SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                  ------------

                                    FORM 10-K
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 1998

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                          Commission File No. 000-23531

                                 AGRITOPE, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                       93-0820945
  (State or other jurisdiction of                          (IRS Employer
   incorporation or organization)                           Identification No.)

  16160 SW Upper Boones Ferry Road
      Portland, Oregon                                      97224-7744
  (Address of principal executive offices)                  (Zip code)

                                 (503) 670-7702
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:

    Common Stock (including Preferred Stock Purchase Rights), $.01 par value
                                (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. [X]

         The  aggregate  market value of the  registrant's  common stock held by
non-affiliates  of the  registrant,  as of November 30, 1998, was  approximately
$4,706,000.

The number of shares  outstanding of the  registrant's  common stock,  par value
$.01 per share, on November 30, 1998 was 4,050,150.

                      DOCUMENTS INCORPORATED BY REFERENCE

Parts of the  registrant's  Proxy  Statement  dated January 20, 1999 prepared in
connection  with the Annual Meeting of  Stockholders  to be held on February 22,
1999 are incorporated by reference into Part III of this Report.


<PAGE>

                         T A B L E  O F  C O N T E N T S


                                     PART I

                                                                            Page

     ITEM 1.      BUSINESS...................................................  3

     ITEM 2.      PROPERTIES................................................. 10

     ITEM 3.      LEGAL PROCEEDINGS.......................................... 10

     ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........ 10

                                    PART II

     ITEM 5.      MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED 
                  STOCKHOLDER MATTERS........................................ 11

     ITEM 6.      SELECTED FINANCIAL DATA.................................... 12

     ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
                  AND RESULTS OF OPERATIONS.................................. 12

     ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 15

     ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................ 16

     ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
                  AND FINANCIAL DISCLOSURE................................... 16

                                    PART III

     ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT......... 16

     ITEM 11.     EXECUTIVE COMPENSATION..................................... 16

     ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT................................................. 16

     ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............. 16

                                    PART IV

     ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON 
                  FORM 8-K................................................... 17


<PAGE>


                                     PART I

Certain  statements  set forth  below  constitute  "forward-looking  statements"
within the meaning of the Private Securities  Litigation Reform Act of 1995. The
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the  Company or  industry  results to be  materially  different  from any future
results, performance or achievements expressed or implied by the forward-looking
statements.  With  respect to the  Company,  these  factors  include its limited
independent  operating  history;  uncertainty  of  additional  funding;  loss or
impairment   of  sources  of  capital;   dependence   on   strategic   partners;
uncertainties relating to patents and proprietary information; dependence on key
personnel; technological change and competition;  uncertainties as to acceptance
of genetically engineered products;  changes in laws or regulations;  as well as
the other factors discussed in Exhibit 99 hereto which is hereby incorporated by
reference.  Given these uncertainties,  readers are cautioned not to place undue
reliance on the forward-looking  statements.  Agritope does not intend to update
any forward-looking statements.

ITEM 1.  BUSINESS

Agritope  Inc.  ("Agritope," or the "Company") is  a developer of  biotechnology
and provider of products utilizing  biotechnology to the agricultural  industry.
The technology developed or acquired by the Company includes a variety of genes,
promoters and enabling  technologies.  In addition,  through its majority  owned
subsidiary,  Vinifera,  Inc.  ("Vinifera"),  the Company  propagates and markets
grapevines and provides disease  screening and elimination  services to the U.S.
wine grape production industry.

The Company is utilizing its patented  ethylene control  technology to produce a
wide variety of fruits and vegetables that are resistant to the decaying effects
of ethylene. The Company has also acquired certain rights to certain proprietary
genes (the "Salk  Genes") from the Salk  Institute for  Biological  Studies (the
"Salk Institute").  Agritope believes that the Salk Genes may have the potential
to confer disease resistance,  enhance crop yield,  control flowering,  regulate
cell division and enhance gene  expression in plants.  Agritope has an option to
obtain a  worldwide  license  to use the Salk Genes in a wide range of fruit and
vegetable species.

The  Company  consists  of two units:  Agritope  Research  and  Development  and
Vinifera,  Inc.  ("Vinifera").  Agritope  Research and  Development  contributes
biotechnology and product development to strategic partners and provides disease
screening  and  elimination  programs to Vinifera.  Through  Vinifera,  Agritope
believes that it offers one of the most  technically  advanced  grapevine  plant
propagation and disease screening and elimination programs available to the wine
and table grape production industry.

B I O T E C H N O L O G Y   P R O G R A M

Historically,  Agritope's  biotechnology  program focused on using the tools and
techniques of plant genetic engineering to regulate the synthesis of ethylene in
ripening  fruits and vegetables.  Recently,  the Company has begun research into
genetically  regulating other physiological  processes in plants.  Ethylene is a
gaseous plant hormone,  which in higher plant species is  responsible  for fruit
and vegetable  ripening and senescence as well as numerous  other  physiological
effects.  The  Company  has  identified  and  patented a single gene that can be
inserted  into plants and  expressed to regulate the plant's  ability to produce
ethylene.  In addition,  Agritope is conducting  research in the area of disease
control,  including  screening  plants for the  presence of disease and creating
genetically engineered plants with resistance to pathogens.

RIPENING  CONTROL.  The fresh  produce  industry  is based  largely  upon  rapid
harvesting,  processing  and  distribution  of fruits and vegetables in order to
prevent  spoilage  and  ensure  the  arrival  of  product  at retail  outlets in
acceptable  condition for consumer purchase and use. The post-harvest period for
most fruits and  vegetables is one of  continuous  ripening and  senescence,  as
evidenced by rapid changes in color,  texture,  flavor,  nutrient  content,  and
other quality attributes. Product losses due to perishability during harvesting,
processing, packing, shipping and distribution can reach substantial portions of
overall  crop  yield.   Growers  frequently  incur  losses  resulting  from  the
abandonment  of crops in the  field or having  shipments  refused  by  receivers
because the produce is overripe.  In addition,  wholesalers and retailers may be
forced  either to  discard  or sell  overripe  produce  at  reduced  prices  and
consumers  often must use produce  shortly  after  purchase  to avoid  spoilage.
Studies  published in the Marketing  Research  Report of the U.S.  Department of
Agriculture  ("USDA") have  estimated  post-harvest  losses of 30 percent and 40
percent,  respectively, for strawberries shipped from Florida to the Chicago and
New York markets.  In the U.S. fruit and vegetable markets,  post-harvest losses
are estimated to amount to several billion dollars annually.


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<PAGE>


Post-harvest losses are largely attributable to the effects of ethylene. Because
ethylene  is a gas,  it not  only  affects  the  plant  producing  it,  but also
surrounding  plants as well.  The  physiological  effects  of  ethylene  include
initiation  and  enhancement  of  ripening,   senescence,  leaf  abscission  and
drooping,  and flower fading and wilting.  Common examples  include the ripening
and  subsequent  rotting of tomatoes  and apples,  discoloration  in lettuce and
broccoli, and the short bloom life of cut flowers.

The importance of controlling  ethylene production in plants has been recognized
for decades,  and has been  addressed  primarily  through the use of  controlled
atmosphere  storage,  chemical  treatment,  and special packaging.  Conventional
techniques for controlling  ethylene production have serious  disadvantages that
include high cost,  time-critical  handling  requirements and lack of consistent
ripening.  For example,  the majority of product sold in the fresh tomato market
today is composed of "gas-green" tomatoes.  These tomatoes are picked and packed
while still green and firm.  Prior to shipping  to  wholesale  customers,  green
tomatoes  are  exposed to  ethylene  gas in order to  initiate  ripening  of the
product. In general,  gas-green tomatoes are perceived by consumers to have less
desirable taste and texture than vine-ripened tomatoes.

Agritope  believes the ability to regulate ethylene and control ripening through
genetic  engineering  represents an opportunity to provide a superior product to
consumers  while also  improving  profitability  for growers  and  distributors.
Growers may achieve  higher  marketable  yields due to fewer  losses of overripe
product  in the field and may  lower  labor  costs by  decreasing  frequency  of
harvest. For packer/shippers, better control of product perishability may result
in improved inventory flexibility and control, and more uniform product quality.

ETHYLENE CONTROL  TECHNOLOGY.  Agritope's ethylene control technology is focused
on the use of a  patented  gene  known as SAMase.  The  expression  of SAMase in
plants  produces an enzyme that acts to degrade one of the  important  precursor
compounds  (S-adenosylmethionine  or  "SAM")  necessary  for the  production  of
ethylene.  Agritope has genetically engineered plants to express the SAMase gene
only when certain levels of rising  ethylene  concentrations  are reached in the
tissues of the fruit or plant.  This feature  causes the  production  of greater
levels of the enzyme that degrades SAM in response to a  correspondingly  higher
level of ethylene.  Agritope  believes that this  technology thus offers a major
advantage  over other  approaches to ripening  control in that the production of
ethylene may be specifically  reduced to levels that allow for the initiation of
ripening but that delay the spoiling effects of excess ethylene.  Therefore, the
fruit can be maintained  at an optimal level of ripeness for an extended  period
of time.  An additional  benefit of  Agritope's  technology is that the reaction
catalyzed  by the SAMase gene  results in  compounds  normally  found in plants.
Agritope  believes  its SAMase  technology  can be  utilized  for the control of
ethylene in any plant species where ethylene affects ripening or senescence.

Agritope's  application  of ethylene  control  technology  to various  fruit and
vegetable crops is at different stages, as described below.  There are difficult
scientific  objectives  to be  achieved  with  respect  to  application  of  the
technology to certain crops before the  technical or commercial  feasibility  of
the  modified  crops can be  demonstrated.  There can be no  assurance  that the
technology can be successfully  applied to particular crops or that the modified
crops can be successfully and profitably produced, distributed and sold.

A U.S.  patent  covering the use of any gene that  encodes  S-adenosylmethionine
hydrolase  (the  enzyme  expressed  in any plant  species  by the  SAMase  gene)
protects Agritope's  ripening control  technology.  In addition to the patent on
the  SAMase  gene,  utility  claims  have  been  allowed  on  the  promoter/gene
combination used by Agritope in applications currently under development as well
as potential  applications  in all other  fruit-bearing  plants.  In the area of
regulated gene  expression and ripening  control,  Agritope has five  additional
U.S.  patents issued as well as a sixth U.S.  patent allowed but not yet issued.
Agritope also has five pending U.S. patents in this area. Additionally, Agritope
has three issued foreign patents as well as 25 pending foreign applications.

THE SALK  GENES.  In  addition  to its  ethylene  control  technology,  Agritope
acquired in fiscal 1997 certain rights to certain  proprietary  genes discovered
by scientists at the Salk  Institute.  The Company  believes that the Salk Genes
may have the potential to confer  disease  resistance,  enhance  yield,  control
flowering ,  regulate  cell  division  and enhance  gene  expression  in plants.
Agritope  believes  these new  technologies  will allow Agritope to leverage its
ability to genetically engineer fruits and vegetables and enhance its ability to
broaden its pipeline of new genetically  engineered  products.  U.S. and foreign
patent  filings  have been made with  respect to each of the Salk Genes.  A U.S.
patent covering one gene, LEAFY, recently issued to the Salk Institute as patent
number 5,637,785.

Under  the  terms of the Salk  agreement,  Agritope  has an  option to obtain an
exclusive  or  nonexclusive  worldwide  license  to use the Salk Genes in a wide
range of fruit and vegetable crops.  The agreement  permits Agritope to use each
Salk Gene for research and evaluation  purposes,  for which Agritope will pay an
annual access fee until it elects to license the gene for  commercial  purposes.
Agritope  will pay a license  issue fee and royalty for each Salk Gene it elects
to license.  Agritope has also agreed to reimburse a  percentage  of  applicable

                                       4
<PAGE>


Salk Institute patent costs. Salk Institute retains ownership of the Salk Genes,
subject to applicable  U.S.  government  rights.  Agritope will own any modified
plant  species and fruit and vegetable  crops it develops  using the Salk Genes,
and will therefore have control of the marketing and distribution rights to such
products.

Agritope's  work with the Salk Genes to produce  desirable  fruit and  vegetable
crops is at an early stage.  There are  difficult  scientific  objectives  to be
achieved before the technological or commercial  feasibility of the products can
be demonstrated. There can be no assurance that any of Agritope's products under
development  using the Salk Genes, if and when fully developed and tested,  will
perform in accordance with Agritope's  expectations,  that necessary  regulatory
approvals will be obtained in a timely manner, if at all, or that these products
can be successfully and profitably produced, distributed and sold.

Agritope is currently  conducting research regarding the following specific Salk
Genes:

DIR1 is a gene that may confer systemic acquired  resistance  ("SAR") to plants.
SAR is the  ability of plants to develop a powerful  disease  resistance  state.
After  exposure  to a  non-lethal  inoculum  of a  bacterial,  viral  or  fungal
pathogen,  a plant will possess a heightened  ability to defend itself against a
broad range of new pathogenic challenges. The phenomenon of SAR has been studied
for years but only  recently  at the  molecular  level.  Scientists  at the Salk
Institute,  in collaboration  with those at the Samuel Roberts Nobel Foundation,
have  discovered  a  gene,  DIR1,  which  appears  to  play  a key  role  in the
maintenance of SAR. Agritope intends to utilize DIR1 in the development of plant
varieties  that have  increased  disease  resistance  to a broad  range of plant
pathogens.  In vitro transformation  experiments using DIR1 are in progress in a
processing tomato variety. Current research plans call for the transgenic plants
with  transgene  DIR1 to be  soil  planted  in  early  1999  and  evaluated  for
resistance to specific fungal, bacterial or viral pathogens of tomato.

DET2  is  a  gene   that   controls   brassinosteroid   synthesis   in   plants.
Brassinosteroids  are compounds that are naturally produced in minute quantities
in plants and play a key role in plant  growth and  development.  In addition to
being  difficult  to extract  (due to their  small  quantity  within the plant),
brassinosteroids  are also  exceedingly  difficult to  synthesize  using organic
synthesis methods.  Nevertheless,  research has demonstrated that application of
purified  brassinosteroids  to  crop  plants  can  result  in  enhanced  yields.
Scientists  at the Salk  Institute  have  identified a key  enzymatic  step that
limits  brassinosteroid  synthesis  in plants and cloned the gene,  DET2,  which
encodes the enzyme.  Expression  of the gene in  transgenic  plants has produced
plants  with  enhanced   growth   properties  due  to  increased   synthesis  of
brassinosteroid  by the  transgenic  plant.  Agritope has  generated  transgenic
plants of a processing tomato variety with DET2 for  brassinosteroid  synthesis.
Currently,  the second  generation of transgenic  plants are being raised in the
greenhouse.  These are scheduled to be evaluated in small-scale  field trials in
1999 for comparison of yield to non-transformed  control plants.  Transformation
experiments with DET2 have also been initiated in a Romaine variety of lettuce.

BRI1 is a gene that encodes the plant  receptor for  brassinosteroids.  The BRI1
gene  encodes  a  receptor-like   protein  kinase  involved  in  brassinosteroid
signaling and provides further  opportunities for biotechnological  applications
related to yield increase in transgenic plants. In principle,  it is possible to
manipulate both hormone  biosynthesis  with DET2, as described above, as well as
the level of brassinosteroid receptor through BRI1. In theory, it is possible to
generate BRI1  derivatives that have been activated as if  brassinosteroid  were
bound to the gene.  Both  approaches,  either  separately or together,  have the
potential  to  greatly   stimulate   plant  growth  and  yield.   Transformation
experiments  with  BRI1 are in  progress  in a  processing  tomato  variety  and
lettuce.

