SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
                                    (Mark One)

     [_] ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934
                                       or

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

         For the transition period from July 1, 1998 to January 3, 1999

                           Commission File No. 0-19746

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

            Delaware                                      04-2912632
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                       Identification Number)

                10 Alvin Court
          East Brunswick, New Jersey                         08816
   (Address of principal executive offices)                (Zip Code)

                         Registrant's telephone number,
                       Including area code: (732) 432-8200

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

                          Common Stock, $.01 par value
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[_]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-8 is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].

     The aggregate market value (based upon the last sales price reported by the
Nasdaq Stock Market) of voting shares held by non-affiliates of the registrant
as of April 15, 1999 was $8,552,884.

     As of April 15, 1999, 12,619,264 shares of Common Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Part III is incorporated by reference to portions of the definitive Proxy
Statement for the Annual Meeting of Shareholders to be held on May 24, 1999.


<PAGE>


     This report contains forward looking statements that have been made
pursuant to the provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are not historical facts but rather are
based on current expectations, estimates and projections about the Company's
industry, its beliefs, and assumptions. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates" and variations of such
words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, some of which are
beyond the Company's control, that are difficult to predict and could cause
actual results to differ materially from those expressed or forecasted in such
forward-looking statements. Such risks and uncertainties include those described
in Item 7A and elsewhere in this report. Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect management's
review only as of the date of this report. The Company undertakes no obligation
to update such statements or publicly release the result of any revisions to
these forward-looking statements that the Company may make to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.


Item 1. BUSINESS

     General

     EcoScience Corporation ("EcoScience" or the "Company") and its subsidiaries
     are primarily engaged in the production, marketing and sale of branded
     premium grade tomatoes grown in intensive greenhouse facilities. In
     addition, the Company markets, sells, develops and commercializes products
     for the agricultural and biological insect and disease control industries.

     The Company is, in terms of total acreage controlled by a single entity,
     the largest producer and marketer of premium quality, greenhouse grown
     tomatoes in the United States. The Company conducts its greenhouse
     operations through Agro Power Development, Inc. ("APD"), a wholly owned
     subsidiary which was acquired by the Company pursuant to a merger
     transaction which became effective on September 30, 1998. See "Recent
     Developments--Merger Transaction." APD develops, constructs and operates
     sophisticated, highly intensive agricultural greenhouse projects and
     markets and sells the premium tomatoes produced at these facilities, as
     well as tomatoes produced by other greenhouse growers, under its Village
     Farms(R) and Home Choice(TM) brand names as a consumer product, primarily
     to retail supermarkets and dedicated fresh food distribution companies. In
     1998, APD sold approximately 47.8 million pounds of tomatoes grown at APD
     greenhouses, and sold an additional 4.3 million pounds of tomatoes under
     APD's Village Farms(R) and Home Choice(TM) brand names pursuant to
     marketing arrangements with third party producers.

     The Company serves the biological and agricultural product markets
     primarily through three subsidiaries: Agro Dynamics, Inc. and Agro Dynamics
     Canada Inc. (collectively, "AGRO") and EcoScience Produce Systems Corp.
     ("EPSC").

     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, nursery 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


                                       2
<PAGE>


     acquisition of certain assets and liabilities of AMC, the Company formed
     EPSC to combine the AMC product line and operating unit with the Company's
     existing activities in those markets.

     In February 1999, the Company sold its postharvest equipment distribution
     business, which engaged primarily in the sale of sorting, grading and
     packing systems manufactured by Aweta, B.V., to Autoline, Inc. See "Recent
     Developments--Sale of PostHarvest Equipment Division."

     The Company's primary products are (i) premium greenhouse grown tomatoes
     which it sells to retail supermarkets and dedicated fresh food distribution
     companies, (ii) advanced growing systems based on Stonewool(R),
     manufactured by Grodania A/S, (iii) computerized environmental and
     irrigation control systems manufactured by H. Hoogendoorn Automation B.V.,
     (iv) PacRite(R) and Indian River Gold(TM) coatings manufactured by EPSC,
     (v) Bio-Save(R) PostHarvest BioProtectant line of products and (vi)
     Bio-Blast(R) 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.

     Financial information for each of the Company's business segments is set
     forth in "Management's Discussion and Analysis of Financial Condition and
     Results of Operations" and Note 15 to the Company's Consolidated Financial
     Statements. Financial information segregated by major geographic area
     (United States and Canada) are set forth in Note 15 to the Company's
     Consolidated Financial Statements.

     Dollar amounts contained in this report are presented in thousands (except
     per share data). References contained herein to "the period ended January
     3, 1999" mean the period commencing July 1, 1998 and ending January 3,
     1999.

     As used herein, the term "Company" refers to EcoScience and its
     subsidiaries, unless the context indicates otherwise.

     Recent Developments

     Merger with Agro Power Development, Inc. On September 30, 1998, the Company
     issued 9,421,487 shares of Common Stock to the holders of the common stock
     of Agro Power Development, Inc., a privately held New York corporation
     ("APDNY"), pursuant to an Agreement and Plan of Merger (the "Merger
     Agreement") that provided for the merger of APDNY with and into a newly
     formed, wholly owned subsidiary of the Company which, at the effective time
     of the merger, changed its name to Agro Power Development, Inc. Pursuant to
     the Merger Agreement, the stockholders of APDNY received 30,619.067 shares
     of the Company's Common Stock for each outstanding share of common stock of
     APDNY. In addition, on September 30, 1998, the Company issued 99,000 shares
     of Common Stock to certain stockholders of APDNY for their entire 50%
     interest in Village Farms of Morocco, S.A., a Moroccan company, as provided
     for in the Merger Agreement (the "Morocco Transaction"). The shares of
     Common Stock issued to the stockholders of APDNY pursuant to the Merger
     Agreement represented


                                       3
<PAGE>


     approximately 80% of the outstanding shares of the Company, on a fully
     diluted basis, at the effective time of the Merger.

     EcoScience and APDNY combined to form an integrated, environmentally
     focused, consumer products driven agri-business, capitalizing on expertise
     in naturally derived food technologies, intensive production and marketing
     of high value, quality fresh produce, innovative bio-rational pest and
     disease control technologies, and sophisticated growing and postharvest
     systems and products. The Company is committed to improving the quality of
     its products by bridging nature, technology and knowledge, utilizing the
     highest standards. EcoScience believes APD will provide the combined entity
     greater international presence, increased marketing capability, management
     depth and the operating level needed to accelerate revenue growth and
     increase shareholder value.

     Acquisition of Cogentrix's Interest in Greenhouses. The Company entered
     into a Stock Purchase Agreement dated as of December 7, 1998 (the "Stock
     Purchase Agreement") with Cogentrix Delaware Holdings, Inc. ("Cogentrix")
     to acquire all of the outstanding stock of certain corporations that are
     partners with subsidiaries of the Company in limited partnerships that
     operate four of the Company's greenhouse facilities. In addition, the Stock
     Purchase Agreement provided for the termination of Cogentrix's right to
     participate in future greenhouse development projects pursuant to an
     Agreement Regarding Future Projects that APD and Cogentrix entered into in
     February 1996. On December 30, 1998, the Company completed the acquisition
     of all of the outstanding capital stock of each of the entities that owned
     an interest in the four greenhouse operations in exchange for 1,000,000
     shares of the Company's Common Stock and a $20,600 promissory note bearing
     interest at a rate of 11.25% per annum which was originally due and payable
     on March 15, 1999. On March 12, 1999, Cogentrix agreed to extend the
     maturity date of the note to June 30, 1999. In connection with the
     extension, the Company issued Cogentrix an additional note in the principal
     amount of $1,000 which has terms similar to the original note and becomes
     due on June 30, 1999. The note, and certain other obligations to Cogentrix,
     are secured by the outstanding shares of APD and the capital stock of the
     entities acquired from Cogentrix. See "Management's Discussion and Analysis
     of Financial Condition and Results of Operations."

     The Company has agreed to register the 1,000,000 shares of Common Stock
     issued to Cogentrix for public sale. In the event that the stock is not
     registered for public sale by June 15, 1999, the Company may be required,
     at the election of Cogentrix, to repurchase the 1,000,000 shares from
     Cogentrix at a price equal to the greater of $4.00 or the market price of
     the stock on the day prior to the repurchase demand. Cogentrix is
     restricted from selling more than (i) 250,000 shares of Common Stock during
     the period ending June 30, 1999 and (ii) 500,000 shares of Common Stock
     prior to September 30, 1999; provided, however, that Cogentrix will not be
     subject to the restrictions described above during any period in which the
     $20,600 note issued to it remains unpaid after its maturity date.

     Sale of Postharvest Equipment Division. In February 1999, the Company sold
     its postharvest equipment division to Autoline, Inc. Prior to its sale,
     this division was engaged primarily in the sale of sorting, grading and
     packing systems manufactured by


                                       4
<PAGE>


     Aweta, B.V. The Company acquired the division from Aweta, B.V. at no cost
     in 1996. Sales for this division were $3,532 for the period ended January
     3, 1999 and $3,557, $4,967 and $2,830 in the fiscal years ended June 30,
     1998, 1997 and 1996, respectively. The sale of the postharvest division
     will result in no material gain or loss and will have no material impact on
     the Company's financial condition or results of operations.

     Potential Delisting. The Company has been notified by NASDAQ that due to
     the merger transaction with APD, the Company is required to meet the
     requirements for a new listing and that NASDAQ intends to delist the
     Company's Common Stock. The Company has requested a hearing with NASDAQ
     representatives to appeal the delisting determination. The delisting has
     been stayed pending the appeal. No assurance can be given that the
     Company's appeal will be successful. If the Common Stock is delisted by
     NASDAQ, it would trade on the OTC Bulletin Board or the "pink sheets"
     maintained by the National Quotation Bureau, Inc., which are generally
     considered to be less efficient markets.

     Greenhouse Tomatoes

          General

     Through APD, the Company currently operates seven greenhouse facilities in
     the United States, representing approximately 190 acres of growing
     capacity. Three of these facilities, each of which has approximately
     forty-one (41) acres of growing capacity, are among the largest greenhouses
     in the United States. By producing, harvesting, packaging and directly
     marketing all of its products, APD eliminates numerous intermediaries (i.e.
     repackers, brokers and wholesalers) utilized by traditional field producers
     of fresh vegetables. In order to develop additional sources of supply, APD
     has entered into agreements to market and sell fresh tomatoes produced,
     under Village Farms(R) specifications, by two other greenhouse operations,
     which currently comprise a total of approximately 30 acres. If these
     marketing arrangements remain in effect, APD will control the marketing of
     approximately 216 acres of greenhouse vegetable production.

          The Greenhouse Vegetable Industry

     Approximately $7 billion at the retail level, or over 5 billion pounds, of
     fresh tomatoes were sold in the United States in 1998. According to
     industry estimates, greenhouse grown tomatoes currently represent only
     approximately 10% to 12% of the fresh tomatoes sold in the United States.
     Although the United States greenhouses vegetable industry is growing
     rapidly (as evidenced by an increase in greenhouse tomato acreage from 1996
     to 1997 of approximately 30% according to Dr. Richard Snyder, Vegetable
     Specialist at Mississippi State University), the Company estimates that
     there are only 700 to 900 acres devoted to greenhouse vegetable production
     in the United States and approximately 55% of the greenhouse grown tomatoes
     sold in the United States are imported from other countries. The Company
     believes that a significant opportunity exists for greenhouse growers to
     capture a sizable share of the market for certain fresh vegetables,
     including tomatoes.


                                       5
<PAGE>


     The ability to control climatic conditions within a greenhouse enables
     greenhouse growers to produce varieties of tomatoes that are superior to
     field grown tomatoes in terms of taste, color, appearance and shelf life.
     This is particularly notable during periods when local production is not
     available. In many markets, the only fresh tomatoes that are consistently
     available during "off season periods" are picked while green and treated
     with ethylene gas during shipment from California, Florida or Mexico to
     turn the tomatoes red. The Company believes that due to inferior flavor,
     many consumers avoid tomatoes during off season periods and generally
     consume only tomatoes grown in their gardens or purchased from nearby farm
     stands during a limited period of seasonal availability. When greenhouse
     grown tomatoes are available, consumers have demonstrated a willingness to
     pay a premium price for superior quality and taste. A 1996 study conducted
     by Information Resources, Inc., an independent research firm, at APD's
     request indicated that in certain areas of the United States (western New
     York; Denver, Colorado; Detroit, Michigan; and New England), where local
     production has been available to certain retail chains from nearby
     greenhouses with consistent quality and volume, the percentage of
     greenhouse grown tomatoes sold by the retail chains has averaged 40% to 70%
     of total fresh tomato sales by the retailers. According to information
     provided to APD by two of these retail chains which are currently APD
     customers, in 1990 sales of greenhouse grown tomatoes did not exceed 15% of
     fresh tomato sales.

     Greenhouse vegetable production has been a thriving industry in Europe,
     particularly the Netherlands, since the 1940s. The acreage devoted to
     greenhouse vegetable production in Europe is substantially greater than
     greenhouse acreage in the United States. Imported greenhouse grown tomatoes
     from Europe, Israel and Canada are available at certain times of the year
     in major United States markets but, with the exception of Canadian
     tomatoes, are rarely distributed throughout the United States due to the
     additional freight, distribution costs and distribution channels necessary
     to reach central and western markets. Due to insufficient domestic
     greenhouse production, imports currently represent the only option for many
     large volume United States supermarkets. The supply of imported tomatoes
     is, however, limited and often erratic because foreign market exporters
     generally sell first to their domestic markets to avoid the increased
     distribution costs associated with distributing tomatoes in the United
     States.

     The Company believes that the market for greenhouse grown produce has
     significant growth potential due to: (i) the superior quality and flavor of
     greenhouse grown vegetables; (ii) an increase in the demand for fresh fruit
     and vegetables, including greenhouse grown tomatoes and other vegetables;
     (iii) the health and food safety benefits of U.S. produced greenhouse grown
     produce and (iv) a growing but limited supply of greenhouse grown produce.
     The successful production of greenhouse vegetables on a large scale basis,
     however, requires specialized operating skills, know-how, technology,
     complex logistics support, market knowledge and capital. As the developer
     and operator of three of the largest tomato greenhouses in the United
     States, the Company believes that the experience it has gained, the
     technological innovations it has made and the success it has achieved to
     date as an industry leader makes it uniquely and strategically positioned
     and qualified to take advantage of promising market opportunities.


                                        6
<PAGE>


          Greenhouse Operations

     The Company currently owns four of the seven greenhouse facilities
     currently in operation. The other three facilities are leased. The Company
     uses inert media culture systems to grow tomatoes in these glass paneled
     greenhouse structures which currently range from 10 to 42 acres. Using
     these sophisticated systems, tomatoes are grown not in soil but in
     "rockwool," a porous, artificial substrate made out of volcanic based rock.
     Through drip irrigation, each plant is fed nutrients directly from a
     computer-controlled irrigation system. Hot water is circulated through
     pipes running next to the plants to keep the plants at optimal temperature,
     which varies throughout each 24 hour period and crop lifecycle. The water
     is heated by cogeneration sources and/or natural gas boilers which capture
     carbon dioxide that is recycled back to the greenhouse for plant
     consumption. The Company's computer systems enable it to regulate
     substantially all environmental and climate parameters to optimize growing
     conditions. The Company believes that greenhouses generally yield
     approximately 10 to 20 times the yield of comparable outdoor farm acreage,
     depending on the crop. The Company's production methods incorporate
     technology and growing systems substantially similar to those used
     throughout the well established European greenhouse growing industry.

     The Company's tomatoes are naturally pollinated by bumblebees released into
     the greenhouse. Integrated pest management practices such as predator
     insects are used to control pests such as white fly.

     Three of the greenhouse facilities operated by the Company were developed
     in conjunction with electric cogeneration plants. Federal laws enacted in
     the 1970s encouraged the establishment of cogeneration plants and the use
     of their waste steam to provide heat for other industries, including
     greenhouse vegetable production. The use of this waste steam enables the
     Company to heat greenhouses located near cogeneration plants. Cogentrix is
     a developer and operator of two cogeneration energy facilities with which
     the Company has associated greenhouse operations.

