<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                              ____________________

                                    FORM 10-K
(MARK ONE)

/X/       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                     FOR THE FISCAL YEAR ENDED JUNE 30, 1996

                                       OR

/ /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
              For the transition period from _________ to ________

                         Commission file number 0-19746

                            ECOSCIENCE CORPORATION
             (Exact name of registrant as specified in its charter)


          DELAWARE                                04-2912632
(State of incorporation)                (I.R.S. Employer Identification No.)


          10 ALVIN COURT                             08816
EAST BRUNSWICK, NEW JERSEY                        (Zip Code)
(Address of principal executive offices)


                                  908-432-8200
              (Registrant's telephone number, including area code).

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

                          Common Stock, $0.01 par value
                                (Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 of 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 the 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 [  ].

As of September 19, 1996, there were outstanding 9,342,177 shares of Common
Stock, $.01 par value per share.  The aggregate market value of shares of Common
Stock held by non-affiliates of the registrant, based upon the last sales price
for such stock on that date as reported by NASDAQ, was approximately
$10,104,436.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the 1996 Annual Meeting of 
Stockholders held on November 7, 1996 are incorporated by reference into 
Part III.
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               Number of Pages:         Exhibit Index on Page:  54
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                                     PART I
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ITEM 1. BUSINESS
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GENERAL

      EcoScience Corporation ("EcoScience") is a marketing, sales and product
development company servicing the needs of the agricultural specialties markets
and professional pest control operators ("PCO"). The Company provides (i)
sophisticated growing systems to greenhouse operators, (ii) technologically
advanced sorting and grading equipment to produce packers, (iii) equipment,
coatings and disease control products, including all natural biologicals for
protecting fruits, vegetables and ornamentals in storage and transit to market,
and (iv) unique biological pest control products to PCO.  The Company focuses on
the technical marketing of agricultural specialties products and services, and
the development of biological pest control products.

      The Company serves the specialty agriculture market through its three
subsidiaries: Agro Dynamics, Inc. and Agro Dynamics Canada Inc. (collectively,
"AGRO") and the EcoScience Produce Systems Corp. ("EPSC")  which are hereinafter
referred to collectively with EcoScience as the "Company."  EcoScience was
incorporated under the laws of the State of Florida on August 27, 1982, and was
reincorporated in the State of Delaware on June 29, 1988.  On November 18, 1992,
EcoScience acquired all of the outstanding capital stock of AGRO, an East
Brunswick, New Jersey based company that designs and markets products and
growing systems for the North American horticulture industry.  The Company sells
technologically advanced products and services for intensive farming.  On May
24, 1994, the Company acquired certain assets and liabilities of American
Machinery Corporation ("AMC"), an Orlando, Florida based business that provides
postharvest coating products and services to the fresh fruit and vegetable
markets throughout the United States, the Caribbean, Central America and South
America.  Concurrent with the acquisition of AMC, the Company formed EPSC to
combine the AMC product line and operating unit with its existing activities. 
EcoScience sells to PCO through marketing collaborations with Terminix
International Company L.P. ("Terminix") and Maruwa Biochemical Co., Ltd.
("Maruwa Biochemical").  See "Collaborative Agreements." 

      The Company's primary products are (i) advanced growing systems based 
on Stonewool-Registered Trademark-, manufactured by Grodania A/S, (ii) 
sophisticated Aweta, B.V. sorting and grading equipment, (iii) computerized 
irrigation systems from H. Hoogendorn Automation B.V., (iv) 
PacRite-Registered Trademark-  and Indian River Gold-TM-  coatings 
manufactured by EPSC, (v) the Bio-Save-TM- PostHarvest BioProtectant line of 
products and (vi) the Bio-Blast-TM- Biological Termiticide.  In addition, the 
Company distributes a broad array of specialty products used in greenhouses 
and in fruit, vegetable and ornamental packing.

      In fiscal 1996, the Company continued to implement an extensive
restructuring program to complete its shift from a research and development
based organization to one focused on commercial product sales.  The
restructuring involved the elimination of the Company's Massachusetts based
research and manufacturing operations.  The Company operates from its
headquarters in East Brunswick, New Jersey, where it maintains sales, marketing
and warehousing operations, and its Orlando, Florida facility which contains the
Company's major coatings and biologicals production facility.  The Company also
maintains sales and customer service offices in Visalia, California; Ventura,
California; Englewood, Colorado; Yakima, Washington; Milton, Canada and Surrey,
British Columbia, Canada.



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      The Company's current technology base is in the development and
application of natural microbial pest control agents and of coatings to sustain
the freshness of fruits and vegetables.  The Company's technology base allows it
to provide technical support for growers and packers of specialty crops.  The
Company conducts research on the use of microbial agents to control plant
diseases and insect pests as well as on new applications for natural coatings to
sustain nutrition and overall quality in fresh cut fruits and vegetables.

      In fiscal 1996, the Company (i) demonstrated the performance of its Bio-
Save line of products for the control of postharvest fruit diseases in a broad
range of commercial programs, (ii) successfully completed commercial tests of
its Bio-Blast Biological Termiticide and (iii) concluded a Phase-1 Small
Business Innovation Research ("SBIR") program on the prevention of postharvest
diseases of bananas.  This SBIR program will be continued in fiscal 1997 and
1998 under a fully funded Phase-2 SBIR grant.  In addition, the Company expects
to conduct tests to determine the range of performance and applicability for
both its Bio-Save line of products as well as for the Bio-Blast insect control
product.

      The fiscal 1996 restructuring program focused on reducing research and
development expenses and long term liabilities associated with the Bio-Path-TM-
Cockroach Control Chamber manufacturing facility formerly located in
Northborough, Massachusetts.  The program led to expanded sales and marketing
efforts for the Company's core products in growing and packing systems and
emphasized the introduction of the Company's Bio-Save and Bio-Blast lines of all
natural biological pest control products.

PRODUCTS

          The Company's focus is on development and commercialization of
products for  the following major markets: (i) specialty agriculture; (ii)
postharvest packing of fruits and vegetables; and (iii) biological pest control
for the professional pest control operator.

          SPECIALTY AGRICULTURE

          The Company, through AGRO, markets and distributes commercial products
and provides services to the greenhouse and nursery market in North America and
Mexico.

     COMMERCIAL PRODUCTS
 
          GROWING SYSTEMS.  The Company is the exclusive distributor in the
United States and Canada of the Grodan brand of stonewool, an inert growing
medium supplied by Grodania A/S, a Danish based company that is headquartered in
Denmark and which is a wholly owned subsidiary of Rockwool International A/S. 
Stonewool is made by melting and spinning rock.  It is designed to support the
growth of high value crops and to improve plant root distribution and plant
yields through more efficient use of oxygen, water and fertilizer.  Stonewool is
used worldwide for cultivation of a variety of plants in controlled growing
environments such as greenhouses.  The sale of products under the distribution
agreement with Grodania A/S accounted for 45%, 43%, and 59% of the Company's
total product sales in fiscal 1996, 1995, and 1994, respectively.  The Company
believes that revenues under this distribution agreement will account for more
than 10% of the Company's consolidated product sales in fiscal 1997.


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          AUTOMATED IRRIGATION AND ENVIRONMENTAL CONTROL SYSTEMS.  The Company
through its ISYS-TM- Division, designs, fabricates, assembles and distributes
greenhouse irrigation and fertilization systems, computerized environmental
control systems, pest control testing and application products. In addition, the
Company provides customers with technical support, product service, turnkey
installation, product marketing and other supplementary services.  The Company
is also the exclusive distributor in the United States, Canada and Mexico of
computerized environmental control systems and accessories produced by a
Netherlands based company, H. Hoogendoorn Automation B.V.  
The Company also distributes additional products in the North American market on
both an exclusive and non-exclusive basis.  These products include accessories
and other product lines for the use in the intensive farming and horticulture
industries. 

     POSTHARVEST PACKING OF FRUITS AND VEGETABLES

     Through AGRO and EPSC, the Company provides equipment, coatings and disease
control products to the fruit, vegetable and ornamental packing markets.

     COMMERCIAL PRODUCTS

     SORTING AND GRADING.  The Company is the exclusive distributor in the
United States, Canada, Mexico and the Caribbean of advanced automated
computerized color, weight and size sorting and grading systems and ancillary
equipment produced by Aweta, B.V., a Netherlands based company.  The sale of
products under the distribution agreement with Aweta, B.V. accounted for 20% of
the Company's total product sales in fiscal 1996.  The Company believes that
revenues under this distribution agreement will account for more than 10% of the
Company's consolidated product sales in fiscal 1997.

     TRADITIONAL COATING PRODUCTS.  The Company manufactures, markets and
provides a broad spectrum of postharvest coating and cleaning products and
services.  Its traditional protective coating and storage products include
Indian River Gold, PacRite, SEALBRITE-Registered Trademark- and 
DURA-FRESH-Registered Trademark-. These products were originally acquired in 
May 1994 with the asset purchase of AMC. These traditional coating products 
are conventional shellac and carnauba based coatings which have been used 
successfully in the citrus and pome fruit markets.  These traditional coating 
products, together with the Company's Nature Seal coating products, maintain 
the quality and extend the shelf life of produce by (i) providing a barrier 
to free gas exchange, (ii) providing a barrier against abrasion, scuffing, 
bruising and other injuries, (iii) providing a carrier for decay preventing 
agents, (iv) providing a glossy appearance that is aesthetically appealing to 
consumers, (v) reducing shrinkage caused by water loss and (vi) maintaining 
firmness of the fruit or vegetable. The Company's traditional coating 
products contain materials that are Food and Drug Administration ("FDA") 
approved additives or have been listed by the FDA as "Generally Recognized As 
Safe" and accordingly, these coatings do not require FDA approval or 
registration.  PacRite, SEALBRITE, and Indian River Gold currently are sold 
by the Company in the United States, the Caribbean, Central America and South 
America.

     NATURE SEAL.  In June 1993, the Company acquired exclusive, worldwide
rights to Nature Seal, a naturally derived cellulose based protective coating
for harvested fruits and vegetables.  Nature Seal coatings provide a protective
preservative film to maintain quality, control ripening and enhance overall
appearance of fruits and vegetables.  The components of the coatings are
"Generally Recognized As Safe" by the FDA and, accordingly, Nature Seal does not
require regulatory approval for marketing.  In August 1993, the Company
commenced sales of its first Nature Seal product.  Since then, the Company's
efforts have been focused on developing and refining formulations for a variety
of fruits and 


                                        3


<PAGE>

vegetables.  Throughout fiscal 1996, the Company conducted field tests on these
formulations and is currently focused on targeted marketing and distribution of
the Nature Seal product.

     BIO-SAVE POSTHARVEST BIOPROTECTANT.  The newest products to be sold by the
Company are its Bio-Save line of biological disease inhibitors.  These products
are sold through EPSC to the pear, apple and citrus markets.  Postharvest
diseases and damage during storage and shipment can account for losses ranging
from 10% to 25% of total annual production of fruits and vegetables, depending
on the crop and climate.  The Company has developed and registered natural
PSEUDOMONAS SYRINGAE microorganisms which can control the development of Blue
Mold (PENICILLIUM EXPANSUM), Gray Mold (BOTRYTIS CINEREA) and Mucor Rot (MUCOR
PYRIFORMIS) on apples and pears, and Blue Mold (P. ITALIUM), Green Mold (P.
DIGITATUM) and Sour Rot (GEOTRICHUM CANDIDUM) on citrus fruit.  The Company has
conducted successful field trials over the last five years utilizing selected
microbial agents in Florida, California, Oregon, West Virginia, Massachusetts,
Michigan, and Washington and Chile. In March 1996, the Company received EPA
registration and state registrations in its primary markets for its Bio-Save
100, Bio-Save 1000, and Bio-Save 110 biofungicides for the control of
postharvest diseases on apples, pears and citrus fruit.  These registrations
were for revised formulations of the original Bio-Save active ingredient first
approved in March 1995. The Company, through EPSC, conducted initial focused
sales of the product in fiscal 1996 and is planning a major  product launch in
fiscal 1997.

          BIOLOGICAL INSECT CONTROL

          In the biological insect  control  market, the Company, with
collaborative partners, has been focused on developing and selling cost
effective bioinsecticide alternatives to synthetic chemical insecticides for use
in specific applications, including sensitive use environments such as homes,
restaurants, schools and food processing facilities.

          COMMERCIAL PRODUCTS

          BIO-BLAST BIOLOGICAL TERMITICIDE.  The Company, together with its
collaborator, Terminix, has developed a natural fungal product to control
termites, the Bio-Blast Biological Termiticide.  See "Collaborative
Arrangements."  This product contains a fungus selected for its ability to
infect and kill termites which has been formulated for application utilizing
conventional equipment in a termite infested structure.  The product uses
METARHIZIUM ANISOPLIAE, the naturally occurring insect killing fungus.    The
product is a dry powder packaged and portioned for ease of storage and use. It
is used as a water suspension. The Company commenced commercial trials of Bio-
Blast in the first quarter of fiscal 1995 under the terms of its development
agreement with Terminix, and trials continued throughout fiscal 1996.  These
trials have demonstrated that Bio-Blast is an effective tool for the control of
termite infestations.  The Company has demonstrated that termites exposed to the
fungus in the product can spread the fungus by contact to nest mates that have
not directly contacted the fungal agent, thereby infecting and killing other
termites through the Horizontal Transfer-Registered Trademark- effect.  The
Company received Environmental Protection Agency ("EPA") product registration
for the termiticide in October 1994,and subsequently received approval for 
registration from 47 states.  In fiscal 1996, the Company made its initial 
sales to both Terminix and Maruwa Biochemical.  

          BIO-PATH COCKROACH CONTROL CHAMBER.  In June 1993, the Company
commenced sales to PCO of its first biological insect control product, the
Bio-Path Cockroach Control Chamber, the first biological cockroach control
product registered by the EPA.  This product uses the Company's patented
Bio-Path Cockroach Chamber technology to house a naturally occurring insect
killing fungus, METARHIZIUM ANISOPLIAE, the same fungal ingredient utilized in
the Bio-Blast Biological Termiticide.  The fungus, when delivered to the
cockroach through the  chamber, adheres to the cockroach's body 


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<PAGE>

causing infection and ultimate death of the insect.  Cockroaches that have
touched the fungus spread the fungus through contact with other cockroaches
which have not passed through the chamber.  Despite the technical  success of
the product, the Company has not been able to generate the expected positive
margins for this first generation product due to high production costs. As a
result, the Company has ceased production of the first generation Bio-Path
Cockroach Control Chamber.  The Company has completed formulation of a second
generation product, which has not yet received EPA approval, and is seeking
contractors for reduced cost toll manufacturing.  The Company is currently
seeking partners to market the second generation product. 

SALES AND DISTRIBUTION

     SPECIALTY AGRICULTURE PRODUCTS.  The Company sells directly into this
market through AGRO.  AGRO has a marketing/sales force of 19 people located in
its distribution and service centers in East Brunswick, New Jersey; Milton,
Ontario, Canada; and Ventura, California, and in its sales/service offices in
Englewood, Colorado; Orlando, Florida; Yakima, Washington and Langley, British
Columbia, Canada.
 
     POSTHARVEST PACKING.  The Company uses its AGRO and EPSC direct sales
forces to market and sell its packing equipment and its traditional and
naturally derived coatings and Bio-Save BioProtectants to fruit and vegetable
growers, packers and processors in the United States, the Caribbean, Central
America and South America.  EPSC has a sales and technical support services
force of 9 people located in its distribution and service centers in Orlando,
Florida and Visalia, California.   AGRO has sales/service offices handling and
supporting this market in Yakima, Washington; East Brunswick, New Jersey and
Englewood, Colorado.

     BIOLOGICAL PEST CONTROL.  In June 1992, the Company entered into a product
development and license agreement with Terminix for collaboration on the
development and marketing of termite control products in the United States and
Canada.  See "Collaborative Agreements."  In July 1995, the Company received its
first purchase order from Terminix for the sale of its Bio-Blast termiticide
product. In March 1996, the Company received its second order from Terminix. 
The Company's sales and distribution agreement with Bengal Chemical, Inc. for
the non-exclusive retail distribution of the Company's Bio-Path Cockroach
Control Chamber in certain retail markets in the United States expired in fiscal
1996.  The Company will seek  additional retail distribution arrangements for
its Bio-Path product pending successful development of cost effective
manufacturing.

     INTERNATIONAL SALES.  The Company expects to market products
internationally primarily through local and regional distributors and partners. 
The Company has established a development and distribution agreement with Maruwa
Biochemical for distribution of its Bio-Path Cockroach Control Chamber and Bio-
Blast Biological Termiticide in Japan upon registration there.  In addition, the
Company has entered into a marketing and distribution agreement with Dong Sung
Pharmaceutical Co., Ltd. ("Dong Sung"), for distribution of its Bio-Path
Cockroach Control Chamber in South Korea upon its registration there.  In May
1995, the Company entered into a marketing and distribution agreement with
Rhone-Poulenc Agrochimie ("Rhone-Poulenc") for distribution of its Bio-Path
Cockroach Control Chamber to PCO in 16 countries in Europe upon registration in
each of those countries.  See "Collaborative Agreements."

          Financial information segregated by major geographic area (United
States and Canada) is set forth in Note 10 to the Company's Consolidated
Financial Statements, which appears elsewhere in this Annual Report on 
Form 10-K.


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MANUFACTURING

     As part of the fiscal 1995 restructuring program, the Company ceased
production of the first generation Bio-Path Cockroach Control Chamber.  The
Company has completed formulation of a second generation product, which has not
yet received EPA approval, and is seeking contractors for reduced cost toll
manufacturing.  The Company is currently seeking partners to market the second
generation product.

     In fiscal 1995, the active ingredient (fungal conidia) for the Bio-Blast
termiticide product was produced at the Northborough, Massachusetts facility. 
Subsequent processing and packaging were conducted by third party subcontractors
with specialized equipment.  During fiscal 1995, the Company identified and
engaged in discussions with a select number of companies with a proven ability
to produce the fungal  active ingredient for the Bio-Blast product on a cost-
effective basis.  Commensurate with the closing of its Northborough facility,
the Company established supply arrangements for manufacture of the active
ingredient  in the Bio-Blast product.  Upon receipt of the raw active
ingredient, the Company  now  processes, formulates and packages this material
to produce the Bio-Blast product in its Orlando, Florida manufacturing facility.

     Traditional coating products and Nature Seal coatings are currently being
manufactured at the EPSC facility in Orlando, Florida.  Production of the
Company's postharvest fruit disease control products (Bio-Save) require
large-scale fermentation and formulation capacity.  The Company has established
relationships with third party subcontractors to manufacture these products.  To
date, the Company has been able to acquire a sufficient supply of the Bio-Save
product for its commercial sales.

COLLABORATIVE AGREEMENTS
 
     MARUWA BIOCHEMICAL CO., LTD.  In June 1993, the Company entered into a
Development and Distribution Agreement with Maruwa Biochemical (the "Maruwa
Agreement") to commercialize the Company's Bio-Path Cockroach Control Chamber in
Japan. In addition, the Company is currently working with Maruwa on
commercialization of its Bio-Blast product. Under the Maruwa Agreement, Maruwa
Biochemical will pursue at its own expense the registration and
commercialization of the Company's cockroach  and termite control products in
Japan, including the initiation of field trials and, if required, the
commencement of toxicology studies. Following receipt of all required approvals,
Maruwa Biochemical is obligated to distribute products supplied by the Company
and sold to Maruwa Biochemical at prices to be determined by agreement.  Maruwa
Biochemical paid an initial licensing fee to the Company upon execution of the
Maruwa Agreement. 

     DONG SUNG PHARMACEUTICAL CO., LTD.  In May 1994, the Company entered into a
Marketing and Distribution Agreement with Dong Sung (the "Dong Sung Agreement")
for the exclusive rights to market and distribute the Company's Bio-Path
Cockroach Control Chamber product in South Korea.  Under the Dong Sung
Agreement, Dong Sung will pursue at its own expense the registration and
commercialization of this product in South Korea, including minimum amounts for
advertising and promotion during the first two calendar years once registration
has occurred as provided for in the agreement.  The Dong Sung Agreement expires
on December 31, 1999, unless extended by the parties.  Dong Sung has the right
to terminate the Dong Sung Agreement without cause upon 90 days notice to the
Company.