Cyclin is a gene that is involved in regulating  cell  division.  Salk Institute
scientists  have  expressed the cyclin gene in transgenic  plants and believe it
may play a role in accelerating plant growth, which is especially  noticeable in
the roots.  Furthermore,  transgenic crop plants  containing the cyclin gene are
also expected to have enhanced vegetative growth properties. Agritope intends to
test the cyclin gene initially in commercial tomato and lettuce varieties.

LEAFY is a gene that is responsible for the initiation of flower  development in
plants. Scientists at the Salk Institute have demonstrated accelerated flowering
in  several  species as a result of LEAFY  expression.  Transgenic  aspen  trees
expressing  LEAFY  develop  flowers  within months rather than the 8 to 10 years
that a  non-transgenic  aspen requires.  Agritope intends to investigate uses of
the  LEAFY  gene  in  tree  fruits,  vegetables  and  grapevines.  Additionally,
inhibiting  LEAFY  expression  in  selected  crop  species may retard or prevent
flowering,  which  could be of value in  vegetable  crops  such as  lettuce  and
celery.  Similar  to the genes  mentioned  above,  the  effect of LEAFY is being
tested initially in tomato at Agritope.  In vitro  manipulations are in progress
for  expression of LEAFY in a processing  tomato variety to assess the flowering
time, normal flower, fruit and seed set.

Booster  Element ("BE") is a genetic  element (a small piece of DNA) that can be
combined with plant gene promoters to enhance gene expression. The BE technology
is applicable to a range of plant genetic engineering strategies,  including the


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<PAGE>

Company's  SAMase  ripening  control  technology,  and Salk Genes.  For example,
certain crops may need a higher level of SAMase expression to produce a specific
level of ripening control.  BE may up-regulate the promoters  controlling SAMase
expression and thus improve the utility of the SAMase technology.  The effect of
BE in combination with two different fruit-specific promoters is being tested in
tomato.  Several  transgenic plants of Cherry tomato containing SAMase under the
transcriptional control of the latter two promoters with BE are being generated.
The level of SAMase  expression  (level of  SAMase  protein)  in the  transgenic
fruits generated in the presence or absence of BE is under evaluation.

ADDITIONAL  TECHNOLOGIES.  Agritope  is  also  conducting  research  on  several
additional  early-stage  technologies.  For example,  Agritope  scientists  have
devised a genetic engineering strategy to confer seedlessness to fruit crops. In
addition,  Agritope has completed a Phase I Small Business  Innovation  Research
("SBIR")  grant  to  develop  a novel  geminivirus  resistance  strategy  and to
incorporate  the approach into  commercial  tomato  varieties.  A second Phase I
grant to continue  the project is  pending.  Geminiviruses  are a class of plant
viruses that cause widespread damage in several crops including tomato,  pepper,
beans, melon,  squash and cotton.  Agritope has entered into an option agreement
with The Ohio State University to use the geminivirus  resistance  strategy in a
wide range of crop species susceptible to white-fly transmitted geminiviruses.

Agritope  maintains  a leading  position  in promoter  discovery,  allowing  the
targeted  expression  of  introduced  genes to certain  tissues  or to  specific
developmental stages in plants.  Company scientists have isolated or synthesized
a  number  of  fruit-specific  promoters  for  a  wide  variety  of  fruits  and
vegetables,  including apple, banana,  peach, melon,  tomato, and raspberry.  In
conjunction  with work  targeted at developing  seedless  plant  varieties,  two
different seed-specific plant promoters have been identified and isolated. Other
plant promoters  identified  include those that will target gene expression in a
root-specific,  senescence or wounding-associated manner. These promoters may be
useful for the directed  expression of our ethylene control genes as well as the
Salk Genes and others.

E X I S T I N G   D E V E L O P M E N T   P R O G R A M S

Agritope's  research and  development  programs are  currently  directed  toward
several highly perishable fruit and vegetable crops described below.

Melon. The U.S. wholesale fresh melon market is estimated to exceed $1.3 billion
annually.  Perishability in melons results in substantial  product losses during
the processes of production, harvesting and distribution. Agritope believes that
melons  represent a substantial  market  opportunity for  implementation  of its
ripening  control  technology.  Recent  scientific  reports have  demonstrated a
dramatic  increase in shelf life for specialty  type melons in which the ability
to produce ethylene has been impaired. Using proprietary seed varieties supplied
by  two  units  of  the  French  seed  company  Groupe  Limagrain  Holding  S.A.
("Limagrain"),  Clause Semences and its U.S. affiliate Harris Moran Seed Company
("Harris  Moran"),  Agritope  is  developing  commercial  melon  varieties  with
controlled ripening and increased  post-harvest product life.  Transgenic melons
containing  Agritope's  ethylene  control  gene are  currently  being  evaluated
jointly by Harris  Moran and Agritope  technicians.  Field trial  evaluation  of
transgenic  melons during the 1998 growing seasons has resulted in the selection
of several new hybrid varieties that demonstrate significantly reduced levels of
ethylene,  more uniform  maturity and improved  firmness.  Counter seasonal seed
production of these new hybrids is currently ongoing. This seed will be used for
commercial  evaluations  during  the  spring  and  summer of 1999.  The  product
development  plan for 1999 calls for  obtaining  deregulation  from the USDA and
completion of the FDA Food Safety consultation process.  Commercial plantings of
the new melon  varieties  are to be  completed  with the goal of a complete  and
thorough evaluation of product performance from field to consumer.

Tomato. Annual U.S. wholesale fresh market tomato revenues are estimated at $1.7
billion.  In order to facilitate the  commercialization  of its ethylene control
technology for this market,  Agritope formed Superior Tomato Associates,  L.L.C.
("STA") in 1996. STA is a joint venture with Sunseeds  Company,  a developer and
producer of several leading fresh market tomato varieties.

Agritope provides genetic engineering  technology and regulatory expertise,  has
responsibility  for managing  the joint  venture,  and has a two -thirds  equity
ownership interest in STA. Sunseeds provides elite tomato germplasm and breeding
expertise in the  development  of transgenic  varieties.  STA owns rights to any
fresh market  cherry,  roma and  vine-ripened  large  fruited  tomato  varieties
developed for the joint venture using Agritope  ethylene control  technology and
Sunseeds  germplasm.  STA also owns any technology jointly developed by Agritope
and  Sunseeds.  The  parties  otherwise  retain all  rights to their  respective
technologies.

STA is currently in the process of  developing  and testing  transgenic  cherry,
roma,  and large  fruited  vine-ripe  tomato  varieties.  Agritope has developed
transgenic inbred lines of elite tomato germplasm  provided by Sunseeds.  Recent


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field trials have  successfully  demonstrated the transfer of Agritope's  SAMase
ripening  control  technology  to a number of these  lines.  Sunseeds  is in the
process of  conducting  further  breeding and  evaluation  field trials of these
transgenic  lines for evaluation in various hybrid  combinations.  If results of
the  current  trials  are  satisfactory,  selections  from  the  trials  will be
evaluated in production  scale trials in 2000 that, if successful,  will lead to
regulatory   submissions   and,   if   regulatory   clearances   are   received,
commercial-scale  seed production.  Seeds will then be sold to approved growers,
who will pay STA a royalty on net sales of tomatoes grown from the seed.

Prior to the  formation  of STA,  Agritope  submitted  safety,  nutritional  and
environmental information on a prototype transgenic tomato line to both the USDA
and the FDA.  In March 1996,  the USDA issued its finding  that this line has no
significant  environmental  impact and would no longer be considered a regulated
article.  During the same month,  the FDA announced  that Agritope had completed
the food safety  consultation  process with respect to its prototype  transgenic
tomato  line and that the  variety  did not  raise  issues  that  would  require
pre-market  review or approval by that agency.  In addition to  receiving  these
U.S. regulatory clearances,  Agritope also conducted field evaluations of SAMase
tomato  lines in  Mexico  under  permits  granted  by the  Mexican  Ministry  of
Agriculture.  In order to commence sale of selected varieties,  Agritope will be
required to make  supplemental  submissions  to the USDA and FDA that  establish
that such varieties are comparable to the previously cleared lines.

Raspberry.  The wholesale raspberry market, estimated at $48 million annually in
the U.S., has experienced limited growth because of the extreme perishability of
the fruit.  Agritope  believes that the  successful  development  of raspberries
containing its ethylene control technology could permit a significant  expansion
of the fresh raspberry market.

In raspberry, Agritope is pursuing active research in three different areas: (1)
enhancement  of  post-harvest  shelf  life  using  Agritope's  ethylene  control
technology; (2) possible control of gray mold and (3) control of raspberry bushy
dwarf virus using a pathogen derived resistance gene.

Raspberry:   Post-harvest   shelf  life.  In   collaboration   with   Sweetbriar
Development,  Inc.  ("Sweetbriar"),  the largest fresh raspberry producer in the
U.S.,  Agritope has engineered  several of Sweetbriar's  proprietary  commercial
raspberry  varieties  to contain the SAMase gene.  Hundreds of these  transgenic
plants are undergoing field evaluation at Sweetbriar.  In the preliminary  field
evaluations  in  1998,   Sweetbriar   identified   two  transgenic   lines  with
significantly firmer fruit than non-transgenic controls. Further analysis of the
berries  from these  transgenic  lines  confirmed a reduction of ethylene in the
berries as compared to control fruit..  These transgenic lines are scheduled for
large scale replicated  trials in 1999 designed to confirm improved  firmness of
the transgenic  fruit. In addition to the above two transgenic  lines, many more
new transgenic events will be field evaluated in 1999 by Sweetbriar.

Successful  development  of a commercial  transgenic  raspberry,  which would be
owned by Sweetbriar,  will require successful  completion of the scheduled field
trials and filings to obtain the  appropriate  regulatory  clearances.  If these
conditions  are  met,   Sweetbriar   would  produce  the  new   raspberries  for
distribution  and  marketing  by  Driscoll  Strawberry  Associates,  the largest
distributor of fresh  raspberries and  strawberries  in the U.S.  Agritope would
receive  royalties  on  wholesale  product  sales.   Separately,   Agritope  has
integrated its ripening control technology into several public domain varieties.

Raspberry:  Fungal  control.  Botrytis  cinerea is a fungal pathogen that causes
both pre-harvest and post-harvest fruit rot of red raspberry,  resulting in loss
estimated to be greater than 25%. Agritope  researchers have transformed  plants
with a gene that may confer  resistance  against  fungal  infection.  Transgenic
plants are currently undergoing field evaluations in cooperation with Sweetbriar
and the USDA.

Raspberry: Pathogen resistance. Raspberry bushy dwarf virus ("RBDV") is the most
common virus disease of raspberry,  affecting yield and fruit quality. The virus
occurs  throughout  the  raspberry  growing areas of the world and has become an
increasingly  important  problem over the past 10 years.  Major  effects of RBDV
infection  are  crumbly  fruit  and  reduced  yield.  Transmission  of  RBDV  is
associated  with  flowering  and,  therefore,   control  is  very  difficult  or
impossible by chemical means.

Agritope has developed a genetic engineering approach to develop RBDV resistance
in red raspberry.  Transgenic plants are currently undergoing  evaluation at the
USDA-ARS  Horticultural  Crops  Research  facility  in  Corvallis,  Oregon.  The
evaluation is expected to be completed in early 1999. If preliminary results are
promising,  Agritope plans to conduct large scale field evaluations in which the
transgenic  plants  will be  exposed  to  natural  disease  pressure  via pollen
transmission  and  evaluated for virus  resistance  traits in 2000. If the field
trials are successful, additional evaluations of fruit and yield characteristics
would be conducted in the following years.


                                       7
<PAGE>

Vegetable and Flower Crops. Agritope and Vilmorin, Clause & Cie ("Vilmorin"),  a
majority owned  affiliate of Limagrain,  entered into a research and development
agreement (the "Vilmorin Research  Agreement") in December 1997 covering certain
vegetable and flower crops. Under the terms of the Vilmorin Research  Agreement,
Vilmorin will provide certain  proprietary  seed varieties and germplasm for use
by Agritope in research and  development  projects to be funded by Vilmorin,  in
which Agritope technology,  and possibly Vilmorin technology,  may be applied to
the various covered crops. The specific  research  projects to be conducted will
be determined by agreement of the parties,  taking into account  recommendations
of Agritope's Project Advisory  Committee,  two of the four members of which are
to be designated by Vilmorin.  Unless otherwise agreed,  Vilmorin will pay, on a
quarterly  basis,  all Agritope's  out-of-pocket  expenses,  including  employee
salaries and overhead, for each selected research project.

Agritope and Vilmorin have agreed to negotiate in good faith the terms of future
commercialization  agreements  applicable to any commercial-stage  products that
arise out of such  research and  development  projects.  It is the intent of the
parties that Agritope will receive royalties on revenues generated through sales
of modified crops or modified seeds  resulting  from the research  projects,  or
that Agritope will receive revenues through  participation in programs providing
royalties  to  Agritope  and  Vilmorin  based on  savings  realized  by  farmers
utilizing the modified products. If the parties are unable to agree on the terms
on  which  a  modified  crop  or  seed is to be  commercialized,  the  terms  of
commercialization  will be determined by "baseball" style arbitration,  in which
the  arbitrator  chooses  all of the  terms  proposed  by one party or the other
without modification or compromise.

Each of Agritope and  Vilmorin  will  continue to own its  existing  proprietary
technology.  The parties  will jointly own any new  technology  developed in the
course of the  research,  other than modified  crops or seeds.  Each will have a
right to commercialize  the new technology in designated  fields of use, subject
to an obligation to pay royalties for such use to the other party.

During the term of the agreement, Vilmorin will have a right of first refusal to
fund and  participate in research  projects  proposed by Agritope  involving the
genetic  alteration of a covered crop. The agreement provides that Agritope will
deal with Vilmorin as a most favored  customer in  connection  with research and
commercialization  agreements. Unless terminated for default, the agreement will
remain in effect until the earlier of (i) expiration of all patents (and absence
of trade secrets) for technology  used in modified crops and seeds for which the
parties  have entered into  commercialization  agreements,  and (ii) the date on
which Vilmorin ceases to own at least 214,285 shares of Agritope capital stock.

In connection with the Vilmorin Research  Agreement,  Vilmorin purchased 214,285
shares of Agritope Series A Preferred Stock ("Series A Preferred") at a price of
$7 per share.  Vilmorin  has agreed to provide  additional  funding  totaling $1
million  either by  exercising  its option to  purchase  Series A  Preferred  or
through the financing of research and development  projects. As of September 30,
1998, Vilmorin had committed to fund specific projects totaling $400,000,  which
are planned to be completed by June 30, 1999.

Vilmorin is majority  owned by Limagrain.  Limagrain is in turn owned by Societe
Cooperative  Agricole de Semences de Limague, a societe organized under the laws
of France ("Cooperative").  Cooperative is a French agricultural cooperative and
the third  largest  seed  company in the world.  Its  principal  business is the
production  of seeds for grains,  corn,  garden  vegetables,  and  oil-producing
plants.

