<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, 1997

                                      OR


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


                For the transition period from _________ to ________

                         Commission file number 0-19746

                              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)

                                    732-432-8200
               (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 29, 1997, there were outstanding 10,401,177 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 $9,861,000.

                         DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the 1997 Special Meeting in 
lieu of the Annual Meeting of Stockholders to be held on November 25, 1997 
are incorporated by reference into Part III.

               Number of Pages: 60     Exhibit Index on Page: : 57

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                                     PART I

Item 1. Business 

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 ("PCOs"). The Company 
provides (i) sophisticated growing systems to greenhouse operators, (ii) 
technologically advanced sorting, grading and packing systems to produce 
packers, (iii) equipment, coatings and disease control products, including 
natural biologicals for protecting fruits, vegetables and ornamentals in 
storage and transit to market, and (iv) a unique biological pest control 
product to PCOs.  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 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 engineers, 
designs, markets and distributes advanced technologies, products, growing 
systems and services for the North American intensive farming, horticulture 
and produce packing industries.  On May 24, 1994, the Company acquired 
certain assets and liabilities of American Machinery Corporation ("AMC"), an 
Orlando, Florida based business that provided 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 the Company's existing activities in those 
markets.  EcoScience sells to PCO's through a marketing collaboration with 
Terminix International Company L.P. ("Terminix").  Additionally, EcoScience 
has initiated an extensive testing, development and marketing program with 
Maruwa Biochemical Co., Ltd. ("Maruwa Biochemical") and Shinto Paint Co., 
Ltd., for biological products in Japan.  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 sorting, grading and packing systems manufactured by Aweta, 
B.V., (iii) computerized environmental and irrigation control systems 
manufactured by H. Hoogendorn Automation B.V., (iv) PacRite-Registered 
Trademark-  and Indian River Gold-TM-  coatings manufactured by EPSC, (v) 
Bio-Save-TM- PostHarvest BioProtectant line of products and (vi) 
Bio-Blast-TM- Biological Termiticide manufactured by EcoScience.  In 
addition, the Company distributes a broad array of specialty products used in 
greenhouses and in fruit, vegetable and ornamental packing.

    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; Union Gap, Washington; and Milton, Ontario, Canada.

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    The Company's technology encompasses the development and application of 
natural microbial pest control agents.  The Company's technology enables it 
to provide products and technical support for PCOs, growers and packers of 
specialty crops.  The Company also 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 fruits and vegetables.

    In fiscal year ended June 30, 1997, the Company (i) expanded marketing of 
its Bio-Save line of products for the control of postharvest fruit diseases 
in a wide range of commercial applications, (ii) initiated the U.S. 
commercial launch of its Bio-Blast Biological Termiticide ("Bio-Blast") and 
(iii) began research on a USDA funded Phase-2 Small Business Innovation 
Research ("SBIR") program on the prevention of postharvest diseases of 
bananas, which will continue through fiscal years 1998 and 1999.  In 
addition, the Company expects to conduct tests to extend the range of 
performance and applicability for both its Bio-Save line of products and for 
its Bio-Blast insect control product.


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, engineers, designs, markets and distributes 
commercial products and provides services to the greenhouse and nursery 
market in the United States, Canada 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 Denmark based wholly owned subsidiary of Rockwool 
International A/S.  Stonewool is made by melting rock, processing it to a 
fibrous material which can be flocculent or formed into solid structures.  It 
is both solid and porous and designed to support the hydroponic 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 distribution agreement expires on 
December 31, 1997; however, the Company is actively negotiating a new 
agreement with Grodania A/S.  The sale of products under the distribution 
agreement with Grodania A/S accounted for 42%, 45% and 43% of the Company's 
total product sales in fiscal 1997, 1996 and 1995, 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 1998.

    Automated Irrigation and Environmental Control Systems.  The Company 
through its ISYS-TM- Division engineers, designs, fabricates, assembles and 
distributes greenhouse irrigation and fertilization systems, computerized 
environmental control systems and application products. In addition, to these 
products and systems, the Company provides customers with technical support, 
product service, turnkey installation, product marketing and other 
supplementary services. The Company is the exclusive distributor in the 
United States, Canada and Mexico of computerized environmental control

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systems and accessories produced by H. Hoogendoorn Automation B.V, a 
Netherlands based company.  The Company also distributes various accessories 
and other product lines for use in the intensive farming and horticulture 
industries in the North American market on both an exclusive and 
non-exclusive basis.

    Postharvest Industry

    The fruit and vegetable production industry requires specialized 
services, equipment and products for the harvesting, processing and storage 
of produce.

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

    Commercial Products

    Sorting, Grading and Packing.  Once harvested, produce must be sorted, 
graded and packaged for shipment and storage.  The Company is the exclusive 
distributor in the United States, Canada, Mexico and the Caribbean of 
computerized color, weight and size sorting, grading and packing automated 
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 26% and 20% of the Company's total product sales in fiscal 
1997 and 1996, 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 1998.

    Traditional Coating Products.  Prior to shipping or storage, fruits and 
vegetables are typically treated with a variety of processing and storage 
aids. These are designed to enhance the appearance and preserve the quality 
of stored produce.  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 Bio-Save 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 U.S. Food and Drug Administration ("FDA") approved 
additives or have been listed by the FDA as "Generally Recognized As Safe" 
("GRAS") 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.

    Bio-Save PostHarvest BioProtectant.  The Bio-Save line of biological 
disease inhibitors 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 for sale biological products using the EPA 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. 

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digitatum) and Sour Rot (Geotrichum candidum) on citrus fruit.  The Company 
has conducted successful field trials over the last five years utilizing 
selected microbial disease inhibiting agents in the U.S. in Florida, 
California, Oregon, West Virginia, Massachusetts, Michigan and Washington; 
and Chile.  The Company initiated commercial product launch of its Bio-Save 
products in fiscal 1997 and plans for wider product marketing and development 
in fiscal 1998.  In 1997, the Company received EPA registration for the use 
of Bio-Save on cherries and continues to investigate the application of 
Bio-Save to control other postharvest diseases on fruits and vegetables, such 
as on potatoes.

    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, a naturally occurring insect killing fungus.  The 
product is a dry powder, packaged and portioned for ease of storage and use; 
and used as a water suspension.  Through commercial trials, the Company has 
demonstrated that Bio-Blast is an effective method 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 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.  In fiscal 1997, the Company initiated the U.S. commercial 
launch of Bio-Blast in collaboration with Terminix.

Sales and Distribution

    Specialty Agriculture Products.  The Company sells directly into this 
market through AGRO.  AGRO has a force of 36 people involved in sales, 
marketing and distribution, engineering and design, and system installation 
and service at its distribution and service centers in East Brunswick, New 
Jersey; Milton, Ontario, Canada; and Ventura, California, and in its 
sales/service office in Englewood, Colorado.

    Postharvest Packing.  The Company uses its AGRO and EPSC direct sales 
operations to market and sell its packing equipment, and its traditional 
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 nine 
people located in its distribution and service centers in Orlando, Florida 
and Visalia, California.  AGRO has a force of nine people involved in sales 
and marketing, engineering and design, and system installation and service in 
this market at its sales and service centers in Union Gap, Washington; East 
Brunswick, New Jersey and Englewood, Colorado.

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    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 fiscal 1996, the 
Company initiated sales to Terminix for its Bio-Blast termiticide product and 
in fiscal 1997 initiated the U.S. commercial launch of the product in 
collaboration with Terminix.

    International Sales.  The Company expects to market products 
internationally primarily through local and regional distributors and 
partners. The Company has a development and distribution agreement with 
Maruwa Biochemical for distribution of its Bio-Path-Registered Trademark- 
Cockroach Control Chamber and Bio-Blast Biological Termiticide in Japan upon 
registration there.  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, incorporated herewith.

Manufacturing

    The Company has established supply arrangements for the manufacture of 
fungal conidia, the active ingredient in the Bio-Blast product.  Upon receipt 
of the raw active ingredient, the Company  processes, formulates and packages 
this material to produce the Bio-Blast product in its Orlando, Florida 
manufacturing facility.

    Traditional coating products are manufactured at the EPSC facility in 
Orlando, Florida.  Production of the Company's postharvest fruit disease 
control products, Bio-Save, requires large-scale fermentation and formulation 
capacity. Currently, a single sub-contractor manufactures the Bio-Save 
products for the Company.  However, the Company believes other entities would 
be capable of manufacturing these products.  Although, to date, the Company 
has been able to acquire a sufficient supply of the Bio-Save product for its 
commercial sales; the inability of the sub-contractor to meet the Company's 
needs for the Bio-Save products or a change in supplier could cause a delay 
in filling orders, as well as a possible loss of sales, which would affect 
operating results adversely.

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 has shipped product to and is working with 
Maruwa on commercialization of its Bio-Blast product in Japan.  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.  At this time emphasis has 
shifted to the Bio-Blast product and the Company anticipates entering into a 
formal agreement with Maruwa for the Bio-Blast product.  Following receipt of 
all required approvals, Maruwa Biochemical is obligated to distribute certain 
products supplied by the Company and sold to Maruwa Biochemical at prices to 
be determined by agreement.

    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.  

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The Company has retained all rights elsewhere.  The Company manufactures and 
sells products to Terminix at an agreed markup over the Company's 
manufacturing cost. The Company will share in 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.  In October 
1996, the Company and Terminix initiated the U.S. commercial launch of 
Bio-Blast.

Technology

    The Company's technology has application in three broad areas:  (i) the 
development of natural microbial biological pesticides; (ii) the development 
of fresh fruit and vegetable coatings; and (iii) providing assistance and 
advice to customers on technical production methods for high value and 
specialty crops and ornamentals, 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 
microorganisms form the foundation of the biological pest control products, 
are packaged alive and perform their function through proliferation in the 
pest environment.  Much of the formulation and delivery technology developed 
for synthetic chemical pesticides or microbial products is inappropriate for 
microbial products which employ and preserve living organisms.  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 list describes 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."

    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 their 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 and Bio-Blast products.  EcoScience has been awarded 

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    U.S. patents which cover certain of its advances in this area.  
    Additionally, it serves as the basis for the contract formulation 
    business EcoScience is developing.

    Development of Delivery Systems.  The Company has developed proprietary 
    delivery systems including insect infection chambers, sprays, dusts and 
    gels, optimizing performance of microbial agents by facilitating accurate 
    delivery of concentrated doses.  EcoScience has been awarded U.S. patents 
    which cover certain of its advances in this area.

    Development of Packaging Systems.  The Company believes to be 
    commercially successful, biopesticide products must remain viable in 
    conventional distribution channels and have a minimum shelf life of 18 to 
    24 months.  The Company has developed and patented certain proprietary 
    packaging systems to extend the shelf life of microbial agents during 
    storage and transportation for such a shelf life period.

    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 transit to market.  The technology focuses on controlling 
respiration (oxygen transport) and water loss of 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 May 1994, the 
Company acquired a line of traditional coating products which utilize 
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 and enhance overall appearance.