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<PAGE>

     RHONE-POULENC AGROCHIMIE.  In May 1995, the Company entered into a
Marketing and Distribution Agreement with Rhone-Poulenc (the "Rhone-Poulenc
Agreement") for the exclusive rights to market and distribute the Company's Bio-
Path Cockroach Control Chamber product to PCO in 16 countries in Europe subject
to registration in each of those countries.  The term of the Rhone-Poulenc
registration is for a period of five years from the date of execution or the
date product registration is received in the particular country, whichever is
later, and may be renewed for successive one year periods thereafter by mutual
agreement of the parties.

     THE TERMINIX INTERNATIONAL COMPANY, L.P.  In June 1992, the Company entered
into a Product Development and License Agreement with Terminix  (the "Terminix
Agreement") for collaboration on the development and marketing of termite
control products.  Under the Terminix Agreement, Terminix provided funding to
the Company for the development of biological termite control products and
received exclusive rights to use and distribute any resulting products in the
United States and Canada.  The Company has retained all rights elsewhere.  The
Company managed product development, manufactures and sells products to Terminix
at an agreed markup over the Company's manufacturing cost. The Company will also
share any profit realized by Terminix over specified levels.  The Terminix
Agreement extends until expiration of the last to expire of any patents which
may issue covering the Company's biological termite control technology, subject
to Terminix's right to terminate the agreement at any time.  The Company
received EPA product registration for the termite control product in October
1994, and subsequently received approval for registration from 47 states.

TECHNOLOGY

     The Company's technology is applied in three broad areas:  (i) the
development of natural microbial biological pesticides; (ii) the development of
fresh fruit and vegetable coatings; and (iii) service to our customers on
postharvest disease control, production of agricultural specialties and the
proper handling and packing of produce after harvest. 

     MICROBIAL PEST CONTROL
     
     Microbial pesticide products are based on microorganisms isolated from the
environment, formulated and delivered to a target pest so that they kill the
pest or control or inhibit its proliferation on the target.  The agents form the
foundation of true biological pest control products. They are packaged alive and
perform their function through proliferation in the pest environment.  They are
distinct from other biological pest control products such as BACILLUS 
THURINGIENSIS ("Bt") which do not require growth in the environment. Bt is
lethal to insects because of its production of a toxin during the manufacturing
process. Much of the formulation and delivery technology developed for synthetic
chemical pesticides or microbial products such as Bt is inappropriate for
microbial products which employ and preserve living organisms. The EcoScience
microbial technology uses live microorganisms which either attack and kill a
target pest (e.g. Bio-Blast) or through natural growth inhibit the ability of a
target pest to proliferate (e.g. Bio-Save). 

     The following is a list describing the Company's proprietary microbial pest
control technologies including methods to (i) identify and isolate active
microbial agents, (ii) manufacture commercial quantities of those microbial
agents, (iii) formulate and package them as products with commercially
acceptable stability and shelf life and (iv) deliver them to the target pest. 
See "Patents and Trade Secrets."


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<PAGE>

  IDENTIFICATION OF ACTIVE INGREDIENTS.  The Company has developed proprietary
  assays for the screening and identification of microbial agents which are
  effective in the prevention of certain plant diseases or which are lethal to
  certain pests.  The Company has been awarded a patent  for the use of a
  microbial agent identified through these proprietary assays and may file
  additional patent applications.
 
  DEVELOPMENT OF MANUFACTURING METHODS.  The Company has access to or has
  developed a variety of proprietary methods for growing, processing and
  harvesting microbial agents which it believes can be used to produce
  commercial quantities of active ingredients for the Company's products.
 
  DEVELOPMENT OF FORMULATION SYSTEMS.  The Company has access to or has
  developed proprietary processing systems to stabilize and extend the shelf
  life of fungal and bacterial agents and ensure stability, longevity and
  activity in use. These systems lead to formulations which allow living fungi
  and bacteria to remain viable in dry, aqueous or oil-based formulations until
  use.  This technology is the basis for the Bio-Save, Bio-Blast and Bio-Path
  products.   Additionally, it serves as the basis for the contract formulation
  business EcoScience will develop in the future.  
 
  DEVELOPMENT OF DELIVERY SYSTEMS.  The Company has developed proprietary
  delivery systems including Bio-Path Cockroach Chambers, sprays, dusts and
  gels, optimizing performance of microbial agents by facilitating accurate
  delivery of concentrated doses.  
 
  DEVELOPMENT OF PACKAGING SYSTEMS.  The Company has developed proprietary
  packaging systems to extend the shelf life of microbial agents during storage
  and transportation. The Company believes that, in order to be commercially
  successful, biopesticide products must remain viable in conventional
  distribution channels and have a minimum shelf life of 18 to 24 months.  

     FRESH FRUIT AND VEGETABLE COATINGS 

     The Company's coating technology utilizes FDA food grade and/or GRAS listed
products to protect fruits and vegetables after harvest and during storage and
during transit to market.  The technology focuses on controlling respiration
(oxygen transport) and water loss on fruits and vegetables.  Restricting
respiration and reducing water loss ensures delivery of fresher products to the
consumer.  The key to the Company's approach is to design the appropriate
coating for each type of produce.  Different types of produce respond
differently to respiration and water loss and therefore different coatings are
required for different classes of produce. In June 1993, the Company acquired
commercial rights to Nature Seal, a naturally derived, cellulose based
protective coating for harvested fruits and vegetables.  In May 1994, the
Company acquired a line of traditional coating products which utilizes
conventional shellac and carnauba as their main ingredients that have been used
successfully in the citrus and pome fruit markets.  The Company's coating
products provide a protective preservative film on fruits and vegetables to
maintain quality, control ripening and enhance overall appearance.

     TECHNICAL ADVICE AND SERVICE

     The Company advises its customers on improved technical growing and packing
techniques and systems.  The key to successfully servicing our customers
requires knowledge of the customers challenges and problems and technical
solutions available to solve those problems.  Customers frequently depend on the
Company  for such service and advice.


                                        8

<PAGE>

       TECHNOLOGY SUMMARY

       The Company's technology has applicability to a variety of potential
products and product systems.  These include various insect spray and chamber
products, plant and root fungal disease control systems, and preharvest and
postharvest coatings and disease control systems which are currently in varying
stages of development.  As part of the Company's restructuring program, certain
research and product development programs and the funding thereof have been
suspended, curtailed, or deferred.  Future development and funding of these
research and product development programs will depend on a number of factors,
including market conditions, availability of financial, technical, and other
resources, technological advancements, manufacturing capabilities, governmental
regulations, and other relevant matters which may confront the Company in the
future.

       The Company's operating costs and expenses to date have related to a
large extent to the research and development of products and product systems for
future commercialization.  Expenses incurred by the Company under third party
funded research and development programs totaled approximately $0, $155,000, and
$603,000 in fiscal 1996, 1995, and 1994, respectively.  Expenses incurred under
Company funded research and development programs totaled approximately
$1,018,000, $4,328,000, and $7,553,000 in fiscal 1996, 1995, and 1994,
respectively.

TECHNOLOGY LICENSING

       UNITED STATES DEPARTMENT OF AGRICULTURE ("USDA").  The Company has an
agreement with the USDA granting the Company exclusive rights to the use of a
microbial strain developed at the USDA for the control of postharvest diseases
of pome fruits.  This use is the subject of a pending U.S. patent application by
the USDA.  The license agreement provides for a royalty to the USDA based on
sales by the Company of products incorporating the licensed microbial strain. 
The Company has also licensed the worldwide rights to develop and commercialize
additional biological disease control organisms recently patented by the USDA. 
The organisms licensed to the Company under the patent are naturally occurring
yeasts which effectively control the development of blue mold (PENICILLIUM
EXPANSUM), gray mold (BOTRYTIS CINEREA) and Mucor rot on apples and pears.
 
       J.R. BROOKS & SON, INC. AND SEALD-SWEET GROWERS, INC.  In June 1993, the
Company acquired from J.R. Brooks & Son, Inc. ("J.R. Brooks") and Seald-Sweet
Growers, Inc. ("Seald-Sweet") an exclusive, worldwide sublicense to use the
technology underlying the Nature Seal coatings, the rights to which J.R. Brooks
and Seald-Sweet obtained under license from the USDA, subject to the rights of
the USDA to use the technology on a royalty free, non-exclusive basis for
governmental purposes only. Under its sublicense with J.R. Brooks and
Seald-Sweet, the Company agreed to pay a royalty or, in certain circumstances, a
percentage of profits, on sales of products incorporating the Nature Seal
technology. The sublicense agreement extends until expiration of the last to
expire patents covering the Nature Seal technology.
 
COMPETITION         

     The Company faces substantial competition in the sale of certain products
and growing systems to greenhouses and nurseries in North America.  The Company
believes that its range of products and services, and product quality, will
allow it to compete effectively in North America.

     Competition in the fruit and vegetable coatings market is similarly
intense.  Fruit and vegetable coating products are developed and marketed
primarily to several large companies which offer a full 


                                        9

<PAGE>

range of products.  In addition, several smaller companies offer a limited range
of fruit and vegetable coating products.  The Company believes that it can
compete effectively in this market with its Nature Seal coating and Bio-Save
PostHarvest BioProtectant and other traditional coating products based on the
cost effectiveness and the quality of its coating formulations and services.

     Competition is also intense in the pesticide industry.  The Company
competes with large manufacturers of synthetic chemical pesticides, and
established biopesticide companies.  The pesticide industry is dominated by
large chemical companies located in the United States, Japan and Europe.  These
companies have substantial financial and technical resources, extensive sales
and distribution capabilities, varied product registration experience and the
ability to manufacture products efficiently.  The Company believes that its
commercial success will depend upon the development of cost effective products
which compete with synthetic chemical pesticides on the basis of effectiveness,
safety and ecological benefit.  In addition, product line profitability will
depend upon cost effective products and strong sales and distribution networks
for the Company's products.  
 
GOVERNMENT REGULATION AND PRODUCT REGISTRATION

     In most countries throughout the world, governmental authorities require
registration of pesticides before sales are allowed.  In the United States, the
EPA regulates pesticides under the Federal Insecticide, Fungicide and
Rodenticide Act ("FIFRA").  Pesticides are also regulated by the individual
states. Some states, such as California, Florida and New York, have their own
extensive registration requirements.  In order to market products outside the
United States, the Company must receive regulatory approval from the authorities
of each applicable jurisdiction.  In addition, the FDA administers the Federal
Food, Drug and Cosmetic Act ("FFDCA") and establishes standards for pesticide
residues in food to protect public health.

     Detailed and complex procedures must be followed in order to obtain
approvals under FIFRA to develop and commercialize a pesticide product.  A
registration application must be submitted to the EPA for each product and must
list each pest for which the product will be used.  Evaluation data for
registration includes, but may not be limited to, non-target organism testing,
environmental data, product analysis and residue studies, product performance,
and toxicology (hazards to human beings and domestic animals).

     The EPA has established specific testing requirements for registration of
microbial pesticides, which are set out in Subdivision M of the EPA's Pesticide
Assessment Guidelines.  Chemical pesticides are currently subject to a three
tier toxicology testing procedure, and a four tier environmental evaluation
process.  A microbial pesticide product which satisfactorily completes both the
toxicology Tier 1 tests and environmental evaluation  is not required to go
through the testing requirements of subsequent tiers.  Additional tests may be
required, however, in response to any questions which may arise during Tier 1
testing.  The Company's product development cycle typically anticipates two to
three years of field evaluation and up to two years for product registration,
which can run concurrently with the last year of field trials.  The cost of
registration is typically less than $500,000.  In contrast, synthetic chemical
pesticides require toxicology and environmental testing to verify product safety
prior to receiving registration, which the Company estimates can take a up to
seven years or longer and can cost up to approximately $10 million or more. 
Already registered chemical pesticides are also being subjected to additional
testing requirements.  In 1988, the United States Congress mandated that the EPA
re-register by 1997 all pesticide products containing active ingredients
registered prior to 1984, using the current testing protocols.


                                       10

<PAGE>

     In July 1992, the EPA announced its "Reduced Risk Pesticide Policy"
initiative which streamlined the regulatory process for qualified products.  In
June 1993, the federal government announced its commitment to reduce the use of
pesticides and promote sustainable agriculture in the United States. The EPA,
the USDA and the FDA are all considering regulatory reforms which may require
amendments to both major pesticide regulatory laws: FIFRA and FFDCA.  In
testimony before Congress on September 21, 1993, the administrators of the USDA,
the FDA and the EPA stated their intentions to work jointly to reduce risk
associated with pesticides and to facilitate the availability of alternative
effective pest control products.  The new Biopesticide and Pollution Prevention
Division of the EPA is intended to accelerate the registration of these "Reduced
Risk" products, but there can be no assurance of the impact or timing of these
initiatives.

          The Company received EPA approval for registration of its cockroach
control product on May 13, 1993.  To date, the Company has received approvals 
for registration of the cockroach control product from every state except 
Hawaii and Alaska, and Puerto Rico and Mexico.  In October 1994, the Company 
received EPA registration for its Bio-Blast termiticide.  The Company 
subsequently received registration from 47 states.  In March 1995, the 
Company received EPA registration for Bio-Save 10 and Bio-Save 11 
biofungicides in all states requested.  In March 1996, the Company received 
EPA registration for Bio-Save 1000, Bio-Save 100 and Bio-Save 110.  These 
registrations are for new formulations of the original Bio-Save 10 and 11 
products.

          The Company's Nature Seal and traditional coating products are
formulated in water and are based on vegetable or resin materials that are FDA
approved food additives or have been listed by the FDA as "Generally Recognized
As Safe" for their intended use.  As such, the Company's Nature Seal and
traditional coating products currently do not require FDA approval or
registration.  Nature Seal and the traditional coating products are not
pesticides and are therefore not subject to EPA registration.

          Certain of the Company's activities, including the operation of its
laboratories and manufacturing facilities, have been, or may be, subject to
regulation (i) under various other state and federal laws and regulations
including the Occupational Safety and Health Act, the National Environmental
Policy Act, the Clean Air Act, the Clean Water Act, the Emergency Planning and
Community Right-To-Know Act and other state and federal statutes regulating
environmental quality and (ii) by state and federal agencies, including the USDA
and the FDA.  From time to time, governmental authorities review the need for
additional laws and regulations for biotechnology and pesticide products that
could, if adopted, apply to the business of the Company.  The Company is unable
to predict whether any such new regulations will be adopted or whether, if
adopted, they will adversely affect its business.  Historically, compliance with
applicable federal, state, and local provisions which have been enacted or
adopted regulating the discharge of materials into the environment by the
Company's manufacturing or laboratory operations has had an immaterial effect
upon the Company's capital expenditures, results of operations and competitive
position.

PATENTS AND TRADE SECRETS

          The Company owns or has rights to certain proprietary information,
including patents and patent applications, which relate to its technology and
its products.  The Company actively seeks protection, when appropriate, for its
products and proprietary information by means of United States and foreign
patents.  In addition, the Company may rely upon confidentiality agreements and
other contractual arrangements to protect certain of its proprietary
information.  The Company has a total of eight U.S. patents covering its
microbial biological insecticide technology.


                                       11

<PAGE>

          The Company has six U.S. patents covering its Bio-Path chamber
technology, with corresponding foreign patents and patent applications: (i)
METHOD AND DEVICE FOR THE BIOLOGICAL CONTROL OF COCKROACHES, (ii) METHOD AND
DEVICE FOR THE BIOLOGICAL CONTROL OF INSECTS, (iii) INSECT CONTAMINATION
CHAMBER, (iv) METHOD AND DEVICE FOR THE BIOLOGICAL CONTROL OF FLYING INSECTS,
(v) DEVICE FOR BIOLOGICAL CONTROL OF COCKROACHES, and (vi) DEVICE CONTAINING
FUNGUS FOR BIOLOGICAL CONTROL OF INSECTS.  The Insect Contamination Chamber
patent contains claims relating to the design of the Company's Bio-Path
Cockroach Control Chambers.  The Company's other issued patents claim methods of
increasing the mortality rate of target species of insects by providing an
effective dose of a pathogenic fungus in a chamber designed to attract and
lethally infect the targeted insect, and the chambers.  
The Company has an additional patent, MAINTENANCE AND LONG-TERM STABILIZATION OF
FUNGAL CONIDIA USING SURFACTANTS, describing methods utilizing a uniqueness of
surfactants for fungal formulation.

          An additional patent, PSEUDOMONAS SYRINGAE ATCC 55389 AND USE THEREOF
FOR INHIBITING MICROBIAL DECAY ON FRUIT, has been awarded covering a
microorganism that is the active ingredient in Bio-Save 10, 100, and 1000.
Provided maintenance fees are paid, U.S. design patents have a term of 14 years
from the date of issue; and U.S. utility patents that are based on applications
filed before June 8, 1995, and that have not expired as of June 8, 1995, have a
term that is the longer of 20 years from the earliest effective filing date or
17 years from issuance.  In certain instances, however, the term may be limited
to the term of a related patent claiming similar technology.  The Company's
patents were issued in 1991, 1992, 1993, 1994, and 1995.  The Company has
pending three patent applications relating to methods of extending microbial
shelf life.  There can be no assurance that any patents will issue from any of
the Company's patent applications or that issued patents will provide adequate
protection for the Company.

          The Company has two exclusive licenses to the issued patents covering
the Nature Seal technology from J.R. Brooks and Seald-Sweet, which licensed the
patents from the USDA.  The patents were issued to the USDA in March 1993 and
December 1994.

          The Company has acquired the exclusive rights to the use of microbial
strains developed at the USDA for the control of postharvest diseases of pome
fruits.  These rights are the subject of pending and issued USDA patents.

          Much of the Company's technology and many of its processes are
dependent upon the knowledge, experience and skills of certain scientific and
technical personnel.  To protect its rights to its proprietary information and
technology, the Company requires all employees, consultants, advisors and
collaborators to enter into confidentiality agreements which prohibit the
disclosure of confidential information to persons unaffiliated with the Company
and require disclosure and assignment to the Company of ideas, developments,
discoveries and inventions made by such persons.  There can be no assurance that
these agreements will prevent disclosure of the Company's confidential
information or will provide meaningful protection for the Company's confidential
information if there is unauthorized use or disclosure.  In the absence of
patent protection, the Company's business may be adversely affected by
competitors who develop substantially equivalent technology.


                                       12

<PAGE>

PERSONNEL

     As of September 20, 1996, the Company had 64 full-time employees.  A total
of 3 persons are employed full-time in manufacturing and production; 41 in
sales, marketing and distribution; 5 in research and development; and 15 in
management and administration.

     None of the Company's employees is covered by a collective bargaining
agreement.  The Company considers its relations with its employees to be good.


ITEM 2. PROPERTIES
--------------------------------------------------------------------------------

     As part of the Company's restructuring program, the Company's corporate
headquarters and research and development operations were relocated in the
second quarter of fiscal 1996 to AGRO's facility in East Brunswick, New Jersey. 
This facility consists of 23,375 square feet of space at under a five-year lease
which expires in July 1999, and which provides an option to renew for an
additional five-year term.  In addition, AGRO leases 10,000 square feet of space
for its sales/service center and warehouse facility located in Milton, Ontario,
under a five-year lease which expires in September 1997, and which provides an
option to renew for an additional five-year term.  AGRO also leases space for
its other sales/service centers located in Ventura, California; Englewood,
Colorado; and Yakima, Washington under various lease terms.

     The Company's wholly-owned subsidiary, EPSC, leases approximately 24,000
square feet of space for its headquarters, production and warehouse facilities
located in Orlando, Florida, under a five-year lease which expires in May 1999,
and which provides an option to renew for an additional five-year term.  In
addition, EPSC leases on a month-to-month basis approximately 4,000 square feet
of space for its sales/service center and warehouse located in Visalia,
California.

     The Company believes that its existing facilities are adequate to meet
current requirements and that suitable additional or substitute space will be
available as needed to accommodate any expansion of operations and additional
offices.

ITEM 3. LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

     The Company is not a party to any material legal proceedings.

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

     There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ended June 30, 1996.


