
service outlets. These two products are marketed under the FreshWorld Farms and
Master's Touch brand names. The Masters Touch and FreshWorld Farms cherry tomato
is a proprietary hybrid with a deep red color, sweet flavor and an extended
shelf life of up to fifteen days. The FreshWorld Farms sweet mini-pepper has a
novel sweet taste, deep red color and a low number of seeds. This new variety of
pepper was developed through anther culture, an advanced breeding technique that
captures and genetically stabilizes preferred characteristics such as taste,
texture and low seed count. The Company is testing in supermarkets a number of
varieties of its proprietary peppers of various shapes and colors in the United
States.
 
    DNAP's scientists are using genetic engineering to enhance the Company's
existing product line and develop new products. Plant genetic engineering
involves either the suppression of specific genes, for example those that
control ripening, or the over-expression of certain genes controlling
characteristics such as sweetness. One of DNAP's most significant technological
developments in this area is its Transwitch gene suppression technology. Using
Transwitch technology, DNAP has grown tomatoes with a shelf life of up to 90
days in the laboratory, while preserving desirable characteristics such as
taste, color and texture. DNAP has received approval from the U.S. Department of
Agriculture (the "USDA") and the Food and Drug Administration (the "FDA") to
grow and ship initial varieties of its second generation tomatoes anywhere in
the United States. DNAP has also received the requisite government approvals in
Canada and Mexico. In the first half of 1995, DNAP conducted a test market of
delayed ripening tomatoes developed by using the Transwitch gene suppression
technology to switch off the ACC synthase gene. These tomatoes were sold under
the Endless Summer tomato brand name and labeled as "farm grown from
genetically-modified seed." The market test demonstrated that there was consumer
acceptance of these genetically-modified fresh market tomatoes and validated the
use of this technology for extending tomato shelf life both on the vine and
after harvest. In 1997, DNAP completed an operations test to evaluate shipping
characteristics of the Endless Summer tomato. This test validated the long shelf
life and reduced spoilage of these tomatoes under commercial shipping and
handling conditions. DNAP is currently expanding production of the Endless
Summer tomato while continuing to collect data on the performance of the tomato.
Transwitch technology has also been used to turn off ethylene biosynthesis and
extend shelf life to 8 to 9 weeks in DNAP's cherry tomato varieties.
 
    The texture of DNAP's mini-pepper is being further enhanced through the use
of Transwitch technology to inhibit the gene responsible for hemicellulase.
Hemicellulase causes the breakdown of the cell walls in peppers, a process which
triggers softening when peppers reach their maximum sweetness. The hemicellulase
trait is being evaluated in a wide range of pepper varieties.
 
PROPRIETARY PROTECTION
 
    In order to develop and maintain its competitive position, DNAP seeks to
protect its intellectual property through patent filings in the United States
and abroad, maintenance of trade secrets and ongoing technological innovation.
DNAP and FWF have over fifty issued patents in the United States.
 
    DNAP has obtained United States patent protection for key plant genetic
engineering technologies in the areas of gene isolation through transposon
tagging; transformation/regeneration methods for pepper,
 
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pea and corn; promoter systems; and selectable marker systems. DNAP has also
established a patent position for important gene systems developed by DNAP,
including issued U.S. patents directed to genes for control of disease,
sweetness, color and acidity.
 
    One of DNAP's most significant technological assets in the area of plant
genetic engineering is its proprietary Transwitch gene suppression technology.
DNAP has received three United States patents and a European patent directed to
methods of using this technology for suppressing plant genes.
 
    DNAP has pursued patents and plant variety protection ("PVP") certificates
specific to certain DNAP products. DNAP has filed patent applications in the
United States claiming certain FWF parent and hybrid tomato lines, resulting in
two issued U.S. patents. In addition, DNAP has a granted United States patent
directed to a ripening controlled cherry tomato line and pending patent
applications directed to ripening controlled tomato and cherry tomato lines.
DNAP also has a granted United States patent directed to the method of
somaclonal variation in tomato. DNAP has been granted a United States patent
covering a broad class of low seed peppers, including the FWF sweet mini-pepper.
DNAP additionally has four issued United States patents directed to the method
of processing carrots. PVP certificates, which are issued by the USDA, have also
been pursued for specific fruit and vegetable varieties. DNAP was issued two PVP
certificates for tomato varieties and two for pepper varieties. FWF has two
pending PVP applications for watermelon varieties developed by DNAP.
 
    DNAP has strengthened its proprietary position by obtaining license rights
from third parties, either to secure freedom to operate via non-exclusive
licenses or to create additional areas of exclusivity through exclusive
licenses. DNAP has obtained license rights from several third parties under
patent filings related to plant molecular biology methods. These license rights
include non-exclusive rights from the Max Planck Institute under patent filings
directed to certain methods of plant transformation using Agrobacterium
(although the rights of the Max Planck Institute under certain of these patent
filings are in dispute), and from Mogen International N.V. under filings also
directed to certain methods of plant transformation using Agrobacterium. DNAP
also has license rights from the USDA under patent filings directed to the ACC
synthase gene. Suppression of this gene, e.g. with Transwitch technology, has
been shown by DNAP to permit control of the ripening process. DNAP's license
from the USDA is co-exclusive for tomato, and exclusive for 25 other crops
including peppers, bananas, peas, strawberries, grapes, pineapples and
watermelons. As a result of the agreement between Savia and Monsanto Company
dated January 31, 1997, DNAP also has access to key enabling technologies,
including promoters, marker genes and transformation methods, as well as genes
for agronomic and quality traits, held by Monsanto Company.
 
    The Company uses trade secret protection for certain of IPHC's distribution
companies and FWF which market produce under the Master's Touch, Premier
Seleccion, FreshWorld Farms and Endless Summer brand names. ABSA and R.B.
Packing, Inc. have registered the Master's Touch name as a trademark in Mexico
and the United States, respectively. Bionova Mexico has registered the Master's
Touch name as a trademark in the Benelux countries, the European Community, Hong
Kong, Indonesia, Japan, Sweden and the United Kingdom. Savia has registered the
Premier Seleccion name in Mexico and has licensed rights to such name on a
royalty-free basis to various of IPHC's subsidiaries. In addition, trademark
registrations of the name "Master's Touch" are pending in Canada, Malaysia,
Singapore and South Korea. FWF has registered the Endless Summer and FreshWorld
Farms names in the United States.
 
GOVERNMENTAL REGULATION
 
    The agribusiness industry witnessed the continued growth in the number of
U.S. government approvals for genetically engineered plant products in 1998 and
additional approvals of genetically engineered products in Europe and Japan.
DNAP believes these events signal maturation of the regulatory approval
processes in the U.S. and growing opportunities for agricultural biotechnology
products in the United States and abroad.
 
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    Regulation by federal, state and local government authorities in the United
States and foreign countries will be a factor in the future production and
marketing of DNAP's genetically-engineered plants and plant products. The
process of obtaining government approvals can be costly and time consuming, and
there can be no assurance that necessary approvals will be granted in a timely
manner, if at all. The extent of government regulation of biotechnology that
might arise from future legislative or administrative actions and the potential
consequences to DNAP are not known and cannot be predicted with certainty.
 
    The U.S. federal government has implemented a coordinated policy for
regulating biotechnology research and products in the United States. The USDA
has jurisdiction over specific research and pre-commercial activities involving
genetically engineered plants, in particular the growing and interstate shipment
of genetically engineered plants and plant products. The FDA has jurisdiction
over plant products that are used for human or animal food. The EPA has asserted
jurisdiction over the field testing and commercial use of plants genetically
engineered to resist pests and diseases, so-called plant pesticides, as well as
administering various federal environmental quality statutes. Failure to comply
with applicable regulatory requirements could result in enforcement action,
including withdrawal of marketing approval, seizure or recall of product,
injunction or criminal prosecution.
 
    In January 1995, DNAP received USDA approval for unrestricted production and
distribution of the initial varieties of its genetically engineered Endless
Summer tomato. That approval closely followed successful completion in October
1994 of consultations with the FDA concerning the safety, nutrition and
composition of Endless Summer tomatoes. In 1995, DNAP also received clearances
from Agriculture and Agri-Food Canada and Health Canada to import and sell
Endless Summer tomatoes in Canada. Together, these approvals allow DNAP to grow
and ship initial varieties of Endless Summer tomatoes anywhere in the U.S. and
Canada in the same manner as conventionally developed tomatoes. DNAP has also
received approval from the Mexican Secretaria de Agricultura y Recursos
Hidraulicas for semi-commercial production of its Endless Summer tomatoes and to
conduct field trials of genetically engineered cherry tomatoes and peppers. In
December 1998, DNAP received approval from the Mexican Secretaria de Salud for
commercial sales of Endless Summer tomatoes in Mexico.
 
    DNAP is continuing consultations with the FDA, begun in 1994, on additional
products, including delayed-ripening cherry tomatoes and peppers with improved
texture. DNAP has also received permission from the USDA to field test
genetically engineered strawberry and grape plants.
 
COMPETITION
 
    Though the fresh produce industry in general, and the tomato industry in
particular, are characterized by numerous competitors and low barriers to entry
at the production level, DNAP Holding believes that a small group of
participants distributes over one-third of the tomatoes sold in the United
States. In the United States, the Company competes directly with the larger
tomato and pepper growers in Florida during the winter, and in California in the
summer and fall. Both the Mexican and the U.S. tomato industries are
characterized by numerous competitors. Major Florida growers include Six L's,
DiMare and NTGargiulo, which was acquired by Monsanto Company. The major growers
in California include DiMare, NTGargiulo, Live Oak, and Central Tomato Growers.
 
    ABSA believes it has advantages over its competitors because, among other
things, (i) the vine ripe tomato ABSA farms has different and generally more
desirable attributes than the gas-green tomato typically produced by most U.S.
growers and (ii) ABSA's production occurs in Mexico where the climate is often
more favorable and labor costs are lower than in the United States.
 
    There are also 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 that have biotechnology divisions, many of which have considerably
greater financial, technical, and marketing resources than DNAP Holding.
Competition may intensify as technological developments occur at a rapid rate in
the agricultural biotechnology industry.
 
                                       9
<PAGE>
EMPLOYEES
 
    The Company and its subsidiaries have a total of 588 employees.
 
    ABSA has no employees. Siembra provides labor and administrative services to
ABSA pursuant to a contractual agreement, and ABSA pays a fee to Siembra based
on Siembra's costs incurred in connection with providing such services. The
number of persons providing such services through Siembra to ABSA ranges from a
minimum of 1,700 to a maximum during the harvesting season (January-April) of
approximately 12,000.
 
CONTROLLING STOCKHOLDER; CONFLICTS OF INTEREST
 
    Approximately 76.6% of the outstanding shares of common stock of the Company
are owned of record by Bionova International, Inc., an indirect, wholly-owned
subsidiary of Savia. Pursuant to a Governance Agreement dated as of September
26, 1996, between Savia and the Company, Savia (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. This restriction and most of the other
provisions of the Governance Agreement terminate on April 27, 1999, the day
before the Company's annual meeting of stockholders. Also, Savia 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 Savia or companies related to
Savia, 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 Savia 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
Savia 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 January 1, 1997, between Seminis
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 Savia.
 
ITEM 2. PROPERTIES
 
    ABSA owns approximately 3,041 acres of agricultural land in Sinaloa and
Sonora. ABSA leases approximately 2,595 acres of land in Sinaloa and Baja
California Sur. See "Legal Proceedings."
 
    R.B. Packing, Inc. and Batiz and Sons, Inc. own warehouse and office space
in Nogales, Arizona. The other subsidiaries of IPHC lease office and warehouse
space. Interfruver leases office and warehouse space
 
                                       10
<PAGE>
in Jalisco. Interfruver also leases warehouse space in Mexico City, Sinaloa,
Sonora, Chihuahua and Nuevo Leon. FWF leases office space in Eddystone,
Pennsylvania.
 
    DNAP leases 41,000 square feet of laboratory and office space and 7,500
square feet of greenhouse space in Oakland, California. DNAP also owns 12,700
square feet of greenhouse and warehouse space, including farm land for field
trials, in Brentwood, California. DNAP also has arrangements in various
locations throughout the United States for field evaluations of improved plant
varieties which DNAP is developing. DNAP's current facilities are not adequate
for large scale growing, processing operations or distribution. Depending on the
needs for its products, DNAP contracts for the requisite facilities with third
parties.
 
ITEM 3. LEGAL PROCEEDINGS
 
    On January 21, 1997, a class action lawsuit styled GORDON K. AARON ET AL. V.
EMPRESAS LA MODERNA, S.A. DE C.V., ET AL. was filed in the U.S. federal district
court for the Northern District of California. The plaintiffs allege that, prior
to the merger (the "Merger") of DNAP with a subsidiary of DNAP Holding on
September 26, 1996, they owned shares of DNAP's $2.25 Convertible, Exchangeable
Preferred Stock ("Preferred Stock"). In connection with the Merger, all of the
shares of common stock and Preferred Stock of DNAP were converted into the
number of shares of common stock of DNAP Holding specified in the Merger
Agreement. The plaintiffs allege that they were denied certain rights they
allegedly had under the terms of the Preferred Stock and that certain
individuals (the "Individual Defendants"), each of whom was a director of DNAP
prior to the Merger and in some cases later served as a director of DNAP
Holding, breached fiduciary duties of loyalty, candor and care allegedly owed to
DNAP and its stockholders. The plaintiffs claim to have been damaged by the
alleged actions of the defendants and therefore the plaintiffs seek unspecified
actual and punitive damages as well as reimbursement of their litigation costs
and expenses. On August 27, 1997, the court granted motions to dismiss all of
the claims pending against all of the defendants, except the claims of breach of
the fiduciary duty of loyalty against the Individual Defendants. The court also
gave the plaintiffs leave to amend the complaint against certain other named
defendants, including DNAP Holding, as to a claim for aiding and abetting the
alleged breach of fiduciary duty of loyalty. On January 14, 1999, the court
granted plaintiffs motion to reinstate the claims for breach of contract and
tortious interference arising from Plaintiffs claim that the preferred
stockholders should have had the opportunity to vote on the Merger. DNAP Holding
and DNAP deny any wrongdoing or liability in this matter and intend to
vigorously contest this lawsuit.
 
    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 arose out of the private placement of common stock and
warrants made by DNAP in August of 1995. The plaintiff alleged that DNAP failed
to disclose material non-public information relating to DNAP's efforts to enter
into a strategic relationship with a third party in violation of federal and
state securities laws and the terms of the contract relating to the private
placement. On November 17, 1997, the plaintiff dismissed DNAP Holding from the
lawsuit. The Court dismissed the plaintiff's claim for federal securities fraud.
In February, 1999 the Court granted DNAP's Motion for Summary Judgment and
dismissed all of the remaining claims.
 
    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 arose out of the Merger on September 26, 1996 of DNAP with a
wholly-owned subsidiary of DNAP Holding. In the Merger, shares of DNAP's
Preferred Stock were converted into the right to receive shares of common stock
of DNAP Holding. The plaintiff alleged 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 alleged that the former
holders of DNAP common stock were unjustly enriched by DNAP's alleged breach of
the
 
                                       11
<PAGE>
Certificate of Designation. On February 17, 1999, the Court granted DNAP
Holding's and DNAP's Motion for Summary Judgment and dismissed all of the
plaintiff's claims.
 
    On January 7, 1999, a class action lawsuit styled GORDON K. AARON ET AL. V.
EMPRESAS LA MODERNA, S.A. DE C.V., ET AL. was filed in the U.S. federal district
court for the Northern District of California. The plaintiffs allege that, prior
to the Merger of DNAP with a subsidiary of DNAP Holding on September 26, 1996,
they owned shares of DNAP's Preferred Stock. In connection with the Merger, all
of the shares of common stock and Preferred Stock of DNAP were converted into
the number of shares of common stock of DNAP Holding specified in the Merger
Agreement. The plaintiffs allege that the Proxy Statement/ Prospectus
distributed to DNAP's stockholders in connection with the merger contained
material misrepresentations and omitted to state material facts, including
alleged facts relating to the preferred stockholders' alleged right to vote on
the merger. Both DNAP and DNAP Holding, as well as certain former and current
directors of DNAP and DNAP Holding, have been named as defendants in this
matter. The plaintiffs claim to have been damaged by the alleged actions of the
defendants and therefore the plaintiffs seek unspecified actual damages,
reimbursement of their litigation costs and expenses, and equitable relief,
including rescission of the Merger. The plaintiffs also allege that they were
entitled to receive, and seek specific performance of, special conversion
privileges under the terms of the Certificate of Designation that established
the Preferred Stock. DNAP Holding and DNAP deny any wrongdoing and liability in
this matter and intend to vigorously contest this lawsuit.
 
    On January 28, 1999, a class action lawsuit styled ROBERT KACZAK V. EMPRESAS
LA MODERNA, S.A. DE C.V., ET AL. was filed in the U.S. federal district court
for the Northern District of California. The complaint is substantially
identical to the above-described complaint filed on January 7, 1999 by the AARON
plaintiffs. DNAP Holding and DNAP deny any wrongdoing and liability in this
matter and intend to vigorously contest this lawsuit.
 
    In July of 1997, DNAP was formally notified by the U.S. Department of
Justice ("DOJ") that a federal grand jury in Washington, D.C. was investigating
possible violations of federal law by individuals associated with DNAP arising
from the FDA's investigation of the tobacco industry. In December, 1997, DNAP
entered into an agreement with DOJ (the "Plea Agreement") pursuant to which,
among other things DNAP pled guilty to one count of conspiracy to violate the
tobacco seed export law, a Class A misdemeanor, and DNAP agreed to cooperate
with the federal government in connection with the United States' investigations
involving the tobacco industry. DNAP fulfilled its obligations under the Plea
Agreement and paid a fine of $100,000 in 1998.
 
    In a complaint filed on March 31, 1998, in the Superior Court of the State
of California, County of San Mateo, U.A. Local No. 467 Health and Welfare Trust
Fund sued numerous defendants including DNAP and various manufacturers and
distributors of tobacco products. Since March 31, 1998, DNAP has been named as a
defendant in twenty-three additional cases brought on behalf of union trust
funds and benefit trusts in the California state courts. In each of these cases,
the plaintiff alleges that the defendants engaged in improper business and
advertising practices; committed fraud and deceit, conspiracy to commit fraud,
and aiding and abetting fraud; made negligent misrepresentations; and violated
California's anti-trust laws. DNAP's involvement in these suits arises from
allegations regarding research it performed for a major tobacco company from
1983 through 1994. In each of these suits, the plaintiff is seeking economic
damages and injunctive relief. These cases have been consolidated in the
Superior Court of the State of California, County of San Diego. DNAP filed a
demurrer (a motion to dismiss all of the claims against it) to all of these
cases and on March 9, 1999, the court sustained DNAP's demurrer and dismissed
all claims against DNAP in all of the cases except claims relating to improper
business practices. The plaintiffs were given the right to attempt to amend
their complaints only with respect to certain of the claims. DNAP denies any
wrongdoing or liability in this matter and intends to vigorously contest all of
these lawsuits.
 
                                       12
<PAGE>
    On October 30, 1998, a class action lawsuit styled PECHANGA BAND OF LUISENO
MISSION INDIANS ET AL. V. PHILIP MORRIS, INC., ET AL. was filed in the Superior
Court of the State of California, County of San Diego. The Plaintiffs sued
numerous defendants including DNAP and various manufacturers and distributors of
tobacco products. The plaintiff's allegations are substantially identical to the
claims made in the above-described cases brought on behalf of union trust funds
and benefit trusts (the "Union Cases"). This case has been coordinated with the
Union Cases, and proceedings in this case have been stayed pending the court's
ruling on the demurrers pending in the Union Cases. DNAP denies any wrongdoing
or liability in this matter and intends to vigorously contest this lawsuit.
 