    Technical Advice and Service

    The Company, as an adjunct to its sales and service efforts, advises its 
customers on improved technical growing methods and systems, and packing 
techniques and systems.  To successfully service 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.

    Research and Development

    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 prior restructuring 
program, and current cost control programs, certain research and product 
development programs and the funding thereof have been suspended, curtailed 
or deferred. Future development and funding of these and other select 
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, commercial 
viability potential of resultant end products, governmental regulations, and 
other relevant matters which may confront the Company in the future.

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    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 $7,000, 
$0 and $155,000 in fiscal 1997, 1996 and 1995, respectively.  Expenses 
incurred under Company funded research and development programs totaled 
approximately $501,000, $1,018,000 and $4,328,000 in fiscal 1997, 1996 and 
1995, 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 organism is the basis for one of the Bio-Save 
products and 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 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 sub-license to use the 
technology underlying the Nature Seal coatings, the rights to which J.R. 
Brooks and Seald-Sweet licensed 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 sub-license 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 and certain minimum annual licensing fees payable to 
the USDA.  While the sub-license agreement extends until expiration of the 
last to expire patents covering the Nature Seal technology, the Company has 
elected to no longer pursue this technology.

Competition

    The Company faces substantial competition from a few large companies and 
several smaller companies 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 also intense. 
Fruit and vegetable coating products are developed and marketed primarily by 
several large companies which offer a full 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 Bio-Save PostHarvest BioProtectant and other traditional 
coating products based on the cost effectiveness and the quality of its 
coating formulations and services.

    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 

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believes that its commercial success in the pesticide market will depend upon 
the continuing development of cost effective products which compete with 
synthetic chemical pesticides on the basis of effectiveness, safety and 
ecological benefit, as well as establishment of 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 the 
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 increasingly difficult 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.

    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.  In addition, in May 1997, the Company received 
approval from the EPA for a label extension for the use of Bio-Save 1000 on 
cherries.

    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 

                                       10

<PAGE>

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 
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 proprietary information.

    Six of the Company's eight U.S. patents cover its fungal technology, and 
principally relate to the control of insects, with corresponding foreign 
patents and patent applications.  The six patents are: (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.  These patents are central to the Bio-Path 
chamber technology which covers cockroaches.  In addition, this technology 
can be extended to any other insect that can be controlled via a chamber 
system.  An additional patent, Maintenance and Long-Term Stabilization of 
Fungal Conidia Using Surfactants, describes methods utilizing a unique class 
of surfactants for fungal formulation.  The Company has also received a 
notice of allowance for its patent application for Packaged Fungal Culture 
Stabile to Long-Term Storage.

    Two additional U.S. patents held by the Company relate to bacterial 
bio-fungicides technology.  The 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.  In addition, the patent application Method and Composition for 
Producing Stabile Bacteria and Bacterial Formulation has received a notice of 
allowance.  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 has an additional pending patent application 
relating to a method 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 exclusive sub-licenses to two issued U.S. patents 
covering the Nature Seal technology from J.R. Brooks and Seald-Sweet, which 
licensed the patents from the USDA.  This sub-license is under active 
re-evaluation by the Company.  See "Technology Licensing."  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 by the USDA for the control of postharvest diseases of pome 
fruits.  The USDA has been granted one patent covering this technology and 
has filed a patent application covering additional coatings. 

                                       11

<PAGE>

    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 which require disclosure of and assignment to the Company 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.  Additionally, in the absence of patent 
protection, the Company's business may be adversely affected by competitors 
who develop substantially equivalent technology.

Personnel

    As of September 25, 1997, the Company had 67 full time employees.  A 
total of three persons are employed full time in manufacturing and 
production; 32 in sales, marketing and distribution; three in engineering and 
design; 11 in system installation and service; four in research and 
development; and 14 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.


                                       12

<PAGE>

Item 2.  Properties 


    The Company's corporate headquarters and research and development 
operations, and AGRO's New Jersey operations are located in two facilities in 
East Brunswick, New Jersey.  These facilities consist of 23,375 and 10,000 
square foot spaces and are under leases that expire in July 1999, and which 
provide 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, Canada under a one year lease 
which expires in June  1998, and which provides an option to renew for an 
additional four year term.  AGRO also leases a 12,000 square foot facility 
for its sales/service and warehouse center located in Ventura, California; as 
well as, sales/service and warehouse centers in Englewood, Colorado; and 
Union Gap, 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, 1997.


                                       13

<PAGE>

Executive Officers of the Registrant

    The executive officers of the Company as of September 29, 1997, are 
listed below:

<TABLE>
<CAPTION>

                                                                                 Executive
     Name               Age                 Position                           Officer Since
     ----               ---                 --------                           -------------
<S>                     <C>  <C>                                               <C>
Michael A. DeGiglio     43   President, Chief Executive Officer and Director        1993
Harold A. Joannidi      46   Treasurer, Corporate Controller and Secretary          1995
David W. Miller         45   Vice President-Technology                              1988

</TABLE>

    Mr. DeGiglio joined the Company upon its acquisition of AGRO in November 
1992, and has served as President of AGRO since that time.  In July 1995, Mr. 
DeGiglio assumed the offices of President and Chief Executive Officer of the 
Company.  From 1984 until joining the Company, Mr. DeGiglio was employed by 
AGRO, 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, and the Naval Air Reserves 
from 1983 to present, currently holding the rank of Captain with the United 
States Naval Reserve.  Throughout his Naval career, he has held various 
department head positions, completed a tour as Commanding Officer of a Jet 
Aviation Squadron, performed multiple tours overseas, and has completed 
numerous Senior Advanced Management 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. 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 in 1992, 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.

    Dr. Miller joined the Company in May 1988 and currently serves as Vice 
President- Technology.  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.  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. 
Throughout his professional career, Dr. Miller has focused on the development 
and commercialization of microbial pesticides.

                                       14

<PAGE>

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

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

    The Company's Common Stock is traded on the National Association of
Securities Dealers Automatic Quotation System ("NASDAQ") Small Capitalization
Market System under the NASDAQ symbol "ECSC". As of September 23, 1997, there
were approximately 265 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.
 

                1997                           HIGH        LOW
                -----------------------       -------     -------

                Fourth Quarter..........      1 3/4          27/32
                Third Quarter...........      2 1/2         1
                Second Quarter..........      1 3/8          7/8
                First Quarter...........      1 5/8         1

                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










                                       15

<PAGE>


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

    The selected financial data presented below has been derived from the
Company's audited consolidated financial statements for each year in the five
year period ended June 30, 1997. 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 document.

<TABLE>
<CAPTION>
                                                                             YEARS ENDED JUNE 30,
        CONSOLIDATED STATEMENTS OF OPERATIONS DATA:          -----------------------------------------------------
         (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)              1997       1996       1995       1994       1993
-----------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
<S>                                                          <C>        <C>        <C>        <C>        <C>
Product sales..............................................  $  20,853  $  14,151  $  12,335  $   9,246  $   3,802
Cost of goods sold.........................................     15,702     10,394     10,153      7,875      3,288
                                                             ---------  ---------  ---------  ---------  ---------
Gross profit...............................................      5,151      3,757      2,182      1,371        514
                                                             ---------  ---------  ---------  ---------  ---------
Operating expenses:
  Research and development.................................        508      1,018      4,483      8,156      6,294
  Acquired research and development........................        --         --         --         --         750
  Selling and marketing....................................      2,463      2,594      3,672      3,043      1,690
  General and administrative...............................      2,107      2,244      2,631      3,382      3,159
  Asset valuation and restructuring (reversal) charges.....       (377)    (1,550)     6,000      5,800        --
                                                             ---------  ---------  ---------  ---------  ---------
   Total operating expenses................................      4,701      4,306     16,786     20,381     11,893
                                                             ---------  ---------  ---------  ---------  ---------
Operating income (loss)....................................        450       (549)   (14,604)   (19,010)   (11,379)
                                                             ---------  ---------  ---------  ---------  ---------
Other income (expense):
   Research, development, licensing fees and other income..          7        125        155        812        545
   Investment income.......................................        105        199        590        853      1,525
   Interest and other expense..............................       (177)      (603)    (1,235)      (208)       (95)
                                                             ---------  ---------  ---------  ---------  ---------
     Total other (expense) income..........................        (65)      (279)      (490)     1,457      1,975
                                                             ---------  ---------  ---------  ---------  ---------
Income (loss) before extraordinary gain....................        385       (828)   (15,094)   (17,553)    (9,404)
Extraordinary gain on early extinguishment of debt.........     --            241     --         --         --
                                                             ---------  ---------  ---------  ---------  ---------
Net income (loss)..........................................  $     385  ($    587) ($ 15,094) ($ 17,553) ($  9,404)
                                                             ---------  ---------  ---------  ---------  ---------
                                                             ---------  ---------  ---------  ---------  ---------
Net income (loss) per share:
  Income (loss) before extraordinary gain..................  $    0.04  ($   0.09) ($   1.71) ($   2.27) ($   1.41)
  Extraordinary gain.......................................     --           0.03     --         --         --
                                                             ---------  ---------  ---------  ---------  ---------
  Net income (loss)........................................  $    0.04  ($   0.06) ($   1.71) ($   2.27) ($   1.41)
                                                             ---------  ---------  ---------  ---------  ---------
                                                             ---------  ---------  ---------  ---------  ---------
Weighted average number of common and common equivalent
  shares outstanding.......................................     10,233      9,070      8,839      7,748      6,664
                                                             ---------  ---------  ---------  ---------  ---------
                                                             ---------  ---------  ---------  ---------  ---------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                       JUNE 30,
               CONSOLIDATED BALANCE SHEET DATA:                  -----------------------------------------------------
                        (IN THOUSANDS)                             1997       1996       1995       1994       1993
---------------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
<S>                                                              <C>        <C>        <C>        <C>        <C>
Unrestricted and restricted cash, cash equivalents, short-term
  investments and marketable securities........................  $   1,775  $   2,639  $   7,831  $  20,141  $  24,576
Total assets...................................................      8,875     10,111     18,769     33,990     31,843
Debt and capital leases........................................         11      2,452      8,290      7,933      3,156
Stockholders' investment.......................................      4,014      2,473      2,492     18,110     25,123
</TABLE>
 
                                       16


<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------------------------------------ 
                             RESULTS OF OPERATIONS
 
GENERAL
 
    EcoScience is engaged in marketing, sales and product development, servicing
the needs of the agricultural specialties markets and professional pest control
operators. The Company provides (i) sophisticated growing systems to greenhouse
operators, (ii) technologically advanced sorting, grading and packing systems to
produce packers, (iii) equipment, coatings and disease control products,
including natural biologicals for protecting fruits, vegetables and ornamentals
in storage and transit to market, and (iv) a unique biological pest control
products to PCOs. The Company focuses on the technical marketing of agricultural
specialties products and services, and the development of biological pest
control products.
 