                                       13

<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company as of September 19, 1996, are listed
below:

                                                                       Executive
Name                Age                 Position                   Officer Since
----                ---                 --------                   -------------

Michael A. DeGiglio  42  President and Chief Executive Officer            1993  
Richard A. Andrews   44  Vice President                                   1990  
Harold A. Joannidi   45  Treasurer, Corporate Controller and Secretary    1995  
David W. Miller      44  Vice President-Technology                        1988  
William B. Silk      69  Vice President                                   1996  

     
     MR. DEGIGLIO joined the Company upon its acquisition of AGRO in November
1992, and has served as President of the AGRO Division since that time.  In July
1995, Mr. DeGiglio assumed the offices of President and Chief Executive Officer
of the Company.  Prior to joining the Company, Mr. DeGiglio was employed with
AGRO since 1984, where he served as President.  Prior to co-founding AGRO, Mr.
DeGiglio was Vice President of International Sales for NYPCO International Inc. 
Mr. DeGiglio served on active duty in the United States Navy as an Officer and
Jet Aviator from July 1976 through December 1982, presently holds the rank of
Commander and is the Commanding Officer of a Jet Aviation Squadron with the
United States Naval Reserve. Throughout his Naval career, he has held various
department head positions and has completed numerous Senior Advanced Management
and Total Quality Leadership courses.  Mr. DeGiglio also serves as Chief
Executive Officer and Director of Agro Power Development, Inc.   Mr. DeGiglio
received a B.S. in Aeronautical Science and Aviation Management from Embry
Riddle Aeronautical University.

     MR. ANDREWS joined the Company in September 1990 and served as its Vice
President of Business Development until April 1994, when he assumed the position
of President of EPSC.  In 1996, Mr. Andrews became Vice President of the
Company. Prior to joining the Company, Mr. Andrews was employed from 1986 to
1990 with BioTechnica International in Cambridge, Massachusetts, where he served
as President of the Diagnostics Division and Vice President of Commercial
Development.  Mr. Andrews received a B.S. in Chemistry from Hobart College, a
M.S. in Chemistry from Purdue University and a S.M. in Technology and Policy
from the Massachusetts Institute of Technology.

     MR. JOANNIDI joined the Company in 1995 as Corporate Controller.  In March
1996, Mr. Joannidi became Treasurer and Secretary of the Company.  In 1992 and
from 1994 until joining the Company, Mr. Joannidi also served as a Financial and
Systems Consultant to the Company.  Prior to joining and in addition to being a
consultant to the Company, Mr. Joannidi operated a manufacturing company from
1992 to 1994, served as a Financial and Systems Consultant to various companies
from 1988 to 1992, and held financial management positions at Tel Plus
International, Inc./Siemens AG, Johnson Matthey Jewelry Corporation and
Refinemet International Company from 1980 to 1988.  Mr. Joannidi attained
Certified Public Accountant designation while employed at the public accounting
firm of Coopers & Lybrand.  He attended Tufts University and Northeastern
University, receiving a B.S. degree in Accounting and Economics from
Northeastern University.


                                       14

<PAGE>

     DR. MILLER joined the Company in May 1988 and currently serves as Vice
President-Technology.  Prior to joining the Company, Dr. Miller was employed
from 1983 to 1988 as Staff Scientist and Project Leader at Genetics Institute,
Inc., in Cambridge, Massachusetts.  Dr. Miller received a B.S. in Biochemistry
from the University of California, Davis, and a Ph.D. in Biochemistry and
Molecular Biology from Harvard University, where he studied the molecular
biology of insects.  Dr. Miller also was a National Institutes of Health
post-doctoral Fellow studying insect viruses at the University of Idaho.


MR. SILK joined EcoScience upon its acquisition of Agro Dynamics, Inc. in
November 1992.  Since that time, Mr. Silk has served as Executive Vice President
and General Sales Manager at AGRO.  In March 1996, Mr. Silk became a Vice
President of the Company.  Prior to joining the Company, Mr. Silk served as Vice
President of Sales and Marketing of Agro Dynamics since its inception in 1984. 
Previously, Mr. Silk was with Johns-Manville Corp. for 33 years in various
sales-engineering and market management positions in both domestic and
international operations.  Mr. Silk holds a Bachelor of Science degree from
Polytechnic Institute of Brooklyn, New York.


                                       15

<PAGE>

                                     PART II
--------------------------------------------------------------------------------

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

          The Common Stock was admitted for trading on the National Association
of Securities Dealers Automatic Quotation System ("NASDAQ"), National Market
System under the NASDAQ symbol "ECSC" since the date of the Company's initial
public offering on February 5, 1992 until November 26, 1995.  On November 27,
1995, the Company's Common Stock was transferred from the NASDAQ, National
Market System to the NASDAQ, Small-Capitalization Market System.  As of
September 19, 1996, there were approximately 303 holders of record of the Common
Stock.  The Company has never declared or paid any cash dividends on its Common
Stock and does not anticipate doing so in the foreseeable future.

     The table below sets forth, for the fiscal quarters indicated, the reported
high and low closing sales prices of the Common Stock as reported by NASDAQ
based on published financial sources.


            1996                                       High      Low
            -------------------                    ----------  --------

                Fourth Quarter . . . . . . . . .      1 5/8     1 1/4
                Third Quarter. . . . . . . . . .      1 3/8     1 1/16
                Second Quarter . . . . . . . . .      1         7/16
                First Quarter. . . . . . . . . .      1 1/2     13/16


             1995                                     High       Low
             -----------------                     ----------  --------

                Fourth Quarter . . . . . . . . .      1 11/16   1 1/4
                Third Quarter. . . . . . . . . .      2 3/8     1 1/4
                Second Quarter . . . . . . . . .      3 1/2     1 3/4
                First Quarter. . . . . . . . . .      4 7/8     2 3/8


                                       16

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------

          The selected financial data presented below have been derived from the
Company's audited consolidated financial statements for each year in the five-
year period ended June 30, 1996.  The information below should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and the Consolidated Financial Statements and related
notes which appear elsewhere in this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                                        YEARS ENDED JUNE 30,
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:                    ------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                         1996           1995           1994           1993           1992
                                                               -------        -------        -------        -------         ------
<S>                                                            <C>            <C>            <C>            <C>             <C>
Revenues:
   Product sales . . . . . . . . . . . . . . . . . . . . .     $14,151        $12,335        $ 9,246        $ 3,802         $    -
   Research, development, licensing fees and other . . . .           8            155            812            545            147
   Investment income . . . . . . . . . . . . . . . . . . .         199            590            853          1,525            869
                                                               -------        -------        -------        -------         ------
      Total revenues . . . . . . . . . . . . . . . . . . .      14,358         13,080         10,911          5,872          1,016
                                                               -------        -------        -------        -------         ------
Costs and expenses:
   Cost of goods sold. . . . . . . . . . . . . . . . . . .      10,394         10,153          7,875          3,288              -
   Research and development. . . . . . . . . . . . . . . .       1,018          4,483          8,156          6,294          4,485
   Acquired research and development . . . . . . . . . . .           -             --             --            750             --
   Asset valuation and restructuring charges (reversal). .      (1,550)         6,000          5,800              -              -
   Selling and marketing . . . . . . . . . . . . . . . . .       2,594          3,672          3,043          1,690            412
   General and administrative. . . . . . . . . . . . . . .       2,216          2,441          3,382          3,159          1,428
   Interest and other. . . . . . . . . . . . . . . . . . .         514          1,425            208             95              6
                                                               -------        -------        -------        -------         ------
      Total costs and expenses . . . . . . . . . . . . . .      15,186         28,174         28,464         15,276          6,331
                                                               -------        -------        -------        -------         ------
Loss before extraordinary gain . . . . . . . . . . . . . .        (828)       (15,094)       (17,553)        (9,404)        (5,315)
Extraordinary gain on early extinguishment of debt . . . .         241              -              -              -              -
                                                               -------        -------        -------        -------         ------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . .       ($587)     ( $15,094)      ($17,553)       ($9,404)       ($5,315)
                                                               -------        -------        -------        -------         ------
                                                               -------        -------        -------        -------         ------
Net income (loss) per share:
   Loss before extraordinary gain. . . . . . . . . . . . .      ($0.09)        ($1.71)        ($2.27)        ($1.41)        ($1.30)
   Extraordinary gain. . . . . . . . . . . . . . . . . . .        0.03              -              -              -              -
                                                               -------        -------        -------        -------         ------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . .      ($0.06)        ($1.71)        ($2.27)        ($1.41)        ($1.30)
                                                               -------        -------        -------        -------         ------
                                                               -------        -------        -------        -------         ------
Weighted average number
   of common shares outstanding. . . . . . . . . . . . . .       9,070          8,839          7,748          6,664          4,086
                                                               -------        -------        -------        -------         ------
                                                               -------        -------        -------        -------         ------

CONSOLIDATED BALANCE SHEET DATA:                                                             JUNE 30,
                                                                ------------------------------------------------------------------
(IN THOUSANDS)                                                   1996           1995           1994           1993           1992
                                                               -------        -------        -------        -------         ------
Unrestricted and restricted cash, cash equivalents, 
    short-term investments and marketable securities . . .      $2,639        $ 7,831        $20,141        $24,576       $,32,121
Total assets . . . . . . . . . . . . . . . . . . . . . . .      10,111         18,769         33,990         31,843         33,741
Noncurrent liabilities, less current maturities. . . . . .         311          8,425          8,119          2,012            126
Stockholders' investment . . . . . . . . . . . . . . . . .       2,473          2,492         18,110         25,123         32,785


</TABLE>

                                       17


<PAGE>

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

RESULTS OF OPERATIONS

GENERAL

     Since its inception and until its 1995 restructuring program which is now
substantially completed and which is discussed below, the Company has been
engaged in research to develop new biological pest control products and in
raising capital to support its development and commercial programs.  Beginning
in 1992, the Company accelerated its commercialization activities, including
the establishment of manufacturing capabilities and premarketing for the Bio-
Path Cockroach Control Chamber, which received marketing approval from the EPA
in May 1993.  In June 1993, the Company commenced sales of Bio-Path Cockroach
Control Chambers to the professional pest control market. As part of the
restructuring program discussed below, the Company has ceased production of the
first generation Bio-Path Cockroach Control Chamber.  The Company has completed
formulation of a second generation product, which has not yet received EPA
approval, and is seeking contractors for reduced cost toll manufacturing.  The
Company is currently seeking partners to market the second generation product.

     In June 1992, the Company entered into the Terminix Agreement for the
joint development of biopesticides for termite control.  In October 1994, the
Company was granted EPA registration for the Company's Bio-Blast Biological
Termiticide.  The Company commenced commercial trials of its Bio-Blast
termiticide in the first quarter of 1995 in 11 states under the terms of its
development agreement with Terminix.  In July 1995, the Company initiated sales
of the Bio-Blast termiticide to Terminix.

     In November 1992, the Company acquired AGRO, an East Brunswick, New Jersey
based company which designs, markets and distributes advanced technologies,
products, growing systems and services for the North American intensive
farming, horticulture and produce packing industries.

     In June 1993, the Company entered into licensing agreements with two
companies for rights to develop, manufacture and distribute Nature Seal, a
patented, naturally derived coating product to protect the quality of fruits
and vegetables after harvest.  In May 1994, the Company acquired certain net
assets of AMC, an Orlando, Florida based company which provides postharvest
coating products and services to the fresh fruit and vegetable markets
throughout the United States, the Caribbean, Central America and South America.
Concurrent with the acquisition of AMC, the Company formed EPSC to combine the
AMC product line and operating unit with its existing coatings activities,
which include the distribution of its Nature Seal coating products.

     On January 11, 1996, the Company entered into a lease termination
agreement for its Worcester corporate headquarters and research and development
under which the Company paid the landlord $125,000 and issued 500,000 shares of
the Company's common stock with a market value of $500,000 in exchange for an
immediate termination of the lease.  Additionally, the Company  incurred
approximately $25,000 for expenses related to the completion of the
transaction.  After accounting for these settlement provisions, which totaled
$650,000, the Company reversed $1,550,000 of accrued restructuring costs in the
third quarter of fiscal 1996 that related to the accrued restructuring costs
which were originally recorded in fiscal 1995 ($2,000,000) and the remaining
accrued restructuring costs which were originally recorded in fiscal 1994
($200,000).

                                       18
<PAGE>

     In 1995, the Company recorded asset valuation and restructuring charges of
$6,000,000 or $0.68 per share to write down the value of certain assets and to
provide for the costs associated with the closure of the Company's facilities
located in Worcester, Northborough, and Shrewsbury, Massachusetts, and for
reductions in the Massachusetts based work force.  The write down of assets in
1995 included a $1,946,000 non-cash charge against the Company's investment in
its manufacturing, laboratory, and office property and equipment located in
Massachusetts and approximately a $354,000 non-cash charge for certain other
assets to their respective net realizable values.  The remaining $3,700,000 of
the 1995 charge consisted of accruals to provide for the costs associated with
the planned facility lease settlements ($2,000,000), manufacturing plant shut
down ($497,000), employee severance benefits ($1,035,000), and other
contractual obligations ($168,000) related to the restructuring program adopted
in 1995.

     At the end of fiscal 1995, the Company began the implementation of the
restructuring program which is now substantially completed.  The program was
designed to shift the corporate focus from research and development to
commercial operations in an effort to reduce operating losses and conserve cash
resources.  As part of the restructuring program, the Company eliminated
substantially all of its Massachusetts based work force (33 positions) in the
first quarter of fiscal 1996.  In addition, during fiscal 1995, certain
functions were moved to the Company's manufacturing facility in Northborough,
Massachusetts, and the Company's space at its corporate headquarters and
research and development facility in Worcester, Massachusetts, was decreased
from approximately 41,000 square feet to approximately 15,000 square feet.  In
the first quarter of fiscal 1996, the Company closed the Worcester facility and
all functions were moved to the Northborough facility.  During the second
quarter of fiscal 1996, the Company relocated all of its Massachusetts based
operations to its East Brunswick, New Jersey facility.  The Company charged
costs and expenses totaling $1,674,000 against the restructuring accruals
during 1996.  In addition, the Company reversed $1,550,000 in accrued
restructuring costs after accounting for the termination of its Worcester
corporate headquarters and research and development facility lease in the third
quarter of fiscal 1996.  The Company has completed a major portion of its
restructuring activities in fiscal 1996.

     In August 1994, the Company implemented a restructuring program to focus
the Company's resources on product development programs with the greatest near
to intermediate market potential, and to significantly reduce expense levels.
As part of this restructuring program, the Company reduced its Massachusetts
based work force by 29% (24 positions) and curtailed and deferred research and
development activities for certain product programs.  In 1994, the Company
recorded asset valuation and restructuring charges of $5,800,000 or $0.75 per
share to write down the value of certain assets, primarily related to its
investment in the Northborough manufacturing facility, and to provide for the
costs associated with the Company's consolidation of its facilities and for
reductions in research and development programs and staff.  The write down of
assets included a $3,000,000 non-cash charge against the Company's investment
in its manufacturing facility and related equipment and a $500,000 non-cash
charge for certain other assets.  The remaining $2,300,000 of the 1994 charge
consisted of accruals to provide for the costs associated with the
consolidation of the Company's corporate headquarters, research and
development, and manufacturing facilities ($1,300,000) and employee severance
benefits ($1,000,000).  The Company paid and charged expenses totaling
$1,746,000 against such restructuring accruals during 1995.  The Company
completed all of the employee terminations related to the 1994 restructuring
program in the first half of fiscal 1995 and a portion of the facility
consolidation activities in fiscal 1995.

                                       19
<PAGE>

     The Company believes that inflation and changing prices have not had a
material effect on its operations to date.


1996 COMPARED TO 1995

     The Company's total revenues increased $1,278,000 or 10% to $14,358,000 in
1996 from $13,080,000 in 1995, due primarily to the Company's product sales
increase of $1,816,000 or 15% to $14,151,000 in 1996 from $12,335,000 in 1995.
Product sales increased at AGRO by $2,302,000, while EPSC and EcoScience had
product sales decreases.  The following table sets forth the Company's product
sales by operating company for 1996 and 1995:

<TABLE>

(IN THOUSANDS)             1996                 1995             Increase
                         -------              -------            ---------
<S>                      <C>                  <C>                <C>
AGRO ................    $11,094              $ 8,792              $2,302
EPSC ................      2,882                3,018                (136)
EcoScience ..........        175                  525                (350)
                         -------              -------              -------
Consolidated ........    $14,151              $12,335              $1,816
                         -------              -------              -------
                         -------              -------              -------

</TABLE>

     AGRO is the exclusive distributor in the United States and Canada of the
Grodan brand of stonewool, which is an inert growing medium supplied by
Grodania A/S, a Danish company.  The sale of products under the distribution
agreement with Grodania A/S accounted for 45%, 43%, and 59% of the Company's
total product sales in 1996, 1995, and 1994, respectively.  Although there are
a limited number of sources of the particular growing medium products that are
sold under this distribution agreement, the Company's management believes that
other suppliers could provide similar products on comparable terms.  A change
in suppliers, however, could cause a delay in filling orders as well as a
possible loss of sales, which would affect operating results adversely.  In
August 1995, AGRO entered into a distribution agreement with Aweta B.V., a
Netherlands based company, for the exclusive right to sell Aweta B.V.'s sorting
and grading products and equipment to the fruit, vegetable, and flower markets
in North America, Mexico, and the Caribbean.  The sale of products under the
distribution agreement with Aweta B.V. accounted for 20% of the Company's total
product sales in 1996.   Although there are a limited number of sorting and
grading equipment manufacturers in the world, the Company's management believes
that other suppliers could provide equipment on comparable terms.  A change in
supplier, however could cause a delay in filling orders as well as a possible
loss of sales which would affect operating results adversely.  The Company
believes that revenues under these distribution agreements will each account
for  more than 10% of the Company's consolidated product sales in 1997.

     The increase in the Company's total product sales in 1996 was offset by a
decrease in research, development, and licensing fee income of $147,000 and
lower investment income of $391,000.  The decrease in research, development,
and licensing fee income in 1996 primarily resulted from a reduction of
$112,000 in license fees and product support payments received from Terminix as
its contractual payment obligations were fulfilled.  The decrease in investment
income in 1996 resulted from a corresponding decline in the average funds
available for investment during the 1996 period.

                                       20
<PAGE>

Cost of goods sold increased $241,000 or 2% to $10,394,000 in 1996 from
$10,153,000 in 1995. In 1996, cost of goods sold at AGRO increased by
$1,947,000 due to product sales increases, while cost of goods sold at
EcoScience decreased $1,716,000 due to the cessation of manufacturing of the
first generation Bio-Path Cockroach Control Chamber.  Gross margin on product
sales increased $1,575,000 or 72% to $3,757,000 in 1996 from $2,182,000 in
1995, while gross margin percentage on product sales increased to 27% in 1996
from 18% in 1995. Gross margin increased due primarily to the cessation of
manufacturing of Bio-Path and related cost savings at EcoScience; and, AGRO's
increase in gross margin from product sales increases, offset by a gross margin
decrease at EPSC from product sales decreases.

     Research and development expenses decreased $3,465,000 or 77% to
$1,018,000 in 1996 from $4,483,000 in 1995, due primarily to a decrease at
EcoScience of $3,783,000 from the implementation of the Company's restructuring
program at the close of fiscal 1995, which curtailed and deferred research and
development activities for certain product programs, as well as reduced
personnel and facility costs.  The Company has and will continue to incur
ongoing research and development expenses for its Bio-Save PostHarvest
BioProtectant, Bio-Blast termiticide and other near term revenue generating
opportunities.  EPSC research and development expenses increased $318,000 in
1996, due primarily to additional personnel and related support expenses for
the Bio-Save PostHarvest BioProtectant and other product programs.

     Selling and marketing expenses decreased $1,078,000 or 29% to $2,594,000
in 1996 from $3,672,000 in 1995, due primarily to the decreases in EcoScience's
and EPSC's selling and marketing expenses of $860,000 and $418,000,
respectively and an increase of $200,000 at AGRO.  The decrease in EcoScience's
selling and marketing expenses for 1996 was primarily attributable to the
restructuring program initiatives discussed above.  The decrease in EPSC's
selling and marketing expenses for 1996 was primarily attributable to the
reduction of selling and marketing department personnel and related costs
during the latter part of fiscal 1995.  The increase in AGRO's selling and
marketing expenses was primarily due to additional personnel and related costs
to support new product sales and sales increases discussed above.

     General and administrative expenses decreased $225,000 or 9% to $2,216,000
in 1996 from $2,441,000 in 1995, due primarily to the decreases in EcoScience's
and EPSC's general and administrative expenses of $208,000 and $107,000,
respectively, which was offset by an increase in such expenses for AGRO of
$90,000.  The decrease in EcoScience's general and administrative expenses for
1996 was primarily attributable to the restructuring program initiatives
discussed above.  The decrease in EPSC's general and administrative expenses
for 1996 was due primarily to personnel and related cost reductions.  The
increase in AGRO's general and administrative expenses was primarily due to
increased business activity and related support costs.