    On May 19, 1998, Patricia Henley filed a lawsuit in the Superior Court of
the State of California, County of San Francisco, against six tobacco companies
and certain other defendants, including DNAP. In
this lawsuit, the plaintiff alleged that the defendants engaged in improper
business and advertising practices, committed fraud and deceit, and made
negligent misrepresentations in the course of manufacturing, marketing, and
distributing cigarettes. DNAP's involvement in this suit arose from allegations
regarding research it performed for a major tobacco company from 1983 through
1994. The plaintiff sought economic damages and injunctive relief. On June 22,
1998, DNAP filed a demurrer and on July 22 the court sustained the demurrer, but
gave the plaintiff leave to amend her complaint. Shortly thereafter, DNAP was
voluntarily dismissed with prejudice from this lawsuit.
 
    ABSA owns one hundred hectares (approximately 247 acres) of rural land in
the State of Sinaloa, Mexico, which is the subject of a judicial proceeding
pending in Mexico initiated by a group of campesinos. The petitioners asserted
that a previous owner of the subject land, Miguel Angel Suarez, owned rural land
in excess of the maximum that was then allowed by law and that therefore the
land rightfully belonged to them. On September 25, 1996, the court upheld the
petition and ordered the land turned over to the petitioners. The court also
ruled that the transfer of the property to Olga Elena Batiz Esquer on June 2,
1990 was null and void, which would mean that the transfer of the land by Ms.
Batiz to ABSA in 1993 was ineffective. On October 23, 1996, Ms. Batiz, who was a
party to the trial court proceeding, filed a challenge to the judicial
determination based on alleged violations of her constitutional rights and
procedural and substantive errors in the trial court proceedings. If ABSA is
ultimately required to transfer the subject land, which constitutes
approximately 8% of the total agricultural land owned by ABSA, Mexican law gives
ABSA indemnification rights against the State of Sinaloa and Ms. Batiz.
 
    ABSA owns seventy-five hectares (approximately 185 acres) of rural land in
the State of Sinaloa, Mexico, which is the subject of a judicial proceeding
pending in Mexico initiated by a group of campesinos. The petitioners requested
that ownership of the land be transferred to them based on the fact that, at
some time prior to ABSA's ownership of the land, the land was not cultivated for
more than two consecutive years without good reason. On March 18, 1997, the
court upheld the petition and ordered the land transferred to the petitioners.
On August 28, 1997, ABSA and other affected parties filed a challenge to the
judicial determination based on alleged violations of their constitutional
rights and procedural and substantive errors in the trial court proceedings. If
ABSA is ultimately required to transfer the subject land, which constitutes
approximately 6% of the total agricultural land owned by ABSA, Mexican law gives
ABSA limited indemnification rights against the State of Sinaloa.
 
    ABSA owns two hundred seventy-four hectares (approximately 677 acres) of
rural land in the State of Sinaloa, Mexico, which is the subject of a judicial
proceeding pending in Mexico initiated by a group of campesinos. The petitioners
asserted that a previous owner of the subject land owned rural land in excess of
the maximum that was then allowed by law and that therefore the land rightfully
belonged to them. On August 27, 1997, the court denied the petition and ruled in
favor of ABSA. On May 25, 1998, the petitioners filed a challenge to the
judicial determination based on alleged violations of their constitutional
rights. If ABSA is ultimately required to transfer the subject land, which
constitutes approximately 22% of the total agricultural land owned by ABSA,
Mexican law gives ABSA limited indemnification rights against the State of
Sinaloa.
 
                                       13
<PAGE>
    In addition to the foregoing, from time to time the Company is involved in
various legal actions that arise in the ordinary course of business. Such legal
actions are not expected, individually or in the aggregate, to have a material
adverse effect on the Company's financial condition or results of operations.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    Not applicable.
 
EXECUTIVE OFFICERS OF THE COMPANY
 
    Information regarding DNAP Holding's executive officers including their
respective ages at March 1, 1999, is set forth below.
 
<TABLE>
<CAPTION>
NAME                                     AGE      POSITION WITH COMPANY
-----------------------------------      ---      -----------------------------------------------------------------------
<S>                                  <C>          <C>
 
Mr. Bernardo Jimenez                         45   Chief Executive Officer and Director
 
Dr. John R. Bedbrook                         49   Executive Vice President
 
Mr. Jorge Fenyvesi                           48   Executive Vice President
 
Mr. Arthur H. Finnel                         48   Executive Vice President, Treasurer, and Chief Financial Officer
</TABLE>
 
    Mr. Bernardo Jimenez was appointed Chief Executive Officer of DNAP Holding
in October 1997. He has been Chairman of the Board of DNAP Holding since
September, 1996. Mr. Jimenez also serves as the Chief Operating Officer of the
agrobiotechnology division of Savia, which includes DNAP Holding and several
other smaller Mexican companies. From 1993 to 1996, Mr. Jimenez served as the
head of the Industrial Banking Division at the Vector Group, a financial
services company in Mexico which is affiliated with Savia, the Vice President of
New Business Development for Pulsar Internacional, S.A. de C.V., and the Chief
Financial Officer of Savia. Mr. Jimenez is a director of Savia.
 
    Dr. John R. Bedbrook, Ph.D. has been an Executive Vice President responsible
for technology and research and development of the Company since October, 1997.
Dr. Bedrook also serves as a co-President of DNAP. Dr. Bedbrook was Executive
Vice President and Director of Science of DNAP from 1988 through 1997.
 
    Mr. Jorge Fenyvesi has been an Executive Vice President of the Company
responsible for planning and business development since October, 1997 and has
been with DNAP Holding since July, 1997. He also serves as a co-President of
DNAP. From 1994 to 1997, Mr. Fenyvesi was Commercial Director for Dow Elanco,
Latin America and from 1992 to 1994 he was Research and Development Director for
Dow Elanco, Latin America.
 
    Mr. Arthur H. Finnel has been an Executive Vice President since October,
1997, and has been the Treasurer and Chief Financial Officer of the Company
since 1996. From 1995 to 1996, he was a financial planning consultant to Savia
and Bionova Mexico. From 1982 to 1995 he was an executive with Mars,
Incorporated, where he held positions of General Manager and President of its
Canadian pet food division and Vice President of Finance of Uncle Ben's, Inc.
 
    All executive officers of DNAP Holding are elected annually by the Board of
Directors to serve until the next annual meeting of the Board and until their
respective successors are chosen and qualified.
 
                                       14
<PAGE>
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "DNAP." Public trading of the Common Stock commenced on September 27,
1996, the date after the Company acquired DNAP. Prior to that date, there was no
public market for the Common Stock.
 
    The following table sets forth the high and low closing sales prices per
share for the Common Stock as reported on the Nasdaq National Market for the
periods indicated.
 
<TABLE>
<CAPTION>
                                                                                                          HIGH          LOW
                                                                                                          -----         ---
<S>                                                                                                    <C>          <C>
1998
First Quarter........................................................................................       4 1/2        3 7/8
Second Quarter.......................................................................................       4 5/8        3 3/4
Third Quarter........................................................................................       4 3/8        3 1/8
Fourth Quarter.......................................................................................       3 7/8        3 1/8
 
1997
First Quarter........................................................................................           6        3 5/8
Second Quarter.......................................................................................       4 3/4        3 1/2
Third Quarter........................................................................................       5 3/8        3 5/8
Fourth Quarter.......................................................................................           5            4
</TABLE>
 
    On March 9, 1999 the last reported sale price of the Common Stock on the
Nasdaq National Market was $3 1/2 per share. As of March 12, 1999 there were
1,015 record holders of the Common Stock.
 
    The Company has never paid cash dividends. Management intends to retain any
future earnings for payment of outstanding indebtedness and for the operation
and expansion of the Company's business and does not anticipate paying any cash
dividends in the foreseeable future.
 
                                       15
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
 
    The selected consolidated financial data set forth below for each of the
years in the five year period ended December 31, 1998, are derived from the
consolidated financial statements of DNAP Holding. The consolidated financial
statements and related notes as of December 31, 1998 and 1997, and the three
years in the period ended December 31, 1998, are included elsewhere in this Form
10-K, and the selected consolidated financial information set forth below should
be read in conjunction with such financial statements and notes. The selected
consolidated financial data of DNAP Holding include financial data for ABSA,
IPHC, Interfruver, DNAP, VPP, and Royal Van Namen as from their respective dates
of acquisition.
 
<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                              ------------------------------------------------------------------
                                                  1998          1997          1996          1995         1994
                                              ------------  ------------  ------------  ------------  ----------
                                                 (THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                           <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
Total revenues..............................  $    262,111  $    281,198  $    192,985  $    197,586  $   64,112
Gross profit................................        26,509        18,485        16,632        19,703      (1,648)
Selling and administrative expenses.........       (25,151)      (26,660)      (16,195)      (14,608)     (9,509)
Write-off of purchased research and
  development...............................            --        (2,815)      (12,900)           --          --
Research and development expenses...........        (5,846)       (5,072)       (1,244)           --          --
Amortization of goodwill, patents and
  trademarks................................        (2,940)       (2,407)       (1,008)         (538)       (404)
Operating (loss) income.....................        (7,428)      (18,469)      (14,715)        4,557     (11,561)
Interest expense, net.......................        (6,697)       (3,740)       (3,482)       (5,031)     (1,254)
Exchange (loss) gain, net...................        (1,762)         (481)          569        (4,748)     (1,473)
Other non-operating (expense) income........           137          (182)        2,058            --          --
Loss before income taxes....................       (15,750)      (22,872)      (15,570)       (5,222)    (14,288)
Income tax (expense) benefit................          (456)       (1,426)       (2,738)       (2,132)      1,842
Minority interests..........................           601         3,986         1,274         3,510       5,673
Net loss....................................       (15,605)      (20,312)      (17,034)       (3,844)     (6,773)
Net loss per common share--basic and
  diluted...................................  $      (0.80) $      (1.11) $      (1.19) $      (0.35) $    (0.70)
Weighted average number of common shares
  outstanding...............................    19,603,320    18,370,640    14,286,318    10,967,299   9,677,384
</TABLE>
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                              ------------------------------------------------------------------
                                                  1998          1997          1996          1995         1994
                                              ------------  ------------  ------------  ------------  ----------
<S>                                           <C>           <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................  $     15,405  $      6,600  $     10,735  $      1,580  $    2,540
Accounts receivable, net....................        40,406        38,088        36,322        32,526      22,649
Inventories, net............................        16,478        17,779        20,139        14,730      10,450
Total current assets........................        74,052        63,085        68,354        48,978      35,761
Total assets................................       167,686       147,249       141,137        88,108      71,682
Bank loans and current portion of long-term
  debt......................................        81,309        53,805        41,214        33,103      27,977
Total current liabilities...................       120,095       109,384        80,939        54,725      40,992
Long-term debt..............................         4,225         7,215         2,423        10,515       2,223
Stockholders' equity........................        42,117        28,356        48,690        14,725      17,839
</TABLE>
 
                                       16
<PAGE>
ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION
 
    The following discussion should be read in conjunction with the selected
financial information of DNAP Holding and the financial statements and related
notes of DNAP Holding included elsewhere in this Form 10-K.
 
OVERVIEW
 
    DNAP Holding engages in the production, distribution, and sale of fresh
produce to wholesalers and retailers primarily in Mexico, the United States, and
Canada. The business strategy of the Company consists of (i) vertical
integration within the produce/agronomics industry, (ii) growth by acquisition
of complementary businesses and (iii) access to basic technology to separate
itself from others in the fresh produce business, as exemplified by the Merger
with DNAP.
 
    DNAP, which was incorporated in Delaware in 1981, is an agribusiness
biotechnology company focused on the development and application of genetic
engineering and transformation technologies in plants, as well as development
and marketing of premium, differentiated, fresh and processed, branded fruits
and vegetables. DNAP uses advanced breeding, genetic engineering, and other
biotechniques to achieve improvements in the taste, texture, product form,
color, and shelf life of produce and to improve production characteristics, such
as disease resistance and production or processing yields.
 
    DNAP Holding expects to capitalize on the combination of production,
distribution, and technology strengths by focusing its longer-term business
strategy on the development and commercialization of value-added, proprietary
differentiated products that are developed with DNAP's technology.
 
RESULTS OF OPERATIONS
 
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
 
    Revenues declined from $281.2 million for the year ended December 31, 1997
to $262.1 million for the year ended December 31, 1998. This decline in revenues
was a direct consequence of the divestiture of Royal Van Namen ("RVN") during
the first quarter of 1998, which contributed full year revenues of $55.0 million
in 1997. Revenues in the U.S., Canadian, and Mexican distribution operations
increased by $35.9 million from 1997 to 1998 due to a higher volume of shipments
and the better pricing environment that prevailed, particularly during the
fourth quarter of 1998. DNAP's revenues increased from 1997 to 1998 by $3.3
million due to higher licensing and contract revenues.
 
    Gross profit (sales less cost of sales) increased from $18.5 million in 1997
to $26.5 million in 1998. ABSA's gross profit improved by $2.3 million due to
the higher volumes shipped and better prices it received for its products, along
with a reduction in write offs taken for inventory obsolesence as was recorded
in 1997. The U.S. and Canadian distribution companies reflected an improvement
of $3.1 million in gross profit from 1997 to 1998, which offset the loss of
RVN's gross profit from 1997. DNAP's gross profit improved by $3.3 million from
1997 to 1998 due to the higher licensing and contract revenues recorded in 1998.
 
    Selling and administrative expenses declined from $26.7 million in 1997 to
$25.2 million in 1998. The reduction in selling and administrative expenses
associated with the divestiture of RVN was offset in part by higher corporate
overhead expenses. The higher corporate expenses in 1998 emanated from the legal
costs incurred in connection with the Company's defense against shareholder
suits, employee termination costs, and other general corporate expenses.
 
    Research and development expenses increased from $5.1 million in 1997 to
$5.8 million in 1998 due to the increased level of activity at DNAP.
 
                                       17
<PAGE>
    During 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. Product programs in UAC were considered in-process since the
products being developed were in various stages of development, have not been
commercially introduced, and require additional research and development before
such products can be produced and introduced to the marketplace. Accordingly,
consistent with generally accepted accounting principles, purchased research and
development must be charged off immediately to current income.
 
    The non-cash charge for amortization of goodwill, patents and trademarks
increased by $0.5 million in 1998 as compared with 1997 due to the recognition
of a complete year of goodwill amortization related to the DNAP Holding's
purchase of the minority interests in ABSA and IPHC.
 
    Interest expense increased by $2.3 million in 1998 as compared with 1997 due
to the higher rates of interest that prevailed on the Company's debt obligations
during the second half of 1998 and an increase in the average level of debt
outstanding that was required to fund working capital and fixed asset
investments in 1998.
 
    Interest income decreased by $0.7 million in 1998 as compared with 1997 due
primarily to certain reclassifications.
 
    In 1998, DNAP Holding experienced a net foreign exchange loss of $1.8
million as compared to a loss of $0.5 million in 1997. The very high level of
volatility that affected worldwide financial and currency markets in the third
and fourth quarters of 1998 impacted significantly the peso/dollar exchange
rate. As a consequence, both ABSA and Interfruver experienced large exchange
losses during the fourth quarter of 1998 due to their net peso montetary
positions, reversing a small gain through the first three quarters of the year.
 
    Income tax expense decreased from $1.4 million in 1997 to $0.5 million in
1998. This variance was primarily attributable to the elimination of R.B.
Packing's tax liability due to its consolidation for tax purposes into DNAP
Holding, beginning in the third quarter of 1997 which followed the Company's
acquisition of the minority interests in IPHC.
 
    For 1998, the share of losses allocable to minority interests was $0.6
million as compared with minority interest losses of $4.0 million in 1997. These
allocations of losses for the years of 1998 and 1997, respectively, were
consistent with the minority positions held across the operating subsidiaries of
the Company. These allocations were affected significantly by the increase in
the Company's interests in ABSA and IPHC (effective August 1, 1997), and the
divestiture of its entire interest in RVN, and profit distributions made by
Interfruver to its owners during 1998.
 
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
 
    Revenues for the year ended December 31, 1997, increased by 45.7%, or $88.2
million, as compared with 1996. Contributing most significantly to this increase
were $26.3 million in revenues generated by the inclusion of DNAP and FWF, which
were not part of the Company during the first nine months of 1996, and $51.6
million in revenues generated by the inclusion of RVN, which was not part of the
Company during the first eleven months of 1996. Revenues were also positively
affected by a $16.6 million increase at Interfruver, the Company's Mexican
distribution subsidiary, which increased its revenues from $55.2 million in 1996
to $71.8 million in 1997. Revenues in the Company's U.S. and Canadian
distribution businesses declined by $6.2 million. This decline 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 was sold
in Mexico through Interfruver in the third and fourth quarters of 1997 due to
the relatively higher fresh produce prices that prevailed in Mexico during this
time period.
 
                                       18
<PAGE>
    Gross profit (sales less cost of sales) increased from $16.6 million in 1996
to $18.5 million in 1997. DNAP and FWF contributed $5.5 million and RVN
contributed $2.4 million to the gross profit increase. Interfruver's gross
profit increased by $0.7 million due to its higher sales. The gross profit of
the U.S. distribution businesses declined by $0.5 million due primarily to
ABSA's production shortfalls, and the effect of the production that was sold in
the Mexican market because of the relatively higher price that prevailed during
the third and fourth quarters. ABSA's decline in gross profit of $6.3 million
stemmed from weather related problems during the first half of 1997 and the
write down of inventories, receivables and property, plant and equipment
recorded during the second and fourth quarters of 1997.
 
    Selling and administrative expenses increased from $16.2 million in 1996 to
$26.7 million in 1997. This increase was primarily associated with the
operational expenses of $5.3 million incurred by DNAP, FWF and RVN, which were
not part of the Company during the three first quarters of 1996, and expenses of
$5.2 million incurred by DNAP Holding, associated primarily with its legal,
accounting, investor relations, and other overhead.
 
    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 $5.1 million charge in 1997 as compared with a $1.2 million
expense in 1996 reflects DNAP's research and product development costs for 1997.
 
    During 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 1996 the Company wrote off $12.9 million of purchased
research and development resulting from the merger with DNAP. Product programs
in these companies were considered in-process since the products being developed
were in various stages of development, have not been commercially introduced,
and require additional research and development before such products can be
produced and introduced to the marketplace. Accordingly, consistent with
generally accepted accounting principles, purchased research and development
must be charged off immediately to current income.
 
    The non-cash charge for amortization of goodwill, patents and trademarks
increased by $1.4 million in 1997 as a result of recognizing a complete year of
goodwill amortization related to the DNAP and RVN acquisitions in 1996 and the
goodwill amortization associated with the 1997 purchase of the minority
interests in ABSA and IPHC.
 
    Interest expense increased by $0.1 million in 1997 as compared with 1996 due
to a higher average level of debt outstanding during 1997.
 
    Interest income decreased by $0.2 million in 1997 as compared with 1996 due
to a lower interest rate generated by ABSA on its short-term investments and a
lower level of advances to growers.
 
    In 1997, DNAP Holding experienced a net foreign exchange loss of $0.5
million as compared to a gain of $0.6 million in 1996. During 1997, the
peso/dollar exchange rate remained relatively stable until the end of September,
but in the fourth quarter the peso declined in value due to the volatility of
the international currency markets. As a consequence, an exchange loss was
experienced in 1997 by ABSA, whose functional currency is the U.S. dollar, due
to its net peso monetary position.
 
    Other non-operating income in 1997 declined by $1.9 million due to
reductions in subsidies received in connection with the special incentive
program established in 1996 by various Mexican government and banking
institutions for companies in the agriculture, fishing and forestry industries
and the loss recorded on the sale of RVN. The special incentive program was
terminated in June, 1997.
 