     The Company forms separate operating companies to own and/or lease and
     manage each of the greenhouse facilities it operates. The following table
     provides information with respect to the Company's greenhouse facilities:

<TABLE>
<CAPTION>
                                  Date
                               Operations
   Greenhouse Facility          Commenced       Acreage            Location                 Leased/ Owned
   -------------------         ----------       -------            --------                 -------------
<S>                              <C>              <C>           <C>                           <C>
Keystone Village Farms           3/1/94            10           Ringgold, PA                  Leased(1)
Village Farms of Wheatfield      3/1/94            12           Wheatfield, NY                Leased(2)
Village Farms of Texas           12/1/96           41           Fort Davis, TX                Owned
Village Farms of Marfa           12/1/97           41           Marfa, TX                     Owned
Village Farms of Buffalo         4/1/98            18           Buffalo, NY                   Owned
Village Farms of Virginia        4/1/98            42           King George Cty, VA           Leased(3)
Village Farms of Presidio        10/1/98           26           Marfa, TX                     Owned(4)
                                                  ---
     Total Acreage                                190
</TABLE>


                                       7
<PAGE>

----------
(1)  This facility is leased pursuant to a ten year lease agreement with
     Cogentrix which expires in 2003 and requires the Company to pay a fixed
     monthly lease payment and an annual supplemental lease payment based on a
     specified percentage of Cash Flow (as defined) of the facility.

(2)  This facility is leased pursuant to a 15 year operating and lease agreement
     which expires in 2008 and requires the Company to pay a fixed monthly lease
     payment and an annual supplemental lease payment based upon a percentage of
     the net operating income (as defined) of the facility.

(3)  This facility is leased pursuant to a ten year lease and operating
     agreement which expires in 2007 and requires a fixed quarterly rental
     payment and an annual supplemental payment equal to a specified percentage
     of the Cash Flow (as defined) of the facility.

(4)  The Company has an 85.25% limited partnership interest and a 1% general
     partnership interest in the limited partnership which owns this facility.
     Third party investors own a 12.75% limited partnership interest and a 1%
     general partnership interest in the limited partnership.

     In addition to the greenhouse facilities identified above, the Company owns
     a 12 acre facility in Mt. Carmel, Pennsylvania which is currently
     inoperative and held for sale.

     In January 1998, Village Farms of Colorado, Inc. ("VFC"), a wholly owned
     subsidiary of the Company, entered into an agreement with Ripe Touch
     Greenhouses, Inc. ("Ripe Touch") of Castlerock, Colorado to lease a 20 acre
     greenhouse to be built and located in Calhan, Colorado. The Company plans
     to produce beefsteak tomatoes during the winter pricing period at this
     greenhouse and to establish a distribution center adjacent to the facility.
     The term of the lease will commence 30 days after substantial completion of
     the construction of the facility and will continue for ten years. The terms
     of the lease require the Company to pay a fixed monthly lease payment and
     an annual supplemental lease payment equal to a specified percentage of
     Cash Flow (as defined in the lease) of the facility. Ripetouch has not
     obtained financing for the construction of this facility and no assurance
     can be given that this facility will be completed.

          Greenhouse Products

     The Company's current product line consists of beefsteak tomatoes and
     cluster or "on-the-vine" tomatoes. These products are distinguished by
     their consistently superior taste and appearance over field grown tomatoes.
     The Company believes that by growing in modern greenhouses using state of
     the art technology in various locations in the United States it can produce
     high quality produce on a year round basis. The Company's premium tomatoes
     are sold in high quality packaging designed to protect the product as well
     as allow the retail supermarket to readily display and replenish the
     product.

     The Company's premium beefsteak tomatoes are packed into single layer 15
     pound boxes with inserts. Hand picked tomatoes are transported by water
     flume and then sorted and weighed using advanced color sorting and grading
     equipment coupled with a skilled worker to assure each package is packed to
     the highest quality standards. Village Farms(R) premium beefsteak tomatoes
     are packed in five sizes, Jumbo, Extra Large, Large, Medium and Small with
     18-52 tomatoes per flat depending on the size. Each


                                       8
<PAGE>


     tomato is labeled with a Price Look Up sticker (PLU) which has the company
     name and logo as well as the industry standard product code number.

     The Company's Home Choice(TM) tomatoes are packed in the same manner as the
     Village Farms(R) Premium tomatoes but do not meet the Company's standards
     for premium tomatoes. Tomatoes which do not meet Village Farms(R) or Home
     Choice(TM) quality standards but grade a US#2 are packed into boxes with a
     net weight of 20 or 25 pounds and marketed to local customers which include
     restaurants, produce distributors and farm stands.

     Cluster or "on-the-vine" tomatoes are packed into 11 pound boxes loose with
     stem tags, or with each tomato labeled with a PLU or in mesh bags. Each
     cluster contains between 3 to 5 blemish free tomatoes attached to vine.

     Prepacked tomatoes are marketed in three package sizes. Village Farms(R)
     premium tomatoes are packed 3 tomatoes into a plastic tray with a net
     weight of 14 oz or into a 4 cell clamshell container with a net weight of
     16 or 20 oz. The later product is marketed under the label Village Farms
     Baby Beefstm . High quality tomatoes without calyxes which have dislodged
     from the cluster tomatoes are packed into 4 count clamshell containers with
     a net weight of 16 or 20 oz and marketed under the Red Splendor(TM) label.

     The Company is engaged in ongoing testing of new technologies and systems
     and various varieties of tomatoes to determine if they could improve the
     Company's production yields. The Company tests these tomato varieties for
     their maturation period, resistance to disease, the size and quality of the
     tomatoes and the tomatoes' shelf life, taste and adaptability to seasonal
     changes in light. The Company's growers conduct these tests initially as
     varietal trials, where a few plants of several different varieties are
     placed throughout a greenhouse and observed. If a new variety shows
     promising characteristics, the Company conducts a commercial trial where
     the new variety is planted on a larger scale, with performance results
     compared to the Company's existing tomato varieties. To date, the Company
     has selected two of these new varieties of tomatoes for regular production
     on a seasonal basis, a Grace variety for winter production and an as yet
     unnamed variety for summer production. All tomato varieties tested and
     grown are of Dutch origin.

          Marketing Arrangements with Others

     Through marketing arrangements, APD markets and distributes fresh tomatoes
     produced by other greenhouse operators under the Village Farms(R)
     trademark. Under the terms of these arrangements, APD is generally entitled
     to a commission based on a percentage of product revenues and a fixed
     amount for each box of produce sold. APD currently participates in
     marketing arrangements with the following growers: Fosters Farms, Inc., a
     wholly owned subsidiary of Foster Wheeler Corporation which operates a 10
     acre greenhouse located in Marion Heights, Pennsylvania; and Agros, S.A.
     which operates a 20 acre greenhouse in Queretaro, Mexico. The Foster Farms
     facility produces beefsteak tomatoes from March through November. Agros,
     S.A. produces beefsteak tomatoes from


                                       9
<PAGE>


     October to May. APD generated approximately $3,053 and $3,154 of revenues
     from various marketing arrangements in calendar 1998 and 1997,
     respectively.

     In May 1998, APD entered into an agreement with SunBlush Technologies Corp.
     ("SunBlush"), a publicly traded corporation, which creates a strategic
     alliance for the development of technology for the packaging of fresh cut
     tomatoes. SunBlush, a Canadian company, owns rights to certain technologies
     which purportedly extend the shelf life of fresh produce and flowers. Under
     the terms of the agreement (the "SunBlush Agreement"), APD has agreed to
     provide up to $50 of funding to SunBlush to develop the application of the
     SunBlush technology to greenhouse tomatoes. If such technology can be
     successfully developed, it is anticipated that it would be used so that
     salad products containing fresh cut tomatoes could be prepackaged for sale
     to consumers. APD has agreed to supply the greenhouse tomatoes required for
     the SunBlush development project and has been granted the right to supply
     tomatoes for inclusion in any product successfully developed by SunBlush
     pursuant to the SunBlush Agreement that is subsequently marketed in the
     United States or Mexico. Test marketing of a salad containing fresh cut
     tomatoes is expected to commence in Boston, Massachusetts in May 1999.

          Sales and Distribution of Tomato Products

     APD currently sells approximately 90% of its Village Farms(R), Home
     Choice(TM) brand products to retail supermarket chains and dedicated
     wholesalers. The remainder is sold to distributors and food service
     clients. APD has no formal agreements with its customers. At the beginning
     of each year, APD generally negotiates approximate volume and price levels
     for the upcoming year with its customers. These arrangements provide APD
     with the flexibility to account for significant changes in market
     conditions and quality/price competition. APD currently employs 12 sales,
     marketing and quality assurance personnel who are responsible for
     developing and servicing APD customers, developing and maintaining industry
     and consumer awareness of Village Farms(R) brand consumer products and
     building national recognition of the Village Farms(R) brandname. The
     Company's supermarket and fresh food distribution customers in 1998 were
     concentrated in the Northeastern United States and Texas. The Company has
     recently initiated a plan to expand its customer base to the midwestern,
     western and southeastern regions of the United States due to the increased
     production capacity added in 1998.

     Village Farms of Morocco

     Village Farms of Morocco SA ("VF Morocco") was established in 1994 by three
     of the Company's directors and a group of investors based in Morocco to
     export tomatoes grown in Morocco to Canada during the winter. VF Morocco
     began to export tomatoes in 1998


                                       10
<PAGE>


     from certain regions of Morocco to the United States. Due to concerns
     regarding the Mediterranean fruit fly, the United States has banned the
     importation of certain products, including tomatoes, from other regions of
     Morocco. Although the acquisition of VF Morocco is not expected to have a
     material effect on the Company's financial condition and operating results
     going forward, the Company believes that efforts made by VF Morocco and its
     shareholders to promote additional business activities in Morocco and
     Europe could facilitate the Company's expansion plans.

     Biological and Agricultural Products Business

          Biological and Agricultural Products

     The Company's biological and agricultural products include (i)
     sophisticated growing systems which it sells to greenhouse operators; (ii)
     automated irrigation and environmental control systems for greenhouses;
     (iii) coatings and disease control products, including natural biologicals
     for protecting fruits and vegetables in storage and transit to market and
     (iv) a unique biological pest control product which it sells for use in
     consumer and industrial applications. These products are described below.

     Growing Systems. The Company is the exclusive distributor in the United
     States, Canada, Mexico and the Caribbean of the Grodan(R) brand of
     stonewool, an inert growing medium supplied by Grodania A/S, a Denmark
     based wholly owned subsidiary of Rockwood 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 with Grodania A/S expires on
     December 31, 2000. The sale of products under the distribution agreement
     accounted for 18%, 17%, 20% and 25% of the Company's total product sales in
     the period ended January 3, 1999 and the fiscal years ended June 30, 1998,
     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 during the year ending January 2, 2000.

     Automated Irrigation and Environmental Control Systems. The Company through
     its ISYS(R) 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
     systems and accessories produced by H. Hoogendoorn Automation B.V., a
     Netherlands based company.

     Coatings and Disease Control Products. The fruits and vegetable production
     industry requires specialized services, equipment and products for the
     harvesting, processing and


                                       11
<PAGE>


     storage of produce. Through AGRO and EPSC, the Company provides coatings
     and disease control products to the fruit, vegetable and ornamental packing
     markets. The Company's coating and disease control products consist of
     traditional coating products and its BioSave(R) Post Harvest BioProtectant
     line of 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(R) and DURA-FRESH(R). 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.

     The Company's Bio-Save line of biological disease inhibitors are based on
     the Company's microbial technology which uses live organisms that, through
     natural growth, inhibit the ability of a target disease to proliferate. 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 with the U.S.
     Environmental Protection Agency ("EPA") biological products for sale using
     the naturally occurring microorganism, Pseudomonas syringae, which can
     control the development of Blue Mold (Penicillium expansum), Gray Mold
     (Botrytis cinerea) and Mucor Rot (Mucor pyriformis) on apples and pears,
     and Blue Mold (P. italium), Green Mold (P. digitatum) and Sour Rot
     (Geotrichum candidum) on citrus fruit. The Company has conducted successful
     field trials over the last five years utilizing these microbial disease
     inhibiting agents in Florida, California, Oregon, West Virginia,
     Massachusetts, Michigan and Washington; and in Chile. The Company initiated
     commercial product launch of its Bio-Save products in fiscal 1997 and plans
     for continued expansion of product marketing and development in fiscal
     1999. 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.


                                       12
<PAGE>


     Biological Insect Control Products. 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.

     The Company, together with its collaborator, Terminix International Company
     L.P. ("Terminix"), has developed a natural fungal product to control
     termites, the Bio-Blast Biological Termiticide. 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 is a dry wettable 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(R) effect. The Company received EPA product
     registration for the termiticide in October 1994, and subsequently received
     approval for registration from 48 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 of Biological and Agricultural Products

     Growing and Control Systems. The Company sells its growing systems and
     automated irrigation and environmental control systems directly through
     AGRO. AGRO has a force of 27 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.

     Coating Products. The Company uses its AGRO and EPSC direct sales
     operations to market and sell 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 eight people located in
     its distribution and service centers in Orlando, Florida and Visalia,
     California.

     Biological Insect Control. In February 1999, the Company entered into a
     Marketing and Distribution Agreement with Terminix pursuant to which
     Terminix was appointed as a non-exclusive distributor of Bio-Blast in the
     United States, its territories and Canada. Pursuant to this agreement, the
     Company has agreed to manufacture and sell Bio-Blast to Terminix at a
     specified price. Terminix has certain rights to return certain product
     previously purchased; however, the Company's maximum repurchase obligation
     is approximately $278. This agreement, which expires in August 2000
     (subject to extension for successive one year periods by mutual agreement
     of the parties) replaces the Product Development and License Agreement
     between the parties which granted Terminix exclusive rights to use and
     distribute Bio-Blast in the United States.


                                       13
<PAGE>


     In March 1999, the Company entered into an agreement with Prentiss
     Incorporated pursuant to which Prentiss Incorporated ("Prentiss") was
     appointed as a non-exclusive distributor of Bio-Blast Biological
     Termiticide in the United States and Puerto Rico. Under this agreement,
     Prentiss has agreed to purchase a specified quantity of Bio-Blast at a
     specified price. The agreement expires on December 31, 1999, subject to
     earlier termination by either party upon 60 days written notice. If
     EcoScience terminates the agreement, it will be obliged to repurchase all
     of Prentiss' unsold inventory.

     The Company expects to market its Bio-Blast Biological Termiticide
     internationally primarily through local and regional distributors and
     partners. The Company has entered into a marketing and distribution
     agreement with Maruwa Biochemical Co. Ltd. ("Maruwa") pursuant to which it
     has appointed Maruwa as the exclusive distributor of Bio-Blast in Japan.
     Pursuant to this agreement, the Company has agreed to manufacture and sell
     Bio-Blast to Maruwa at a specified price. The agreement, which replaces a
     prior Development and Distribution Agreement between the parties, expires
     on September 30, 1999 and may be renewed for successive one year periods by
     mutual agreement of the parties.

     Manufacturing

     The Company has established supply arrangements for the production 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 using proprietary processes 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 biological postharvest fruit
     disease control product, 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.

     Research and Development

     The Company's technology for the postharvest and pest control industries
     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,


                                       14
<PAGE>


     technical and other resources, joint ventures, alliances, technological
     advancements, manufacturing capabilities, commercial potential of resultant
     end products, governmental regulations, and other relevant matters which
     may confront the Company in the future.

     Lyme disease has become, in recent years, a disease of significant public
     and medical concern throughout the U.S., particularly in the Northeast. The
     disease is spread to people through the bite of several species of ticks.
     The Company has signed a Material Transfer Agreement with the United States
     Department of Agriculture's Agricultural Research Service ("ARS"), whereby
     the Company provides formulated Metarhizium anisopliae to the ARS to
     support their field trials against tick larvae. Laboratory trials conducted
     with this fungus indicated good killing activity towards the tick larvae.
     Should these trials be successful, the Company will consider further
     commercial development of a product for the control of ticks capable of
     spreading Lyme disease.