     Interest and other expenses decreased $911,000 or 64% to $514,000 in 1996
from $1,425,000 in 1995 due primarily to the decrease in interest expense which
resulted from the lower average level of long-term debt and capital lease
obligations outstanding during 1996.  During 1995, the Company had also
incurred approximately $211,000 of expenses in connection with the exploration
and evaluation of its various strategic alternatives which included potential
mergers, acquisitions, divestitures, joint ventures, and other transactions.

     In connection with the acquisition of AMC in May 1994, the Company issued
a promissory note in the principal amount of $430,000 to the shareholder of
AMC.  In February 1996, the Company settled the remaining balance of the
promissory note and other acquisition related 

                                       21
<PAGE>

liabilities totaling $501,000 for $251,000, excluding $9,000 of related 
transaction expenses, which resulted in an extraordinary gain on the early 
extinguishment of debt of $241,000 or $0.03 per share with no related income 
tax effect.

     The Company incurred a loss before extraordinary gain of $828,000 or $0.09
per share in 1996.  The Company incurred a net loss of $587,000 or $0.06 per
share in 1996 compared to a net loss of $15,094,000 or $1.71 per share in 1995.
Excluding the reversal of the accrued restructuring costs and the extraordinary
gain on early extinguishment of debt, the Company incurred a loss of $2,378,000
or $0.26 per share in 1996.  Excluding the asset valuation and restructuring
charges, the Company incurred a loss of $9,094,000 or $1.03 per share in 1995.

1995 COMPARED TO 1994

     The Company's total revenues increased $2,169,000 or 20% to $13,080,000 in
1995 from $10,911,000 in 1994, due primarily to the inclusion of a full year of
operating results of EPSC in the 1995 period.  The Company's product sales
increased $3,089,000 or 33% to $12,335,000 in 1995 from $9,246,000 in 1994 due
primarily to the increases in sales by EPSC and AGRO of $2,841,000 and
$229,000, respectively.  The following table sets forth the Company's product
sales by operating company for 1995 and 1994:

<TABLE>
(IN THOUSANDS              1995                 1994               Increase
                         -------              -------             ---------
<S>                      <C>                  <C>                 <C>
 AGRO ................   $ 8,792               $8,563                $  229
 EPSC ................     3,018                  177                 2,841
 EcoScience ..........       525                  506                    19
                         -------               ------                ------
 Consolidated ........   $12,335               $9,246                $3,089
                         -------               ------                ------
                         -------               ------                ------
</TABLE>

     The increase in the Company's total product sales in 1995 was offset by a
decrease in research, development, and licensing fee income of $657,000 and
lower investment income of $263,000.  The decrease in research, development,
and licensing fee income in 1995 primarily resulted from a reduction of
$363,000 in license fees and product support payments received from Terminix as
its contractual payment obligations were fulfilled.  The decrease in investment
income in 1995 resulted from a corresponding decline in the average funds
available for investment during the 1995 period.

     Cost of goods sold increased $2,278,000 or 29% to $10,153,000 in 1995 from
$7,875,000 in 1994 due primarily to the inclusion of a full year of operating
results of EPSC which accounted for $1,519,000 of this increase.  In addition,
the Company incurred higher than expected production costs for its Bio-Path
Cockroach Control Chamber in 1995 which accounted for $719,000 of this increase
in cost of goods sold.  Gross margin on product sales increased $811,000 or 59%
to $2,182,000 in 1995 from $1,371,000 in 1994, while gross margin percentage on
product sales increased to 18% in 1995 from 15% in 1994 due primarily to the
inclusion of a full year of operating results of EPSC in the 1995 period.  As
previously discussed, the Company has ceased any further development and
production of its first generation Bio-Path Cockroach Chamber as of June 30,
1995.

                                       22
<PAGE>

     Research and development expenses decreased $3,673,000 or 45% to
$4,483,000 in 1995 from $8,156,000 in 1994.  Approximately $1,631,000 of the
decrease in research and development expenses was due to the closure of the
Company's process development facility, and the termination of related
activities at the Company's Amherst, Massachusetts pilot plant in June 1994.
The remaining portion of the decrease was primarily due to the major reductions
in research and development activities and personnel as part of the Company's
restructuring program implemented in August 1994.

     Selling and marketing expenses increased $629,000 or 21% to $3,672,000 in
1995 from $3,043,000 in 1994.  The increase in selling and marketing expenses
was primarily attributable to the inclusion of a full year of operating results
of EPSC in the 1995 period, which accounted for $1,299,000 of this increase,
and to additional personnel costs incurred by AGRO of $103,000, which were
offset by reductions in personnel, travel, consulting, and other expenses of
$773,000 at EcoScience.

     General and administrative expenses decreased $941,000 or 28% to
$2,441,000 in 1995 from $3,382,000 in 1994.  The decrease in general and
administrative expenses was primarily due to reductions in personnel and
facility related costs of approximately $1,069,000, which resulted primarily
from the restructuring program implemented in August 1994, and to a decrease in
professional service fees of approximately $343,000 at EcoScience.  The
decrease in general and administrative expenses in 1995 was offset by the
inclusion of a full year of operating results of EPSC which added approximately
$496,000 to general and administrative costs.

     Interest and other expenses increased $1,217,000 to $1,425,000 in 1995
from $208,000 in 1994 due primarily to the increase in interest expense which
resulted from the higher level of long term debt and capital lease obligations
outstanding during 1995 and because certain interest costs were capitalized as
part of the Company's construction activities at the Northborough manufacturing
facility in 1994.  The Company also incurred approximately $238,000 of expenses
during 1995 in connection with the exploration and evaluation of its various
strategic alternatives which included potential mergers, acquisitions,
divestitures, joint ventures, and other transactions.  In addition, the Company
recorded a gain of $150,000 for the settlement of certain debt obligations at
less than their carrying values in 1994.

     The Company incurred a net loss of $15,094,000 or $1.71 per share in 1995
compared to a net loss of $17,553,000 or $2.27 per share in 1994.  Excluding
the asset valuation and restructuring charges, the Company incurred a loss of
$9,094,000 or $1.03 per share in 1995 compared to a loss of $11,753,000 or
$1.52 per share in 1994.


LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the Company's cash expenditures have exceeded its
revenues.  The Company's operations have been funded through public and private
placements of its equity securities, bank loans and lease financings, revenues
from product sales, licensing, collaborative research and development
arrangements, and investment income.  In conjunction with the asset valuation
and restructuring charges recorded in 1995, the Company implemented and
substantially completed in fiscal 1996 a program to reduce its operating losses
and to conserve its cash resources for use in the Company's operating
businesses. This restructuring program has significantly reduced research and
development and general and administrative costs from historical levels.  In
1995, the Company funded $1,174,000

                                       23
<PAGE>

of accrued restructuring costs that had been recorded in 1994 and 1995.  
Additionally, accrued restructuring costs were reduced by changes related to 
the operating lease termination, discussed above, in the amount of 
$2,050,000, consisting of a $1,550,000 restructuring cost reversal and 
$500,000 for the issuance of common stock.  The balance of accrued 
restructuring costs, $1,030,000 (total current and noncurrent portions), as 
of June 30, 1996, is expected to be funded in 1997 and beyond.  The Company 
expects to incur administrative, business development and commercialization 
expenditures in the future as it advances  the  development, manufacturing, 
and marketing of its Bio-Blast and Bio-Save products.  In addition, the 
Company expects to incur incremental costs associated with its plans to 
expand product lines at AGRO.  The Company may also use cash to acquire 
technology, products or companies that support the strategy of the Company.

     Cash and cash equivalents were $734,000 at June 30, 1996, compared to
$481,000 at June 30, 1995.  Unrestricted and restricted cash, cash equivalents,
and short-term investments totaled $2,639,000, compared to $7,831,000 at June
30, 1995.  Cash flows used for operating activities totaled $2,651,000 and
principally represented the $1,174,000 expended for costs accrued as part of
the Company's restructuring program adopted in 1995.  Cash flows used by
financing activities totaled $2,892,000 in 1996, which consisted principally of
payments of $2,900,000 on debt and capital leases. Cash flows provided by
investment activities in 1996 totaled $5,790,000 and included the proceeds from
the sales of short-term investments of $6,159,000 and property and equipment of
$368,000, and a decrease in other noncurrent assets of $95,000, which were
offset by purchases of short-term investments of $705,000 and property and
equipment of $127,000.  The Company's working capital and current ratio were
($308,000) and 0.9 to 1, respectively, at June 30, 1996, compared to $3,347,000
and 1.4 to 1, respectively, at June 30, 1995.  The Company's working capital
has increased significantly since June 30, 1996, as a result of the subsequent
equity offering and lease settlement transactions which occurred on September
27, 1996, and are discussed further below and in Notes 4 and 11 to the Notes 
to the Consolidated Financial Statement.  Giving effect to the subsequent 
equity offering and lease settlement transactions, the working capital and 
current ratio would have been $1,119,000 and 1.2 to 1 (unaudited), 
respectively, if these transactions had occured on June 30, 1996.

     On June 30, 1994, the Company sold certain manufacturing equipment and
leasehold  improvements with an original cost of approximately $3,800,000 to a
financing company.  The Company, in turn, leased the equipment and improvements
back from the financing company.  The lease was accounted for as a capitalized
lease obligation.  The lease bore interest at an effective rate of
approximately 14% and has been payable in monthly installments of principal and
interest of approximately $88,000 over 50 months.  On October 11, 1995, the
Company and the financing company entered into an agreement which modified the
lease pursuant to which the financing company waived a payment default which
occurred in September 1995, in exchange for the Company's advance payment of
approximately $1,135,000 which was applied to satisfy the total amount of the
obligation outstanding under rental schedule No. 2 to the lease.  In addition,
the Company issued to the financing company a warrant to purchase 100,000
shares of common stock at an exercise price of $3.00 per share.    The Company
continued to make the remaining monthly payments of approximately $55,000 under
rental schedule No. 1.  In August 1996, the Company entered into a lease
settlement agreement with the financing company pursuant to which the Company
paid $880,000, from the proceeds of an equity offering discussed below, to
satisfy the remaining capital lease obligation under rental schedule No. 1 of
approximately $1,248,000 on September 27, 1996.  Accordingly, the Company
reclassified $880,000 from "long-term debt and capital leases" to "current
maturities of noncurrent liabilities" in the consolidated balance sheet to
reflect the impact of this agreement as of June 30, 1996.  The present value of
the minimum lease payments under this capital lease obligation was $1,390,000
as of June 30, 1996.

     In May 1993, the Company entered into a 15 year lease agreement for a
manufacturing facility in Northborough, Massachusetts.  This lease was
accounted for as a capital lease, had borne interest at

                                       24
<PAGE>

an effective annual rate of approximately 13% and had been payable in monthly 
installments of principal and interest of approximately $44,000.  The present 
value of the minimum lease payments under this capital lease obligation was 
$3,525,000 at September 29, 1995.  On September 29, 1995, the Company and the 
lessor entered into a lease termination agreement under which the Company 
paid the lessor, on October 31, 1995, approximately $195,000; released to the 
lessor approximately $305,000 held in an escrow account; and agreed to make 
an advance lease payment for the period October 1995 through December 1995 to 
the lessor in exchange for an early termination and release from the 
remaining lease obligations effective December 31, 1995.  The effect of this 
lease termination on the consolidated financial statements during fiscal 1996 
was to reduce assets under capital leases by $2,936,000 and capital lease 
obligations by $3,500,000, and to increase accrued restructuring costs by 
$73,000.  These transactions had a non-cash effect on the Company's 
consolidated financial statements for 1996.

     The Company issued a promissory note in the amount of $430,000 in
connection with the acquisition of AMC in May 1994.  This promissory note was
payable in 16 equal quarterly installments plus accrued interest calculated at
the prime rate (8.25% at June 30, 1996) plus 1%, not to exceed 9%.  This
promissory note was part of the EPSC debt settlement discussed above in the
Results of Operations section.

     In October 1994, the Company established a $250,000 line of credit with a
bank for the purchase of equipment.  Funds borrowed under that line had been
payable over 36 months commencing February 5, 1995 at an interest rate of prime
plus 2%.  In addition, the Company established a $1,500,000 revolving line of
credit with the same bank for AGRO under which borrowings had borne interest at
a rate of prime plus 1% and is secured by all the assets of AGRO and the
outstanding common stock of AGRO owned by the Company.  The loan proceeds from
the revolving line of credit have been used to finance the working capital
needs of AGRO and any principal amounts outstanding were originally due on
January 5, 1996.  As of June 30, 1996, the Company had principal obligations of
$1,041,000 under the revolving line of credit.  Under the terms of the credit
agreements, the Company was required to maintain a minimum consolidated
tangible  net worth of $5,000,000 ("Net Worth Covenant"), a consolidated quick
asset to current liabilities ratio of 1.50 to 1 through June 30, 1995 and 1.25
to 1 thereafter ("Quick Ratio Covenant"), and a minimum aggregate cash, cash
equivalents and short-term investment balance of $5,000,000 ("Cash Covenant").
As of June 30, 1995 and through October 5, 1995, the Company was in violation
of the Net Worth Covenant and Quick Ratio Covenant.  On October 5, 1995, the
Company and the bank entered into an amendment to the revolving and equipment
lines of credit agreements pursuant to which the bank waived the violations of
Net Worth and Quick Ratio Covenants at June 30, 1995 and through October 5,
1995, eliminated the Net Worth and Quick Ratio Covenants for compliance periods
commencing after June 30, 1995, and reduced the Cash Covenant from $5,000,000
to $1,000,000 for compliance periods commencing after June 30, 1995.  In
addition, the amendment to the credit agreements required repayment of all
outstanding obligations under the equipment line of credit (approximately
$194,000 as of October 5, 1995); increased  the interest rate on borrowings
under the revolving line of credit to prime (8.25% at June 30, 1996) plus 1.5%
effective October 1, 1995; and expanded the collateral requirements to include
a certificate of deposit in the amount of $700,000 to be held by the bank as
partial cash collateral for the borrowings currently outstanding under the
revolving line of credit.  Any additional borrowings under the revolving line
of credit will require 67% cash collateral coverage in the form of a
certificate of deposit to be held by the bank.  The amendment also extended the
expiration date of the credit agreement from January 5, 1996 to July 5, 1996
and any principal amounts outstanding, together with accrued interest thereon
were due on such date.

                                       25
<PAGE>

     On July 5, 1996, September 5, 1996 and October 5, 1996, the Company and
the bank entered into three amendments to the revolving line of credit
agreement pursuant to which the bank extended the expiration date of the credit
agreement from July 5, 1996 to December 15, 1996 on the same terms, and any
principal amounts outstanding, together with accrued interest thereon, are due
on December 15, 1996.  The Company is currently negotiating with the bank
certain modifications to the terms of the revolving line of credit which
include, but are not limited to, an increase in the borrowing capacity,
elimination of the cash collateral coverage requirement, financial covenants,
and extension of the repayment and expiration dates of the credit agreement.
In addition, the Company has received a term sheet from a financial institution
to replace the existing revolving line of credit with a proposed credit
facility structure that meets the Company's requirements for the foreseeable
future.  The Company believes that it will obtain either a modification and
extension to the existing revolving line of credit agreement or secure another
financing arrangement which has terms no less favorable than those contained in
the current revolving line of credit agreement in fiscal 1997.

     On January 11, 1996, the Company entered into a lease termination
agreement for its Worcester corporate headquarters and research and development
facility, under which the Company paid the landlord $125,000 and issued 500,000
shares of the Company's common stock with a market value of $500,000 on January
22, 1996, in exchange for an immediate termination of the lease.  Additionally,
the Company incurred approximately $25,000 for expenses related to the
completion of the transaction.  After accounting for these settlement
provisions, which totaled $650,000, the Company reversed $1,550,000 of accrued
restructuring costs in the third quarter of fiscal 1996 that related to accrued
restructuring costs, which were originally recorded in fiscal 1995 ($2,000,000)
and the remaining accrued restructuring costs which were originally recorded in
fiscal 1994 ($200,000).

     On September 27, 1996, the Company sold 1,040,000 unregistered shares of
common stock in a Regulation D and Company offering.  Net proceeds realized
from the equity offering totaled $1,119,000 after placement agent fees and
expenses and Company expenses totaling $181,000.  On September 27, 1996,
pursuant to a lease settlement agreement dated August 8, 1996, between the
Company and its financing company, the Company paid $880,000 and returned
certain leased equipment with a net book value of $328,000 to the financing
Company as final satisfaction of its capital lease obligation under rental
schedule No. 1, as discussed in Note 4(b) to the Company's consolidated
financial statements.

     The Company plans to finance the cash needs discussed above principally
with existing cash reserves, represented by approximately $734,000 of
unrestricted cash and cash equivalents, $700,000 of short-term investments and
$1,205,000 of restricted cash and short-term investments as of June 30, 1996.
The Company believes that such cash reserves, along with revenues from product
sales, and funds available under the extended or potentially modified revolving
line of credit or replacement financing arrangement, as discussed above, will
be sufficient throughout the next 12 months to finance the Company's working
capital needs, planned capital expenditures, restructuring program initiatives
and related obligations, and to service its indebtedness.  The Company believes
it may need to raise additional funds to finance its ongoing operations after
June 30, 1997, although there can be no assurances that such funds will be
available on terms favorable to the Company, if at all.  The Company is
continuing to explore potential mergers, joint ventures, and various other
strategic options, which are aimed at enhancing stockholder value and the long-
term commercial viability of the Company.

                                       26
<PAGE>

SEASONALITY

     The timing of the Company's operating revenues may vary as a result of the
seasonal nature of its businesses.  In addition, operating revenues may be
affected by the timing of new product launches, acquisitions, sales orders, and
other economic factors.  Operating revenues may be concentrated in the
Company's second and third quarters as a result of the North American growing
season.  Although the Company believes that the historical trend in quarterly
revenues for the second and third quarters of each year are generally higher
than the first and fourth quarters, there can be no assurance that this will
occur in future periods.  Accordingly, quarterly or other interim results
should not be considered indicative of results to be expected for any other
quarter or for the full fiscal year.

FORWARD LOOKING STATEMENTS

     This report contains forward looking statements that describe the
Company's business prospects. These statements involve risks and uncertainties
including, but not limited to, regulatory uncertainty, level of demand for the
Company's products and services, product acceptance, industry wide competitive
factors, seasonality factors, timing of completion of major equipment projects
and political, economic or other conditions.  Furthermore, market trends are
subject to changes which could adversely affect future results.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                                                               
     The Company's consolidated financial statements and supplementary
consolidated quarterly financial data for the years ended June 30, 1996, 1995,
and 1994, are set forth on pages 28 through 53.

                                       27
<PAGE>

                            ECOSCIENCE CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
<TABLE>
                                                          June 30,
                                              --------------------------------
                                                 1996                   1995
                                              --------                --------
<S>                                           <C>                     <C>
                                     ASSETS
Current assets:
    Cash and cash equivalents ............... $    734                $    481
    Short-term investments ..................      700                   6,150
    Restricted cash and short-term 
     investment .............................    1,205                     500
    Accounts receivable, less reserves of 
     $118 and $186 at June 30, 1996 and 1995, 
     respectively ...........................    1,552                   1,961
    Interest receivable .....................       32                      84
    Inventories .............................    2,001                   1,525
    Other current assets ....................      795                     498
                                              --------                --------
       Total current assets .................    7,019                  11,199
                                              --------                --------
Property and equipment, net .................      998                   4,478
Restricted cash equivalents .................        -                     700
Intangible assets, net ......................    1,949                   2,152
Other noncurrent assets .....................      145                     240
                                              --------                --------
       Total assets ......................... $ 10,111                $ 18,769
                                              --------                --------
                                              --------                --------
                                                                              

                         LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
    Current maturities of noncurrent
     liabilities ..........................   $  2,441                $  2,597
    Accounts payable ......................      2,347                   1,946
    Accrued restructuring costs ...........        730                   1,754
    Accrued expenses and other current
     liabilities ..........................      1,809                   1,555
                                              --------                --------
        Total current liabilities .........      7,327                   7,852
                                              --------                --------
Noncurrent liabilities:
    Long-term debt and capital leases,
     less current maturities ..............         11                   5,693
    Other long-term liabilities ...........        300                   2,732
                                              --------                --------
        Total noncurrent liabilities ......        311                   8,425
                                              --------                --------

Commitments and contingencies .............          -                       -
Stockholders' investment:
    Preferred stock, $.01 par value,
      1,000,000 shares authorized;
      none issued and outstanding .........          -                       -
    Common stock, $.01 par value,
      25,000,000 shares authorized; 
      9,342,177 and 8,840,511 shares
      issued and outstanding at June 30, 
      1996 and 1995, respectively .........         93                      88
Additional paid-in capital ................     56,077                  55,581
Accumulated deficit .......................    (53,697)                (53,110)
Unrealized loss on short-term investments .          -                     (67)
                                              --------                --------
        Total stockholders' investment ....      2,473                   2,492
                                              --------                --------
        Total liabilities and stockholders'
         investment .......................   $ 10,111                $ 18,769
                                              --------                --------
                                              --------                --------
</TABLE>
  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS.

