<PAGE>

                       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 (Fee required)

                     FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

           / /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                THE SECURITIES EXCHANGE ACT OF 1934 (No fee required)
                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     No  X
                                              ---    ---

    Aggregate market value of Common Stock held by nonaffiliates as of March
18, 1997:  $26,178,162

    Number of shares of Common Stock outstanding as of March 18, 1997:
18,370,640


                      DOCUMENTS INCORPORATED BY REFERENCE

    Part III incorporates information by reference from the Registrant's
definitive proxy statement to be filed for its 1997 annual meeting of
stockholders.

<PAGE>

                               TABLE OF CONTENTS

                                                                           PAGE
                                                                          NUMBER
                                                                          ------
PART I...................................................................    1
    ITEM 1.  BUSINESS....................................................    1
         Overview........................................................    1
         Background......................................................    1
         Production......................................................    2
         Marketing and Distribution......................................    2
         Research and Development........................................    4
         Proprietary Protection..........................................    7
         Governmental Regulation.........................................    9
         Competition.....................................................    9
         Employees.......................................................   10
         Controlling Stockholder; Conflicts of Interest..................   10
    ITEM 2.  PROPERTIES..................................................   11
    ITEM 3.  LEGAL PROCEEDINGS...........................................   11
    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........   13

    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............................................   19
         Liquidity and Capital Resources.................................   19
         Disclosures Regarding Forward Looking Statements................   20
    ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................   24
    ITEM 9.   DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE...................................   48

PART III.................................................................   48
    ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY............   48
    ITEM 11.  EXECUTIVE COMPENSATION.....................................   48
    ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT.............................................   48
    ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.......   48

PART IV..................................................................   48
    ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
              REPORTS ON FORM 8-K........................................   48


    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 of DNAP Holding by an affiliate.
Petoseed-Registered Trademark-, Asgrow-Registered Trademark- and Royal
Sluis-Registered Trademark- are registered trademarks of Seminis Vegetable
Seeds, Inc.

                                     i
<PAGE>

                                     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 50.004% ("ABSA"),  (ii)
International Produce Holding Company, a Delaware corporation, of which the
Company owns 57.7% ("IPHC"), and  (iii) DNA Plant Technology Corporation, a
Delaware corporation, wholly-owned by the Company ("DNAP").  The Company
acquired its majority interests in ABSA and IPHC on July 1, 1996, by means of
a capital contribution from Bionova S.A. de C.V. ("Bionova Mexico").  DNAP
became a wholly-owned subsidiary of the Company on September 26, 1996, as a
result of the merger (the "Merger") of Bionova Acquisition, Inc., a Delaware
corporation that was a wholly-owned subsidiary of the Company, with and into
DNAP. Approximately 70% of the outstanding common stock of the Company is
owned by Empresas La Moderna, S.A. de C.V. ("ELM").

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

    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

    ELM, the Company's 70% owner, is the leading producer and distributor of
cigarettes in Mexico through its subsidiary Cigarrera La Moderna, S.A. de
C.V. ("CLM"); the leading vegetable seed company in the world through its
majority-owned subsidiary, Seminis, Inc., which sells its seed products under
the Petoseed, Asgrow and Royal Sluis brand names; and the leading producer of
folding boxboard and folding and flexible packaging in Mexico through
Empaques Ponderosa, S.A. de C.V.

    Through its Bionova Mexico subsidiary, ELM 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 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.  The Batiz Family own the 49.996% minority
interest in ABSA and the 42.3% minority interest in IPHC.

    Significant market developments over the past four 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, and a growing market
for fresh produce in the United States.  The Company 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



                                      1

<PAGE>

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, Baja California and Jalisco.  Advanced
technology is used to ensure consistent quality and yields, including special
hybrid varieties, integrated pest management control, greenhouse production
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 1996, approximately 60% 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, Jalisco and Sonora.  Almost 40% of ABSA's
supply in 1996 came from land owned or leased by ABSA.  ABSA owns
approximately 2,505 acres in Sinaloa and Sonora, and ABSA leases
approximately 1,870 acres in Sinaloa and Baja California Sur.  During 1996, a
very limited amount of produce was sourced through distribution contracts.

    In 1996, approximately 49% of ABSA's sales was tomatoes, 26% was peppers,
15% was cucumbers, 6% was grapes and the remaining 4% was mixed vegetables
and melons.  In both 1994 and 1995, ABSA's sales were allocated approximately
as follows:  tomatoes - 52%, peppers - 26%, cucumbers - 6%, melons - 3%, and
mixed vegetables (including eggplant and squash) - 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"), Interfruver in Mexico and Royal Van Namen in Holland.
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 Philadelphia,
Pennsylvania ("FreshWorld").

    NATIONAL DISTRIBUTORS.  The R.B. Packing companies had revenues of $76
million in 1996.  Most of R.B. Packing's sales were made by R.B. Packing,
Inc. which is located in Nogales, Arizona, the main point of entry for
Mexican produce into the United States.  Approximately 85% 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 8% of R.B. Packing, Inc.'s sales in 1996.  In 1996
its sales were 55% to supermarkets, 35% to wholesalers and 10% 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 1996 its sales were 50%



                                      2

<PAGE>

to supermarkets, 40% to wholesalers, and 10% 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.

    R.B. Packing, Inc. and R.B. Packing of California, Inc. have a seasonal
contract program at fixed prices with major customers and are pursuing
similar programs with other customers.  The objectives of contract pricing
are to improve margins and reduce distribution expenses by concentrating
volume and increasing the proportion of business done with large customers
with more progressive produce purchasing practices.  Contract pricing also
avoids much of the risk associated with selling large volumes at spot prices.

    Interfruver, together with its subsidiaries, 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.  It is one of the largest
importers of Chilean produce in Mexico.  Approximately 60% of its sales is to
wholesalers and other intermediaries and 40% is to supermarkets.
Interfruver's sales, which totalled $55 million in 1996, are denominated in
pesos.

    In November 1996, IPHC completed its acquisition of 51% of Rijnhout Food
Group B.V., a Holland-based holding company whose subsidiaries include
Koninklijke Exporthandel Jac. Van Namen & Zonen B.V., and Rijnhout Groenten
B.V. (collectively, "Royal Van Namen").  Royal Van Namen is a fresh produce
distributor with 1996 sales of $57 million ($3.2 million in December, 1996
after the acquisition by IPHC), dealing primarily in tomatoes, peppers,
citrus and apples which it buys locally through auctions and importers.  It
exports throughout Europe, the Middle East, the Far East and North America.
Sixty-five percent of Royal Van Namen's sales are to food service, 20% to
supermarkets, and 15% to wholesalers.

    REGIONAL DISTRIBUTORS.  TDI, a 75%-owned subsidiary of IPHC, is managed
by Kirby Tanimura, who has more than 10 years of experience in the fresh
produce industry and owns 25% of TDI.  In 1996, TDI's sales of $36 million
were 50% to supermarkets, 30% to food service and 20% to other wholesalers.

    Premier, an 80%-owned subsidiary of IPHC, is managed by Robert M. Levine,
who has more than 15 years of experience in the fresh produce industry and
owns 20% of Premier.  Premier distributes produce throughout eastern Canada
and its sales were approximately 40% to supermarkets, 40% to independent
retailers, and 20% to wholesalers in 1996.  Sales in 1996 were approximately
U.S. $16 million and are denominated in Canadian dollars.

    FreshWorld Farms, Inc., 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.  Its 1996
revenues were $13 million.

    Each of the regional distributors is working to enhance its value-added
programs with major customers.  Such programs typically consist of repacking
and special packaging.

    POTENTIAL ACQUISITION.  The Board of Directors of Company has approved
the acquisition of all of the minority interests in ABSA and IPHC from the
Batiz Family, subject to the availability of financing on satisfactory terms.
This acquisition would be made under the terms of an agreement reached by
ELM and the Batiz Family in March 1997 providing that, subject to certain
conditions, ELM or its designee would purchase all of the minority interests
in ABSA and IPHC for a purchase price of $23.75 million, $11.75 million to be
paid in cash at the closing of the transaction and $12 million to be paid in
equal annual installments over the following three years, with interest on
the outstanding amount to be paid quarterly.  The conditions include
satisfactory completion of due diligence and assurances from the Batiz Family
regarding continuity of operations.  Raul Batiz G. and Guillermo Batiz G.,
the Director of Operations and Director of Administration of ABSA
respectively, have agreed to remain with ABSA in consulting roles.  Pedro
Batiz G. has agreed to continue as an executive of IPHC.  Raul Batiz E., the
President of IPHC, is expected to retire.  The Company intends to seek bank
debt to finance this acquisition.



                                      3

<PAGE>

RESEARCH AND DEVELOPMENT

    The Company's research 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 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,
through its FreshWorld subsidiary, is engaged in the production and marketing
of branded, premium fruits and vegetables.  It currently is marketing its
first generation of products developed through advanced biotechnological
techniques to supermarkets and institutions.  DNAP is developing its second
generation products using genetic engineering.

    DNAP's 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.  DNAP will seek to deliver consistently
superior products, thereby building brand name awareness, which DNAP believes
will enable it to sell its products at premium prices.  Because it perceives
public dissatisfaction with the quality of tomatoes generally available in
supermarkets, DNAP is initially concentrating on marketing its FreshWorld
Farms tomato.  DNAP believes that the success of this product will help to
establish consumer awareness of, and demand for, its other products.

    Under the Long Term Funded Research Agreement between ELM and DNAP, DNAP
has initiated several research programs directed at improving agronomic
performance of vegetable seeds.  These include programs aimed at developing
virus, fungal and nematode resistant plants.

    PRODUCTS.  DNAP is currently marketing products it developed through
advanced biotechnological techniques to supermarkets and food service
outlets. The products, which are marketed under the FreshWorld Farms brand
name, are:


PLANT           PREMIUM BRANDED PRODUCT            CURRENT CUSTOMERS
-----           -----------------------            -----------------

Cherry Tomato   FreshWorld Farms Cherry Tomatoes   Distributors and supermarket
                                                   chains in the mid-Atlantic,
                                                   Northeast and Midwest regions
                                                   and Canada

Pepper          FreshWorld Farms Mini-Peppers      Distributors in several
                                                   states


    The 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.

    DNAP is using genetic engineering to develop its second generation of
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.  DNAP has received three
issued United States patents and has made additional pending filings directed
to Transwitch 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.  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



                                      4

<PAGE>

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. After the test market was completed, sales of
Endless Summer tomatoes were suspended according to the terms of a settlement
agreement with Monsanto Company which related to patents covering a
particular promoter and a particular marker gene.  DNAP now has access to
Monsanto's patented technology for the promoter and the marker as the result
of a January 31, 1997 technology agreement between Monsanto and ELM.  DNAP
has also developed alternative genetic engineering approaches, based on
proprietary promoters and marker genes, for the suppression of ACC synthase
in tomatoes.  Second generation products being developed by DNAP through
plant genetic engineering include cherry tomatoes, snap peas, peppers,
bananas, pineapples, grapes and strawberries.

    Other products under development using plant genetic engineering are
described below:


<TABLE>
PLANT                  TECHNOLOGY                               TARGETED BENEFIT
-----                  ----------                               ----------------
<S>                    <C>                                      <C>
Cherry Tomato          Transwitch technology to suppress a      Extended shelf life of up to three months;
                       gene responsible for ripening            facilitates harvesting.

Snap Pea               Transwitch technology to suppress a      Improved taste compared to existing types; pea
                       gene responsible for the conversion of   remains sweeter for a longer time.  Increased
                       sugar to starch                          yield.

Pepper                 Transwitch technology to suppress a      Extended shelf life compared to existing types;
                       gene responsible for softening           peppers remain firmer for a longer time after
                                                                harvest.

Banana and Pineapple   Transwitch technology to suppress a      Extended shelf life compared to existing types.
                       gene responsible for rotting

Strawberry             Addition of genes to prevent diseases    Improved yield and post-harvest shelf life.
</TABLE>


    Some of DNAP's work in fruit crops is being supported by corporate
contracts including contracts with Alida Marine, Inc. for pineapple, Zeneca
PLC for bananas and United Agricorp, Inc. ("UAC") for strawberries.

    RESEARCH AND TECHNOLOGY.  DNAP believes that it is a leader in the
application of plant biotechnology to develop new and improved fruit and
vegetable varieties designed to appeal to the consumer.  The research team of
33 scientists (including 16 with Ph.D. degrees) and support staff includes
scientists in the fields of cell biology, plant genetic engineering, plant
genetics, biochemistry, plant breeding, agronomy, plant pathology and food
science (the science of processing and packaging food).  DNAP's scientists
have published over 300 articles in peer-reviewed scientific literature and
are named inventors on more than forty United States patents owned by DNAP or
FreshWorld.