    The Company's primary products are (i) advanced growing systems based on
Stonewool, manufactured by Grodania A/S, (ii) sophisticated sorting, grading and
packing systems manufactured by Aweta, B.V., (iii) computerized environmental
and irrigation control systems manufactured by H. Hoogendorn Automation B.V.,
(iv) PacRite and Indian River Gold coatings manufactured by EPSC, (v) Bio-Save
PostHarvest BioProtectant line of products and (vi) Bio-Blast Biological
Termiticide manufactured by EcoScience. In addition, the Company distributes a
broad array of specialty products used in greenhouses and in fruit, vegetable
and ornamental packing.
 
    EcoScience sells to PCO's through a marketing collaboration with Terminix.
In fiscal 1997, the Company initiated the U.S. commercial launch of Bio-Blast in
collaboration with Terminix. Additionally, EcoScience has initiated an extensive
testing, development and marketing program with Maruwa BioChemical and Shinto
Paint Co., Ltd. for biological products in Japan. The Company initiated
shipments of Bio-Blast to Maruwa in fiscal 1997.
 
    The Company's technology is used for the development and application of
natural microbial pest control agents and coatings to sustain the freshness of
fruits and vegetables. The Company's technology enables 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 fruits and vegetables.
 
    In fiscal 1997, the Company (i) expanded marketing of its Bio-Save line of
products for the control of postharvest fruit diseases in a wide range of
commercial applications, (ii) initiated the U.S. commercial launch of its
Bio-Blast Biological Termiticide and (iii) began research on a USDA funded
Phase-2 Small Business Innovation Research program on the prevention of
postharvest diseases of bananas, which will continue through fiscal years 1998
and 1999. In addition, the Company expects to conduct tests to determine the
possibility of extending the range of performance and applicability for both its
Bio-Save line of products and its Bio-Blast insect control product.
 
    The Company derives most its revenues from the AGRO and EPSC operations
through the sale of (i) growing medium products to the North American intensive
farming and horticulture industries; (ii) sorting, grading and packing systems
to the produce packing industry; and (iii) postharvest coating products to the
fresh fruit and vegetable markets throughout the western hemisphere.


                                        17

<PAGE>

    Prior to the acquisition of AGRO in November 1992 and EPSC in May 1994,
substantially all revenues generated by the Company were from collaborative
research and development arrangements and investment income. During this period,
the Company had devoted substantially all of its efforts toward new product
research and development, and commercialization of certain products.
 
    The Company believes that inflation and changing prices have not had a
material effect on its operations to date. 

1997 Compared to 1996

    The Company's product sales increased $6,702,000 or 47% to $20,853,000 in
1997 from $14,151,000 in 1996. This increase was primarily due to the increase
in product sales by AGRO of $6,294,000. The following table sets forth the
Company's product sales by operating company for 1997 and 1996:
 
<TABLE>
<CAPTION>
(IN THOUSANDS)                                                                        1997       1996      INCREASE
----------------------------------------------------------------------------------  ---------  ---------  -----------
<S>                                                                                 <C>        <C>        <C>
AGRO..............................................................................  $  17,388  $  11,094   $   6,294
EPSC..............................................................................      3,045      2,882         163
EcoScience........................................................................        420        175         245
                                                                                    ---------  ---------  -----------
Consolidated......................................................................  $  20,853  $  14,151   $   6,702
                                                                                    ---------  ---------  -----------
                                                                                    ---------  ---------  -----------
</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 Denmark based company. The sale of products under the distribution
agreement with Grodania A/S accounted for 42%, 45% and 43% of the Company's
total product sales in 1997, 1996 and 1995, 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, grading and
packing products and equipment to the fruit, vegetable and flower markets in the
United States, Canada, Mexico and the Caribbean. The sale of products under the
distribution agreement with Aweta B.V. accounted for 26% and 20% of the
Company's total product sales in 1997 and 1996, respectively. Although there are
a limited number of sorting, grading and packing 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 1998.
 
    The Company sold product to an affiliated group of companies ("Affiliates")
in the amount of $2,893,000 or 14% of product sales in 1997 and $556,000 or 4%
of product sales in 1996. An officer of the Company is also an officer of the
Affiliates. Management believes that prices and fees charged to the Affiliates


                                        18

<PAGE>


are reasonable. Loss of revenue from this customer would adversely affect
operations. Sales to the Affiliates are expected to account for more than 10% of
the Company's product sales in 1998.
 
    The Company's biological product sales increased $598,000 to $795,000 for
1997 compared to $197,000 for 1996. The increase in sales was primarily due to
EcoScience's Bio-Blast Biological Termiticide and EPSC's Bio-Save PostHarvest
BioProtectant, representing broader market exposure and customer acceptance for
both products.
 
    Cost of goods sold increased $5,308,000 or 51% to $15,702,000 in 1997 from
$10,394,000 in 1996 primarily due to product sales increases.
 
    Gross margin on product sales increased $1,394,000 or 37% to $5,151,000 in
1997 from $3,757,000 in 1996, while gross margin percentage on product sales
decreased to 25% in 1997 from 27% in 1996. The decrease in gross margin
percentage was primarily due to a change in product mix and lower margin on
sales to achieve greater market penetration and competitive factors.
 
    Research and development expenses decreased $510,000 or 50% to $508,000 in
1997 from $1,018,000 in 1996, due primarily to reductions in personnel and
related costs at EcoScience and EPSC. The Company has and will continue to incur
ongoing research and development expenses for its Bio-Save PostHarvest
BioProtectant, Bio-Blast Biological Termiticide and other select programs in
fiscal 1998.

    Selling and marketing expenses decreased $131,000 or 5% to $2,463,000 in
1997 from $2,594,000 in 1996, due primarily to the decreases in EPSC's selling
and marketing expenses of $236,000, partially offset by an increase of $101,000
at AGRO. The decrease in EPSC's selling and marketing expenses for 1997 was
primarily attributable to the reduction of selling and marketing department
personnel and related costs during fiscal 1997. The increase in AGRO's selling
and marketing expenses was primarily due to additional personnel, promotional
and related costs to support new product sales and sales increases.
 
    General and administrative expenses decreased $137,000 or 6% to $2,107,000
in 1997 from $2,244,000 in 1996, primarily due to the decreases in EcoScience's
and EPSC's general and administrative expenses of $16,000 and $123,000,
respectively. The decrease in EcoScience's general and administrative expenses
for 1997 was primarily attributable to personnel costs, professional fees and
related cost reductions. The decrease in EPSC's general and administrative
expenses for 1997 was primarily due to personnel costs and related cost
reductions.
 
    In June 1997, the Company reversed $300,000 of accrued restructuring costs
no longer deemed necessary for facilities consolidation and relocation, which
relate to accrued restructuring costs originally recorded in 1995.
 
    In August 1996, the Company and a finance company reached a lease settlement
agreement under which the Company paid $880,000 to satisfy the remaining lease
obligation of approximately $1,248,000 of principal and $17,000 of accrued
interest, and returned certain leased equipment with a net book value of
$308,000 to the financing company, which resulted in a reversal of a
restructuring charge of $77,000 in 1997.
 


                                       19

<PAGE>


    The Company charged costs and expenses totaling $273,000 against the
restructuring accruals during 1997. The Company completed most of its
restructuring activities by the end of fiscal 1997.
 
    In 1996, the Company reversed $1,550,000 of accrued restructuring costs that
related to a termination of a lease for its Worcester corporate headquarters and
research and development facility (see Note 9 to the Consolidated Financial
Statements).
 
    Operating income increased $999,000 to $450,000 for 1997 compared to an
operating loss of ($549,000) for 1996. The increase in operating income resulted
from a $1,394,000 increase in gross profits in 1997 compared to 1996, partially
offset by a $395,000 increase in operating expenses. Operating income for 1997
increased $2,172,000 to $73,000 after exclusion of the reversal of restructuring
charges of $377,000 and $1,550,000 in 1997 and 1996, respectively. Operating
expenses decreased $778,000 or 13% to $5,078,000 for 1997 compared to $5,856,000
for 1996 when the restructuring reversals are excluded for both periods.
 
    Other income / (expense) decreased $214,000 or 77% to ($65,000) net expenses
in 1997 compared to ($279,000) net expense in 1996. The decrease was primarily
attributable to a reduction in interest and other expenses of $426,000 or 71%,
primarily due to the decrease in interest expense resulting from the lower
average level of long-term debt and capital lease obligations outstanding during
1997 compared to 1996; partially offset by (i) a decrease in investment income
of $94,000 resulting from a decline in the average funds available for
investment in 1997 compared to 1996 and (ii) a $74,000 gain on sale of property
and equipment and a $51,000 gain on settlements of accounts payable recorded in
1996.
 
    In 1996, the Company realized an extraordinary gain on the early
extinguishment of debt of $241,000 or $0.03 per share with no related income tax
effect (see Note 4 to the Consolidated Financial Statements).
 
    The Company's net income increased $972,000 or $0.10 per share to net 
income of $385,000 or $0.04 per share for 1997 compared to a net loss of 
($587,000) or ($0.06) per share for 1996. Excluding non-recurring amounts, 
net income for 1997 was $8,000 or $0.00 per share, a $2,386,000 or $0.26 per 
share improvement, compared to the net loss of ($2,378,000) or ($0.26) per 
share for 1996. The excluded non-recurring amounts are: (i) for 1997: the 
$377,000 reversals of restructuring charges; and (ii) for 1996: (a) the 
$1,550,000 reversal of accrued restructuring costs, and (b) the $241,000 
extraordinary gain on early extinguishment of debt. 


                                       20

<PAGE>

1996 Compared to 1995
 
    The Company's product sales increased $1,816,000 or 15% to $14,151,000 in
1996 from $12,335,000 in 1995 primarily due to an increase in AGRO sales of
$2,302,000, partially offset by EPSC and EcoScience's product sales decreases.
The following table sets forth the Company's product sales by operating company
for 1996 and 1995:
 
<TABLE>
<CAPTION>
                                                                                                         INCREASE
(IN THOUSANDS)                                                                      1996       1995     (DECREASE)
--------------------------------------------------------------------------------  ---------  ---------  -----------
<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>
 
    Cost of goods sold increased $241,000 or 2% to $10,394,000 in 1996 from
$10,153,000 in 1995. In 1996, AGRO's cost of goods sold increased by $1,947,000
due to increased product sales, while cost of goods sold at EcoScience decreased
$1,716,000 due to the cessation of manufacturing of the 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 primarily due
to the cessation of manufacturing of Bio-Path and related cost savings at
EcoScience; and an increase in gross margin from AGRO's product sales increases,
partially 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, primarily due 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. EPSC research and development expenses increased $318,000 in
1996, primarily due 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, primarily due to the decreases in EcoScience's and
EPSC's selling and marketing expenses of $860,000 and $418,000, respectively and
an increase in AGRO's selling and marketing expenses of $200,000. The decrease
in EcoScience's selling and marketing expenses for 1996 was primarily
attributable to the Company's restructuring program initiatives. 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.
 