                                       28
<PAGE>

                            ECOSCIENCE CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)
<TABLE>
                                                                          Years Ended June 30,
                                                            ---------------------------------------------------
                                                               1996                 1995                 1994  
                                                            --------             --------             ---------
<S>                                                         <C>                  <C>                  <C>
Revenues:
 Product sales ........................................     $ 14,151             $ 12,335              $ 9,246
 Research, development, licensing fees and other ......            8                  155                  812
 Investment income ....................................          199                  590                  853
                                                            --------             --------              -------
       Total revenues .................................       14,358               13,080               10,911
                                                            --------             --------              -------
Costs and expenses:
 Cost of goods sold ...................................       10,394               10,153                7,875
 Research and development .............................        1,018                4,483                8,156
 Asset valuation and restructuring charges (reversal) .       (1,550)               6,000                5,800
 Selling and marketing ................................        2,594                3,672                3,043
 General and administrative ...........................        2,216                2,441                3,382
 Interest and other ...................................          514                1,425                  208
                                                            --------             --------              -------
       Total costs and expenses .......................       15,186               28,174               28,464
                                                            --------             --------              -------
Loss before extraordinary gain ........................         (828)             (15,094)             (17,553)
Extraordinary gain on early extinguishment of debt ....          241                    -                    -
                                                            --------             --------              -------
Net loss ..............................................        ($587)            ($15,094)            ($17,553)
                                                            --------             --------              -------
                                                            --------             --------              -------
Net income (loss) per share:
    Loss before extraordinary gain ....................       ($0.09)              ($1.71)              ($2.27)
    Extraordinary gain ................................         0.03                    -                    -
                                                            --------             --------              -------
    Net loss ..........................................       ($0.06)              ($1.71)              ($2.27)
                                                            --------             --------              -------
                                                            --------             --------              -------
Weighted average number of
     common shares outstanding ........................        9,070                8,839                 7,748
                                                            --------             --------              --------
                                                            --------             --------              --------
</TABLE>

THE ACCOMPANYING NOTES ARE IN AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      29
<PAGE>
                            ECOSCIENCE CORPORATION
              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
                     (In thousands, except share amounts)

<TABLE>
                                                      COMMON STOCK                                  UNREALIZED
                                                -----------------------   ADDITIONAL                  LOSS ON        TOTAL
                                                NUMBER OF        $.01      PAID-IN    ACCUMULATED   SHORT-TERM    STOCKHOLDERS'
                                                 SHARES       PAR VALUE    CAPITAL      DEFICIT     INVESTMENTS    INVESTMENT
                                                ---------     ---------   ----------  -----------   -----------  -------------
<S>                                             <C>           <C>          <C>         <C>          <C>          <C>
Balance at June 30, 1993 ....................   6,786,291          $68       $45,518    ($20,463)       $   -       $ 25,123
Exercise of stock options ...................      44,798            -           201           -            -            201
Compensation associated with common
 stock grants ...............................       5,790            -            48           -            -             48
Exercise of common stock warrants ...........      39,354            -            11           -            -             11
Sale of common stock, net of issuance
 costs of $440 ..............................   1,763,050           18         9,485           -            -          9,503
Issuance of common stock for purchase
 of American Machinery Corporation ..........     202,553            2         1,024           -            -          1,026
Change in unrealized loss on
 short-term investments .....................           -            -             -           -         (249)          (249)
Net loss ....................................           -            -             -     (17,553)           -        (17,553)
                                                ---------          ---       -------     -------         ----        --------
Balance at June 30, 1994 ....................   8,841,836           88        56,287     (38,016)        (249)        18,110
Exercise of stock options ...................       6,082            -             1           -            -              1
Retirement of common stock ..................      (7,407)           -             -           -            -              -
Cash settlement of price guarantee for
 common stock issued for purchase of
 American Machinery Corporation .............           -            -          (707)          -            -           (707)
Change in unrealized loss on
 short-term investments .....................           -            -             -           -          182            182
Net loss ....................................           -            -             -     (15,094)           -        (15,094)
                                                ---------          ---       -------     -------         ----        --------
Balance at June 30, 1995 ....................   8,840,511           88        55,581     (53,110)         (67)         2,492

Exercise of stock options ...................       1,666            -             1           -             -             1
Issuance of common stock in
  settlement of lease obligation ............     500,000            5           495           -             -           500
Change in unrealized loss on
  short-term investments ....................           -            -             -           -            67            67
Net loss ....................................           -            -             -        (587)            -          (587)
                                                ---------          ---       -------     -------         ----        --------
Balance at June 30, 1996 ....................   9,342,177          $93       $56,077    ($53,697)        $   -      $  2,473
                                                ---------          ---       -------     -------         ----        --------
                                                ---------          ---       -------     -------         ----        --------
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                       30
<PAGE>
                            ECOSCIENCE CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
<TABLE>
                                                                                Years Ended June 30,
                                                                    -----------------------------------------
                                                                      1996            1995            1994
                                                                    --------       ----------      ----------
<S>                                                                 <C>            <C>             <C>
Cash flows from operating activities:
  Net loss .....................................................      ($587)        ($15,094)       ($17,553)
  Adjustments to reconcile net loss to net
    cash used for operating activities:
      Depreciation and amortization ............................        580             1,125          1,059
      Gain on sale of property and equipment ...................        (74)                -              -
      Gain on settlement of accounts payable ...................        (51)                -              -
      Loss on sale of investments ..............................         58                23             21
      Non-cash gain on settlement of debt ......................       (241)                -          (150)
      Asset valuation and restructuring charges (reversal) .....     (1,550)            6,000          5,800
      Deferred and other non-cash compensation .................          -                 -             48
      Foreign exchange loss (gain) .............................        (13)               58             71
      Deferred rent ............................................          -               (38)           177
      Changes in current assets and liabilities,                                                            
        net of effect of companies acquired:                                                                
          Accounts and interest receivable .....................        461                478          (779)
          Inventories ..........................................       (476)              (39)          (363)
          Other current assets .................................       (297)               82            (72)
          Accounts payable and accrued expenses ................        713            (1,808)         1,329
          Accrued restructuring costs ..........................     (1,174)           (1,746)             -
                                                                    -------          --------       --------
      Net cash used for operating activities ...................     (2,651)          (10,959)       (10,412)
                                                                    -------          --------       --------
Cash flows from investing activities:
  Purchases of property and equipment, net .....................       (127)             (725)        (3,918)
  Proceeds from sales of property and equipment ................        368                56            192
  Payments for purchases of companies,
    net of cash acquired .......................................          -              (707)          (488)
  Purchases of short-term investments
    and marketable securities ..................................       (705)           (1,494)       (23,960)
  Proceeds from sales of short-term investments
    and marketable securities ..................................      6,159             5,265         34,113
  Decrease (increase) in other noncurrent assets ...............         95            (1,066)          (296)
                                                                    -------          --------       --------
      Net cash provided by investing activities ................      5,790             1,329          5,643
                                                                    -------          --------       --------
Cash flows from financing activities:
  Proceeds from sale of common stock and
    exercise of stock options ..................................          1                 1          9,704
  Proceeds from long-term debt .................................          7             2,567          5,800
  Payments on  long-term debt and capital leases ...............     (2,900)           (2,278)        (4,978)
                                                                    -------          --------       --------
    Net cash (used for) provided by financing activities .......     (2,892)              290         10,526
                                                                    -------          --------       --------
Increase (decrease) in cash and cash equivalents before
  effect of exchange rate changes on cash ......................        247            (9,340)         5,757
Effect of exchange rate changes on cash ........................          6               (65)           (18)
                                                                    -------          --------       --------
Increase (decrease) in cash and cash equivalents ...............        253            (9,405)          5,739
Cash and cash equivalents at beginning of period ...............        481             9,886           4,147
                                                                    -------          --------       --------
Cash and cash equivalents at end of period .....................    $   734            $  481         $ 9,886
                                                                    -------          --------       --------
                                                                    -------          --------       --------
Total unrestricted and restricted cash, cash equivalents and
  short-term investments at end of period ......................    $ 2,639            $7,831         $20,141
                                                                    -------          --------       --------
                                                                    -------          --------       --------
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                       31
<PAGE>

                            ECOSCIENCE CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1996

1.   OPERATIONS

     EcoScience Corporation ("EcoScience") and its wholly owned subsidiaries 
(collectively, the "Company"), Agro Dynamics, Inc. and Agro Dynamics Canada 
Inc. (collectively, "AGRO") and EcoScience Produce Systems Corp. ("EPSC") are 
engaged in the development and commercialization of natural pest control 
products, naturally derived coatings to preserve food quality and extend the 
shelf life of fruits and vegetables, and the marketing and distribution of 
advanced technologies, products, growing systems and services for the 
intensive farming, horticulture and produce packing industries.  The Company 
derives a major portion of its revenues from the sale of growing medium 
products to the North American intensive farming and horticulture industries, 
and sorting and grading equipment to the produce packing industries, and to a 
lesser extent from the sale of postharvest coating products to the fresh 
fruit and vegetable markets throughout the western hemisphere.

     The Company historically has devoted substantially all of its efforts
toward new product research and development, and the manufacture, marketing and
distribution of products developed, acquired or licensed.  Substantially all
revenues generated by the Company prior to the acquisition of AGRO were from
collaborative research and development arrangements and investment income.  The
Company introduced its first two products, the Bio-Path Cockroach Control
Chamber and Nature Seal, in June 1993.  In March 1995, the Company began
marketing its third product, Bio-Save PostHarvest BioProtectant.  In August
1995, the Company introduced its fourth product, Bio-Blast termiticide.  The
Company is subject to a number of risks similar to those of other companies in
similar stages of development, including dependence on key individuals,
competition from other products and companies, the necessity to develop,
register, and manufacture commercially usable products, the ability to achieve
profitable operations and the need to raise additional funds through public or
private debt or equity financing.

     At the close of fiscal 1995, the Company adopted and began implementation
of a restructuring program to shift the corporate focus from research and
development activities to commercial operations in an effort to reduce
operating losses and conserve cash reserves.  Under the restructuring program,
the Company eliminated substantially all of its Massachusetts based work force,
closed its manufacturing facility located in Northborough, Massachusetts, and
relocated its corporate headquarters and operations to AGRO's East Brunswick,
New Jersey facility during the second quarter of fiscal 1996.  As part of the
restructuring program, the Company has ceased production of the first
generation Bio-Path Cockroach Control Chamber.  The Company has completed
formulation of a second generation product, which has yet received EPA
approval, and is seeking contractors for reduced cost toll manufacturing.  The
Company is currently seeking partners to market the second generation product.
The Company believes that the impact of the restructuring program has
significantly reduced its working capital needs such that its cash and short-
term investments as of June 30, 1996, together with the proceeds from the
equity offering subsequent to June 30, 1996, funds available under its existing
or potential replacement revolving line of credit, along with revenues from
product sales will be sufficient to finance the Company's working capital needs
for at least the next twelve months.  At such time, the Company believes that
it may need to raise additional funds through public or private debt or equity
financings.  Although there can be no assurances that such funds will be
available on terms favorable to the Company, if at all.  The

                                       32
<PAGE>

Company is continuing to explore potential mergers, joint ventures, and 
various other strategic options, which are aimed at enhancing stockholder 
value and the long-term commercial viability of the Company.  See Notes 4, 8 
and 11 for further discussion of the Company's restructuring program and 
subsequent events.

2.  ACQUISITIONS

(A) AMERICAN MACHINERY CORPORATION

     In May 1994, the Company acquired certain assets and assumed certain
liabilities of American Machinery Corporation ("AMC"), an Orlando, Florida
based company which provides postharvest coating products and services to the
fresh fruit and vegetable markets throughout the United States, the Caribbean,
Central America and South America. Concurrent with the acquisition of AMC, the
Company formed EPSC to combine the AMC product line and operating unit with its
coating activities, which included the distribution of Nature Seal coating
products.  The initial purchase price for AMC consisted of $419,000 in cash
(including acquisition related costs), a promissory note in the principal
amount of $430,000 and 202,553 shares of the Company's common stock with a
market value of $1,026,000, as well as the assumption of liabilities totaling
$304,000.  The acquisition agreement provided for additional payments of up to
$300,000 based upon the attainment of certain annual and cumulative revenue
milestones through December 31, 1997.  The Company accrued such additional
consideration and increased goodwill by the same amount at the acquisition
date.  The initial financial performance milestone was achieved as of December
31, 1994, and $68,000 was paid to AMC and charged against the purchase accrual
in June 1995.  In addition, the acquisition agreement provided that at the end
of a four month period following the effective date (December 2, 1994) of a
registration statement filed with the Securities and Exchange Commission (the
"Commission") registering the 202,553 shares of common stock issued in
connection with the purchase of AMC, the Company was obligated to pay AMC in
cash the amount by which the fair market value of the 202,553 shares of common
stock as of the date of the acquisition ($1,026,000) exceeded the sum of the
net proceeds received by AMC from the sale of such shares during the four month
period ($319,000).  In April 1995, the Company paid $707,000 to AMC in
satisfaction of this obligation and reduced "additional paid-in capital" by the
same amount.  The acquisition has been accounted for as a purchase in
accordance with Accounting Principles Board Opinion ("APBO") No. 16, "Business
Combinations."  Accordingly, the results of operations have been included in
the accompanying consolidated financial statements from the date of
acquisition.  The Company allocated approximately $1,082,000 of the total
purchase price to certain assets acquired.  In February 1996, the Company
settled the remaining outstanding balance under the promissory note and
additional consideration liabilities related to the acquisition which together
totaled $501,000 for $251,000.  As part of this settlement, the Company also
issued a warrant to purchase 50,000 shares of its common stock at $2.00 per
share to the shareholder of AMC.  See Note 4 for further discussion of the AMC
settlement.

(B) AGRO DYNAMICS, INC.

     In November 1992, the Company acquired all of the outstanding capital
stock of AGRO, an East Brunswick, New Jersey based company which markets and
distributes advanced technologies, products,  growing systems and services to
the North American intensive farming, horticulture and produce packing
industries.  The initial purchase price for AGRO consisted of cash and shares
of the Company's common stock which totaled $2,184,000.  The acquisition
agreement also provided for additional payments of up to $900,000 based upon
the attainment by AGRO of certain cumulative

                                       33
<PAGE>

earnings milestones ranging from $1,250,000 (at which level no additional 
payments are due) to $1,700,000 (at which level the entire additional payment 
is due) over a 39 month period from October 1, 1992 to December 31, 1995.  
The initial financial performance milestone was achieved as of December 31, 
1993, and correspondingly, the Company recorded additional consideration of 
$68,000 for the acquisition, as reflected in the consolidated financial 
statements for the year ended June 30, 1994.  The second and third financial 
performance milestones were not achieved as of December 31, 1994 and 1995, 
respectively.  The acquisition was accounted for as a purchase in accordance 
with APBO No. 16.

3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of EcoScience
and its wholly-owned subsidiaries, AGRO and EPSC.  All material intercompany
transactions and balances have been eliminated in consolidation.

(B) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

(C) CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

     Cash, cash equivalents and short-term investments consist of highly liquid
investments and are stated at the lower of cost or market value.  Cash and cash
equivalents consist of investments with original maturities of less than 90
days.  Short-term investments have maturities greater than 90 days and such
securities are classified as available for sale in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."  The Company uses the specific
identification method in determining the cost basis of short-term investments
and marketable securities, and in computing any realized gains or losses from
the sale of such securities.  Short-term investments are stated at fair market
value, net of unrealized holding losses of $0 and $67,000 at June 30, 1996 and
1995, respectively.  Net realized losses on short-term investments and
marketable securities were $58,000, $23,000, and $21,000 in 1996, 1995, and
1994, respectively.

                                       34
<PAGE>

     The balances of cash and cash equivalents, and short-term investments
consist of the following:

<TABLE>
(IN THOUSANDS)                                   June 30,
                                           --------------------
                                             1996       1995
                                           --------    --------
<S>                                        <C>         <C>
CASH AND CASH EQUIVALENTS:
  Cash ...................................  $  508      $  471
  Bond mutual funds ......................       -           3
  Money market funds .....................     226           -
  United States Government obligations ...       -           7
                                            ------      ------
                                            $  734      $  481
                                            ------      ------
                                            ------      ------

SHORT-TERM INVESTMENTS:
  United States Government obligations ...  $  700      $6,150
                                            ------      ------
                                            ------      ------

RESTRICTED CASH AND SHORT-TERM INVESTMENT:
  Cash in money market account ..........   $   80      $   80
  Certificate of deposits ...............    1,125         420
                                            ------      ------
                                            $1,205      $  500
                                            ------      ------
                                            ------      ------
</TABLE>

     The aggregate fair value, gross unrealized holding gain and loss, 
amortized cost, and average maturity for the Company's short-term investments 
held at June 30, 1996 and 1995, are presented below:

<TABLE>
(IN THOUSANDS)                              Fair       Gross Unrealized      Amortized
                                           Value   Holding Gain and (Loss)      Cost
                                          ------   -----------------------   ---------
<S>                                       <C>        <C>            <C>        <C>
AT JUNE 30, 1996:
United States Government obligations ... $  700     $ -            $ -        $  700
                                          ------     ----           ----       ------
                                          ------     ----           ----       ------
(Matures  June 30, 1996)

AT JUNE 30, 1995:
United States Government obligations ...  $6,150     $ 6           $ (73)      $6,217
(Average maturity of 9.6 months)          ------     ----           ----       ------
                                          ------     ----           ----       ------


Certificate of Deposit .................  $  420     $ -           $  -        $  420
(Matured December 31, 1995)               ------     ----           ----       ------
                                          ------     ----           ----       ------

</TABLE>

     The Company has a certificate of deposit in the amount of $425,000 which
has been pledged as security to the issuing bank for the payment or performance
of any or all obligations that may arise under the terms of an outstanding
standby letter of credit in the amount of $400,000.  In addition, the Company
is required to maintain a minimum cash balance of $80,000 in a money market
account under the terms of its revolving line of credit agreement with a bank.

(D) CONCENTRATION OF CREDIT RISK

     Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash, cash equivalents, short-term
investments, accounts receivable, and other receivables.  The Company primarily
invests its available funds into United States Government securities as well as
investments with high quality financial institutions.  The Company performs

                                       35
<PAGE>

ongoing evaluations of its customers' financial condition and, generally,
requires no collateral from its customers.  The Company maintains reserves and
allowances for potential credit losses; which to date, such credit losses have
been insignificant and within management's expectations.  As of June 30, 1996,
the Company had cash and term deposits with certain banks which exceeded the
United States Federal Deposit Insurance Corporation ("FDIC") insurance limit
for such deposits by approximately $1,210,000, and cash and cash equivalents in
the amount of $251,000 in a bank in Canada, where there is no deposit
insurance.

(E) INVENTORIES

     Inventories are stated at the lower of first-in, first-out (FIFO) cost or
market and consist of the following:

<TABLE>
(IN THOUSANDS)                                      June 30,
                                            -------------------------
                                               1996            1995
                                            ---------        --------
<S>                                         <C>              <C>
Raw materials ...........................    $  226           $   43
Work-in-process .........................         -              160
Finished goods ..........................     1,775            1,322
                                             ------           ------
                                             $2,001           $1,525
                                             ------           ------
                                             ------           ------
</TABLE>

  Work-in-process and finished goods inventories include material, labor and
manufacturing overhead.