     The Company's operating costs and expenses to date for the biological and
     agricultural products segment have, to a large extent, related 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 $43 in the
     period ended January 3, 1999 and $53, $7 and $0 in the fiscal years ended
     June 30, 1998, 1997 and 1996, respectively. Expenses incurred under Company
     funded research and development programs totaled approximately $196 in the
     period ended January 3, 1999 and $412, $501 and $1,018 in the fiscal years
     ended June 30, 1998, 1997 and 1996, respectively.

     Competition

     The tomato market in which the Company competes is highly competitive. In
     addition to other greenhouse producers, the Company must compete with U.S.
     producers of field grown tomatoes, which generally have prices
     substantially below those of greenhouse tomatoes. In addition, due to
     increased environmental compliance costs in the United States, competition
     from producers in Mexico has increased due to the North American Free Trade
     Agreement. Certain of the producers of field tomatoes may have greater
     resources than APD. APD's greenhouse competitors are located primarily in
     the United States, Canada, Israel, Spain and Holland.

     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 coatings market is also intense. Fruit 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 coating products. The Company
     believes that it can compete effectively in this market with its Bio-Save
     PostHarvest BioProtectant and traditional coating products based on the
     cost effectiveness and the quality of its coating formulations and
     services.


                                       15
<PAGE>


     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.

     Environmental and Regulatory Matters

     The Company's operations are subject to numerous environmental laws and
     regulations, including the Food Quality Protection Act of 1996, the Clean
     Air Act, the Clean Water Act, the Resource Conservation and Recovery Act,
     the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), the Toxic
     Substances Control Act and the Comprehensive Environmental Response,
     Compensation and Liability Act. Compliance with these laws and regulations
     is an ongoing process which is not currently expected to have a material
     effect on the Company's capital expenditures, earnings or competitive
     position. Environmental concerns are, however, inherent in most major
     agricultural operations, including those conducted by the Company, and
     there can be no assurance that the cost of compliance with environmental
     laws and regulations will not be material in the future. The environmental
     laws which have the greatest impact on the Company's operations are those
     that govern the handling of fertilizers and pesticides. To help ensure
     compliance with environmental laws and regulations, all Company personnel
     who handle fertilizers and pesticides must first be trained by a licensed
     private applicator on the Company's staff certified to provide training in
     the handling of hazardous materials. In addition, the Company has adopted
     certain written policies and procedures which are designed to prevent
     accidents and set forth the appropriate course of action in the event that
     a spill or other accident occurs. The Company has also contracted with
     third parties to assist in cleanup efforts in the event that an accident
     having environmental implications occurs at certain of its facilities.

     The Company's greenhouse operations are subject to regulations enforced by,
     among others, the FDA and the USDA. The FDA enforces statutory standards
     regarding the branding and safety of food products and determines the
     safety of food substances in the United States.

     The USDA sets standards for raw produce and governs its inspection and
     certification. Under the Perishable Agricultural and Commodities Act
     ("PACA"), the USDA exercises broad control over the marketing of produce in
     domestic and foreign commerce, sets standards of fair conduct as to
     representations, sales, delivery, shipment and payment for goods, and
     regulates the licensing of produce merchants and brokers. The Company's
     growing operations are also subject to oversight by the EPA regarding the
     use of fertilizers and pesticides protection.

     Through its extensive use of labor in its growing operations, the Company
     is subject to supervision by the United States Department of Labor, under
     both the Fair Labor Standards Act and the Occupational Safety and Health
     Act; and the prevalence of foreign


                                       16
<PAGE>


     workers in this sector of the Company's work force necessarily involves
     oversight by the Immigration and Naturalization Service.

     Almost every aspect of federal regulation is accompanied by regulation on
     the state level, in each jurisdiction where the Company conducts greenhouse
     operations.

     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 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 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 48 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, manufacturing facilities and greenhouse facilities, have
     been, or maybe, subject to regulation under various other state and federal
     laws and regulations including the Occupational Safety and Health Act, the
     National Environmental Policy Act, the Emergency Planning and Community
     Right-To-Know Act, the Food Quality Protection


                                       17
<PAGE>


     Act of 1996, the Resource Conservation and Recovery Act, and other state
     and federal statutes regulating environmental quality. From time to time,
     governmental authorities review the need for additional laws and
     regulations that could, if adopted, apply to the business of the Company.
     The Company is unable to predict whether any such new regulations will be
     adopted or whether, if adopted, they will adversely affect its business.
     Historically, compliance with applicable federal, state and local
     provisions which have been enacted or adopted regulating the discharge of
     materials into the environment by the Company's greenhouse, manufacturing
     or laboratory operations has had an immaterial effect upon the Company's
     capital expenditures, results of operations and competitive position.

     Patents, Proprietary Rights 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.

     The Company has been issued patents and has pending patent applications
     that address its core technological strengths, with emphasis on fungal and
     bacterial formulation, and storage technologies. These patents and patent
     applications have been principally pursued in the U.S. and in some cases
     internationally. The technology described in these patents and patent
     applications is useful in the development of fungal and bacterial active
     ingredient microbial pesticides. 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. These microorganisms 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 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).

     Together, the Company's patents describe a set of technologies applicable
     to the use of fungi for the control of insect pests, and are central to the
     Bio-Path(R) chamber technology which covers cockroaches, the further
     development and sale of which the Company has suspended; however, this
     technology can be extended to any other insect that can be controlled via a
     chamber system. An additional patent describing further fungal formulation
     technology is pending.

     The Company has been issued two additional U.S. Patents which relate to the
     use of bacteria, chiefly as biofungicides in the treatment of plant fungal
     disease.

     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,


                                       18
<PAGE>


     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. None of the Company's current patents expire prior to
     2006. 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.

     In addition to its own active ingredients, 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 postharvest disease control agents.

     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 certain 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 biological
     and agricultural business may be adversely affected by competitors who
     develop substantially equivalent technology.

     Employees

     As of April 1, 1999 the Company had approximately 950 employees. The
     majority of these workers are employed in the Company's greenhouse
     operations. None of the Company's employees is covered by a collective
     bargaining agreement. The Company considers its relations with employees to
     be good.

Item 2. Properties

     The Company's corporate headquarters and research and development
     operations, and AGRO's New Jersey operations are currently located in two
     facilities in East Brunswick, New Jersey. These facilities consist of
     23,000 and 10,000 square foot spaces and are under leases that expire in
     July 1999. The Company recently entered into a ten year lease agreement
     with respect to 20,000 square feet of office/warehouse space in Eatontown,
     New Jersey and expects to move its corporate headquarters and research and
     development operations to this location in September 1999.

     AGRO leases 10,000 square feet of space for its sales, service and
     warehouse center located in Milton, Ontario, Canada under a three year
     lease which expires in June 2001. AGRO


                                       19
<PAGE>


     also leases a 12,000 square foot facility for its sales, service and
     warehouse center in Ventura, California.

     APD's principal properties consist of its greenhouse facilities in
     Ringgold, Pennsylvania; Buffalo and Wheatfield, New York; Fort Davis and
     Marfa, Texas; and King George County, Virginia. APD has an ownership
     interest in the facilities located in Buffalo, New York; Fort Davis, Texas;
     and the two facilities in Marfa, Texas. The remaining facilities, and the
     land upon which the Buffalo and Marfa facilities are located, are leased.
     Each of the greenhouses operated by APD has adjacent packing and support
     facilities ranging in size from approximately 11,300 square feet at the
     Ringgold, Pennsylvania facility to the approximately 170,000 square foot
     storage and distribution center adjacent to the Virginia greenhouse
     facility. Collectively, these facilities provide an aggregate of
     approximately 512,778 square feet of packing and support space to APD. In
     addition, APD leases a 4,000 square foot distribution center in Buffalo,
     New York and approximately 500 square feet of office space in Naples,
     Florida.

     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 and
     warehouse center 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 currently is not a party to any material legal proceedings, nor
     is it currently aware of any threatened material legal proceedings. From
     time to time, the Company may become involved in litigation relating to
     claims arising out of its operations in the normal course of its business.

Item 4. Submission of Matters to a Vote of Security Holders

     There were no matters submitted to a vote of security holders during the
     fiscal quarter ended January 3, 1999.

Item 4A. Executive Officers of the Registrant

     The executive officers of the Registrant are listed in the table below, and
     brief summaries of their business experience and certain other information
     is set forth in the information which follows the table:

         Name                Age                Position
         ----                ---                --------
     Michael A. DeGiglio     44    President and Chief Executive Officer
     Albert VanZeyst         53    Executive Vice President
     J. Kevin Cobb           38    Senior Vice President--Corporate Development,
                                      Interim Chief Financial Officer
                                       and Treasurer
     David W. Miller         47    Senior Vice President and Chief Technology
                                      Officer
     Kurt Hoffman            38    Secretary and Corporate Controller


                                       20
<PAGE>


     Michael A. DeGiglio, age 44, has served as a Director of the Company since
     November 1996, when he was elected to serve as a Director by the Board. Mr.
     DeGiglio joined the Company upon its acquisition of Agro Dynamics, Inc.
     ("AGRO Dynamics") in November 1992, and served as Chief Executive Officer
     of AGRO Dynamics until November 1998. 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 Dynamics,
     where he served as Chief Executive Officer. 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 January 1983, 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 is
     a co-founder of APD and has served as Chief Executive Officer of APD since
     its inception in 1990. He served as President of APD until January 1997.
     Mr. DeGiglio received a B.S. in Aeronautical Science and Aviation
     Management from Embry Riddle Aeronautical University. Mr. DeGiglio's term
     as a director of the Company will expire at the 2000 Annual Meeting of
     Stockholders.

     Albert W. Vanzeyst has served as a Director of the Company since September
     1998, when he was elected to serve as a Director and Executive Vice
     President by the Board pursuant to certain covenants related to the Merger
     pursuant to which the Company acquired APD. Mr. Vanzeyst, a co-founder of
     APD, has been Chief Operating Officer and a Director of APD since its
     inception in 1990. In January, 1997, he also assumed the role of President
     of APD. Mr. Vanzeyst has 30 years of greenhouse design, engineering and
     construction experience spanning several countries, crops and climates
     throughout the world. Between 1984 and 1990, Mr. Vanzeyst was President of
     Dace U.S.A., Inc., a subsidiary of Dace International, Inc., an
     international turn-key greenhouse construction company. Prior thereto, he
     participated in the development, design and construction of numerous
     greenhouse operations in several countries throughout the world. Mr.
     Vanzeyst holds a degree in Foreign Trade and International Commerce from
     Handelavond College in the Netherlands. Mr. Vanzeyst's term as a director
     will expire at the 1999 Annual Meeting of Stockholders.

     J. Kevin Cobb joined the Company in September 1998, as Senior Vice
     President-Corporate Development pursuant to certain covenants related to
     the Merger pursuant to which the Company acquired APD. In February 1999, he
     was named interim Chief Financial Officer and Treasurer of the Company.
     Prior to joining the Company, Mr. Cobb served as Senior Vice President and
     Chief Financial Officer of APD from January 1995 until July 1998, when he
     was appointed Senior Vice President - Corporate Development of APD. Mr.
     Cobb


                                       21
<PAGE>


     came to APD after five years experience with Cogentrix Energy, Inc. of
     Charlotte, North Carolina. While at Cogentrix, he served as Treasurer and
     Director of Project Finance. From 1988 to 1990, he served as Vice President
     of Finance of The Lexington Group, Inc., a real estate investment and
     management firm. Prior thereto, Mr. Cobb was employed as a Certified Public
     Accountant with Arthur Andersen, LLP. Mr. Cobb holds a B.S. degree in
     accounting from the University of North Carolina - Charlotte.

     David W. Miller joined the Company in May 1988 and serves as Senior Vice
     President and Chief Technology Officer. Dr. Miller's current
     responsibilities include technology development and management,
     intellectual property oversight and product development 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 with involvement from the discovery stage to product
     sales.

     Kurt Hoffman was appointed Secretary of the Company in April 1999. He was
     appointed Corporate Controller in March 1999, having served as Division
     Controller from November 1997 through February 1999 and Assistant
     Controller from December 1995 through October 1997. From April 1991 through
     August 1995, Mr. Hoffman served as an Assistant Controller for Infomed,
     Inc. He is a Certified Public Accountant and received a Bachelor of Arts
     Degree in Accounting from the University of Maryland.

                                     PART II

Item 5.   Market for the Registrant's Common Stock and Related Stockholders
          Matters

     The Company's Common Stock trades on NASDAQ under the symbol "ECSC". As of
     April 15, 1999, there were approximately 269 holders of record of the
     Company's Common Stock. The Company effectuated a one-for-five reverse
     stock split effective at the close of business on September 30, 1998 (the
     "Reverse Split"). On April 15, 1999, the reported closing price of the
     Common Stock was $2-3/8 per share. The Company has been notified by NASDAQ
     that due to the merger transaction with APD, the Company is required to
     meet the requirements for a new listing and that NASDAQ intends to delist
     the Common Stock. The Company has requested a hearing with NASDAQ
     representatives to appeal the delisting determination. No assurance can be
     given that the Company's appeal will be successful. If the Common Stock is
     delisted by NASDAQ, it would trade on the OTC Bulletin Board or in the
     "pink sheets" maintained by the National Quotation Bureau, Inc., which are
     generally considered to be less efficient markets.

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


                                       22
<PAGE>


                                                 High            Low
                                                 ----            ---
                  1998
Fiscal Quarter ended January 3, 1999            $9 1/16        $5
Fiscal Quarter ended September 30, 1998         9 11/16         6 3/32
Fiscal Quarter ended June 30, 1998               9 1/16         5
Fiscal Quarter ended March 31, 1998             9 11/16         6 3/32


                  1997
Fiscal Quarter ended December 31, 1997               10         5
Fiscal Quarter ended September 30, 1997          7 3/16         5 5/16
Fiscal Quarter ended June 30, 1997                8 3/4         4 7/32
Fiscal Quarter ended March 31, 1997              12 1/2         5


     The Company has not paid any dividends on its Common Stock and does not
     anticipate doing so in the foreseeable future. Certain provisions of the
     Company's loan agreements prohibit the payment of dividends.