    General and administrative expenses decreased $387,000 or 15% to $2,244,000
in 1996 from $2,631,000 in 1995, primarily due to the decreases in EcoScience's
and EPSC's general and administrative expenses of $208,000 and $207,000,
respectively, which were partially offset by an increase of $28,000 in such
expenses for AGRO. The decrease in EcoScience's general and administrative


                                        21

<PAGE>


expenses for 1996 was primarily attributable to the Company's restructuring
program initiatives. The decrease in EPSC's general and administrative expenses
for 1996 was primarily due to a reduction in 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.
 
    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 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 1996 that related to the accrued restructuring 
costs which were originally recorded in 1995 ($2,000,000) and the remaining 
accrued restructuring costs which were originally recorded in 1994 ($200,000).
 
    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 had completed a major portion of
its restructuring activities in fiscal 1996. The Company paid and charged
expenses totaling $1,746,000 against 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 (see Note 9 to the Consolidated
Financial Statements).
 
    Operating loss decreased $14,055,000 to ($549,000) for 1996 compared to an
operating loss of ($14,604,000) for 1995. The decrease in operating loss
resulted from a $12,480,000 decrease of total operating expenses in 1996
compared to 1995, in addition to a $1,575,000 increase in gross profit. The
operating loss for 1996 was ($2,099,000), a decrease of $6,505,000 or 76%, when
the $1,550,000 reversal of restructuring charge discussed above is excluded,
compared to an operating loss of ($8,604,000) for 1995, when the $6,000,000
restructuring charge is excluded. Operating expenses decreased $4,930,000 or 46%
to $5,856,000 for 1996 compared to $10,786,000 for 1995 when the restructuring
charges / reversals are excluded from both periods.
 
    Other income / (expense) decreased $211,000 or 43% to ($279,000) net expense
in 1996 compared to ($490,000) net expense in 1995. The decrease was primarily
attributable to a reduction in interest and other expense of $632,000 or 51%
primarily due to the decrease in interest expense resulting from the lower
average level of long-term debt and capital lease obligations outstanding during
1996 compared to 1995, offset by (i) a decrease in investment income of $391,000
resulting from a decline in the average funds available for investment for 1996
and (ii) a decrease in research, development, licensing fees and other income of
$30,000. In 1996, EcoScience recorded a $74,000 gain on sale of property and
equipment and a $51,000 gain on settlements of accounts payable. In 1995,
EcoScience recorded $155,000 in product support payments from Terminix.
 
    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



                                         22

<PAGE>


extraordinary gain on the early extinguishment of debt of $241,000 or $0.03 per
share with no related income tax effect.
 
    The Company's net loss decreased $14,507,000 or $1.65 per share to a net
loss of ($587,000) or ($0.06) per share for 1996 compared to a net loss of
($15,094,000) or ($1.71) per share for 1995. Excluding non-recurring amounts,
the net loss for 1996 was ($2,378,000) or ($0.26) per share, a $6,716,000 or 74%
decrease compared to the net loss of ($9,094,000) or ($1.03) per share for 1995.
The excluded non-recurring amounts for 1996 are: (a) the $1,550,000 reversal of
accrued restructuring costs related to the facility lease settlement, and (b)
the $241,000 extraordinary gain on early extinguishment of debt; and for 1995:
the $6,000,000 restructuring charge.
 
                        LIQUIDITY AND CAPITAL RESOURCES
 
    The Company's operations have been funded through revenues from product
sales, public and private placements of its equity securities, bank loans and
lease financings, licensing, collaborative research and development
arrangements, and investment income.

    Cash and cash equivalents were $1,247,000 at June 30, 1997 compared to
$734,000 at June 30, 1996. Unrestricted and restricted cash, cash equivalents,
and short-term investments totaled $1,775,000 compared to $2,639,000 at June 30,
1996. Cash provided by operating activities totaled $184,000 and principally
represented net income of $385,000. Cash used for financing activities totaled
$881,000 in 1997, which consisted principally of payments of $2,037,000 on debt
and capital leases, partially offset by proceeds from the issuance of stock of
$1,139,000. Cash provided by investment activities in 1997 totaled $1,211,000
and included the proceeds from the sales of short-term investments of $677,000
and the release of restricted cash of $1,205,000, partially offset by purchases
of short-term investments of $503,000 and property and equipment of $90,000. The
Company's working capital and current ratio were $1,635,000 and 1.3 to 1,
respectively, at June 30, 1997 compared to ($308,000) and 0.9 to 1,
respectively, at June 30, 1996.
 
    Debt and capital leases were reduced by $2,441,000 to $11,000 at June 30,
1997 compared to $2,452,000 at June 30, 1996. The reduction was achieved by: (i)
negotiating a more flexible and favorable line of credit with the existing
lender; (ii) reaching a relatively low borrowing point in seasonal financing
needs at June 30, 1997, and (iii) use of proceeds from the private placement of
stock to primarily paydown the last remaining capital lease.
 
    On April 28, 1997, the Company and its lender entered into a new revolving
line of credit agreement, under which the Company may borrow up to the lesser of
$3,000,000 or the sum of (i) 85% of eligible account receivables, as defined,
and (ii) eligible inventory at stratified rates from 25% to 50% up to a maximum
of the lesser of $1,200,000 or 66.67% of the amount of eligible accounts
receivable. Funds borrowed under the new revolving line of credit bear interest
at a rate of prime (8.50% at June 30, 1997) plus 2.0% and are secured by all the
assets of the Company and all of the outstanding common stock of AGRO owned by
the Company. Interest on funds borrowed under the revolving line of credit is
payable monthly in arrears and repayment of principal is due on April 27, 1998,
subject to automatic renewal, as provided. The revolving line of credit imposes
a financial covenant on the Company that requires a minimum tangible net worth
of $750,000, as defined. In addition, the new line of credit eliminates certain
provisions under the old line of credit as follows: (i) the cash collateral
requirement, the balance of which was $749,000 at the time the new line of


                                      23

<PAGE>


credit went into effect; (ii) the 67% cash collateral coverage requirement on
additional borrowings and (iii) the $1,000,000 minimum cash balance requirement.
 
    On September 27, 1996, the Company sold 1,040,000 unregistered shares of
common stock in a private placement. Net proceeds realized from the equity
offering totaled $1,139,000 after fees and expenses totaling $161,000. 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 $308,000 to the
financing company in satisfaction of a capital lease obligation, in the amount
of $1,248,000 of principal and $17,000 of accrued interest, which resulted in a
$77,000 reversal of a restructuring charge.
 
    In conjunction with the asset valuation and restructuring charges recorded
in 1995, the Company implemented and has completed in fiscal 1997 and 1996 most
of the program to reduce operating losses and to conserve its cash resources for
use in the Company's operating businesses. This restructuring program
significantly reduced research and development and general and administrative
costs from historical levels. In 1997, the Company funded $273,000 of accrued
restructuring costs that had been recorded in 1994 and 1995. In June 1997, the
Company reversed $300,000 of accrued restructuring costs recorded in 1995, no
longer deemed necessary for facilities consolidation and relocation. The balance
of accrued restructuring costs, $457,000 (total current and noncurrent
portions), as of June 30, 1997, is expected to be utilized in 1998 and
thereafter.
 
    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, and other 
select development programs in its bio-technology operations. 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.
 
    The Company plans to finance its cash needs principally with existing cash
reserves, represented by approximately $1,247,000 of cash and cash equivalents
and $528,000 of short-term investments as of June 30, 1997. The Company believes
that such cash reserves, along with revenues from product sales, and funds
available under its revolving line of credit, will be sufficient to fund the
Company's working capital needs, planned capital expenditures, restructuring
program initiatives and related obligations, and to service its indebtedness
through June 30, 1998. The Company may need to raise additional funds to finance
its ongoing operations after June 30, 1998, although there can be no assurances
that such funds will be available on terms favorable to the Company. The Company
is continuing to explore potential mergers, joint ventures and various other
strategic opportunities, which are aimed at enhancing stockholder value and the
long-term commercial viability of the Company.


                                       24

<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,
sales product mix and other economic factors. Operating revenues may be
concentrated in the Company's second and fourth quarters as a result of the
North American growing and harvesting seasons. Although the Company believes
that the historical trend in quarterly revenues for the second and fourth
quarters of each year are generally higher than the first and third 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, 1997, 1996
and 1995, are set forth on pages 26 through 46.





                                       25


<PAGE>

                            ECOSCIENCE CORPORATION 
                          CONSOLIDATED BALANCE SHEETS 
                        (In thousands, except share data)
 
<TABLE>
<CAPTION>
                                                                                                     JUNE 30,
                                                                                               --------------------
<S>                                                                                            <C>        <C>
ASSETS                                                                                           1997       1996
---------------------------------------------------------------------------------------------  ---------  ---------
Current assets:
  Cash and cash equivalents..................................................................  $   1,247  $     734
  Short-term investments.....................................................................        528        700
  Restricted cash and short-term investments.................................................        --       1,205
  Accounts receivable, less reserves of $150 and $118 at June 30, 1997 and 1996,
    respectively.............................................................................      1,788      1,552
  Inventories................................................................................      1,940      2,001
  Other current assets.......................................................................        842        827
                                                                                               ---------  ---------
    Total current assets.....................................................................      6,345      7,019
                                                                                               ---------  ---------
Property and equipment, net..................................................................        562        998
Intangible assets, net.......................................................................      1,745      1,949
Other noncurrent assets......................................................................        223        145
                                                                                               ---------  ---------
    Total assets.............................................................................  $   8,875  $  10,111
                                                                                               ---------  ---------
                                                                                               ---------  ---------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
  Current maturities of long-term debt.......................................................  $      10  $   2,441
  Accounts payable...........................................................................      2,641      2,347
  Accrued restructuring costs................................................................        307        730
  Accrued expenses and other current liabilities.............................................      1,752      1,809
                                                                                               ---------  ---------
    Total current liabilities................................................................      4,710      7,327
                                                                                               ---------  ---------
Noncurrent liabilities:
  Long-term debt, less current maturities....................................................          1         11
  Other long-term liabilities................................................................        150        300
                                                                                               ---------  ---------
    Total noncurrent liabilities.............................................................        151        311
                                                                                               ---------  ---------
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; 
    10,401,177 and 9,342,177 shares issued and outstanding at 
    June 30, 1997 and 1996, respectively.....................................................        104         93
Additional paid-in capital...................................................................     57,222     56,077
Accumulated deficit..........................................................................    (53,312)   (53,697)
                                                                                               ---------  ---------
    Total stockholders' investment...........................................................      4,014      2,473
                                                                                               ---------  ---------
     Total liabilities and stockholders' investment..........................................  $   8,875  $  10,111
                                                                                               ---------  ---------
                                                                                               ---------  ---------
</TABLE>
 
    The accompanying notes are an integral part of these consolidated financial
statements.
 