    DNAP's research and product development system involves a two-track
strategy employing advanced breeding methods to develop first generation
products, and genetic engineering coupled with breeding methods to develop
second generation products (which build on the varieties developed from the
first generation).  The primary goal of the research effort is to develop
fruit and vegetable varieties which are differentiated in taste, appearance,
texture, and retention of freshness, attributes which are attractive to the
consumer. DNAP's secondary goal is to improve production characteristics such
as higher yield, disease resistance and more efficient harvesting
characteristics. Additionally, DNAP is working to develop improved processing
attributes for fruits and vegetables.

    ADVANCED BIOTECHNOLOGICAL BREEDING.  DNAP's scientists have pioneered the
use of advanced biotechnological breeding methods in commercial agriculture.
These methods take advantage of DNAP's ability to regenerate plants from
single cells in culture.  One advanced breeding method used by DNAP's
scientists is anther culture, which captures and stabilizes preferred
characteristics from two separate varieties in a single step.  Traditionally,
this process takes multiple generations of crossing between the two parental
lines and their progeny.



                                       5

<PAGE>

Anther culture, in combination with plant breeding techniques, was used to
develop the small size and low seed trait of DNAP's sweet mini-pepper.

    PLANT GENETIC ENGINEERING.  DNAP believes that it is a leader in plant
genetic engineering which it is using to develop its second generation of
products.  Genetic engineering involves the modification of a plant's
chromosomes, which are made up of DNA segments including genes encoding plant
characteristics.  Genetic engineering enables the development of new
varieties by promoting specific traits in plants, such as extended freshness,
enhanced sweetness and disease resistance.  The genetic engineering process
requires identification of genes responsible for certain characteristics: the
expression or suppression of such genes in plant cells using transformation
technology, vector systems and gene expression technology; the selection of
successfully engineered plant cells; and the regeneration of whole plants
from the engineered plant cells.  The insertion of desired genes into plant
cells can either add a desired characteristic such as sweetness, to the plant
or, if inserted using DNAP's proprietary Transwitch gene suppression
technology, suppress an undesirable characteristic or process, such as
rotting.  These technologies are described below:

    GENE IDENTIFICATION TECHNOLOGIES are procedures for the identification
and characterization of genes.  Genes are specific sequences of DNA that
control specific plant characteristics through the expression of certain
proteins which, in turn, initiate certain biological processes.  For example,
there are genes that cause the expression of a certain protein that controls
the ripening process in tomatoes.

    DNAP's scientists have extensive experience in chemically-based methods
for gene identification and have pioneered a method for gene identification
in plants called heterologous transposon technology.  A United States patent
has been granted to DNAP for the use of certain aspects of transposon
technology to isolate genes.  Transposons are genetic elements capable of
moving from one location on a plant's chromosome to another.  The points at
which transposons insert themselves in the chromosome can be determined.
When a transposon inserts itself into a gene encoding a specific
characteristic, it alters the function of the host gene, causing detectable
changes in the characteristic. Tracing the location of the transposon leads
to the location of the host gene controlling the characteristic.  The
advantage of this proprietary gene identification technique is that it allows
scientists to associate ultimate plant characteristics with specific genes
without the need for first developing an understanding of the intermediate
operative proteins and biological processes involved.  DNAP's scientists were
the first to successfully use this method and have used it to isolate genes
affecting acidity in plants.  Acidity is one of the major determinants of
flavor in fruits.  A United States patent has been granted to DNAP for an
isolated acidity gene and its uses.  DNAP's scientists have also used this
method to isolate genes that influence sugar production in plants and have
applied this proprietary technology to identify and isolate additional genes
that are responsible for traits such as freezing and dehydration tolerance,
and sweetness and flavor regulation.

    TRANSFORMATION/REGENERATION TECHNOLOGY is a tissue culture-based method
by which new genes are stably incorporated into selected plant cells, which
are subsequently regenerated into whole plants.  DNAP believes it is a leader
in the development and use of this technology and has used it to develop
efficient systems in commercially important varieties of tomatoes, peppers,
melons, peas, strawberries, carrots, potatoes, and lettuce.  FreshWorld was
granted United States patents for certain transformation/regeneration methods
in peppers and peas developed by DNAP.  DNAP and Du Pont were jointly granted
a United States patent for certain transformation methods in corn developed
by DNAP.

    VECTOR SYSTEMS are means for inserting genes into plant cells.  The
principal vector system is based on Agrobacterium tumefaciens, a soil
bacterium, which as part of its natural life cycle delivers DNA to plants.
DNAP has licenses from the Max Planck Institute, Monsanto Company and others
providing certain rights to this vector system.  The rights of both the Max
Planck Institute and Monsanto Company to patent this technology are in
dispute.  See "Proprietary Protection."

    GENE EXPRESSION TECHNOLOGY is the manipulation of gene systems to ensure
successful, timely and specific expression of introduced genes in plant
cells. DNAP has developed promoter systems for enhancing gene expression in
plants and has been issued a United States patent for certain of those
promoter systems. Other promoter systems are the subject of pending United
States patent applications filed by DNAP.



                                      6

<PAGE>

    ENGINEERED PLANT CELL SELECTION technologies are techniques for
distinguishing plant cells which have been successfully engineered to
incorporate the desired genetic material from cells not so engineered.  The
technique involves using a marker gene conferring resistance to a phytotoxic
compound, such as an antibiotic, which is inserted into cells along with the
gene encoding the desired plant characteristic.  Cells are then treated with
the phytotoxic compound, and only successfully engineered cells survive.
These cells can then be used for plant regeneration.

    DNAP's scientists have developed proprietary cell selection systems for
the selection of engineered plant cells.  DNAP was issued two United States
patents directed to the use of certain marker genes which confer resistance
to the antibiotic spectinomycin.  DNAP also has royalty-free license rights
to a sulfonylurea-resistance gene for use as a marker gene in developing new
plants.

    TRANSWITCH GENE SUPPRESSION TECHNOLOGY, one of DNAP's most significant
technological developments, is a method for switching off gene expression in
plants.  DNAP has received three United States patents and a European patent
directed to methods of using this technology for suppressing plant genes.
This technology is an effective alternative to antisense technology for gene
suppression.

    As more fully described herein, DNAP's scientists are using plant genetic
engineering, including its proprietary Transwitch gene suppression
technology, to enhance DNAP's existing product line of fresh fruits and
vegetables and to develop new products.  For example, the shelf life of
DNAP's FreshWorld Farms tomato has been extended from 10 to 14 days to up to
90 days under laboratory conditions by using Transwitch technology to switch
off the ACC synthase gene. This gene is responsible for the biosynthesis of
ethylene, which triggers the ripening process in tomatoes.  On the basis of
its experience with the ACC synthase suppressed Endless Summer tomatoes test
marketed in 1995, DNAP believes that an ACC synthase suppressed tomato will
offer considerable cost savings in production and distribution.  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.  DNAP has also used Transwitch technology to enhance and maintain
the sweetness of snap peas and thereby extend their shelf life by inhibiting
the biosynthesis of ADPG pyrophosphorylase, an enzyme which causes the
conversion of sugar to starch. FreshWorld has an issued United States patent
directed to the use of the ADPG pyrophosphorylase gene in peas for sweetness
control.

    DNAP is also developing tools to apply plant genetic engineering
technology to a range of additional crops, including tropical crops such as
bananas and pineapples.  DNAP believes the application of its Transwitch
technology and its ripening control technology may have significant
commercial applications in controlling spoilage of these fruits during
transportation.  For example, by inhibiting the production of ethylene in
bananas, rotting can be delayed so that fruits being shipped long distances
will arrive in better condition with less spoilage.

    In other areas of plant genetic engineering, DNAP's scientists were the
first to demonstrate the ability to control fungal diseases affecting plants
by inserting a chitinase gene into plants.  Chitinase is a naturally
occurring enzyme with anti-fungal activity.  DNAP has been issued two United
States patents directed to plants transformed with chitinase genes.


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 FreshWorld have over forty issued patents in the United
States.  DNAP and FreshWorld have pursued proprietary protection across the
spectrum of their activities, including protection for basic tools of plant
genetic engineering and the protection of specific products.



                                      7
<PAGE>

    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, 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 one European
patent directed to methods of using this technology for suppressing plant
genes.  The European patent is in opposition.  DNAP has made additional
pending filings in the United States and abroad directed to Transwitch
technology.

    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 FreshWorld parent and
hybrid tomato lines, resulting in two issued U.S. patents.  In addition, DNAP
has pending patent applications directed to ripening controlled tomato lines
and cherry tomato lines.  DNAP also has a granted United States patent
directed to the method of somaclonal variation in tomato which was used to
create the FreshWorld Farms tomato.  DNAP has been granted a United States
patent covering a broad class of low seed peppers, including the FreshWorld
Farms 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.  FreshWorld 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 Stanford University
under the basic recombinant-DNA patent filings, 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 to one
of such patents is 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 ELM 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.

    DNAP uses trade secret protection for certain innovations and technical
know-how on which new products may be based.  DNAP also uses trade secret
protection for inbred parent lines of its hybrid plants.  DNAP believes that
the use of hybrid seed (from which hybrid plants are grown) provides
additional protection for the FreshWorld Farms tomato, since seeds from the
tomatoes sold to consumers will not breed true.  In addition, a hybrid seed
generally produces a heartier plant.  In-house procedures are in place to
protect trade secrets, know how and inbred parent plant lines.

    DNAP has ongoing programs to develop patentable processes, plant
varieties and products, and these programs are monitored by DNAP's patent
counsel to insure that timely and appropriate action is taken to seek patent
rights or to maintain trade secret protection.  To gain further value from
its technology, DNAP may from time to time license its technology to others,
particularly in connection with corporate collaborations or instances in
which a financial or technology return may be earned without impacting its
competitive position.

    IPHC's distribution companies market produce under the Master's Touch,
Premier Selecci n 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.  ELM has registered the Premier Seleccion name
in Mexico and has



                                      8

<PAGE>

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 Great Britain, Ireland, Sweden, the Benelux countries
and Japan.  FreshWorld Farms, Inc. has registered the Endless Summer name in
the United States.


GOVERNMENTAL REGULATION

    The agribusiness industry saw continued growth in the number of U.S.
government approvals for genetically engineered plant products in 1996 and
the first 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.

    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 to conduct field trials of
its Endless Summer tomatoes.

    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 grape plants.

    To date, DNAP, to the best of its knowledge, has successfully functioned
within the scope of applicable laws and regulations, including rules
administered by the FDA, USDA and EPA.  The company believes it is in
material compliance with all applicable laws and regulations pertaining to
the development and commercialization of its products.  DNAP believes that
its current research and development activities and products will not be
subject to delays other than the ordinary delays associated with government
review and approvals for traditional products, when and if such review and
approvals are required.  DNAP further believes that its experience in this
area enables it to deal effectively with the applicable regulatory processes.


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 produces 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



                                      9

<PAGE>

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.  Meyer Tomatoes
is one of the largest growers in California.

    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.


EMPLOYEES

    The Company and its subsidiaries have a total of 382 employees.

    ABSA has no employees.  Copropriedad Agricola Batiz Hermanos, a Mexican
entity that is controlled by the Batiz Family ("CABH"), provides services to
ABSA pursuant to a contractual agreement.  CABH provides services to ABSA,
and ABSA pays a fee  to CABH based on CABH's costs incurred in connection
with providing such services.  The number of persons providing such services
to ABSA ranges from a minimum of 60 to a maximum during the harvesting season
(January-April) of approximately 4,500.


CONTROLLING STOCKHOLDER; CONFLICTS OF INTEREST

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

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

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



                                      10

<PAGE>

additional indebtedness.  The Company's acquisition activities may in the
future include participation in the acquisition or restructuring activities
conducted by other companies that may be deemed to be controlled by ELM.


ITEM 2.  PROPERTIES

    ABSA owns approximately 2,505 acres of agricultural land in Sinaloa and
Sonora.  ABSA leases approximately 1,870 acres of land in Sinaloa and Baja
California Sur.  See "Legal Proceedings."

    Interfruver leases office and warehouse space in Jalisco.  Interfruver
and its subsidiaries also lease warehouse space in Mexico City, Sinaloa,
Sonora, Chihuahua and Nuevo Leon.

    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.