(F) OTHER CURRENT ASSETS

     Other current assets consist of the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)                              June 30,
                                       ------------------
                                        1996        1995
                                       ------      ------
<S>                                    <C>         <C>
Prepaid insurance ..................    $ 34        $ 82
Prepaid equipment project costs ....     639          -
Facility lease deposit in escrow ...       -          296
Non-trade receivables ..............      25          49
Other ..............................      97          71
                                        ----        ----
                                        $795        $498
                                        ----        ----
                                        ----        ----

</TABLE>

                                       36



<PAGE>

(G) PROPERTY AND EQUIPMENT

     Property and equipment is summarized as follows:

(IN THOUSANDS)                                           June 30,
                                                  ---------------------
                                                     1996        1995
                                                  --------   ----------
Laboratory equipment . . . . . . . . . . . . . .  $   990     $   951
Furniture, fixtures and equipment. . . . . . . .    1,543       1,471
Leasehold improvements . . . . . . . . . . . . .       61         564
Assets under capital leases. . . . . . . . . . .      585       4,115
                                                  -------     -------
                                                    3,179       7,101
Less accumulated depreciation and amortization .   (2,181)     (2,623)
                                                  -------     -------
                                                  $   998     $ 4,478
                                                  -------     -------
                                                  -------     -------

     The Company provides for depreciation and amortization using the declining
balance and straight-line methods by charges to operations in amounts estimated
to allocate the cost of these assets over their useful lives as follows:

Classification                             Estimated Useful Life
--------------                             ----------------------
Laboratory equipment . . . . . . . . . . .        5 Years
Furniture, fixtures and equipment. . . . .       5-7 Years
Leasehold improvements . . . . . . . . . .    Life of Lease
Assets under capital leases. . . . . . . .      3-25 Years

     Leasehold improvements are amortized over the term of the lease or the
useful life of the asset, whichever is shorter.  The Company leases certain
production and laboratory equipment under a capital lease agreement.
Accumulated amortization for assets under capital leases totaled $257,000 and
$760,000 at June 30, 1996 and 1995, respectively.

     The property and equipment costs stated above are net of asset valuation
charges of $1,946,000 and $3,000,000 in 1995 and 1994, respectively, relating
to the Company's restructuring programs described in Notes 1, 4 and 8.  As of
June 30, 1996, the Company had certain property and equipment with a net book
value of approximately $328,000 which is intended to be disposed of as part of
the restructuring program adopted in fiscal 1995.

(H) INTANGIBLE ASSETS

     Intangible assets consist primarily of goodwill and other intangible
assets resulting from acquisitions accounted for using the purchase method of
accounting. Goodwill is amortized using the straight-line method over 20 years.
Other intangible assets relating to acquired businesses consist principally of
amounts attributable to distribution agreements and other deferred costs.  The
amortization for distribution agreements and other assets is on a straight-line
basis over five years.

     Goodwill, net of accumulated amortization, was $1,815,000 and $1,919,000
at June 30, 1996 and 1995, respectively.  The accumulated amortization of
goodwill and other intangible assets totaled $819,000 and $715,000 at June 30,
1996 and 1995, respectively.  Amortization of goodwill and other intangible
assets included in the accompanying consolidated statements of operations was
$204,000, $195,000 and $331,000 in 1996, 1995, and 1994, respectively.

                                      37


<PAGE>

     The carrying values and amortization periods for goodwill and other
intangible assets are reviewed on an ongoing basis by the Company's management
based on several factors including, among others, the Company's future
operations and their impact on cash flows.  If impairment to the carrying
values or the estimated useful lives of such intangible assets are indicated by
this review, the Company will adjust the carrying values of such assets to
their respective estimated fair values or revise the amortization period for
such assets to their estimated remaining useful lives.

(I) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities consist of the following:

(IN THOUSANDS)                                   June 30,
                                           --------------------
                                             1996        1995
                                           --------     -------
Payroll related costs . . . . . . . . . .  $  107       $  109
Professional fees . . . . . . . . . . . .     152          218
Deferred rent . . . . . . . . . . . . . .      --          304
Accrued inventory purchases . . . . . . .     202          163
Customer deposits . . . . . . . . . . . .     986          311
Other . . . . . . . . . . . . . . . . . .     362          450
                                           --------    -------
                                           $1,809       $1,555

(J) REVENUE RECOGNITION

     Product sales revenue is recognized upon shipment or equipment
installation, as applicable.

     The Company recognizes revenue under research and development agreements
in accordance with the terms of the respective contracts which typically
stipulate as the work is performed and costs are incurred.  The Company
recognizes license fees under sales and license agreements, as certain
milestones are achieved and related nonrefundable license fees are received.

(K) RESEARCH AND DEVELOPMENT EXPENSES

     The Company charges research and development expenses to operations as
incurred.

(L) FOREIGN CURRENCY TRANSLATION

     Assets and liabilities of the Company's Canadian subsidiary are translated
into U.S. dollars at year-end exchange rates.  Revenue and expense items are
translated at average rates prevailing during the year.  Cumulative translation
adjustments have been immaterial.  Transaction gains and losses are included in
the results of operations as incurred.

(M) NET LOSS PER SHARE

     Net loss per common share is computed based upon the weighted average
number of common shares outstanding. Common equivalent shares are not included
in the per share calculations for each of the years presented as the effect of
their inclusion would be antidilutive.

                                      38

<PAGE>

(N) FAIR VALUE OF FINANCIAL INSTRUMENTS

       Except as disclosed in Note 3(c), no class of financial instrument has a
material difference between its carrying value and estimated fair value based
on market quotations, projected cash flows and other estimating methods.

(O) SUPPLEMENTAL CASH FLOW INFORMATION

     The Company made certain cash payments and consummated certain non-cash
investing and financing transactions as summarized below:


(IN THOUSANDS)                                       Years Ended June 30,
                                                -----------------------------
                                                1996          1995       1994
                                               ------        ------    -------
CASH PAID FOR:
  Interest. . . . . . . . . . . . . . . . . .  $  608         $ 930     $  585
  Income taxes. . . . . . . . . . . . . . . .      18            60          9
NON-CASH INVESTING AND FINANCING ACTIVITIES:
 Acquisition of assets under capital leases .      --            --     (3,675)
 Capital lease financing for assets 
  acquired. . . . . . . . . . . . . . . . . .      --            --      3,675
 Disposition of assets under capital lease. .   2,936            --         --
 Termination of capital lease obligation. . .  (3,500)           --         --
 Termination of operating lease obligation 
  and related reduction of accrued 
  restructuring . . . . . . . . . . . . . . .  (2,050)           --         --
 Issuance of common stock for companies
  acquired . . . . . . . . . . . . . . . . .       --            --      1,026

Issuance of common stock in exchange for
  termination of operating lease obligation .     500            --         --

(P) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board ("FASB") issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" in March 1995, which is effective January 1, 1996 and must
be adopted by no later than the fiscal year ending June 30, 1997.  SFAS No. 121
requires that an impairment loss be recognized when circumstances indicate that
the carrying amount of the asset may not be recoverable.  Historically, the
Company has used a methodology similar to SFAS No. 121 in determining the
amount of any potential impairment.  Accordingly, the Company does not believe
that the adoption of SFAS No. 121 will have a significant impact on its
consolidated financial statements.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123"). SFAS 123 requires that an entity account for
employee stock compensation under a fair value based method.  However, SFAS 123
also allows an entity to continue to measure compensation costs for employee
stock based compensation plans using the intrinsic value based method of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25").  Effective for fiscal years beginning after December 15,
1995, entities electing to remain with accounting under APB 25 are required to
make pro forma disclosures of net income and earnings per share as if the fair
value based method of accounting under SFAS 123 had been applied.  The Company
will continue to account for employee stock based compensation under APB 25 and
will make the pro forma disclosures required under SFAS 123 beginning in fiscal
1997.

                                      39

<PAGE>

Accordingly, the Company does not believe that the adoption of SFAS
No. 123 will have a significant impact on its consolidated financial
statements.

4.  DEBT AND LEASES

(A) LONG-TERM DEBT

     Long-term debt consists of the following:

(IN THOUSANDS)
                                                       June 30,
                                             --------------------------
                                               1996              1995
                                             --------          --------
Revolving line of credit . . . . . . . . .    $1,041            $1,050
Equipment line of credit . . . . . . . . .        --               216
Promissory note for AMC acquisition. . . .        --               322
Installment notes. . . . . . . . . . . . .        21                16
                                              -------           -------
                                               1,062              1,604
Less current maturities. . . . . . . . . .    (1,051)              (328)
                                              -------           -------
                                              $   11            $ 1,276
                                              -------           -------
                                              -------           -------

     As of June 30, 1996, the future maturities of long-term debt are as
follows:

         Year Ending                   Amount
         -----------                  -------
           1997 . . . . . . . . . .    $1,051
           1998 . . . . . . . . . .        10
           1999 . . . . . . . . . .         1
           2000 . . . . . . . . . .        --
           2001 . . . . . . . . . .        --

     In connection with the acquisition of AMC in May 1994, the Company issued
a promissory note in the principal amount of $430,000 to the shareholder of
AMC.  In February 1996, the Company settled the remaining balance of the
promissory note and other acquisition related liabilities totaling $501,000 for
$251,000, excluding $9,000 of related transaction expenses, which resulted in
an extraordinary gain on the early extinguishment of debt of $241,000 or $0.03
per share with no related income tax effect.  As part of this settlement, the
Company also issued a warrant to purchase 50,000 shares of its common stock at
$2.00 per share to the shareholder of AMC.

     On October 28, 1994, the Company and AGRO entered into equipment and
revolving lines of credit with a bank, under which the Company borrowed
$250,000 to finance the purchases of capital equipment and AGRO may borrow up
to the lesser of $1,500,000 or the sum of 75% of eligible accounts receivable
and 25% of eligible inventories up to a maximum of $250,000 on a revolving
basis for working capital needs.  Funds borrowed under the equipment line of
credit were payable in equal principal installments of $6,944 plus accrued
interest over 36 months commencing February 5, 1995, at an interest rate of
prime plus 2% and were secured by the first lien on all fixed assets financed
under this line of credit.  Funds borrowed under the revolving line of credit
have borne interest at a rate of prime plus 1% and are secured by all the
assets of AGRO and all the outstanding common stock of AGRO owned by the
Company.  Interest on funds borrowed under the

                                      40


<PAGE>

revolving line of credit is payable monthly in arrears and repayment of 
principal was originally due on January 5, 1996.

     As of June 30, 1995, the equipment and revolving lines of credit agreement
imposed certain covenants including a minimum consolidated tangible net worth
of $5,000,000 ("Net Worth Covenant"), a consolidated quick asset to current
liabilities ratio of 1.50 to 1 through June 30, 1995, and 1.25 to 1 thereafter
("Quick Ratio Covenant"), a minimum cash, cash equivalents, and short-term
investments balance of $5,000,000 ("Cash Covenant"), and a restriction on the
declaration and payment of any cash dividends.  As of June 30, 1995 and through
October 5, 1995, the Company was in violation of the Net Worth and Quick Ratio
Covenants.  On October 5, 1995, the Company and the bank entered into an
amendment to the equipment and revolving lines of credit agreement pursuant to
which the bank waived the violations of the Net Worth and Quick Ratio Covenants
at June 30, 1995 and through October 5, 1995; eliminated the Net Worth and
Quick Ratio Covenants for compliance periods after June 30, 1995; and reduced
the Cash Covenant from $5,000,000 to $1,000,000 for compliance periods after
June 30, 1995.  In addition, the amendment to the credit agreement required
repayment of all outstanding obligations under the equipment line of credit
(approximately $194,000 at September 29, 1995); increased the interest rate on
borrowings under the revolving line of credit to prime (8.25% at June 30, 1996)
plus 1.5% effective October 1, 1995; and expanded the collateral requirements
to include a certificate of deposit in the amount of $700,000 to be held by the
bank as partial cash security for the borrowings  outstanding under the
revolving line of credit at October 5, 1995.  Any additional borrowings under
the revolving line of credit will require 67% cash collateral coverage in the
form of a certificate of deposit to be held by the bank.  The amendment also
extended the expiration date of the credit agreement from January 5, 1996 to
July 5, 1996, and any principal amounts outstanding, together with accrued
interest thereon, were due on such date.

     On July 5, 1996, September 5, 1996 and October 5, 1996, the Company and
the bank entered into three amendments to the revolving line of credit
agreement pursuant to which the bank extended the expiration date of the credit
agreement from July 5, 1996 to December 15, 1996 on the same terms, and any
principal amounts outstanding, together with accrued interest thereon, are due
on December 15, 1996.  The Company is currently negotiating with the bank
certain modifications to the terms of the revolving line of credit which
include, but are not limited to, an increase in the borrowing capacity,
elimination of the cash collateral coverage requirement, financial covenants
and extension of the repayment and expiration dates of the credit agreement.
In addition, the Company has received a term sheet from a financial institution
to replace the existing revolving line of credit with a proposed credit
facility structure that meets the Company's requirements for the foreseeable
future.  The Company believes that it will obtain either a modification and
extension to the existing revolving line of credit agreement or secure another
financing arrangement which has terms no less favorable than those contained in
the current revolving line of credit agreement in fiscal 1997.

     In June 1995, the Company entered into an installment note with a bank to
finance the purchase of a truck.  The installment note is payable in monthly
installments of $548, bears interest at 9.55%, and is secured by that truck.
In September 1995, the Company entered into an installment note with a bank to
finance the purchase of another truck.  This installment note is payable in
monthly installments of $401, bears interest at 8.75% and is secured by that
truck.

                                      41


<PAGE>

(B)  LEASES

     In November 1991, the Company entered into a 10 year lease for one of its
facilities in Worcester, Massachusetts.  The lease granted the Company five
months of free rent which was amortized on a straight line basis over the total
expected lease payments and which served to reduce rent expense recorded by the
Company.

      In September 1992, the Company entered into a 10-year facility lease with
its landlord for expanded space in a new facility in Worcester, Massachusetts.
The new lease canceled the Company's obligations under its prior lease,
discussed above, upon occupancy in April 1994.  The new lease granted the
Company three months of free rent which was amortized on a straight line basis
over the total expected lease payments and which served to reduce rent expense
recorded by the Company.  On November 1, 1994, the Company and Hybridon, Inc.
(the "Subtenant") entered into a sublease agreement under which the Company
sublet certain space at its corporate headquarters and research and development
facility to the Subtenant for a term of 21 months ending July 1996.  On October
11, 1995, the Company and the Subtenant entered into an amendment to the
sublease agreement under which the Company sublet a significant amount of
additional space at this facility to the Subtenant and extended the term of the
sublease agreement through December 31, 1996.  The basic rental rate charged to
the Subtenant is approximately the same as the Company's rental rate under its
lease.  In addition, on September 19, 1995, the Company and its landlord
entered into a partial lease termination agreement with respect to certain
space at its corporate headquarters and research and development facility.

     On January 11, 1996, the Company and its landlord entered into a lease
termination agreement, under which the Company paid the landlord $125,000 on
January 18, 1996 and issued 500,000 shares of the Company's common stock with a
market value of $500,000 on January 22, 1996 in exchange for an immediate
termination of the lease.  Additionally, the Company incurred approximately
$25,000 for expenses related to the completion of the transaction.   See Note 8
for a discussion of these transactions and their impact on restructuring
accounting in fiscal 1996.

      In May 1993, the Company entered into a 15 year lease agreement for a
manufacturing facility in Northborough, Massachusetts.  This lease was
accounted for as a capital lease, had borne interest at an effective annual
rate of approximately 13% and had been payable in monthly installments of
principal and interest of approximately $44,000. The present value of the
minimum lease payments under this capital lease obligation was $3,525,000 at
September 29, 1995.  On September 29, 1995, the Company and the lessor entered
into a lease termination agreement under which the Company paid the lessor on
October 31, 1995 approximately $195,000; released to the lessor approximately
$305,000 held in an escrow account; and agreed to make an advance lease payment
for the period October 1995 through December 1995 to the lessor in exchange for
an early termination and release from the remaining lease obligations effective
December 31, 1995.  Accordingly, the Company reclassified $500,000 from "long-
term debt and capital leases" to "current maturities of noncurrent liabilities"
in the consolidated balance sheet and adjusted the present value of the
remaining minimum lease payments under this capital lease obligation to reflect
the impact of the lease termination agreement as of June 30, 1995.  The effect
of this lease termination on the consolidated financial statements during
fiscal 1996 was to reduce assets under capital leases by $2,936,000 and capital
lease obligations by $3,500,000, and to increase accrued restructuring costs by
$73,000.

                                      42

<PAGE>

     On June 30, 1994, the Company sold certain manufacturing equipment and
leasehold improvements with an original cost of approximately $3,800,000 to a
financing company.  The Company, in turn, leased the equipment and improvements
back from the financing company.  The lease was accounted for as a capitalized
lease obligation.  The lease  bore interest at an effective rate of
approximately 14% and had been payable in monthly installments of principal and
interest of approximately $88,000 over 50 months.  On October 11, 1995, the
Company and the financing company entered into an agreement which modified the
lease pursuant to which the financing company waived a payment default which
occurred in September 1995, in exchange for the Company's advance payment of
approximately $1,135,000, which resulted in a decrease to accrued restructuring
costs of $45,000 in fiscal 1996.  This payment satisfied the total amount of
the obligation outstanding under rental schedule No. 2 to the lease.  In
addition, the Company issued to the financing company a warrant to purchase
100,000 shares of common stock for $3.00 per share pursuant to the terms of
this agreement.  Accordingly, the Company reclassified $886,000 from "long-term
debt and capital leases" to "current maturities of noncurrent liabilities" in
the consolidated balance sheet to reflect the impact of this agreement as of
June 30, 1995.  The Company continued to make the remaining monthly  payments
of approximately $55,000 under rental schedule No. 1 to the lease until the
remaining obligation was fully satisfied on September 27, 1996, with the
proceeds from an equity offering described in Note 11.  Pursuant to a lease
settlement agreement dated August 8, 1996, between the Company and the
financing company, the Company paid $880,000 to satisfy the remaining capital
lease obligation under rental schedule No. 1 of approximately $1,248,000 on
September 27, 1996, which resulted in an increase to accrued restructuring
costs of $60,000.  Accordingly the Company reclassified $880,000 from "long-
term debt and capital leases" to "current maturities of noncurrent liabilities"
in the consolidated balance sheet to reflect the impact of this agreement as of
June 30, 1996.  See Note 11 for further discussion of the pro forma impact of
this settlement.  The present value of the minimum lease payments under this
capital lease obligation was $1,390,000 as of June 30, 1996.

     Future minimum lease payments under noncancellable operating leases,
future minimum sublease payments under noncancellable operating leases, and the
present value of future minimum capital lease payments after reflecting the
impact of the subsequent settlement to the lease described above, are as
follows:


(IN THOUSANDS)                         Capital      Operating       Operating
                                       Leases         Leases        Subleases
                                       -------      ---------      -----------
Years ending June 30,
     1997 . . . . . . . . . . . . . .   $1,445        $   319            ($29)
     1998 . . . . . . . . . . . . . .      --             293              (3)
     1999 . . . . . . . . . . . . . .      --             275              (3)
     2000 . . . . . . . . . . . . . .      --              63              (3)
     2001 . . . . . . . . . . . . . .      --              56              (3)
     Thereafter . . . . . . . . . . .      --               9              --
                                        -------       -------            -----
Total minimum lease payments. . . . .    1,445         $1,015            ($41)
Amount representing interest. . . . .      (55)       -------            -----
                                        -------       -------            -----
Present value of minimum lease 
 payments . . . . . . . . . . . . . .     1,390
Less current maturities . . . . . . .    (1,390)
                                        -------
                                        $    --
                                        -------
                                        -------

                                      43

<PAGE>


   Rental expense included in the accompanying consolidated statements of
operations was $833,000, $1,064,000, and $1,051,000 for 1996, 1995 and 1994,
respectively.  Sublease rental income was ($346,000) and ($302,000) for 1996
and 1995, respectively.

5.  STOCKHOLDERS' INVESTMENT

(A) PUBLIC OFFERINGS

     In February 1992, the Company sold 2,990,000 shares of common stock in an
initial public offering.  Net proceeds of the offering were $29,958,000.

     In connection with the initial public offering of its common stock,
2,306,174 outstanding shares of Series A convertible redeemable preferred stock
and 2,050,000 outstanding shares of Series B convertible redeemable preferred
stock were converted into 2,904,087 shares of common stock.

     In December 1993, the Company sold 1,763,050 shares of common stock in a
public offering.  Net proceeds of the offering were $9,503,000.