                                       23
<PAGE>


Item 6.   Selected Financial Data

     The selected financial data presented below has been derived from (i) the
     Company's audited consolidated financial statements for the transition
     period ended January 3, 1999 and for each year in the five year period
     ended June 30, 1998 and (ii) the Company's unaudited consolidated financial
     statements for the six months ended December 31, 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>
Consolidated Statements of Operations Data      Transition    Six Months
(in thousands, except per share amounts)      Period Ended      Ended                        Years Ended June 30,
                                                January 3,   December 31,     --------------------------------------------------
                                                   1999          1997        1998        1997        1996        1995       1994
                                               ------------  ------------  --------    --------    --------    --------    -------
                                                             (Unaudited)

<S>                                              <C>           <C>         <C>         <C>         <C>         <C>         <C>
Net revenues .................................   $ 26,194      $ 17,835    $ 46,177    $ 39,862    $ 24,668    $ 20,251    $ 15,535
Cost of revenues .............................     25,237        14,675      41,847      32,279      18,603      16,617      12,639
                                                 --------      --------    --------    --------    --------    --------    --------
Gross profit .................................        957         3,160       4,330       7,583       6,065       3,634       2,896
                                                 --------      --------    --------    --------    --------    --------    --------
Operating expenses:
   Selling, general and administrative .......      8,307         3,987      10,336       6,879       6,394       7,317       7,302
   Research and development ..................        239           202         465         508       1,018       4,483       8,156
   Asset valuation and restructuring
(reversal)
     charges .................................         --            --          --        (377)     (1,550)      6,000       5,800
                                                 --------      --------    --------    --------    --------    --------    --------
   Total operating expenses ..................      8,546         4,189      10,801       7,010       5,862      17,800      21,258
                                                 --------      --------    --------    --------    --------    --------    --------
Operating (loss) income ......................     (7,589)       (1,029)     (6,471)        573         203     (14,166)    (18,362)
                                                 --------      --------    --------    --------    --------    --------    --------
   Other (expense) income:
   Interest, net .............................     (2,928)         (841)     (3,289)     (1,923)       (611)       (682)        599
   Other, net ................................       (158)         (100)       (115)         12         136         158         796
                                                 --------      --------    --------    --------    --------    --------    --------
       Total other (expense) income ..........     (3,086)         (941)     (3,404)     (1,911)       (475)       (524)      1,395
                                                 --------      --------    --------    --------    --------    --------    --------
Loss before taxes, minority
interest and extraordinary item. .............    (10,675)       (1,970)     (9,875)     (1,338)       (272)    (14,690)    (16,967)
Provision for income taxes ...................         67            21          21          78         116          91          48
                                                 --------      --------    --------    --------    --------    --------    --------
Loss  before minority interest and ...........    (10,742)       (1,991)     (9,896)     (1,416)       (388)    (14,781)    (17,015)
  extraordinary item
Minority interest ............................      2,255         1,311       5,659       1,936         274          --          --
                                                 --------      --------    --------    --------    --------    --------    --------
(Loss) income before extraordinary item ......     (8,487)         (680)     (4,237)        520        (114)    (14,781)    (17,015)
Extraordinary item ...........................         --            --          --          --         241          --          --
                                                 --------      --------    --------    --------    --------    --------    --------
Net (loss) income ............................   ($ 8,487)     ($   680)   ($ 4,237)   $    520    $    127    ($14,781)   ($17,015)
                                                 ========      ========    ========    ========    ========    ========    ========
(Loss) earnings per share:

Basic
   Income (loss) before extraordinary
item .........................................   ($  0.73)     ($  0.06)   ($  0.36)   $   0.05    ($  0.01)   ($  1.31)   ($  1.54)
   Extraordinary item ........................         --            --          --          --        0.02          --          --
                                                 --------      --------    --------    --------    --------    --------    --------
   Net (loss) income  ........................   ($  0.73)     ($  0.06)   ($  0.36)   $   0.05    $   0.01    ($  1.31)   ($  1.54)
                                                 ========      ========    ========    ========    ========    ========    ========
   Weighted average basic shares
     outstanding .............................     11,641        11,605      11,619      11,548      11,334      11,288      11,070
                                                 ========      ========    ========    ========    ========    ========    ========


Diluted
   Income (loss) before extraordinary ........   ($  0.73)     ($  0.06)   ($  0.36)   $   0.05    ($  0.01)   ($  1.31)   ($  1.54)
item
   Extraordinary item ........................         --            --          --          --        0.02          --          --
                                                 --------      --------    --------    --------    --------    --------    --------
   Net income (loss)  ........................   ($  0.73)     ($  0.06)   ($  0.36)   $   0.05    $   0.01    ($  1.31)   ($  1.54)
                                                 ========      ========    ========    ========    ========    ========    ========
   Weighted average diluted shares
     outstanding .............................     11,641        11,605      11,619      11,583      11,381      11,288      11,070
                                                 --------      --------    --------    --------    --------    --------    --------
</TABLE>


                                       24
<PAGE>

<TABLE>
<CAPTION>

Consolidated Balance Sheet (in thousands)              January 3,                                 June 30,
                                                       ----------     --------------------------------------------------------------
                                                          1999           1998         1997         1996          1995        1994
                                                        ---------     ---------     ---------    ---------    ---------    ---------
Unrestricted and restricted cash, cash
equivalents,
   short-term investments and marketable
<S>                                                     <C>           <C>           <C>          <C>          <C>          <C>
   securities ......................................    $   1,222     $   4,222     $   6,787    $   6,151    $   8,036    $  20,542
Total assets .......................................      101,864        79,508        70,592       36,249       20,465       35,251
Debt and capital leases ............................       85,797        55,274        43,483       19,460        8,580        8,287
Stockholder's equity (deficit) .....................    ($  5,094)    ($    118)    $   4,046    $   3,010    $   2,625    $  17,974
</TABLE>


Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

          General

          The Company's two reportable segments are comprised of (i) greenhouse
          tomatoes and (ii) biological and agricultural products.

          The Company experienced significant and unprecedented growth during
          the first six months of calendar year 1998, particularly in the
          greenhouse tomato segment represented by APD. See "Merger with Agro
          Power Development, Inc." below. During this period, APD completed
          construction and started up approximately 101 additional acres of
          greenhouse production in beefsteak (42 acres) and cluster on-the-vine
          (59 acres) tomatoes. This increase in acreage represented an
          approximate 135% increase in production capacity over the 75 acres of
          production capacity for calendar year 1997. In addition, APD began
          construction on an additional 41 acre greenhouse to grow and sell
          colored bell peppers (the "Presidio Phase I Project"). The first 26
          acres of this greenhouse went into operation in October 1998, thereby
          increasing production capacity by approximately 169% for calendar 1998
          as compared to calendar 1997. To accommodate this growth, the Company
          also expanded its sales and marketing organization and its financial
          and greenhouse management operations. Increases in sales and revenues
          and the achievement of economies of scale generally lag increases in
          production capacity, but expenses for startup, infrastructure and
          personnel occur in advance of revenues. The operating results for the
          period ended January 3, 1999 reflect a significant portion of these
          expenses in advance of anticipated revenues from the three new
          greenhouse projects.

          As described below under "Results of Operations," operating results
          for the period ended January 3, 1999 were adversely affected by
          abbreviated growing cycles and delays in crop planting at certain of
          the Company's greenhouse facilities. In addition, in April 1999,
          management determined that in view of unfavorable pricing trends in
          the pepper market, it would convert the Presidio Phase I Project from
          peppers to tomatoes, thereby shortening the harvest period for the
          then current pepper crop by approximately three months. As a result,
          certain significant expenditures made by the Company to plant the
          pepper crop will not be recoverable and were charged to earnings in
          the three month period ending January 3, 1999. The Company believes
          that, with the exception of the Presidio facility, its greenhouse
          operations are now approaching their optimal production schedules for
          the first time in its history, compared with results in calendar 1998
          when three of seven operations (101 of the 176 acres in operation)
          were out of the harvest cycle necessary to achieve optimal production
          and pricing due to start-up factors. The


                                       25
<PAGE>


          Company has begun to realize the benefits of the increased production
          capacity added during 1998, through its increased production and
          sales, in the quarter ended January 3, 1999 and expects this trend to
          continue during 1999.

          During the period ended January 3, 1999, the Company incurred
          non-recurring expenses of approximately $1,500 as a result of the
          merger transaction with APD.

          Change of Fiscal Year

          The Company has amended its by-laws to change its fiscal year from the
          twelve month period ended June 30 to a 52-53 week fiscal year ending
          on the Sunday nearest December 31 of each year. For the transition
          period, the fiscal year end date will be January 3, 1999.

          Merger with Agro Power Development, Inc.

          On September 30, 1998, the Company issued 9,421,487 shares of Common
          Stock to the holders of the common stock of APDNY, a privately held
          New York corporation pursuant to the Merger Agreement, which provided
          for the merger of APDNY with and into a newly formed, wholly owned
          subsidiary of the Company which, at the effective time of the merger,
          changed its name to Agro Power Development, Inc. The Merger was
          structured as a tax free reorganization under Section 368(a) of the
          Internal Revenue Code. Pursuant to the Merger Agreement, the
          stockholders of APDNY received 30,619.067 shares of the Company's
          Common Stock for each outstanding share of common stock of APDNY. In
          addition, on September 30, 1998, the Company issued 99,000 shares of
          Common Stock to certain stockholders of APDNY for their entire 50%
          interest in Village Farms of Morocco, S.A., a Moroccan company, as
          provided for in the Merger Agreement. The shares of Common Stock
          issued to the stockholders of APDNY pursuant to the Merger Agreement
          represented approximately 80% of the outstanding shares of the
          Company, on a fully diluted basis, at the effective time of the
          Merger. The Merger has been accounted for as a pooling of interests
          and accordingly, the historical consolidated financial statements have
          been restated to reflect the business combination as if it had
          occurred at the beginning of the earliest period presented.

          Acquisition

          On December 30, 1998, the Company acquired from Cogentrix all of the
          outstanding capital stock of each of Cogentrix Greenhouse Investments,
          Inc.; Cogentrix of Fort Davis I, Inc.; Cogentrix of Pocono, Inc.;
          Cogentrix of Marfa, Inc. and Cogentrix of Buffalo, Inc. (collectively
          the "Acquired Companies") which were 50% partners with the Company in
          limited partnerships that operate four of the Company's greenhouse
          operations. The purchase price of the Acquired Companies consisted of
          1,000,000 shares of EcoScience common stock and a $20,600 note bearing
          interest at a rate of 11.25% per annum, which was originally due and
          payable on March 15, 1999. On March 12, 1999, Cogentrix agreed to
          extend the maturity date of the note to June 30, 1999. In connection
          with the extension, the Company issued Cogentrix an additional note in
          the principal amount of $1,000 which has terms similar to the original
          note and becomes due on June 30, 1999.


                                       26
<PAGE>


          The notes are secured by all of the outstanding capital stock of APD
          and the Acquired Companies. EcoScience is currently seeking additional
          debt and equity financing to fulfill this obligation. If the Company
          is not successful in refinancing the $21,600 aggregate principal
          amount of notes, it will seek an extension of the due date or a
          restructuring of the notes. There can be no assurances that EcoScience
          will be successful in these efforts.

          As a condition to the acquisition, EcoScience agreed to register the
          1,000,000 shares of common stock for public sale. In the event the
          stock is not registered by June 15, 1999, EcoScience may be required,
          at the election of Cogentrix, to repurchase the 1,000,000 shares from
          Cogentrix at a price equal to the greater of $4.00 or the market price
          on the day prior to the repurchase demand, as provided.

          Additional consideration given in the transaction is as follows: (i)
          termination of an option agreement with Cogentrix, pursuant to which
          APD granted to Cogentrix certain rights to participate in future
          projects involving the development, acquisition, owning of or
          operating by APD of any greenhouse facility at which fruit or
          vegetables are to be grown, as defined; (ii) Cogentrix assigned and
          contributed its note receivable of $643 along with accrued interest
          ($65), due from APD to Cogentrix Greenhouse Investment, Inc. and (iii)
          one of the greenhouse limited partnerships cancelled its note
          receivable due from Cogentrix in the amount of $1,838, along with
          accrued interest ($191). Following the cancellation and the
          acquisition of the Acquired Companies by EcoScience, Cogentrix
          Greenhouse Investment, Inc. issued a promissory note payable to that
          greenhouse limited partnership in the same amount.

          Sale of Postharvest Equipment Division

          On February 1, 1999, the Company's postharvest equipment division of
          its wholly owned subsidiary Agro Dynamics, Inc., which was the
          exclusive distributor in North America for Aweta B.V.'s sorting and
          grading equipment, was sold to Autoline, Inc. Autoline Inc. and Aweta
          B.V. are both wholly owned subsidiaries of FPS Food Processing Systems
          of Holland.

          Sales of this division were $3,532 in the period ended January 3, 1999
          and $3,557, $4,967 and $2,830 in the fiscal years ended June 30, 1998,
          1997 and 1996, respectively. The Company concluded that the long term
          outlook of the postharvest equipment distribution business was no
          longer consistent with its future strategic direction. This
          transaction will not result in a material gain or loss and will not
          have a material impact on the Company's financial position or results
          of operations.

          Results of Operations

                      Transition Ended January 3, 1999 vs.
                       Six Months Ended December 31, 1997

          The Company's net revenues increased by $8,359 or 47% to $26,194 for
          the period ended January 3, 1999 from $17,835 for the same period in
          1997. This increase was primarily


                                       27
<PAGE>


          due to the increases in product sales in the greenhouse tomato market
          of $6,797, and the biological and agricultural products market of
          $1,562.

          The following table sets forth the Company's net revenues by market
          for the period ended January 3, 1999 and the six months ended December
          31, 1997:

                                          January 3,    December 31,
                                             1999          1997         Increase
                                           --=----       -------        --------
Tomatoes ................................  $15,453       $ 8,656        $ 6,797
Biological and Agricultural Products ....   10,741         9,179          1,562
                                           --=----       -------        --------
Consolidated ............................  $26,194       $17,835        $ 8,359
                                           =======       =======        ========

          Net revenues increases for the greenhouse tomato market were primarily
          due to increased capacity. The Company's Buffalo, New York, Virginia
          and Marfa, Texas facilities (representing 101 acres) became
          operational in the first half of 1998 and recorded product sales in
          the period ended January 3, 1999. The Company's Presidio facility
          (representing 26 acres) became operational in the six month period
          ended January 3, 1999.

          Product sale increases for the biological and agricultural products
          market were primarily due to approximately $1,236 in Postharvest
          equipment sold in the period ended January 3, 1999 that was delayed
          from the first half of 1998 due to a fire damage sustained at the
          manufacturer's facility. The remaining increases related to increased
          selling efforts.

          Cost of revenues increased $10,562 or 72% to $25,237 for the period
          ended January 3, 1999 from $14,675 for the same period in 1997,
          primarily due to net revenues increases. For tomatoes, cost of
          revenues sold increased $9,067 or 116% to $16,903 for the period ended
          January 3, 1999 from $7,836 for the same period in 1997, primarily due
          to the significant growth in production (169%) during 1998 associated
          with the three new facilities in Virginia, Marfa, Texas and Buffalo,
          New York, which combined for substantially all of the increase in cost
          of revenues.

          Gross profit on net revenues decreased $2,203 to $957 for the period
          ended January 3, 1999 from a gross profit of $3,160 for the same
          period in 1997, while gross profit percentage on net revenues
          decreased to 4% for the period ended January 3, 1999 from 18% for the
          same period in 1997. Gross profit on net revenues decreased $2,270 for
          the tomato greenhouse market to a gross loss of $1,450 from a gross
          profit of $820 for the period ended January 3, 1999, while gross
          profit percentage decreased to (9%) from 9% in the same period. The
          decrease was primarily due to start-up costs and delays at the
          Company's Buffalo, New York and Virginia greenhouse facilities and the
          poor results of its pepper crop at the Presidio greenhouse facility.

          The facilities in Buffalo, New York and Virginia recorded $2,285 in
          gross losses because the timing of the construction completion and
          startup did not coincide with the optimal cropping cycle (seed, plant,
          grow, harvest) of these facilities during the first year of
          operations. The costs incurred at these facilities were naturally
          spread across lower


                                       28
<PAGE>


          production and sales due to the abbreviated growing cycle and,
          therefore, significantly lowered gross profits of these facilities.

          The timing of the 101 additional acres that started up between January
          and April of 1998 came at a time when market prices were on a seasonal
          decline going into the summer season and the crop cycle was coming to
          an end (to ready greenhouses for the next and normal starting cycle),
          thereby preventing the Company from recovering the up front crop
          expenditures in an abbreviated crop cycle or harvest period. In
          addition, the crop cycle of the Company's 42 acre Virginia greenhouse
          was adversely impacted by the delay of the lessor of the facility in
          obtaining the approval of its lenders required for the conversion and
          expansion of the facility. As a result, the Company was not able to
          begin planting in the Virginia greenhouse until late in the growing
          cycle which delayed tomato production beyond the favorable spring
          pricing period. As a result, this facility was unable to produce
          sufficient yield to cover costs. In addition, the Company subsequently
          determined that light levels in Virginia were sufficient to produce
          tomatoes in the winter and thus elected to cut short the already
          abbreviated growing cycle at the Virginia greenhouse and begin a new
          crop that would come into initial harvest in December 1998 when the
          higher winter pricing is available in the marketplace. Also, the
          Buffalo, New York greenhouse had construction delays and was late in
          installing infrastructure and required systems, thereby delaying the
          start of the normal crop cycle and further impacting operating
          performance. These delays increased operating costs during the period
          ended January 3, 1999.

          The Company's Presidio facility in Texas began pepper production in
          the second half of 1998. Management decided, subsequent to January
          3,1999, to end the crop prematurely in April 1999 due to unfavorable
          market prices. This resulted in a write down of inventory resulting in
          $1,784 of negative gross margin. The Company is currently converting
          the facility for tomato production and plans to begin harvesting these
          tomatoes in June 1999.