    DNAP's properties are more fully described below:


<TABLE>
                                                                        Acres of     Lease
Location                  Ownership              Facilities               Land     Expiration
--------                  ---------              ----------             --------   ----------
<S>                        <C>        <C>                                  <C>      <C>
Oakland, California......  Leased     41,000 square feet of laboratory     ---      05/31/99
                                      and office space
                                      7,500 square feet of greenhouse
                                      space

Brentwood, California....  Owned      12,700 square feet of greenhouse     10(1)
                                      and warehouse space(1)

Eddystone, Pennsylvania..  Leased     2,300 square feet of office space    ---      06/30/2000

Bonita Springs, Florida..  Leased     1,000 square feet of office space    ---      month-to-
                                                                                    month
</TABLE>
--------------------
(1)   Includes farm land for field trials


    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 AND
FAY H. AARON V. EMPRESAS LA MODERNA, S.A. DE C.V., BIONOVA, S.A. DE C.V.,
ALFONSO ROMO GARZA, BIONOVA INTERNATIONAL, INC., DNAP HOLDING CORPORATION,
ROBERT SERENBETZ, GERALD LAUBACH, EVELYN BEREZIN, AND DOUGLAS LUKE, JR. was
filed in the U.S. federal district court for the Northern District of
California.  The plaintiffs allege that they owned shares of DNAP's $2.25
Convertible, Exchangeable Preferred Stock ("Preferred Stock") prior to the
merger (the "Merger") of DNAP with a subsidiary of the Company on September
26, 1996.  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 the Company specified in the Merger Agreement.  The
plaintiffs allege that they were owners of shares of DNAP's Preferred Stock
prior to the Merger and that they were entitled to receive more consideration
for their Preferred Stock than was provided to them under the Merger
Agreement.  Specifically, the plaintiffs allege that (i) they were denied the
rights they allegedly had under the terms of the Preferred Stock to vote on
the Merger, to receive dividend payments, and to receive special conversion
privileges in connection with the Merger; (ii) defendants Serenbetz, Laubach,
Luke, and Berezin (the "Individual Defendants"), each of whom was a director
of DNAP prior



                                      11

<PAGE>

to the Merger and currently serves as a director of the Company, breached
fiduciary duties of loyalty, candor and care allegedly owed to DNAP and its
stockholders; (iii) all of the defendants aided, knew of or recklessly
disregarded, and all of the defendants substantially assisted, the conduct
giving rise to the alleged breaches of fiduciary duty by the Individual
Defendants; and (iv) each of ELM, Bionova Mexico, the Company and Mr. Romo
Garza had knowledge of the alleged contractual duties allegedly owed by DNAP
to the plaintiffs and each of such defendants intentionally caused DNAP to
breach such alleged duties.  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.  The Company believes the claims of the
plaintiffs are without merit and intends to vigorously defend against these
claims.

    R.B. Packing, Inc., a subsidiary of DNAP Holding, has received a "30-day
letter" from the U.S. Internal Revenue Service (the "IRS") proposing tax
adjustments for the fiscal years ended September 30, 1993, 1992 and 1991
totalling approximately $.9 million plus interest and penalties.  The
proposed adjustments relate primarily to the sales commissions charged by
R.B. Packing, Inc. to ABSA, as well as to certain travel and entertainment
and other expenses. R.B. Packing, Inc. disagrees with the position taken by
the IRS and has appealed the IRS's determination.

    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. The proceeding arose from a petition presented on
September 1, 1964, by a group of campesinos from the town of "La Eureka,"
Municipality of Culiacan, Sinaloa, to the Governor of the state of Sinaloa.
The petition 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 the petitioners. A
trial on this matter was instituted on August 4, 1993, in the TRIBUNAL
SUPERIOR AGRARIO in Sinaloa. In its judicial determination published in the
Mexican DIARIO OFICIAL DE LA FEDERACION 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 an "amparo"
before the TRIBUNAL COLEGIADO DEL PRIMER CIRCUITO EN MATERIA ADMINISTRATIVA
in Mexico City challenging 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 9% of the total land owned
by ABSA, Mexican law gives ABSA indemnification rights against Ms. Batiz.

    DNAP Holding, through its subsidiaries, currently grows fresh or chilled
tomatoes in Mexico that it imports into the United States.  On March 29,
1996, the Florida Tomato Growers Exchange, the Florida Fruit and Vegetable
Association, the Florida Farm Bureau Federation, the South Carolina Tomato
Association, Inc., the Gadsden County Tomato Growers Association, Inc., the
Accomack County Farm Bureau and the Florida Tomato Exchange filed a petition
before the United States Department of Commerce ("DOC") and the U. S.
International Trade Commission requesting the imposition of antidumping
duties on imports of fresh tomatoes from Mexico. ABSA is affected by this
dumping investigation because ABSA exports tomatoes from Mexico to the United
States. On October 28, 1996, the DOC issued a preliminary finding of dumping,
as required by law, finding a dumping rate of 17.56% for most Mexican
growers. On the same date, the DOC and representatives of Mexican tomato
producers signed a five-year Suspension Agreement discontinuing the dumping
investigation and suspending any dumping duties resulting from such
preliminary determination if certain conditions are met. The Suspension
Agreement requires that all tomatoes (other than greenhouse and cocktail
tomatoes) entering the United States be priced no lower than 20.68 cents per
pound ($5.17 per twenty-five pound box), which price may be adjusted from
time to time by the DOC in response to significant changes in the
relationship of domestic prices to import prices. The Suspension Agreement
does not affect the requirement under the North American Free Trade Agreement
that Mexican-grown tomatoes be accorded "national treatment," which means
that no limitations, quality standards or other restrictions can be applied
to Mexican-grown tomatoes unless such limitations, quality standards or other
restrictions are also applied to tomatoes grown in the United States. ABSA
supports and has signed the Suspension Agreement, in part because the
Suspension Agreement could lead to more price stability throughout the
growing season and more consistent sales practices in the industry.
Furthermore, counsel for the petitioners in the dumping proceeding has
indicated that the



                                      12

<PAGE>

petitioners do not intend to pursue further trade remedies or legislative
initiatives to restrict the importation of tomatoes from Mexico as long as
the Suspension Agreement remains in effect and is being complied with.

    In addition to the foregoing, from time to time, the Company is involved
in various legal actions that arise in the ordinary course of its business.
Such legal actions are not expected, individually or in the aggregate, to
have a material adverse effect on DNAP's financial condition or results of
operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    Not applicable.



















                                      13
<PAGE>

EXECUTIVE OFFICERS OF THE COMPANY

    Information regarding DNAP Holding's executive officers including their
respective ages at March 1, 1997, is set forth below.


Name                    Age     Position with Company
----                    ---     ---------------------

Carlos Herrera          56      Chief Executive Officer and Director
Robert Serenbetz        52      Chief Operating Officer and Director
Arthur H. Finnel        46      Treasurer and Chief Financial Officer
Raul Batiz E.           72      President of IPHC
Raul Batiz G.           47      Director of Operations of ABSA
Guillermo Batiz G.      44      Director of Administration of ABSA
Dr. John R. Bedbrook    47      Executive Vice President and
                                Director of Science of DNAP
Dr. David A. Evans      44      Executive Vice President - Business Development
                                of DNAP


    Carlos Herrera has served as the Managing Director (Chief Executive
Officer) of Bionova, S.A. de C.V. since 1993.  Prior to that time, he served
as the Director of Operations of Cigarrera La Moderna, S.A. de C.V., the
leading cigarette company in Mexico and a wholly-owned subsidiary of ELM.
Mr. Herrera is an alternate director of ELM.

    Robert Serenbetz has been the Chief Operating Officer of the Company
since 1996.  He served as Chairman of DNAP from 1994 to 1996, Chief Executive
Officer of DNAP from 1992 to 1996, and President of DNAP from 1991 to 1996.
Mr. Serenbetz was Chief Operating Officer of DNAP from 1991 to 1992.  From
1989 to 1991, he was Group President of the American Chicle Division of
Warner Lambert Company, a manufacturer of pharmaceutical and consumer
products.

    Arthur H. Finnel has been the Treasurer and Chief Financial Officer of
the Company since 1996.  From 1995 to 1996 he was a financial planning
consultant to ELM and Bionova Mexico.  From 1982-1995 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.

    Raul Batiz E. is the President of IPHC and since 1984 has served as the
President of R.B. Packing, Inc.

    Raul Batiz G. has served as the Director of Operations of ABSA since
1993. Prior to that time he acted for twenty years as the head of operations
of Agricola Batiz Hermanos, which was engaged in the fresh produce business
in Mexico.  He is the son of Raul Batiz E.

    Guillermo Batiz G. has served as the Director of Administration of ABSA
since 1993.  Prior to that time, he acted for twenty years as head of
administration for Agricola Batiz Hermanos, which was engaged in the fresh
produce business in Mexico.  He is the son of Raul Batiz E.

    John R. Bedbrook, PhD has been Executive Vice President and Director of
Science of DNAP since November 1988.

    David A. Evans, PhD became Executive Vice President-Business Development
of DNAP in January 1995 and previously had been the Vice President Business
Development of DNAP since 1990.

    All executive officers of DNAP Holding, DNAP and IPHC are elected
annually by their respective Boards of Directors to serve until the next
annual meetings of such Boards and until their respective successors are
chosen and qualified. Officers of ABSA have been granted powers by the Board
of Directors of ABSA which may be revoked by the Board of Directors of ABSA
at any time.



                                      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 DNA Plant Technology
Corporation. 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.

                                                    HIGH          LOW
                                                    ----          ---
    1996
      Third Quarter (from September 27)            $7            $6 1/2
      Fourth Quarter                                7             3 1/16

    1997
      First Quarter (through March 18)              6 1/8         3 1/2

    -------------------------------------------------------------------
    -------------------------------------------------------------------


    On March 18, 1996, the last reported sale price of the Common Stock on
the Nasdaq National Market was $4 3/4 per share.  As of March 18, 1996, there
were 1,570 record holders of the Common Stock.

    The Company has never paid cash dividends.  Management intends to retain
any future earnings 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 four year period ended December 31, 1996 are derived from the
consolidated financial statements of DNAP Holding Corporation.  The
consolidated financial statements and related notes as of December 31, 1996
and 1995 and the three years in the period ended December 31, 1996 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 and Royal
Van Namen as from their respective dates of acquisition.

<TABLE>
                                                   (THOUSANDS OF DOLLARS, EXCEPT SHARE AND
                                                               PER SHARE DATA)
                                                           YEARS ENDED DECEMBER 31,
                                               ----------------------------------------------
                                                 1996         1995         1994         1993
                                               --------     --------     --------     -------
<S>                                            <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
  Total revenues............................   $192,985     $197,586     $ 64,112     $   164
  Gross profit..............................     16,632       20,510       (1,648)     (3,638)
  Selling and administrative................    (16,195)     (14,397)      (9,509)       (915)
  Write-off of purchased research
    and development.........................    (12,900)        -            -           -
  Research and development expenses.........     (1,244)        -            -           -
  Amortization of goodwill, patents
    and trademarks..........................     (1,008)        (538)        (404)       (404)
  Operating income (loss)...................    (14,715)       5,575      (11,561)     (4,957)
  Interest expense, net.....................     (3,482)      (4,940)      (1,254)        404
  Exchange gain (loss), net.................        569       (4,748)      (1,473)         (7)
  Other non-operating income................      2,058         -            -           -
  Loss before income taxes..................    (15,570)      (4,113)     (14,288)     (4,560)
  (Provision) benefit for income taxes......     (2,738)      (2,320)       1,842         513
  Minority interests........................      1,274        3,049        5,673       1,770
  Net loss..................................    (17,034)      (3,384)      (6,773)     (2,227)
  Net loss per common share (1).............     ($1.19)
  Weighted average number of common
    shares outstanding (1).................. 14,286,318


                                                               AT DECEMBER 31,
                                               ----------------------------------------------
                                                 1996         1995         1994         1993
                                               --------     --------     --------     -------
BALANCE SHEET DATA:
  Cash and cash equivalents.................   $ 10,735     $  1,580     $  2,540     $ 4,079
  Accounts and notes receivable, net........     37,129       33,333       22,649       3,246
  Inventories...............................     20,139       14,730       10,450      10,758
  Total current assets......................     69,161       49,785       35,761      18,661
  Total assets..............................    142,155       89,126       71,682      45,428
  Bank loans and current portion of
    long-term debt..........................     41,214       33,103       27,977       3,590
  Total current liabilities.................     81,037       54,823       40,992       7,371
  Long-term debt and payables...............      2,423       10,515        2,223       1,485
  Stockholders' equity......................     49,150       15,815       17,839      22,083

---------------------------------------------------------------------------------------------
</TABLE>

(1) Comparative share and per share data for 1995, 1994, 1993 is not presented
    because the information is not meaningful.



                                      16
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

    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 in Mexico, the United States, Canada,
Europe, the Middle East, and the Far East.  Since 1993, the business strategy of
the Company and its predecessors has been (i) vertical integration within the
produce/agronomics industry, (ii) growth by acquisition of complementary
businesses and (iii) aggressive growth of the businesses acquired.  While these
continue to be important components of the business strategy, DNAP Holding
wanted to improve its access to basic technology to separate itself from others
in the produce business by completing 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.

    DNAP Holding is seeking to exercise greater control over its production and
distribution operations to facilitate and strengthen its ability to
commercialize new products that are developed with DNAP's technology.  DNAP
Holding's recent announcement of its intent to acquire the minority interests in
ABSA and IPHC is part of this strategy.  The purchase price of $23.75 million
($11.75 million due on closing and the balance paid in equal installments over
the next three years with interest), subject to adjustments from the due
diligence review, will require that the Company raise additional financing.