    Income tax expense decreased from $2.7 million in 1996 to $1.4 million in
1997. The decrease in income tax expense was due primarily to reduced income in
the Company's U. S. and Mexican operations partially offset by taxes from income
generated from European operations and additional taxes charged in
 
                                       19
<PAGE>
connection with an expected settlement with the Internal Revenue Service
regarding prior years' tax filings of R.B. Packing.
 
    For 1997, the share of losses allocable to minority interests was $4.0
million as compared with minority interest losses of $1.3 million in 1996. These
allocations of losses for the years 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 (the effective date
of the transaction agreed to by the parties) to the Batiz family, and of ABSA's
results from August 1, 1997 through December 31, 1997 to Bionova Mexico.
 
CAPITAL EXPENDITURES
 
    During 1998, the Company made capital investments of $9.8 million in
property, plant and equipment. The majority of the funds were spent on three
investment projects at ABSA--the installation of new irrigation systems on
agricultural land owned by the ABSA, additional cooling room capacity required
for product quality, and initial investments for a new packaging facility at
ABSA's production site in Culiacan, Mexico.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    For the year ended December 31, 1998, the Company used $23.4 million of cash
in operating activities. The great majority of this cash usage in operations was
associated with the losses sustained by the Company ($15.6 million), offset to
some extent by non-cash items ($6.0 million). The increase in accounts
receivable ($0.7 million) was consistent with the higher sales in December. The
increase in advances to growers ($6.8 million) reflected new projects initiated
during the second half of the year and the impact of cold weather on the
Company's joint venture in Baja California Norte, which caused part of this
joint venture's outstanding advance to be carried over to 1999. Inventories
declined by $1.1 million reflecting another impact of the cold weather in
Mexico. Acounts payable and accrued expenses decreased by $2.1 million during
1998 as the Company paid off certain obligations outstanding from year-end 1997
in 1998.
 
    In addition to the capital investments discussed above, investment
requirements reflected in the the cash flows included the payment of the 1997
earn-out to Interfruver ($0.5 million).
 
    Cash provided by financing activities in 1998 included the investment made
by Bionova International, Inc. in connection with the re-capitalization of the
Company ($29.3 million) and the proceeds received from additional short-term
bank debt ($30.0 million). This additional short-term bank debt was used to
repay outstanding short-term debt to Savia, and the balance was used to fund the
operations of the Company
 
    On March 22, 1999, the Company completed a refinancing of its $85 million in
consolidated debt. This refinancing culminated in a three year $100 million
credit facility enabling the Company to correct the significant working capital
imbalance that has persisted for several years and relieve the risk associated
with the need to continuously refinance large short-term lines of credit. The
key provisions of this credit arrangement consist of (i) a payment of the entire
principal amount on the third anniversary following closing, (ii) prepayments at
the option of the Company with no penalties, (iii) an interest rate of LIBOR
plus 7%, (iv) up front fees of $3 million to the lead banks which have arranged
the financing, and (v) requirements that the Company must keep one year's worth
of interest in an interest bearing reserve account and that all existing
short-term financing must be paid off with the proceeds of this loan. The
contract also provides that the Company is permitted to obtain up to $30 million
in new financing for working capital purposes. This credit facility will be
fully guaranteed by Savia. Certain restrictions will be placed on DNAP Holding
with respect to capital investments, acquisitions, and use of proceeds from
asset sales. While there are no financial covenants in the contract insofar as
DNAP Holding is concerned, Savia and some of its other affiliates are obligated
to meet certain covenants.
 
                                       20
<PAGE>
YEAR 2000 ("Y2K") UPDATE
 
BACKGROUND
 
    The "Year 2000 Issue" is the result of computer programs that were written
using two digits rather than four to define the applicable year. If the
Company's computer programs with date-sensitive functions are not Year 2000
compliant, they may recognize a date using "00" as the Year 1900 rather than the
Year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activities.
 
THE PROJECT
 
    The Company's Y2K project includes both information technology ("IT") and
non-IT systems and has been divided into four principal sections. These sections
are (1) hardware, (2) software, (3) non-IT systems, and (4) third parties
(suppliers, customers, and other). Sections 1, 2, and 3 have, or will go through
seven phases, as follows: (i) an inventory of all items relevant to Y2K, (ii)
assignment of priorities regarding each of these items for the Company's
activities in the Y2K, (iii) determination of the Company's current Y2K
capability and compliance with regard to each of these items, (iv) preliminary
testing of Y2K capability, (v) maintenance and or replacement of items that fail
to meet Y2K requirements, (vi) validation that maintenance and replacement
changes meet Y2K requirements, and (vii) design of contingency plans.
 
    The Company has completed the first two phases--the inventory and assignment
of priorities--for all four sections of the project. Progress on the other
sections has not been quite as rapid as had been anticipated at the end of the
third quarter, 1998. The Company now expects to have completed the entire
project by July 31, 1999, as discussed below.
 
    The hardware section includes personal computers, servers, routers, central
telephone systems, printers, faxes, etc. The Company has determined that 80
percent of the hardware already is compliant and has moved on to the testing,
maintenance and/or replacement, and validation phases. The balance of the
hardware and non-IT systems, such as alarm systems, are expected to be 100
percent compliant by March 31, 1999. The contingency plan for this section is
scheduled to be complete by March 31, 1999.
 
    The software section includes both purchased and internally developed
software. These software applications are in the preliminary testing phase, and
the Company estimates that about 85 percent of all applications software being
used today already is compliant. The software that is not Y2K compliant will be
converted, upgraded or replaced. Software applications are scheduled to be 100
percent compliant by July 31, 1999 and the contingency plan for this section is
expected to be complete by July 31, 1999.
 
    The third parties section includes suppliers and customers. This section
consists of identifying those parties that are critical to the normal operations
of the Company and contacting each of the critical parties, determining the
extent to which these parties are vulnerable to Y2K issues, and identifying any
exposure the Company might therefore have in its operations. Once this
evaluation has been completed, contingency plans will be developed to deal with
any Y2K issues emanating from this section. Both the evaluation process and the
contingency plans for this section are scheduled to be complete by March 31,
1999.
 
COST TO ADDRESS THE COMPANY'S Y2K ISSUES
 
    Costs incurred by the Company to date with respect to its Y2K activities
have been immaterial. It is expected that the most significant expenses
associated with completion of the project will be any replacement or conversion
of software that is required. The current estimate of the cost to complete the
project is $150,000.
 
                                       21
<PAGE>
THE RISK OF THE COMPANY TO Y2K ISSUES
 
    The failure to identify and/or correct properly a Y2K problem could result
in an interruption in, or a failure of certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity or financial condition. The Company's Y2K
project is proceeding ahead and is expected to be completed by July 31, 1999.
With the completion of this project as scheduled, the Company believes that the
possibility of significant interruptions of normal business activities and
operations will be reduced.
 
NEW ACCOUNTING PRONOUNCEMENTS
 
    In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities ("FAS 133"), which the Company will be required to adopt for its 2000
annual financial statements. This statement establishes a new model for
accounting for derivatives and hedging activities. Under FAS 133, all
derivatives must be recognized as assets and liabilities and measured at fair
value. The Company historically has conducted a limited number of hedging
transactions by using forward contracts. The Company has not determined the
impact of the adoption of this new accounting standard on its consolidated
financial position or results of operations at this time.
 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
    This report on Form 10-K includes "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical facts included in this Form 10-K, including
without limitation statements contained in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and under "Notes to
the Consolidated Financial Statements" located elsewhere herein regarding the
Company's financial position, business strategy, prospects, plans and objectives
of management of the Company for future operations, and industry conditions, are
forward-looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. In addition to
important factors described elsewhere in this report, the following significant
factors, among others, sometimes have affected, and in the future could affect,
the Company's actual results and could cause such results during 1999, and
beyond, to differ materially from those expressed in any forward-looking
statements made by or on behalf of the Company:
 
    MANAGEMENT INFORMATION SYSTEMS AND CONTROLS. The Company's business has
undergone rapid growth. As a result of this rapid growth, significant strains
have been placed on the management, operations and financial resources of the
Company's subsidiaries. The realization of the business strategy for the Company
and its subsidiaries will be dependent upon, among other things, the ability of
the Company to adapt management information systems and controls and to hire,
train and retain qualified employees to allow the operations thereof to be
effectively managed. The geographic separation of the operations of the
Company's subsidiaries exacerbates these issues.
 
    HISTORICAL LOSSES AND ACCUMULATED DEFICITS. DNAP Holding sustained losses in
1996, 1997, and 1998. There is no assurance that some of the factors that caused
these historical losses will not be present in future periods or that the
Company will be profitable in the future.
 
    POSSIBLE NEED FOR ADDITIONAL FINANCING. The projected cash flows from
operations and existing capital resources of the Company, including existing
credit lines, may not be sufficient to permit the Company to pursue proposed
business strategies to acquire additional producers, distributors, marketers and
additional rights to technologies. Therefore, the ability to pursue such
acquisitions may be dependent upon the Company's ability to obtain additional
capital, which could result in the incurrence of additional debt or potentially
dilutive issuances of additional equity securities. There can be no assurance
that the Company will be successful in obtaining such capital and, as a result,
may be restricted in its pursuit of its future growth and acquisition
strategies.
 
                                       22
<PAGE>
    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 one-third of the Company's sales occur in
Mexico. Approximately 11% of the Company's sales occurs in Canada. Foreign
operations such as those conducted by the Company, especially in countries with
volatile economies, are subject to political and economic risks, including
political instability, currency controls, currency devaluations, exchange rate
fluctuations, increased credit risks, inflation, foreign tax laws, changes in
import/export or other regulations and tariff and freight rates. Political and
other factors beyond the Company's control, including without limitation those
factors discussed below, could have a materially adverse effect on the Company's
operations.
 
    CURRENCY FLUCTUATIONS AND INFLATION. The currency exchange rates in Mexico
have historically been volatile. For example, in December 1994, the Mexican
government announced its intention to float the Mexican peso against the United
States dollar and, as a result, the peso devalued over 40% relative to the
dollar during that month. Such exchange rate fluctuations impact the business of
the Company's subsidiaries. If the value of the peso decreases relative to the
value of the dollar, then (i) imports of produce into Mexico for distribution by
the Company's subsidiaries become more expensive in peso terms and therefore
more difficult to sell in the Mexican market and (ii) inflation that generally
accompanies reductions in the value of the peso reduces the purchasing power of
Mexican consumers, which reduces the demand for all products including produce
and, in particular, imported, branded or other premium-quality produce.
Conversely, if the value of the peso increases relative to the value of the
dollar, Mexican production costs increase in dollar terms, which results in
lower margins or higher prices with respect to produce grown in Mexico and sold
in the United States and Canada.
 
    INTEREST RATES. Historically, interest rates in Mexico have been volatile,
particularly in times of economic unrest and uncertainty. High interest rates
restrict the availability and raise the cost of capital for the Company's
subsidiaries that are Mexican companies and for growers and other Mexican
parties with whom they do business, both for borrowings denominated in pesos and
for borrowings denominated in dollars. Costs of operations for these Mexican
entities are higher as a result.
 
    TRADE SANCTIONS. Notwithstanding the enactment of the North American Free
Trade Agreement, Mexico and the United States from time to time are involved in
trade disputes. On occasion, the United States has imposed tariffs, quotas, and
importation bans on products produced in Mexico. Such actions, if taken, could
subject the Company to an additional financial burden, some or all of which may
not be able to be passed on to consumers.
 
    AGRIBUSINESS RISKS. A variety of risks are inherent in the agribusiness
industry, including, without limitation, the following:
 
    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
 
                                       23
<PAGE>
conditions or increased supply from foreign competitors (which could be caused
by a variety of economic and climatic factors in such competitors' home
countries).
 
    LIMITED BARRIERS TO ENTRY. The relatively low capital requirements for
farming and produce distribution permit relatively easy entrance into the fresh
produce business, which in turn can result in oversupply.
 
    WEATHER. Weather conditions greatly affect the amount of fresh produce that
is brought to market, and, accordingly, the prices received for such produce.
Storms, frosts, droughts, and particularly floods, can destroy a crop and less
severe weather conditions, such as excess precipitation, cold weather and heat,
can kill or damage significant portions of a crop, rendering much of it
unpackable and unsalable. Conversely, unusually favorable weather conditions can
result in oversupply that drives down the prices realized by producers,
including ABSA.
 
    CROP DISEASE AND PESTILENCE. Crop disease and pestilence can be
unpredictable and can have a devastating effect on crops, rendering them
unsalable and resulting in the loss of all or a portion of the crop for that
harvest season. Even when only a portion of the crop is damaged, the profits a
grower could have made on the crop will be severely affected because the costs
to plant and cultivate the entire crop will have been incurred although only a
portion of it can be sold.
 
    LABOR SHORTAGES AND UNION ACTIVITY. The production of fresh produce is
heavily dependent upon the availability of a large labor force to harvest crops.
The turnover rate among the labor force is high due to the strenuous work, long
hours, necessary relocation and relatively low pay. To the extent it becomes
necessary to pay more to attract labor to farm work, labor costs can be expected
to increase.
 
    The Mexican farm work force retained by ABSA is unionized. If the union
attempted to disrupt production and were successful on a large scale, labor
costs would likely increase and there could be work stoppages, which would be
particularly damaging in an industry where harvesting crops at peak times and
getting them to market on a timely basis is critical.
 
    The majority of fresh produce is shipped by truck. In Mexico, truck
deliveries are sometimes less reliable than in the United States due to, among
other factors, the unreliability of some Mexican trucking companies and drivers
to make deliveries on schedule, inconsistent quality and maintenance of the
trucks used by Mexican trucking companies and poor road conditions in some
areas. In the United States and in Mexico, the trucking industry is largely
unionized and therefore susceptible to labor disturbances. Delivery delays
caused by labor disturbances in the trucking industry or any other reason limit
the ability to get fresh produce to market before it spoils.
 
    AVAILABILITY OF SUPPLY. ABSA relies on agricultural land leased from others
and production associations with other growers for a large part of its supply.
If the other parties to these leases and other arrangements were to choose not
to renew their agreements with ABSA, ABSA would be required to locate alternate
sources of supply and/or land or, in some cases, to pay increased rents for
land. In addition to increased rental rates, increases in land costs could
result from increases in water charges, property taxes and related expenses.
 
    DEPENDENCE ON ONE SUPPLIER. One grower in Baja California, Santa Cruz
Empacadora, S. de R.L. de C.V., accounted in 1998 for approximately 12% of the
Company's consolidated sales. ABSA recently has entered into a five-year
production association agreement with this grower that extends through 2003.
 
    GOVERNMENTAL REGULATION. The U.S. activities of the Company's subsidiaries
are subject to extensive regulation by the Food and Drug Administration, the
United States Department of Agriculture, the Environmental Protection Agency,
and other federal and state regulatory agencies in the United States. Similarly,
the Mexican activities of the Company's subsidiaries are subject to extensive
regulation by
 
                                       24
<PAGE>
the Secretaria de Agricultura, Ganaderia y Desarrollo Rural, the Secretaria de
Salud, and other federal and state regulatory agencies in Mexico. Also, certain
of the Company's products may require regulatory approval or notification in the
United States or in other countries in which they are tested, used or sold. The
regulatory process may delay research, development, production, or marketing and
require more costly and time-consuming procedures, and there can be no assurance
that requisite regulatory approvals or registration of certain of its current or
future genetically engineered products will be granted on a timely basis.
 
    PRODUCT LIABILITY. Certain of the products being marketed and developed by
the Company entail a risk of product liability. While the Company has taken what
it believes are adequate precautions, there can be no assurance that it will
avoid significant product liability exposure.
 
    NUMEROUS COMPETITORS. The fresh produce industry in general, and the tomato
industry in particular, are characterized by a large number of competitors at
both the production and distribution levels. In the past some of these
competitors have sought to limit the importation of Mexican-grown tomatoes and
peppers into the United States. DNAP is one of many companies engaged in
research and product development activities based on agricultural biotechnology.
Competitors include specialized biotechnology firms, as well as major
pharmaceutical, food and chemical companies, many of which have substantial
financial, technical and marketing resources.
 
    MARKETING OF PREMIUM QUALITY PRODUCE. The Company's subsidiaries are
currently producing and distributing premium quality fresh fruits and
vegetables. The success of these and future products depends on many variables,
including the ability to produce and make available to the market consistent,
premium quality fruits and vegetables on a year-round basis, consumers'
willingness to pay higher prices for premium quality fruits and vegetables, and
retailers' willingness to carry such fruits and vegetables.
 
    NO ASSURANCE OF COMMERCIAL SUCCESS OF PRODUCTS BEING DEVELOPED AND MARKETED.
Marketing of several products currently developed by DNAP is in the early
stages, and there can be no assurance that any of these products will be
successful or will produce significant revenues or profits. In addition, a
number of DNAP's product development projects are in the early stages, and there
can be no assurance that these projects will be successful or that any resulting
products will be commercially successful or profitable. In particular, although
DNAP has produced and sold a limited amount of its products, there can be no
assurance that it will be able to produce or market such products on a larger
scale.
 
    NO ASSURANCE OF PUBLIC ACCEPTANCE OF GENETICALLY ENGINEERED PRODUCTS. DNAP's
second generation products are being developed through the use of genetic
engineering. The commercial success of these products will depend in part on
public acceptance of the cultivation and consumption of genetically engineered
products. There can be no assurance that such products will gain sufficient
public acceptance to be profitable, even if such products obtain the required
regulatory approvals.
 
    POSSIBLE DEVELOPMENT OF SUPERIOR TECHNOLOGY BY COMPETITORS. The application
of recombinant DNA and related technologies to plants is complex and subject to
rapid change. A number of companies are engaged in research related to plant
biotechnology, including companies that rely on the use of recombinant DNA as a
principal scientific strategy and companies that rely on other technologies.
Technological advances by others could render the Company's products less
competitive. Some of these companies, as well as competitors that supply
non-genetically-engineered products, have substantial resources.
 
    PROPRIETARY PROTECTION. The Company's success will depend, in part, on its
ability to obtain patents, maintain trade secret protection, and conduct its
business without infringing the proprietary rights of others. There can be no
assurance that others will not develop competing technologies and market
 
                                       25
<PAGE>
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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
INTEREST RATE RISK
 
    The table below provides information about the Company's financial
instruments consisting primarily of debt obligations that are sensitive to
changes in interest rates. For debt obligations, the table presents principal
cash flows and related weighted average interest rates by expected (contractual)
maturity dates. Notional amounts are used to calculate the contractual payments
to be exchanged under the contracts. Weighted average variable rates are based
on implied forward rates in the yield curve on December 31, 1998. The
information is presented in U.S. dollar equivalents, which is the Company's
reporting currency. The instrument's actual cash flows are denominated in both
U.S. dollars and Mexican pesos, and are indicated accordingly in the tables
below.
<TABLE>
<CAPTION>
                                                                        EXPECTED MATURITY DATE
                                            -------------------------------------------------------------------------------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>            <C>
                                              1999       2000       2001       2002       2003      THEREAFTER      TOTAL
                                            ---------  ---------  ---------  ---------  ---------  -------------  ---------
Short-term debt:
($US EQUIVALENT IN MILLIONS)
  U.S. dollar variable rate...............  $    79.3                                                             $    79.3
    Average interest rate.................         12%
  Peso fixed rate (in $US)................        0.5                                                                   0.5
    Average interest rate.................         29%
 
Long-term debt:...........................
  U.S. dollar fixed rate..................  $     1.3  $     3.7                                                  $     5.0
    Average interest rate.................         10%        10%
  U.S. dollar variable rate...............  $     0.2  $     0.2  $     0.3                                       $     0.7
    Average interest rate.................         12%        12%        12%
 
<CAPTION>
<S>                                         <C>
                                              FAIR
                                              VALUE
                                            ---------
Short-term debt:
($US EQUIVALENT IN MILLIONS)
  U.S. dollar variable rate...............  $    79.3
    Average interest rate.................
  Peso fixed rate (in $US)................        0.5
    Average interest rate.................
Long-term debt:...........................
  U.S. dollar fixed rate..................  $     5.0
    Average interest rate.................
  U.S. dollar variable rate...............  $     0.7
    Average interest rate.................
</TABLE>
 
    The Company tries to use the most cost-effective means to fund its operating
and capital needs. Fixed or variable debt will be borrowed in both U.S. Dollars
and Mexican pesos. The Company borrows Mexican pesos to provide for its working
capital needs in its Mexican operations. To minimize exchange risk associated
with the importation of products, the Company will enter into forward exchange
contracts where the functional currency to be used in the transaction is
dollars. At December 31, 1998 approximately 87% of the Company's long-term debt
is fixed rate debt and 13% is variable rate debt. All of the fixed rate
long-term debt is denominated in U.S. dollars. All of the variable rate debt is
denominated in U.S. dollars.
 