                                       26
<PAGE>

                            ECOSCIENCE CORPORATION 
                    CONSOLIDATED STATEMENTS OF OPERATIONS 
                   (In thousands, except per share amounts)
 
<TABLE>
<CAPTION>
                                                                              YEARS ENDED JUNE 30,
                                                                         -------------------------------
                                                                           1997       1996       1995
                                                                         ---------  ---------  ---------
<S>                                                                      <C>        <C>        <C>
Product sales.........................................................    $20,853    $14,151    $12,335
Cost of goods sold....................................................     15,702     10,394     10,153
                                                                        ---------  ---------  ---------
Gross profit..........................................................      5,151      3,757      2,182
                                                                        ---------  ---------  ---------
Operating expenses:
  Research and development............................................        508      1,018      4,483
  Selling and marketing...............................................      2,463      2,594      3,672
  General and administrative..........................................      2,107      2,244      2,631
  Asset valuation and restructuring (reversal) charges................       (377)    (1,550)     6,000
                                                                        ---------  ---------  ---------
      Total operating expenses........................................      4,701      4,306     16,786
                                                                        ---------  ---------  ---------
Operating income (loss)...............................................        450       (549)   (14,604)
                                                                        ---------  ---------  ---------
Other income (expense):
  Research, development, licensing fees and other income..............          7        125        155
  Investment income...................................................        105        199        590
  Interest and other expense..........................................       (177)      (603)    (1,235)
                                                                        ---------  ---------  ---------
      Total other expense.............................................        (65)      (279)      (490)
                                                                        ---------  ---------  ---------
Income (loss) before extraordinary gain...............................        385       (828)   (15,094)
Extraordinary gain on early extinguishment of debt....................       --          241       --
                                                                        ---------  ---------  ---------
Net income (loss).....................................................    $   385    ($  587)  ($15,094)
                                                                        ---------  ---------  ---------
                                                                        ---------  ---------  ---------
Net income (loss) per common share:
  Income (loss) before extraordinary item.............................    $  0.04   ($  0.09)  ($  1.71)
  Extraordinary gain..................................................       --         0.03       --
                                                                        ---------  ---------  ---------
  Net income (loss)...................................................    $  0.04   ($  0.06)  ($  1.71)
                                                                        ---------  ---------  ---------
                                                                        ---------  ---------  ---------
Weighted average number of common and 
  common equivalent shares outstanding................................     10,233      9,070      8,839
                                                                         ---------  ---------  ---------
                                                                         ---------  ---------  ---------
</TABLE>
 
    The accompanying notes are an integral part of these consolidated financial
statements.
 
                                       27

<PAGE>


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

<TABLE>
<CAPTION>
                                                   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, 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 inpurchase 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
  WBDC lease...............................       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
Exercise of stock options..................        19,000        --             17          --           --              17
Issuance of common stock...................     1,040,000          11        1,128          --           --           1,139
Net income.................................         --           --           --             385         --             385
                                             ------------       -----   -----------  ------------  -----------  ------------
Balance at June 30, 1997...................    10,401,177   $     104    $  57,222    ($  53,312)   $       0    $    4,014
                                             ------------       -----   -----------  ------------  -----------  ------------
                                             ------------       -----   -----------  ------------  -----------  ------------
</TABLE>
 
    The accompanying notes are an integral part of these consolidated financial
statements.
 
                                       28
<PAGE>

                            ECOSCIENCE CORPORATION 
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                            YEARS ENDED JUNE 30,
                                                                                       -------------------------------
<S>                                                                                    <C>        <C>        <C>
                                                                                         1997       1996       1995
                                                                                       ---------  ---------  ---------
Cash flows from operating activities:
  Net income (loss).................................................................  $     385  ($    587) ($ 15,094)
  Adjustments to reconcile net income (loss) to net cash 
    provided by (used for) operating activities:
      Depreciation and amortization.................................................        402        580      1,125
      (Gain) loss on sale of investments............................................         (2)        58         23
      Gain on sale of property and equipment........................................       --          (74)      --
      Gain on settlement of accounts payable........................................       --          (51)      --
      Gain on settlement of debt and other liabilities..............................       --         (241)      --
      (Reversal) accrual of restructuring charge....................................       (377)    (1,550)     6,000
      Foreign exchange (gain) loss..................................................        (29)       (13)        58
      Deferred rent.................................................................       --           --        (38)
      Changes in current assets and liabilities:
        Accounts receivable, net.....................................................      (236)       409        377
        Inventories..................................................................        61       (476)       (39)
        Other current assets.........................................................       (15)      (245)       183
        Accounts payable and accrued expenses........................................       268        713     (1,808)
        Accrued restructuring costs..................................................      (273)    (1,174)    (1,746)
                                                                                       ---------  ---------  ---------
      Net cash provided by (used for) operating activities...........................       184     (2,651)   (10,959)
                                                                                       ---------  ---------  ---------
Cash flows from investing activities:
  Purchases of property and equipment................................................        (90)      (127)      (725)
  Proceeds from sale of property and equipment.......................................       --          368         56
  Payments for companies, net of cash acquired.......................................       --         --         (707)
  Purchases of restricted cash and short-term investments............................       (503)      (705)    (1,494)
  Proceeds from sale of short-term investments.......................................        677      6,159      5,265
  Proceeds from release of restricted cash...........................................      1,205       --         --
  (Increase) decrease in other noncurrent assets.....................................        (78)        95     (1,066)
                                                                                       ---------  ---------  ---------
      Net cash provided by investing activities......................................      1,211      5,790      1,329
                                                                                       ---------  ---------  ---------
Cash flows from financing activities:
  Proceeds from issuance of stock....................................................      1,139       --         --
  Proceeds from exercise of stock options............................................         17          1          1
  Proceeds from long-term debt.......................................................       --            7      2,567
  Payments on long-term debt and capital leases......................................     (2,037)    (2,900)    (2,278)
                                                                                       ---------  ---------  ---------
      Net cash (used for) provided by financing activities...........................       (881)    (2,892)       290
Effect of exchange rate changes on cash..............................................         (1)         6        (65)
                                                                                       ---------  ---------  ---------
Increase (decrease) in cash and cash equivalents.....................................        513        253     (9,405)
Cash and cash equivalents at beginning of period.....................................        734        481      9,886
                                                                                       ---------  ---------  ---------
Cash and cash equivalents at end of period...........................................  $   1,247  $     734  $     481
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
Total unrestricted and restricted cash, cash equivalents and 
  short-term investments at end of period............................................  $   1,775  $   2,639  $   7,831
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
</TABLE>
 
    The accompanying notes are an integral part of these consolidated financial
statements.
 
                                      29
<PAGE>
                                       
                            ECOSCIENCE CORPORATION
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                                 JUNE 30, 1997
 
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 marketing, sales and product development, servicing the needs of 
the agricultural specialties markets and professional pest control operators 
("PCOs"). The Company provides (i) sophisticated growing systems to 
greenhouse operators, (ii) technologically advanced sorting, grading and 
packing systems to produce packers, (iii) equipment, coatings and disease 
control products, including natural biologicals for protecting fruits, 
vegetables and ornamentals in storage and transit to market, and (iv) unique 
biological pest control products to PCOs. The Company focuses on the 
technical marketing of agricultural specialties products and services, and 
the development of biological pest control products.
 
    The Company derives a major portion of its revenues from the AGRO and 
EPSC operations through the sale of growing medium products to the North 
American intensive farming and horticulture industries, sorting, grading and 
packing systems to the produce packing industry, and postharvest coating 
products to the fresh fruit and vegetable markets throughout the western 
hemisphere.
 
    Prior to the acquisition of AGRO in November 1992 and EPSC in May 1994, 
substantially all revenues generated by the Company were from collaborative 
research and development arrangements and investment income. During this 
period, the Company had devoted substantially all of its efforts toward new 
product research and development, and commercialization of certain products.
 
    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.
 
    The Company believes cash reserves of $1,247,000 of cash and cash 
equivalents and $528,000 of short-term investments as of June 30, 1997, along 
with revenues from product sales, and funds available under its revolving 
line of credit will be sufficient to fund the Company's working capital 
needs, planned capital expenditures, restructuring program initiatives and 
related obligations, and to service its indebtedness through June 30, 1998. 
The Company may need to raise additional funds to finance its ongoing 
operations after June 30, 1998, although there can be no assurances that such 
funds will be available on terms favorable to the Company. The Company is 
continuing to explore potential mergers, joint ventures and various other 
strategic opportunities, which are aimed at enhancing stockholder value and 
the long-term commercial viability of the Company.
 
    See Note 9 for further discussion of the Company's prior restructuring
programs.

                                      30

<PAGE>

2.  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 original 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 in computing any realized gains or losses from 
the sale of such securities. Net realized gains on short-term investments 
were $2,000 in 1997. Net realized losses on short-term investments were 
$58,000 and $23,000 in 1996 and 1995, respectively.
 
    Cash and cash equivalents consist of cash and highly liquid money market 
funds, the balance of which was $1,247,000 and $734,000 at June 30, 1997 and 
1996, respectively. Short-term investments consist of United States 
government obligations with an original maturity date of greater than 90 
days, the balance of which was $528,000 and $700,000 at June 30, 1997 and 
1996, respectively. Restricted cash and short-term investment balance at June 
30, 1997 was $0 and at June 30, 1996 consisted of $80,000 in cash and 
$1,125,000 in certificate of deposits with original maturity of dates greater 
than 90 days, for a total of $1,205,000. Aggregate fair value of the 
Company's short-term investments held at June 30, 1997 and 1996 approximated 
cost and therefore no unrealized holding gain or loss is reflected in the 
consolidated financial statements.
 
(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 
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.
 
                                      31

<PAGE>

(e) Inventories
 
    Inventories are stated at the lower of first-in, first-out (FIFO) cost or 
market and consist of the following:
 
<TABLE>
<CAPTION>
                                                             (IN THOUSANDS)
                                                                JUNE 30,
                                                           --------------------
<S>                                                         <C>        <C>
                                                              1997       1996
                                                           ---------  ---------
Raw materials.............................................. $   17     $  226
Finished goods.............................................  1,923      1,775
                                                           ---------  ---------
                                                            $1,940     $2,001
                                                           ---------  ---------
                                                           ---------  ---------
</TABLE>
 
    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,
                                                           -------------------
<S>                                                          <C>      <C>
                                                             1997      1996
                                                           --------- ---------
Prepaid insurance..........................................  $ 35      $ 34
Prepaid equipment project costs............................   653       639
Non-trade receivables......................................    46        57
Other......................................................   108        97
                                                           ---------  ---------
                                                             $842      $827
                                                           ---------  ---------
                                                           ---------  ---------
</TABLE>
 
(g) Property and Equipment

       Property and equipment is summarized as follows:
 
<TABLE>
<CAPTION>
                                                             (IN THOUSANDS)
                                                                JUNE 30,
                                                           -------------------
<S>                                                          <C>       <C>
                                                             1997       1996
                                                           --------- ---------
Laboratory equipment......................................   $ 65       $990
Furniture, fixtures and equipment.........................    926      1,543
Leasehold improvements....................................     62         61
Assets under capital leases...............................    --         585
                                                           --------- ---------
                                                             1,053     3,179
Less accumulated depreciation and amortization............    (491)   (2,181)
                                                           --------- ----------
                                                            $  562    $  998
                                                           --------- ----------
                                                           --------- ----------
</TABLE>

                                      32

<PAGE>


    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:

<TABLE>
<CAPTION>

CLASSIFICATION                                             ESTIMATED USEFUL LIFE
--------------                                             ---------------------
<S>                                                             <C>
Laboratory equipment....................................           5 Years
Furniture, fixtures and equipment.......................          5-7 Years
Leasehold improvements..................................        Life of Lease
Assets under capital leases.............................          3-25 Years

</TABLE>
 
    Leasehold improvements are amortized over the term of the lease or the 
useful life of the asset, whichever is shorter.
 