RESULTS OF OPERATIONS

YEAR-ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

    DNAP Holding's total revenues declined from $197.6 million in 1995 to
$193.0 million in 1996.  The primary components of this change were a $5.6
million decline in other service income, a $16.1 million decrease in IPHC's U.S.
and Canadian sales, partially offset by a $6.3 million increase in the sales of
Interfruver in Mexico, and the inclusion of $8.2 million in sales generated from
the partial year results of DNAP and Royal Van Namen following their acquisition
and merger into DNAP Holding.  ABSA's revenues in 1996 and 1995 were $67.4
million and $61.7 million, respectively, of which $67.0 million and $57.8
million were intercompany sales (eliminated in consolidation).  The decline in
U.S. and Canadian sales reflected the effect of lower average realized prices of
fresh produce sold during the first six months of the year and a reduction in
ABSA's production for the U.S. market during the third quarter.  This reduction
in ABSA's production was a direct result of the Company's decision to terminate
relationships with some of its growers in 1996 to improve product quality, build
more stable relationships with its growers, and reduce credit losses.
Interfruver's sales volume increased from 1995 to 1996 due to the addition of
new commodities to the products sold by Interfruver, slightly higher prices due
to improved brand name recognition and quality, and additional sales to a major
Mexican retailer.  Other service income from the sale of materials (seeds,
fertilizer, etc.) to contract growers, net of costs, included in total revenues
declined from 1995 to 1996 as a direct consequence of ABSA's decision to
terminate relationships with some of its growers in 1996, to whom such materials
are sold.


                                      17

<PAGE>

    Gross profit (sales less cost of sales) declined from $20.5 million in 1995
to $16.6 million in 1996.  The negative effects of the lower average selling
prices ($8.6 million) in the U.S. and Canada and the decline in service income
($5.6 million) in Mexico were offset to some extent by the incremental margin
contribution by DNAP and Royal Van Namen ($1.3 million and $.7 million,
respectively) and lower cost of sales ($8.3 million).  Included in the change in
cost of sales is a reduction in the expense recorded in 1996 versus 1995
associated with the provisions for uncollectible grower and customer receivables
($2.0 million and $5.0 million in 1996 and 1995, respectively).

    Selling and administrative expenses increased from $14.4 million in 1995 to
$16.2 million in 1996.  This increase was primarily associated with expenses
incurred by DNAP and Royal Van Namen during the fourth quarter of 1996 after the
Merger and acquisition, respectively, and their incorporation into DNAP Holding.


    Research and product development expenses appeared in DNAP Holding's
results of operations for the first time in the fourth quarter of 1996.  This
$1.2 million expense item reflects DNAP's research and product development
overhead recorded in the fourth quarter.

    In 1996, the Company wrote off $12.9 million of purchased research and
development resulting from the Merger.  This one-time charge reflects the
value of in-process research and development programs ongoing at DNAP at the
time of the Merger, as estimated by an independent appraiser, which was part
of the purchase price in the transaction.  These product programs 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 in 1996 due to the first quarter of amortization charges (recorded in
the fourth quarter of 1996) emanating from the DNAP Merger and Royal Van Namen
acquisition, respectively.

    Interest expense decreased by $2.8 million in 1996, or 33%, versus 1995.
This decrease was due to a decline in the average interest rate that DNAP
Holding paid on its short term debt during the year.

    Interest income declined from $3.5 million in 1995 to $2.2 million in 1996.
This decline was due to a lower level of interest income generated by ABSA on
its short-term investments and a lower level of advances to growers on which
ABSA collected interest in 1996 versus 1995.

    In 1996, DNAP Holding experienced a net foreign exchange gain of $.6
million as compared to a loss of $4.7 million in 1995.  During 1996 the
peso/dollar exchange rate remained relatively stable throughout the year.  At
the end of 1994 a significant devaluation of the Mexican peso took place with
further declines experienced throughout 1995.  As a consequence, large exchange
losses were experienced in 1995 by ABSA, whose functional currency is the U.S.
dollar, due to its net peso monetary position.

    Income tax expense increased from $2.3 million in 1995 to $2.7 million in
1996.  This increase in expense was attributable to the recognition of a
deferred tax liability for ABSA arising from Mexican tax law which requires
expensing of inventory acquisition costs in the year of purchase.  Because ABSA
had no income in 1996 against which to apply these expenses, the deductions
resulted in an increase in ABSA's net operating loss carry forward.  Since
realization of such net operating loss carry forwards in their entirety is not
believed to be sufficiently assured, an increase in the valuation allowance
against deferred income tax assets was recorded commensurate with the increase
in deferred income tax assets.

    Other non-operating income in 1996 included a gain on the sale of property,
plant and equipment of $.3 million and a subsidy of $1.7 million in connection
with a special incentive program sponsored by various Mexican government and
banking institutions for companies in the agriculture, fishing and forestry
industries.


                                      18

<PAGE>

    During 1996 the share of losses allocable to minority interests was $1.3
million as compared with $3.0 million in 1995.  The 1996 and 1995 allocations of
losses are consistent with the minority positions held across the operating
subsidiaries of the Company.

YEAR-ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

    Total revenues during 1995 increased 201% to $197.6 million from $64.1
million in 1994.  The increase reflects the effect of the start-up of Premier
(1995 sales of $15.9 million), the acquisition of R.B. Packing by IPHC (1995
sales of $90.8 million) in December 1994, the acquisition of Interfruver by ABSA
in January 1995 (1995 sales of $48.8 million), the growth of TDI (1995 sales of
$32.3 million), and service income, net of costs ($5.9 million).  ABSA's sales
in 1995 amounted to $61.7 million, of which $57.8 million represented
intercompany sales (and were eliminated in consolidation).  In 1994 ABSA's sales
amounted to $27.0 million, including $20.9 million of sales to R.B. Packing
prior to its acquisition by IPHC.  The balance of the sales in 1994 was
generated by IPHC after its acquisition in December, 1994.

    Gross profit was negative in 1994.  In 1995, gross profit was 10.4% of
total revenues, reflecting the effects of higher average sales prices, sales
volumes and harvest yields versus those in 1994.

    Selling and administrative expenses increased 51.4% to $14.4 million from
$9.5 million, but decreased as a percentage of sales from 14.8% in 1994 to 7.3%
in 1995 reflecting higher sales volumes in 1995.

    The non-cash charge for amortization of goodwill increased in 1995 due to
the acquisition of IPHC in December 1994 and Interfruver in January 1995.

    Interest expense increased from $2.2 million in 1994 to $8.4 million in
1995 reflecting the higher average levels of borrowing outstanding during the
year and the higher average cost of borrowing during 1995 (16.4%) as compared to
1994 (12.1%).  The increased borrowings were required to fund the higher working
capital requirements associated with the greatly expanding sales activities, and
advances provided to growers.  Interest income increased from $.9 million in
1994 to $3.5 million in 1995 reflecting the increased level of financing
provided to growers and higher interest rates in Mexico during 1995.  Exchange
losses relate primarily to the significant effects of the devaluation of the
Mexican peso on the net peso monetary position of ABSA, whose functional
currency is the U.S. dollar.

    Income tax expense increased to $2.3 million in 1995 from a benefit of $1.8
million in 1994 due to income tax payable by IPHC's subsidiaries and the effects
of the devaluation of the Mexican peso, which reduced the effect of future tax
benefits from net operating loss carry-forwards in the Mexican subsidiaries.

CAPITAL EXPENDITURES

    During 1996 the Company made capital investments of $7.1 million in
property, plant, and equipment.  The majority of these investments were made to
expand ABSA's farming activities in Mexico, in particular, the new farming
operation in Baja California which became one of the sources of produce sold by
the Company beginning in the second quarter of 1996.  ABSA also made a major
investment in temperature controlled storage space and equipment which it
believes will reduce spoilage and shrinkage and enhance the overall quality of
its products.

    Capital expenditures during 1995 and 1994 were $4.4 million and $6.1
million, respectively, reflecting primarily the investment levels required to
acquire and develop ABSA's owned and leased acreage in Mexico.

LIQUIDITY AND CAPITAL RESOURCES

    As of December 31, 1995, the Company had a working capital deficit position
of $5.0 million.  The deficit position increased to $11.8 million at December
31, 1996.  The primary reason for this increase is certain long-term debt which
is scheduled to mature in May 1997 and was therefore reclassified to current
liabilities.  The Company


                                      19

<PAGE>

is beginning the process of negotiating long-term financing arrangements.
Cash provided by Bionova Mexico was predominantly used to make acquisitions
and acquire property, plant and equipment.

    For the year ended December 31, 1996 the Company generated $5.8 million in
cash from operations, which was due primarily to changes in certain working
capital components.  After adjusting for the impact of consolidating DNAP and
Royal Van Namen at the time of the Merger and acquisition, respectively,
accounts receivable reflected a decline due to lower sales in December of 1996
as compared with 1995, and advances to growers also declined due to the
Company's decision to discontinue relationships with some of its growers in
1996.  After adjusting for the consolidation of DNAP and Royal Van Namen,
accounts payable and accrued expenses increased $5.6 million during 1996.  A
primary driver of this was ABSA ($3.5 million), which invested heavily in
property, plant and equipment and its growing operations during the last few
months of 1996, resulting in a higher level of payables at December 31, 1996 as
compared with December 31, 1995.  The second major contributor to the increase
in accounts payable was FreshWorld Farms, which ramped up its sourcing of
products at the end of 1996.  Partially offsetting these two positive impacts on
cash flows was a $5.0 million increase in inventories, which derived entirely
from the increase in ABSA's growing operations at the end of 1996.

    In addition to the capital expenditures discussed above, investment
requirements reflected in the cash flows include the Merger with DNAP and the
acquisition of Royal Van Namen.  The Company made a net investment of $6.7
million in DNAP prior to the Merger.  The Company advanced DNAP $10.5 million,
and DNAP provided $3.8 million of cash at September 26, 1996, the date of the
Merger.  The Company made a net investment of $1.2 million in Van Namen.  The
Company paid $1.5 million for the Van Namen acquisition, and Van Namen provided
$.3 million of cash on November 30,  the date of acquisition.

    Cash provided by financing activities during 1996 was $18.8 million.  The
great majority of this cash was received in the form of a capital contribution
by Bionova Mexico in connection with the Merger.

    As discussed elsewhere in this Form 10-K, the Company's Board of Directors
has authorized management to pursue the acquisition of the 49.99% interest in
ABSA and the 42.3% interest in IPHC currently held by the Batiz family.  The
purchase price of $23.75 million is subject to adjustment based on the results
of the due diligence review.  The Company currently is in the process of
beginning discussions with banks to obtain the necessary financing that will
permit the Company to complete this transaction and to continue the Company's
aggressive development and growth of its farming, distribution, and research
activities in the future.

DISCLOSURES 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 Audited Consolidated Financial Statements" located elsewhere herein
regarding the Company's financial position, business strategy, plans and
objectives of management of the Company for future operations, and industry
conditions, are forward-looking statements.  Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct.  In addition to important factors described elsewhere in this
report, the following significant factors, among others, sometimes have
affected, and in the future could affect, the Company's actual results and
could cause such results during the remainder of 1997, and beyond, to differ
materially from those expressed in any forward-looking statements made by or
on behalf of the Company:

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


                                      20

<PAGE>

to be effectively managed.  The geographic separation of the operations of
the Company's subsidiaries and their traditionally decentralized,
family-based management teams exacerbate these issues.

    HISTORICAL LOSSES AND ACCUMULATED DEFICITS.  IPHC and ABSA sustained losses
in 1994, 1995 and 1996.  DNAP sustained losses in each year since its
incorporation in 1981.  There is no assurance that some of the factors that
caused these historical losses will not be present in future periods or that the
Company will be profitable in the future.

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

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

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

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

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

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

    SUPPLY AND DEMAND.  The fresh produce business is particularly sensitive to
fluctuations in supply and demand.  When the supply of produce in the market
exceeds the demand for such products, the market price for fresh produce may be
driven down significantly, in some instances below the cost of harvesting and
packing.  In such situations it may be uneconomical to harvest a crop, resulting
in a total loss of the costs incurred in growing


                                      21

<PAGE>

such crop.  Even when market prices are sufficient to permit recovery of
direct harvesting and packing costs, prices may not be high enough to permit
recovery of growing costs and/or overhead and other indirect costs.  In
addition, oversupply can affect the prices obtained for premium quality
produce.  Oversupply can result from, among other reasons, an increase in the
number of growers, an increase in the acreage allocated by growers to a
particular crop, unusually favorable growing conditions or increased supply
from foreign competitors (which could be caused by a variety of economic and
climatic factors in such competitors' home countries).