    The Company recently completed a transaction to refinance its short-term
variable rate debt, as discussed in the liquidity and capital resources section
of Management's Discussion and Analysis of Financial Condition and Results of
Operations. This new credit facility will bear a variable interest rate of
between 12% to 15%.
 
                                       26
<PAGE>
EXCHANGE RATE RISK
 
    The table below provides information about the Company's financial
instruments by functional currency that are subject to exchange rate risk. This
information is presented in U.S. dollar equivalents. The table summarizes
information on instruments that are sensitive to foreign currency exchange
rates, including peso-denominated debt obligations. For debt obligations, the
table presents principal cash flows and related weighted average interest rates
by expected maturity dates.
<TABLE>
<CAPTION>
                                                                             EXPECTED MATURITY DATE
                                                --------------------------------------------------------------------------------
<S>                                             <C>        <C>          <C>          <C>          <C>          <C>
                                                  1999        2000         2001         2002         2003         THEREAFTER
                                                ---------     -----        -----        -----        -----     -----------------
On-Balance sheet
Financial Investments
  ($US Equivalent in millions)
  Peso short-term debt:
    Variable rate (in $US)....................  $     0.5
    Average interest rate.....................         29%
    Expected maturity or transaction date.....    Dec. 31
 
<CAPTION>
<S>                                             <C>        <C>
                                                             FAIR
                                                  TOTAL      VALUE
                                                ---------  ---------
On-Balance sheet
Financial Investments
  ($US Equivalent in millions)
  Peso short-term debt:
    Variable rate (in $US)....................  $     0.5  $     0.5
    Average interest rate.....................
    Expected maturity or transaction date.....
</TABLE>
 
    The Company had no firmly committed forward sales contracts in Mexican pesos
as of December 31, 1998.
 
    The Company is exposed to U.S. dollar-to-Mexican peso currency exchange risk
due to revenues and costs denominated in Mexican pesos associated with its
Mexican subsidiaries, ABSA and Interfruver. The Company expects it will continue
to be exposed to currency exchange risks in the near future.
 
    The Company's subsidiary, Interfruver, from time to time enters into foreign
exchange forward contracts to manage its exposure to fluctuations in foreign
currency denominated payables. These contracts generally mature within three
months. As of December 31, 1998, the Company did not have any foreign exchange
forward contracts outstanding. Company management believes that these financial
instruments do not subject the Company to material risk due to foreign exchange
movements because gains or losses on these contracts will offset gains or losses
on the assets, liabilities, and transactions being hedged.
 
COMMODITY PRICE RISK
 
    The table below provides information about the Company's fresh produce
growing crops inventory and fixed price contracts that are sensitive to changes
in commodity prices. For inventory, the table presents the carrying amount and
fair value at December 31, 1998. For the Fixed price contracts, the table
presents the notional amounts in Boxes, the weighted average contract prices,
and the total dollar contract amount by expected maturity dates, the latest of
which occurs within one year from the reporting date. Contract amounts are used
to calculate the contractual payments and quantity of fresh produce to be
exchanged under futures contracts.
 
<TABLE>
<CAPTION>
                                                                                                  CARRYING      FAIR
                                     AT DECEMBER 31, 1998                                          AMOUNT       VALUE
-----------------------------------------------------------------------------------------------  -----------  ---------
<S>                                                                                              <C>          <C>
On-balance sheet commodity position:
  Fresh produce crops in process inventory ($US in millions)...................................   $     8.0   $     8.0
Fixed price contracts:
  Contract volumes (1,349,100 boxes)
  Weighted average unit price (per 1,349,100 boxes)............................................   $    7.62   $    7.62
  Contract amount ($US in millions)............................................................   $    10.2   $    10.2
</TABLE>
 
                                       27
<PAGE>
    In order to manage the exposure to commodity price sensitivity associated
with fresh produce products, the Company enters into fixed price contracts with
certain customers which guarantee specified volumes for the growing season or
the year at a fixed price. The Company believes that its efforts to assure a
high level of product quality along with efforts to develop and market
differentiated, added value products also reduce to some extent its exposure to
commodity price sensitivity.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The Report of Independent Accountants, and the consolidated financial
statements of the Company and the notes thereto appear on the following pages.
 
                                       28
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors
and Stockholders of
DNAP Holding Corporation
 
    In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations and comprehensive income and loss, of
changes in stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of DNAP Holding Corporation and its
subsidiaries at December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
 
PRICEWATERHOUSECOOPERS LLP
 
San Diego, California
March 23, 1999
 
                                       29
<PAGE>
                            DNAP HOLDING CORPORATION
 
                           CONSOLIDATED BALANCE SHEET
 
                           THOUSANDS OF U.S. DOLLARS
 
<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                            ----------------------
<S>                                                                                         <C>         <C>
                                                                                               1998        1997
                                                                                            ----------  ----------
ASSETS
Current assets:
Cash and cash equivalents.................................................................  $   15,405  $    6,600
Accounts receivable, net..................................................................      28,220      32,777
Advances to growers.......................................................................      12,186       5,311
Inventories, net..........................................................................      16,478      17,779
Other current assets......................................................................       1,763         618
                                                                                            ----------  ----------
      Total current assets................................................................      74,052      63,085
                                                                                            ----------  ----------
Property, plant and equipment, net........................................................      38,611      36,520
Patents and trademarks, net...............................................................      17,025      13,258
Goodwill, net.............................................................................      29,539      30,792
Deferred income taxes.....................................................................       4,174       3,279
Other assets..............................................................................       4,285         315
                                                                                            ----------  ----------
      Total assets........................................................................  $  167,686  $  147,249
                                                                                            ----------  ----------
                                                                                            ----------  ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans.....................................................................  $   79,751  $   51,217
Current portion of long-term debt.........................................................       1,558       2,588
Accounts payable and accrued expenses.....................................................      26,075      28,915
Accounts due to related parties...........................................................       7,396      21,949
Deferred income taxes.....................................................................       5,315       4,715
                                                                                            ----------  ----------
      Total current liabilities...........................................................     120,095     109,384
Long-term debt............................................................................       4,225       7,215
                                                                                            ----------  ----------
      Total liabilities...................................................................     124,320     116,599
                                                                                            ----------  ----------
Minority interest.........................................................................       1,249       2,294
                                                                                            ----------  ----------
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized, no shares issued and
  outstanding.............................................................................          --          --
Common stock, $.01 par value, 25,000,000 shares authorized, 23,588,031 shares issued and
  outstanding.............................................................................         236         184
Additional paid-in capital................................................................     107,918      78,720
Accumulated deficit.......................................................................     (65,845)    (50,240)
Accumulated other comprehensive income (loss).............................................        (192)       (308)
                                                                                            ----------  ----------
Total stockholders' equity................................................................      42,117      28,356
                                                                                            ----------  ----------
      Total liabilities and stockholders' equity..........................................  $  167,686  $  147,249
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       30
<PAGE>
                            DNAP HOLDING CORPORATION
 
     CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME AND LOSS
 
                           THOUSANDS OF U.S. DOLLARS
 
                           (EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                      -------------------------------------------
<S>                                                                   <C>            <C>            <C>
                                                                          1998           1997           1996
                                                                      -------------  -------------  -------------
Total revenues......................................................  $     262,111  $     281,198  $     192,985
                                                                      -------------  -------------  -------------
Cost of sales.......................................................       (235,602)      (262,713)      (176,353)
Selling and administrative expenses.................................        (25,151)       (26,660)       (16,195)
Research and development expenses...................................         (5,846)        (5,072)        (1,244)
Purchased research and development..................................             --         (2,815)       (12,900)
Amortization of goodwill, patents and trademarks....................         (2,940)        (2,407)        (1,008)
                                                                      -------------  -------------  -------------
                                                                           (269,539)      (299,667)      (207,700)
                                                                      -------------  -------------  -------------
Operating (loss) income.............................................         (7,428)       (18,469)       (14,715)
                                                                      -------------  -------------  -------------
Interest expense....................................................         (7,982)        (5,704)        (5,651)
Interest income.....................................................          1,285          1,964          2,169
Exchange (loss) gain, net...........................................         (1,762)          (481)           569
Other non-operating (expense) income................................            137           (182)         2,058
                                                                      -------------  -------------  -------------
                                                                             (8,322)        (4,403)          (855)
                                                                      -------------  -------------  -------------
Loss before income tax..............................................        (15,750)       (22,872)       (15,570)
 
Income tax expense..................................................           (456)        (1,426)        (2,738)
                                                                      -------------  -------------  -------------
Loss before minority interest.......................................        (16,206)       (24,298)       (18,308)
 
Minority interest in net loss of subsidiaries, net..................            601          3,986          1,274
                                                                      -------------  -------------  -------------
Net loss............................................................        (15,605)       (20,312)       (17,034)
 
Other comprehensive income (expense) net of tax:
    Foreign currency translation adjustment.........................            116           (207)           128
                                                                      -------------  -------------  -------------
Comprehensive income (loss).........................................  $     (15,489) $     (20,519) $     (16,906)
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Net loss per share--basic and diluted...............................  $       (0.80) $       (1.11) $       (1.19)
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Weighted average number of common shares outstanding................     19,603,320     18,370,640     14,286,318
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       31
<PAGE>
                            DNAP HOLDING CORPORATION
 
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
 
                           THOUSANDS OF U.S. DOLLARS
 
<TABLE>
<CAPTION>
                                                                                      ACCUMULATED
                                 COMMON                  ADDITIONAL                      OTHER                          TOTAL
                                 SHARES       COMMON       PAID-IN    CONTRIBUTED    COMPREHENSIVE    ACCUMULATED   STOCKHOLDERS'
                               OUTSTANDING     STOCK       CAPITAL      CAPITAL      INCOME (LOSS)      DEFICIT        EQUITY
                               -----------  -----------  -----------  -----------  -----------------  ------------  -------------
<S>                            <C>          <C>          <C>          <C>          <C>                <C>           <C>
Balance at December 31,
  1995.......................                                          $  27,848       $    (229)      $  (12,894)    $  14,725
Issuance of shares for cash
  upon the formation of
  Bionova, U.S. Inc..........      25,000                 $      25                                                          25
Issuance of shares for cash
  and upon transfer of
  Bionova, S.A. de C.V.'s
  interests in the Bionova
  subsidiaries...............     270,922    $       3       32,845      (27,848)                                         5,000
Issuance of shares to
  Bionova, S.A. de C.V. prior
  to the merger..............      52,800            1        5,279                                                       5,280
Shares issued to DNA Plant
  Technology stockholders
  upon consummation of the
  merger.....................   5,511,192           55       32,511                                                      32,566
Shares issued to Bionova
  International, Inc. in
  connection with merger and
  capital contribution.......  12,510,726          125        7,875                                                       8,000
Net loss.....................                                                                             (17,034)      (17,034)
Cumulative translation
  adjustment.................                                                                128                            128
                               -----------       -----   -----------  -----------          -----      ------------  -------------
Balance at December 31,
  1996.......................  18,370,640          184       78,535           --            (101)         (29,928)       48,690
Options issued in conjunction
  with UAC acquisition.......                                   185                                                         185
Net loss.....................                                                                             (20,312)      (20,312)
Cumulative translation
  adjustment.................                                                               (207)                          (207)
                               -----------       -----   -----------  -----------          -----      ------------  -------------
Balance at December 31,
  1997.......................  18,370,640          184       78,720           --            (308)         (50,240)       28,356
Shares issued to Bionova
  International, Inc., net of
  expenses...................   5,217,391           52       29,198                                                      29,250
Net loss.....................                                                                             (15,605)      (15,605)
Cumulative translation
  adjustment.................                                                                116                            116
                               -----------       -----   -----------  -----------          -----      ------------  -------------
Balance at December 31,
  1998.......................  23,588,031    $     236    $ 107,918           --       $    (192)      $  (65,845)    $  42,117
                               -----------       -----   -----------  -----------          -----      ------------  -------------
                               -----------       -----   -----------  -----------          -----      ------------  -------------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       32
<PAGE>
                            DNAP HOLDING CORPORATION
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
 
                           THOUSANDS OF U.S. DOLLARS
 
<TABLE>
<CAPTION>
                                                                                      YEAR ENDED DECEMBER 31,
                                                                                  -------------------------------
<S>                                                                               <C>        <C>        <C>
                                                                                    1998       1997       1996
                                                                                  ---------  ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss........................................................................  $ (15,605) $ (20,312) $ (17,034)
Items not affecting cash:
  Minority interest.............................................................       (601)    (3,986)    (1,274)
  Depreciation..................................................................      4,136      3,938      2,244
  Amortization of goodwill, patents and trademarks..............................      2,940      2,407      1,008
  Purchased research and development............................................         --      2,815     12,900
  Deferred income taxes.........................................................       (295)       882      1,986
  Write-off of property, plant and equipment....................................         --        943         --
  Loss (gain) from sale of property, plant and equipment........................       (137)      (321)      (325)
Net changes (exclusive of acquisitions) in:
  Accounts receivable and advances to growers, net..............................     (7,504)    (1,766)     5,675
  Inventories...................................................................      1,059      2,360     (4,951)
  Other assets..................................................................     (5,263)     1,524        (35)
  Accounts payable and accrued expenses.........................................     (2,120)    (2,690)     5,627
                                                                                  ---------  ---------  ---------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES.............................    (23,390)   (14,206)     5,821
                                                                                  ---------  ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of intellectual property..........................................         --     (2,630)        --
  Advances to DNAP prior to merger, net of cash acquired........................         --         --     (6,664)
  Acquisitions, net of cash acquired............................................         --     (8,188)    (1,221)
  Purchases of property, plant and equipment....................................     (9,775)    (6,444)    (7,104)
  Proceeds from sale of property, plant and equipment...........................        479        564        535
  Payments for purchases of companies...........................................       (476)      (627)        --
  Proceeds from divestiture of Van Namen, net of cash divested..................        637         --         --
  Loss on divestiture of subsidiary.............................................       (832)       832         --
                                                                                  ---------  ---------  ---------
NET CASH USED IN INVESTING ACTIVITIES...........................................     (9,967)   (16,493)   (14,454)
                                                                                  ---------  ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net changes in short-term borrowings..........................................     29,955     19,107     (2,142)
  Proceeds from bank loans and other debtors....................................        256        267     34,556
  Repayment of long-term debt...................................................     (2,746)    (9,211)   (35,451)
  Accounts due to related parties...............................................    (14,553)    16,401      2,520
  Investment by Bionova International, Inc., net of expenses....................     29,250         --     18,305
                                                                                  ---------  ---------  ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES.......................................     42,162     26,564     17,788
                                                                                  ---------  ---------  ---------
Net (decrease) increase in cash and cash equivalents............................      8,805     (4,135)     9,155
Cash at beginning of year.......................................................      6,600     10,735      1,580
                                                                                  ---------  ---------  ---------
Cash at end of year.............................................................  $  15,405  $   6,600  $  10,735
                                                                                  ---------  ---------  ---------
                                                                                  ---------  ---------  ---------
SUPPLEMENTAL CASH FLOW DATA
Interest paid...................................................................  $   7,439  $   4,915  $   4,438
Income taxes paid...............................................................        954        294      1,693
NON-CASH INVESTING AND FINANCING ACTIVITIES
Contribution of Bionova, S.A. de C.V. investment in subsidiaries for common
  stock.........................................................................         --         --     27,848
Patents and trademarks resulting from merger with DNA Plant Technology
  Corporation...................................................................         --         --     14,800
Options issued in connection with UAC acquisition...............................         --        185         --
Issuance of promissory notes in the acquisition of the minority interests of
  ABSA and IPHC.................................................................         --      7,220         --
Acquisition of Monsanto Company's strawberry development program................      5,000         --         --
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       33
<PAGE>
                            DNAP HOLDING CORPORATION
 
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1--BASIS OF PRESENTATION
 
    DNAP Holding Corporation, a Delaware corporation (together with its
subsidiaries, "DNAP Holding" or the "Company"), a subsidiary of Bionova, S.A. de
C.V. ("Bionova Mexico"), a Mexican corporation, 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 the merger discussed
below effective September 26, 1996, DNA Plant Technology Corporation and its
subsidiaries (DNAP). Today, the Company acts as a holding company for (i)
Agricola Batiz, S.A. de C.V., of which the Company owns 80.0% ("ABSA"), (ii)
International Produce Holding Company, of which the Company owns 100.0%
("IPHC"), (iii) DNA Plant Technology Corporation, of which the Company owns
100.0% ("DNAP"), and (iv) VPP Corporation, of which the Company owns 100.0%
("VPP"). As of July 1, 1996 and the date of the Merger, the Bionova Subsidiaries
consisted of majority interests in ABSA and IPHC. On October 7, 1997, the
Company acquired all of the minority interests in IPHC and increased its
ownership interest in ABSA to 80.0%.
 
THE COMPANY AND THE BIONOVA SUBSIDIARIES
 
    On January 26, 1996, the Company issued 25,000 shares to Bionova Mexico in
exchange for a capital contribution of $25,000 and borrowed $5 million from
Bionova Mexico under a demand note agreement, at a fixed interest rate of
10.25%.
 
    On July 1, 1996, Bionova Mexico transferred its interest in the Bionova
Subsidiaries to the Company and $5 million in cash in exchange for 270,922
common shares and acquired an additional 2,800 common shares of the Company for
$280,000 on August 1, 1996. Additionally, Bionova Mexico contributed the $5
million demand note in exchange for 50,000 common shares on August 2, 1996. On
August 5, 1996, Bionova Mexico contributed its shares of the Company's common
stock to its wholly-owned subsidiary, Bionova International, Inc.
 
    The consolidated financial statements included herein have been prepared
giving retroactive effect to the contribution of the Bionova Subsidiaries in a
manner similar to a pooling of interest.
 
DNAP MERGER
 
    On September 26, 1996, the merger of Bionova Acquisition, Inc., a
wholly-owned subsidiary of the Company, with and into DNAP (the "Merger") was
approved by DNAP stockholders and was consummated. Upon consummation of the
Merger, Bionova International, Inc. contributed an additional $8 million to the
Company for 12,510,726 common shares, and the former DNAP stockholders received
5,511,192 common shares. The name of the Company was changed to DNAP Holding
Corporation immediately prior to the Merger.
 
    The value of the shares of the Company's common stock issued in connection
with the Merger was determined based on the number of shares of DNAP's common
stock and DNAP's $2.25 Convertible Exchangeable Preferred Stock outstanding, at
the fair value of the securities based on their respective
 
                                       34
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 1--BASIS OF PRESENTATION (CONTINUED)
closing prices as quoted on the Nasdaq National Market at July 30, 1996, the
date of the second amendment to the merger agreement.
 