(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 $1,710,000 and $1,815,000 
at June 30, 1997 and 1996, respectively. The accumulated amortization of 
goodwill and other intangible assets totaled $823,000 and $619,000 at June 
30, 1997 and 1996, respectively. Amortization of goodwill and other 
intangible assets included in the accompanying consolidated statements of 
operations was $204,000, $204,000 and $195,000 in 1997, 1996 and 1995, 
respectively.
 
(i) Accrued Expenses and Other Current Liabilities

       Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>
                                                             (IN THOUSANDS)
                                                                JUNE 30,
                                                           --------------------
<S>                                                         <C>       <C>
                                                            1997       1996
                                                           --------- ---------
Payroll related costs...................................... $  136     $  107
Professional fees..........................................    146        152
Accrued warranty costs.....................................     59        --
Accrued inventory purchases................................     83        202
Customer deposits..........................................    971        986
Other......................................................    357        362
                                                            -------- ----------
                                                             $1,752    $1,809
                                                            -------- ----------
                                                            -------- ----------

</TABLE>

(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 

                                      33

<PAGE>

incurred. The Company recognizes license fees under sales and license 
agreements, as certain milestones are achieved and related non-refundable 
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) Earnings Per Share
 
      Net income (loss) per share is calculated based upon the weighted 
average number of common shares outstanding during the year plus, in years in 
which they have a dilutive effect, the effect of common share equivalents 
which arise from the assumed exercise of stock options and warrants.
 
    In March 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 128, "Earnings per Share", which makes 
certain changes to the manner in which earnings per share is reported. The 
Company is required to adopt this standard for the year ending June 30, 1998. 
The adoption of this standard will require restatement of prior years' 
earnings per share.
 
    If the Company had adopted the new standard in 1997, basic earnings per 
common share would have been $0.04, based on 10,137,000 basic weighted 
average shares. Diluted earnings per share would have been $0.04, based on 
10,224,000 diluted weighted average shares.
 
(n) Fair Value of Financial Instruments
 
       No class of financial instrument had a material difference between its 
carrying value and estimated fair value based on market quotations, projected 
cash flows or other estimating methods. 

                                      34

<PAGE>

(o) Supplemental Cash Flow Information
 
       The Company made certain cash payments and consummated certain 
non-cash investing and financing transactions as summarized below:

<TABLE>
<CAPTION>
                                                                                                     (IN THOUSANDS)
                                                                                           -------------------------------
                                                                                                 YEARS ENDED JUNE 30,
                                                                                           -------------------------------
                                                                                               1997       1996       1995
                                                                                           ---------  ---------  ---------
<S>                                                                                        <C>        <C>        <C>
Cash paid for:
  Interest.................................................................................  $     196  $     608  $     930
  Income taxes.............................................................................         15         18         60
Non-cash investing and financing activities:
  Disposition of assets under capital lease................................................        308      2,936         --
  Termination of capital lease obligation..................................................       (405)    (3,500)        --
  Termination of operating lease obligation and related reduction of accrued restructuring
    costs..................................................................................         --     (2,050)        --
  Issuance of common stock in exchange for termination of operating lease obligation.......         --        500         --
</TABLE>
 
(p) Long Lived Assets
 
     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long
Lived Assets and for Long Lived Assets to be Disposed of" ("SFAS 121"). The
Company was required to adopt this standard as of July 1, 1996. SFAS 121
requires, among other things, that an entity review its long lived assets and
certain related intangibles for impairment whenever changes in circumstances
indicate that the carrying amount of an asset may not be fully recoverable. The
implementation of this standard had no impact on the 1997 fiscal year financial
statements.
 
(q) Stock Based Compensation
 
      The Financial Accounting Standards Board has issued Statement of 
Financial Accounting Standards No. 123, "Accounting for Stock Based 
Compensation" ("SFAS 123"), which encourages, but does not require that an 
entity account for employee stock based compensation under a fair value based 
method. SFAS 123 allows an entity to continue to measure compensation cost 
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"). The Company continues to account for 
employee stock based compensation using the intrinsic value based method and 
is 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 (See Note 5).
 
(r) Income Taxes
 
        The Company accounts for income taxes under the provisions of SFAS 
109, "Accounting for Income Taxes". SFAS 109 utilizes the liability method, 
and deferred taxes are determined based on the estimated future tax effects 
of differences between the financial statements and tax basis of assets and 
liabilities at currently enacted tax laws and rates.

                                      35

<PAGE>

(s) Reclassifications
 
       Certain amounts in the 1996 and 1995 consolidated financial statements 
have been reclassified to conform to the current year presentation.
 
4.  DEBT AND LEASES
 
(a) Long-Term Debt
 
       Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                                        (IN THOUSANDS)

                                                                                                           JUNE 30,
                                                                                                    ----------------------
 
<CAPTION>
                                                                                                       1997        1996
                                                                                                       --------  ---------
<S>                                                                                                  <C>          <C>
Revolving line of credit..........................................................................   $      --   $   1,041
Installment notes.................................................................................          11          21
                                                                                                        ------   ---------
                                                                                                            11       1,062
Less current maturities...........................................................................         (10)     (1,051)
                                                                                                        ------   ---------
                                                                                                     $       1   $      11
                                                                                                        ------   ---------
                                                                                                        ------   ---------
</TABLE>
 
    As of June 30, 1997, the future maturities of long-term debt are as follows:
 
<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
               YEARS ENDING JUNE 30,                              AMOUNT
               --------------------                          -----------------
                  <S>                                             <C>
                  1998....................................        $  10
                  1999....................................            1
                  2000....................................           --
                  2001....................................           --
                  2002....................................           --

</TABLE>
 
    On April 28, 1997, the Company and its lender entered into a new 
revolving line of credit agreement, under which the Company may borrow up to 
the lesser of $3,000,000 or the sum of (i) 85% of eligible account 
receivables, as defined, and (ii) eligible inventory at stratified rates from 
25% to 50% up to a maximum of the lesser of $1,200,000 or 66.67% of the 
amount of eligible accounts receivable. Funds borrowed under the new 
revolving line of credit bear interest at a rate of prime (8.50% at June 30, 
1997) plus 2.0% and are secured by all the assets of the Company and all of 
the outstanding common stock of AGRO owned by the Company. Interest on funds 
borrowed under the revolving line of credit is payable monthly in arrears and 
repayment of principal is due on April 27, 1998, subject to automatic 
renewal, as provided. The revolving line of credit imposes a financial 
covenant on the Company that requires a minimum tangible net worth of 
$750,000, as defined. In addition, the new line of credit eliminates certain 
provisions under the old line of credit as follows: (i) the cash collateral 
requirement, the balance of which was $749,000 at the time the new line of 
credit

                                      36

<PAGE>

went into effect; (ii) the 67% cash collateral coverage requirement on 
additional borrowings and (iii) the $1,000,000 minimum cash balance 
requirement.

    In connection with the acquisition of American Machinery Corporation 
("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.
 
(b) Leases
 
    On January 11, 1996, the Company and its landlord entered into a lease 
termination agreement with respect to certain space at its former corporate 
headquarters and research and development facility in Worcester, 
Massachusetts, 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 9 
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 capital lease agreement 
for a manufacturing facility in Northborough, Massachusetts. 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.
 
    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 capital lease obligation. 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. The Company continued to make the remaining monthly 
payments 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. Pursuant to a lease settlement agreement dated August 8, 
1996, between the Company and the financing company, the Company 

                                      37

<PAGE>

paid $880,000 and returned certain leased equipment with a net book value of 
$308,000 to the financing company as satisfaction of its remaining capital 
lease obligation under rental schedule No. 1 of approximately $1,248,000 of 
principal and $17,000 of accrued interest on September 27, 1996, which 
resulted in a reversal of a restructuring charge of $77,000. 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.
 
    Future minimum lease payments under non-cancelable operating leases are as
follows:
 
<TABLE>
<CAPTION>
                                            (IN THOUSANDS)
YEARS ENDING JUNE 30,                           AMOUNT
-----------------------------------------  ---------------
<S>                                             <C>
   1998......................................   $  485
   1999......................................      377
   2000......................................       95
   2001......................................       56
   2002......................................        9
Thereafter................................          --
                                               ---------
Total minimum lease payments..............      $1,022
                                               ---------
                                               ---------
</TABLE>
 
    Rental expense included in the accompanying consolidated statements of 
operations was $392,000, $833,000, and $1,064,000 for 1997, 1996 and 1995, 
respectively. Sublease rental income was ($33,000), (346,000) and ($302,000) 
for 1997, 1996 and 1995, respectively.
 
5.  STOCKHOLDERS' INVESTMENT
 
(a) Private Placement
 
    In September 1996, the Company sold 1,040,000 unregistered shares of 
common stock in a private placement. Net proceeds realized from the equity 
offering totaled $1,139,000 after fees and expenses totaling $161,000. 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. The registration was declared 
effective in April 1997.

                                      38

<PAGE>

(b) Common Stock Purchase Warrants
 
    The Company has issued warrants to purchase shares of its common stock to 
certain stockholders, directors and consultants of the Company. Outstanding 
warrants expire through 2002. The following table summarizes warrant activity 
for the three years ended June 30, 1997:
 
<TABLE>
<CAPTION>
                                                                     NUMBER OF      PRICE PER     WEIGHTED AVERAGE
                                                                     WARRANTS      SHARE RANGE     EXERCISE PRICE
                                                                    -----------  ---------------  -----------------
<S>                                                                   <C>        <C>              <C>
Outstanding at June 30, 1994......................................     360,047   $  0.38--$11.00      $    6.60
  Granted.........................................................          --          --                   --
                                                                      ---------  ---------------      ---------
Outstanding at June 30, 1995......................................     360,047       0.38--11.00           6.60
  Granted.........................................................     250,000       1.38-- 3.00           2.15
  Canceled........................................................    (151,087)      0.38-- 9.55           4.07
                                                                      ---------  ---------------      ---------
Outstanding at June 30, 1996......................................     458,960       1.38--11.00           5.01
  Granted.........................................................     281,554       1.00-- 3.75           2.30
  Canceled........................................................     (78,960)      6.00--11.00          10.22
                                                                      ---------  ---------------      ---------
Outstanding at June 30, 1997......................................     661,554   $   1.00--$9.75      $    3.24
                                                                      ---------  ---------------      ---------
                                                                      ---------  ---------------      ---------
Exercisable at June 30, 1997......................................     631,024   $   1.00--$9.75      $    3.33
                                                                      ---------  ---------------      ---------
                                                                      ---------  ---------------      ---------
</TABLE>
 
(c) Stock Option Plans
 
    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. Options have been granted at the fair value of the Company's common 
stock on the date of grant.
 