Other Crops.  Agritope is also  pursuing  research and  development  programs to
incorporate its SAMase  technology into other crops where  perishability  causes
significant  losses in the production and  distribution  process.  These include
strawberries,  bananas,  peaches,  pears and apples.  Agritope  is working  with
leading  proprietary tree fruit germplasm of peach, apple and pear and maintains
thousands of shoots through routine  micropropagation  techniques.  Agritope has
developed  rapid and  efficient  shoot  regeneration  methods in apple and pear.
Transformation  experiments to incorporate  SAMase,  the ripening  control gene,
into apple and pear  cultivars are in progress.  A patent  application  has been
filed with respect to a novel method of apple  transformation  discovered during
the course of the experimental work.

One component of introducing  Agritope's  ethylene control  technology into tree
fruit is to target the  expression  of ethylene  control  genes to the  ripening
fruit. Toward this goal,  Agritope has several  proprietary  promoters that have
already been proven in tomato and melon. In addition, Agritope has been actively
identifying and testing fruit-specific  promoters from apple, banana, peach, and
pear.  Once  appropriate  promoters  are isolated  and tested,  they are used to
direct  expression of ethylene  control genes in ripening  fruit of  genetically
modified plants.

The  estimated  U.S.  wholesale  markets  in 1996 for these  crops  ranged  from
approximately  $325  million  for  pears,  to $1.6  billion  for apples and $2.4
billion for bananas.


                                       8
<PAGE>

COMMERCIALIZATION  STRATEGY.  Agritope  is  currently  evaluating  a  number  of
commercialization  strategies  in order to realize the value of its  technology.
The Company intends to generate  revenues by licensing  rights to its technology
in exchange for license fees, royalties and other payments.  Agritope intends to
focus its  development  and  licensing  efforts  primarily  toward  growers  and
distributors  of fruits and vegetables who are likely to derive the most benefit
from the reduced costs and spoilage  losses that could  potentially  result from
using the Company's technologies.

As part of the Vilmorin Research Agreement, Agritope and Vilmorin have agreed to
negotiate  in good  faith  the  terms  of  future  commercialization  agreements
covering  any  products  that  reach  commercial-stage   development.   Agritope
anticipates  that  it  will  receive  royalties  on the  sale  of any  products,
including  modified crops or seeds,  that arise out of research and  development
projects conducted by Agritope and funded by Vilmorin.

G R A N T S   A N D   C O N T R A C T S

U.S.  DEPARTMENT OF COMMERCE GRANT. In October 1997, Agritope was awarded a U.S.
Department of Commerce, National Institute of Standards and Technology ("NIST"),
Advanced Technology Program ("ATP") grant. The award covers a three-year project
and totals  $990,000.  Agritope was awarded the grant for use in the application
of its  proprietary  ripening-control  technology  to  certain  tree  fruits and
bananas.

The NIST/ATP grant  provides  cost-shared  funding for research and  development
projects with potential for important  broad-based economic benefits to the U.S.
Agritope  will bear $1.8  million of the total costs of the  program,  which are
estimated  at $2.8  million.  The  awards  are made on the  basis of a  rigorous
competitive review that considers both scientific and technical merit.

SBIR PROGRAMS.  Agritope actively participates in the SBIR programs sponsored by
the USDA. The SBIR programs have two phases.  Phase I covers a six-month project
period  and a total  award not to exceed  $100,000.  Phase II covers a  two-year
project period and a total award not to exceed $750,000.  Agritope was awarded a
Phase I grant of $50,000 in 1994 plus a Phase II grant of  $198,000  in 1995 for
development of diagnostic  tests for the detection of grapevine  leafroll virus.
In 1997,  Agritope  received  a $55,000  Phase I grant  for work on  geminivirus
resistance  strategies in tomatoes. A second Phase I geminivirus  application is
currently undergoing review.

COOPERATIVE RESEARCH AND DEVELOPMENT  AGREEMENTS.  Agritope has entered into two
Cooperative  Research  and  Development  Agreements  ("CRADA's")  with  the U.S.
Department of Agriculture/Agricultural Research Services ("USDA/ARS"). Under the
CRADA's,  Agritope  will  collaborate  with USDA/ARS  laboratories  by providing
research services or partial funding for research projects. In return,  Agritope
has been granted a right of first  refusal to obtain a license for any resulting
inventions.  The objective of the first CRADA is to create  raspberries that are
resistant to RBDV.  This research is a  collaborative  effort with the Northwest
Center for Small Fruit Research, located in Corvallis,  Oregon. The second CRADA
is funded  jointly by Agritope  and Harris  Moran Seed  Company.  It is aimed at
furthering the understanding of the ethylene associated  physiological processes
in ripening  cantaloupe using  SAMase-transformed  cantaloupe.  This research is
being  carried  out in  collaboration  with the  USDA/ARS  research  station  in
Weslaco, Texas.

OTHER GRANTS AND CONTRACTS.  Agritope has also been awarded grant support in the
past from the Oregon  Strawberry  Commission and Oregon  Raspberry and Blueberry
Commission for antifungal biocontrol research.  Agritope also receives funds for
research  and  development  programs  from  its  strategic  partners,  including
Vilmorin (See  "Agritope  Existing  Development  Programs--Vegetable  and Flower
Crops").  Agritope  intends to  continue  to  participate  in the SBIR  program,
similar  grant  programs  and  projects  with  strategic  partners,  as it deems
appropriate.  Agritope  regularly makes application for new grants, but there is
no assurance that grant support will be continued.

V I N I F E R A ,   I N C.

Vinifera  was  incorporated  in 1993 to  participate  in the  grapevine  nursery
business.   Through  proprietary  processes,   Vinifera  propagates  and  grafts
grapevine  plants for sale to vineyards and to growers of table  grapes.  All of
Agritope's current product sales are attributable to Vinifera.  Industry sources
have  estimated that 44 million  grafted wine grapevine  plants were produced in
California in 1996.

Traditionally,  grapevine  plants for sale to vineyards are produced  seasonally
using field grown, dormant cuttings that are grafted. In contrast, Vinifera uses
year-round greenhouse  propagation and a herbaceous grafting method that employs
very young,  actively growing cuttings.  As a result of greenhouse  propagation,
Vinifera  is able to  develop  in two years a  quantity  of new  plants  that is
approximately ten times larger than can be produced with traditional techniques.
In addition,  herbaceous  grafting with green cuttings could allow a vineyard to
begin  commercial  production  of grapes  from a newly  planted  vineyard a year


                                       9
<PAGE>

sooner than would  otherwise be possible.  This  grafting  process also produces
sturdier unions than dormant grafting,  resulting in significantly higher yields
of  successful  grafts,  both at the  propagation  stage and in the  survival of
actual  plantings  in the field.  Agritope  Research  and  Development  provides
disease testing services for Vinifera.

Vinifera is  headquartered  in  Petaluma,  California.  Its library of grapevine
plants  includes  32  different  phylloxera-resistant  types  of  rootstock,  88
different wine varietal  clones,  and ten different table grape varietal clones.
In addition,  several French and Italian varietals are currently passing through
quarantine and, when released,  will be available to the U.S. market exclusively
through Vinifera.  Vinifera believes that this collection of different grapevine
clones  is one of the  largest  in the  world.  Vinifera's  U.S.  customer  base
consists of over 200 vineyards in California, Washington and Oregon.

P E R S O N N E L

At September 30, 1998, Agritope and its subsidiaries had 56 full-time employees,
including 23 in research and development and 23 at the Vinifera  grapevine plant
nursery operation,  which also employs seasonal  part-time  employees as needed.
Agritope considers its relations with its employees to be excellent. None of its
employees are represented by labor unions.

Agritope  employs six persons  holding  Ph.D.  degrees with  specialties  in the
following   disciplines:   applied  botany,   bacteriology  and  public  health,
biological sciences,  genetics, plant pathology and plant sciences. From time to
time, Agritope also engages the services of scientists as consultants to augment
the skills of its scientific staff.

S C I E N T I F I C   A D V I S O R Y   B O A R D

Agritope  utilizes the services of a Scientific  Advisory Board.  The Scientific
Advisory Board meets periodically to review Agritope's  research and development
efforts  and  to  apprise  Agritope  of  scientific  developments  pertinent  to
Agritope's  business.  The Agritope  Scientific Advisory Board consists of chair
Eugene W.  Nester,  Ph.D.,  Professor  and Chair,  Department  of  Microbiology,
University of Washington;  Peter R. Bristow, Ph.D., Associate Professor of Plant
Pathology, Washington State University; Antoine de Courcel, Scientific Director,
Vilmorin,  Clause & Cie; and  Christopher J. Lamb,  Ph.D.,  Regius  Professor of
Plant Science, Institute of Cell and Molecular Biology, University of Edinburgh,
Scotland. Dr. Nester is a member of the National Academy of Sciences.

ITEM 2.  PROPERTIES

Agritope leases  approximately 11,000 square feet of office and laboratory space
in Portland,  Oregon. The agreement requires monthly rental payments on a triple
net lease basis of $10,285 from  commencement of the lease term on March 1, 1998
through May 1, 2001, and thereafter of $11,210 until  expiration of the lease on
February 28, 2003.  Agritope  relocated its office and research and  development
operations to the leased facilities on March 15, 1998.

Agritope owns a 15-acre farm in Woodburn,  Oregon, which it uses for propagation
of experimental  crops.  Greenhouse capacity at the farm currently totals 60,000
square feet.

Vinifera leases 250,000 square feet of greenhouse space in Petaluma,  California
under a lease that  expires  January 31, 2001.  The lease  provides an option to
purchase the leased premises,  exercisable through January 31, 1999, for a price
of $1.3 million.  Vinifera also leases 1,400 square feet of office space under a
lease that expires February 1, 2003.

Agritope  believes  that its present  facilities  are  adequate to meet  current
requirements.

ITEM 3.  LEGAL PROCEEDINGS

As of the date of this filing,  Agritope is not a party to any material  pending
legal proceedings.

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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year covered by this report.



                                       10
<PAGE>

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Agritope common stock (the "Common Stock") is traded on the SmallCap tier of The
Nasdaq Stock Market under the symbol "AGTO."  Trading  commenced on December 29,
1997. As reported by Nasdaq,  the  following  table sets forth the range of high
and low sales prices for the Common Stock since commencement of trading:


                          Year ended September 30, 1998
             --------------------------------------------------------

              Sales price per share                 High        Low

              First Quarter ....................    7.50        6.00
              (from December 29, 1997)

              Second Quarter ...................    8.00        4.38

              Third Quarter ....................    5.00        3.13

              Fourth Quarter ...................    4.25        1.38


At  November  30,  1998,  the  Company  had  4,050,150  shares of  Common  Stock
outstanding, held by 865 stockholders of record.

Agritope has never declared or paid cash dividends on its common stock. Agritope
currently  anticipates  that it will retain all future  earnings  for use in the
operation  and growth of its  business and does not  anticipate  paying any cash
dividends in the foreseeable future.



                                       11
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA Financial Data

The  following  table sets forth  selected  historical  consolidated  income and
balance sheet data of Agritope and its  subsidiaries.  The consolidated  balance
sheet data at September 30, 1998 and 1997 and the consolidated operating results
data for the years ended  September 30, 1998,  1997,  and 1996 have been derived
from audited  consolidated  financial  statements and notes thereto  included in
this Annual  Report.  The balance  sheet data at September 30, 1996 and 1995 and
operating  results  data for the years  ended  September  30,  1995 and 1994 are
derived from audited  consolidated  financial  statements  and notes thereto not
included in this Annual Report. The balance sheet data at September 30, 1994 are
derived from unaudited  consolidated  financial statements and notes thereto not
included in this Annual  Report and, in the opinion of  management,  include all
adjustments necessary for fair presentation.  This information should be read in
conjunction  with the  consolidated  financial  statements and notes thereto and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

<TABLE>
<CAPTION>
     (In thousands, except per share data)               Year ended September 30
<S>                                                  <C>          <C>          <C>          <C>         <C>
CONSOLIDATED OPERATING RESULTS                       1998         1997         1996         1995(1)    1994(1)
Revenues...................................      $  2,800     $  1,551       $  585     $  2,110   $  2,213
Operating costs and expenses...............         9,024        6,089        2,821        9,920     11,703
Other income (expense), net ...............           980       (4,153)(2)     (265)        (235)      (314)
Net loss...................................        (5,244)      (8,691)      (2,501)      (8,045)    (9,804)
Net loss per share (basic and diluted) (3).         (1.42)       (3.23)        (.93)       (2.99)     (3.64)
Shares used in per
  share calculations (3)...................         3,705        2,691        2,691        2,691      2,691
</TABLE>
<TABLE>
<CAPTION>
                                                                    September 30
<S>                                                   <C>         <C>          <C>          <C>         <C>
                                                     1998         1997         1996         1995       1994
CONSOLIDATED BALANCE SHEET                                                                     Unaudited
Working capital (deficiency)............         $  6,884     $  1,659    $  (3,163)    $    846   $    418
Total assets............................           14,390        7,285        5,670        4,067      4,081
Long-term debt..........................               10           15            -           22         38
Convertible notes, due 1997.............                -            -        3,620        3,620      4,070
Accumulated deficit.....................          (46,419)     (41,168)     (32,478)     (29,976)   (21,931)
Shareholder's equity (deficit)..........           11,010        4,763        1,008           75       (482)
</TABLE>

(1)      Data for  1995  and 1994  include  revenues  of $2.0  million  and $2.1
         million,  and  operating  losses  of $3.8  million  and  $5.6  million,
         respectively,  attributable to business units which were divested.  See
         Note 3 to consolidated financial statements.
(2)      Includes  non-cash  charges of $2.3 million,  reflecting  the permanent
         impairment  in  the  value  of  Agritope's   investment  in  affiliated
         companies,  and $1.2 million for the conversion of Agritope convertible
         notes into Epitope,  Inc. common stock, no par value ("Epitope  Stock")
         at a  reduced  price.  See  Notes  3  and 5 to  consolidated  financial
         statements.
(3)      Net loss per share  (basic and  diluted)  is  presented  on a pro forma
         basis assuming that the  distribution of Agritope common stock pursuant
         to the spin-off had occurred on October 1, 1994.  potentially  dilutive
         securities are excluded from net loss per share  calculations  as their
         effect  would  have  been  antidulutive.  See  Note  2 to  consolidated
         financial statements.

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

The following discussion of operations and financial condition should be read in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included elsewhere in this Annual Report.

O V E R V I E W

Agritope consists of two units:  Agritope Research and Development and Vinifera,
Inc.  ("Vinifera").  Agritope  Research and Development  uses  biotechnology  to
develop  improved  plant  varieties for sale to the fresh produce  industry.  To
date, Agritope has not completed commercialization of this technology. A portion
of the research and development efforts conducted by Agritope has been performed
under  various  research  grants  and  contracts.  Vinifera  is  engaged  in the
grapevine  propagation and distribution  business.  During 1995, Vinifera was in
the development  stage and generated minimal product sales.  Vinifera  commenced
commercial  stage  operations  in 1996.  Vinifera's  operations  are included in
results of operations  for the fourth  quarter of 1996,  and for all of 1997 and
1998.