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

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

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

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

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

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

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

    DEPENDENCE ON ONE SUPPLIER.  One grower in Baja California, Santa Cruz
Empacadora, S. de R.L. de C.V., accounted in 1996 for approximately 10% of the
consolidated sales of the Company's subsidiaries (excluding DNAP).  ABSA has
entered into one-year production association agreements with this grower for
each of the past two years and expects to continue to do so, but there can be no
assurance that the grower will continue to be willing to enter into such
agreements with ABSA on terms satisfactory to ABSA.

    GOVERNMENTAL REGULATION.  The U.S. activities of the Company's subsidiaries
are subject to extensive regulation by the Food and Drug Administration, the
United States Department of Agriculture, and other federal and state regulatory
agencies in the United States.  Similarly, the Mexican activities of the
Company's

                                      22

<PAGE>

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

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

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

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

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

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

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

    PROPRIETARY PROTECTION.  The Company's success will depend, in part, on its
ability to obtain patents, maintain trade secret protection, and conduct its
business without infringing the proprietary rights of others.  There can be no
assurance that others will not develop competing technologies and market
competing products or that DNAP will be able to enforce the patents which it
currently possesses or will be able otherwise to obtain or enforce any patents
for which it has filed an application.  DNAP also relies upon unpatented
proprietary and trade secret technology.

                                      23

<PAGE>

    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 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.

















                                      24

<PAGE>

                      REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
  and Stockholders of
  DNAP Holding Corporation

    In our opinion, the accompanying consolidated balance sheets and the
related consolidated results of operations, changes in stockholders' equity and
cash flows present fairly, in all material respects, the consolidated financial
position of DNAP Holding Corporation at December 31, 1996 and 1995, and the
consolidated results of its operations and cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.  These financial statements are the
responsibility of DNAP Holding Corporation 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.

PRICE WATERHOUSE LLP

San Diego, California
March 27, 1997





                                     25
<PAGE>

                           DNAP HOLDING CORPORATION
                         (formerly Bionova U.S. Inc.)

                          CONSOLIDATED BALANCE SHEET
                          Thousands of U.S. Dollars

                                                      December 31,
                                                    ------------------
                                                      1996      1995
                                                    --------  --------
    ASSETS
Current assets:
Cash and cash equivalents                           $ 10,735  $  1,580
Accounts receivable                                   30,941    25,444
Advances to growers                                    6,188     7,889
Inventories                                           20,139    14,730
Other current assets                                   1,158       142
                                                    --------  --------
    Total current assets                              69,161    49,785
                                                    --------  --------
Property, plant and equipment, net                    34,784    25,983
Patents and trademarks, net                           14,492        --
Goodwill, net                                         19,323     9,319
Deferred income taxes                                  2,850     3,281
Other assets                                           1,545       758
                                                    --------  --------
    Total assets                                    $142,155  $ 89,126
                                                    --------  --------
                                                    --------  --------

              LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans                               $ 32,110  $ 32,493
Current portion of long-term debt                      9,104       610
Accounts payable and accrued expenses                 30,773    17,038
Accounts payable to related parties                    5,458     2,645
Deferred income taxes                                  3,592     2,037
                                                    --------  --------
    Total current liabilities                         81,037    54,823
Long-term debt                                         2,423    10,222
Long-term debt to related parties                         --       293
                                                    --------  --------
    Total liabilities                                 83,460    65,338
                                                    --------  --------
Minority interest                                      9,545     8,603
                                                    --------  --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares
 authorized, no shares issued and outstanding             --        --
Common stock, $.01 par value, 25,000,000 shares
 authorized, 18,370,640 issued and outstanding           184        --
Additional paid-in capital                            78,535        --
Capital contributed by Bionova (see note 1)               --    27,848
Accumulated deficit                                  (29,468)  (12,434)
Cumulative translation adjustment                       (101)     (229)
                                                    --------  --------
                                                      49,150    15,185
                                                    --------  --------
    Total liabilities and stockholders' equity      $142,155  $ 89,126
                                                    --------  --------
                                                    --------  --------

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

                                     26
<PAGE>

                               DNAP HOLDING CORPORATION
                             (formerly Bionova U.S. Inc.)

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

                                                   Year Ended December 31,
                                             ---------------------------------
                                               1996         1995        1994
                                             ---------    ---------    -------
Total revenues                               $ 192,985    $ 197,586    $64,112
                                             ---------    ---------    -------
Cost of sales                                 (176,353)    (177,076)   (65,760)
Selling and administrative expenses            (16,195)     (14,397)    (9,509)
Write-off of purchased research and
 development                                   (12,900)          --         --

Research and development expenses               (1,244)          --         --
Amortization of goodwill, patents
 and trademarks                                 (1,008)        (538)      (404)
                                             ---------    ---------    -------
                                              (207,700)    (192,011)   (75,673)
                                             ---------    ---------    -------
Operating income (loss)                        (14,715)       5,575    (11,561)
                                             ---------    ---------    -------
Interest expense                                (5,651)      (8,430)    (2,160)
Interest income                                  2,169        3,490        906
Exchange gain (loss), net                          569       (4,748)    (1,473)
Other non-operating income                       2,058           --         --
                                             ---------    ---------    -------
                                                  (855)      (9,688)    (2,727)
                                             ---------    ---------    -------
Income (loss) before income tax                (15,570)      (4,113)   (14,288)

Income tax (expense) benefit                    (2,738)      (2,320)     1,842
                                             ---------    ---------    -------
Net income (loss) before minority interest     (18,308)      (6,433)   (12,446)

Minority interest in net loss (income)
 of subsidiaries                                 1,274        3,049      5,673
                                             ---------    ---------    -------
Net loss                                     $ (17,034)   $  (3,384)   $(6,773)
                                             ---------    ---------    -------
                                             ---------    ---------    -------
Net loss per share                           $   (1.19)
                                             ---------
                                             ---------


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

                                     27

<PAGE>

                               DNAP HOLDING CORPORATION
                             (FORMERLY BIONOVA U.S. INC.)
              CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                              THOUSANDS OF U.S. DOLLARS

<TABLE>
                                            COMMON                                     CUMULATIVE
                                            SHARES     COMMON   PAID-IN   CONTRIBUTED  TRANSLATION   ACCUMULATED
                                          OUTSTANDING   STOCK   CAPITAL     CAPITAL     ADJUSTMENT     DEFICIT        TOTAL
                                          -----------  ------   -------   -----------  -----------   -----------    --------
<S>                                        <C>         <C>      <C>       <C>           <C>           <C>            <C>
BALANCES AT DECEMBER 31, 1993                                              $ 24,360                   $ (2,277)     $ 22,083
Investment by Bionova, S.A. de C.V.                                           2,552                                    2,552
Net loss                                                                                                (6,773)       (6,773)
Translation adjustment                                                                    $ (23)                         (23)
                                                                           --------       -----       --------      --------

BALANCES AT DECEMBER 31, 1994                                                26,912         (23)        (9,050)       17,839
Investment by Bionova, S.A. de C.V.                                             936                                      936
Net loss                                                                                                (3,384)       (3,384)
Translation adjustment                                                                     (206)                        (206)
                                                                           --------       -----       --------      --------

BALANCES AT DECEMBER 31, 1995                                                27,848        (229)       (12,434)       15,185
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)
Translation adjustment                                                                      128                          128
                                           ----------   ----   -------     --------       -----       --------      --------
BALANCES AT DECEMBER 31, 1996              18,370,640   $184   $78,535           --       $(101)      $(29,468)     $49,150
                                           ----------   ----   -------     --------       -----       --------      --------
                                           ----------   ----   -------     --------       -----       --------      --------

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


                                      28

<PAGE>

                               DNAP HOLDING CORPORATION
                             (formerly Bionova U.S. Inc.)

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

<TABLE>
                                                                          Year Ended December 31,
                                                                   ----------------------------------
                                                                       1996         1995        1994
                                                                   ---------    ---------   ---------
<S>                                                                <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                           $ (17,034)   $  (3,384)  $  (6,773)
Items not affecting cash:
  Minority interest                                                   (1,274)      (3,049)     (5,673)
  Depreciation                                                         2,244        2,805       2,858
  Amortization of goodwill, patents and trademarks                     1,008          538         404
  Write-off of purchased research and development                     12,900           --          --
  Deferred income taxes                                                1,986        2,320      (1,842)
  Gain from sale of property, plant and equipment                       (325)          --          --
Net changes (exclusive of changes due to subsidiaries acquired):
  Accounts receivable and advances to growers                          5,675      (10,683)    (11,999)
  Inventories                                                         (4,951)      (4,280)        723
  Other assets                                                           (35)        (733)       (109)
  Accounts payable and accrued expenses                                5,627        4,548       2,687
                                                                   ---------    ---------   ---------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                    5,821      (11,918)    (19,724)
                                                                   ---------    ---------   ---------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property, plant and equipment                          (7,104)      (4,426)     (6,121)
  Advances to DNAP prior to merger, net of cash acquired              (6,664)          --          --
  Acquisition of subsidiaries, net of cash acquired                   (1,221)      (2,026)       (943)
  Proceeds from sale of property, plant and equipment                    535           --          --
                                                                   ---------    ---------   ---------

NET CASH USED IN INVESTING ACTIVITIES                                (14,454)      (6,452)     (7,064)
                                                                   ---------    ---------   ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net change in short-term borrowings                                 (2,142)          --          --
  Proceeds from bank loans                                            34,556       13,122      21,932
  Repayments of long-term debt                                       (35,451)          --          --
  Amounts due to related parties                                       2,520        2,416         392
  Investment by Bionova, S.A. de C.V.                                 18,305          936       2,552
  Investment by minority interests                                        --          936         372
                                                                   ---------    ---------   ---------

NET CASH PROVIDED BY INVESTING ACTIVITIES                             17,788       17,410      25,248
                                                                   ---------    ---------   ---------
Net increase (decrease) in cash and cash equivalents                   9,155         (960)     (1,540)
Cash at beginning of period                                            1,580        2,540       4,080
                                                                   ---------    ---------   ---------
Cash at end of period                                              $  10,735    $   1,580   $   2,540
                                                                   ---------    ---------   ---------

SUPPLEMENTAL CASH FLOW DATA
Interest paid                                                      $   4,438    $   4,578   $   1,874
Income taxes                                                       $   1,693    $     996          --

NONCASH 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           --          --


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

                                       29

<PAGE>

                               DNAP HOLDING CORPORATION
                             (FORMERLY BIONOVA U.S. INC.)
                    Notes to the Consolidated Financial Statements
                           December 31, 1996, 1995 and 1994


NOTE 1 - BASIS OF PRESENTATION

DNAP Holding Corporation (together with its subsidiaries, the "Company"), a
subsidiary of Bionova, S.A. de C.V. (Bionova), 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 (the "Bionova Subsidiaries") and, after consummation of the merger
discussed below effective September 26, 1996, DNA Plant Technology Corporation
and its subsidiaries (DNAP).  The Bionova subsidiaries consist of majority
interests in Agricola Batiz, S.A. de C.V., a Mexican company, and subsidiaries
(ABSA) and International Produce Holding Company, a Delaware corporation, and
subsidiaries (IPHC).


THE COMPANY AND THE BIONOVA SUBSIDIARIES

On January 26, 1996, the Company issued 25,000 shares to Bionova in exchange for
a capital contribution of $25,000 and borrowed $5 million from Bionova under a
demand note agreement, at a fixed interest rate of 10.25%.

On July 1, 1996 Bionova 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 contributed the $5 million demand note in
exchange for 50,000 common shares on August 2, 1996.  On August 5, 1996 Bionova
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 closing prices as quoted
on the Nasdaq National Market at July 30, 1996, the date of the second amendment
to the merger agreement.


                                      30

<PAGE>

<TABLE>
                                              Shares         Fair market    Fair market
                                           Outstanding          value          value
                                         (000's of shares)    per 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 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.

                                                      $(000's)
                                                      --------

Patents and trademarks...........................     $14,800
Research and development.........................      12,900
Goodwill.........................................      10,528
Net liabilities of DNAP at fair value............      (5,662)
                                                      -------
                                                      $32,566
                                                      -------
                                                      -------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


a.  Consolidation

The accompanying financial statements include the accounts of (i) the Company,
(ii) the Bionova Subsidiaries, (iii) effective September 26, 1996, DNAP, and
(iv) effective November 30, 1996, Royal Van Namen.  All intercompany accounts
and transactions are eliminated in consolidation.


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
amounts could differ from reported amounts.


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, 1996 and 1995 sales recognized on a commissioned basis and the
related commissions earned were as follows:


                                      31

<PAGE>

                                       $(000'S)
                               YEAR ENDED DECEMBER 31,
                               -----------------------
                                 1996            1995
                               -------         -------
Sales.......................   $30,455         $35,080
Commissions earned..........     3,253           3,189

There were no commissioned sales in 1994.

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 ratably over
the term of the agreement, which generally approximates the performance effort.
Revenue that is related to future performance under such agreements is deferred
and recognized as revenue when earned.