    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 then 
existing 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.
 
    In November 1996, the Board of Directors approved an amendment to the 
Company's 1991 Stock Option Plan. The amendment provides for the number of 
shares of the Company's common stock which may be granted under the 1991 
Stock Option Plan shall be increased from 1,300,000 to 1,800,000 shares. The 
Board authorized this increase to ensure a sufficient number of option shares 
would be available for future grants. This amendment is being submitted to 
stockholders for ratification at the Company's next annual meeting.
 
                                      39

<PAGE>

    Option activity for the three years ended June 30, 1997, is summarized as
follows:
 
<TABLE>
<CAPTION>
                                                             NUMBER OF      PRICE PER     WEIGHTED AVERAGE
                                                              OPTIONS      SHARE RANGE     EXERCISE PRICE
                                                            -----------  ---------------  -----------------
<S>                                                         <C>          <C>                  <C>
Outstanding at June 30, 1994..............................     855,847   $ 0.38 - $11.38      $    6.30
  Granted.................................................      18,250     1.84 -   4.88           3.09
  Exercised...............................................      (6,082)             0.45           0.45
  Canceled................................................    (406,982)    0.45 -  11.38           8.30
                                                            -----------  ---------------          -----
Outstanding at June 30, 1995..............................     461,033     0.38 -  11.38           4.48
  Granted.................................................     550,500     0.56 -   1.63           0.97
  Exercised...............................................      (1,666)             0.45           0.45
  Canceled................................................    (173,851)    0.60 -  11.38           0.43
                                                            -----------  ---------------          -----
Outstanding at June 30, 1996..............................     836,016     0.38 -  11.38           2.17
  Granted.................................................     340,178     0.94 -   2.50           1.21
  Exercised...............................................     (19,000)             0.88           0.88
  Canceled................................................    (271,816)    0.38 -  11.38           3.99
                                                            -----------  ---------------          -----
Outstanding at June 30, 1997..............................     885,378   $  0.56 -  7.00      $    1.27
                                                            -----------  ---------------          -----
                                                            -----------  ---------------          -----
Exercisable at June 30, 1997..............................     428,003   $  0.56 -  7.00      $    1.38
                                                            -----------  ---------------          -----
                                                            -----------  ---------------          -----
</TABLE>
 
    All stock options and warrants granted by the Company were granted at 
exercise prices not less than the fair market value of the Company's common 
stock on the date of grant.
 
    The Company accounts for its common stock purchase warrants and options 
plans based upon the "intrinsic value" method set forth in APB 25. Had 
compensation costs for the Company's stock option plans been determined 
consistent with SFAS 123, the Company's pro-forma net income (loss) and net 
income (loss) per share for 1997 and 1996 would have been as follows:

<TABLE>
<CAPTION>
                                                                                                    (IN THOUSANDS)
                                                                                                 YEARS ENDED JUNE 30,
                                                                                                 --------------------
                                                                                                    1997       1996
                                                                                                 ---------  ---------
<S>                                                                                              <C>        <C>
Net loss.......................................................................................  ($    106) ($    738)
                                                                                                 ---------- ----------
                                                                                                 ---------- ----------
Net loss per share.............................................................................  ($   0.01) ($   0.08)
                                                                                                 ---------- ----------
                                                                                                 ---------- ----------

</TABLE>
 
    Because SFAS 123 has not been applied to warrants and options granted 
prior to July 1, 1995, the resulting pro-forma compensation cost may not be 
representative of that to be expected in future periods.
 
    Under SFAS 123, the fair value of each stock option grant is estimated on 
the date of grant using the Black-Shoals option pricing model with the 
weighted average assumptions in 1997 and 1996, respectively as follows: (i) 
risk free interest rate of 6% for both years; (ii) expected life of 
approximately eight years for both years; and (iii) expected volatility of 
70% for both years. The weighted average fair value of the options granted 
during 1997 and 1996 was $0.86 and $0.69, respectively.
 
                                      40

<PAGE>

6.  INCOME TAXES

    As of June 30, 1997, the Company had available net operating loss 
carryforwards of approximately $44,000,000 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 credit 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. Therefore, utilization of net operating loss and 
tax credit carryforwards may be limited due to ownership changes.
 
The components of the net deferred tax amount recognized in the accompanying 
consolidated balance sheets are set forth below:
 
<TABLE>
<CAPTION>
                                                                                                 (IN THOUSANDS)
                                                                                                    JUNE 30,
                                                                                              --------------------
<S>                                                                                           <C>        <C>
                                                                                                1997       1996
                                                                                              ---------  ---------
Deferred tax assets.........................................................................  $  16,000  $  16,500
Valuation allowance.........................................................................    (16,000)   (16,500)
                                                                                              ---------  ---------
                                                                                              $      --  $      --
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</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>
                                                                                                 (IN THOUSANDS)
                                                                                                    JUNE 30,
                                                                                              --------------------
<S>                                                                                           <C>        <C>
                                                                                                1997       1996
                                                                                              ---------  ---------
Net operating losses........................................................................  $  15,000  $  15,600
Other temporary differences.................................................................        100     --
Research and development credits............................................................        900        900
                                                                                              ---------  ---------
                                                                                              $  16,000  $  16,500
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</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.  TRANSACTIONS WITH AFFILIATES

    The Company sold product to an affiliated group of companies ("Affiliates") 
in the amount of $2,893,000 or 14% of product sales in 1997 and $556,000 or 4% 
of product sales in 1996. An officer of the Company is also an officer of the 
Affiliates. Net amount due from the Affiliates was $348,000 and $89,000 at June 
30, 1997 and 1996, respectively. The Affiliates also pay a monthly fee to the 
Company for facilities and other costs amounting to $39,000 and $55,000 for 1997
and 

                                      41

<PAGE>

1996, respectively. Management believes that prices and fees charged to the 
Affiliates are reasonable.
 
8.  SALES, LICENSE AND DEVELOPMENT AGREEMENTS
 
    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. Its extension is being 
actively negotiated. 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 42%, 45% and 43% of 
the Company's total product sales for the years ended June 30, 1997, 1996 and 
1995, 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 an 
unrelated company for an initial term of three years for the fruit, vegetable 
and flower markets in the United States and Canada ending in September 1998, 
and in the fruit, vegetable and flower markets in the Caribbean and Mexico 
ending in August 1997, which has been extended to August 1998. These 
agreements 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, grading and packing products 
and equipment in the United States, Canada, Mexico and the Caribbean. The 
agreement requires AGRO to secure annually certain minimum market share 
percentage of the market for sorting, grading and packing machines. The sale 
of products under this agreement accounted for 26% and 20% of total product 
sales for the fiscal years ended June 30, 1997 and 1996, respectively. 
Although there are a limited number of sorting, grading and packing equipment 
manufacturers in the world, 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 has been extended to June 30, 1998. 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.
 
    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 

                                      42

<PAGE>

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.
 
    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. Under the agreement, 
Maruwa Biochemical will pursue at its own expense the registration and 
commercialization of the Company's cockroach and termite control products in 
Japan. At this time emphasis has shifted to the Bio-Blast product and the 
Company anticipates entering into a formal agreement with Maruwa for the 
Bio-Blast product. The Company will retain manufacturing rights and will 
receive royalties on sales of Bio-Blast.
 
    In June 1993, the Company entered into an agreement to sub-license 
certain technology and patents for the manufacture and sale of vegetable and 
fruit coating products under the name Nature Seal. Under this sub-license, 
the Company agreed to pay a royalty or, in certain circumstances, a 
percentage of profits on sales of products incorporating the Nature Seal 
technology, and certain minimum annual licensing fees payable to the USDA. 
While the sub-license agreement extends until expiration of the last to 
expire patents covering the Nature Seal technology, the Company has elected 
to no longer pursue this technology.
 
9.  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 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 all 
of the employee terminations related to a 1994 restructuring program in the 
first half of 1995 and a portion of the facility consolidation activities in 
1995. The Company completed a major portion of its 1995 restructuring program 
activities in fiscal 1996 and 1997 and the remaining restructuring program 
initiatives are expected to be completed in fiscal 1998 and thereafter.
 
    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 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 

                                      43

<PAGE>

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 1997, the Company paid and charged $273,000 of restructuring 
related costs of which $157,000 related to employee severance benefits, and 
$116,000 related to other contracted liabilities. As of June 30, 1997, 
accrued restructuring costs of $457,000 (total current and noncurrent 
portions) consisted of $250,000 for facility consolidations and lease 
settlements, $137,000 for employee severance benefits and $70,000 for other 
contractual liabilities.
 
10. GEOGRAPHIC SEGMENT INFORMATION
 
    Financial information segregated by major geographic area is summarized 
as follows:

<TABLE>
<CAPTION>
                                                                                           (IN THOUSANDS)
                                                                                  
                                                                                        YEARS ENDED JUNE 30,
                                                                                  --------------------------------
                                                                                    1997       1996        1995
                                                                                  ---------  ---------  ----------
<S>                                                                               <C>        <C>        <C>
Revenues:
  United States.................................................................  $  15,210  $   9,730  $    8,771
  Canada........................................................................      5,643      4,421       3,564
                                                                                  ---------  ---------  ----------
     Consolidated...............................................................  $  20,853  $  14,151  $   12,335
                                                                                  ---------  ---------  ----------
                                                                                  ---------  ---------  ----------
Net income (loss):
  United States.................................................................  $     309  ($    587) ($  15,122)
  Canada........................................................................         76         --          28
                                                                                  ---------  ---------  ----------
     Consolidated...............................................................  $     385  ($    587) ($  15,094)
                                                                                  ---------  ---------  ----------
                                                                                  ---------  ---------  ----------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                               JUNE 30,
                                                                                     -------------------------------
                                                                                      1997       1996       1995
                                                                                     ---------  ---------  ---------
<S>                                                                                  <C>        <C>        <C>
Identifiable assets:
  United States...................................................................  $   7,829  $   9,316  $  18,143
  Canada..........................................................................      1,226      1,412      1,364
  Intercompany eliminations.......................................................       (180)      (617)      (738)
                                                                                    ---------  ---------  ---------
     Consolidated.................................................................  $   8,875  $  10,111  $  18,769
                                                                                    ---------  ---------  ---------
                                                                                    ---------  ---------  ---------
</TABLE>
 
                                      44

<PAGE>

11. QUARTERLY FINANCIAL DATA (UNAUDITED)
 
    The following is an analysis of certain items in the consolidated 
statements of operations by quarter for 1997 and 1996:
 