The accompanying consolidated financial statements have been prepared to reflect
the  historical  operating  results and financial  condition of Agritope and its
subsidiaries.  The operating  statements  include the cost of certain  corporate

                                       12
<PAGE>

overhead  services which were provided on a centralized basis for the benefit of
the  medical  products  business  conducted  by  Epitope  and  the  agricultural
biotechnology  business  conducted  by Agritope  and its  subsidiaries  ("Shared
Services"). Such expenses were allocated using activity indicators which, in the
opinion  of  management,  represent  a  reasonable  measure  of  the  respective
business' utilization of or benefit from such Shared Services.  Epitope provided
such services  through December 1, 1997 and,  pursuant to a Transition  Services
and Facilities  Agreement,  continued to provide office and laboratory space and
certain  other  services  after that date until  March 15, 1998 when the Company
moved to a separate facility.

In July 1997,  the board of  directors  of Epitope,  Inc.  approved a management
proposal to spin off Agritope,  subject to obtaining  financing for Agritope and
the  satisfaction  of certain  other  conditions.  The spin-off was completed on
December 30, 1997. To finance its operations as an independent entity,  Agritope
sold 1,343,704 shares of Agritope common stock,  including  associated preferred
stock purchase rights, to certain foreign investors pursuant to the Regulation S
exemptions under the Securities Act of 1933, as amended. The shares were sold at
a price of $7 per share for an aggregate  price of $9.4  million.  Proceeds were
received  immediately  after the  spin-off.  In  connection  with a research and
development  collaboration,  Agritope  also  sold  214,285  shares  of its newly
designated  Series A Preferred  Stock to Vilmorin at a price of $7 per share for
an aggregate  price of $1.5 million.  The proceeds of the  preferred  stock sale
were  received  approximately  one week after the  completion  of the  spin-off.
Epitope no longer owns or controls any shares of Agritope  stock  following  the
spin-off.

R E S U L T S   O F   O P E R A T I O N S

Years ended September 30, 1998, 1997 and 1996

REVENUES.  Total  revenues  increased by $1.2 million or 80 percent from 1997 to
1998,  and  increased by $966,000 or 165 percent from 1996 to 1997.  Revenues by
component are shown below:

<TABLE>
<CAPTION>

<S>                                                                          <C>             <C>              <C>
YEAR ENDED SEPTEMBER 30 (IN THOUSANDS)                                      1998             1997            1996

Product sales
     Grapevine plant sales....................................           $ 2,575          $ 1,436           $   -
Grants and contracts
     Government research grants...............................               207               30             145
     Research projects with strategic partners................                 -               53             326
     Other....................................................                18               32             114
                                                                     -----------             ----           -----
                                                                             225              115             585

Total revenue                                                            $ 2,800          $ 1,551           $ 585

</TABLE>

Grapevine plant sales pertain to Agritope's majority owned subsidiary, Vinifera.
Grapevine plant sales increased $1.1 million or 79 percent from 1997 to 1998 due
to expansion of Vinifera's customer base. Vinifera was sold in the third quarter
of 1995,  and a majority  interest  was  reacquired  at the end of August  1996.
Vinifera had no product sales in September 1996. Vinifera was in the development
stage in 1995,  commenced  commercial stage operations in 1996 and continued its
marketing  efforts  and  expansion  of its  customer  base during 1997 and 1998.
Vinifera  currently has confirmed  orders exceeding $1.6 million for delivery in
the spring and summer of 1999 as compared to confirmed orders of $1.4 million at
the beginning of fiscal 1998.

Grant and contract  revenues pertain to research projects directed at developing
superior new plants through genetic engineering.  Revenue from such projects can
vary  significantly  from year to year as new projects  are started  while other
projects may be extended, completed or terminated. In addition, not all research
projects  conducted by Agritope  receive  grant or contract  funding.  Grant and
contract  revenues in 1996 included three  significant  contracts with strategic
partners  for joint  research  projects.  There were no material  revenues  from
strategic  partners in 1998 or 1997.  Grant and contract  revenue also  included
SBIR government grants totaling $78,000, $30,000, and $145,000 in 1998, 1997 and
1996, respectively.

In October 1997,  the Company was awarded a three-year  matching  grant totaling
$990,000  under  the  Advanced  Technology  Program  of the U.S.  Department  of
Commerce National Institute of Standards and Technology  ("NIST"),  to study the
application  of  Agritope's  ripening  technology  to  certain  tree  fruits and
bananas. The NIST grant funds 49% of the Company's direct costs incurred for the
study.  Grant and contract  revenues in 1998 include $129,000  applicable to the
study.


                                       13
<PAGE>

In 1997,  Vilmorin agreed to provide  $400,000 to fund the Company's  direct and
indirect costs of conducting  certain  specified  research projects from July 1,
1998  through  June 30,  1999.  No revenue was  recognized  with respect to such
projects in 1998.

GROSS MARGIN. Vinifera recorded a negative gross margin in 1998. Loss of grafted
plants  due  to  abnormal  weather   conditions  caused  grafting  yield  to  be
significantly  lower than  planned,  especially  in the  fourth  quarter of 1998
resulting in a charge of $974,000 to reduce  inventory to net realizable  value.
Gross margin on product sales was 7.7 percent of sales for 1997. Gross margin in
1997 was adversely  affected by production  start-up costs  incurred  during the
expansion of production  capacity at Vinifera.  There were no comparable product
sales in 1996.

RESEARCH AND DEVELOPMENT  EXPENSES.  Research and development  expenses in 1998,
1997 and 1996 totaled $2.5 million, $1.7 million and $1.3 million, respectively.
Such  expenses  increased  $790,000  from  1997 to 1998.  In 1998,  the  Company
initiated  work on banana and tree fruit under the NIST grant and also conducted
extensive field trials of its extended  shelf-life  cantaloupes.  An increase of
$343,000, or 26 percent, from 1996 to 1997 reflects increased efforts to develop
and propagate crops containing  Agritope's  patented ethylene control technology
as  well  as  research  and  development  efforts  to  improve  grapevine  plant
propagation conducted by Vinifera.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative expenses in 1998, 1997 and 1996 were $3.14 million, $3.08 million
and $1.48 million,  respectively. In 1988, expenses included non-cash charges of
$309,000 for  amortization  of the excess of fair value of stock options at date
of grant over the  exercise  price and  $81,000  representing  the fair value of
stock  options  issued  to  consultants.  See Note 6 to  consolidated  financial
statements.  Expenses in 1997 included  $913,000 of costs  incurred by Vinifera,
which was not part of  Agritope  during  the first  eleven  months of 1996.  The
increase in 1997 is also  attributable  to  expenses  of  $424,000  related to a
withdrawn  proposal  to create two classes of common  stock of  Epitope.  During
1997, Vinifera expanded greenhouse capacity and continued to establish marketing
and  administrative  functions  at its new  headquarters  location in  Petaluma,
California.  Such activities contributed to relatively high selling, general and
administrative expenses in comparison to product sales levels.

Selling, general and administrative expenses included $228,000, $1.4 million and
$1.1  million for the  allocation  of Shared  Services  in 1998,  1997 and 1996,
respectively.  The amount of allocated Shared Services  increased by $334,000 or
31 percent  from 1996 to 1997 as a result of the  reacquisition  of  Vinifera in
August 1996,  as well as increased  corporate  costs at Epitope due to increased
administrative  personnel.  Epitope  provided such services  through December 1,
1997 and, pursuant to a Transition Services and Facilities Agreement,  continued
to provide  office and  laboratory  space and certain other  services after that
date until March 15, 1998 when the Company moved to a separate facility.

OTHER INCOME (EXPENSE),  NET. Other income (expense),  net was affected by three
significant  non-recurring  charges totaling $4.2 million in 1997.  During 1997,
Agritope  recorded a non-cash  charge to results of  operations of $2.3 million,
reflecting the permanent impairment in the value of its investment in affiliated
companies (UAF and Petals).  Additionally,  conversion of $3.4 million principal
amount of Agritope  convertible  notes into  Epitope  common  stock at a reduced
conversion  price resulted in a charge to results of operations of $1.2 million.
Also in 1997, a charge of $744,000 in  recognition  of the Company's  contingent
liability as primary lessee on two leases pertaining to Agritope's  discontinued
wholesale fresh flower  packaging and distribution  business was recognized.  In
1998, the Company sold its minority  interest in Vinifera  Sudamericana,  SA for
$70,000 and recognized a loss of $130,000.

Interest  income of $224,350 was earned in 1998 from  investment  of proceeds of
private placements of capital stock in the last three quarters of 1998. Interest
expense  decreased  by  $240,000  or 90  percent  from  1996 to 1997  due to the
conversion  of $3.4  million  principal  amount of Agritope  notes into  Epitope
common stock in the first quarter of 1997 and payment of the remaining principal
amount of $240,000 on June 30, 1997.


                                       14
<PAGE>

L I Q U I D I T Y   A N D   C A P I T A L   R E S O U R C E S

SEPTEMBER 30                                          1998                 1997
                                                           (in thousands)

Cash and cash equivalents....................         $ 3,904            $     4
Working capital .............................           6,884              1,659

At September 30, 1998,  Agritope had working capital of $6.9 million as compared
to working capital of $1.7 million at September 30, 1997.  Proceeds from private
placements of equity  securities  provided  increased  working capital for 1998.
Working  capital at Vinifera  increased $3.3 million due to increased  sales and
production  at Vinifera and the  resultant  increase in  inventory  and accounts
receivable.

The  increase in working  capital in 1997 was  principally  attributable  to the
conversion of $3.4 million of  convertible  notes into 250,367 shares of Epitope
common stock in the first quarter of 1997.  Concurrent with the note conversion,
Epitope made a $4.4 million non-cash capital  contribution to Agritope.  Working
capital also increased due to a $1.6 million buildup in Vinifera's  inventory of
growing grapevine plants.  The plants can be maintained in greenhouses or stored
outside for several years during which time they continue to grow.  Inventory on
hand at September 30, 1998  represents  grapevine  plants expected to be sold in
the spring and summer of 1999.

Agritope  expended $1.3 million in 1998 to furnish and equip its newly  occupied
facilities  and  $638,000 for patents and  licenses of  proprietary  technology.
Vinifera  expended  $861,000 to expand  production  capacity.  Expenditures  for
property and  equipment  were $1.9 million  during 1997,  largely as a result of
expansion  of  greenhouse  capacity at  Vinifera.  Expenditures  for patents and
proprietary technology in 1997 included a one-time cash payment of $590,000 to a
co-inventor  of  Agritope's  ethylene  control  technology  who is an officer of
Agritope. Agritope has also acquired certain rights to certain proprietary genes
for which it made  payments  of  $171,000  in 1997 and  $300,000  in 1998.  Such
amounts are included in "Patents and proprietary  technology,  net."  Agritope's
investment in affiliated companies,  obtained in connection with the divestiture
of its fresh  flower  packaging  and  distribution  business,  was  reduced by a
non-cash charge of $2.3 million in 1997  reflecting the permanent  impairment in
the value of these investments.

Historically,  through  September  30,  1997,  the primary  sources of funds for
meeting  Agritope's  requirements  for operations,  working capital and business
expansion have been $45.4 million in cash from Epitope,  $5.4 million  principal
amount of convertible notes, $1.6 million of investments in Vinifera by minority
shareholders,  and $1.0  million in funding  from  strategic  partners and other
research grants.  In 1998,  Agritope  realized $1.2 million in cash from Epitope
prior to the spin-off. Proceeds from private placements yielded $9.8 million for
Agritope and minority  shareholders of Vinifera invested $1.8 million.  Agritope
expects to continue to require  significant  funds to support its operations and
research activities.  Agritope intends to utilize cash reserves,  cash generated
from sales of products,  and research funding from strategic  partners and other
research  grants to provide the necessary  funds.  Agritope may also rely on the
sale of equity securities to generate additional funds.

Agritope presently anticipates that funds on hand as of September 30, 1998, will
be  sufficient  to finance  operations  as a separate  business for the upcoming
year, based on currently estimated revenues and expenses.  Because this estimate
is based on a number of factors, many of which are beyond the Company's control,
there can be no assurance  that this estimate will prove to be accurate,  and to
the extent that Agritope's operations do not progress as anticipated, additional
capital may be required.  Additional  capital may not be available on acceptable
terms,  if at all, and the failure to raise such  capital  would have a material
adverse  effect on  Agritope's  business,  financial  condition,  and results of
operations.

Agritope  has  completed a Year 2000 review of its  systems  and  procedures  to
determine  the costs and risks  related to the Year 2000 date  conversion.  As a
result of this review, the Company believes that it will not incur material Year
2000 remedial costs and that its operations  will not be materially  affected by
the  Year  2000  conversion,  and as a  consequence  it has  not  established  a
contingency plan.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


                                       15
<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information with respect to this Item is contained in the Company's Consolidated
Financial Statements included in Item 14 of this Annual Report on Form 10-K.

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

(a)  Effective  February  23, 1998,  Agritope  dismissed  its prior  independent
     accountant,  PricewaterhouseCoopers LLP. The decision to change accountants
     was recommended by Agritope's Audit Committee and was approved by its Board
     of Directors.

     PricewaterhouseCoopers  LLP reports on Agritope's  financial statements for
     fiscal years 1997 and 1996 did not contain an adverse opinion or disclaimer
     of opinion,  nor were they qualified or modified as to  uncertainty,  audit
     scope or accounting principles,  except that the PricewaterhouseCoopers LLP
     report on the financial  statements  for the year ended  September 30, 1997
     included  an  explanatory  paragraph  regarding  a change  in the  basis of
     presentation of such financial statements from those previously issued.

     During the audits for the fiscal  years 1997 and 1996 and  through the date
     hereof,    there    were   no    disagreement    between    Agritope    and
     PricewaterhouseCoopers  LLP on any matters of auditing scope or procedures,
     which   disagreements,   if   not   resolved   to   the   satisfaction   of
     PricewaterhouseCoopers LLP, would have caused it to make a reference to the
     subject matter of the disagreements in connection with its reports.

     Agritope requested that PricewaterhouseCoopers LLP furnish it with a letter
     addressed to the Securities and Exchange  Commission stating whether or not
     it agrees with the above statements.  A copy of such letter, dated February
     27,  1998,  was filed as Exhibit 16 to a report on Form 8-K dated  February
     23, 1998 and is incorporated herein by reference.

(b)  Effective February 23, 1998,  Agritope engaged Arthur Andersen LLP ("Arthur
     Andersen") as its principal  accountant.  During fiscal years 1997 and 1996
     and through  February 23, 1998,  Agritope did not consult  Arthur  Andersen
     regarding  any of the  matters  or events set forth in Item 304 (a) (2) (i)
     and (ii) of Regulation S-K.

                                    PART III

The Company has omitted  from Part III the  information  that will appear in the
Company's definitive proxy statement for its 1999 annual meeting of stockholders
(the "Proxy  Statement"),  which will be filed  within 120 days after the end of
the Company's fiscal year pursuant to Regulation 14A.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  required  by this Item is  incorporated  by  reference  to the
information under the caption  "Election of Directors" and "Executive  Officers"
in the Proxy Statement

ITEM 11.  EXECUTIVE COMPENSATION

The  information  required  by this Item is  incorporated  by  reference  to the
information under the caption "Executive Compensation" in the Proxy Statement

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required  by this Item is  incorporated  by  reference  to the
information under the caption "Principal Shareholders" in the Proxy Statement

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required  by this Item is  incorporated  by  reference  to the
information under the caption "Certain Transactions" in the Proxy Statement


                                       16
<PAGE>

                                    PART IV

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

(a) (1) and (a) (2)  Financial Statements and Schedules
                                                                            Page

Agritope, Inc. and Subsidiaries

Reports of Independent Accountants........................................    18
Consolidated Balance Sheets as of September 30, 1998 and 1997.............    20
Consolidated Statements of Operations for the years ended September 30,
 1998, 1997 and 1996.......................................................   21
Consolidated Statements of Changes in Stockholders' Equity for the years
 ended September 30, 1998, 1997 and 1996...................................   22
Consolidated Statements of Cash Flows for the years ended September 30, 
 1998, 1997 and 1996.......................................................   23
Notes to Consolidated Financial Statements.................................   24

No schedules  are included in the  foregoing  financial  statements  because the
required information is inapplicable or is presented in the financial statements
or related notes thereto.