          Selling, general and administrative expenses increased $4,320 or 108%
          to $8,307 for the period ended January 3, 1999 from $3,987 for the
          same period in 1997, primarily due to non-recurring merger costs of
          $1,500, increased expenses attributable to the Company's four new
          greenhouse facilities, the expansion of the Company's sales,
          marketing, finance and greenhouse management operations, and
          post-merger transaction costs, including severance compensation to
          former officers and professional fees.

          Research and development expenses increased $37 or 18% to $239 for the
          period ended January 3, 1999 from $202 for the same period in 1997,
          due primarily to increases in personnel and related costs.

          Operating loss increased $6,560 to $7,589 for the period ended January
          3, 1999 compared to a $1,029 operating loss for the same period in
          1997. The increase in operating loss resulted primarily from a $2,203
          decrease in gross profit for the period ended January 3, 1999 compared
          to the same period in 1997, and a $4,357 increase in operating
          expenses.


                                       29
<PAGE>


          Other expenses increased by $2,145 to $3,086 for the period ended
          January 3, 1999, compared to $941 for the same period in 1997,
          primarily due to increased interest expenses attributable to
          indebtedness incurred in connection with the development of the new
          greenhouse facilities. Interest expense, net, increased by $2,087
          reflecting the higher level of debt outstanding during the period
          ended January 3, 1999 compared to the same period in 1997.

          The Company's net loss increased $7,807 or $0.67 per diluted share to
          $8,487 or $0.73 per diluted share for the period ended January 3, 1999
          compared to a net loss of $680 or $0.06 per diluted share for the same
          period in 1997.

                          Year Ended June 30, 1998 vs.
                            Year Ended June 30, 1997

          The Company's net revenues increased $6,315 or 16% to $46,177 in 1998
          from $39,862 in 1997 primarily due to increases in tomatoes product
          sales of $6,908, partially offset by a decrease in biological and
          agricultural product sales of $593. The following table sets forth the
          Company's net revenues by market for 1998 and 1997:

                                                    Years Ended
                                                      June 30,
                                                -------------------    Increase
                                                 1998        1997     (Decrease)
                                                -------     -------    ---------
Tomatoes ..................................     $28,871     $21,963    $ 6,908
Biological and Agricultural Products ......      17,306      17,899       (593)
                                                -------     -------    ---------
Consolidated ..............................     $46,177     $39,862    $ 6,315
                                                =======     =======    =========


          Net revenues increases for the greenhouse tomato market were primarily
          due to increased capacity. The Company's Buffalo, Virginia and Marfa,
          Texas facilities (representing 101 acres) became operational in the
          first half of 1998 and recorded net revenues in 1998.

          Net revenues decreases for the biological and agricultural products
          market were primarily due to the delayed shipment and installation of
          equipment orders as a result of fire damage sustained at the
          manufacturer's facility. This decrease was partially offset by
          increases in the sales of other product lines. The result of the
          postponement of shipments caused by the fire had an adverse effect on
          the Company's operating results for the fourth quarter of fiscal 1998.

          Cost of revenues increased $9,568 or 30% to $41,847 in 1998 from
          $32,279 in 1997, primarily due to product sales increases. For
          tomatoes, cost of revenues increased $9,705, or 50% to $29,015 in 1998
          from $19,310 in 1997, primarily due to the growth in production during
          1998 associated with the three new facilities in Buffalo, Virginia and
          Marfa, Texas.

          Gross profit on net revenues decreased $3,253 or 43% to $4,330 in 1998
          from $7,583 in 1997, while gross margin percentage on product sales
          decreased to 9% in 1998 from 19%


                                       30
<PAGE>


          in 1997. For tomatoes, gross profit decreased $2,797 to a gross loss
          of $144 in 1998 from a gross profit of $2,653 in 1997, while gross
          margin percentage decreased to 0% in 1998 from 12% in 1997 due to the
          abbreviated crop cycles, resulting in production costs being spread
          over lower sales, in the Buffalo and Virginia facilities and growing
          system problems at the Company's Fort Davis, Texas facility which have
          subsequently been corrected. For biological and agricultural products,
          gross profit decreased $456 or to $4,474 in 1998 from $4,930 in 1997,
          while gross margin percentage decreased to 26% in 1998 from 28% in
          1997, due to decreased sales and a shift in product mix towards
          certain typically lower margin product lines.

          The facilities in Buffalo, New York and Virginia recorded $1,567 in
          combined gross losses because the timing of the construction
          completion and startup did not coincide with the optimal cropping
          cycle (seed, plant, grow, harvest) of these facilities during the
          first year of operations. The costs incurred at these facilities were
          naturally spread across lower production and sales due to the
          abbreviated growing cycle and, therefore, significantly lowered gross
          profits of these facilities.

          The timing of the 101 additional acres that started up between January
          and April of 1998 came at a time when market prices were on a seasonal
          decline going into the summer season and the crop cycle was coming to
          an end (to ready greenhouses for the next and normal starting cycle),
          thereby preventing the Company from recovering the up front crop
          expenditures in an abbreviated crop cycle or harvest period. In
          addition, the crop cycle of the Company's 42 acre Virginia greenhouse
          was adversely impacted by the delay of lessor of the facility in
          obtaining the approval of its lenders required for the conversion and
          expansion of the facility. As a result, the Company was not able to
          begin planting in the Virginia greenhouse until late in the growing
          cycle which delayed tomato production beyond the favorable spring
          pricing period. As a result, this facility was unable to produce
          sufficient yield to cover costs. In addition, the Company subsequently
          determined that light levels in Virginia were sufficient to produce
          tomatoes in the winter and thus elected to cut short the already
          abbreviated growing cycle at the Virginia greenhouse and begin a new
          crop that would come into initial harvest in December 1998 when the
          higher winter pricing is available in the marketplace. Also, the
          Buffalo, New York greenhouse had construction delays and was late in
          installing infrastructure and required systems, thereby delaying the
          start of the normal crop cycle and further impacting operating
          performance. These delays increased operating costs during the quarter
          ended June 30, 1998.

          The facility at Fort Davis, Texas experienced significant production
          problems, resulting in lower production, thereby raising costs
          relative to sales. This resulted in the recording of $558 in negative
          gross profit.

          Selling, general and administrative expenses increased $3,457 or 50%
          to $10,336 in 1998 from $6,879 in 1997, primarily due to start-up
          costs attributable to the Company's three


                                       31
<PAGE>


          new greenhouse facilities and the expansion of the Company's sales,
          marketing, finance and greenhouse management operations.

          Research and development expenses decreased $43 or 8% to $465 in 1998
          from $508 in 1997, primarily due to reductions in personnel and
          related costs.

          In June 1997, the Company reversed $300 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
          to satisfy the remaining lease obligation of approximately $1,248 of
          principal and $17 of accrued interest, and returned certain leased
          equipment with a net book value of $308 to the finance company, which
          resulted in a reversal of a restructuring charge of $77 in 1997. The
          Company charged costs and expenses totaling $109 and $273 against the
          restructuring accruals during 1998 and 1997, respectively.

          Operating income decreased $7,044 to an operating loss of $6,471 for
          1998 compared to operating income of $573 for 1997. The decrease in
          operating income resulted from a $3,791 increase of total operating
          expenses in 1998 compared to 1997, in addition to a $3,253 decrease in
          gross profit. The operating loss for 1998 was $6,471, a decrease in
          operating income of $6,667, compared to operating income of $196 for
          1997, when the $377 in restructuring reversals are excluded. Operating
          expenses increased $3,414 or 46% to $10,801 for 1998 compared to
          $7,387 for 1997 when the restructuring reversals are excluded.

          Other income (expense) increased $1,493 or 78% to $3,404 net expense
          in 1998 compared to $1,911 net expense in 1997. The increase in other,
          net was primarily attributable to increased interest expense. Interest
          expense increased by $1,366 reflecting the higher level of debt
          incurred in connection with the development of the new greenhouse
          facilities.

          The Company's net loss increased $4,757 or $0.41 per share basic and
          diluted to a net loss of $4,237 or $0.36 per share basic and diluted
          for 1998 compared to net income of $520 or $0.05 per share basic and
          diluted for 1997. Excluding the $377 reversal of restructuring charges
          in 1997, the net income for 1997 was $143 or $0.01 per share basic and
          diluted.

                            Year Ended June 30, 1997
                      Compared to Year Ended June 30, 1996

          The Company's net revenues increased $15,194 or 62% to $39,862 in 1997
          from $24,668 in 1996 primarily due to increases in tomato sales of
          $10,873, and biological and agricultural product sales of $4,321. The
          following table sets forth the Company's net revenues by market for
          1997 and 1996:

                                                     Years Ended
                                                        June
                                                  1997         1996     Increase
                                                 -------     -------    --------
Tomatoes ...................................     $21,963     $11,090     $10,873
Biological and agricultural products .......      17,899      13,578       4,321
                                                 -------     -------    --------
Consolidated ...............................     $39,862     $24,668     $15,194
                                                 -------     -------    --------


                                       32
<PAGE>


          Net revenues increases for the greenhouse tomato market were primarily
          due to increased capacity. The Company's Fort Davis, Texas and Pocono,
          Pennsylvania facilities (representing 53 acres) became operational in
          1997 and recorded product sales in 1997.

          Product sale increases for the biological and agricultural products
          market were primarily due to increased selling efforts and market
          penetration for its substrate, postharvest equipment and irrigation
          systems product lines.

          Cost of revenues increased $13,676 or 74% to $32,279 in 1997 from
          $18,603 in 1996, primarily due to product sales increases. For
          tomatoes, cost of revenues increased $10,548 or 120% to $19,310 in
          1997 from $8,762 in 1996, primarily due to the growth in production
          during 1997 associated with the two new facilities in Fort Davis,
          Texas and Pocono, Pennsylvania.

          Gross profit on net revenues increased $1,518 or 25% to $7,583 in 1997
          from $6,065 in 1996, while gross margin percentage on product sales
          decreased to 19% in 1997 from 25% in 1996. Gross margin percentage
          decrease was primarily due to startup costs in the greenhouse tomatoes
          segment and a shift in product mix towards typically lower margin
          equipment product sales in the biological and agricultural products
          market, partially offset by increased sales of typically higher margin
          Biologicals, Bio-Blast and Bio-Save.

          Selling, general and administrative expenses increased $485 or 8% to
          $6,879 in 1997 from $6,394 in 1996, primarily due to increases in
          personnel and related costs.

          Research and development expenses decreased $510 or 50% to $508 in
          1997 from $1,018 in 1996, primarily due to reductions in personnel and
          related costs and certain professional fees.

          In June 1997, the Company reversed $300 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
          to satisfy the remaining lease obligation of approximately $1,248 of
          principal and $17 of accrued interest, and returned certain leased
          equipment with a net book value of $308 to the finance company, which
          resulted in a reversal of a restructuring charge of $77 in 1997. In
          1996, the Company reversed $1,550 of accrued restructuring costs that
          related to a termination of a lease for its Worcester corporate
          headquarters and research and development facility.

          Operating income increased $370 to $573 for 1997 compared to an
          operating profit of $203 for 1996. The increase in operating income
          resulted from a $1,518 increase in gross profit, partially offset by
          an increase of $1,148 in total operating expenses in 1997 compared to
          1996. Operating income for 1997 was $196, an increase of $1,543,
          compared to an operating loss of $1,347 for 1996, when the
          restructuring reversals are


                                       33
<PAGE>


          excluded. Operating expenses decreased $25 to $7,387 for 1997 compared
          to $7,412 for 1996 when the restructuring reversals are excluded.

          Other income (expense) increased $1,436 or 302% to $1,911 net expenses
          in 1997 compared to $475 net expense in 1996. The increase was
          primarily attributable to an increase in interest expense of $1,312 or
          215%, resulting primarily from the higher average levels of long-term
          debt and capital lease obligations outstanding during 1997 compared to
          1996.

          In 1996, the Company realized an extraordinary gain on the early
          extinguishment of debt of $241 or $0.02 per share basic and diluted
          with no related income tax effect.

          The Company's net income increased $393 or $0.04 per share basic and
          diluted to net income of $520 or $0.05 per share basic and diluted for
          1997 compared to net income of $127 or $0.01 per share basic and
          diluted for 1996. Excluding amounts for the reversals of accrued
          restructuring costs and extraordinary gain, net income for 1997 was
          $143 or $0.01 per share basic and diluted, a $1,807 or $0.16 per share
          basic and diluted improvement, compared to the net loss of $1,664 or
          $0.15 per share basic and diluted for 1996. The excluded amounts for
          the reversals and extraordinary gain of accrued restructuring costs
          are: (i) for 1997: the $377 reversals of restructuring charges; and
          (ii) for 1996: (a) the $1,550 reversal of accrued restructuring costs,
          and (b) the $241 extraordinary gain on early extinguishment of debt.

          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.

          The Company is experiencing a significant liquidity shortfall
          primarily due to (i) the production start-up issues encountered at and
          crop cycle adjustments of the approximate 127 acres of additional
          greenhouse production capacity in its greenhouse tomato segment during
          1998, discussed above, and (ii) the need to refinance its $21,600
          aggregate principal amount of promissory notes issued to Cogentrix
          that becomes due on June 30, 1999 and its $3,000 line of credit, the
          extended due date of which is April 28, 1999. In addition, the Company
          did not make certain interest and principal payments due to its
          primary lender beginning on October 20, 1998, which constituted
          default, and is in default of financial covenants with its lenders. In
          February 1999, the Company cured its payment defaults with its primary
          lender. The Company has also delayed payments to vendors; however, the
          Company has structured extended terms with certain vendors and has
          substantially paid most other vendors whose payments were delayed.

          Production and sales, and correspondingly, cash flow has improved in
          the first quarter of calendar 1999 and the Company expects these
          improvements to generally continue through 1999. The Company's
          management has been in close contact with major suppliers and its
          lenders, and the parties are working cooperatively together to manage
          this cash flow shortfall. Although the Company's liquidity position is
          currently manageable, the


                                       34
<PAGE>


          cash shortfall will remain until additional capital is raised. The
          Company is, as well, actively seeking the refinancing of its $21,600
          aggregate principal amount of promissory notes and its $3,000
          revolving line of credit related to its agricultural and biological
          products division. If the Company is not successful in refinancing the
          notes, it will seek a further extension of the due date or a
          restructuring of the terms of the notes. The Company has received a
          term sheet from a financial institution in the amount of $4,000 to
          replace its expiring revolving line of credit. The Company believes
          that it will finalize the replacement financing arrangement in April
          or May 1999. No assurance can be given that the Company will be able
          to complete the refinancings, obtain an extension or restructuring of
          the notes or that the Company's creditors will not attempt to enforce
          legal remedies available to them.

          Village Farms International Finance Association ("VFIFA") is a
          non-profit cooperative formed by APD to obtain and provide
          construction, term and working capital financing for its members.
          VFIFA has entered into each of a line of credit agreement (the "Line
          of Credit Agreement"), a term loan agreement (the "Term Loan
          Agreement") and a construction loan agreement (the "Construction Loan
          Agreement") with CoBank, ACB ("CoBank"), as lender and as agent for
          other lenders which may become a party to such agreements
          (collectively, the "VFIFA Loan Agreements"). The VFIFA Loan Agreements
          collectively provide up to $60 million aggregate amount of borrowings
          availability to VFIFA. The proceeds of borrowings under the Loan
          Agreements are loaned by VFIFA to its members and eligible affiliates
          of APD (such loans to be referred to herein as "Underlying Loans" and
          the recipients of such loans to be referred to herein as "Underlying
          Borrowers").

          APD has guaranteed all of VFIFA's obligations under the VFIFA Loan
          Agreements. Advances under the VFIFA Loan Documents are secured by a
          first lien and security interest in all of the assets of VFIFA
          (including the agreements and instruments which evidence the
          Underlying Loans) and APD. APD is in default of a covenant contained
          in the VFIFA Loan Documents which requires it to maintain a 25% ratio
          of equity to long term debt. As a result of this default and the
          payment defaults that were subsequently cured, CoBank has notified the
          Company that until the default is cured, it will not advance funds
          under the VFIFA Loan Agreements.