(B) COMMON STOCK PURCHASE WARRANTS

     The Company has issued warrants to purchase shares of its common stock to
certain stockholders, directors and consultants to the Company.  Outstanding
warrants expire through 2002.  The following table summarizes warrant activity
for the three years ended June 30, 1996:

                                          Number of         Price Per
                                           Warrants           Share
                                          ----------     ----------------
Outstanding at June 30, 1993 . . . . . .  408,712         $0.38  -  $11.00
  Granted. . . . . . . . . . . . . . . .   20,000          9.75
  Exercised. . . . . . . . . . . . . . .  (68,665)         3.75
                                          --------        ----------------
Outstanding at June 30, 1994 . . . . . .  360,047           0.38  -  11.00
  Granted. . . . . . . . . . . . . . . .       --                       --
                                          --------        ----------------
Outstanding at June 30, 1995 . . . . . .  360,047           0.38  -  11.00
  Granted. . . . . . . . . . . . . . . .  250,000           1.3   -   3.00
  Expired. . . . . . . . . . . . . . . . (151,087)         0.38   -   9.55
                                          --------        ----------------
Outstanding at June 30, 1996 . . . . . .  458,960          1.38   -  11.00
                                          --------        ----------------
                                          --------        ----------------
Exercisable at June 30, 1996 . . . . . .  391,850         $1.38   - $11.00
                                          --------        ----------------
                                          --------        ----------------

(C) STOCK OPTION PLANS

     On December 14, 1988, the Company's Board of Directors approved the 1988
stock option plan (the "1988 Plan") which provided for the grant of incentive
stock options and nonqualified stock options.  The Board of Directors has
agreed not to issue future options under the 1988 Plan.

     In May 1991, the Board of Directors approved a stock option plan (the
"1991 Plan") to grant options to acquire up to 1,300,000 shares of common stock
to employees and consultants.  Options granted under the 1991 Plan vest over
various periods and expire no later than 10 years from the date of grant.  The
difference, if any, between the fair value of the Company's common stock on the
date

                                      44


<PAGE>

of grant and the exercise price of the option has been recognized as 
compensation expense in the accompanying consolidated statements of 
operations.

     On December 13, 1994, the Compensation Committee of the Board of 
Directors authorized the Company to offer an exchange with each holder (who 
was then an employee but not an executive officer or director of the Company) 
of stock options granted under the 1991 Plan, a new stock option for a number 
of shares equal to the number of shares remaining unexercised under the old 
stock option at the time of exchange subject to certain conditions.  The 
option price of each new stock option granted under this offer was equal to 
the fair market value ($2.125 per share) of the Company's common stock on the 
date of authorization.  A total of 169,483 stock options were exchanged under 
this offer during 1995.

     Option activity for the three years ended June 30, 1996, is summarized 
as follows:

<TABLE>
<CAPTION>

                                            Number of         Price Per
                                             Shares             Share
                                            ---------         ---------
<S>                                         <C>               <C>
Outstanding at June 30, 1993 ...........     572,794       $0.38 - $11.38
  Granted ..............................     395,334        4.88 -  11.00
  Exercised ............................     (44,798)       0.38 -   6.98
  Terminated ...........................     (67,483)       0.45 -  11.38
                                            --------       --------------
Outstanding at June 30, 1994 ...........     855,847        0.38 -  11.38
  Granted ..............................      18,250        1.84 -   4.88
  Exercised ............................      (6,082)       0.45 -   0.45
  Terminated ...........................    (406,982)       0.45 -  11.38
                                            --------       --------------
Outstanding at June 30, 1995 ...........     461,033        0.38 -  11.38
  Granted ..............................     551,500        0.56 -   1.63
  Exercised ............................      (1,666)                0.45
  Terminated ...........................    (174,851)       0.60 -  11.38
                                            --------       --------------
Outstanding at June 30, 1996 ...........     836,016       $0.38 - $11.38
                                            --------       --------------
                                            --------       --------------
Exercisable at June 30, 1996 ...........     257,708       $0.38 - $11.38
                                            --------       --------------
                                            --------       --------------
</TABLE>

6.  INCOME TAXES

     As of June 30, 1996, the Company had available net operating loss 
carryforwards of approximately $46,000,000 and research and development tax 
credit carryforwards of approximately $900,000 to reduce future federal 
income taxes, if any.  These carryforwards expire through 2010 and are 
subject to review and possible adjustment by the Internal Revenue Service.  
The Tax Reform Act of 1986 limits a Company's ability to utilize certain net 
operating loss and tax carryforwards in the event of a cumulative change in 
ownership in excess of 50%, as defined.  The Company has completed numerous 
financings which may have resulted in a change in ownership in excess of 50%, 
as defined.  The utilization of net operating loss and tax credit 
carryforwards may be limited due to ownership changes.

     The Company adopted the provisions of SFAS No. 109 in 1994 which had no 
impact upon the consolidated financial statements.  There was no effect on 
net loss or financial position from adopting the provisions of SFAS No. 109 
for any period presented.

                                       45



<PAGE>

      The components of the net deferred tax amount recognized in the 
accompanying consolidated balance sheets are set forth below:

<TABLE>
<CAPTION>

                                                           June 30,
                                                ---------------------------
(IN THOUSANDS)                                     1996               1995 
                                                -----------     -----------
<S>                                             <C>             <C>
Deferred tax assets ......................      $16,500,000     $14,200,000
Valuation allowance ......................      (16,500,000)    (14,200,000)
                                                -----------     ------------
                                                $         -     $         - 
                                                -----------     ------------
                                                -----------     ------------
</TABLE>


     The approximate tax effect of each type of temporary difference and
carryforward before allocation of the valuation allowance is summarized as
follows:

<TABLE>
<CAPTION>

                                                           June 30,
                                                ---------------------------
(IN THOUSANDS)                                     1996               1995 
                                                -----------     -----------
<S>                                             <C>             <C>
Net operating losses ....................       $15,600,000     $12,920,000
Other temporary differences .............                 -         180,000
Research and development credits ........           900,000       1,100,000
                                                -----------     ------------
                                                $16,500,000     $14,200,000
                                                -----------     ------------
                                                -----------     ------------
</TABLE>

     Due to the uncertainty surrounding the timing of realizing the potential
benefits of its favorable tax attributes in future income tax returns, the
Company has placed a valuation allowance against its otherwise recognizable
deferred tax assets.

7.  SALES, LICENSE AND DEVELOPMENT AGREEMENTS

     In June 1992, the Company entered into a Product Development and License 
Agreement (the "License Agreement") with The Terminix International Company, 
L.P. ("Terminix") to license certain technology and provide for the joint 
development of biopesticides for termite control.  The License Agreement 
provides for license fees and product development support to be paid to the 
Company over a three-year period plus reimbursement for certain outside 
development costs.  The License Agreement grants Terminix exclusive sales 
rights in the United States and Canada for the termite control product 
developed under the Agreement.  The Company will retain manufacturing rights 
and will receive royalties on sales of the termite control product by 
Terminix.

     AGRO has a distribution agreement with an unrelated company for a term 
of five years ending in December 1997, with automatic one-year extensions 
unless either party elects to terminate the agreement.  The agreement grants 
AGRO the exclusive right to sell the unrelated company's product in the 
United States and Canada. The agreement requires AGRO to maintain minimum 
annual sales which, if not met, would allow the unrelated company to modify 
the exclusivity of the agreement.  The sale of products under this agreement 
accounted for 45%, 43%, and 59% of the Company's total product sales for the 
years ended June 30, 1996, 1995, and 1994, respectively.  Although there are 
a limited number of sources of the particular growing medium products that 
are sold under this distribution agreement, the Company's management believes 
that other suppliers could provide similar products on comparable terms.  A 
change in suppliers, however, could cause a delay in filling orders as well 
as a possible loss of sales, which would affect operating results adversely.

                                       46

<PAGE>

     In June 1993, the Company entered into an agreement to license certain 
technology and patents for the manufacture and sale of vegetable and fruit 
coating products under the name Nature Seal.  In consideration for this 
license, the Company issued common stock and a warrant for the purchase of 
common stock to the licensers and is required to pay certain minimum future 
royalties and royalties based upon future sales of products which incorporate 
the licensed technology.  The value of the stock and warrant consideration 
was recorded as research and development expense in 1993.

     In June 1993, the Company entered into a Sales and License Agreement 
(the "Maruwa Agreement") with Maruwa BioChemical Co., Ltd. to license certain 
biopesticide technology for control of cockroaches.  The Maruwa Agreement 
provides for license fees to be paid to the Company in accordance with the 
achievement of certain registration and development milestones.  The Maruwa 
Agreement grants the licensee exclusive sales rights in Japan for Bio-Path 
cockroach control technology.  The Company will retain manufacturing rights 
and will receive royalties on sales of the Bio-Path Cockroach Control Chamber 
by the licensee.

     In January 1994, the Company entered into a Development and Distribution 
Agreement with Bengal Chemical, Inc. (the "Bengal Agreement") for the 
nonexclusive distribution rights to the Company's Bio-Path Cockroach Control 
Chamber.  The term of the Bengal Agreement is for calendar years 1994 and 
1995 with year to year extensions permitted upon the attainment of minimum 
product sales for the year preceding the extension.  The Bengal Agreement 
expired during fiscal 1996.

     In May 1994, the Company entered into a Marketing and Distribution 
Agreement with Dong Sung Pharmaceutical Co., Ltd. (the "Dong Sung Agreement") 
for the exclusive rights to market and distribute the Company's Bio-Path 
Cockroach Control Chamber in South Korea.  The term of the Dong Sung 
Agreement commences on May 24, 1994, and continues in effect through December 
31, 1999, and may be renewed for an additional two calendar years thereafter.

     In May 1995, the Company entered into a Marketing and Distribution 
Agreement with Rhone-Poulenc Agrichimie (the "Rhone-Poulenc Agreement") for 
the exclusive rights to market and distribute the Company's Bio-Path 
Cockroach Control Chamber to professional pest control operators in 16 
countries in Europe.  The term of the Rhone-Poulenc Agreement is for a period 
of three years for each country named therein, except for the United Kingdom 
which is for a period of five years from the date of execution or the date 
product registration is received in the particular country, whichever is 
later, and may be renewed for successive one year periods thereafter by 
mutual agreement of the parties.

     In August 1995, AGRO entered into a distribution agreement with an 
unrelated company for an initial term of three years for the North American 
fruit, vegetable, and flower markets ending in September 1998, and in the 
fruit, vegetable, and flower markets in the Caribbean Islands and Mexico 
ending in August 1997.  This agreement will be automatically extended for 
each of the respective terms set forth above unless either party elects to 
terminate the agreement upon ninety days prior written notice.  The agreement 
grants AGRO the exclusive right to sell the unrelated company's sorting and 
grading products and equipment in most of the United States, Canada, Mexico, 
and the Caribbean. The agreement requires AGRO to secure annually a certain 
minimum market share percentage of the available market for sorting and 
grading machines.  The sale of products under this agreement accounted for 
20% of total product sales for the fiscal year ended June 30, 1996.  Although 
there are a limited number of sorting and grading equipment manufacturers in 
the world,

                                       47

<PAGE>

the Company's management believes that other suppliers could provide similar 
equipment on comparable terms.  A change in supplier, however, could cause a 
delay in filling orders as well as a possible loss of sales, which would 
affect operating results adversely.

     In September 1995, AGRO entered into a distribution agreement with an 
unrelated company for a term commencing on July 1, 1995 and ending on June 
30, 1997, with automatic one year extensions unless either party elects to 
terminate the agreement with three months' advanced notice in writing.  The 
agreement grants AGRO the exclusive right to sell the unrelated company's 
environment control products and accessories in the United States, Canada and 
Mexico.

8.  ASSET VALUATION AND RESTRUCTURING CHARGES

     The Company's consolidated statement of operations for 1995 included a 
$6,000,000 or $0.68 per share charge to write down the value of certain 
assets and to provide for the costs associated with the closure of the 
Company's facilities located in Worcester, Northborough, and Shrewsbury, 
Massachusetts, and for reductions in the Massachusetts based work force.  The 
write-down of assets in 1995 included a $1,946,000 non-cash charge against 
the Company's investment in manufacturing, laboratory, and office property 
and equipment located in Massachusetts and approximately a $354,000 non-cash 
charge for certain other assets to their respective net realizable values.  
As of June 30, 1996 and 1995, these assets had a net book value of 
approximately $328,000 and $3,835,000, respectively, and were intended to be 
disposed of in fiscal 1997 and 1996, respectively.  The remaining $3,700,000 
consisted of accrued charges, of which $2,500,000 was classified in other 
long-term liabilities at June 30, 1995, for the costs of facility lease 
settlements ($2,000,000), manufacturing plant shut-down ($497,000), severance 
benefits for 33 employees primarily in the research and development and 
manufacturing areas ($1,035,000), and other contractual obligations, 
including the termination of certain inventory supply and distribution 
agreements ($168,000), related to the restructuring program adopted in fiscal 
1995.  The Company completed a major portion of its 1995 restructuring 
program activities in the first half of fiscal 1996 and the remaining 
restructuring program initiatives are expected to be completed in fiscal 1997 
and beyond.

     The Company's consolidated statement of operations for 1994 included a 
$5,800,000 or $0.75 per share charge to write down the value of certain 
assets and to provide for the costs associated with the consolidation of the 
Company's facilities and for reductions in research and development programs. 
The write down of assets in 1994 included a $3,000,000 non-cash charge 
against the Company's investment in its manufacturing facility and related 
equipment in Northborough, Massachusetts and approximately a $500,000 
non-cash charge for certain other assets to reduce their carrying value to 
their respective net realizable values.  The remaining $2,300,000 consisted 
of accrued charges, of which $800,000 was classified in other long-term 
liabilities at June 30, 1994, for the consolidation of the Company's 
corporate headquarters, research and development, and manufacturing 
facilities ($1,300,000), and for reductions in research and development 
activities and 24 related employees ($1,000,000).  The Company completed all 
of the employee terminations related to the 1994 restructuring program in the 
first half of 1995 and a portion of the facility consolidation activities in 
1995.

At the close of fiscal 1995, the Company began the implementation of the 
restructuring program which was designed to shift the corporate focus from 
research and development to commercial operations, in an effort to reduce 
operating losses and conserve cash resources.  As part of the restructuring 
program, the Company eliminated substantially all of its Massachusetts based 
work

                                       48

<PAGE>

force (33 positions) in the first quarter of fiscal 1996.  In addition, 
during fiscal 1995 certain functions were moved to the Company's 
manufacturing facility in Northborough, Massachusetts, and the Company's 
space at its corporate headquarters and research and development facility 
located in Worcester, Massachusetts, was decreased from approximately 41,000 
square feet to approximately 13,000 square feet.  In the first quarter of 
fiscal 1996, the Company closed the Worcester facility and all remaining 
functions were moved to the Northborough facility.  During the second quarter 
of fiscal 1996, the Company relocated its Massachusetts based operations 
including corporate headquarters to AGRO's East Brunswick, New Jersey 
facility.

On January 11, 1996, the Company and its landlord for its Worcester corporate 
headquarters and research and development facility entered into a lease 
termination agreement, under which the Company paid the landlord $125,000 on 
January 18, 1996 and issued 500,000 shares of the Company's common stock with 
a market value of $500,000 on January 22, 1996, in exchange for an immediate 
termination of the lease.  Additionally, the Company incurred approximately 
$25,000 for expenses related to the completion of the transaction.  After 
accounting for these settlement provisions which totaled $650,000, the 
Company reversed $1,550,000 of accrued restructuring costs in the third 
quarter of fiscal 1996 that related to accrued restructuring costs which were 
originally recorded in fiscal 1995 ($2,000,000) and the remaining accrued 
restructuring costs which were originally recorded in fiscal 1994 ($200,000). 
 During fiscal 1996, the Company incurred $1,674,000 of costs related to the 
1995 restructuring program of which $860,000 related to facility lease 
settlements and manufacturing plant shut down, $725,000 related to employee 
severance benefits, and $89,000 related to other contracted liabilities.  As 
of June 30, 1996, accrued restructuring costs of $1,030,000 (total current 
and noncurrent portions) consisted of $641,000 for facility lease 
settlements, $310,000 for employee severance benefits and $79,000 for other 
contractual liabilities.

9.  GEOGRAPHIC SEGMENT INFORMATION

     Financial information segregated by major geographic area is summarized 
as follows:

<TABLE>
<CAPTION>
                                                  Years Ended June 30,
                                          ------------------------------------
(IN THOUSANDS)                              1996           1995        1994
                                          --------      ---------      -----
<S>                                       <C>           <C>           <C>
Revenues:
  United States ...................         $9,937       $9,516       $ 8,126
  Canada ..........................          4,421        3,564         2,785
                                           -------      -------       -------
     Consolidated .................        $14,358      $13,080       $10,911
                                           -------      -------       -------
                                           -------      -------       -------
Net income (loss):
  United States ...................          ($587)    ($15,122)     ($17,494)
  Canada ..........................              -           28           (59)
                                           -------      -------        -------
     Consolidated .................          ($587)    ($15,094)     ($17,553)
                                           -------      -------        -------
                                           -------      -------        -------
</TABLE>

<TABLE>
<CAPTION>
                                                             June 30,
                                          ------------------------------------
(IN THOUSANDS)                              1996             1995       1994 
                                          --------        ---------     -----
<S>                                       <C>             <C>           <C>
Identifiable assets:                                                   
  United States ....................     $   9,316       $ 18,143    $ 33,316
  Canada ...........................         1,412          1,364       1,004
  Intercompany eliminations ........          (617)          (738)       (330)
                                           -------        -------     -------
     Consolidated ..................      $ 10,111       $ 18,769    $ 33,990
                                           -------        -------     -------
                                           -------        -------     -------
</TABLE>

                                       49

<PAGE>

10.  QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following is an analysis of certain items in the consolidated
statements of operations by quarter for 1996 and 1995:


<TABLE>

CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:                                                                1996
                                               -------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)        First Quarter        Second Quarter        Third Quarter        Fourth Quarter
                                               --------------        --------------        -------------        --------------
<S>                                            <C>                   <C>                   <C>                  <C>
Revenues ...................................           $4,194               $ 4,295              $ 3,139               $ 2,730
Cost of goods sold .........................            3,147                 2,933                2,097                 2,217
Research and development ...................              312                   274                  197                   235
Asset valuation and restructuring
   charges (reversal) ......................                -                     -               (1,550)                    -
Selling, general, administrative and other .            1,351                 1,363                1,285                 1,325
                                                       ------               -------              -------               -------
Income (loss) before extraordinary gain ....             (616)                 (275)               1,110                (1,047)
Extraordinary gain on early extinguishment
   of debt .................................                -                     -                  241                    -
                                                       ------               -------              -------               -------
Net income (loss) ..........................            ($616)                ($275)              $1,351               ($1,047)
                                                       ------               -------              -------               -------
                                                       ------               -------              -------               -------
Net income (loss) per share:                                                                                                      
   Before extraordinary gain ...............           ($0.07)               ($0.03)               $0.12                ($0.11)
   Extraordinary gain ......................                -                     -                 0.03                     -
                                                       ------               -------              -------               -------
   Net income (loss) .......................           ($0.07)               ($0.03)               $0.15                ($0.11)
                                                       ------               -------              -------               -------
                                                       ------               -------              -------               -------

</TABLE>

<TABLE>
<CAPTION>
                                                                                1995
                                               -------------------------------------------------------------------------------
                                               First Quarter        Second Quarter        Third Quarter        Fourth Quarter
                                               --------------        --------------        -------------        --------------
<S>                                            <C>                   <C>                   <C>                  <C>
Revenues ..................................            $ 2,861              $ 3,265              $ 3,938              $ 3,016
Cost of goods sold ........................              2,313                2,442                3,021                2,377
Research and development ..................              1,183                1,141                1,086                1,073
Asset valuation and restructuring charges .                  -                    -                    -                6,000
Selling, general, administrative and other.              1,822                1,725                1,983                2,008
                                                        ------               -------              -------               -----

Net loss ..................................            ($2,457)             ($2,043)             ($2,152)             ($8,442)
                                                        ------               -------              -------               -----
                                                        ------               -------              -------               -----
Net loss per common share .................             ($0.28)              ($0.23)              ($0.24)              ($0.96)
                                                        ------               -------              -------               -----
                                                        ------               -------              -------               -----
</TABLE>

                                       50

<PAGE>

11.  SUBSEQUENT EVENTS

     On September 27, 1996, the Company sold 1,040,000 unregistered shares of 
common stock in a Regulation D offering.  Net proceeds realized from the 
equity offering totaled $1,119,000 after placement agent fees and expenses 
and Company expenses totaling $181,000.  In connection with the offering, the 
Company also issued a warrant to purchase 156,000 shares of its common stock 
at $2.00 per share to the placement agent.  The Company agreed to register 
the shares of the offering and warrant within nine months under the 
Securities Act of 1933.  On September 27, 1996, pursuant to a lease 
settlement agreement dated August 8, 1996, between the Company and its 
financing company, the Company paid $880,000 and returned certain leased 
equipment with a net book value of $308,000 to the financing company as final 
satisfaction of its capital lease obligation under rental schedule No. 1, as 
discussed in Note 4(b).