(a)  (3) Exhibits

See Index to Exhibits following the signature page of this report.

(b)  Reports on Form 8-K

No  reports on Form 8-K were  filed in the  fourth  quarter  of the fiscal  year
covered by this report.


                                       17
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

R E P O R T    OF   I N D E P E N D E N T   A C C O U N T A N T S

To the Board of Directors and Stockholders of Agritope, Inc.

We have audited the accompanying consolidated balance sheet of Agritope, Inc. (a
Delaware corporation) and subsidiaries as of September 30, 1998, and the related
consolidated statements of operations,  changes in stockholders' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Agritope,  Inc. as of September 30, 1998,  and the  consolidated  results of its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
generally accepted accounting principles.


ARTHUR ANDERSEN LLP


Portland, Oregon,
October 30, 1998


                                       18
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

R E P O R T    O F   I N D E P E N D E N T   A C C O U N T A N T S

To the Board of Directors and Stockholders of Agritope, Inc.

In our opinion,  the  accompanying  consolidated  balance  sheet and the related
consolidated statements of operations, of changes in stockholders' equity and of
cash flows as of and for each of the two years in the period ended September 30,
1997 present fairly, in all material respects,  the financial position,  results
of operations and cash flows of Agritope,  Inc. and its  subsidiaries  as of and
for each of the two years in the period ended  September 30, 1997, in conformity
with generally accepted accounting  principles.  These financial  statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial  statements based on our audits.  We conducted our
audits of these  statements  in  accordance  with  generally  accepted  auditing
standards which require that we plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable  basis for the opinion  expressed above. We have not
audited the consolidated  financial statements of Agritope,  Inc. for any period
subsequent to September 30, 1997.


PricewaterhouseCoopers LLP

Portland, Oregon
October 31, 1997


                                       19
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

C O N S O L I D A T E D   B A L A N C E   S H E E T S

<TABLE>
<CAPTION>

<S>                                                                        <C>                       <C>
September 30                                                                1998                      1997

Assets
Current assets
Cash and cash equivalents (Note 2)...................              $    3,904,087           $        4,384
Trade accounts receivable, net (Note 2)..............                   1,033,860                  617,359
Other accounts receivable............................                     124,690                    5,554
Inventories (Note 2).................................                   3,289,172                2,081,295
Prepaid expenses.....................................                     172,196                  276,224
                                                                  ---------------           --------------
Total current assets.................................                   8,524,005                2,984,816

Property and equipment, net (Notes 2 and 4)..........                   4,100,804                2,749,788
Patents and proprietary technology, net (Note 2).....                   1,736,998                1,276,692
Investment in affiliated companies (Note 3)..........                           -                  246,962
Other assets and deposits ...........................                      28,519                   26,797
                                                                  ---------------           --------------
                                                                      $14,390,326              $ 7,285,055

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable.....................................              $      178,171            $     100,945
Current portion of installment notes payable.........                       4,255                    4,255
Current portion of lease liability (Note 9)..........                     358,404                  341,304
Deposits on customer orders..........................                     599,944                  389,931
Salaries, benefits and other accrued liabilities.....                     499,313                  489,573
                                                                      -----------             ------------
Total current liabilities............................                   1,640,087                1,326,008

Long-term portion of installment notes payable.......                      10,238                   14,569
Long-term portion of lease liability (Note 9)........                     115,785                  450,805
Minority interest (Note 3)...........................                   1,613,977                  730,947

Commitments and contingencies (Note 9)

Stockholders' equity (Note 6)
Preferred stock, par value $.01
  10,000,000 shares authorized; 214,285 shares
  and no shares issued and outstanding,  respectively                       2,143                        -
Common stock, par value $ .01
  30,000,000 shares authorized; 4,050,150 shares
  and 2,690,776 shares issued and outstanding,
  respectively.......................................                      40,502                   26,908
Additional paid-in capital...........................                  57,386,675               45,910,932
Accumulated deficit..................................                 (46,419,081)             (41,175,114)
                                                                      ------------             ------------
                                                                       11,010,239                4,762,726

                                                                     $ 14,390,326             $  7,285,055
</TABLE>

The accompanying notes are an integral part of these statements.


                                       20
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

C O N S O L I D A T E D   S T A T E M E N T S   O F   O P E R A T I O N S

<TABLE>
<CAPTION>

<S>                                                                  <C>               <C>                <C>
For the Year Ended September 30                                      1998              1997               1996

Revenues
Product sales........................................        $  2,574,976     $   1,436,498       $          -
Grants and contracts (Note 8)........................             224,688           114,692            585,485
                                                           --------------         ---------          ---------
                                                                2,799,664         1,551,190            585,485

Costs and expenses
Product costs........................................           3,414,293         1,326,163                  -
Research and development costs (Notes 2 and 8).......           2,471,374         1,681,646          1,338,703
Selling, general and administrative expenses
  (Notes 2 and 6)....................................           3,138,437         3,081,074          1,482,694
                                                            -------------       -----------        -----------
                                                                9,024,104         6,088,883          2,821,397

Loss from operations.................................          (6,224,440)       (4,537,693)        (2,235,912)
                                                             -------------      ------------       ------------

Other income (expense), net
Interest income......................................             224,350                 -                  -
Interest expense.....................................              (1,248)          (25,307)          (265,356)
Valuation loss (Note 3)..............................                   -        (2,258,080)                 -
Debt conversion (Note 5).............................                   -        (1,216,654)                 -
Other, net (Notes 3 and 9)...........................            (125,052)         (927,234)                 -
                                                             -------------        ----------                --
                                                                   98,050        (4,427,275)          (265,356)

Minority interest in subsidiary net loss.............             882,423           274,369                  -
                                                             ------------          --------                 --

Net loss.............................................        $ (5,243,967)     $ (8,690,599)      $ (2,501,268)

Net loss per share (basic and diluted) (Note 1)......            $  (1.42)         $  (3.23)           $  (.93)

Weighted average number
  of shares outstanding..............................           3,705,490         2,690,770          2,690,770

</TABLE>

The accompanying notes are an integral part of these statements.


                                       21
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

C O N S O L I D A T E D   S T A T E M E N T S   O F   C H A N G E S
I N   S T O C K H O L D E R S '  E Q U I T Y

<TABLE>
<CAPTION>

<S>                                                 <C>          <C>          <C>       <C>          <C>           <C>
                                                        Shares              Preferred   Common      Additional   Accumulated
                                                 Preferred    Common          stock     stock    Paid-in capital   Deficit
Balances at September 30, 1995 (Note 1).......         -     2,690,776      $     -    $  26,908   $30,031,356   $(29,983,247)
Compensation expense for stock awards (Note 6)         -             -            -            -        14,500              -
Compensation expense for stock option grants
  (Note 6)....................................         -             -            -            -       229,164              -
Cash contribution from Epitope, Inc. (Note 1).         -             -            -            -     3,190,194              -
Net loss for the year ........................         -             -            -            -             -     (2,501,268)
                                              -------------------------------------------------------------------------------------
Balances at September 30, 1996 (Note 1).......         -     2,690,776$           -    $  26,908   $33,465,214   $(32,484,515)

Compensation expense for stock awards (Note 6)         -             -            -            -        33,063              -
Compensation expense for stock option grants
  (Note 6)....................................         -             -            -            -        20,832              -
Capital contributed by Epitope, Inc., 
  upon exchange of convertible notes (Note 5).         -             -            -            -     4,529,009              -
Equity issuance costs (Note 5)................         -             -            -            -       (86,134)             -
Minority interest investment in subsidiary (Note 6)    -             -            -            -       742,752              -
Cash contribution from Epitope, Inc. (Note 1).         -             -            -            -     7,206,196              -
Net loss for the year ........................         -             -            -            -             -      (8,690,599)
                                              ------------------------------------------------------------------------------------
Balances at September 30, 1997 (Note 1).......         -     2,690,776$           -    $  26,908   $45,910,932    $(41,175,114)

Compensation expense for stock option grants
  (Note 6)....................................         -             -            -            -       390,420               -
Common stock issued as compensation (Note 6)..         -        15,670            -          157        40,345               -
Common stock issued in private placement (Note 1)      -     1,343,704            -       13,437    10,322,333               -
Preferred stock issued in private placement 
  (Note 8)....................................   214,285             -        2,143            -     1,497,852               -
Equity issuance costs ........................         -             -            -            -    (2,023,347)              -
Cash contribution from Epitope, Inc. (Note 1).         -             -            -            -     1,248,140               -
Net loss for the year ........................         -             -            -            -             -      (5,243,967)
                                              -------------------------------------------------------------------------------------
Balances at September 30, 1998 ...............   214,285     4,050,150     $  2,143    $  40,502   $57,386,675    $(46,419,081)
</TABLE>

The accompanying notes are an integral part of these statements.


                                       22
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

C O N S O L I D A T E D   S T A T E M E N T S   O F   C A S H   F L O W S

<TABLE>
<CAPTION>

<S>                                                                   <C>             <C>                 <C>
For the Year Ended September 30                                       1998            1997               1996

Cash flows from operating activities
Net loss.............................................         $ (5,243,967)   $ (8,690,599)      $ (2,501,268)
Adjustments to reconcile net loss to net cash
  used in operating activities:
Depreciation and amortization........................              951,209         566,813            294,045
Loss on sale of property.............................                   54               -                  -
Compensation expense for stock awards................               40,502          33,063             14,500
Compensation expense for stock option grants.........              390,420          20,832            229,164
Minority interest in subsidiary net loss.............             (882,423)       (274,369)                 -
Valuation loss.......................................                    -       2,258,080                  -
Non-cash portion of cost of debt conversion..........                    -       1,149,054                  -
Decrease (increase) in receivables...................             (535,637)       (325,590)           832,333
(Increase) in inventories............................           (1,207,877)     (1,571,550)          (509,745)
Decrease (increase) in prepaid expenses..............              104,028        (275,412)            55,252
Decrease (increase) in other assets and deposits.....               (1,722)         21,462            (36,219)
Increase in accounts payable and
  accrued liabilities................................               86,966       1,022,592             27,716
Increase (decrease) in deposits on customer orders...              210,013         (76,986)           466,917
Other................................................              162,647               -                  -
                                                              ------------              --                 --
Net cash used in operating activities                           (5,925,787)     (6,142,610)        (1,127,305)

Cash flows from investing activities
Additions to property and equipment..................           (2,126,906)     (1,927,209)          (886,646)
Proceeds from sale of property.......................               11,033               -                  -
Expenditures for patents and proprietary
  technology.........................................             (646,712)       (870,910)          (411,943)
Investment in affiliated companies...................               70,000         (56,419)          (473,790)
                                                             -------------       ----------        -----------
Net cash used in investing activities                           (2,692,585)     (2,854,538)        (1,772,379)

Cash flows from financing activities
Issuance of long-term debt...........................                    -          20,887                  -
Principal payments on long-term debt ................               (4,331)       (242,063)           (39,508)
Payments on long-term lease obligation...............             (317,920)              -                  -
Proceeds from issuance of stock (Note 5).............            9,812,418               -                  -
Minority interest investment in subsidiary (Note 6)..            1,779,768       1,540,000            215,407
Cash from Epitope, Inc...............................            1,248,140       7,206,196          3,190,194
                                                              ------------      ----------        -----------
Net cash provided by financing activities                       12,518,075       8,525,020          3,366,093

Net increase (decrease) in cash and cash equivalents.            3,899,703        (472,128)           466,409
Cash and cash equivalents at beginning of year.......                4,384         476,512             10,103
                                                            --------------       ---------           --------
Cash and cash equivalents at end of year                      $  3,904,087   $       4,384       $    476,512
</TABLE>

The accompanying notes are an integral part of these statements.


                                       23
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  1    T H E   C O M P A N Y

Agritope, Inc. (the "Company" or "Agritope") is a Delaware corporation utilizing
biotechnology  to develop and market  superior new plants and related  products.
Through its 64 percent owned subsidiary,  Vinifera, Inc. ("Vinifera"),  Agritope
is also engaged in the business of  propagating,  growing,  and  distributing of
grapevine  plants.  Agrimax  Floral  Products,  Inc.  ("Agrimax") is an inactive
subsidiary that holds minority interests in a flower distribution  business. See
Note 3,  Investment in Affiliated  Companies  for further  discussion.  Prior to
December 30,  1997,  Agritope was a wholly  owned  subsidiary  of Epitope,  Inc.
("Epitope"),  an Oregon corporation  engaged in the development and marketing of
medical diagnostic products.

AGRITOPE  SPIN-OFF.  In July 1997,  the Epitope  board of  directors  approved a
management  proposal to spin off  Agritope,  subject to obtaining  financing for
Agritope and the  satisfaction  of certain other  conditions.  In December 1997,
Agritope sold 1,343,704  shares of Agritope common stock in a private  placement
to certain investors for an aggregate price of $9,406,000, immediately after the
spin-off. The spin-off was accomplished by a distribution of 2,690,776 shares of
Agritope common stock to Epitope  shareholders,  representing  100% of Epitope's
holdings of Agritope common stock.

Agritope  and Epitope  entered  into certain  agreements  governing  the ongoing
relationship  between the companies  after the spin-off,  including a Separation
Agreement,  a Tax  Allocation  Agreement,  a Transition  Services and Facilities
Agreement and an Employee Benefits Agreement.  Pursuant to the Employee Benefits
Agreement,  Agritope established  replacement plans that effectively continue to
provide benefits available under current Epitope benefit plans.

DELAWARE REINCORPORATION; RECAPITALIZATION. In November 1997, in connection with
the  spin-off of Agritope by Epitope,  Agritope  agreed to merge with  Agritope,
Inc.,  a newly  formed  Delaware  corporation.  The purpose of the merger was to
change the Company's domicile from Oregon to Delaware and increase the Company's
authorized  capital stock to 30 million  shares of common stock,  par value $.01
per share,  and 10 million shares of preferred  stock, par value $.01 per share.
The merger occurred on December 3, 1997.

On November 25, 1997, the Agritope board of directors  declared a stock dividend
of 690,866  shares of Agritope  common stock to the sole  Agritope  stockholder.
Subsequently,  2,690,766 shares of Agritope common stock were distributed to the
shareholders of Epitope in the spin-off and the remaining  shares,  representing
fractional  interest,  were  redeemed  for cash.  All of the shares of  Agritope
common stock that were distributed to Epitope  shareholders  have been reflected
as  outstanding  for  all  periods  presented  in  the  accompanying   financial
statements.