<TABLE>
<CAPTION>
                                                                            SHARES
                                                                          OUTSTANDING    FAIR MARKET  FAIR MARKET
                                                                           (000'S OF      VALUE PER      VALUE
                                                                            SHARES)         SHARE      ($000'S)
                                                                        ---------------  -----------  -----------
<S>                                                                     <C>              <C>          <C>
DNAP common stock.....................................................        45,676      $   0.531    $  24,254
DNAP $2.25 Convertible Exchangeable Preferred Stock...................         1,380          3.125        4,312
                                                                                                      -----------
                                                                                                          28,566
Costs incurred by Bionova Mexico associated with the Merger...........                                     4,000
                                                                                                      -----------
                                                                                                       $  32,566
                                                                                                      -----------
                                                                                                      -----------
</TABLE>
 
    The purchase price was allocated to the following items based on a valuation
of the intangibles by an independent appraiser.
 
<TABLE>
<CAPTION>
                                                                                     ($000'S)
                                                                                     ---------
<S>                                                                                  <C>
Patents and trademarks.............................................................  $  14,800
Research and development...........................................................     12,900
Goodwill...........................................................................     10,528
Net liabilities of DNAP at fair value..............................................     (5,662)
                                                                                     ---------
                                                                                     $  32,566
                                                                                     ---------
                                                                                     ---------
</TABLE>
 
DNAP HOLDING CORPORATION CAPITAL INCREASE DURING 1998
 
    On October 6, 1998, DNAP Holding announced a re-capitalization program
whereby all common shareholders as of the record date will be issued rights to
acquire 3 shares of common stock for every 4 shares they own at an exercise
price of $5.75 per share. Rights associated with partial shares will be rounded
up to the next higher whole number of shares equivalent.
 
    At DNAP Holding's 1999 Annual Meeting of Stockholders, stockholders will be
asked to approve a proposal to amend DNAP Holding's Certificate of Incorporation
to increase the number of authorized shares of common stock to 50 million.
Bionova International, Inc., holder of 76.6% of the shares outstanding, has
agreed to vote all of its shares in favor of this proposal. An increase in the
number of authorized shares is required to issue all of the rights under this
capitalization program. Upon this affirmative vote to increase the number of
authorized shares, the rights to acquire the stock will be issued and
exercisable immediately and will expire on May 31, 2000.
 
    As a part of the re-capitalization program, Bionova International, Inc.,
made a capital contribution of $30 million in October 6, 1998, and received in
exchange 5,217,391 shares of DNAP Holding Corporation common stock at a price of
$5.75 per share. Bionova International, Inc. agreed that, upon issuance of the
13,557,630 rights it will be due to receive following the shareholders meeting
on April 28, 1999, it will surrender back to DNAP Holding the equivalent number
of rights (9,130,435) corresponding to the number of shares it purchased in
October. Approximately 4,133,390 rights will be issued to all other stockholders
in accordance with their share holdings.
 
                                       35
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
a.  Consolidation
 
    The consolidated financial statements include DNAP Holding Corporation and
all of its wholly-owned and majority-owned subsidiaries (the Company). All
significant intercompany accounts and transactions have been eliminated.
Acquired businesses are included in the results of operations since their
acquisition dates. Divested businesses are included in the results of operations
until their divestiture dates. The minority stockholders' interest in the
majority-owned subsidiaries' financial position and results of operations is
presented as a minority interest in the Company's consolidated financial
statements.
 
b.  Management's estimates and assumptions
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from such estimates.
 
c.  Revenue recognition
 
PRODUCE SALES
 
    The Company sells produce on its own account and on behalf of growers and
other parties on a commissioned basis. Revenue from such sales is recognized
when the produce is shipped, net of an allowance for estimated returns. Since
the Company bears the risk of loss for collection of sales proceeds for sales on
behalf of growers and other parties on which commissions are earned, the
associated sales are recognized at the gross sales amounts, net of an allowance
for estimated returns or other credits. In the consolidated results of
operations, 1998, 1997, and 1996 sales recognized on a commissioned basis and
the related commissions earned were as follows:
 
<TABLE>
<CAPTION>
                                                                          ($000'S)
                                                                  YEAR ENDED DECEMBER 31,
                                                              --------------------------------
                                                                 1998       1997       1996
                                                              ----------  ---------  ---------
<S>                                                           <C>         <C>        <C>
Sales.......................................................  $  148,079  $  98,882  $  30,455
Commissions earned..........................................      13,695      9,132      3,253
</TABLE>
 
PRODUCT DEVELOPMENT ACTIVITIES
 
    Revenue from product development activities is recognized during the period
the Company performs the development efforts in accordance with the term of the
agreements and activities undertaken. The revenue is recognized as earned over
the term of the agreement, in accordance with the performance effort. Revenue
that is related to future performance under such agreements is deferred and
recognized as revenue when earned.
 
d.  Cash and cash equivalents
 
    Cash equivalents are stated at cost, which approximates the fair value. The
Company considers all highly liquid and temporary cash investments with original
maturities of three months or less to be cash equivalents. The Company's policy
is to place its cash and cash equivalents with large creditworthy financial
institutions to limit the amount of credit exposure.
 
                                       36
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e.  Advances to growers
 
    Advances to growers are made for supplies, seed, and other growing and
harvesting costs. The advances are interest bearing and repaid from amounts
withheld from sales proceeds due to growers.
 
f.  Association agreements
 
    The Company has entered into certain participation agreements with growers
under which the Company shares in the profits and losses associated with growing
activities. The Company records these participation agreements under the equity
method of accounting.
 
    One grower in Baja California, Santa Cruz Empacadora, S. de R.L. de C.V.,
accounted in 1998 for approximately 12% of Company's consolidated sales. ABSA
recently has entered into a five-year production association agreement with this
grower that extends through 2003.
 
g.  Inventories
 
    Inventories are stated at the lower of cost or market. Cost is determined by
using the first-in, first-out method for finished produce. Cost of growing crops
includes direct material and labor and an allocation of indirect costs and are
accumulated until the time of the harvest, subject to lower of cost or market
adjustments.
 
h.  Property, plant and equipment
 
    Property, plant and equipment are stated at their acquisition cost.
Additions to property, plant and equipment, including significant improvements
and renewals, are capitalized. Maintenance and repair costs are charged to
expense as incurred. Depreciation is computed using straight-line methods over
the estimated useful lives of the assets.
 
i.  Goodwill
 
    Goodwill consists principally of excess purchase price over net tangible
assets of businesses acquired. Goodwill is amortized on a straight-line basis
over twenty years. Amortization of goodwill amounted to $1.708 million, $1.174
million, and $0.700 million in 1998, 1997 and 1996, respectively. Accumulated
amortization was $4.857 million and $3.149 million at December 31, 1998 and
1997, respectively.
 
j.  Patents and trademarks
 
    The costs of obtaining patents are expensed as incurred. Acquired patents
and trademarks are capitalized and amortized using the straight-line method over
their estimated useful lives. During 1998 and 1997, the Company recorded
amortization expense of $1.233 million for both years.
 
k.  Research and product development costs
 
    All research and product development costs incurred or acquired are
expensed.
 
l.  Stock based compensation
 
    The Company measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method and provides pro forma
disclosures of net income (loss) and earnings (loss) per share as if the fair
value-based method had been applied in measuring compensation expense.
 
                                       37
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
m. Concentration of credit risks
 
    Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables and
advances to growers. Credit risk associated with trade receivables is limited
due to the large number of customers comprising the Company's customer base.
There can be no assurance that an event outside of the Company's control will
not occur and cause these trade receivables or advances to be at risk. The
Company performs ongoing credit evaluations of its customers' and growers'
financial condition to determine the need for an allowance for uncollectible
accounts.
 
n.  Impairment of long-lived assets
 
    Management periodically reviews for impairment the long-lived assets and
certain identifiable intangibles held and used by the Company whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. An impairment loss is recognized whenever it is determined that
recoverability is impaired. Measurement of an impairment loss for long-lived
assets and identifiable intangibles that management expects to hold and use is
based on the fair value of the asset.
 
o.  Income taxes
 
    Current income tax expense or benefit represents the amount of income taxes
expected to be payable or refundable for the current year. A deferred income tax
liability or asset is established for the expected future tax consequences of
temporary differences between the financial reporting and income tax bases of
assets and liabilities. Deferred income tax expense or benefit represents the
net change during the year in the deferred income tax liabilities or assets.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be more likely than not realized in future tax
returns.
 
p.  Fair value of financial instruments
 
    The carrying value of the Company's financial instruments, including cash
and cash equivalents, trade receivables and payables, and advances to growers,
approximate their fair market value due to their short-term maturities. The
carrying value of the Company's long-term debt is estimated to approximate its
fair value.
 
q.  Translation of financial statements
 
    The financial statements for subsidiaries whose functional currency is not
the U.S. dollar are translated in the following manner: assets and liabilities
at the year end rates; stockholders' equity at historical rates and results of
operations at the monthly average exchange rates. The effects of exchange rate
changes are reflected as a separate component of stockholders' equity.
 
    For subsidiaries whose activities are recorded in currencies which are not
their functional currency and any subsidiaries located in a hyperinflationary
environment, i.e. countries with inflation exceeding
 
                                       38
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
100% over the prior three years (which in the case of DNAP Holding includes all
Mexican subsidiaries), the components of the financial statements are translated
as follows:
 
<TABLE>
<S>                                                          <C>
BALANCE SHEET:
Current assets, except inventories.........................  year-end
Inventories................................................  historical
Liabilities................................................  year-end
Property, plant and equipment..............................  historical
Stockholders' equity.......................................  historical
 
RESULTS OF OPERATIONS:
Sales......................................................  historical
Cost of sales..............................................  historical
Depreciation and amortization..............................  historical
Interest...................................................  monthly average
Other expenses and income..................................  monthly average
Income taxes...............................................  monthly average
</TABLE>
 
    Gains and losses in re-measurement arise mainly from the effect of exchange
rate fluctuations on net monetary items denominated in pesos and are included in
results of operations.
 
r.  Net loss per common share
 
    Basic net income (loss) per common share is computed as net income (loss)
divided by the weighted average number of common shares outstanding during the
period. Diluted net income (loss) per common share is computed as net income
(loss) divided by the weighted average number of common shares and potential
common shares, using the treasury stock method, outstanding during the period.
There are no reconciling items in calculating the numerator and denominator for
basic and diluted net income (loss) per share for any periods presented.
 
s.  Employee benefit plan
 
    DNAP has a savings and retirement plan and trust (the "401(k) Plan")
available to all eligible employees of DNAP. An eligible employee may elect to
defer, in the form of contributions to the 401(k) Plan, between 1% and 15% (in
1% increments) of the total compensation that would otherwise be paid to the
employee, subject to annual contribution limitations. An employee's
contributions are invested at the direction of the employee in various
investment options and are fully vested and non-forfeitable immediately upon
contribution. The 401(k) Plan provides for DNAP contributions in the form of
common stock or cash, not to exceed 3% of elective salary deferral
contributions. During 1998, 1997, and 1996, DNAP's cash contributions to the
401(k) Plan were approximately $0.110 million, $0.082 million, and $0.017
million, respectively.
 
    Effective January 1, 1998, Tanimura Distributing, Inc. ("TDI"), implemented
a 401(k) profit sharing plan (the "TDI Plan") available to all eligible
employees of TDI. An eligible employee may elect to defer, in the form of
contributions to the TDI Plan, up to 15% of the total compensation that would
otherwise be paid to the employee, subject to annual contribution limitations.
An employee's contributions are invested at the direction of the employee in
various investment options and are fully vested and non-forfeitable immediately
upon contribution. The TDI Plan provides for TDI matching contributions at the
discretion of
 
                                       39
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
the employer (TDI). For 1998, TDI agreed to match employee contributions up to a
maximum of $500 per employee. During 1998, TDI's employer contributions amounted
to approximately $0.013 million.
 
t.  Comprehensive income
 
    The Company adopted Statement of Financial Accounting Standard No. 130 ("FAS
130"), "Reporting Comprehensive Income," for fiscal 1998 and retroactively
restated all prior periods to conform with FAS 130 as required. FAS 130
establishes standards for reporting and display of comprehensive income and its
components in financial statements. Comprehensive income is defined as "the
change in equity (net assets) of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources. It
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners."
 
u.  Segment reporting
 
    The company adopted Statement of Financial Accounting Standard No. 131 ("FAS
131"), "Disclosures about Segments of an Enterprise and Related Information,"
for fiscal 1998 and retroactively restated all prior periods to conform with FAS
131 as required. FAS 131 requires that public business enterprises report
certain information about their products and services, the geographic areas in
which they operate, and their major customers.
 
v.  New Accounting Pronouncements
 
    In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities ("FAS 133") which the Company will be required to adopt for its 2000
annual financial statements. This statement establishes a new model for
accounting for derivatives and hedging activities. Under FAS 133, all
derivatives must be recognized as assets and liabilities and measured at fair
value. The Company historically has conducted a limited number of hedging
transactions in foreign currencies by using forward contracts. The Company has
not determined the impact of the adoption of this new accounting standard on its
consolidated financial position or results of operations at this time.
 
w.  Reclassification of costs
 
    Certain prior year amounts have been reclassified to conform to the current
year presentation.
 
NOTE 3--ACQUISITIONS, MERGERS, AND DIVESTITURES
 
    In 1994 and 1995, Bionova Mexico and its subsidiaries acquired control of
the following companies:
 
    - During 1994, Bionova Mexico made a capital contribution toward the
      formation of Premier Fruits & Vegetables BBL, Inc. ("Premier") in the
      amount of $0.161 million in cash, representing an 80% share of the capital
      stock. This investment was contributed to IPHC in December, 1994.
 
    - During December 1994, Bionova Mexico acquired 51% of IPHC for $2.2 million
      in cash. This U.S. company distributes fresh produce in the United States
      and Canada through its subsidiaries, R.B. Packing, Inc., R.B. Packing of
      California, Inc., R.B. Packing of Texas, Inc. (all 100% owned), TDI (75%
      owned), and Premier (80% owned). The goodwill resulting from this 1994
      acquisition amounted to $0.675 million.
 
                                       40
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 3--ACQUISITIONS, MERGERS, AND DIVESTITURES (CONTINUED)
    - In January 1995, ABSA acquired a 50.01% stake in Interfruver de Mexico,
      S.A. de C.V. ("Interfruver"), a Mexican distributor of fresh produce, for
      $2.055 million in cash, resulting in the recognition of goodwill of $1.94
      million. The agreement to acquire Interfruver established that, in
      addition to the purchase price mentioned above, a contingent pay out of
      $2.0 million could be due to the sellers (the minority stockholders) on an
      earn out basis over a four-year period beginning in 1995. This contingent
      payment has resulted in an adjustment of the original purchase price and a
      corresponding increase in goodwill and related amortization. Amounts paid
      under this contingent payment arrangement were $0.476 million, $0.350
      million and $0.0 million in 1998, 1997 and 1996 respectively. While the
      amount has not yet been determined by the Company, a payment could be made
      in the second quarter of 1999 representing the earn out for 1998.
 
    The following table summarizes the net investment by Bionova Mexico in the
subsidiaries acquired through December 31, 1995, which were contributed to the
Company in 1996.
 
<TABLE>
<CAPTION>
                                                                                ($000'S)
                                                                              DECEMBER 31,
                                                                          --------------------
COMPANY ACQUIRED                                                            1996       1995
------------------------------------------------------------------------  ---------  ---------
<S>                                                                       <C>        <C>
ABSA....................................................................  $  25,296  $  24,360
Tanimura................................................................        191        191
IPHC....................................................................      2,200      2,200
Premier.................................................................        161        161
                                                                          ---------  ---------
Total...................................................................  $  27,848  $  26,912
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>
 
    These acquisitions were accounted for under the purchase method. The
companies are included in the consolidated financial statements since the date
of their acquisition. Tanimura and Premier had no operations prior to their
formation with Bionova Mexico as the controlling stockholder.
 
    In 1996, 1997 and 1998, the Company and its subsidiaries made the following
acquisitions and divestitures:
 
    - In November 1996, IPHC acquired a 51% stake in Royal Van Namen ("RVN"), a
      distributor of fresh produce located in The Netherlands, for $1.475
      million in cash, resulting in the recognition of minimal goodwill. In
      addition, the Company made an earn-out payment in 1997 for 1996
      performance of $0.277 million. In February 1998, the Company sold its
      entire 51% interest in RVN for $0.9 million. The loss on the sale was
      recognized in the 1997 accounts, and amounted to $0.832 million. Revenues,
      operating profit, and income before income tax recorded in the the
      consolidated statement of operations for RVN in 1997 were $54.843 million,
      $0.486 million, and $0.355 million, respectively.
 
    - In August 1997, the Company, through its wholly owned subsidiary, VPP
      Corporation, acquired the intellectual property assets of United Agricorp,
      Inc. ("UAC"), 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
 
                                       41
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 3--ACQUISITIONS, MERGERS, AND DIVESTITURES (CONTINUED)
     non-competition and indemnification commitments made by UAC's major
      stockholder, the Company issued 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 October 1997, the Company completed its acquisition of the minority
      interests in IPHC and increased its ownership in ABSA to 80.0% (the
      effective date of the transaction agreed to by the parties was July 31,
      1997 for purposes of allocating minority income and losses). The price for
      acquiring these interests was $14.7 million. The goodwill resulting from
      the acquisition of these interests was $12.1 million.
 
    - In December 1998, the Company, through its wholly owned subsidiary, VPP
      Corporation, acquired Monsanto Company's strawberry development program.
      The program includes exclusive rights to most of Monsanto's existing
      genetic and gene technology for berry development, and a non-exclusive
      right to future Monsanto berry technology, including strawberries,
      cranberries, raspberries, blackberries, boysenberries and blueberries. The
      package includes a breeding program with a strawberry variety expected to
      be commercially available in the United States in 1999, as well as
      multiple strawberry varieties planned for commercial introduction over the
      next few years. This acquisition complements the research that DNAP had
      been conducting since 1995 in the area of genetic modifications of
      strawberries to improve various traits. The purchase price for Monsanto's
      technology assets was $5.0 million and was paid in January, 1999. These
      technology assets will be amortized over a period of ten years. In
      consideration for certain additional licenses and assets the Company could
      be obligated to the payment of an additional $7.0 million, which will be
      recorded as additions to the purchase price if and when they occur.
 
    The following unaudited pro forma results of operations assume that the
Merger had been consummated on January 1, 1995 and the acquisition of the
minority interests in ABSA and IPHC had been consummated on January 1, 1996.
Further, as RVN was sold in February 1998, the 1996 and 1997 results have been
adjusted to exclude its results of operations.
 
<TABLE>
<CAPTION>
                                                                                          ($000'S)
                                                                                         PRO FORMA
                                                                                        (UNAUDITED)
                                                                                  YEAR ENDED DECEMBER 31,
                                                                          ----------------------------------------
                                                                              1997          1996          1995
                                                                          ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>
Net sales...............................................................       227,184       200,448       211,935
Net loss (1)............................................................       (20,949)      (14,566)      (18,347)
Loss per common share--basic and diluted................................  $      (1.14) $      (1.02) $      (1.67)
Pro forma weighted average common shares outstanding....................    18,370,640    14,286,318    10,967,299
</TABLE>
 
------------------------
 
(1) does not include the $2.8 million and $12.9 million write-off of purchased
    research and development in 1997 and 1996, respectively.
 