Research and development costs not associated with product development
activities are expensed as incurred.


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 and to limit the amount of credit exposure.


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.  Since the Company exercises control over the associations, the
Company proportionally consolidates the results of operations of those growing
activities in the results of operations.


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.


                                      32

<PAGE>

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.  Patents and trademarks

The costs of obtaining patents are expensed as incurred.  Acquired patents and
trademarks are capitalized and amortized over their estimated useful lives.
During 1996, the Company recorded amortization expense of $308,000.


j.  Research and product development costs

All research and product development costs incurred or acquired are expensed.


k.  Stock based compensation

As a result of the Merger, DNA Plant Technology Corporation's existing stock
option plans were assumed by the Company.  In October, 1995, the Financial
Accounting Standards Board issued Statement No. 123, Accounting for Stock-Based
Compensation.  Statement No. 123 applies to all transactions in which an entity
acquires goods or services by issuing equity instruments such as common stock,
except for employee stock ownership plans.  Statement No. 123 establishes a new
method of accounting for stock-based compensation arrangements with employees
which is fair value based.  The statement encourages (but does not require)
employers to adopt the new method in place of the provisions of Accounting
Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees.
Companies may continue to apply the accounting provisions of APB No. 25 in
determining net income, however, they must apply the disclosure requirements of
Statement No. 123.  If the Company adopts the fair value based method of
Statement No. 123, a higher compensation cost would result for fixed option
plans and a different compensation cost will result for the Company's contingent
and variable stock option plans.  The recognition provisions and disclosure
requirements of Statement No. 123 are effective January 1, 1996.  The Company
plans to use the accounting practice under APB No. 25 previously followed by
DNAP.


l.  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.  Concentration of credit
risk associated with advances to growers is limited due to the geographic
dispersion of the growers.  However, there can be no assurance that an event
outside the Company's control will not occur and cause these 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.


m.  Acquisitions

The underlying assets and liabilities of acquired companies are recorded at fair
market values and the excess purchase price is recorded as goodwill.  The
Company periodically evaluates the recoverability of the recorded goodwill based
upon projected operating income of the related subsidiary.  Goodwill is
amortized over twenty years.  Goodwill amortization amounted to $0.700 million,
$0.538 million and $0.404 million in 1996, 1995 and 1994, respectively.


                                      33

<PAGE>

n.  Impairment of long-lived assets

Management periodically reviews for impairment the long-lived assets and certain
identifiable intangibles to be 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

An income tax provision is made using the assets and liability approach.  Under
this approach, deferred taxes are provided for the differences between the
financial statement and tax basis of assets and liabilities.  Deferred income
tax expense (benefit) is the net change during the year in the deferred income
tax asset or liability.  Current income tax expense is the amount of income
taxes expected to be payable for the current year.  Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.


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, the components of the financial statements are translated
as follows:

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


Gains and losses in remeasurement arise mainly from the effect of exchange rate
fluctuations on net monetary items denominated in pesos and are included in
results of operations.


                                      34

<PAGE>

Effective January 1, 1997, Mexico will be considered a hyperinflationary
environment since the cumulative inflation over the last three years has
exceeded 100%.  As a result of this, subsidiaries whose functional currency is
the Mexican peso will be required to translate their financial statements in a
manner similar to that utilized by subsidiaries whose activities are recorded in
currencies which are not their functional currencies.

r.  Net loss per common share

The weighted average number of common shares outstanding for 1996, giving
retroactive effect to the common shares issued to Bionova upon the contribution
of its interests in the Bionova subsidiaries and shares issued in connection
with the merger, was 14,286,318.

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 nonforfeitable 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 the last quarter of 1996 DNAP's cash contributions to the
401(k) Plan were approximately $17,000.

t.  Reclassification of costs

Certain financial statement items have been reclassified to conform to the
current year's format.  The most significant of these items was the
reclassification of distribution costs from selling, general and administrative
expenses to cost of sales.  Management believes that this reclassification is a
more accurate reflection of the nature of these expenses in the operations of
the business than the manner in which they had been classified previously.
During the years ended December 31, 1996, 1995, and 1994 distribution costs
amounted to $12.3 million, $14.8 million, and $6.7 million, respectively.

NOTE 3 - ACQUISITIONS AND MERGERS

During the years ended December 31, 1996, 1995 and 1994, Bionova and the Company
acquired control of the following subsidiaries:

-   During 1994, Bionova made a capital contribution toward the formation of
    Premier Fruits & Vegetables BBL, Inc. (Premier) in the amount of $161,000
    in cash, representing an 80% share of the capital stock.  This investment
    was contributed to IPHC in December, 1994.

-   During December 1994, Bionova 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), Tanimura
    Distributing, Inc. (75% owned), Premier (80% owned), and in Europe, the
    Middle East, and the Far East through its recent acquisition of Royal Van
    Namen (discussed below).  The goodwill resulting from this 1994 acquisition
    amounted to $675,000.

-   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 payout 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, if any, will result in an adjustment of the original purchase
    price and a corresponding increase in goodwill and related


                                      35

<PAGE>

    amortization in the future.  No amounts were due or paid in 1995 under this
    agreement.  The amount for 1996 has not yet been determined by the Company.

The following table summarizes the net investment by Bionova in the subsidiaries
acquired through December 31, 1995, which were contributed to the Company in
1996.
                                       $(000'S)
                                      DECEMBER 31,
                                ----------------------
                                  1995           1994
                                -------        -------
COMPANY ACQUIRED
ABSA..........................  $25,296        $24,360
Tanimura......................      191            191
IPHC..........................    2,200          2,200
Premier.......................      161            161
                                -------        -------
                                $27,848        $26,912
                                -------        -------
                                -------        -------


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 as the controlling stockholder.

-   In November 1996, IPHC acquired a 51% stake in Royal Van Namen (Van Namen),
    a distributor of fresh produce located in The Netherlands, for $1.475
    million in cash, resulting in the recognition of minimal goodwill.  Under
    the terms of the purchase agreement, a contingent pay out of as much as
    $1.945 million could be due to the sellers (the minority stockholders) on
    an earn out basis over a four-year period beginning in 1997 (based on prior
    year earnings before interest and taxes from the results of operations).
    This contingent payment, if any, will result in an adjustment of the
    original purchase price and a corresponding increase in goodwill and
    related amortization in the future.  The amount for 1996 has not yet been
    determined by the Company.

The following unaudited pro forma financial information assumes that the Merger
and Van Namen acquisition occurred at the beginning of 1996 and 1995 and gives
effect to certain adjustments, including depreciation and amortization of the
assets acquired, amortization of goodwill, and related income tax effects.

                                                  $(000'S)
                                                  ---------
                                                  PRO FORMA
                                                  (UNAUDITED)
                                            YEAR ENDED DECEMBER 31
                                         ---------------------------
                                             1996            1995
                                         -----------     -----------

Net sales..............................  $   257,895     $   254,416
Net loss(1)............................      (11,045)        (17,764)
Loss per common share (in dollars).....        (0.60)          (0.97)
Pro forma weighted average common
  shares outstanding...................   18,370,640      18,370,640


(1) does not include the $12.9 million write-off of purchased research and
development.


                                     36

<PAGE>

NOTE 4 - ACCOUNTS RECEIVABLE

Accounts receivable were comprised of the following:

                                                               ($000'S)
                                                             DECEMBER 31,
                                                           -----------------
                                                             1996      1995
                                                           -------   -------
  Trade............................................        $27,192   $24,452
  Recoverable value-added tax......................          1,338       980
  Officers and employees...........................            287        32
  Sundry debtors...................................          4,143        10
                                                           -------   -------
                                                            32,960    25,474
  Allowance for doubtful accounts and returns......         (2,019)      (30)
                                                           -------   -------
                                                           $30,941   $25,444
                                                           -------   -------
                                                           -------   -------

The Company sells its produce primarily to retailers and wholesalers in the
United States, Mexico, Canada and Europe.  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, 1996 or 1995.

NOTE 5 - ADVANCES TO GROWERS

                                                               ($000'S)
                                                             DECEMBER 31,
                                                            ---------------
                                                             1996     1995
                                                            ------   ------
  Advances to growers..............................         $5,857   $6,247
  Advances to related parties......................            331    1,642
                                                            ------   ------
                                                            $6,188   $7,889
                                                            ------   ------
                                                            ------   ------


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 ($4.979 million and $5.689 million at December 31,
1996 and 1995, 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 ($1.209 million and $2.200
million at December 31, 1996 and 1995, respectively) are generally not
collateralized.

Advances earned interest at 12% per annum.  Interest income from these advances
amounted to $0.884 million, $0.811 million, and $0.279 million during the years
ended December 31, 1996, 1995 and 1994, respectively.


                                      37

<PAGE>


NOTE 6 - INVENTORIES


Inventories were comprised of the following:

                                                               ($000'S)
                                                             DECEMBER 31,
                                                           -----------------
                                                             1996      1995
                                                           -------   -------
  Finished produce.................................        $ 2,047   $ 3,357
  Growing crops....................................         11,317     8,436
  Advances to suppliers............................          1,274       718
  Spare parts and materials........................          5,301     1,932
  Merchandise in transit and other.................            752       387
                                                           -------   -------
                                                            20,691    14,830
  Allowance for slow moving inventory..............           (552)     (100)
                                                           -------   -------
                                                           $20,139   $14,730
                                                           -------   -------
                                                           -------   -------

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT


Property, plant and equipment was composed of the following:

<TABLE>
                                                        ($000'S)
                                                      DECEMBER 31,
                                                    ----------------   ESTIMATED
                                                      1996     1995   USEFUL LIFE
                                                    -------  -------  -----------
   <S>                                                <C>      <C>        <C>
  Land............................................  $10,399  $ 8,490
  Buildings.......................................    9,570    6,767    25 years
  Machinery and equipment.........................   15,009    8,366    15 years
  Office equipment................................    2,214    3,341     4 years
  Transportation equipment........................    2,505    2,126    10 years
  Vineyards and agricultural tools................    2,268    2,672     3 years
  Land improvements and other.....................    4,935      438    13 years
                                                    -------  -------
                                                     46,900   32,200
  Accumulated depreciation and amortization.......  (12,116)  (6,217)
                                                    -------  -------
                                                    $34,784  $25,983
                                                    -------  -------
                                                    -------  -------
</TABLE>

Equipment amounting to $2.370 million and $5.279 million at December 31, 1996
and 1995, respectively, has been recorded under capitalized leases and included
above.  Related accumulated depreciation amounted to $0.594 million and $0.951
million at December 31, 1996 and 1995, respectively, and the related
depreciation expense amounted to $0.126 million, $0.317 million and $0.317
million for the years ended December 31, 1996, 1995 and 1994, respectively.


                                      38

<PAGE>

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 Company is in compliance with
those covenants.  The lines of credit bear interest at prime (8.1% and 8.5% at
December 31, 1996 and 1995, respectively).

Various bank credit facilities are available with banks whereby the Company may
borrow upon such terms as the subsidiaries and banks mutually agree.  At
December 31, 1996, such bank credit facilities amounted to $42.645 million, of
which $10.535 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.

ELM and the minority shareholders of ABSA and IPHC provide certain guarantees
on both the short-term and long-term bank debt.  At December 31, 1996, ELM
guaranteed $20 million of this debt, and ELM and the minority shareholders
guaranteed on a 50/50 basis all otherwise unsecured bank debt.  ELM 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.