N O T E  2    S U M M A R Y   O F   S I G N I F I C A N T   A C C O U N T I N G
P O L I C I E S

BASIS  OF  PRESENTATION.  The  accompanying  consolidated  financial  statements
include the  assets,  liabilities,  revenues  and  expenses of Agritope  and its
majority owned  subsidiaries.  All  significant  intercompany  transactions  and
balances have been eliminated in consolidation.  Minority-owned  investments and
joint  ventures are accounted for using the equity  method.  Investments of less
than 20 percent are carried at cost or estimated net realizable value, whichever
is lower.  Intercompany  balances  with Epitope  have been  reflected as capital
contributions  (common stock and additional paid-in capital) in the accompanying
consolidated  financial  statements because they were converted into a permanent
capital  contribution  in  conjunction  with the  spin-off.  Certain  prior year
amounts have been reclassified to conform to 1998 presentation.

Certain corporate  overhead  services such as accounting,  annual meeting costs,
annual report preparation,  audit,  executive management,  facilities,  finance,
general management,  human resources,  information systems,  investor relations,
legal  services,  payroll  and  SEC  filings  were  provided  by  Epitope  on  a
centralized basis for the benefit of Agritope ("Shared Services"). Such expenses
have been allocated to Agritope in the accompanying  financial  statements using
activity indicators which, in the opinion of management,  represent a reasonable
measure of  Agritope's  utilization  of such  Shared  Services.  These  activity
indicators,  which were reviewed periodically and adjusted to reflect changes in
utilization,  include  number of employees,  number of  computers,  and level of
expenditures.  Management  believes  that the amount  allocated for these Shared
Services is not materially  different from the amount which would be incurred by
Agritope for such services  provided on a stand-alone  basis.  Allocated  Shared
Services of $227,990,  $1,402,895 and $1,069,249,  respectively,  for 1998, 1997
and 1996 are included  under the caption  "Selling,  general and  administrative
expenses" in the  accompanying  consolidated  statements of operations.  Epitope
discontinued  provision of Shared  Services in March 1998 when Agritope moved to
separate physical facilities.


                                       24
<PAGE>

A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  2    S U M M A R Y   O F   S I G N I F I C A N T   A C C O U N T I N G 
P O L I C I E S,   C O N T I N U E D

Cash and Cash Equivalents.  For purposes of the consolidated  balance sheets and
statements of cash flows, all highly liquid  investments with maturities at time
of purchase of three months or less are considered to be cash equivalents.

Inventories.  Inventories, consisting principally of growing grapevine plants at
Vinifera,  are  recorded at the lower of average  cost or market.  Average  cost
includes all direct and indirect  costs  attributable  to the growing  grapevine
plants. Inventory is summarized as follows:

<TABLE>
<CAPTION>
<S>                                                       <C>             <C>
                                                                September 30
                                                            1998            1997
Operating supplies ...........................    $      142,900     $         -
Work-in-process ...............................          128,374       1,387,706
Finished goods ................................        3,017,898         693,589
                                                    ------------       ---------
                                                     $ 3,289,172     $ 2,081,295
</TABLE>

Loss of grafted plants due to abnormal weather  conditions caused grafting yield
to be  significantly  lower than planned,  especially  in the fourth  quarter of
fiscal  1998,  resulting  in a charge of $974,000  to product  costs in order to
reduce inventory to net realizable value.

DEPRECIATION AND CAPITALIZATION  POLICIES.  Property and equipment are stated at
cost less accumulated depreciation. Expenditures for repairs and maintenance are
charged  to  operating  expense  as  incurred.  Expenditures  for  renewals  and
betterments  are  capitalized.  Depreciation  and  amortization  of property and
equipment  are  calculated  primarily  under the  straight-line  method over the
estimated  useful lives of the related assets (three to seven years).  Leasehold
improvements  are  amortized  over the shorter of estimated  useful lives or the
terms of the related leases. When assets are sold or otherwise disposed of, cost
and related  accumulated  depreciation  or  amortization  are  removed  from the
accounts and any resulting gain or loss is included in results of operations.

ACCOUNTING FOR LONG-LIVED  ASSETS. The Company reviews its long-lived assets for
impairment periodically or as events or circumstances indicate that the carrying
amount of long-lived  assets may not be  recoverable.  If the estimated net cash
flows are less than the carrying  amount of the long-lived  assets,  the Company
recognizes an impairment  loss in an amount  necessary to write down  long-lived
assets to fair value as determined from expected  discounted  future cash flows.
This  accounting  policy is consistent  with  Statement of Financial  Accounting
Standards No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets to be  Disposed  Of." See Note 3,  Investment  in  Affiliated
Companies.

PATENTS  AND  PROPRIETARY  TECHNOLOGY.   Direct  costs  associated  with  patent
submissions  and acquired  technology are  capitalized  and amortized over their
minimum estimated economic useful lives, generally five years.

In August  1996,  the Company  amended the 1987  agreement  pursuant to which it
acquired  its  patented  ethylene  control  technology.  A  co-inventor  of  the
technology relinquished all rights to future compensation under the agreement in
exchange for a one-time cash payment of $365,000, a research grant and a limited
non-exclusive license to use the technology for one crop. The amount is included
under the caption  "Patents and  proprietary  technology" and is being amortized
over 15 years, the remaining life of the related patent.

On  November  11,  1996,  the  Company  further  amended  the  ethylene  control
technology  agreement.  A co-inventor of the technology who is an officer of the
Company  relinquished  all  rights to future  payments  under the  agreement  in
exchange for a one-time cash payment of $590,000.  The amount is included  under
the caption "Patents and proprietary  technology" and is being amortized over 15
years, the remaining life of the related patent.

Amortization and accumulated amortization are summarized as follows:

<TABLE>
<CAPTION>

<S>                                                                  <C>                 <C>                 <C> 
                                                                     1998                1997                1996
Amortization for the year ended September 30,........           $ 186,406           $ 104,461           $  91,110
Accumulated amortization.............................             419,428             233,022             128,561

</TABLE>


                                       25
<PAGE>

A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  2    S U M M A R Y   O F   S I G N I F I C A N T   A C C O U N T I N G 
P O L I C I E S,   C O N T I N U E D

FAIR VALUE OF FINANCIAL INSTRUMENTS.  The carrying amounts for cash equivalents,
accounts  receivable and accounts payable  approximate fair value because of the
immediate or short-term  maturity of these financial  instruments.  The carrying
amount for installment notes payable approximates fair value because the related
interest  rates are comparable to rates  currently  available to the Company for
debt with similar terms and maturities.

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133"), which establishes  accounting and reporting  standards for all derivative
financial  instruments.  SFAS 133 is effective for fiscal years  beginning after
June 15, 1999.  The Company does not have any derivative  financial  instruments
and, accordingly,  the adoption of SFAS 133 will have no impact on the Company's
financial position or results of operations.

REVENUE RECOGNITION.  Product sales are recognized when the related products are
shipped.  Grant and contract  revenues include funds received under research and
development  agreements  with  various  entities.  These  grants  and  contracts
generally  provide for  progress  payments as expenses  are incurred and certain
research  milestones are achieved.  Revenue related to such grants and contracts
is  recognized as research  milestones  are achieved.  Accounts  receivable  are
stated net of an allowance for doubtful  accounts of $25,057 as of September 30,
1998 and $57 as of September 30, 1997.

MAJOR CUSTOMER.  For the years ended September 30, 1998 and 1997,  respectively,
one customer  purchased $829,578 and $337,374 of grapevine plants from Vinifera,
representing 32.2% and 23.4% of Vinifera's net sales.

RESEARCH AND DEVELOPMENT. Research and development expenditures are comprised of
those  costs  associated  with  Agritope's   ongoing  research  and  development
activities  to develop  superior  new  plants.  Expenditures  for  research  and
development  also include  costs  incurred  under  contracts to develop  certain
products,  including those contracts  resulting in grant and contract  revenues.
All research and development costs are expensed as incurred.

INCOME  TAXES.  The  Company  accounts  for certain  revenue  and expense  items
differently for income tax purposes than for financial reporting purposes. These
differences  arise principally from methods used in accounting for stock options
and depreciation rates. Deferred tax assets and liabilities are recognized based
on temporary  differences  between the financial  statement and the tax bases of
assets and  liabilities  using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.

STOCK-BASED  COMPENSATION.  In October 1995, the Financial  Accounting Standards
Board ("FASB") issued Statement of Financial Accounting No. 123, "Accounting for
Stock-Based  Compensation"  ("SFAS 123").  SFAS 123 allows  companies which have
stock-based compensation arrangements with employees to adopt a fair-value basis
of accounting  for stock options and other equity  instruments or to continue to
apply the existing  accounting rules under  Accounting  Principles Board Opinion
No.  25,  "Accounting  for  Stock  Issued to  Employees"  ("APB  25"),  but with
additional  financial  statement   disclosure.   The  Company  has  adopted  two
stock-based  compensation  plans  for  employees  and has  elected  to apply the
existing accounting rules under APB 25. See Note 6.

NET LOSS PER SHARE.  In February  1997,  the FASB issued  Statement of Financial
Accounting  Standards  No. 128,  "Earnings  Per Share"  ("SFAS  128").  This new
standard  became  effective for interim and annual periods ending after December
15, 1997. SFAS 128 requires the reporting of "basic" and "diluted"  earnings per
share  ("EPS")  instead of "primary" and "fully  diluted" EPS as required  under
prior accounting  principles.  Basic EPS eliminates the common stock equivalents
considered in calculating  primary EPS.  Diluted EPS is similar to fully diluted
EPS.  Basic EPS under SFAS 128 does not  differ  from the  Company's  previously
reported EPS. The following  potentially  dilutive  securities are excluded from
net loss per share calculations as their effect would have been antidilutive:


<TABLE>
<CAPTION>
<S>                                                               <C>                   <C>                  <C>
YEAR ENDED SEPTEMBER 30                                            1998                 1997                 1996
Options to purchase common stock..................            1,255,264                    -                    -
Warrants to purchase common stock.................              583,333                    -                    -
Preferred stock...................................              214,285                    -                    -
                                                            -----------             --------             --------
                                                              2,052,882                    -                    -
</TABLE>


                                       26
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  2    S U M M A R Y   O F   S I G N I F I C A N T   A C C O U N T I N G
P O L I C I E S,   C O N T I N U E D

SUPPLEMENTAL CASH FLOW INFORMATION.  Non-cash financing and investing activities
not included in the  consolidated  statements  of cash flows are  summarized  as
follows:

<TABLE>
<CAPTION>

<S>                                                               <C>                  <C>                  <C> 
YEAR ENDED SEPTEMBER 30                                            1998                 1997                 1996
Conversion of notes to equity (Notes 5 and 6).....           $        -          $ 3,380,000                    -
Fair value of warrants issued in connection
  with spin off and related private placement.....              929,842                    -                    -
Minority interest contribution of capital (Note 6)                    -              742,752                    -
</TABLE>

Management Estimates. The preparation of financial statements in conformity with
generally accepted  accounting  principles requires management to make estimates
relating  to  assumptions  that  affect  the  reported  amounts  of  assets  and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  as well as the  reported  amounts  of  revenues  and
expenses  during the  reporting  period.  Actual  results  could vary from these
estimates.

N O T E  3   I N V E S T M E N T  I N    A F F I L I A T E D   C O M P A N I E S

AGRIMAX.  Agritope's  investment  in affiliated  companies  includes a 9 percent
interest  in UAF,  Limited  Partnership  ("UAF"),  a fresh  flower  distribution
operation in Charlotte,  North Carolina,  owned by its wholly owned  subsidiary,
Agrimax

In May 1995,  Agrimax ceased  operations as an independent  entity.  Agrimax had
been engaged in the fresh flower  packaging and distribution  business.  Also in
May  1995,  the  Company  surrendered  control  of its  Charlotte  facility  and
contributed  inventory and  operating  supplies to a limited  liability  company
("LLC") 60 percent  owned by  Universal  American  Flowers,  Inc. and 40 percent
owned by the Company  pursuant to an Operating  and  Transition  Agreement  (the
"Agreement").  Pursuant to the  Agreement,  on October 27, 1995,  the assets and
liabilities of LLC and of Universal  American Flowers,  Inc.,  together with the
Company's  equipment  and  leasehold   improvements  located  at  the  Charlotte
facility,  were transferred to a newly formed entity,  UAF. UAF also assumed the
liability for the lease of the Charlotte  facility.  In fiscal 1995, the Company
removed the assets  transferred  to LLC from its books and  recorded the cost of
such assets as "Investment in affiliated  companies," less a charge of $500,000,
representing  the  Company's  share in the losses of LLC during the  intervening
period  in  which a 40  percent  interest  was  held,  and  estimated  costs  to
discontinue  the Agrimax  business.  Until May 1995,  the Agrimax  business  was
included in the Company's  financial  statements.  From May 1995 through October
27,  1995,  the  Company  followed  the  equity  method  of  accounting  for its
investment in UAF in accordance with Accounting  Principles Board Opinion No. 18
("APB 18"). Since October 27, 1995, the investment in UAF has been accounted for
under the cost method in accordance with APB 18. In 1996, the equity interest of
Agrimax in UAF was reduced to 9 percent as the result of a re-capitalization  of
UAF.

In 1996, Agrimax  contributed the operating assets of its discontinued St. Paul,
Minnesota operations to Petals USA, Inc. ("Petals"), a fresh flower distribution
company in which Agritope held a minority  interest,,  an unrelated company,  in
exchange  for a 19.5  percent  equity  interest  in Petals.  No gain or loss was
recognized  on the  transaction  with  Petals and the  investment  in Petals was
recorded at the net book value of the contributed assets.

Based on  information  that became  available on December  26,  1996,  including
information  related to  continued  operating  losses at UAF in the four  months
ended October 31, 1996,  coupled with a shortfall in sales and larger  operating
loss than expected at Petals in the fourth quarter of calendar 1996, the Company
recorded a non-cash  charge to results of operations  of  $1,900,000  during the
first quarter of fiscal 1997,  reflecting the permanent  impairment in the value
of its  investment in affiliated  companies,  and reducing the carrying value of
the assets to management's estimate of the net realizable value.

An  additional  charge of $358,000 was recorded in the fourth  quarter of fiscal
1997 based on  information  received in October 1997 that the majority  owner of
Petals  intended to either sell the business or cease  operations  and liquidate
assets. In November 1997, Petals ceased  operations and liquidated  assets.  All
proceeds from the liquidation were applied to outstanding debts of Petals.


                                       27
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  3   I N V E S T M E N T  I N   A F F I L I A T E D   C O M P A N I E S,
C O N T I N U E D

The Company's investment in affiliated companies is summarized as follows:

<TABLE>
<CAPTION>
<S>                                                                                  <C>                    <C> 
September 30                                                                          1998                   1997
Investment in UAF.............................................               $           -            $         -
Vinifera Sudamericana, S.A....................................                           -                200,000
Other investments.............................................                           -                 46,962
                                                                             -------------              ---------
Investment in affiliated companies............................               $           -             $  246,962

</TABLE>


VINIFERA. In June 1995, Agritope agreed to sell its wholly owned grapevine plant
propagation subsidiary, Vinifera, to VF Holdings, Inc. ("VF"), an affiliate of a
Swiss investment group, pursuant to a stock purchase agreement.  VF subsequently
failed  to make the  payments  required  under  the VF  Agreement.  As part of a
settlement  of claims based on VF's  default,  VF retained a 4 percent  minority
interest in Vinifera  and  relinquished  the  remaining  interest to Agritope in
August  1996.  Additional  minority  investors  in Vinifera  reduced  Agritope's
ownership  to 76  percent  as of  September  30,  1996,  and to 61 percent as of
September 30, 1997. In June 1998, Agritope cancelled certain  intercompany loans
in exchange for shares of common  stock of Vinifera  and  minority  shareholders
purchased  additional  shares of Vinifera  common stock,  increasing  Agritope's
ownership interest to 64%. See Note 6.