                                       42
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 4--ACCOUNTS RECEIVABLE
 
    Accounts receivable were comprised of the following:
 
<TABLE>
<CAPTION>
                                                                                                    ($000'S)
                                                                                                  DECEMBER 31,
                                                                                              --------------------
<S>                                                                                           <C>        <C>
                                                                                                1998       1997
                                                                                              ---------  ---------
Trade.......................................................................................  $  21,960  $  28,871
Recoverable value-added tax.................................................................      1,960      1,305
Officers and employees......................................................................        286        121
Sundry debtors..............................................................................      2,688      4,517
Related parties.............................................................................      2,484        690
                                                                                              ---------  ---------
                                                                                                 29,378     35,504
Allowance for doubtful accounts and returns.................................................     (1,158)    (2,727)
                                                                                              ---------  ---------
                                                                                              $  28,220  $  32,777
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</TABLE>
 
    The Company sells its produce primarily to retailers and wholesalers in the
United States, Mexico and Canada. No single customer accounted for more than 5%
of the Company's sales, and there were no significant accounts receivable from a
single customer at December 31, 1998 or 1997.
 
NOTE 5--ADVANCES TO GROWERS
 
    Advances to growers were comprised of the following:
 
<TABLE>
<CAPTION>
                                                                                                     ($000'S)
                                                                                                   DECEMBER 31,
                                                                                               --------------------
<S>                                                                                            <C>        <C>
                                                                                                 1998       1997
                                                                                               ---------  ---------
Advances to growers..........................................................................  $  13,901  $   5,283
Advances to related parties..................................................................        760      1,016
                                                                                               ---------  ---------
                                                                                                  14,661      6,299
Allowance for doubtful accounts..............................................................     (2,475)      (988)
                                                                                               ---------  ---------
                                                                                               $  12,186  $   5,311
                                                                                               ---------  ---------
                                                                                               ---------  ---------
</TABLE>
 
    The Company has agreements with certain produce growers in Mexico and in the
United States, whereby a significant portion of growing costs are paid in
advance by the Company. The growing costs are recorded as advances to growers
and are recognized as a component of cost of produce sales when the produce is
sold. The advances in Mexico ($7.572 million and $4.569 million at December 31,
1998 and 1997, respectively) in some cases are secured by promissory notes
and/or the right to use the acreage of the grower if the advances are not
repaid. Advances to growers in the United States ($4.614 million and $0.742
million at December 31, 1998 and 1997, respectively) are generally not
collateralized.
 
    Advances earned interest at 14% per annum in 1998 and 1997, and 12% per
annum in 1996. Interest income from these advances amounted to $0.609 million,
$0.651 million, and $0.884 million during the years ended December 31, 1998,
1997 and 1996, respectively.
 
                                       43
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 6--INVENTORIES
 
    Inventories were comprised of the following:
 
<TABLE>
<CAPTION>
                                                                                        ($000'S)
                                                                                      DECEMBER 31,
                                                                                  --------------------
<S>                                                                               <C>        <C>        <C>
                                                                                    1998       1997
                                                                                  ---------  ---------
Finished produce................................................................  $   2,756  $   1,815
Growing crops...................................................................      8,020      9,974
Advances to suppliers...........................................................        299        316
Spare parts and materials.......................................................      3,977      4,821
Merchandise in transit and other................................................      1,566        980
                                                                                  ---------  ---------
                                                                                     16,618     17,906
Allowance for slow moving inventory.............................................       (140)      (127)
                                                                                  ---------  ---------
                                                                                  $  16,478  $  17,779
                                                                                  ---------  ---------
                                                                                  ---------  ---------
</TABLE>
 
NOTE 7--PROPERTY, PLANT, AND EQUIPMENT
 
    Property, plant and equipment was comprised of the following:
 
<TABLE>
<CAPTION>
                                                                                        ($000'S)
                                                                                  --------------------
<S>                                                                               <C>        <C>        <C>
                                                                                      DECEMBER 31,
                                                                                  --------------------   ESTIMATED
                                                                                    1998       1997     USEFUL LIFE
                                                                                  ---------  ---------  -----------
Land............................................................................  $   9,422  $  10,993
Buildings.......................................................................     14,699     10,672    25 years
Machinery and equipment.........................................................     14,567     13,364    15 years
Office equipment................................................................      2,232      2,232     4 years
Transportation equipment........................................................      3,906      3,383    10 years
Vineyards and agricultural tools................................................      2,459      2,471     3 years
Land improvements and others....................................................      3,315      2,638    13 years
                                                                                  ---------  ---------
                                                                                     50,600     45,753
Accumulated depreciation and amortization.......................................    (11,989)    (9,233)
                                                                                  ---------  ---------
                                                                                  $  38,611  $  36,520
                                                                                  ---------  ---------
                                                                                  ---------  ---------
</TABLE>
 
    Equipment amounting to $2.414 million and $2.150 million at December 31,
1998 and 1997, respectively, has been recorded under capitalized leases and
included above. Related accumulated depreciation amounted to $0.822 million and
$0.582 million at December 31, 1998 and 1997, respectively, and the related
depreciation expense amounted to $0.175 million, $0.192 million and $0.126
million for the years ended December 31, 1998, 1997 and 1996, respectively.
 
NOTE 8--BANK LOANS AND LONG-TERM DEBT
 
SHORT-TERM LOANS
 
    Short-term bank loans consist of amounts due to banks, denominated in U.S.
dollars, under various lines of credit facilities. The lines of credit contain
certain covenants which, among other things, require maintenance of certain
ratio levels and tangible net worth levels. The lines of credit bear interest at
prime (9.7% and 7.5% at December 31, 1998 and 1997, respectively). Various
credit facilities are available with
 
                                       44
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 8--BANK LOANS AND LONG-TERM DEBT (CONTINUED)
banks whereby the Company may borrow upon such terms as the subsidiaries and
banks mutually agree. At December 31, 1998, such bank credit facilities amounted
to $93.3 million, of which $13.5 million was not used. The amounts due under
bank credit facilities with Mexican banks are generally renewable at the
discretion of the banks. The Company has informal arrangements with these banks,
which permit additional borrowings, subject to the availability of funds by the
banks.
 
    The Company completed a $30 million one-year term credit facility with Bank
of Montreal which matures on November 23, 1999. Such credit facility is included
in the short-term debt outstanding of $79.8 million at December 31, 1998. This
loan is guaranteed by Savia, S.A. de C.V., formerly known as Empresas La
Moderna, S.A. de C.V. ("Savia"). The interest rate assigned to this loan is
LIBOR plus 5% or PRIME plus 2.5% (10.25% on December 31, 1998); its continued
funding is subject to the maintenance of certain financial and other covenants
by both DNAP Holding and Savia.
 
    At December 31, 1998, Savia, the parent company of Bionova Mexico,
guaranteed $79.8 million of this debt. Savia is obligated under the terms of the
Merger through September, 1999 to provide under certain conditions a guarantee
of indebtedness of the Company of up to $20 million to a financial institution
under a loan or a line of credit.
 
                                       45
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 8--BANK LOANS AND LONG-TERM DEBT (CONTINUED)
LONG-TERM LOANS
 
    Consolidated obligations under long-term debt arrangements are denominated
in U.S. dollars and were comprised of:
 
<TABLE>
<CAPTION>
                                                                                                               ($000'S)
                                                                                                             DECEMBER 31,
                                                                                                            --------------
<S>                                                                                                  <C>    <C>     <C>
                                                                                                             1998    1997
                                                                                                            ------  ------
 
Bank loan that bore interest at a rate equivalent to Libor plus 1% and which was secured with first
  mortgage on land and buildings in The Netherlands................................................             --  $1,342
 
Capital lease obligations secured by the related equipment acquired, bearing interest at variable
  annual rates (14% at December 31, 1998 and 1997).................................................         $  306     473
 
Mortgage notes payable to banks secured by the related real estate, interest at prime plus 1.5%
  (10.0% and 8.75% at December 31, 1998 and 1997, respectively), interest payable monthly and
  maturing on dates through October, 2001..........................................................            234     273
 
Notes to former minority stockholders of ABSA and IPHC, bearing interest at 10% and payable
  annually in installments in 1999 and 2000........................................................          4,972   7,220
 
Other..............................................................................................            271     495
                                                                                                            ------  ------
                                                                                                              5,783   9,803
 
Less current portion...............................................................................         (1,558) (2,588)
                                                                                                            ------  ------
 
Long-term debt.....................................................................................         $4,225  $7,215
                                                                                                            ------  ------
                                                                                                            ------  ------
</TABLE>
 
    The maturities of the long-term debt at December 31, 1998 were as follows:
 
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,                                                                            ($000'S)
---------------------------------------------------------------------------------------------------------  -----------
<S>                                                                                                        <C>
 
1999.....................................................................................................   $   1,558
 
2000.....................................................................................................       3,908
 
2001.....................................................................................................         277
 
2002.....................................................................................................          37
 
2003.....................................................................................................           3
 
Thereafter...............................................................................................          --
                                                                                                           -----------
 
                                                                                                            $   5,783
                                                                                                           -----------
                                                                                                           -----------
</TABLE>
 
                                       46
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 9--ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
    Accounts payable and accrued expenses were comprised of the following:
 
<TABLE>
<CAPTION>
                                                                                                    ($000'S)
                                                                                                  DECEMBER 31,
                                                                                              --------------------
<S>                                                                                           <C>        <C>
                                                                                                1998       1997
                                                                                              ---------  ---------
Trade.......................................................................................  $   8,528  $  16,119
Payables to growers.........................................................................      6,889      6,106
Accrued compensation........................................................................      1,749      2,606
Accrued interest............................................................................        996      1,433
Income taxes payable........................................................................        578        635
Accrual for purchase of strawberry development program......................................      5,000         --
Sundry creditors............................................................................      2,335      2,016
                                                                                              ---------  ---------
                                                                                              $  26,075  $  28,915
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</TABLE>
 
NOTE 10--INCOME TAXES
 
    The (charges) credits for income taxes are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                                                 ($000'S)
                                                                                          YEAR ENDED DECEMBER 31,
                                                                                      -------------------------------
<S>                                                                                   <C>        <C>        <C>
                                                                                        1998       1997       1996
                                                                                      ---------  ---------  ---------
CURRENT
United States
  Federal...........................................................................  $    (118) $    (313) $    (606)
  State.............................................................................         (1)       (85)      (146)
Foreign.............................................................................       (632)      (146)        --
                                                                                      ---------  ---------  ---------
                                                                                           (751)      (544)      (752)
                                                                                      ---------  ---------  ---------
DEFERRED
United States
  Federal...........................................................................          3       (160)        21
  State.............................................................................         (2)        21         --
Foreign.............................................................................        294       (743)    (2,007)
                                                                                      ---------  ---------  ---------
                                                                                            295       (882)    (1,986)
                                                                                      ---------  ---------  ---------
Income tax expense..................................................................  $    (456) $  (1,426) $  (2,738)
                                                                                      ---------  ---------  ---------
                                                                                      ---------  ---------  ---------
</TABLE>
 
                                       47
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 10--INCOME TAXES (CONTINUED)
    Income tax (expense) benefit differs from the amounts computed by applying
the statutory federal income tax rate (34% in both Mexico and the United States)
to pretax income as a result of the following:
 
<TABLE>
<CAPTION>
                                                                                                ($000'S)
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                     -------------------------------
<S>                                                                                  <C>        <C>        <C>
                                                                                       1998       1997       1996
                                                                                     ---------  ---------  ---------
Tax benefit at statutory rate in the United States (34%)...........................  $   5,355  $   7,776  $   5,294
Effect of lower tax rate of 17% for agricultural businesses in Mexico..............     (1,949)    (1,650)      (316)
Write-off of purchased research and development....................................         --         --     (4,386)
Change in valuation allowance of deferred tax assets...............................     (1,679)    (5,872)    (2,384)
Taxable inflationary gains in Mexico...............................................     (1,243)      (944)      (548)
Depreciation on inflation-indexed value of property, plant, and equipment in
  Mexico...........................................................................        215        501        328
Expected settlement of prior years' income taxes...................................         --       (519)        --
State taxes........................................................................          2         --        (97)
Other..............................................................................     (1,157)      (718)      (629)
                                                                                     ---------  ---------  ---------
                                                                                     $    (456) $  (1,426) $  (2,738)
                                                                                     ---------  ---------  ---------
                                                                                     ---------  ---------  ---------
</TABLE>
 
    Significant components of the Company's deferred tax liabilities and assets
at December 31, 1998 and 1997 are shown below:
 
<TABLE>
<CAPTION>
                                                                                                    ($000'S)
                                                                                                  DECEMBER 31,
                                                                                              --------------------
                                                                                                1998       1997
                                                                                              ---------  ---------
<S>                                                                                           <C>        <C>
DEFERRED TAX ASSETS
  Tax loss carryforwards....................................................................  $  21,912  $  19,680
  Non-deductible provisions.................................................................        748        350
  Other.....................................................................................         --         56
                                                                                              ---------  ---------
Total deferred tax assets...................................................................     22,660     20,086
Valuation allowance.........................................................................    (18,486)   (16,807)
                                                                                              ---------  ---------
Net deferred tax assets.....................................................................  $   4,174  $   3,279
                                                                                              ---------  ---------
                                                                                              ---------  ---------
DEFERRED TAX LIABILITIES
  Inventories...............................................................................     (3,209)    (2,875)
  Other.....................................................................................     (2,106)    (1,840)
                                                                                              ---------  ---------
Total deferred tax liabilities..............................................................     (5,315)    (4,715)
                                                                                              ---------  ---------
Net deferred tax liabilities................................................................  $  (1,141) $  (1,436)
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</TABLE>
 
    The Mexican asset tax of 1.8% on certain net assets is not applied during
the first three years after an asset in placed in operation. This tax, once
applied, is due if federal income taxes are not in excess of the asset tax. It
can be recovered in future years from taxes on future income in excess of future
asset tax.
 
    During 1998 ABSA applied its investment tax credits generated from its fixed
asset investments against the asset tax. Starting in 1999, ABSA, due to changes
in the tax law in Mexico, will compute its federal income taxes on the basis of
a simplified tax filing scheme (i.e., a cash basis). Under this approach,
 
                                       48
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 10--INCOME TAXES (CONTINUED)
ABSA will not have taxable income until profits are distributed to its
stockholders as dividends. The Company has not determined the impact of this
change on ABSA's tax loss carryforwards.
 
    At December 31, 1998, the Company had total tax loss carryforwards of
approximately $74.3 million. Tax loss carryforwards from the Company's Mexican
subsidiaries can be inflation-indexed in Mexico until the date of their
application against future taxable profits. The tax loss carryforwards expire
from 2003 to 2008. The tax loss carryforwards are contained in the Company's
Mexican subsidiaries ($26.6 million), U.S. subsidiaries ($46.5 million), and
other foreign subsidiaries ($1.2 million).
 
    DNAP had tax loss carryforwards at the date of the Merger whose utilization
is limited to $27.8 million. A full valuation allowance has been provided with
respect to these tax loss carryforwards.
 
    A settlement was reached between R.B. Packing, Inc. and the Internal Revenue
Service regarding a dispute relating to commissions charged and certain travel
and expense charges relating to an audit of the 1991 through 1995 tax years. The
Company made a provision in 1996 and 1997 amounting to $0.650 million for the
five years in dispute, which included interest and state income taxes and
further provided for the effect of this settlement.
 
NOTE 11--STOCK OPTIONS AND WARRANTS
 
STOCK OPTION PLANS
 
    As a result of the Merger the Company assumed DNAP's existing stock option
plans. The number of shares and option exercise prices were adjusted to give
effect to the exchange ratio stipulated in the merger agreement. The six plans
are the 1982 Stock Option Plan, 1986 Stock Option Plan, 1994 Stock Option Plan,
the Non-Employee Directors Stock Option Plan, the Incentive Stock Option Plan,
and the Non-Qualified Stock Option Plan. Approximately 65,782 options were
outstanding at December 31, 1998 under all of these stock option plans. The
Company does not expect to award any new options under any of these plans.
 
    The 1986 Plan and the 1994 Plan provided for the granting of incentive stock
options, as defined under the Internal Revenue Code, and non-qualified stock
options, restricted stock and stock appreciation rights to officers and
employees of, and consultants and advisors to DNAP (and now the Company), at
prices which were generally not less than the fair market value of the common
stock on the date of grant and expiring ten years from the date of grant.
 
    The Directors' Plan provided for initial and annual grants of non-qualified
stock options to each non-employee director at prices which were equal to 90%
and 100%, respectively, of the fair market value of DNAP's (and now the
Company's) common stock on the date of grant and expiring ten years from the
date of grant. An initial director's option became exercisable in five equal
annual installments, beginning one year from the date of grant, and the annual
awards became fully exercisable within one year from the date of grant.
 
    In addition to the options plans assumed at the time of the Merger, at the
1998 Annual Meeting of Shareholders, DNAP Holding Corporation's 1998 Long-Term
Incentive Plan was approved. This plan provides for the issuance of stock
options and other forms of stock-based awards to all employees and directors of
the Company. The maximum number of shares of common stock that are available for
grant of awards under this plan is not to exceed 2,000,000 shares. No options or
other stock-based awards were issued under this plan during 1998.
 
                                       49
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 11--STOCK OPTIONS AND WARRANTS (CONTINUED)
    A summary of the activity under all of the Company's stock option plans
during 1996, 1997, 1998 is as follows:
 
<TABLE>
<S>                                                                                <C>
Outstanding, at the effective date of the Merger on September 26, 1996...........    134,959
  Granted........................................................................         --
  Exercised......................................................................         --
  Expired and canceled...........................................................       (191)
                                                                                   ---------
Outstanding on December 31, 1996.................................................    134,768
  Granted........................................................................         --
  Exercised......................................................................         --
  Expired and canceled...........................................................    (10,745)
                                                                                   ---------
Outstanding on December 31, 1997.................................................    124,023
  Granted........................................................................         --
  Exercised......................................................................         --
  Expired and canceled...........................................................    (58,241)
                                                                                   ---------
Outstanding on December 31, 1998.................................................     65,782
                                                                                   ---------
Available for grant at December 31...............................................  2,001,228
                                                                                   ---------
Exercisable at December 31.......................................................     65,372
                                                                                   ---------
Option prices per share
  Granted........................................................................       None
  Exercised......................................................................       None
  Expired or canceled....................................................   $13.75 to $52.50
  Outstanding............................................................   $20.31 to $76.25
</TABLE>
 
    The following table summarizes information about the outstanding stock
options at December 31, 1998.
 
<TABLE>
<CAPTION>
                                                                    WEIGHTED
                                                                     AVERAGE     WEIGHTED                  WEIGHTED
                                                                    REMAINING     AVERAGE     NUMBER OF     AVERAGE
                                                        OPTIONS    CONTRACTUAL   EXERCISE    EXERCISABLE   EXERCISE
RANGE OF EXERCISE PRICES                              OUTSTANDING     LIFE         PRICE       OPTIONS       PRICE
----------------------------------------------------  -----------  -----------  -----------  -----------  -----------
<S>                                                   <C>          <C>          <C>          <C>          <C>
$20.31--$29.94......................................       5,218    6.32 Yrs.    $   21.34        4,888    $   21.22
$30.00--$38.75......................................      23,658    4.63 Yrs.    $   34.00       23,578    $   34.01
$41.25--$50.00......................................      19,995    3.99 Yrs.    $   47.10       19,996    $   47.10
$51.25--$76.25......................................      16,911    3.81 Yrs.    $   54.98       16,910    $   54.98
                                                      -----------                            -----------
Total...............................................      65,782    4.36 Yrs.    $   42.37       65,372    $   42.48
                                                      -----------                            -----------
                                                      -----------                            -----------
</TABLE>
 
FAIR VALUE DISCLOSURES
 
    Had compensation cost for the Company's option plans been determined based
on the fair value at the grant dates, the Company's net loss and net loss per
share would not have been materially different than the reported amounts.
 