The following table sets forth the unaudited consolidated pro forma summary 
balance sheet giving effect to the transactions described above, as if they 
had occurred on June 30, 1996:

<TABLE>
<CAPTION>
                                                                                                         
                                                                                (Unaudited)        (Unaudited)
                                                           Consolidated          Pro Forma         Consolidated
(IN THOUSANDS)                                              Historical          Adjustments         Pro Forma
                                                           ------------         -----------        ------------
<S>                                                        <C>                  <C>                <C>
ASSETS:
   Current assets .........................                   $  7,019            $  289            $  7,308
   Property and equipment, net ............                        998              (308)                690
   Other noncurrent assets ................                      2,094                 -               2,094
                                                               -------            -------           --------
      Total assets ........................                    $10,111              ($19)            $10,092
                                                               -------            -------           --------
                                                               -------            -------           --------
LIABILITIES AND STOCKHOLDERS' INVESTMENT:
   Current liabilities ....................                   $  7,327           ($1,138)           $  6,189
   Noncurrent liabilities .................                        311                 -                 311
   Stockholders' investment ...............                      2,473             1,119               3,592
                                                               -------            -------           --------
      Total liabilities and stockholders'
       investment .........................                    $10,111              ($19)            $10,092
                                                               -------            -------           --------
                                                               -------            -------           --------
</TABLE>

                                       51

<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
  of EcoScience Corporation:


     We have audited the accompanying balance sheets of EcoScience 
Corporation (a Delaware corporation) and subsidiaries as of June 30, 1996 and 
1995, and the related consolidated statements of operations, stockholders' 
investment and cash flows for each of the three years in the period ended 
June 30, 1996. 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 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 audits provide a 
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of EcoScience 
Corporation and subsidiaries as of June 30, 1996 and 1995, and the results of 
their operations and their cash flows for each of the three years in the 
period ended June 30, 1996, in conformity with generally accepted accounting 
principles.

                                         Arthur Andersen LLP



Roseland, New Jersey
September 6, 1996 (except for
the matters discussed in Notes 4 and 11,
as to which the date is October 5, 1996)

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES
-------------------------------------------------------------------------------
     Not applicable.

                                       52


<PAGE>
                                       
                                   PART III
-------------------------------------------------------------------------------

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------------------------------------------------------------------------------
     The information required by this item, in addition to that set forth above
in Part I under the caption "Executive Officers of the Registrant" is set forth
in the section entitled "Election of Directors" contained in the Company's
definitive proxy statement filed with the Securities and Exchange Commission
pursuant to Regulation 14A (the "Proxy Statement") in connection with the
Company's 1996 Annual Meeting of Stockholders to be held on November 7, 1996,
and such information is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION
-------------------------------------------------------------------------------

     Remuneration of directors and officers and information related thereto is
included in the section entitled "Executive Compensation" contained in the
Proxy Statement and such information is incorporated herein by reference,
except for information contained under the captions "Report of the Compensation
Committee" and "Performance Graph", which shall not be deemed incorporated by
reference.

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

     Security ownership of management and certain beneficial owners and
information related thereto is included in the section entitled "Security
Ownership of Beneficial Owners and Management" contained in the Proxy Statement
and such information is incorporated herein by reference.

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

     Transactions with management and related parties and information related
thereto is included in the section entitled "Certain Transactions" contained in
the Proxy Statement and such information is incorporated herein by reference.

                                       53

<PAGE>


                                    PART IV
-------------------------------------------------------------------------------
                                       
ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------------

(a)(1) The following consolidated financial statements of the Company and its
       subsidiaries for the years ended June 30, 1996, 1995 and 1994, are
       included at the pages indicated below:
                                                                           Page
                                                                           ----
       Consolidated Balance Sheets.......................................... 28
       -As of June 30, 1996 and 1995

       Consolidated Statements of Operations................................ 29
       -For the Years Ended June 30, 1996, 1995 and 1994

       Consolidated Statements of Changes in Stockholders' Investment....... 30
       -For the Years Ended June 30, 1996, 1995 and 1994

       Consolidated Statements of Cash Flows................................ 31
       -For the Years Ended June 30, 1996, 1995 and 1994

       Notes to Consolidated Financial Statements........................... 32

       Report of Independent Accountants.................................... 52

(a)(2) There are no consolidated financial statement schedules required to be
       presented herein:

       All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not 
required under the related instructions or 
                                  ------------------------------------ 
       are not applicable, and therefore have been omitted.

(a)(3) The following Exhibits are included in this Annual Report on Form 10-K:

Exhibit                        Exhibit
Number                         Description
-------   ---------------------------------------------------------------------
 3.1      Restated Certificate of Incorporation of the Registrant dated June
          29, 1988 [incorporated by reference to  Exhibit 3.1 to the
          Registrant's Annual Report on Form 10-K for the fiscal year ended
          June 30, 1992].

 3.2      By-Laws of the Registrant [incorporated by reference to Exhibit
          3.2 to the Registrant's Registration Statement on Form S-1,
          Registration Statement No. 33-44664].

 4.1      Specimen Common Stock Certificate of the Registrant [incorporated
          by reference to Exhibit 4.1 to the Registrant's Registration
          Statement on Form S-1, Registration Statement No. 33-44664].


                                       54

<PAGE>



Exhibit                     Exhibit
Number                    Description
-------   --------------------------------------------------------------------
 10.1*    Registrant's 1991 Stock Option Plan, As Amended [incorporated by
          reference to Exhibit 10.1 to the Registrant's Registration Statement
          on Form S-1, Registration Statement No. 33-44664].

 10.2*    Registrant's 1988 Stock Option Plan [incorporated by reference
          to Exhibit 10.2 to the Registrant's Registration Statement on Form S-
          1, Registration Statement No. 33-44664].

 10.3*    Form of Non-Statutory Stock Option Agreement [incorporated by
          reference to Exhibit 10.3 to the Registrant's Registration Statement
          on Form S-1, Registration Statement No. 33-44664].

 10.4     Common Stock Purchase Warrant between the Registrant and Copley
          Partners 2, L.P., dated December 6, 1989, as amended [incorporated by
          reference to Exhibit 10.8 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1993].

 10.5     8% Convertible Preferred Stock Purchase Agreement between the
          Registrant and the other parties named therein, dated June 29, 1988,
          amended and restated on December 6, 1989, and amended June 7, 1991
          and July 30, 1991[incorporated by reference to Exhibit 10.5 to the
          Registrant's Registration Statement on Form S-1, Registration
          Statement No. 33-44664].

 10.6     Preferred Stock Purchase Agreement between the Registrant and
          the other parties named therein, dated June 7, 1991, and amended as
          of July 30, 1991 [incorporated by reference to Exhibit 10.6 to the
          Registrant's Registration Statement on Form S-1, Registration
          Statement No. 33-44664].

 10.7     Series B Preferred Stock Purchase Agreement between the
          Registrant and the other parties named therein, dated July 30, 1991,
          and amended on October 31, 1991 [incorporated by reference to Exhibit
          10.7 to the Registrant's Registration Statement on Form S-1,
          Registration Statement No. 33-44664].

 10.8     Common Stock Warrant between the Registrant and E. Andrews
          Grinstead III, dated May 22, 1991, as amended [incorporated by
          reference to Exhibit 10.9 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1993].

 10.9     Common Stock Purchase Warrant between the Registrant and Burns
          McClellan, Inc., dated May 28, 1991 [incorporated by reference to
          Exhibit 10.14 to the Registrant's Registration Statement on Form S-1,
          Registration Statement No. 33-44664].

 * Indicates a management contract or compensatory plan or arrangement required
to be filed pursuant to Item 14(c) of Form 10-K.

                                       55

<PAGE>


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

 10.10    Common Stock Purchase Warrant between the Registrant and E.
          Andrews Grinstead, III, dated June 7, 1991, as amended [incorporated
          by reference to Exhibit 10.11 to the Registrant's Annual Report on
          Form 10-K for the fiscal year ended June 30, 1993].

 10.11    Common Stock Purchase Warrant between the Registrant and
          Ray A. Goldberg, dated June 7, 1991, as amended [incorporated by
          reference to Exhibit 10.12 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1993].

 10.12    Common Stock Purchase Warrant between the Registrant and
          Richard E. Lyng, dated June 7, 1991, as amended [incorporated by
          reference to Exhibit 10.13 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1993].

 10.13    Warrant to Purchase Shares of Common Stock by and between the
          Registrant and Oppenheimer & Co., Inc., dated October 31, 1991
          [incorporated by reference to Exhibit 10.18 to the Registrant's
          Registration Statement on Form S-1, Registration Statement No. 33-
          44664].

 10.14    Letter Agreement between the Registrant and Dr. and Mrs. Meir
          Broza, dated November 4, 1991 [incorporated by reference to Exhibit
          10.19 to the Registrant's Registration Statement on Form S-1,
          Registration Statement No. 33-44664].

 10.15    Assignment of Patent Rights, dated November 7, 1991
          [incorporated by reference to Exhibit 10.20 to the Registrant's
          Registration Statement on Form S-1, Registration Statement No. 33-
          44664].

 10.16    Option to Purchase Common Stock between the Registrant and Dr.
          Meir Broza, dated November 4, 1991 [incorporated by reference to
          Exhibit 10.21 to the Registrant's Registration Statement on Form S-1,
          Registration Statement No. 33-44664].


 10.17    Warrant Purchase Agreement between the Registrant and Dominion
          Ventures, Inc., dated November 26, 1991 [incorporated by reference to
          Exhibit 10.23 to the Registrant's Registration Statement on Form S-1,
          Registration Statement No. 33-44664].

 10.18    Master Lease Agreement between the Registrant and Dominion
          Ventures, Inc., dated November 26, 1991 [incorporated by reference to
          Exhibit 10.24 to the Registrant's Registration Statement on Form S-1,
          Registration Statement No. 33-44664].

                                       56

<PAGE>


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

 10.19*   Non-Statutory Stock Option Agreement between the Registrant and
          Haim B. Gunner, dated as of July 25, 1991 [incorporated by reference
          to Exhibit 10.25 to the Registrant's Registration Statement on Form S-
          1, Registration Statement No. 33-44664].

 10.20    Cooperative Research and Development Agreement between the
          Registrant and the United States Department of Agriculture, dated
          July 10, 1990 [incorporated by reference to Exhibit 10.26 to the
          Registrant's Registration Statement on Form S-1, Registration
          Statement No. 33-44664].

 10.21    Product Development and License Agreement between the Registrant
          and The Terminix International Company, L.P., dated as of June 3,
          1992, with certain confidential material omitted [incorporated by
          reference to Exhibit 10.38 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1992].

 10.22    Agreement and Plan of Reorganization dated as of November 18,
          1992, among the Registrant, Agro Dynamics, Inc., Eco Acquisition
          Corporation and the Stockholders named therein [incorporated by
          reference to Exhibit 4.1 to the Registrant's Registration Statement
          on Form S-3, Registration Statement No. 33-58540].

10.23     Sublicense Agreement between the Registrant, J.R. Brooks &
          Sons., Inc. and Seald-Sweet Growers, Inc., dated as of June 23, 1993,
          with certain confidential material omitted [incorporated by reference
          to Exhibit 10.34 to the Registrant's Annual Report on Form 10-K for
          the fiscal year ended June 30, 1993].

10.24     Agreement between Agro Dynamics, Inc. and Grodania A/S with
          certain confidential material omitted [incorporated by reference to
          Exhibit 10.35 to the Registrant's Annual Report on Form 10-K for the
          fiscal year ended June 30, 1993].

10.25     Lease between the Registrant and Worcester Business
          Development Corporation, dated as of May 28, 1993 [incorporated by
          reference to Exhibit 10.36 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1993].

10.26     Form of Warrant issued to Directors of the Registrant
          [incorporated by reference to Exhibit 10.38 to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1993].

10.27     Massachusetts Biotechnology Research Park Space Lease
          between the Registrant and Worcester Business Development
          Corporation, dated as of September 25, 1992 [incorporated by
          reference to Exhibit 10.37 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1993].



 * Indicates a management contract or compensatory plan or arrangement required
to be filed pursuant to Item 14(c) of Form 10-K.

                                       57

<PAGE>


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

 10.28    Asset Purchase Agreement, dated as of March 2, 1994, by and
          among the Registrant, American Machinery Corporation and Aeroglide
          Corporation [incorporated by reference to Exhibit 4.2 to the
          Registrant's Registration Statement on Form S-3, Registration
          Statement No. 33-83184].

 10.29    Master Equipment Lease Agreement, dated as of June 7, 1994,
          between the Registrant and Financing For Science International, Inc.
          [incorporated by reference to Exhibit 10.34 to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1994].

 10.30    Loan Agreement dated as of October 28, 1994 by and among
          the Registrant, Agro Dynamics, Inc., Agro Dynamics Canada Inc. and
          Silicon Valley Bank [incorporated by reference to Exhibit 10.35 to
          the Registrant's Annual Report on Form 10-K for the fiscal year ended
          June 30, 1994].

 10.31    Sublease Agreement dated as of November 1, 1994, between
          the Registrant and Hybridon, Inc. [incorporated by reference to
          Exhibit 10.32 to the Registrant's Annual Report on Form 10-K/A-2 for
          the fiscal year ended June 30, 1995].

 10.32    Marketing and Distribution Agreement dated as of May 15,
          1995 between Registrant and Rhone-Poulenc Agrichimie. [incorporated
          by reference to Exhibit 10.33 to the Registrant's Annual Report on
          Form 10-K/A-2 for the fiscal year ended June 30, 1995].

 10.33    Distribution Agreement dated as of August 1, 1995, by and
          among Agro Dynamics, Inc., Aweta, BV and Autoline. [incorporated by
          reference to Exhibit 10.34 to the Registrant's Annual Report on Form
          10-K/A-2 for the fiscal year ended June 30, 1995].

 10.34    Distributorship Agreement dated as of September 25, 1995,
          between Agro Dynamics, Inc. and H. Hoogendoorn Automation B.V.
          [incorporated by reference to Exhibit 10.35 to the Registrant's
          Annual Report on Form 10-K/A-2 for the fiscal year ended June 30,
          1995].


 10.35    Partial Lease Termination Agreement for Massachusetts
          Biotechnology Research Park Space dated as of September 19, 1995,
          between the Registrant and Worcester Business Development
          Corporation. [incorporated by reference to Exhibit 10.36 to the
          Registrant's Annual Report on Form 10-K/A-2 for the fiscal year ended
          June 30, 1995].


 10.36    Lease Termination Agreement dated as of September 29, 1995,
          between the Registrant and Worcester Business Development
          Corporation. [incorporated by reference to Exhibit 10.37 to the
          Registrant's Annual Report on Form 10-K/A-2 for the fiscal year ended
          June 30, 1995].

                                       58

<PAGE>


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

 10.37    Amendment of Sublease dated as of October 11, 1995, between
          the Registrant and Hybridon, Inc. [incorporated by reference to
          Exhibit 10.38 to the Registrant's Annual Report on Form 10-K/A-2 for
          the fiscal year ended June 30, 1995].

 10.38    Loan Modification Agreement dated as of October 5, 1995, by
          and among the Registrant, Agro Dynamics, Inc., Agro Dynamics Canada
          Inc., and Silicon Valley Bank. [incorporated by reference to Exhibit
          10.39 to the Registrant's Annual Report on Form 10-K/A-2 for the
          fiscal year ended June 30, 1995].

 10.39    Agreement dated as of October 11, 1995 modifying the Master
          Equipment Lease between the Registrant and Financing For Science
          International, Inc. [incorporated by reference to Exhibit 10.40 to
          the Registrant's Annual Report on Form 10-K/A-2 for the fiscal year
          ended June 30, 1995].

 10.40    Lease Termination Agreement dated as of January 11, 1996 between
          the Registrant and Worcester Business Development Corporation
          [incorporated by reference to Exhibit 10.41 to the Registrant's
          Current Report on Form 8-K dated January 16, 1996].

 10.41    Debt Settlement Agreement dated as of February 20, 1996, by and
          among the Registrant, EcoScience Produce Systems Corp., Aeroglide
          Corporation of Florida and Aeroglide Corporation [incorporated by
          reference to Exhibit 10.42 to the Registrant's Current Report on Form
          8-K dated March 20, 1996].

 10.42    Loan Modification Agreement dated as of July 5, 1996, by and
          among the Registrant, Agro Dynamics, Inc., Agro Dynamics Canada Inc.,
          and Silicon Valley Bank [filed herewith].

 10.43    Loan Modification Agreement dated as of September 5, 1996, by
          and among the Registrant, Agro Dynamics, Inc., Agro Dynamics Canada
          Inc., and Silicon Valley Bank [filed herewith].

 10.44    Loan Modification Agreement dated as of October 5, 1996, by and
          among the Registrant, Agro Dynamics, Inc., Agro Dynamics Canada Inc.,
          and Silicon Valley Bank [filed herewith].

 10.45    Private Placement Memorandum dated September 20, 1996 for
          Offering of Registrants's Common Stock [filed herewith].

 10.46    Common Stock Warrant between the Registrant and Taglich
          Brothers, D'Amadeo, Wagner & Company, Incorporated [filed herewith].

 10.47    Master Equipment Lease Settlement Agreement dated as of August
          8, 1996, between the Registrant and Financing For Science
          International, Inc. [filed herewith].

                                       59

<PAGE>


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

 10.48    Common Stock Warrant between the Registrant and Aeroglide
          Corporation [filed herewith].

 10.49    Form of Stock Purchase Agreement dated September 25, 1996, by and
          among EcoScience Corporation, Taglich Brothers, D'Amadeo, Wagner & 
          Company, Incorporated, and other entities [filed herewith].

 21       Subsidiaries of the Registrant [filed herewith].

 23       Consent of Arthur Andersen LLP [filed herewith].

 24       Powers of Attorney of officers and directors of the Company
          [included in the signature page filed on October 14, 1996].

 27       Financial Data Schedule for the Fiscal Year Ended June 30, 1996
          [filed herewith]


(b)       Reports on Form 8-K.  No reports on Form 8-K were filed by the
          Company during the fourth quarter of the fiscal year ended June 30,
          1996.

Note:     [NONE OF THE EXHIBITS LISTED IN THE FOREGOING INDEX IS INCLUDED WITH
          THIS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30,
          1996.  A COPY OF THESE EXHIBITS MAY BE OBTAINED WITHOUT CHARGE BY
          WRITING TO HAROLD A. JOANNIDI, ECOSCIENCE CORPORATION, 10 ALVIN
          COURT, EAST BRUNSWICK, NEW JERSEY  08816.]

                                       60

<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, thereunto duly authorized in the City of East
Brunswick, the State of New Jersey, on October 14, 1996.


                                      ECOSCIENCE CORPORATION


                                      By: /s/ Michael A. DeGiglio
                                          ----------------------------
                                          Michael A. DeGiglio
                                          President and Chief Executive Officer



                                 POWER OF ATTORNEY
                                       
     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below on this report hereby constitutes and appoints Michael A.
DeGiglio and Kenneth S. Boger, and each of them with full power to act without
the other, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any and all amendments to this report, and to
file the same, with all exhibits hereto, and other documents in connection
herewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing, ratifying and confirming all that
said attorneys-in-fact and agents or any of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.

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

Name                           Title                          Date
----                           -----                          ----  



/s/ Michael A. DeGiglio       President and Chief Executive   October 14, 1996
---------------------------   Officer
Michael A. DeGiglio           
                                                                             
                                                                             
/s/ Harold A. Joannidi        Treasurer, Secretary and        October 14, 1996 
---------------------------   Corporate Controller 
Harold A. Joannidi            
                                                                             
                                                                     
                                                                           
/s/ Kenneth S. Boger          Director                        October 14, 1996
---------------------------
Kenneth S. Boger
                                                                            
                                                                               
                                        61

<PAGE>
    
                                                                               
/s/ E. Andrews Grinstead III  Director                        October 14, 1996
----------------------------
E. Andrews Grinstead III
                                                                              
                                                                               
                                                                             
/s/ Larry M. Nouvel           Director                        October 14, 1996
------------------------
Larry M. Nouvel
                                                                               
                                                                            
                                                                            
/s/ David J. Ryan             Chairman of the Board           October 14, 1996
------------------------
David J. Ryan
                                                                              
                                                                          
                                                                         
/s/ Heinz K. Wehner           Director                         October 14, 1996
------------------------
Heinz K. Wehner
                                                                           


                                       62