The  reacquisition  of  Vinifera  in  August  1996 was  accounted  for under the
purchase method and the net purchase price of $916,000 was allocated to tangible
net assets.  Vinifera's  results of operations are included in the  accompanying
statements  of  operations  since the August 1996  reacquisition.  The following
summarized,  unaudited  pro forma  results of  operations of the Company for the
year ended September 30, 1996 are presented as if the reacquisition had occurred
on October 1, 1995:

<TABLE>
<CAPTION>

                                                   Year Ended September 30, 1996
<S>                                           <C>                 <C>               <C>
                                            Agritope           Pro forma          Pro forma
                                            Historical          Vinifera          Combined
                                                               Adjustment
Revenues
Product Sales.................        $                      $    833,948     $    833,948
Grants and Contracts..........                585,485                   -          585,485
                                           ----------    ----------------      -----------
                                              585,485             833,948        1,419,433
Costs and expenses
Product costs.................                      -           1,373,106        1,373,106
Research and
   development costs..........              1,338,703              85,085        1,423,788
Selling general and
  Administrative expenses.....              1,482,694             837,395        2,320,089
                                           ----------          ----------      -----------
                                            2,821,397           2,295,586        5,116,983

Loss from operations..........             (2,235,912)         (1,461,638)      (3,697,550)
                                          ------------        ------------     ------------

Other income (expense) net....               (265,356)             (2,364)        (267,720)
                                         -------------     ---------------     ------------

Net loss......................           $ (2,501,268)       $ (1,464,002)    $ (3,965,270)

Net loss per share............        $          (.93)       $       (.54)    $      (1.47)

</TABLE>
The pro forma  Vinifera  adjustments  represent  the  results of  operations  of
Vinifera for the period when Vinifera's accounts were not included in Agritope's
consolidated statements of operations (October 1, 1995 through August 27, 1996).


                                       28
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  3   I N V E S T M E N T  I N   A F F I L I A T E D   C O M P A N I E S,
C O N T I N U E D

In June  1998,  Vinifera  accepted  an offer to sell its  minority  interest  in
Vinifera  Sudamericana,  S.A.  to the  majority  shareholder  for  $70,000.  The
resultant  non-cash loss on disposition of $130,000 is included in "Other,  net"
under the caption "Other income (expense), net" in the accompanying consolidated
statements of operations for 1998.

N O T E  4    P R O P E R T Y   A N D   E Q U I P M E N T

Property and equipment are summarized as follows:

<TABLE>
<CAPTION>

<S>                                                                                   <C>                      <C> 
SEPTEMBER 30                                                                          1998                     1997
Land..........................................................               $      30,020            $      30,020
Grapevine propagation blocks..................................                   1,602,617                1,089,830
Production equipment..........................................                     127,736                   79,289
Buildings and improvements....................................                   2,418,182                2,127,237
Research and development laboratory equipment.................                     812,734                  353,380
Office furniture and equipment................................                     711,416                  191,290
Leasehold improvements........................................                     306,146                   23,962
Construction in progress......................................                           -                   10,000
                                                                         -----------------                  -------
                                                                                 6,008,851                3,905,008
Less accumulated depreciation and amortization................                  (1,908,047)              (1,155,220)
                                                                              -------------             ------------
                                                                               $ 4,100,804              $ 2,749,788
</TABLE>


N O T E  5    L O N G - T E R M   D E B T

In November 1996,  Epitope  exchanged  $3,380,000  principal  amount of Agritope
convertible  notes for  250,367  shares of common  stock of Epitope at a reduced
exchange price of $13.50 per share. The exchange price had previously been fixed
at $19.53 per share.  Accordingly,  Agritope  recognized  a charge to results of
operations of $1,216,654  in the first quarter of fiscal 1997  representing  the
conversion expense. In conjunction with the exchange,  unamortized debt issuance
costs of $86,134  related to such notes were recognized as equity issuance costs
during  1997.  Concurrent  with the note  conversion,  Epitope made a $4,529,009
capital  contribution to Agritope.  On June 30, 1997,  Agritope paid in full the
remaining $240,000 principal amount outstanding.

Debt issuance costs were included in other assets and were being  amortized over
the five-year life of the notes. Amortization expense of debt issuance costs for
the years ended  September 30, 1997 and 1996,  respectively,  totaled $2,687 and
$108,257. Debt issuance costs were fully amortized as of September 30, 1997.


                                       29
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  6    S T O C K H O L D E R S'   E Q U I T Y

STOCKHOLDER  RIGHTS PLAN. In November  1997,  Agritope  adopted a  Stockholders'
Rights Plan, which enables holders of Common Stock, under certain circumstances,
to purchase  fractional  shares of a series of preferred stock.

Each share of Common Stock includes the right to purchase (the "Right"),  if and
when  the  Rights  are  exercisable,  1/1,000  of a share  of  Series  B  Junior
Participating  Preferred  Stock at an exercise  price of $25. The exercise price
and the number of shares  issuable  upon  exercise  of the Rights are subject to
adjustment in certain cases to prevent dilution. The Rights are evidenced by the
Agritope Common certificates and are not exercisable, or transferable apart from
the  Agritope  Common,  until 10  business  days after (i) a person  acquires 15
percent or more of the Agritope  Common;  (ii) a person commences a tender offer
which  would  result in the  ownership  of 15  percent  or more of the  Agritope
Common;  or (iii) the Agritope  Board declares a person  beneficially  owning at
least 10 percent of the  Agritope  Common to be an Adverse  Person (the  "Rights
Distribution  Date"). In the event any person becomes the beneficial owner of 15
percent or more of the Agritope  Common or the Agritope Board  determines that a
person is an Adverse  Person,  each of the Rights (other than Rights held by the
party triggering the Rights and certain of their transferees,  all of which will
be voided)  becomes a discount  right  entitling the holder to acquire  Agritope
Common  having a value  equal to twice the  Right's  exercise  price.  Vilmorin,
Clause and Cie ("Vilmorin")  will not trigger the Stockholder  Rights Plan if it
acquires  other  Agritope  securities  directly  from Agritope or with the prior
approval of the Agritope Board.

In the event  Agritope  is acquired  in a merger or other  business  combination
transaction (including one in which Agritope is the surviving corporation), each
Right will entitle its holder to purchase, at the then current exercise price of
the Right,  that number of shares of common stock of the surviving company which
at the time of such  transaction  would  have a market  value of two  times  the
exercise  price of the Right.  The Rights do not have any voting  rights and are
redeemable,  at the option of Agritope, at a price of $.01 per Right at any time
until 10 business days after a person acquires beneficial  ownership of at least
15 percent of the Agritope  Common.  The Rights  expire on November 14, 2007. So
long as the  Rights are not  separately  transferable,  Agritope  will issue one
Right with each new share of Agritope Common issued.

COMMON  STOCK.  Cash and cash  equivalents  provided to Agritope by Epitope have
been  reflected in  additional  paid-in  capital.  Also  reflected in additional
paid-in capital are certain  transactions in Epitope common stock.  The exchange
of shares of Epitope common stock for Agritope  convertible debt and the related
write-off of debt  issuance  costs have been  reflected  as Agritope  additional
paid-in capital.

As employees of a wholly owned subsidiary of Epitope,  the employees of Agritope
and its  subsidiaries  participated in stock award,  employee stock purchase and
other  benefit plans of Epitope.  Compensation  expense  recognized  for Epitope
stock  grants  and awards to  Agritope  employees  totaling  $53,895 in 1997 and
$243,664 in 1996,  has been  recognized  as operating  expenses  and  additional
paid-in capital of Agritope.

In January  1997, a minority  shareholder  in Vinifera  contributed  $100,000 to
Vinifera  in  satisfaction  of a stock  subscription  agreement.  In June  1997,
Agritope sold 770,000 shares of common stock of Vinifera to outside  parties for
$1,540,000 in cash. In accordance  with the terms of the related stock  purchase
agreements, Agritope contributed the proceeds of these stock sales to Vinifera's
capital.  These  sales of  previously  issued  shares of Vinifera  common  stock
reduced Agritope's percentage ownership of Vinifera voting stock from 76 percent
to 61 percent.

In June 1998,  Vinifera sold 898,269 shares of common stock to certain  minority
shareholders for $1.8 million. In connection with the terms of the related stock
purchase  agreements,  Agritope  canceled $4 million of working capital loans to
Vinifera in  exchange  for 2 million  shares of common  stock of  Vinifera.  The
transactions  increased  Agritope's  percentage  ownership from 61 percent to 64
percent.


                                       30
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  6    S T O C K H O L D E R S'   E Q U I T Y,   C O N T I N U E D

Warrants to Purchase  Common  Stock.  As of September  30, 1998,  the  following
warrants to purchase common stock were outstanding:

<TABLE>
<CAPTION>

<S>                                  <C>              <C>            <C>
Date of Issuance                    Shares    Exercise Price     Expiration Date
December 30, 1997..........         500,000          $ 7.00    December 30, 2000
April 30, 1998.............          83,333            7.34    December 30, 2000
                                   --------
                                    583,333
</TABLE>


SERIES A PREFERRED STOCK. Agritope's board of directors has designated 1 million
shares of  Agritope  preferred  stock,  par value  $.01 per  share,  as Series A
Preferred  Stock ("Series A  Preferred").  The Series A Preferred has preemptive
rights and the right to elect a director, but otherwise has rights substantially
equivalent to Agritope  common stock and is  convertible at any time into shares
of Agritope common stock on a share-for-share  basis, subject to adjustment upon
the  occurrence  of certain  events.  In connection  with a research  agreement,
Vilmorin  purchased  214,285  shares of Series A Preferred  at a price of $7 per
share. See Note 8.

STOCK AWARD PLAN. In November  1997,  the  Agritope,  Inc. 1997 Stock Award Plan
(the "Award Plan") was adopted by Agritope's  board of directors and approved by
Epitope as Agritope's sole stockholder.  The Award Plan provides for stock-based
awards to employees,  outside directors,  members of scientific  advisory boards
and  consultants.  Awards  that may be  granted  under  the Award  Plan  include
incentive stock options,  nonqualified stock options, stock appreciation rights,
restricted awards,  performance  awards and other stock-based  awards. The Award
Plan provides for the issuance of a total of up to 2,000,000  shares of Agritope
common stock,  subject to adjustment for changes in capitalization.  Options for
751,236  shares  were  available  for future  grants  under the Award Plan as of
September 30, 1998.

The following table summarizes Award Plan activity:

<TABLE>
<CAPTION>
<S>                                              <C>                    <C>
                                                 Shares         Weighted Average
                                                                  Exercise Price
Balance, September 30, 1997........                   -                 $      -
Granted............................           1,422,664                     5.51
Exercised..........................                   -                        -
Canceled...........................            (167,400)                    5.31
                                            ------------                    ----
Balance, September 30, 1998........           1,255,264                   $ 5.54

Exercisable........................              65,000                   $ 5.07
Weighted average fair value of options 
 granted...........................                                       $ 3.68
</TABLE>

The amounts granted above include options  covering 65,000 shares granted to two
consultants at exercise prices of $5.25 and $5.31. With respect to such options,
Agritope recognized  compensation  expense of $81,000 in 1998 in accordance with
SFAS 123,  representing  the fair value of the options  using the  Black-Scholes
method of valuation.  With respect to options granted 1998 to participants other
than consultants,  Agritope will recognize  compensation  expense of $1,902,065,
representing  discounts  from  market  prices  on date of grant,  which  will be
amortized over the four-year  vesting period of the options,  in accordance with
APB 25. Amortization in 1998 amounted to $309,420.


                                       31
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  6    S T O C K H O L D E R S'   E Q U I T Y,   C O N T I N U E D

The following table summarizes information about stock options outstanding as of
September 30, 1998:

<TABLE>
<CAPTION>
<S>                            <C>               <C>                 <C>              <C>              <C>
Options Outstanding                                                                    Options Exercisable
Exercise Price             Outstanding      Weighted Average   Weighted Average   Exercisable   Weighted Average
                              Shares           Remaining        Exercise Price      Options      Exercise Price
                                                               Contract Life
                                                                   (Years)
$5.00.............            50,000             2.36               $ 7.00          50,000          $ 5.00
$5.25 to $5.31....           998,264             9.18                 5.25          15,000            5.31
$7.00.............           207,000             9.17                 5.00               -               -
                           ---------                                           -----------
                           1,255,264             8.91               $ 5.54          65,000            5.07

</TABLE>

As required by SFAS 123,  the Company  has  computed,  for pro forma  disclosure
purposes,  the value of options  granted and amortized over the vesting  periods
using the Black-Scholes  option pricing model. The weighted average  assumptions
used for stock  option  grants  in 1998,  the  first  year of the plan,  were as
follows:  risk-free interest rate, 5%; expected dividend yield,  none;  expected
life 4 years;  expected  volatility,  55%. If the Company had  accounted for the
Award Plan in accordance  with SFAS 123, the Company's net loss and net loss per
share would have increased as follows:

<TABLE>
<CAPTION>

<S>                                    <C>               <C>                <C>
FOR THE YEAR ENDED SEPTEMBER 30        1998              1997               1996
Net loss:
As reported.................. $ (5,243,967)     $ (8,690,599)      $ (2,501,268)
Pro forma.................... $ (6,165,274)     $ (8,690,599)      $ (2,501,268)

Net loss per share:
As reported..................      $ (1.42)         $ (3.23)            $ ( .93)
Pro forma....................      $ (1.66)         $ (3.23)            $ ( .93)

</TABLE>

EMPLOYEE  STOCK  PURCHASE  PLAN.  Also in  November  1997,  Agritope's  board of
directors and Epitope,  as Agritope's sole  stockholder,  approved the Agritope,
Inc. 1997 Employee  Stock Purchase Plan (the  "Purchase  Plan"),  covering up to
250,000 shares of Agritope  common stock which Agritope  employees may subscribe
to purchase  during  offering  periods to be established  from time to time. The
Compensation Committee of Agritope's board of directors was granted authority to
determine the number of offering periods,  the number of shares offered, and the
length of each period.  No more than three offering  periods (other than Special
Offering  Subscriptions  as defined in the Purchase Plan) may be set during each
fiscal year. The purchase price for stock  purchased  under the Purchase Plan is
the lesser of 85 percent of the fair market value of a share on the last trading
day before the offering date  established for the offering period and 85 percent
of the fair market value of a share on the date the purchase period ends (or any
earlier purchase date provided for in the Purchase Plan). No offerings were made
in the year ended September 30, 1998.