                                       50
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 11--STOCK OPTIONS AND WARRANTS (CONTINUED)
WARRANTS AND OTHER OPTIONS
 
    At December 31, 1998 the Company had the following warrants and options
outstanding, which it assumed in connection with the merger:
 
<TABLE>
<CAPTION>
  NUMBER OF
COMMON SHARES   PRICE PER SHARE  EXPIRATION DATE
--------------  ---------------  --------------------------------------
<C>             <C>              <S>
      40,000       $   66.50     January, 1999
     407,018           25.00     Third and fourth quarters of 2000
     100,000            4.38     August, 1999
</TABLE>
 
    During 1995, DNAP issued common stock with warrants that expire during the
third and fourth quarters of 2000, and which entitle the holders to purchase an
additional 407,018 shares of common stock at $25.00 per share. In 1997, DNAP
Holding granted UAC's majority stockholder options to purchase 100,000 shares at
an exercise price of 4 3/8, which was the fair market value on the date of the
grant, in consideration for certain non-competition and indemnification
commitments. These options expire in August, 1999.
 
NOTE 12--BALANCES AND TRANSACTIONS WITH RELATED PARTIES
 
SAVIA CREDIT LINE
 
    The short-term accounts due to related parties shown in the consolidated
balance sheet bears interest at variable rates comparable to those prevailing in
the market place. The debt with related parties arose from the long-term credit
line made available to affiliates of Savia and bears interest at variable rates
similar to those prevailing in the market place. At December 31, 1998, such
credit facility amounted to $27.0 million, of which $26.8 million was not used.
At December 31, 1997, $15.429 million was outstanding under this arrangement.
During 1998, 1997, and 1996, the Company incurred interest expense of $0.883
million, $0.519 million, and $0.310 million, respectively.
 
INSURANCE AND FACTORING ARRANGEMENTS
 
    The Company contracts for insurance and factoring services with a related
party. During 1998, 1997 and 1996, the Company incurred insurance expense of
$0.213 million, $0.289 million, and $0.591 million, respectively. Amounts due
under factoring arrangements were $0.0 million and $0.868 million at December
31, 1998 and 1997, respectively, and interest expense incurred in connection
with factoring arrangements was $0.035 million, $0.0 million, and $0.123 million
in 1998, 1997, and 1996, respectively.
 
LABOR AND ADMINISTRATIVE SERVICES
 
    From 1995 through October, 1997 ABSA had a contractual arrangement with
Copropriedad Agricola Batiz Hermanos ("CABH") pursuant to which CABH provided
labor and administrative services to ABSA, and ABSA paid a fee to CABH based on
CABH's costs incurred in connection with providing such services. Both Raul
Batiz G. and Guillermo Batiz G., former executive officers of ABSA, owned in
excess of 10% of CABH and were deemed, by virtue of their positions with ABSA,
to be executive officers of DNAP Holding. In 1997 and 1996, ABSA paid a total of
approximately $14.094 million and $13.208 million, respectively, to CABH under
this arrangement. As of October 31, 1997, ABSA terminated its relationship with
CABH. Labor and administrative services are now being provided by Siembra
Cultivo y Cosecha del Noroeste, S.A. de C.V., which is a subsidiary of ABSA.
 
                                       51
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 12--BALANCES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
ADMINISTRATIVE SERVICES AGREEMENT
 
    An Administrative Services Agreement between the Company and Bionova Mexico
was entered into on July 1, 1996. This agreement provides that Bionova Mexico
will render certain administrative and clerical services to the Company and its
direct and indirect subsidiaries in return for payment equivalent to the
compensation, benefits, and other overhead attributable to the employees of
Bionova Mexico performing these services, all of which will be performed in
Mexico. The initial term of the agreement was extended to December 31, 1998 and
will continue thereafter for successive one-year terms unless either the Company
or Bionova Mexico elects to terminate the agreement. Amounts billed in 1998,
1997 and 1996 by Bionova Mexico under this agreement were $3.050 million, $1.000
million and $0.616 million, respectively. As of December 31, 1998, 1997 and
1996, the Company had a payable to Bionova Mexico outstanding of $4.530, $3.001
and $1.845 million, respectively. The outstanding balances bear interest at
variable rates comparable to those prevailing in the market place.
 
ADVANCES TO GROWER RELATED PARTIES
 
    The Company has agreements with certain related party produce growers in
Mexico, whereby a significant portion of growing costs are paid in advance by
the Company. The growing costs are recorded as advances to growers and are
recognized as a component of cost of produce sales when the produce is sold.
These advances in some cases are secured by promissory notes and/or the right to
use the acreage of the grower if the advances are not repaid.
 
LOANS AND CAPITAL CONTRIBUTIONS
 
    In connection with the acquisition of DNAP, Bionova Mexico loaned $5 million
to the Company on January 26, 1996 and contributed $5 million to the capital of
the Company on July 1, 1996. The interest rate on the loan was 10.25% per annum.
The loan was capitalized by Bionova Mexico on August 2, 1996. Interest expense
for the period that the loan was outstanding during 1996 amounted to $0.264
million. Pursuant to a loan agreement dated January 26, 1996 between the Company
and DNAP, the Company made two loans to DNAP in equal amounts of $5 million on
January 26, 1996 and July 1, 1996. These loans are secured by the assignment to
the Company of DNAP's right, title, and interest in the patents relating to
DNAP's Transwitch gene suppression technology, and the Company may require
additional security under certain circumstances. These loans, which were
originally due to mature in January 1999, have been extended with the principal
plus accrued interest due in full on January 31, 2001.
 
LONG-TERM FUNDED RESEARCH AGREEMENT
 
    On September 26, 1996, in connection with the merger, DNAP and Savia entered
into a long-term funded research agreement, which provided that DNAP and Savia,
directly or through its affiliates, will use their best efforts to agree on
research projects to be conducted by DNAP for Savia or its affiliates and which
will result in payments to DNAP of $30 million over a 10-year period, with
minimum funding (subject to carry forwards) of $9 million in any three-year
period. Unless otherwise agreed by the parties, payments of at least $0.625
million in respect of Savia's obligation to fund research projects are to be
paid at the beginning of each calendar quarter. In the fourth quarter of 1996,
Seminis Vegetable Seed, Inc. ("Seminis"), a subsidiary of Savia, commenced work
under this long-term research agreement with DNAP. Through December 31, 1998
Seminis paid DNAP $5.625 million in cash. Work performed during 1998, 1997 and
1996 earned revenue in the amounts of $2.775 million, $2.008 million, and $0.100
million, respectively. The remaining $0.742 million of deferred revenue has been
included in accounts due to
 
                                       52
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 12--BALANCES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
related parties. Several other affiliates of Savia are in discussions with DNAP
to identify additional research projects to be worked on under the long-term
funded research agreement.
 
LEGAL REPRESENTATION
 
    The Secretary of the Company is a shareholder in the law firm which provides
legal services to the Company and several subsidiaries. During 1998, 1997, and
1996 the law firm billed approximately $0.684 million, $0.694 million, and
$0.100 million respectively, to the Company.
 
NOTE 13--OTHER NON-OPERATING INCOME (LOSS)
 
    During 1998, 1997, and 1996 the Company recorded a gain upon sale of
property, plant and equipment of $0.137 million, $0.321 million, and $0.325
million, respectively, and received subsidies of $0.0 million, $0.520 million,
and $1.733 million, respectively, in connection with a special incentive program
sponsored by the various Mexican government and banking institutions for
companies in the agriculture, fishing, and forestry industries. The subsidy
received was determined using specified formulas based on ABSA's debt
outstanding as of June 30, 1996 and the repayments of principal and interest
made by ABSA from July 1996 through June 1997. The special incentive program was
terminated in June 1997.
 
    A provision of $0.832 million was recorded by the Company in 1997 as a
result of the divestiture of RVN in February 1998.
 
NOTE 14--COMMITMENTS AND CONTINGENCIES
 
CONTINGENCIES
 
    On January 21, 1997, a class action lawsuit STYLED GORDON K. AARON ET AL. V.
EMPRESAS LA MODERNA, S.A. DE C.V., ET AL. was filed in the U.S. federal district
court for the Northern District of California. The plaintiffs allege that, prior
to the merger (the "Merger") of DNAP with a subsidiary of DNAP Holding on
September 26, 1996, they owned shares of DNAP's $2.25 Convertible, Exchangeable
Preferred Stock ("Preferred Stock"). In connection with the Merger, all of the
shares of common stock and Preferred Stock of DNAP were converted into the
number of shares of common stock of DNAP Holding specified in the Merger
Agreement. The plaintiffs allege that they were denied certain rights they
allegedly had under the terms of the Preferred Stock and that certain
individuals (the "Individual Defendants"), each of whom was a director of DNAP
prior to the Merger and in some cases later served as a director of DNAP
Holding, breached fiduciary duties of loyalty, candor and care allegedly owed to
DNAP and its stockholders. The plaintiffs claim to have been damaged by the
alleged actions of the defendants and therefore the plaintiffs seek unspecified
actual and punitive damages as well as reimbursement of their litigation costs
and expenses. On August 27, 1997, the court granted motions to dismiss all of
the claims pending against all of the defendants, except the claims of breach of
the fiduciary duty of loyalty against the Individual Defendants. The court also
gave the plaintiffs leave to amend the complaint against certain other named
defendants, including DNAP Holding, as to a claim for aiding and abetting the
alleged breach of fiduciary duty of loyalty. On January 14, 1999, the court
granted plaintiffs motion to reinstate the claims for breach of contract and
tortious interference arising from Plaintiffs claim that the preferred
stockholders should have had the opportunity to vote on the Merger. DNAP Holding
and DNAP deny any wrongdoing or liability in this matter and intend to
vigorously contest this lawsuit.
 
                                       53
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 14--COMMITMENTS AND CONTINGENCIES (CONTINUED)
 
    On January 7, 1999, a class action lawsuit STYLED GORDON K. AARON ET AL. V.
EMPRESAS LA MODERNA, S.A. DE C.V., ET AL. was filed in the U.S. federal district
court for the Northern District of California. The plaintiffs allege that, prior
to the Merger of DNAP with a subsidiary of DNAP Holding on September 26, 1996,
they owned shares of DNAP's Preferred Stock. In connection with the Merger, all
of the shares of common stock and Preferred Stock of DNAP were converted into
the number of shares of common stock of DNAP Holding specified in the Merger
Agreement. The plaintiffs allege that the Proxy Statement/Prospectus distributed
to DNAP's stockholders in connection with the merger contained material
misrepresentations and omitted to state material facts, including alleged facts
relating to the preferred stockholders' alleged right to vote on the merger.
Both DNAP and DNAP Holding, as well as certain former and current directors of
DNAP and DNAP Holding, have been named as defendants in this matter. The
plaintiffs claim to have been damaged by the alleged actions of the defendants
and therefore the plaintiffs seek unspecified actual damages, reimbursement of
their litigation costs and expenses, and equitable relief, including rescission
of the Merger. The plaintiffs also allege that they were entitled to receive,
and seek specific performance of, special conversion privileges under the terms
of the Certificate of Designation that established the Preferred Stock. DNAP
Holding and DNAP deny any wrongdoing and liability in this matter and intend to
vigorously contest this lawsuit.
 
    On January 28, 1999, a class action lawsuit styled ROBERT KACZAK V. EMPRESAS
LA MODERNA, S.A. DE C.V., ET AL. was filed in the U.S. federal district court
for the Northern District of California. The complaint is substantially
identical to the above-described complaint filed on January 7, 1999 by the AARON
plaintiffs. DNAP Holding and DNAP deny any wrongdoing and liability in this
matter and intend to vigorously contest this lawsuit.
 
    In a complaint filed on March 31, 1998, in the Superior Court of the State
of California, County of San Mateo, U.A. Local No. 467 Health and Welfare Trust
Fund sued numerous defendants including DNAP and various manufacturers and
distributors of tobacco products. Since March 31, 1998, DNAP has been named as a
defendant in twenty-three additional cases brought on behalf of union trust
funds and benefit trusts in the California state courts. In each of these cases,
the plaintiff alleges that the defendants engaged in improper business and
advertising practices; committed fraud and deceit, conspiracy to commit fraud,
and aiding and abetting fraud; made negligent misrepresentations; and violated
California's anti-trust laws. DNAP's involvement in these suits arises from
allegations regarding research it performed for a major tobacco company from
1983 through 1994. In each of these suits, the plaintiff is seeking economic
damages and injunctive relief. These cases have been consolidated in the
Superior Court of the State of California, County of San Diego. DNAP filed a
demurrer (a motion to dismiss all of the claims against it) to all of these
cases and on March 9, 1999, the court sustained DNAP's demurrer and dismissed
all claims against DNAP in all of the cases except claims relating to improper
business practices. The plaintiffs were given the right to attempt to amend
their complaints with respect to certain of the claims. DNAP denies any
wrongdoing or liability in this matter and intends to vigorously contest all of
these lawsuits.
 
    On October 30, 1998, a class action lawsuit STYLED PECHANGA BAND OF LUISENO
MISSION INDIANS ET AL. V. PHILIP MORRIS, INC., ET AL. was filed in the Superior
Court of the State of California, County of San Diego. The Plaintiffs sued
numerous defendants including DNAP and various manufacturers and distributors of
tobacco products. The plaintiff's allegations are substantially identical to the
claims made in the above-described cases brought on behalf of union trust funds
and benefit trusts (the "Union Cases"). This case has been coordinated with the
Union Cases, and proceedings in this case have been stayed pending the
 
                                       54
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 14--COMMITMENTS AND CONTINGENCIES (CONTINUED)
court's ruling on the demurrers pending in the Union cases. DNAP denies any
wrongdoing or liability in this matter and intends to vigorously contest this
lawsuit.
 
    ABSA owns one hundred hectares (approximately 247 acres) of rural land in
the State of Sinaloa, Mexico, which is the subject of a judicial proceeding
pending in Mexico initiated by a group of campesinos. The petitioners asserted
that a previous owner of the subject land, Miguel Angel Suarez, owned rural land
in excess of the maximum that was then allowed by law and that therefore the
land rightfully belonged to them. On September 25, 1996, the court upheld the
petition and ordered the land turned over to the petitioners. The court also
ruled that the transfer of the property to Olga Elena Batiz Esquer on June 2,
1990 was null and void, which would mean that the transfer of the land by Ms.
Batiz to ABSA in 1993 was ineffective. On October 23, 1996, Ms. Batiz, who was a
party to the trial court proceeding, filed a challenge to the judicial
determination based on alleged violations of her constitutional rights and
procedural and substantive errors in the trial court proceedings. If ABSA is
ultimately required to transfer the subject land, which constitutes
approximately 8% of the total agricultural land owned by ABSA, Mexican law gives
ABSA indemnification rights against the State of Sinaloa and Ms. Batiz.
 
    ABSA owns seventy-five hectares (approximately 185 acres) of rural land in
the State of Sinaloa, Mexico, which is the subject of a judicial proceeding
pending in Mexico initiated by a group of campesinos. The petitioners requested
that ownership of the land be transferred to them based on the fact that, at
some time prior to ABSA's ownership of the land, the land was not cultivated for
more than two consecutive years without good reason. On March 18, 1997, the
court upheld the petition and ordered the land transferred to the petitioners.
On August 28, 1997, ABSA and other affected parties filed a challenge to the
judicial determination based on alleged violations of their constitutional
rights and procedural and substantive errors in the trial court proceedings. If
ABSA is ultimately required to transfer the subject land, which constitutes
approximately 6% of the total agricultural land owned by ABSA, Mexican law gives
ABSA limited indemnification rights against the State of Sinaloa.
 
    ABSA owns two hundred seventy-four hectares (approximately 677 acres) of
rural land in the State of Sinaloa, Mexico, which is the subject of a judicial
proceeding pending in Mexico initiated by a group of campesinos. The petitioners
asserted that a previous owner of the subject land owned rural land in excess of
the maximum that was then allowed by law and that therefore the land rightfully
belonged to them. On August 27, 1997, the court denied the petition and ruled in
favor of ABSA. On May 25, 1998, the petitioners filed a challenge to the
judicial determination based on alleged violations of their constitutional
rights. If ABSA is ultimately required to transfer the subject land, which
constitutes approximately 22% of the total agricultural land owned by ABSA,
Mexican law gives ABSA limited indemnification rights against the State of
Sinaloa.
 
    In addition to the indemnification rights referred to in the paragraphs
above with regard to the land in Sinaloa, Mexico, the Company, as a part of its
agreement with the Batiz family on the sale of their interests in ABSA to the
Company in October 1997, is entitled to recover from the Batiz family 100% of
the value of any losses of agricultural land held by ABSA prior to the sale.
 
COMMITMENTS
 
    The Company leases certain facilities and land under non-cancelable
operating lease agreements. The leases expire at various dates through 2003 and
provide that the Company pay the taxes, insurance and maintenance expenses
related to the leased facilities. The monthly rental payments are subject to
periodic
 
                                       55
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 14--COMMITMENTS AND CONTINGENCIES (CONTINUED)
adjustments. Certain leases contain fixed escalation clauses, and rent under
these leases is charged ratably over the lease term.
 
    The aggregate future minimum lease obligations under capital and operating
leases are as follows:
 
<TABLE>
<CAPTION>
                                                                                                       ($000'S)
FOR THE YEAR ENDING DECEMBER 31,                                                                 CAPITAL     OPERATING
---------------------------------------------------------------------------------------------  -----------  -----------
<S>                                                                                            <C>          <C>
1999.........................................................................................   $     118    $   1,369
2000.........................................................................................         113          594
2001.........................................................................................          86          542
2002.........................................................................................          37          514
2003.........................................................................................          --          465
                                                                                                    -----   -----------
Total future minimum lease payments..........................................................         354    $   3,484
                                                                                                            -----------
                                                                                                            -----------
Amount representing interest.................................................................         (48)
                                                                                                    -----
                                                                                                $     306
                                                                                                    -----
                                                                                                    -----
</TABLE>
 
    Rent expense incurred under the non-cancelable operating leases totaled
$0.426 million, $0.692 million, and $0.570 million during the years ended
December 31, 1998, 1997 and 1996, respectively.
 
NOTE 15--INFORMATION ON SEGMENTS AND OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
 
    Effective December 31, 1998, the Company adopted FAS 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company classifies its
business into three fundamental areas: FARMING, which consists principally of
interests in 100% Company-owned fresh produce production facilities and joint
ventures with other growers; DISTRIBUTION, consisting principally of interests
in sales and distribution companies in Mexico, the United States, and Canada;
and RESEARCH AND DEVELOPMENT consisting of business units focused on the
development of fruits and vegetables and intellectual properties associated with
these development efforts.
 
    Information pertaining to the operations of these different business
segments is set forth below. The Company evaluates performance based on several
factors. The most significant financial measure used to evaluate business
performance is business segment operating income. The accounting policies for
each of the business segments are the same as those described in the summary of
significant accounting policies in Note 2. Inter-segment sales are accounted for
at fair value as if the sales were to third parties. Segment information
includes the allocation of corporate overhead to the various segments, as looked
at from the
 
                                       56
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 15--INFORMATION ON SEGMENTS AND OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
(CONTINUED)
point of view of the segment presidents, and all acquired goodwill has been
pushed down to the companies and segments that have made the acquisitions.
 