Consolidated Statements of 
Operations Data:
 
<TABLE>
<CAPTION>
                                                                                  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                                                    1997
                                                                             --------------------------------------------------
                                                                                FIRST       SECOND        THIRD       FOURTH
                                                                               QUARTER      QUARTER      QUARTER      QUARTER
                                                                             -----------  -----------  -----------  -----------
<S>                                                                           <C>          <C>          <C>          <C>
Revenues...................................................................   $   4,508    $   7,753    $   3,633    $   4,959
Cost of goods sold.........................................................       3,405        6,049        2,608        3,640
                                                                             -----------  -----------  -----------  -----------
Gross profit...............................................................       1,103        1,704        1,025        1,319
Research and development...................................................         128          153          128           99
Asset valuation and restructuring reversal.................................         (77)      --           --             (300)
Selling, general, administrative and other.................................       1,173        1,180        1,208        1,074
                                                                             -----------  -----------  -----------  -----------
Net income (loss)..........................................................   ($    121)   $     371    ($    311)   $     446
                                                                             -----------  -----------  -----------  -----------
                                                                             -----------  -----------  -----------  -----------
Net income (loss) per common share.........................................   ($   0.01)   $    0.04    ($   0.03)   $    0.04
                                                                             -----------  -----------  -----------  -----------
                                                                             -----------  -----------  -----------  -----------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                                  1996
                                                                            ------------------------------------------------
                                                                               FIRST       SECOND        THIRD      FOURTH
                                                                              QUARTER      QUARTER      QUARTER     QUARTER
                                                                            -----------  -----------  -----------  ---------
<S>                                                                          <C>          <C>          <C>          <C>
Revenues..................................................................   $   4,095    $   4,262    $   3,097   $   2,697
Cost of goods sold........................................................       3,147        2,933        2,097       2,217
                                                                            -----------  -----------  -----------  ---------
Gross profit..............................................................         948        1,329        1,000         480
Research and development..................................................         312          274          197         235
Asset valuation and restructuring reversal................................      --           --           (1,550)     --
Selling, general, administrative and other................................       1,252        1,330        1,243       1,292
                                                                            -----------  -----------  -----------  ---------
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:
  Income (loss) 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>
 
                                       45
<PAGE>
                              ARTHUR ANDERSEN, LLP
 



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
Board of Directors and Stockholders
 of EcoScience Corporation:
 
    We have audited the accompanying consolidated balance sheets of EcoScience
Corporation (a Delaware corporation) and subsidiaries as of June 30, 1997 and
1996, and the related consolidated statements of operations, stockholders'
investment and cash flows for each of the three years in the period ended June
30, 1997. 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, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1997, in conformity with generally accepted accounting principles.
 
                                            Arthur Andersen LLP


 
Roseland, New Jersey 
September 3, 1997
 




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURES
 
    Not applicable.
 
                                          46

<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 1997 Special Meeting in lieu of the Annual Meeting of Stockholders to
be held on November 25, 1997, 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 Notes to the Consolidated 
Financial Statements contained in Item 8 above, as it pertains to certain 
transactions and 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 for certain transactions in Notes to the Consolidated
Financial Statements contained in Item 8, above, and certain other information
is included in the section entitled "Certain Transactions" contained in the
Proxy Statement and such information is incorporated herein by reference.
 



                                     47

<PAGE>


                                    PART IV
 

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
 
<TABLE>
<S>        <C>                                                                              
(a)(1)     The following consolidated financial statements of the Company and its subsidiaries for the
           years ended June 30, 1997, 1996 and 1995, are included at the pages indicated below:

                                                                                                  PAGE
                                                                                                  ----
 
           Consolidated Balance Sheets....................................................          26 
           -As of June 30, 1997 and 1996                                                            
 
           Consolidated Statements of Operations..........................................          27  
           -For the Years Ended June 30, 1997, 1996 and 1995                                        
 
           Consolidated Statements of Changes in Stockholders' Investment.................          28  
           -For the Years Ended June 30, 1997, 1996 and 1995                                        
 
           Consolidated Statements of Cash Flows..........................................          29  
           -For the Years Ended June 30, 1997, 1996 and 1995                                        
 
           Notes to Consolidated Financial Statements.....................................          30
 
           Report of Independent Public Accountants.......................................          46
 
(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:
 
<CAPTION>
 
 EXHIBIT                                       EXHIBIT
 NUMBER                                      DESCRIPTION
<S>        <C>                                                                              
---------  ----------------------------------------------------------------------------------------------------

  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].
</TABLE>
 
                                       48
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                    EXHIBIT
  NUMBER                                                   DESCRIPTION
<S>        <C>                                                                              
---------  ----------------------------------------------------------------------------------------------------


  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].
 
   10.10     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].
</TABLE>
 
    * Indicates a management contract or compensatory plan or arrangement
required to be filed pursuant to Item 14(c) of Form 10-K.
 
                                       49
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                    EXHIBIT
  NUMBER                                                   DESCRIPTION
<S>        <C>                                                                              
---------  ----------------------------------------------------------------------------------------------------

 
  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].
 
  10.20      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].
</TABLE>
 
                                       50
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                    EXHIBIT
  NUMBER                                                   DESCRIPTION
<S>        <C>                                                                              
---------  ----------------------------------------------------------------------------------------------------


  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].
</TABLE>
 
                                       51
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                    EXHIBIT
  NUMBER                                                   DESCRIPTION
<S>        <C>                                                                              
---------  ----------------------------------------------------------------------------------------------------

  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 [Incorporated by reference to Exhibit 10.42 to
             Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1996].
 
  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 [Incorporated by reference to Exhibit
             10.43 to Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1996].
 
  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 [Incorporated by reference to Exhibit
             10.44 to Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1996].
 
  10.45      Private Placement Memorandum dated September 20, 1996 for Offering of Registrant's Common Stock
             [Incorporated by reference to Exhibit 10.45 to Registrant's Annual Report on Form 10-K for fiscal
             year ended June 30, 1996].
</TABLE>
 
                                       52
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                    EXHIBIT
  NUMBER                                                   DESCRIPTION
<S>        <C>                                                                              
---------  ----------------------------------------------------------------------------------------------------


  10.47      Master Equipment Lease Settlement Agreement dated as of August 8, 1996, between the Registrant and
             Financing For Science International, Inc. [Incorporated by reference to Exhibit 10.47 to
             Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1996].
 
  10.48      Common Stock Warrant between the Registrant and Aeroglide Corporation [Incorporated by reference
             to Exhibit 10.48 to Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1996].
 
  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 [Incorporated by reference
             to Exhibit 10.49 to Registrant's Annual Report on Form 10-K for fiscal year ended June 30, 1996].
 
  10.50      Loan and Security Agreement dated as of April 28, 1997 by and among the Registrant, Agro Dynamics, Inc.,
             Agro Dynamics Canada Inc. and EcoScience Produce Systems Corp. and Silicon Valley Bank.
             [incorporated by reference to Exhibit 10.50 to the Registrant's Quarterly Report on Form 10-Q for
             the Quarter Ended March 31, 1997].
 
  10.51      Schedule to Loan and Security Agreement dated as of April 28, 1997 by among the Registrant, Agro
             Dynamics, Inc., Agro Dynamics Canada Inc. and EcoScience Produce Systems Corp. and Silicon Valley Bank.
             [incorporated by reference to Exhibit 10.51 to the Registrant's Quarterly Report on Form 10-Q for
             the Quarter Ended March 31, 1997].
 
  10.52      Continuing Guaranty by each of the Registrant, EcoScience Produce Systems Corp. and Agro Dynamics, Inc.
             guaranteeing the obligations of the Registrant, EcoScience Produce Systems Corp., Agro Dynamics, Inc.
             and Agro Dynamics Canada Inc. in favor of Silicon Valley Bank. [incorporated by reference to
             Exhibit 10.52 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31,
             1997].
 
  10.53      Continuing Guarantee by Agro Dynamics Canada Inc. guaranteeing the obligations of the Registrant in
             favor of Silicon Valley Bank. [incorporated by reference to Exhibit 10.53 to the Registrant's
             Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1997].
 
  10.54      Collateral Assignment, Patent Mortgage and Security Agreement by and between EcoScience Corporation
             (Assignor) and Silicon Valley Bank (Assignee). [incorporated by reference to Exhibit 10.54 to the
             Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1997].
</TABLE>
 
                                       53
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                    EXHIBIT
  NUMBER                                                   DESCRIPTION
<S>        <C>                                                                              
---------  ----------------------------------------------------------------------------------------------------


  10.55      Collateral Assignment, Patent Mortgage and Security Agreement by and between EcoScience Produce Systems
             Corp. (Assignor) and Silicon Valley Bank (Assignee). [incorporated by reference to Exhibit 10.55
             to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1997].
 
  10.56      Collateral Assignment, Patent Mortgage and Security Agreement by and between Agro Dynamics, Inc.
             (Assignor) and Silicon Valley Bank (Assignee). [incorporated by reference to Exhibit 10.56 to the
             Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1997].
 
  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 1, 1997].
 
  27         Financial Data Schedule for the Fiscal Year Ended June 30, 1997 [filed herewith]
</TABLE>
 
    (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, 1997.
 
                                       54
<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 September 30, 1997.

                                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.


<TABLE>
<CAPTION>

NAME                                       TITLE                          DATE
----                                       -----                          ----
<S>                               <C>                               <C>

/s/ Michael A. DeGiglio            President, Chief Executive       September 30, 1997
-------------------------------    Officer and Director
    Michael A. DeGiglio

/s/ Harold A. Joannidi             Treasurer, Secretary and         September 30, 1997
-------------------------------    Corporate Controller
    Harold A. Joannidi

/s/ Kenneth S. Boger
-------------------------------
    Kenneth S. Boger               Director                         September 30, 1997

</TABLE>


                                      55

<PAGE>

<TABLE>
<CAPTION>

NAME                                       TITLE                          DATE
----                                       -----                          ----
<S>                               <C>                               <C>

/s/ E. Andrews Grinstead III
-------------------------------
    E. Andrews Grinstead III       Director                         September 30, 1997

/s/ Larry M. Nouvel
-------------------------------
    Larry M. Nouvel                Director                         September 30, 1997

/s/ David J. Ryan
-------------------------------
    David J. Ryan                  Chairman of the Board            September 30, 1997

/s/ Heinz K. Wehner
-------------------------------
    Heinz K. Wehner                Director                         September 30, 1997

</TABLE>

                                      56

<PAGE>


                             ECOSCIENCE CORPORATION

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>

 EXHIBIT NO.                                       DESCRIPTION OF EXHIBIT               PAGE NO.
------------                                       ----------------------               --------
<C>              <S>                                                                    <C>

    21           Subsidiaries of the Registrant as of June 30, 1997                        58

    23           Consent of Independent Public Accountants                                 59

    27           Financial Data Schedule as of and for the Year Ended June 30, 1997        60

</TABLE>

                                      57