                                       32
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  7    I N C O M E   T A X E S

As of September  30, 1998,  Agritope had net  operating  loss  carryforwards  of
approximately $37.7 million and $24.9 million,  respectively,  to offset federal
and Oregon state taxable  income.  These net operating loss  carryforwards  will
expire if not used by Agritope, as follows:

<TABLE>
<CAPTION>
<S>                                             <C>                       <C>
Year of Expiration                              Federal                   Oregon
2004     ..................                $    111,000             $    111,000
2005     ..................                     317,000                  317,000
2006     ..................                     941,000                  941,000
2007     ..................                   2,620,000                2,620,000
2008     ..................                   6,733,000                4,847,000
2009     ..................                   8,327,000                2,179,000
2010     ..................                   8,477,000                3,765,000
2011     ..................                   2,249,000                2,168,000
2012     ..................                   4,279,000                4,279,000
2018     ..................                   3,667,000                3,667,000
                                           ------------             ------------
                                           $ 37,721,000             $ 24,894,000

Significant components of Agritope's deferred tax asset were as follows:

SEPTEMBER 30                                       1998                    1997
Net operating loss carryforwards....       $ 14,636,000            $ 12,215,000
Deferred compensation...............            631,000                 513,000
Research and experimentation credit 
carryforwards.......................            522,000                 418,000
Accrued expenses....................            233,000                 805,000
Other    ...........................            630,000                 622,000
                                          -------------            ------------
Gross deferred tax assets...........         16,652,000              14,573,000
Valuation allowance.................        (16,652,000)            (14,573,000)
                                         ----------------        ---------------
Net deferred tax asset..............$                  -     $                -

</TABLE>

No  benefit  for  Agritope's  deferred  tax assets  has been  recognized  in the
accompanying  financial  statements  as  they  do not  satisfy  the  recognition
criteria  set forth in SFAS  109.  The  valuation  allowance  increased  by $2.1
million in 1998. The research and experimentation tax credit  carryforwards will
generally  expire from 2004 through 2013 if not used by Agritope.  Net operating
loss and tax credit  carryforwards  incurred by Agritope through the date of the
spin-off (see Note 1, The Company--Agritope Spin-off) continued as carryforwards
of  Agritope  after the date of  distribution.  The  issuance  of  voting  stock
following  the spin-off may result in a change of  ownership  under  federal tax
rules  and  regulations.   Upon  occurrence  of  such  a  change  in  ownership,
utilization of existing tax loss and tax credit  carryforwards  would be subject
to cumulative annual limitations.

The expected  federal  statutory  tax benefit of $1.3 million for the year ended
September  30, 1998 is  increased  by  approximately  $151,000 for the effect of
state and local taxes (net of federal  impact),  and decreased by  approximately
$2.1  million for the effect of the  increase  in  valuation  allowance,  and by
$107,000   for   permanent   differences   consisting   primarily   of  deferred
compensation.

The 1998  consolidated  financial  statements  include the financial  results of
Vinifera,  a 64  percent  owned  subsidiary  (see  Note  3).  However,  the  tax
disclosures  above do not include the deferred tax assets and related  valuation
allowance for  Vinifera's  carryforwards  since  Vinifera is not included in the
consolidated group for tax purposes. Vinifera files its tax return separately on
a stand-alone basis.


                                       33
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  8   R E S E A R C H  A N D  D E V E L O P M E N T  
A R R A N G E M E N T S

On  December  5,  1997,  Agritope  and  Vilmorin  entered  into a  research  and
development  agreement  covering certain  vegetable and flower crops.  Under the
terms of the research agreement,  Vilmorin will provide certain proprietary seed
varieties and germplasm for use by Agritope in research and development projects
to be funded by Vilmorin,  in which Agritope  technology,  and possibly Vilmorin
technology,  will be applied to the various covered crops. The specific research
projects to be conducted will be determined by agreement of the parties.  Unless
otherwise  agreed,  Vilmorin will pay, on a quarterly  basis,  all of Agritope's
out-of-pocket  expenses,  including  employee  salaries and  overhead,  for each
selected research project.

Agritope and Vilmorin have agreed to negotiate in good faith the terms of future
commercialization  agreements  applicable to any commercial-stage  products that
arise out of  Vilmorin-funded  research.  If the  parties  are  unable to agree,
commercialization terms will be determined by binding arbitration.

Vilmorin has agreed to provide  additional funding totaling $1 million either by
exercising its option to purchase Series A Preferred or through the financing of
research  and  development  projects.  As of September  30,  1998,  Vilmorin had
committed  $400,000 to fund specified projects which are planned to be completed
by June 1999. No revenues were recognized with respect to such projects in 1998.

Agritope  performed  research work in 1998,  1997, 1996 and 1995 with respect to
grapevine  disease  diagnostics  funded by a grant from the U.S.  Department  of
Agriculture under the Small Business Innovation Research Program and in 1996 and
1995 with  respect to  raspberries,  which was  partially  funded by  Sweetbriar
Development, Inc. under a License Agreement dated October 18, 1994. Agritope has
also received  grant support from the U.S.  Department  of  Agriculture,  Oregon
Strawberry  Commission,   and  Oregon  Raspberry  &  Blackberry  Commission  for
antifungal biocontrol research and from several strategic partners.

In October 1997,  Agritope was awarded a U.S.  Department  of Commerce  matching
grant totaling $990,022 through the Advanced  Technology Program of the National
Institute of Standards and Technology  (NIST) and covering a three-year  period.
Agritope  was awarded the grant for use in the  application  of its  proprietary
ripening control  technology to certain tree fruits and bananas.  Under terms of
the grant, the NIST reimburses Agritope for 49% of direct costs incurred for the
projects.  As of September 30, 1998,  $760,763,  was available for reimbursement
under the grant.

Revenues  from  research  and  development  arrangements  are  included  in  the
accompanying consolidated statements of operations under the caption "Grants and
contracts." Expenses related to such arrangements are included under the caption
"Research and development  costs." The activity related to these arrangements is
summarized as follows:

<TABLE>
<CAPTION>

<S>                                                                  <C>                 <C>                   <C> 
YEAR ENDED SEPTEMBER 30                                              1998                1997                  1996
Government research grants....................                 $  206,974         $    30,228            $  144,987
Research projects with strategic partners.....                          -              52,770               326,462
Other.........................................                     17,714              31,694               114,036
                                                          ---------------         -----------           -----------
                                                               $  224,688          $  114,692            $  585,485

Project related expenses......................                 $  371,184          $  272,309            $  461,460
</TABLE>


                                       34
<PAGE>


A G R I T O P E ,  I N C .   A N D   S U B S I D I A R I E S

N O T E S  TO  C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S

N O T E  9    C O M M I T M E N T S   A N D   C O N T I N G E N C I E S

Agritope   leases  office  space  and  Vinifera  leases  office  and  greenhouse
facilities  under  operating  lease  agreements,  which require  minimum  annual
payments as follows:

YEAR ENDING SEPTEMBER 30
1999     ................................................             $  338,682
2000     ................................................                322,182
2001     ................................................                223,722
2002     ................................................                181,122
2003     ................................................                 78,917
                                                                       ---------
                                                                      $1,144,625

Rent  expense  was  $556,717,  $326,388,  $218,100  for  1998,  1997  and  1996,
respectively.

Agritope is also  contingently  liable for a lease that has been assigned to UAF
and the  lease of  property  that has been  subleased  to Petals  which  require
payments  totaling  $347,104 and $55,701 for the years ended  September 30, 1999
and  2000,  respectively.  During  1997,  the  Company  accrued  its  contingent
obligation  under  these  leases as both UAF and Petals  have  defaulted  on the
related subleases.  The corresponding  charge of $744,109 is included in "Other,
net"  under  the  caption  "Other  income  (expense),  net" in the  accompanying
consolidated statements of operations for 1997.

N O T E  10    P R O F I T   S H A R I N G   A N D   S A V I N G S   P L A NS

EMPLOYEE  STOCK  OWNERSHIP  PLAN.  Agritope's  board of  directors  adopted  the
Agritope,  Inc.  Employee Stock Ownership Plan ("ESOP") in November 1997.  After
the spin-off,  all employees,  except excluded classes, of Agritope and those of
its affiliates  that elect to  participate,  were eligible to participate in the
ESOP.  The  employers'  contribution  to the ESOP  each  year,  if any,  will be
determined  by the  Agritope  board  of  directors,  and may be made  either  in
Agritope  common  stock  or  in  cash.   Contributions   will  be  allocated  to
participants in proportion to their compensation.  Contributions vest over a six
-year period, or upon the participant's earlier death, disability, or attainment
of age 65. To date, no contributions have been declared.

401(K) PROFIT  SHARING PLAN.  Agritope  established  the Agritope,  Inc.  401(k)
Profit  Sharing  Plan  (the  "401(k)  Plan") in  November  1997.  All  employees
(including officers),  other than excluded classes, are eligible to participate.
Participants  may  contribute up to 17 percent of their cash  compensation  on a
before-tax  basis,  subject to an annual maximum amount that is adjusted for the
cost of living  ($10,000  for  1998).  The first 5  percent  of a  participant's
compensation  is  eligible  for  a  discretionary,  pro-rata  employer  matching
contribution which will be invested in Agritope common stock. In 1998,  Agritope
made  contributions  of $40,502 to the 401(k) Plan. The 401(K) plan holds 14,604
shares of Agritope common stock as of September 30, 1998.

EPITOPE  401(K) PROFIT  SHARING PLAN.  Epitope  established a profit sharing and
deferred salary savings plan in 1986 and restated the plan in 1991. All Agritope
employees were eligible to participate in the plan prior to the date of the spin
off.  During 1998,  1997 and 1996,  respectively,  Agritope was charged  $8,196,
$33,063 and $14,500 by Epitope for its share of the matching  contribution under
the plan.


                                       35
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.

                                    AGRITOPE, INC.
                           By       /S/ GILBERT N. MILLER
                                    ---------------------
                                    Gilbert N. Miller
                                    Executive Vice President and 
                                     Chief Financial Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.

December 23, 1998                   /S/ ADOLPH J. FERRO
-----------------                   --------------------------------------------
Date                                Adolph J. Ferro
                                    Chairman, President, Chief Executive Officer
                                   (Principal Executive Officer)

December 23, 1998                   /S/ GILBERT N. MILLER
-----------------                   --------------------------------------------
Date                                Gilbert N. Miller
                                    Executive Vice President, Chief Financial 
                                     Officer  and Director
                                    (Principal Financial and Accounting Officer)

December 23, 1998                   W. CHARLES. ARMSTRONG *
-----------------                   --------------------------------------------
Date                                W. Charles Armstrong
                                    Director

December 23, 1998                   ROGER L. PRINGLE*
-----------------                   --------------------------------------------
Date                                Roger L. Pringle
                                    Director

December 23, 1998                   MICHEL de BEAUMONT*
-----------------                   --------------------------------------------
Date                                Michel de Beaumont
                                    Director

December 23, 1998                   NANCY L. BUC*
-----------------                   --------------------------------------------
Date                                Nancy L. Buc
                                    Director

December 23, 1998                   PIERRE LEFEBVRE*
-----------------                   --------------------------------------------
Date                                Pierre Lefebvre
                                    Director

                           *By      /S/ GILBERT N. MILLER
                                    ---------------------
                                    Gilbert N. Miller
                                    (Attorney-in-Fact)


                                       36
<PAGE>



                                 EXHIBIT INDEX
NUMBER   DESCRIPTION

2.*      Separation Agreement between Epitope, Inc. ("Epitope"),  and Agritope,
         Inc. ("Agritope"), dated as of December 1, 1997.

3.1*     Certificate of Incorporation of Agritope.

3.2*     Bylaws of Agritope.

3.3*     Certificate  of  Designation,  Preferences  and  Rights  of  the Series
         A Preferred Stock.

4.1*     Form of Common Stock Certificate.

4.2*     Form  of  Rights   Agreement    between   Agritope   and    ChaseMellon
         Shareholder  Services,  L.L.C.,  as Rights  Agent,  which  includes  as
         Exhibit A the Designation of Terms of the Series B Junior Participating
         Preferred  Stock and as  Exhibit B the form of Rights  Certificate,  as
         amended.  4.3* Form of stock purchase  agreement in connection with the
         Regulation S Sale.

4.4*     Preferred  Stock  Purchase  Agreement   between   Agritope and Vilmorin
         dated December 5, 1997.

10.1*    Transition  Services  and   Facilities  Agreement  between  Epitope and
         Agritope, dated as of December 1, 1997.

10.2*    Tax  Allocation  Agreement  between  Epitope  and  Agritope,  dated  as
         of December 1, 1997.

10.3*    Amended  and  Restated  Employee  Benefits  Agreement  between  Epitope
         and Agritope, dated as of December 19, 1997.**

10.4*    Agritope, Inc. 1997 Stock Award Plan.**

10.5*    Agritope, Inc. 1997 Employee Stock Purchase Plan.**

10.6*    Form of Employment Agreement between  Agritope  and  Adolph  J.  Ferro,
         Ph.D.**

10.7*    Form of Employment Agreement between Agritope and Gilbert N.  Miller.**

10.8     Form   of   Employment   Agreement   between   Agritope   and   D.   Ry
         Wagner.**

10.9*    Form of Employment Agreement between Agritope and Matthew G. Kramer.**

10.10*   Employment  Agreement between Vinifera, Inc. and Joseph A. Bouckaert.**

10.11*   Form of Indemnification Agreement for directors.

10.12*   Form of Indemnification Agreement for officers.

10.13*   Lease of Land and Certain  Improvements  located at 4288 Bodega  Avenue
         entered into by and between Gianni Neve and Maria Neve,  Landlord,  and
         Vinifera, Inc., Tenant, dated as of February 1, 1996.

10.14*   Option to License  and  Research  Support  Agreement  between  the Salk
         Institute for  Biological  Studies and Epitope dated February 25, 1997,
         including  Amendment  dated  July  25,  1997,  and  Assignment  between
         Agritope and Epitope.

10.15*   Superior Tomato Associates,  L.L.C.  Operating Agreement dated February
         19, 1996,  including  Assignment and Assumption  Agreement  between the
         Company and Andrew and Williamson Sales, Co.

10.16*   Form of Restated  Placement Agent Agreement  between American  Equities
         Overseas Inc., and Agritope.

10.17    Form of Warrant Agreement to be issued to Vector  Securities in partial
         consideration for services in connection with the Distribution.

10.18*   Form of Warrant  Agreement  issued in connection  with the Regulation S
         Sale.

10.19*   Research and Development Agreement between Agritope and Vilmorin & Cie,
         dated as of December 5, 1997.

10.20*   Assignment and Modification of  Lease  dated  November  7,  1997  among
         Pacific Realty Associates, L.P. ("Pacific"),  American Show Management,
         Inc. ("ASM"), and Agritope, Lease Amendment dated June 3, 1996, between
         Pacific and ASM, and Lease dated October 4, 1995,  between  Pacific and
         ASM.


                                       37
<PAGE>

                            EXHIBIT INDEX, continued

Number   Description

21.1     List of Subsidiaries

23.1     Consent of Arthur Andersen LLP.

23.2     Consent of PricewaterhouseCoopers LLP.

24.1     Power of Attorney for W. Charles Armstrong

24.2     Power fo Attorney for Roger L. Pringle

24.3     Power fo Attorney for Michel de Beaumont

24.4     Power fo Attorney for Nancy L. Buc

24.5     Power fo Attorney for Pierre LeFebvre

27       Financial Data Schedule.

99       Certain  Factors   to   Consider  in  Connection  with  Forward-Looking
         Statements

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

Other exhibits listed in Item 601 of Regulation S-K are not applicable.

*  Incorporated by reference to Registrant's Registration  Statement on Form S-1
   (No. 333-34597).

** Compensatory plans or agreements


                                       38