<TABLE>
<CAPTION>
                                                                                 ($000'S)
                                                                                                    TOTAL OF
                                                                                     RESEARCH AND  REPORTABLE
                                                              FARMING   DISTRIBUTION DEVELOPMENT    SEGMENTS
                                                             ---------  -----------  ------------  -----------
<S>                                                          <C>        <C>          <C>           <C>
1998
Revenues from unaffiliated customers.......................  $   1,022   $ 253,040    $    8,049    $ 262,111
Inter-segment revenues.....................................     71,279          86            --       71,365
                                                             ---------  -----------  ------------  -----------
Total revenues.............................................     72,301     253,126         8,049      333,476
                                                             ---------  -----------  ------------  -----------
                                                             ---------  -----------  ------------  -----------
Operating income (loss)....................................     (5,560)        535        (2,403)      (7,428)
Depreciation and amortization..............................      3,952       1,178         1,946        7,076
Identifiable assets (2)....................................     75,940      56,934        39,363      172,237
Acquisition of long-lived assets...........................      8,543       1,427         5,280       15,250
 
1997
Revenues from unaffiliated customers.......................  $     798   $ 275,696    $    4,704    $ 281,198
Inter-segment revenues.....................................     71,597          --            --       71,597
                                                             ---------  -----------  ------------  -----------
Total revenues.............................................     72,395     275,696         4,704      352,795
                                                             ---------  -----------  ------------  -----------
                                                             ---------  -----------  ------------  -----------
Operating income (loss)....................................     (7,933)     (2,755)       (7,781)(1)    (18,469)
Depreciation, amortization & write-offs....................      3,270       1,196         4,694(1)      9,160
Identifiable assets (2)....................................     65,320      58,726        34,769      158,815
Acquisition of long-lived assets...........................     11,675       7,687           335       19,697
 
1996
Revenues from unaffiliated customers.......................  $     355   $ 191,524    $    1,106    $ 192,985
Inter-segment revenues.....................................     68,784         122            --       68,906
                                                             ---------  -----------  ------------  -----------
Total revenues.............................................     69,139     191,646         1,106      261,891
                                                             ---------  -----------  ------------  -----------
                                                             ---------  -----------  ------------  -----------
Operating income (loss)....................................     (1,198)        943       (14,460)(1)    (14,715)
Depreciation, amortization & write-offs....................      1,964         826        13,362(1)     16,152
Identifiable assets (2)....................................     59,008      44,289        26,902      130,199
Acquisition of long-lived assets...........................      3,335       4,530        25,531       33,396
</TABLE>
 
NOTES:
 
1.  Operating losses for the research and development segment included $2.8
    million and $12.9 million of write-offs of purchased research and
    development for the years ended December 31, 1997 and 1996, respectively.
 
2.  Identifiable assets for segments are defined as total assets less cash in
    banks, deferred income taxes and investment in shares.
 
                                       57
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 15--INFORMATION ON SEGMENTS AND OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
(CONTINUED)
    Reconciliation of the segments to total consolidated amounts is set forth
below:
 
<TABLE>
<CAPTION>
                                                                                                             ($000'S)
                                                                                                   1998         1997        1996
                                                                                                -----------  -----------  --------
<S>                                                                                             <C>          <C>          <C>
REVENUES
  Total segment revenues......................................................................  $   333,476  $   352,795  $261,891
  Elimination of inter-segment revenues.......................................................      (71,365)     (71,597)  (68,906)
                                                                                                -----------  -----------  --------
  Consolidated revenues.......................................................................  $   262,111  $   281,198  $192,985
                                                                                                -----------  -----------  --------
                                                                                                -----------  -----------  --------
INCOME BEFORE TAXES
  Total operating income (loss) from reportable segments                                        $    (7,428) $   (18,469) $(14,715)
  Interest, net...............................................................................       (6,697)      (3,740)   (3,482)
  Exchange gain (loss), net...................................................................       (1,762)        (481)      569
  Other non-operating income (loss), net......................................................          137         (182)    2,058
                                                                                                -----------  -----------  --------
  Consolidated income (loss) before taxes.....................................................  $   (15,750) $   (22,872) $(15,570)
                                                                                                -----------  -----------  --------
                                                                                                -----------  -----------  --------
ASSETS
  Total segment identifiable assets...........................................................  $   172,237  $   158,815  $130,199
  Unallocated and corporate assets............................................................       23,318(1)    10,676(1) 13,585
  Eliminations................................................................................      (27,869)(2)  (22,242)(2)(2,647)
                                                                                                -----------  -----------  --------
  Consolidated assets.........................................................................  $   167,686  $   147,249  $141,137
                                                                                                -----------  -----------  --------
                                                                                                -----------  -----------  --------
</TABLE>
 
NOTES:
 
1.  Includes DNAP Holding's and segments' cash in banks, deferred income taxes
    and other corporate assets.
 
2.  Consists principally of inter-segment intercompany balances.
 
    Revenue from external customers by product / service category is set forth
below:
 
<TABLE>
<CAPTION>
                                                                                       ($000'S)
                                                                                                           TOTAL OF
                                                                                           RESEARCH AND   REPORTABLE
                                                                   FARMING    DISTRIBUTION  DEVELOPMENT    SEGMENTS
                                                                 -----------  -----------  -------------  -----------
<S>                                                              <C>          <C>          <C>            <C>
1998
Core vegetables (1)............................................                $ 156,812                   $ 156,812
Fruits and other fresh produce (2).............................   $   1,022       96,228                      97,250
Contracted R&D revenue.........................................                              $   3,198         3,198
Licensed technology and royalties..............................                                  4,851         4,851
 
1997
Core vegetables (1)............................................                  176,562                     176,562
Fruits and other fresh produce (2).............................         798       99,134                      99,932
Contracted R&D revenue.........................................                                  2,799         2,799
Licensed technology and royalties..............................                                  1,905         1,905
 
1996
Core vegetables (1)............................................                  123,283                     123,283
Fruits and other fresh produce (2).............................         355       68,241                      68,596
Contracted R&D revenue.........................................                                  1,072         1,072
Licensed technology and royalties..............................                                     34            34
</TABLE>
 
NOTES:
 
1.  Core vegetables include tomatoes, bell peppers and cucumbers.
 
2.  Fruits and other fresh produce include papayas, mangoes, grapes, melons,
    watermelons and others.
 
                                       58
<PAGE>
                            DNAP HOLDING CORPORATION
 
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 15--INFORMATION ON SEGMENTS AND OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
(CONTINUED)
    Information about the Company's operations by geographic area is summarized
below:
 
<TABLE>
<CAPTION>
                                                                                ($000'S)
                                                         MEXICO       U.S.      CANADA     EUROPE    CONSOLIDATED
                                                        ---------  ----------  ---------  ---------  ------------
<S>                                                     <C>        <C>         <C>        <C>        <C>
1998
Revenues from unaffiliated customers..................  $  92,367  $  139,752  $  29,992         --   $  262,111
Identifiable long-lived assets........................  $  47,237  $   37,588  $     350         --   $   85,175
 
1997
Revenues from unaffiliated customers..................  $  72,441  $  135,691  $  19,052  $  54,014   $  281,198
Identifiable long-lived assets........................  $  42,326  $   34,661  $     358  $   3,225   $   80,570
1996
Revenues from unaffiliated customers..................  $  56,868  $  117,504  $  16,712  $   1,901   $  192,985
Identifiable long-lived assets........................  $  34,957  $   30,719  $     381  $   3,204   $   69,261
</TABLE>
 
NOTE 16--SUBSEQUENT EVENT--BANK FINANCING
 
    On March 22, 1999, the Company completed a refinancing of its $85 million in
consolidated debt. This refinancing culminated in a three year $100 million
credit. The key provisions of this credit arrangement consist of (i) a payment
of the entire principal amount on the third anniversary following closing, (ii)
prepayments at the option of the Company with no penalties, (iii) an interest
rate of LIBOR plus 7%, (iv) up front fees of $3 million to the lead banks which
have arranged the financing, and (v) requirements that the Company must keep one
year's worth of interest in an interest bearing reserve account and that all
existing short-term financing must be paid off with the proceeds of this loan.
The contract also provides that the Company is permitted to obtain up to $30
million in new financing for working capital purposes. This credit facility will
be fully guaranteed by Savia. Certain restrictions will be placed on DNAP
Holding with respect to capital investments, acquisitions, and use of proceeds
from asset sales. While there are no financial covenants in the contract insofar
as DNAP Holding is concerned, Savia is obligated to meet certain covenants.
 
                                       59
<PAGE>
ITEM 9.  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
    Not applicable.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
 
    The section entitled "Election of Directors" appearing in the Company's
proxy statement for the annual meeting of stockholders to be held on April 28,
1999 sets forth certain information with respect to the directors of the Company
and is incorporated herein by reference. Certain information with respect to
persons who are or may be deemed to be executive officers of the Company is set
forth under the caption "Executive Officers of the Company" in Part I of this
report.
 
ITEM 11. EXECUTIVE COMPENSATION
 
    The section entitled "Executive Compensation" appearing in the Company's
proxy statement for the annual meeting of stockholders to be held on April 28,
1999 sets forth certain information with respect to the compensation of
management of the Company and is incorporated herein by reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The sections entitled "Security Ownership of Certain Beneficial Owners" and
"Security Ownership of Directors and Executive Officers" appearing in the
Company's proxy statement for the annual meeting of stockholders to be held on
April 28, 1999 sets forth certain information with respect to the ownership of
the Company's Common Stock and is incorporated herein by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 
    The section entitled "Certain Relationships and Related Transactions"
appearing in the Company's proxy statement for the annual meeting of
stockholders to be held on April 28, 1999 sets forth certain information with
respect to certain business relationships and transactions between the Company
and its directors and officers and is incorporated herein by reference.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
    (a) The following documents are filed as a part of this report:
 
       (1) Financial Statements included in Item 8 herein:
 
           Report of Independent Accountants
 
           Consolidated Balance Sheets as of December 31, 1998 and 1997
 
           Consolidated Statements of Operations and Comprehensive Income and
           Loss for the years ended December 31, 1998, 1997 and 1996
 
           Consolidated Statements of Changes in Stockholders' Equity for the
           years ended December 31, 1998, 1997 and 1996
 
           Consolidated Statements of Cash Flows for years ended December 31,
           1998, 1997 and 1996
 
           Notes to Consolidated Financial Statements
 
       (2) Financial Statement Schedules included in Item 8 herein:
 
           All schedules for which provision is made in the applicable
           accounting regulations of the Securities and Exchange Commission are
           not required under the related instructions or are inapplicable and,
           therefore, have been omitted.
 
                                       60
<PAGE>
       (3) Exhibits:
 
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER     DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
 
       3.1*  Certificate of Incorporation of the Company
 
       3.2   Certificate of Amendment to the Certificate of Incorporation of the Company (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)
 
       3.3   Bylaws of the Company
 
       4.1   Note Acquisition Agreement dated as of March 22, 1999 among Savia, S.A. de C.V., the Company, the
             Holders referred to therein, Morgan Guaranty Trust Company of New York, as Administrative Agent and
             Documentation Agent, Bankers Trust Company, as Paying Agent and Registrar, and Citibank, N.A., as
             Collateral Agent.
 
      10.1*  Loan Agreement dated as of January 26, 1996, between the Company and DNAP
 
      10.2*  Assignment of Patents dated January 26, 1996, between the Company and DNAP
 
      10.3*  Sole Patent License Agreement dated as of January 26, 1996, between the Company and DNAP
 
      10.4*  Non-Exclusive Patent License Agreement dated as of January 26, 1996, between the Company and DNAP
 
      10.5   Promissory Note made January 25, 1999, by DNAP in favor of the Company
 
      10.6   Governance Agreement dated as of September 26, 1996, between Savia and the Company (filed as an exhibit
             to the Company's current report on Form 8-K dated September 26, 1996 and incorporated herein by
             reference)
 
      10.7   Long-Term Funded Research Agreement dated as of September 26, 1996, between Savia and DNAP (filed as an
             exhibit to the Company's current report on Form 8-K dated September 26, 1996 and incorporated herein by
             reference)
 
      10.8   Stock Purchase Agreement dated as of August 12, 1997, by and among International Produce Holding
             Company, DNAP Holding Corporation, Raul Batiz E., Pedro Batiz G., J. Guillermo Batiz G., and Raul Batiz
             G. (filed as an exhibit to the Company's current report on Form 8-K dated October 6, 1997 and
             incorporated herein by reference).
 
      10.9   First Amendment to Stock Purchase Agreement dated as of October 6, 1997, by and among International
             Produce Holding Company, DNAP Holding Corporation, Raul Batiz E., Pedro Batiz G., J. Guillermo Batiz G.,
             and Raul Batiz G. (filed as an exhibit to the Company's current report on Form 8-K dated October 6, 1997
             and incorporated herein by reference).
 
      10.10  English-language summary of the CONVENIO RELATIVO AL EJERCICIO DEL DERECHO DE RETIRO TOTAL DE
             APORTACIONES (Agreement Concerning the Exercise of the Right of Withdrawal of all Contributions) dated
             August 29, 1997, by and among Agricola Batiz, S.A. de C.V., certain of its shareholders, and DNAP
             Holding Corporation (filed as an exhibit to the Company's current report on Form 8-K dated October 6,
             1997 and incorporated herein by reference).
 
      10.11  Long-Term Funded Research Agreement dated as of January 1, 1997, between Seminis Vegetable Seeds, Inc.
             and DNAP.
 
      10.12  Stock Purchase Agreement dated as of October 1, 1998, between the Company and Bionova International,
             Inc. (filed as an exhibit to the Company's quarterly report on Form 10-Q for the quarterly period ended
             September 30, 1998 and incorporated herein by reference).
 
      10.13  Amendment to Stock Purchase Agreement dated as of January 14, 1999, between the Company and Bionova
             International, Inc.
</TABLE>
 
                                       61
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER     DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
      10.14  Amendment to Governance Agreement dated as of January 14, 1999, between Savia and the Company.
 
      10.15  DNAP Holding Corporation 1998 Long-Term Incentive Plan (filed as an exhibit to the Company's proxy
             statement for the annual meeting of stockholders held on May 28, 1998 and incorporated herein by
             reference).
 
      21.1   Subsidiaries
 
      27.1   Financial Data Schedule
</TABLE>
 
------------------------
 
*   Filed as an exhibit to the Company's Registration Statement on Form S-4 (No.
    333-09975) and incorporated herein by reference.
 
    (b) Reports on Form 8-K
 
    On October 14, 1998, the Company filed a Report on Form 8-K dated October 6,
1998 relating to the capitalization transaction pursuant to which Bionova
International, Inc. made an investment in the Company. The Form 8-K included an
unaudited pro forma condensed balance sheet of the Company presenting the pro
forma effect of the capitalization transaction assuming that it occurred as of
August 31, 1998.
 
                                       62
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, DNAP Holding Corporation has duly caused this Annual
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
<TABLE>
<S>                             <C>  <C>
Date: March 24, 1999            DNAP HOLDING CORPORATION
 
                                By:             /s/ BERNARDO JIMENEZ
                                     -----------------------------------------
                                                  Bernardo Jimenez
                                              CHIEF EXECUTIVE OFFICER
</TABLE>
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed by the following persons in the capacities and on
the dates indicated.
 
<TABLE>
<CAPTION>
          SIGNATURE             TITLE                              DATE
------------------------------                              -------------------
 
<C>                             <S>                         <C>
                                Chief Executive Officer
     /s/ BERNARDO JIMENEZ         and Chairman of the
------------------------------    Board                       March 24, 1999
       Bernardo Jimenez           (Principal Executive
                                  Officer)
 
     /s/ ARTHUR H. FINNEL       Chief Financial Officer
------------------------------    (Principal Financial and    March 24, 1999
       Arthur H. Finnel           Accounting Officer)
 
      /s/ EVELYN BEREZIN
------------------------------           Director             March 24, 1999
        Evelyn Berezin
 
       /s/ PETER DAVIS
------------------------------           Director             March 24, 1999
         Peter Davis
 
      /s/ CARLOS HERRERA
------------------------------           Director             March 24, 1999
        Carlos Herrera
 
    /s/ ERIK C. JURGENSEN
------------------------------           Director             March 24, 1999
      Erik C. Jurgensen
 
      /s/ EUGENIO NAJERA
------------------------------           Director             March 24, 1999
        Eugenio Najera
 
      /s/ GERALD LAUBACH
------------------------------           Director             March 24, 1999
        Gerald Laubach
 
     /s/ ALEJANDRO PEREZ
------------------------------           Director             March 24, 1999
       Alejandro Perez
 
  /s/ CHRISTOPHER SOMERVILLE
------------------------------           Director             March 24, 1999
    Christopher Somerville
</TABLE>
 
                                       63
<PAGE>
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER     DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
 
       3.1*  Certificate of Incorporation of the Company
 
       3.2   Certificate of Amendment to the Certificate of Incorporation of the Company (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)
 
       3.3   Bylaws of the Company
 
       4.1   Note Acquisition Agreement dated as of March 22, 1999 among Savia, S.A. de C.V., the Company, the
             Holders referred to therein, Morgan Guaranty Trust Company of New York, as Administrative Agent and
             Documentation Agent, Bankers Trust Company, as Paying Agent and Registrar, and Citibank, N.A., as
             Collateral Agent.
 
      10.1*  Loan Agreement dated as of January 26, 1996, between the Company and DNAP
 
      10.2*  Assignment of Patents dated January 26, 1996, between the Company and DNAP
 
      10.3*  Sole Patent License Agreement dated as of January 26, 1996, between the Company and DNAP
 
      10.4*  Non-Exclusive Patent License Agreement dated as of January 26, 1996, between the Company and DNAP
 
      10.5   Promissory Note made January 25, 1999, by DNAP in favor of the Company
 
      10.6   Governance Agreement dated as of September 26, 1996, between Savia and the Company (filed as an exhibit
             to the Company's current report on Form 8-K dated September 26, 1996 and incorporated herein by
             reference)
 
      10.7   Long-Term Funded Research Agreement dated as of September 26, 1996, between Savia and DNAP (filed as an
             exhibit to the Company's current report on Form 8-K dated September 26, 1996 and incorporated herein by
             reference)
 
      10.8   Stock Purchase Agreement dated as of August 12, 1997, by and among International Produce Holding
             Company, DNAP Holding Corporation, Raul Batiz E., Pedro Batiz G., J. Guillermo Batiz G., and Raul Batiz
             G. (filed as an exhibit to the Company's current report on Form 8-K dated October 6, 1997 and
             incorporated herein by reference).
 
      10.9   First Amendment to Stock Purchase Agreement dated as of October 6, 1997, by and among International
             Produce Holding Company, DNAP Holding Corporation, Raul Batiz E., Pedro Batiz G., J. Guillermo Batiz G.,
             and Raul Batiz G. (filed as an exhibit to the Company's current report on Form 8-K dated October 6, 1997
             and incorporated herein by reference).
 
      10.10  English-language summary of the CONVENIO RELATIVO AL EJERCICIO DEL DERECHO DE RETIRO TOTAL DE
             APORTACIONES (Agreement Concerning the Exercise of the Right of Withdrawal of all Contributions) dated
             August 29, 1997, by and among Agricola Batiz, S.A. de C.V., certain of its shareholders, and DNAP
             Holding Corporation (filed as an exhibit to the Company's current report on Form 8-K dated October 6,
             1997 and incorporated herein by reference).
 
      10.11  Long-Term Funded Research Agreement dated as of January 1, 1997, between Seminis Vegetable Seeds, Inc.
             and DNAP.
 
      10.12  Stock Purchase Agreement dated as of October 1, 1998, between the Company and Bionova International,
             Inc. (filed as an exhibit to the Company's quarterly report on Form 10-Q for the quarterly period ended
             September 30, 1998 and incorporated herein by reference).
</TABLE>
 
                                       64
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER     DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
      10.13  Amendment to Stock Purchase Agreement dated as of January 14, 1999, between the Company and Bionova
             International, Inc.
 
      10.14  Amendment to Governance Agreement dated as of January 14, 1999, between Savia and the Company.
 
      10.15  DNAP Holding Corporation 1998 Long-Term Incentive Plan (filed as an exhibit to the Company's proxy
             statement for the annual meeting of stockholders held on May 28, 1998 and incorporated herein by
             reference).
 
      21.1   Subsidiaries
 
      27.1   Financial Data Schedule
</TABLE>
 
------------------------
 
*   Filed as an exhibit to the Company's Registration Statement on Form S-4 (No.
    333-09975) and incorporated herein by reference.
 
                                       65