LONG-TERM LOANS

Consolidated obligations under long-term debt arrangements are denominated in
U.S. dollars and were comprised of:

<TABLE>
                                                                             ($000'S)
                                                                           DECEMBER 31,
                                                                       ------------------
                                                                         1996       1995
                                                                       -------    -------
   <S>                                                                   <C>        <C>
  Outstanding revolving bank credit facility (bearing interest at
  8.25%; principal and interest are payable in one installment in
  May 1997).........................................................   $ 7,946    $ 8,508

  Bank loan bearing interest at a rate equivalent to Libor plus 1%
  at December 31, 1996, secured with first mortgage on land and
  buildings in The Netherlands......................................     1,590

  Capital lease obligations secured by the related equipment
  acquired, bearing interest at variable annual rates (12% at
  December 31, 1996 and 1995).......................................     1,105      1,222

  Mortgage notes payable to banks secured by the related real
  estate, interest at prime (8.75% and 8.5% at December 31, 1996
  and 1995, respectively) plus 1.5%, interest payable monthly and
  maturing on dates through October, 2001...........................       614        687

  Other.............................................................       272        415
                                                                       -------    -------
                                                                        11,527     10,832
  Less current portion..............................................    (9,104)      (610)
                                                                       -------    -------
  Long-term debt....................................................   $ 2,423    $10,222
                                                                       -------    -------
                                                                       -------    -------
</TABLE>


                                       39

<PAGE>

The maturities of the long-term debt at December 31, 1996 were as follows:

  For the years ended December 31,                    (000's)
  --------------------------------                    -------
  1997.......................................         $ 9,104
  1998.......................................             572
  1999.......................................             400
  2000.......................................             263
  2001.......................................             174
  Thereafter.................................           1,014
                                                      -------
                                                      $11,527
                                                      -------
                                                      -------

NOTE 9 - INCOME TAXES

The (charges) credits for income taxes are summarized as follows:

                                                              ($000's)
                                                      Year ended December 31,
                                                  -----------------------------
                                                    1996       1995       1994
                                                  -------    -------     ------
  CURRENT
    United States
      Federal..................................   $  (606)   $  (740)        --
      State....................................      (146)      (256)        --
                                                  -------    -------     ------
                                                     (752)      (996)        --
                                                  -------    -------     ------
  DEFERRED
    Mexico - Federal...........................    (2,007)      (955)    $1,460
    United States
      Federal..................................        21       (323)       382
      State....................................        --        (46)        --
                                                  -------    -------     ------
                                                   (1,986)    (1,324)     1,842
                                                  -------    -------     ------
  INCOME TAX (EXPENSE) BENEFIT.................   $(2,738)   $(2,320)    $1,842
                                                  -------    -------     ------
                                                  -------    -------     ------

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>
                                                                              ($000's)
                                                                      Year ended December 31,
                                                                   -----------------------------
                                                                     1996       1995       1994
                                                                   -------    -------    -------
   <S>                                                               <C>        <C>         <C>
 Tax benefit at statutory rate in the United States (34%)........  $ 5,189    $ 1,398    $ 4,857
 Effect of lower tax rate of 17% for agricultural
   businesses in Mexico..........................................     (316)    (1,122)    (1,915)
 Write-off of purchased research and
   development...................................................   (4,386)        --         --
 Change in valuation allowance of deferred tax
   assets........................................................   (2,384)        --         --
 Tax loss carryforwards for which tax benefit
   was lost due to the peso devaluation..........................       --     (1,235)      (890)
 Inflationary component..........................................     (548)    (1,064)      (188)
 Depreciation on inflation-indexed value of
   property, plant and equipment.................................      328        252        197
 State taxes.....................................................      (97)      (210)        --
 Other permanent differences.....................................     (524)      (339)      (219)
                                                                   -------    -------     ------
                                                                   $(2,738)   $(2,320)    $1,842
                                                                   -------    -------     ------
                                                                   -------    -------     ------
</TABLE>


                                       40

<PAGE>


Significant components of the Company's deferred tax liabilities and assets at
December 31, 1996 and 1995 are shown below:

                                                                  ($000'S)
                                                                DECEMBER 31,
                                                            -------------------
                                                              1996        1995
                                                            --------    -------
 DEFERRED TAX ASSETS
   Tax loss carryforwards..............................     $ 13,298    $ 2,403
   Non-deductible provisions...........................          420        850
   Other...............................................           67         49
                                                            --------    -------
 Total deferred tax assets.............................       13,785      3,302
 Valuation allowance...................................      (10,935)       (21)
                                                            --------    -------
 Net deferred tax assets...............................     $  2,850    $ 3,281
                                                            --------    -------
                                                            --------    -------
 DEFERRED TAX LIABILITIES
   Inventories.........................................       (3,376)    (1,818)
   Other...............................................         (216)      (219)
                                                            --------    -------
 Total deferred tax liabilities........................       (3,592)    (2,037)
                                                            --------    -------
 NET DEFERRED TAX ASSETS (LIABILITIES).................     $   (742)   $ 1,244
                                                            --------    -------
                                                            --------    -------

The Mexican asset tax of 1.8% on certain net assets is not applicable in the
first four years of operation.  This tax, once applicable, 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.

At December 31, 1996 the Company had total tax loss carryforwards of
approximately $50.5 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 2004 to 2011.  The tax loss carryforwards are contained in the Company's
Mexican subsidiaries ($23.1 million), U.S. subsidiaries ($26.3 million), and
other foreign subsidiaries ($1.1 million).

DNAP had tax loss carryforwards at the date of the merger whose utilization is
limited to $25.1 million.  A full valuation allowance has been provided with
respect to these tax loss carryforwards.

NOTE 10 - 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 three
plans are the 1986 Stock Option Plan (the "1986 Plan"), the 1994 Stock Option
Plan (the "1994 Plan"), and the Non-Employee Directors Stock Option Plan (the
"Directors' Plan"), under which a maximum of 160,000, 300,000 and 80,000 shares
of common stock, respectively, are available for issuance.  Approximately 52,072
options were outstanding at December 31, 1996 under three other stock option
plans.  It is not anticipated that any further grants will be awarded under
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.


                                      41


<PAGE>

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.

A summary of the activity under all of the Company's stock option plans since
the date of the merger is as follows:

                                                    DECEMBER 31,
                                                       1996
                                                    ------------
 Outstanding, at the effective date of the merger:    134,959
    Granted                                                --
    Exercised                                              --
    Expired and canceled..........................       (191)
                                                      -------
 Outstanding at the end of the year...............    134,768
                                                      -------
 Available for grant at December 31...............      1,228
                                                      -------
 Exercisable at December 31.......................     93,275
                                                      -------
 Option prices per share:
    Granted.......................................      none
    Exercised.....................................      none
    Expired or canceled........................... $ 8.75 to $201.90
    Outstanding................................... $13.75 to $128.75


The following table summarizes information about the outstanding stock options
at December 31, 1996.


<TABLE>
                                         Weighted
                                         average     Weighted                 Weighted
                                        remaining    average        Number    average
                            Options    contractual   exercise     of vested   exercise
Range of exercise prices  outstanding      life       price        options      price
------------------------  -----------  -----------   --------     ---------   --------
<S>                       <C>          <C>           <C>          <C>         <C>
 $13.75....................     925      8.75 Yrs.    $13.75           370    $ 13.75
 $20.31 - $29.94...........  33,698      8.13 Yrs.    $27.50         4,468    $ 20.98
 $30.00 - $38.75...........  35,018      6.99 Yrs.    $35.09        27,936    $ 35.37
 $41.25 - $50.00...........  37,277      4.28 Yrs.    $47.22        35,850    $ 47.21
 $51.25 - $76.25...........  22,360      4.80 Yrs.    $54.36        19,161    $ 54.46
 $100.00 - $128.75.........   5,490      0.34 Yrs.   $118.59         5,490    $118.59
                            -------      ---------   -------        ------    -------
    Total.................. 134,768      5.90 Yrs.    $43.00        93,275    $ 47.96
                            -------      ---------   -------        ------    -------
                            -------      ---------   -------        ------    -------
</TABLE>

FAIR VALUE DISCLOSURES

Had compensation cost for the Company's option plans been determined based on
the fair value at the grant dates, as prescribed in Statement No. 123, the
Company's net loss and net loss per share would not have been materially
different than the reported amounts.

WARRANTS

At December 31, 1996 the Company had the following warrants and options
outstanding, which it assumed in connection with the merger:


                                     42

<PAGE>

  Number of
common shares   Price per share    Expiration date
-------------   ---------------    ---------------
    40,000          $66.50         January, 1999
   407,018           25.00         Third and fourth quarters of 2000
    72,500           17.50         September, 1997
    36,250           17.50         September, 1998 or one year
                                   from the exercise of the unit
                                   purchase options (see below)

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.  As part of the
compensation to the consultant who assisted DNAP in placing these securities,
DNAP granted the consultant unit purchase options to purchase 72,500 placement
units at $17.50 per unit.  Each placement unit consists of one share of common
stock and a warrant entitling the holder to purchase during the year following
the exercise of the unit purchase options, one half share of common stock
(36,250 in total if all unit purchase options are exercised) for $17.50 per
share.

NOTE 11 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES

ELM CREDIT LINE

The short-term accounts payable 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 ELM and bears interest at variable rates
similar to those prevailing in the market place.  At December 31, 1996, $2.461
million was outstanding under this arrangement.  During 1996 and 1995, the
Company incurred interest expense of $0.310 million and $0.223 million,
respectively.

INSURANCE AND FACTORING ARRANGEMENTS

The Company contracts for insurance and factoring services with a related party.
During 1996, 1995 and 1994 the Company incurred insurance expense of $0.591
million, $0.339 million, and $0, respectively.  Amounts due under factoring
arrangements were $1.2 million at December 31, 1996, and interest expense
incurred in connection with factoring arrangements was $0.123 million in 1996.

LABOR AND ADMINISTRATIVE SERVICES

ABSA has entered into a contractual arrangement with Copropriedad Agricola Batiz
Hermanos (CABH) pursuant to which CABH provides labor and administrative
services to ABSA, and ABSA pays a fee to CABH based on CABH's costs incurred in
connection with providing such services.  Both Raul Batiz G. and Guillermo Batiz
G. own in excess of 10% of CABH and are deemed, by virtue of their positions
with ABSA, to be executive officers of Bionova.  In 1996, 1995 and 1994, ABSA
paid a total of approximately $13.208 million, $7.558 million, and $12.620
million, respectively to CABH under this arrangement.

ADVANCES TO GROWERS

Advances to growers includes a balance due from a grower who is a relative of
the minority stockholders of ABSA.  The balance with this grower amounted to
$1.642 million at both December 31, 1996 and 1995, and the interest earned on
this balance amounted to $0 and $21,000 during 1996 and 1995, respectively.

                                     43

<PAGE>

ADMINISTRATIVE SERVICES AGREEMENT

An Administrative Services Agreement between the Company and Bionova was entered
into on July 1, 1996.  This agreement provides that Bionova 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 performing these
services, all of which will be performed in Mexico.  The initial term of the
agreement was extended to December 31, 1996 and will continue thereafter for
successive one-year terms unless either the Company or Bionova elects to
terminate the agreement.  Amounts billed in 1996 by Bionova under this agreement
were $616,000.

LOANS AND CAPITAL CONTRIBUTIONS

In connection with the Merger between Bionova and DNAP, Bionova 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 in connection with the
merger on August 2, 1996.  Interest expense for the period that the loan was
outstanding during 1996 amounted to $264,000.  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 remain outstanding with the balance plus accrued
interest due in full on January 26, 1999.

ABSA CREDIT FACILITY

Beginning in August, 1996, a credit facility was established between a separate
company owned by the Batiz family and ABSA to enable ABSA to fund a large grower
advance and some property, plant and equipment investments.  Loans made under
this credit facility were in the form of demand loans bearing interest at 15.3%
per annum.  As of December 31, 1996, the outstanding balance under this credit
facility was $1.479 million.  Interest paid during 1996 under this facility was
$89,319.

LICENSE AGREEMENTS

On January 26, 1996, DNAP and Bionova entered into a non-exclusive license
agreement under which Bionova was granted a license to use the Transwitch
patents with certain restrictions and exclusions.  The non-exclusive license
agreement provided for the payment of royalties by Bionova to DNAP of $250,000
per calendar quarter, except that royalties for the quarter ended March 31, 1996
were $50,000 and royalties for the quarter ending June 30, 1996 were $125,000.
During 1996, DNAP Holding accrued $675,000 in royalty fees relating to this
arrangement.

In January, 1996, the Company granted to a related party the option to obtain a
sublicense from the Company to use certain licensed patents in the field of
tobacco products and to make, have made, use and sell certain licensed products
related to the field of tobacco.  The term of this option was for two months
ended March 31, 1996, extendable by the related party for an additional six
months.  In exchange for the option the related party was obligated to pay
$50,000 to the Company for the initial two months and $5,000 per month for each
additional month.  The Company accrued $80,000 during 1996 for this option.  The
option agreement was terminated on September 30, 1996.

LONG-TERM FUNDED RESEARCH AGREEMENT

On September 26, 1996, in connection with the merger, DNAP and Empresas La
Moderna, S.A. de C.V. (ELM), the parent company of Bionova, entered into a long-
term funded research agreement, which provided that ELM, directly or through
its affiliates, will use their best efforts to agree on research projects to be
conducted by DNAP for ELM or its affiliates and which will result in payments to
DNAP of $30 million over a 10-year period, with minimum funding (subject to
carryforwards) of $9 million in any three-year period.  Unless otherwise agreed
by the parties, payments of at least $625,000 in respect of ELM's obligation to
fund research projects are to be paid

                                     44
<PAGE>

at the beginning of each calendar quarter. During the fourth quarter of 1996,
Seminis Vegetable Seed, Inc. ("Seminis"), a subsidiary of ELM, commenced a
limited amount of work under this long-term research agreement and paid to
DNAP $625,000.  An additional payment of $625,000 was made by Seminis to DNAP
in January, 1997.  Seminis and DNAP presently are engaged in discussions to
finalize the list of research projects that will be worked upon along with the
terms of their contract under this agreement.  The final contract between
these two parties is expected to be signed in April, 1997.  Several other
affiliates of ELM have entered into discussions with DNAP to identify
additional research projects that might 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 1996 the law
firm billed approximately $100,000 to the Company.