          Under the terms of the Line of Credit Agreement, CoBank has agreed to
          lend VFIFA up to $13,319 on a revolving basis. Subject to CoBank's
          right to accelerate due to the existing default, borrowings under the
          Line of Credit Agreement become due on September 30, 1999; provided,
          however, that such date will be automatically extended for successive
          12 month periods unless on or before July 31, either CoBank or VFIFA
          elects to terminate the agreement as of the following September 30.

          CoBank has agreed to loan VFIFA up to $46,681 under the Term Loan
          Agreement; provided, however, that CoBank's commitment under the Term
          Loan Agreement is effectively reduced by the amount of borrowings
          outstanding under the Construction Loan Agreement. Subject to CoBank's
          right to accelerate due to the existing default, all borrowings under
          the Term Loan Agreement become due on July 31, 2010.


                                       35
<PAGE>

          CoBank has agreed to make up to $30 million of loans to VFIFA under
          the Construction Loan Agreement. Subject to CoBank's right to
          accelerate due to the existing default, each advance made under the
          Construction Loan Agreement with respect to an Underlying Loan becomes
          due within 16 months from the date of the first advance made with
          respect to such Underlying Loan; provided, however, that the due date
          may be extended for a period of approximately 10 years if a commitment
          to issue permanent financing with respect to the Underlying Loan is
          issued under the Term Loan Agreement but the lenders under the Term
          Loan Agreement refuse to provide such refinancing.

          In the absence of a default, interest on amounts advanced under the
          Line of Credit Agreement accrues at a rate based upon the prime rate.
          Interest on amounts advanced under the Term Loan Agreement and the
          Construction Loan Agreement accrues at a rate based upon the prime
          rate unless VFIFA chooses a "Fixed Rate Option" (which is based upon a
          LIBOR rate) or a "Quoted Rate Option" (which is based upon a rated
          quoted by CoBank). Interest is payable monthly under all of the Loan
          Agreements. Due to the existing defaults under the VFIFA Loan
          Agreements, CoBank has imposed a default rate of interest which is
          equal to 4% above the base rate and notified VFIFA that the option to
          select an alternative interest rate is not currently available.

          The VFIFA Loan Agreements and the documents evidencing the Underlying
          Loans made by VFIFA contain covenants, including, among others,
          covenants which limit the ability of VFIFA, APD and the Underlying
          Borrowers to incur other indebtedness, pay dividends, make
          distributions, sell assets and participate in mergers and other
          acquisition transactions.

          As of January 3, 1999, $13,226 of borrowings were outstanding under
          the Line of Credit Facility, $42,798 of borrowings were outstanding
          under the Term Loan Agreement and $3,421 was outstanding under the
          Construction Loan Agreement.

          In April 1997, the Company and a lender entered into a $3,000
          revolving line of credit agreement (the "Revolving Credit Agreement")
          for its biological and agricultural products division. In the absence
          of a default, funds borrowed under the Revolving Agreement bear
          interest at a rate of prime (7.75% at January 3, 1999) plus 2% and are
          secured by all the assets of the Company and all of the outstanding
          common stock of AGRO owned by the Company. The Revolving Credit
          Agreement imposes a financial covenant on the Company that requires a
          minimum tangible net worth of $750, as defined. The Company is
          currently not in compliance with this covenant. On November 24, 1998,
          the lender notified the Company of its intention to terminate the
          Revolving Credit Agreement on December 28, 1998. The Company and the
          lender have agreed to four extensions which extend the maturity date
          to April 28, 1999. The Company and the lender have agreed to certain
          other modifications of the Revolving Credit Agreement, including a
          reduction of the $1,200 inventory based borrowing limit by $40 each
          week which commenced on January 28, 1999 and an increase in the
          interest rate to prime plus 5%. As of January 3, 1999, approximately
          $2,253 of borrowings were outstanding under the Revolving Credit
          Agreement.


                                       36
<PAGE>


          In January 1999, the Company received a term sheet from an
          institutional lender for a $4,000 revolving line of credit which the
          Company intends to utilize to replace the Revolving Credit Agreement.
          The commitment letter provides that (i) the lender's obligation to
          advance funds will be subject to certain formulas based upon accounts
          receivable and inventory, (ii) interest will accrue at a rate per
          annum equal to the prime rate plus 2.75%, (iii) advances will be
          secured by all of the assets of EcoScience and (iv) the facility will
          have a two year term. The lender's obligation to provide the facility
          is subject to various conditions, including a satisfactory examination
          of the Company and the collateral, the approval of its credit
          committee and the absence of any material change in the condition of
          the Company. No assurance can be given that the Company and the lender
          will be able to finalize the proposed loan facility.

          A limited partnership owned by the Company owes a lender $804 plus
          accrued interest under a loan agreement entered into in connection
          with the acquisition and improvement of a greenhouse facility in
          Pennsylvania. This loan is secured by a mortgage on the greenhouse
          property and a first lien on all assets, excluding certain inventory
          and accounts receivable, of the limited partnership. The limited
          partnership is in default of a net worth covenant contained in the
          loan agreement. As a result, the lender has the right to accelerate
          the limited partnership's obligation to repay the outstanding
          indebtedness which is otherwise required to be repaid in quarterly
          installments during a 15 year period ending in June 2012. With the
          cooperation of the lender, the Company is currently in negotiations to
          sell the greenhouse (which is currently inoperative) and plans to use
          a portion of the proceeds to satisfy the loan made to the limited
          partnership.

          In March 1997, APD borrowed $1,375 from Cogentrix. The note
          representing this loan becomes due on June 2, 2000 and provides for
          quarterly interest and principal payments of $69. Borrowings under the
          note bear interest at the rate of 6% per annum.

          Cash and cash equivalents were $1,095 at January 3, 1999 compared to
          $1,189 at June 30, 1998. Cash used in operating activities totaled
          $6,015 for the period ended January 3, 1999 and principally consisted
          of a net loss of $8,487, minority interest in the net loss of the
          consolidated limited partnerships of $2,255 and an increase in
          inventory of $4,159; partially offset by an increase in accounts
          payable and accrued expenses of $6,094, and depreciation and
          amortization of $2,146. Cash provided by financing activities totaled
          $10,037 for the period ended January 3, 1999, which consisted
          principally of net borrowings under lines of credit of $8,332,
          proceeds from long-term debt of $3,602 and minority interest
          contributions of $1,000 partially offset by payments of long-term debt
          of $2,312, and S Corporation stockholder distributions of $400 (prior
          to the merger, APD was taxed as a S Corporation, which required this
          distribution for payment of related taxes by the APD shareholders).
          Cash used in investment activities for the period ended January 3,
          1999 totaled $4,026, which consisted principally of purchases of
          property and equipment of $4,632, associated with the construction of
          an additional 26 acre greenhouse facility, and a decrease in
          non-current liabilities of $2,548; partially offset by a release of
          restricted cash of $2,500, which partially paid down debt in the
          amount of $1,500. The Company's current liabilities exceeded its
          current assets by $82,661 (which includes $44,756 of senior debt
          classified as current, which otherwise would have been classified as
          long-term had the Company not had certain technical


                                       37
<PAGE>


          defaults under the VFIFA Loan Documents) and its current ratio was
          0.20 to 1, at January 3, 1999 compared to 0.91 to 1, respectively, at
          June 30, 1998.

          Debt and capital leases increased by $30,523 to $85,797 at January 3,
          1999 compared to $55,274 at June 30, 1998. The increase was
          attributable to borrowings under the Company's lines of credit,
          construction loans and the $21,600 of indebtedness in connection with
          the acquisition transaction with Cogentrix.

          The Company believes that its $1,095 of cash and cash equivalents and
          $127 of short-term investments as of January 3, 1999, along with
          revenues from product sales, will be sufficient to fund the Company's
          working capital needs, planned capital expenditures, and to service
          its indebtedness through January 4, 2000, provided that the Company
          can resolve its short term cash flow shortfall by raising additional
          capital and refinance its $21,600 aggregate principal amount of
          promissory notes due on June 30, 1999 and its $3,000 Revolving Credit
          Agreement due April 28, 1999. The Company has engaged a financial
          advisor to assist it in raising additional funds to finance its
          ongoing operations in 1999, current debt obligations and expected
          growth after January 4, 2000. The Company is currently attempting to
          raise debt and/or equity financing. In addition, the Company will
          attempt to restructure the VFIFA loan arrangement. If the Company is
          not successful in refinancing the $21,600 of notes, it will seek an
          extension of the due date or a restructuring of the terms of the
          notes. No assurance can be given that the Company will be able to
          complete the refinancings, restructure the VFIFA loan facility, obtain
          an extension or restructuring of the notes, or that the Company's
          creditors will not attempt to enforce legal remedies available to
          them.

          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, addition of growing capacity,
          cropping cycles, crop production and other economic factors.
          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.

          Year 2000

          The Company has initiated an in-house assessment of Year 2000 ("Y2K")
          issues as they relate to the Company's information technology ("IT")
          and non-IT systems. The Company has completed its assessment of all
          computer hardware. The Company has determined that 95% of the
          Company's hardware is free of Year 2000 problems. The Company
          estimates that the replacement cost of non-compliant computer hardware
          will be approximately $10, which amount is budgeted for the second
          quarter of 1999. The Company expects that all computer hardware will
          be fully compliant by September 1, 1999.

          The Company has identified six software applications critical to the
          Company's operations. All such packages were purchased from
          third-party vendors. Four software


                                       38
<PAGE>


          applications constitute the Company's accounting applications. The
          software vendors for two of these applications have certified the
          packages to be Y2K compliant. The other two applications shall be Y2K
          compliant by the end of the second quarter of 1999. The Company is in
          the process of creating test plans for all accounting applications.
          The Company expects to complete such compliance testing by July 31,
          1999.

          The Company's assessment of software applications relating to
          communications with business partners is 50% complete. All such
          applications assessed to date are Y2K compliant. The Company expects
          to complete its assessment of such applications by the end of the
          second quarter of 1999. The Company's remaining critical software
          applications relate to the operations of the Company's greenhouse
          facilities. The Company is awaiting a Y2K assessment and certification
          from the third-party vendors who maintain such software. Such
          assessment and the resulting certification or maintenance is scheduled
          for completion by the end of the second quarter of 1999.

          In addition to the above-referenced IT systems, the Company is
          currently assessing its non-IT systems including its
          telecommunications and security systems. This assessment of non-IT
          systems is 85% complete. To date, the Company has discovered no Y2K
          problems. The Company expects that all non-IT systems shall be Y2K
          compliant by the end of the second quarter of 1999.

          The Company has contacted all of its critical vendors and customers,
          and has provided each such vendor and customer with a questionnaire
          relating to its respective Y2K compliance. To date, the Company has
          received completed questionnaires relating to approximately 15% of
          such vendors and customers. Vendors or customers that have not
          returned a completed questionnaire will be pursued for a response.
          Upon its receipt of the remaining questionnaires, the Company, with
          appropriate participation by each of its divisions, shall create a Y2K
          contingency plan which will provide for vendor supply and customer
          base adaptations necessitated by Y2K non-compliance by such parties.

          To date, the only anticipated Y2K costs to the Company will relate to
          the replacement of non-compliant computer hardware and upgrades of
          software. The cost of upgrading current software to become Y2K
          compliant is expected to be less than $10. The Company does not expect
          to incur Y2K assessment and compliance costs, as such assessments and
          compliance are performed by Company personnel.

          The Company's primary risks relating to Y2K non-compliance consist of
          its dependence upon computer hardware and software, its highly
          computerized greenhouse facilities, and its dependence upon various
          transportation vendors to move the Company's products to market. As
          discussed previously, the Company believes that the risks associated
          with computer hardware and software will be minimal. The Company's
          potential risks associated with its computerized greenhouse operations
          are extensive. The greenhouse facilities utilize computers to control
          water, sunlight, carbon dioxide and temperature. The costs of
          non-compliant control systems would be considerable. The Company is
          currently working with the vendors of such control systems to assess
          and correct any possible Y2K related problems. The Company expects
          that the costs to the Company of such assessment and correction will
          be minimal, as the Company's vendors are expected to provide any
          necessary Y2K corrections at minimal cost to the Company. Finally, the
          Company's trucking contractors


                                       39
<PAGE>


          are among those surveyed for Y2K compliance. The Company will assess
          the risks associated with noncompliance among those contractors and
          will provide for the use of alternative transportation sources in its
          Y2K contingency plan as necessary.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

          Financial instruments which potentially subject the Company to
          concentration of credit risk consist of 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. The merged entity is subject to a higher level of risk
          of this nature due to the higher level of business activity and a
          higher level of customer concentration.

          The Company is a party to certain loan arrangements which provide for
          variable interest rates. As a result, the Company is subject to
          increases in interest expense resulting from an increase in interest
          rates. The Merger, which changed the Company's debt to equity ratio
          from minor to significant, has increased this risk. The Company, from
          time to time, attempts to manage this risk through the purchase of
          interest rate cap agreements. The Company does not believe that it
          currently faces any material exposure to market risk relating to
          foreign currency exchange risk, commodity price risk or equity price
          risk.

          The Company is subject to a number of risks similar to those of other
          companies in similar stages of development, including but not limited
          to (i) a history of losses, (ii) a need for additional financing,
          (iii) substantial debt, (iv) risks related to defaults under certain
          loan agreements, (v) the markets in which it competes are highly
          competitive, (vi) the share price of its common stock may be volatile,
          (vii) its operations are subject to extensive government regulation,
          (viii) its patent position is uncertain and its success depends, in
          part, on its proprietary rights, (ix) it depends on key personnel, (x)
          its Common Stock may be delisted by NASDAQ, (xi) its operating results
          may fluctuate significantly, (xii) its greenhouse operations may be
          adversely affected by crop disease and pestilence, and the
          perishability of its produce, (xiii) weather and other events could
          effect crop yields and damage greenhouse structures, (xiv) it is
          sensitive to price increases and raw materials, (xv) it depends on
          certain corporate relationships, (xvi) a significant percentage of its
          sales are made to a limited number of customers, (xvii) its directors
          and officers own a significant percentage of its capital stock (xiii)
          unanticipated expenses may be incurred relating to the integration of
          the businesses of the Company and APD as a result of the merger and
          (xiv) a sale of substantial number of shares may adversely impact the
          market price of its common stock. These factors could adversely affect
          future results and shareholder value.

Item 8.   Financial Statements and Supplementary Data

          The Company's consolidated financial statements for the transition
          period ended January 3, 1999 and the six month period ended December


                                       40
<PAGE>


          31, 1997 and the years ended June 30, 1998, 1997 and 1996 are set
          forth on pages F-1 through F-28.

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosures

          Not applicable.

                                    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 to be
          filed with the Securities and Exchange Commission pursuant to
          Regulation 14A (the "Proxy Statement") in connection with the
          Company's 1999 Annual Meeting of Stockholders to be held on May 24,
          1999, 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
          information related thereto is included in the section entitled
          "Security Ownership of Beneficial Owners and Management" contained in
          the Proxy Statement and such information is incorporated herein by
          reference.

Item 13.  Certain Relationships and Related Transactions

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

                                     PART IV

Item 14.  Exhibits, Financial Statements and Reports on Form 8-K


                                       41
<PAGE>

                                                                           Page
                                                                           ----
(a)   1 and 2    Financial statements and schedules:

                 Reference is made to the Index of Financial Statements and
                 Financial Statement Schedules hereinafter contained.......  F-1

            3    Exhibits:

                 Reference is made to the Index of Exhibits hereinafter
                 contained.................................................  E-1

(b)              Reports on Form 8-K:

          (1)    Report dated September 30, 1998,  describing changes
                 in control of  Registrant as a result of issuance of
                 Common Stock  pursuant to the Merger with Agro Power
                 Development, Inc.

          (2)    Report dated December 7, 1998  announcing  execution
                 of Stock Purchase  Agreement with Cogentrix  Energy,
                 Inc.

          (3)    Report dated January 8, 1999  announcing  acquisition
                 of interests in greenhouse  operations from Cogentrix
                 Energy,  Inc.  (as  amended by Form  8-K/A,  filed on
                 March 15, 1999)

          (4)    Report  dated  February  1, 1999  announcing  sale of
                 Post-Harvest Division


                                       42
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing and 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 April 19, 1999.

                                                     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 Registration Statement hereby constitutes and appoints Michael A.
DeGiglio and J. Kevin Cobb, 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 Registration
Statement (including post-effective amendments and amendments thereto) and any
registration statement relating to the same offering as this report, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, 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 Officer (Principal      April 19, 1999
Michael A. DeGiglio          Executive Officer) and Director

/s/ J. Kevin Cobb
------------------------     Senior Vice President and Interm Chief Financial   April 19, 1999
J. Kevin Cobb                Officer (Principal Financial Officer)

/s/ Kurt Hoffman
------------------------     Secretary and Corporate Controller (Principal      April 19, 1999
Kurt Hoffman                 Accounting Officer)

/s/ Thomas A. Montanti
------------------------     Director                                           April 19, 1999
Thomas A. Montanti

/s/ David J. Ryan
------------------------     Director                                           April 19, 1999
David J. Ryan

/s/ Albert W. Vanzeyst
------------------------     Executive Vice President and                       April 19, 1999
Albert W. Vanzeyst           Director

/s/ Heinz K. Wehner
------------------------     Director                                           April 19, 1999
Heinz K. Wehner
</TABLE>

                                       43

<PAGE>



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Public Accountants .................................  F-2

Consolidated Balance Sheets as of January 3, 1999, June 30, 1998
     and 1997 ............................................................  F-3

Consolidated Statements of Operations for the fiscal years ended
     June 30, 1998, 1997, 1996 and the transition periods (see
     Note 2) ended January 3, 1999 and December 31, 1997
     (unaudited) .........................................................  F-4

Consolidated Statements of Stockholders' Equity (Deficit) for the
     fiscal years ended June 30, 1998, 1997 and 1996 and the
     transition period (see Note 2) ended January 3, 1999.................  F-5

Consolidated Statements of Cash Flows for the fiscal years ended
     June 30, 1998, 1997 and 1996 and the transition periods (see
     Note 2) ended January 3, 1999 and December 31, 1997
     (unaudited) .........................................................  F-6

Notes to Consolidated Financial Statements ...............................  F-7



                                       F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the 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 January 3, 1999,
June 30, 1998 and 1997, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the transition period (see
Note 2) ended January 3, 1999 and each of the three years in the period ended
June 30, 1998. 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 January 3, 1999, June 30, 1998 and 1997, and the results of
their operations and their cash flows for the transition period (see Note 2)
ended January 3, 1999 and each of the three years in the period ended June 30,
1998, in conformity with generally accepted accounting principles.

     The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated financial statements, the Company has suffered recurring
losses from operations, an accumulated deficit, negative working capital and was
in default of certain covenants under its various debt agreements. These factors
raise substantial doubt about the ability of the Company to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

                                              ARTHUR ANDERSEN LLP


Roseland, New Jersey
April 2, 1999



                                      F-2
<PAGE>

                     ECOSCIENCE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                           January 3,              June 30,
                                                                                             1999            1998            1997
                                                                                          ---------       ---------       ---------
<S>                                                                                       <C>             <C>             <C>
                                     ASSETS
Current assets:
     Cash and cash equivalents .....................................................      $   1,095       $   1,189       $   3,009
     Restricted cash ...............................................................             --           2,500              --
     Short-term investments ........................................................            127             533             528
     Accounts receivable, less reserves of $551, $660 and $178 at January 3,
       1999, June 30, 1998 and 1997, respectively ..................................          7,271           6,809           3,456
     Assets held for sale ..........................................................          1,911           1,911              --
     Note receivable due from related party ........................................             --           1,838           1,838
     Inventories ...................................................................          9,209           5,050           6,716
     Other current assets ..........................................................          1,212           2,411           1,756
                                                                                          ---------       ---------       ---------
       Total current assets ........................................................         20,825          22,241          17,303
                                                                                          ---------       ---------       ---------
     Property, plant and equipment, net ............................................         65,200          53,136          45,225
     Restricted cash ...............................................................             --              --           3,250
     Intangible assets, net ........................................................         13,550           1,542           1,745
     Other noncurrent assets .......................................................          2,289           2,589           3,069
                                                                                          ---------       ---------       ---------
              Total assets .........................................................      $ 101,864       $  79,508       $  70,592
                                                                                          =========       =========       =========
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
     Short-term borrowings .........................................................      $  37,080       $   7,148       $   3,950
     Current maturities of long-term debt ..........................................         47,557           5,043           3,878
     Current obligations under capital leases ......................................             42              55              59
     Accounts payable ..............................................................         11,102           5,080           3,916
     Accrued expenses and other current liabilities ................................          7,705           7,118           3,719
                                                                                          ---------       ---------       ---------
       Total current liabilities ...................................................        103,486          24,444          15,522
                                                                                          ---------       ---------       ---------
Noncurrent liabilities:
     Long-term debt, less current maturities .......................................            780          42,648          35,190
     Obligations under capital leases ..............................................            338             380             406
     Other long-term liabilities ...................................................          1,689           4,387           3,313
                                                                                          ---------       ---------       ---------
       Total noncurrent liabilities ................................................          2,807          47,415          38,909
                                                                                          ---------       ---------       ---------
Minority interest in limited partnerships ..........................................            665           7,767          12,115
Commitments and contingencies 
Stockholders' equity (deficit):
     Preferred stock, $0.01 par value, 10,000,000 shares authorized; none
       issued and outstanding ......................................................             --              --              --
     Common stock, $0.01 par value, 100,000,000 shares authorized;
       12,619,278, 11,618,178 and 11,600,722 shares issued and outstanding
       at January 3, 1999, June 30, 1998 and 1997, respectively ....................            126             116             116
Additional paid-in capital .........................................................         55,574          57,509          57,426
Accumulated deficit ................................................................        (60,706)        (57,749)        (53,496)
Accumulated other comprehensive income (loss) ......................................            (88)              6              --
                                                                                          ---------       ---------       ---------
       Total stockholders' equity (deficit) ........................................         (5,094)           (118)          4,046
                                                                                          ---------       ---------       ---------
              Total liabilities and stockholders' equity (deficit) .................      $ 101,864       $  79,508       $  70,592
                                                                                          =========       =========       =========
</TABLE>

              The accompanying notes are an integral part of these
                          consolidated balance sheets.


                                      F-3
<PAGE>

                     ECOSCIENCE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                      Transition Period                    Years Ended
                                                                     (see Note 2) Ended                      June 30,
                                                                   ----------------------      ------------------------------------
                                                                               (Unaudited)
                                                                   January 3,  December 31,
                                                                     1999          1997          1998          1997           1996
                                                                   --------      --------      --------      --------      --------
<S>                                                                <C>           <C>           <C>           <C>           <C>
Net revenues .................................................     $ 26,194      $ 17,835      $ 46,177      $ 39,862      $ 24,668
Cost of revenues .............................................       25,237        14,675        41,847        32,279        18,603
                                                                   --------      --------      --------      --------      --------
Gross profit .................................................          957         3,160         4,330         7,583         6,065
                                                                   --------      --------      --------      --------      --------
Operating expenses:
     Selling, general and administrative .....................        8,307         3,987        10,336         6,879         6,394
     Research and development ................................          239           202           465           508         1,018
     Asset valuation and restructuring reversal ..............           --            --            --          (377)       (1,550)
                                                                   --------      --------      --------      --------      --------
       Total operating expenses ..............................        8,546         4,189        10,801         7,010         5,862
                                                                   --------      --------      --------      --------      --------
Operating (loss) income ......................................       (7,589)       (1,029)       (6,471)          573           203
                                                                   --------      --------      --------      --------      --------
Other income (expense):
     Interest, net ...........................................       (2,928)         (841)       (3,289)       (1,923)         (611)
     Other, net ..............................................         (158)         (100)         (115)           12           136
                                                                   --------      --------      --------      --------      --------
       Total other expense ...................................       (3,086)         (941)       (3,404)       (1,911)         (475)
                                                                   --------      --------      --------      --------      --------
Loss before taxes, minority interest and extraordinary
     item ....................................................      (10,675)       (1,970)       (9,875)       (1,338)         (272)
Provision for income taxes ...................................           67            21            21            78           116
                                                                   --------      --------      --------      --------      --------
Loss before minority interest and extraordinary item .........      (10,742)       (1,991)       (9,896)       (1,416)         (388)
Minority interest ............................................        2,255         1,311         5,659         1,936           274
                                                                   --------      --------      --------      --------      --------
(Loss) income before extraordinary item ......................       (8,487)         (680)       (4,237)          520          (114)
                                                                   --------      --------      --------      --------      --------
Extraordinary item ...........................................           --            --            --            --           241
                                                                   --------      --------      --------      --------      --------
Net (loss) income ............................................     ($ 8,487)     ($   680)     ($ 4,237)     $    520      $    127
                                                                   ========      ========      ========      ========      ========
(Loss) earnings per share

Basic
     (Loss) income before extraordinary item .................     ($  0.73)     ($  0.06)     ($  0.36)     $   0.05      ($  0.01)
     Extraordinary item ......................................           --            --            --            --          0.02
                                                                   --------      --------      --------      --------      --------
     Net (loss) income .......................................     ($  0.73)     ($  0.06)     ($  0.36)     $   0.05      $   0.01
                                                                   ========      ========      ========      ========      ========
     Weighted average basic shares outstanding ...............       11,641        11,605        11,619        11,548        11,334
                                                                   ========      ========      ========      ========      ========
Diluted
     (Loss) income before extraordinary item .................     ($  0.73)     ($  0.06)     ($  0.36)     $   0.05      ($  0.01)
     Extraordinary item ......................................           --            --            --            --          0.02
                                                                   --------      --------      --------      --------      --------
     Net (loss) income .......................................     ($  0.73)     ($  0.06)     ($  0.36)     $   0.05      $   0.01
                                                                   ========      ========      ========      ========      ========
     Weighted average diluted shares outstanding .............       11,641        11,605        11,619        11,583        11,381
                                                                   ========      ========      ========      ========      ========
</TABLE>


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


                                      F-4
<PAGE>

                     ECOSCIENCE CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                       Common Stock
                                  -----------------------                                  Accumulated       Total
                                                             Additional                      Other       Stockholders'
                                  Number of     $0.01 Par     Paid-in       Accumulated   Comprehensive     Equity     Comprehensive
                                   Shares         Value       Capital         Deficit     Income (loss)    (deficit)   Income (loss)
                                 ----------    ----------    ----------     ----------     ----------     ----------   ------------
<S>                              <C>           <C>           <C>            <C>            <C>            <C>            <C>
Balance at June 30, 1995 ....    11,288,589    $      113    $   55,768     ($  53,189)    ($      67)    $    2,625     $       --
Exercise of stock options ...           333            --             5             --             --              5             --
Issuance of common stock in
  settlement of WBDC lease ..       100,000             1           499             --             --            500             --
Unrealized gain on short-term
  investments ...............            --            --            --             --             67             67             67
S Corp Distributions ........            --            --            --           (314)            --           (314)            --
Net income ..................            --            --            --            127             --            127            127
                                 ----------    ----------    ----------     ----------     ----------     ----------     ----------
Balance at June 30, 1996 ....    11,388,922           114        56,272        (53,376)            --          3,010            194
                                                                                                                         ==========
Exercise of stock options ...         3,800            --            17             --             --             17             --
Issuance of common stock ....       208,000             2         1,137             --             --          1,139             --
S Corp Distributions ........            --            --            --           (640)            --           (640)            --
Net income ..................            --            --            --            520             --            520            520
                                 ----------    ----------    ----------     ----------     ----------     ----------     ----------
Balance at June 30, 1997 ....    11,600,722           116        57,426        (53,496)            --          4,046            520
                                                                                                                         ==========
Exercise of stock options ...        17,456            --            83             --             --             83             --
Unrealized gain on short-term
  investments ...............            --            --            --             --              6              6              6
Pooling adjustment ..........            --            --            --            314             --            314             --
S Corp Distributions ........            --            --            --           (330)            --           (330)            --
Net loss ....................            --            --            --         (4,237)            --         (4,237)        (4,237)
                                 ----------    ----------    ----------     ----------     ----------     ----------     ----------
Balance at June 30, 1998 ....    11,618,178           116        57,509        (57,749)             6           (118)        (4,231)
                                                                                                                         ==========
Exercise of stock options ...         1,100            --             5             --             --              5             --
Unrealized loss on short-term
  investments ...............            --            --            --             --             (4)            (4)            (4)
Cumulative translation
  adjustments ...............            --            --            --             --            (90)           (90)           (90)
S Corp conversion ...........            --            --        (5,930)         5,930             --             --             --
S Corp Distributions ........            --            --            --           (400)            --           (400)            --
Issuance of common stock ....     1,000,000            10         3,990             --             --          4,000             --
Net loss ....................            --            --            --         (8,487)            --         (8,487)        (8,487)
                                 ----------    ----------    ----------     ----------     ----------     ----------     ----------
Balance at January 3, 1999 ..    12,619,278    $      126    $   55,574        (60,706)    ($      88)    ($   5,094)    ($   8,581)
                                 ==========    ==========    ==========        =======     ==========     ==========     ==========
</TABLE>


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


                                      F-5
<PAGE>

                     ECOSCIENCE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                      Transition Period
                                                                     (See Note 2) Ended                Years Ended June 30,
                                                                   ----------------------      ------------------------------------
                                                                               (Unaudited)
                                                                  January 3,   December 31,
                                                                     1999          1997          1998          1997          1996
                                                                   --------      --------      --------      --------      --------
<S>                                                                <C>           <C>           <C>           <C>           <C>
Cash flows from operating activities:
     Net (loss) income .......................................     ($ 8,487)     ($   680)     ($ 4,237)     $    520      $    127
     Adjustments to reconcile net (loss) income to net
       cash used in by operating activities:
         Extraordinary Item ..................................           --            --            --            --          (241)
         Depreciation and amortization .......................        2,146         1,301         3,223         1,906           863
         Minority interest in limited partnership ............       (2,255)       (1,311)       (5,659)       (1,935)         (274)
         (Gain) loss on sale of investments ..................           (6)           --            --            (2)           58
         Loss (Gain) on sale of property, plant and
           equipment .........................................            1            (3)           (3)           --           (74)
         Gain on settlement of accounts payable ..............           --            --            --            --           (51)
         Reversal of restructuring charge ....................           --            --            --          (377)       (1,550)
         Changes in current assets and liabilities:
             Accounts receivable, net ........................         (462)         (917)       (2,818)       (1,002)         (488)
             Inventories .....................................       (4,159)       (3,704)       (1,987)       (2,427)       (2,216)
             Other current assets ............................        1,008        (1,015)       (1,040)         (553)         (598)
             Other ...........................................          105             3            73           (30)           (7)
             Accounts payable and accrued expenses ...........        6,094           908         5,015         1,081           831
                                                                   --------      --------      --------      --------      --------
         Net cash used in operating activities ...............       (6,015)       (5,418)       (7,433)       (2,819)       (3,620)
                                                                   --------      --------      --------      --------      --------
Cash flows from investing activities:
     Purchases of property, plant and equipment ..............       (4,632)      (14,306)      (26,099)      (28,244)      (17,499)
     Proceeds from sale of property, plant and equipment .....            2           343           628            50           368
     Purchases of short-term investments .....................           --            --            --          (503)           --
     Proceeds from sale of short-term investments ............          409            --            --           677         6,079
     Changes in restricted cash ..............................        2,500            --           750           455        (3,205)
     Decrease (increase) in other noncurrent assets ..........          243          (356)         (141)         (268)          (80)
     Decrease in other noncurrent liabilities ................       (2,548)       (4,606)       (3,532)           --            --
     Decrease (increase) in loan receivable ..................           --          (643)         (643)       (1,538)          131
     Proceeds from long-term construction liabilities ........           --            --            --           801         1,645
                                                                   --------      --------      --------      --------      --------
         Net cash used in investing activities ...............       (4,026)      (19,568)      (29,037)      (28,570)      (12,561)
                                                                   --------      --------      --------      --------      --------
Cash flows from financing activities:
     Issuance of common stock ................................           --            --            --         1,139             4
     Proceeds from exercise of stock options .................            5            83            83            17             1
     Debt issue costs ........................................         (134)         (601)         (601)       (1,507)       (1,012)
     Minority interest contribution ..........................        1,000         2,741         2,741         9,667         4,657
     Cash dividends ..........................................         (400)         (220)         (330)         (640)         (314)
     Proceeds from long-term debt ............................        3,602        14,306        24,299        28,123        16,239
     Net borrowings under line of credit .....................        8,332         5,394         7,148         2,045         1,905
     Payments on capital leases ..............................          (56)          (24)          (54)          (46)          (25)
     Payments on long-term debt ..............................       (2,312)       (3,849)       (5,225)       (6,146)       (4,294)
                                                                   --------      --------      --------      --------      --------
       Net cash provided by financing
           activities ........................................       10,037        17,830        28,061        32,652        17,161
                                                                   --------      --------      --------      --------      --------
     Effects of exchange rates on cash balances ..............          (90)           --            --            --            --
                                                                   --------      --------      --------      --------      --------
Net change in cash and cash equivalents ......................          (94)       (7,156)       (8,409)        1,263           980
Cash and cash equivalents at beginning of period .............        1,189      $  9,598      $  9,598         1,746           766
                                                                   ========      ========      ========      ========      ========
Cash and cash equivalents at end of period ...................     $  1,095      $  2,442      $  1,189      $  3,009      $  1,746
                                                                   ========      ========      ========      ========      ========
</TABLE>

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


                                      F-6
<PAGE>

                     ECOSCIENCE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        (in thousands, except share data)

1.   OPERATIONS

     EcoScience Corporation ("EcoScience") and its wholly owned subsidiaries
(collectively, the "Company"), Agro Power Development, Inc. and its subsidiaries
and consolidated limited partnerships (collectively "APD"), Agro Dynamics, Inc.
and Agro Dynamics Canada Inc. (collectively, "AGRO") and EcoScience Produce
Systems Corp. ("EPSC") are primarily engaged in the production, marketing and
sale of premium grade tomatoes grown in intensive greenhouse facilities. In
addition, the Company markets, sells, develops and commercializes products for
the agricultural and biological industries.