NOTE 12 - OTHER

TOTAL REVENUES

Total revenues in 1996 and 1995 included $0.249 million and $3.160 million,
respectively, representing the income that arose from sales of seeds,
agrochemicals, spare parts and other materials to growers.  In addition, in 1996
and 1995 total revenues included $0.527 million and $0.139 million,
respectively, of technical and support services provided to growers.

OTHER NON-OPERATING INCOME

During 1996, the Company recorded a gain upon sale of property, plant and
equipment of $0.325 million and received a subsidy of $1.733 million 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 1 through December 31, 1996.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

CONTINGENCIES -

-   R.B. Packing, Inc., a subsidiary of IPHC, was audited by the Internal
    Revenue Service for 1991, 1992, and 1993.  The IRS has asserted that the
    sales commissions charged to ABSA are too low.  The company believes that
    the sales commissions charged between related parties are reasonable and
    supportable.  The IRS also has asserted that certain travel and expense
    charges lack substantiation and that insufficient business purpose has been
    put forward for certain advertising and interest expenses.  The Company
    believes that these expenses also are reasonable and supportable.  The
    Appeals Division of the IRS recently filed a 30 day notice regarding the
    three years under consideration and recited a proposed deficiency of
    $941,000 in tax and $188,000 in penalties.  This initial IRS proposal
    disallows certain business expenses in full and adjusts commission rates to
    amounts well in excess of market rates.  The Company intends to defend its
    position vigorously, and on the belief that any final tax and penalty that
    might ultimately be assessed will be immaterial, no provision has been made
    to the financial statements.

-   On January 21, 1997, a class action lawsuit was filed by Gordon K. Aaron
    and Fay H. Aaron against ELM, Bionova, Alfonso Romo Garza, Bionova
    International, Inc., the Company, Robert Serenbetz, Gerald Laubach, Evelyn
    Berezin, and Douglas Luke, Jr. in the U.S. federal district court for the
    Northern District of California.  The plaintiffs allege that they were
    owners of shares of DNAP's $2.25 convertible Exchangeable Preferred Stock
    (Preferred Stock) prior to the Merger and that they were entitled to
    receive more consideration for their Preferred Stock than was provided to
    them under the Merger Agreement.  Specifically,

                                     45

<PAGE>

    the plaintiffs allege that (i) they were denied the rights they allegedly
    had under the terms of the Preferred Stock to vote on the Merger;
    (ii) defendants Serenbetz, Laubach, Luke, and Berezin (the "Individual
    Defendants"), each of whom was a director of DNAP prior to the Merger
    and currently serves as a director of the Company, breached fiduciary
    duties of loyalty, candor and care allegedly owed to DNAP and its
    stockholders, (iii) all of the defendants aided, knew of or recklessly
    disregarded, and all of the defendants substantially assisted, the
    conduct giving rise to the alleged breaches of fiduciary duty by the
    Individual Defendants; and (iv) each of ELM, Bionova, the Registrant
    and Alfonso Romo Garza had knowledge of the alleged contractual duties
    allegedly owed by DNAP to the plaintiffs and each of such defendants
    intentionally caused DNAP to breach such alleged duties.  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.  The
    Company believes the claims of the plaintiffs are without merit and
    intends to vigorously defend against these claims.

-   In a complaint dated August 5, 1996 and filed in the Superior Court for the
    County of Los Angeles, California, the County of Los Angeles sued DNAP and
    others, including several cigarette manufacturers, alleging breach of
    express warranty, unlawful, deceptive and unfair business practices, fraud
    and misrepresentation, and conspiracy, in connection with the manufacture,
    promotion, distribution and sale of tobacco products.  DNAP's involvement
    in the suit arises from allegations regarding research it performed for a
    major tobacco company.  The County of Los Angeles is seeking economic
    damages and injunctive relief.  DNAP denies any wrongdoing or liability in
    this matter and intends to vigorously contest this lawsuit.

-   A former executive of FreshWorld Farms, a subsidiary of DNAP, has
    threatened to institute arbitration with respect to the termination of his
    employment.  The Company believes his allegations are without merit and
    intends to vigorously defend itself if such a proceeding is commenced.

-   On September 25, 1996 a court in the state of Sinaloa, Mexico ruled that
    Olga Elena Batiz Esquer did not have legal title to one hundred hectares
    (approximately 247 acres) of land that she purported to transfer to ABSA on
    June 2, 1990.  This decision was made in concert with a ruling from a
    petition originally presented in 1964 that the former owner of the subject
    land owned rural land in excess of the maximum that was then allowed by law
    in 1964, and that therefore the land rightfully belonged to the
    petitioners.  On October 23, 1996 Ms. Batiz filed a challenge to this
    ruling.  If ABSA is ultimately required to transfer the subject land, which
    constitutes approximately 9% of the total land owned by ASBA, Mexican law
    gives ABSA indemnification rights against Ms. Batiz.


COMMITMENTS -

The Company leases certain facilities and land under non-cancelable operating
lease agreements.  The leases expire at various dates through 2002 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 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:

                                                  ($000'S)
FOR THE YEAR ENDING                               -------
DECEMBER 31,                                CAPITAL     OPERATING
-----------                                 -------     ---------
1997......................................  $  680       $1,125
1998......................................     284        1,138
1999......................................     189          550
2000......................................      44           29
2001......................................      14           29
Thereafter................................      --           25
                                            ------       ------
Total future minimum lease payments.......   1,211        2,896
Amount representing interest..............    (106)          --
                                            ------       ------
                                            $1,105       $2,896
                                            ------       ------
                                            ------       ------



                                      46

<PAGE>

Rent expense incurred under the non-cancelable operating leases totaled
$0.304 million, $0.623 million and $0.606 million during the years ended
December 31, 1996, 1995 and 1994, respectively.


NOTE 14 - OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS

Information about the Company's operations by geographic area is summarized
below:

<TABLE>
                                                                  ($000's)
                                                                  --------
                                                                          ADJUSTMENTS AND
                                     MEXICO         US         OTHER       ELIMINATIONS      CONSOLIDATED
                                    --------     --------     -------     ---------------    ------------
<S>                                 <C>          <C>          <C>            <C>               <C>
1996
Sales to unaffiliated customers     $ 56,868     $117,504     $18,613                          $192,985
Transfers                             65,877       13,083       1,346        $(80,306)               --
                                    --------     --------     -------        --------          --------
Total revenue                        122,745      130,587      19,959         (80,306)          192,985
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------

Operating income (loss)                  318      (12,535)     (1,050)         (1,148)          (14,715)
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------
Identifiable assets                   64,203       79,985      13,883         (15,916)          142,155
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------

1995
Sales to unaffiliated customers       54,735      125,974      16,877                           197,586
Transfers                             57,972       12,630          --         (70,602)               --
                                    --------     --------     -------        --------          --------
Total revenue                        112,707      138,604      16,877         (70,602)          197,586
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------

Operating income (loss)                2,266        3,966        (330)           (327)            5,575
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------
Identifiable assets                   70,108       24,052       1,950          (6,984)           89,126
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------

1994
Sales to unaffiliated customers       38,851       25,261          --              --            64,112
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------

Operating income (loss)              (11,101)        (842)         --             382           (11,561)
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------
Identifiable assets                 $ 57,711     $ 14,949     $   705        $ (1,683)         $ 71,682
                                    --------     --------     -------        --------          --------
                                    --------     --------     -------        --------          --------
</TABLE>



                                      47
<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 May 22,
1997 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 May 22,
1997 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 section entitled "Security Ownership of Certain Beneficial Owners and
Management" appearing in the Company's proxy statement for the annual meeting
of stockholders to be held on May 22, 1997 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 Transactions" appearing in the Company's
proxy statement for the annual meeting of stockholders to be held on May 22,
1997 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, 1996 and 1995
              Consolidated Statements of Operations for the years ended
                December 31, 1996, 1995 and 1994
              Consolidated Statements of Changes in Stockholders' Equity for
                the years ended December 31, 1996, 1995 and 1994
              Consolidated Statements of Cash Flows for years ended
                December 31, 1996, 1995 and 1993
              Notes to Consolidated Financial Statements



                                      48

<PAGE>

         (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.

         (3)  Exhibits:

              The information required by this Item 14(a)(3) is set forth
              in the Index to Exhibits accompanying this Annual Report on
              Form 10-K.

    (b)  Reports on Form 8-K

    On October 11, 1996, the Company filed a report on Form 8-K dated
September 26, 1996 relating to the acquisition of DNAP by means of a merger
of DNAP with Bionova Acquisition, Inc., which was a wholly-owned subsidiary
of the Company (the "Acquisition").  The following financial statements were
filed with or incorporated by reference in such Form 8-K:

    Audited consolidated financial statements and schedule of DNA Plant
    Technology Corporation and Subsidiaries, consisting of:

         Consolidated balance sheets at December 31, 1995 and 1994

         Consolidated statements of operations for the years ended
         December 31, 1995, 1994 and 1993

         Consolidated statements of cash flows for the years ended
         December 31, 1995, 1994 and 1993

         Consolidated statements of stockholders' equity for the years ended
         December 31, 1995, 1994 and 1993

         Notes to consolidated financial statements

         Schedule II: Valuation and qualifying account for the years ended
         December 31, 1995, 1994 and 1993

    Unaudited consolidated financial statements of DNA Plant Technology
    Corporation and Subsidiaries, consisting of:

         Unaudited consolidated balance sheets at June 30, 1996 and
         December 31, 1995.

         Unaudited consolidated statements of operations for the three and
         six months ended June 30, 1996 and 1995.

         Unaudited consolidated statements of cash flows for the six months
         ended June 30, 1996 and 1995.

          Notes to unaudited consolidated financial statements.

    On November 6, 1996, the Company filed a report on Form 8-K/A dated
September 26, 1996 relating to the Acquisition.  The following financial
statements were filed with such Form 8-K/A:

    Unaudited pro forma condensed combined financial information of DNAP
    Holding Corporation and its subsidiaries, consisting of:

          Unaudited pro forma condensed combined balance sheet as of
          June 30, 1996



                                      49

<PAGE>

         Unaudited pro forma condensed combined income statement for the year
         ended December 31, 1995

         Unaudited pro forma condensed combined income statement for the six
         months ended June 30, 1996

         Notes to unaudited pro forma condensed combined financial statements

    On February 21, 1997, the Company filed a report on Form 8-K dated January
21, 1997 relating to the filing of a lawsuit against the Company by certain of
its stockholders.















                                      50
<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.

                                       DNAP HOLDING CORPORATION

Date:  March 27, 1997



                                       By:  /s/ CARLOS HERRERA
                                          ---------------------------------
                                                Carlos Herrera
                                            Chief Executive Officer


    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.

         SIGNATURE                          TITLE                   DATE
         ---------                          -----                   ----

  /s/  BERNARDO JIMENEZ            Chairman of the Board       March 27, 1997
-----------------------------           and Director
       Bernardo Jimenez


  /s/  CARLOS HERRERA              Chief Executive Officer     March 27, 1997
-----------------------------            and Director
       Carlos Herrera


  /s/ ARTHUR H. FINNEL             Chief Financial Officer     March 27, 1997
-----------------------------     (Principal Financial and
      Arthur H. Finnel               Accounting Officer)


  /s/ EVELYN BEREZIN
-----------------------------              Director            March 27, 1997
      Evelyn Berezin


-----------------------------              Director            March __, 1997
       Nam-Hai Chua



                                       51

<PAGE>

         SIGNATURE                          TITLE                   DATE
         ---------                          -----                   ----

  /s/  PETER DAVIS
-----------------------------              Director            March 27, 1997
       Peter Davis


-----------------------------              Director            March ___, 1997
    Francisco Gonzalez


-----------------------------              Director            March ___, 1997
    Erik C. Jurgensen


  /s/  GERALD LAUBACH
-----------------------------              Director            March 27, 1997
       Gerald Laubach


  /s/  DOUGLAS LUKE
-----------------------------              Director            March 27, 1997
       Douglas Luke


-----------------------------              Director            March __, 1997
   Alejandro Rodriguez


  /s/  ROBERT SERENBETZ
-----------------------------              Director            March 27, 1997
       Robert Serenbetz




                                       52

<PAGE>

                                  INDEX TO EXHIBITS

Exhibit
Number   Description
-------  -----------
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

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 26, 1996, by DNAP in favor of
         the Company

10.6     Governance Agreement dated as of September 26, 1996, between
         ELM 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 ELM 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 October 18, 1996, between
         International Produce Holding Company and
         Houdstermaatschappij C.J. Rijnhout B.V. (filed as an exhibit
         to the Company's report on Form 10-Q for the quarterly
         period ended September 30, 1996 and incorporated herein by
         reference)

21.1     Subsidiaries

27.1     Financial Data Schedule


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

                                     53