     The Company derives most of its revenues from the sale of: (i) greenhouse
tomatoes to retail supermarkets and dedicated fresh food distribution companies;
(ii) growing medium products and computerized environmental and irrigation
control systems to the intensive farming and horticulture industries; and (iii)
postharvest coating products to the fresh fruit market throughout the western
hemisphere. Prior to the sale of the Company's postharvest equipment division to
Aweta, B.V., in February 1999 (see Note 14), the Company had also derived
revenues from the sale of sorting, grading and packing systems to the produce
packing industry.

     In 1988, EcoScience began full scale research and development operations,
which continued through its fiscal year ended June 30, 1996. The Company
incurred in excess of $30,000 in research and development costs during this
phase of its growth and development. During fiscal 1994 and 1995, the Company
incurred approximately $12,000 in restructuring charges to transition the
Company from research and development to a commercial operation. This was
enhanced through the beginning of greenhouse operations in 1994 by APD and the
acquisitions of AGRO in November 1992 and EPSC in May 1994. In addition, the
Company has also funded the construction and initial start-up operations of
approximately 180 acres of greenhouse production capacity since mid-1996.
EcoScience and APD completed a merger on September 30, 1998 (see Note 3), which
resulted in approximately $1,500 in transaction costs. The above activities have
been principally funded by the Company's initial private capitalization, public
equity offerings in February 1992 and December 1993 and the combined $60,000
credit facility discussed in Note 10.

     As a result of the above, the Company has suffered significant recurring
losses resulting in an accumulated deficit of $60,706 as of January 3, 1999. The
Company is in violation of certain covenants under various debt agreements as of
January 3, 1999, which has resulted in approximately $44,756 of debt being
classified as current in the accompanying January 3, 1999 balance sheet which
otherwise would have been classified as long-term. See Note 10 for further
information regarding the Company's various defaults. This along with the note
issued on December 30, 1998, in connection with the acquisition of certain
minority interests in consolidated limited partnerships (see Note 4), has
resulted in significant negative working


                                      F-7
<PAGE>

capital; however, the Company's greenhouse operations are now believed by
management to be approaching their optimal cropping cycles for the first time
since the large 180 acreage expansion that began in mid-1996, with the exception
of Village Farms of Presidio, L.P. ("VFP") (see Note 2a). Management's plan is
focused on improving the gross profit of all greenhouse operations as a result
of greater production volumes, sizing and efficiency through a full cropping
cycle at each greenhouse facility.

     The Company believes that its $1,095 of cash and cash equivalents and $127
of short-term investments as of January 3, 1999, along with revenues from
product sales, will be sufficient to fund the Company's working capital needs,
planned capital expenditures, current acquisitions and to service its
indebtedness through January 4, 2000, provided that the Company can resolve its
near term cash flow problems by raising additional capital and refinance its
$21,600 aggregate principal amount of promissory notes issued on December 30,
1998 and March 15, 1999 that are due on June 30, 1999, restructure its $60
million credit facility and refinance its $3,000 line of credit, for which the
due date is April 28, 1999. The Company has engaged a financial advisor, who is
assisting in the raising of additional funds to finance its ongoing operations
during 1999 and expected growth after January 4, 2000. There can be no
assurances that such efforts will be successful or that additional debt or
equity financing can be obtained to meet working capital needs. These factors
raise substantial doubt about the ability of the Company to continue as a going
concern.

     The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of
EcoScience and its wholly owned subsidiaries, APD, AGRO and EPSC.

     Through December 30, 1998, the Company consolidated four 50% owned limited
partnerships due to the direction of power and control exerted by the Company's
management in the normal course of business over the daily operations of Village
Farms of Texas, L.P. ("VFT"), Pocono Village Farms, L.P. ("PVF"), Village Farms
of Marfa, L.P. ("VFM") and Village Farms of Buffalo, L.P. ("VFB"). The remaining
minority interests in these four limited partnerships were purchased from
Cogentrix Delaware Holdings, Inc. ("Cogentrix") on December 30, 1998 (see Note
4).

     On August 31, 1998, the Company entered into an agreement with two
wholly-owned subsidiaries of Agro Rent B.V. ("Agro Rent") to form a limited
partnership in Presidio County, Texas (the "VFP Agreement"). The purpose of the
VFP Agreement was to develop and operate a 41 acre greenhouse for the purpose of
producing and selling peppers. Due to the inability to attain the desired level
of financing only 26 acres of the greenhouse has been constructed. The VFP
Agreement defined the Company and Agro Rent as approximate 86% and 14% owners,
respectively. Therefore, the 86% interest in VFP is included in the accompanying
consolidated financial statements. All material intercompany transactions and
balances have been eliminated in consolidation.


                                      F-8
<PAGE>

     (b)  Fiscal Year-End and Transition Period

     The Company has elected to change its fiscal year-end from the twelve month
period ended June 30 to a 52-53 week fiscal year. The year-end date of such
fiscal year shall be on the Sunday nearest December 31 of each year. The audited
transition period financial statements will be as of January 3, 1999 and for the
period from July 1, 1998 through January 3, 1999 (the "transition period").

     The unaudited consolidated financial information included herein for the
six months ended December 31, 1997 have been included for comparative purposes
to the audited transition period and have been prepared in accordance with
generally accepted accounting principles for interim financial statements. In
the opinion of the Company, these unaudited consolidated financial statements
reflect all adjustments necessary, consisting of normal recurring adjustments,
for a fair presentation of such data on a basis consistent with that of the
audited data presented herein.

     (c)  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 liabilities, 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.

     (d)  Cash and Cash Equivalents and Short-Term Investments

     Cash and 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.

     Cash and cash equivalents consist of cash and highly liquid money market
funds, the balance of which was $1,095, $1,189 and $3,009 at January 3, 1999,
and June 30, 1998 and 1997, 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 $127, $533 and $528 at January 3, 1999,
and June 30, 1998 and 1997, respectively.

     (e)  Restricted Cash

     The Company had restricted cash of $2,500 and $3,250 at June 30, 1998 and
1997, respectively. The amounts were held as collateral for certain outstanding
debt. (See Notes 5 and 10).

     (f)  Inventories


                                      F-9
<PAGE>

                                         January 3,              June 30,
                                          ------          ----------------------
                                           1999            1998            1997
                                          ------          ------          ------
Raw materials ..................          $   77          $   74          $   17
Crop inventory .................           6,582           2,724           4,776
Finished goods .................           2,550           2,252           1,923
                                          ------          ------          ------
                                          $9,209          $5,050          $6,716
                                          ======          ======          ======

     Crop inventories represent direct and indirect production costs incurred
before harvesting the annual tomato and growing crops. Growing crops are valued
at the lower of cost or estimated market. Finished goods inventories include
material, labor and overhead. Raw materials and finished goods are stated at the
lower of first-in, first-out ("FIFO") cost or market.

     (g) Property, plant and equipment.

     Property, pant and equipment are stated at cost. The Company provides for
depreciation and amortization using the straight-line method by charges to
operations in amounts estimated to allocate the cost of these assets over their
useful lives as follows:

         Classification                                 Estimated Useful Life
         --------------                                 ---------------------

         Land........................................             --
         Land improvements...........................         5-20 years
         Greenhouses.................................          20 years
         Greenhouse improvements.....................        10-20 years
         Greenhouse equipment........................         5-10 years
         Computer and office equipment...............         5-7 years
         Laboratory equipment........................          5 years

     Leasehold improvements and assets held under capital leases 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. The amortization for
distribution agreements is on a straight line basis over five years. On December
30, 1998, the Company acquired the minority interests in certain limited
partnerships. The goodwill resulting from this transaction was $12,058 (see Note
4).

     Goodwill, net of accumulated amortization, was $13,550, $1,542 and $1,745
at January 3, 1999, June 30, 1998 and 1997, respectively. The accumulated
amortization of goodwill and other intangible assets totaled $509, $459, and
$823 at January 3, 1999, June 30, 1998 and 1997, respectively. Amortization of
goodwill and other intangible assets included in the accompanying consolidated
statements of operations was $50, $136, $204 and $204 in the transition period
ended January 3, 1999 and fiscal years 1998, 1997 and 1996, respectively.

     (i)  Revenue Recognition


                                      F-10


<PAGE>


<PAGE>

     Revenue from tomato product sales is recognized upon shipment by the
Company. Certain equipment sales are recognized upon installation and include
certain warranty provisions.

     (j)  Research and Development Expenses

     The Company charges research and development expenses to operations as
incurred. Expenses incurred by EcoScience under third party funded research and
development programs totaled approximately $43, $53, $7, and $0 in transition
period ended January 3, 1999 and fiscal years 1998, 1997 and 1996, respectively.
Expenses incurred under Company funded research and development programs totaled
approximately $196, $412, $501 and $1,018 in the transition period ended January
3, 1999 and fiscal years 1998, 1997 and 1996.

     (k)  Foreign Currency Translation

     The assets and liabilities of the Company's Canadian subsidiary are
translated into U.S. dollars at current exchange rates and the related revenue
and expense items are translated at average annual exchange rates. The aggregate
effect of translation losses is reflected as a component of accumulated other
comprehensive loss in the accompanying financial statements until the sale or
liquidation of the underlying foreign investment.

     (l)  Earnings (Loss) Per Share

     The Company has adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share," which requires presentation of both basic and diluted
earnings per share in the Consolidated Statement of Operations. Basic earnings
per share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share gives effect to all potentially dilutive
common shares that were outstanding during the period.

     The following table sets forth a reconciliation of weighted average common
shares outstanding to the weighted average common shares assuming dilution:

<TABLE>
<CAPTION>
                                                  Transition
                                                 Period Ended
                                                  January 3,        Years ended June 30,
                                                 ------------  ----------------------------
                                                      1999      1998       1997       1996
                                                    ------     ------     ------     ------
<S>                                                 <C>        <C>        <C>        <C>
Weighted average common shares outstanding ....     11,641     11,619     11,548     11,334
Dilutive effect of common shares
     issuable (1) .............................         --         --         35         47
                                                    ------     ------     ------     ------
Weighted average common shares outstanding
     assuming dilution ........................     11,641     11,619     11,583     11,381
                                                    ======     ======     ======     ======
</TABLE>

(1) Issuable under common stock purchase warrants and stock option plans.

     Common stock purchase warrants and stock options at January 3, 1999, June
30, 1998, 1997 and 1996 to purchase 259,209, 281,491, 185,673 and 119,829
shares, respectively, of common stock were not included in the computation of
earnings per common share assuming dilution because their effect would be
anti-dilutive.


                                      F-11
<PAGE>

     (m)  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. See Note 10 for the estimated fair value
of certain debt agreements.

     (n)  Supplemental Cash Flow Information

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

<TABLE>
<CAPTION>
                                                                     Transition
                                                                    Period Ended
                                                                     January 3,                     Years ended June 30,
                                                                    ------------        -------------------------------------------
                                                                        1999              1998             1997              1996
                                                                      --------          --------         --------          --------
<S>                                                                   <C>               <C>              <C>               <C>
Cash paid for:
     Interest ...............................................         $  1,828          $  3,320         $  2,761          $  1,004
     Income taxes ...........................................                2                 5              175                73

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
     Assets acquired under capital leases ...................               --               319              451                --
     Interest capitalized ...................................              165               384              384               285
     Acquisition of minority interests ......................          (26,921)               --               --                --
     Cancellation of notes and related
       interest, net ........................................            1,321                --               --                --
     Issuance of acquisition notes payable ..................           21,600                --               --                --
     Issuance of common stock ...............................            4,000                --               --                --
</TABLE>

     (o)  Long-Lived Assets

     The Company has adopted Financial Accounting Standards Board ("FASB")
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"). SFAS 121 requires, among other things, that an entity review its
long lived assets and certain related intangibles for impairment from changes in
circumstances that would indicate the carrying amount of an asset may not be
fully recoverable. As a result of its review during the transition period, the
Company does not believe any impairment exists in the recoverability of its long
lived assets.

     (p)  Stock Based Compensation


                                      F-12
<PAGE>

     The Company has adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123"), which encourages, but does not require, an entity to
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 12).

     (q)  Income Taxes

     The Company accounts for income taxes under the provisions of SFAS 109,
"Accounting for Income Taxes". This statement requires the Company to recognize
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. Under this method, deferred tax assets and liabilities are determined
based on the estimated future tax effects of differences between the financial
statements, carrying amounts and the tax basis of assets and liabilities at
currently enacted tax laws and rates. Prior to the merger on September 30, 1998,
APD elected, by consent of their stockholders, to be treated under the
provisions of Subchapter S of the Internal Revenue Code, Section 1372. Under
such provisions, earnings and losses of APD were passed through to the
stockholders in proportion to their ownership interest and reported on their
individual income tax returns. Accordingly, no provision for Federal income
taxes had been made in the APD financial statements. All distributions paid to
stockholders through September 30, 1998 were paid in part to fund Federal and
state income tax obligations of the stockholders arising from the income
generated by APD (see Note 13).

     (r)  Accumulated Other Comprehensive Income (Loss)

     In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive Income,"
which establishes standards for reporting and presenting information on
comprehensive income and its components in annual and interim financial
statements. The Company adopted SFAS 130 as of July 1, 1998. Comprehensive
income (loss) includes net income, unrealized gains on available-for-sale
securities and foreign currency translation adjustments. The Company has
disclosed comprehensive income (loss) in the Consolidated Statement of
Stockholders' Equity (Deficit).

     (s)  Reclassifications

     Certain amounts in the previous years consolidated financial statements
have been reclassified to conform to the transition period presentations.

3.   MERGER WITH AGRO POWER DEVELOPMENT, INC.

     On September 30, 1998, the Company issued 9,421,487 shares of the Company's
common stock, $0.01 par value, to the holders of the common stock of APD, a
privately held corporation, pursuant to an Agreement and Plan of Merger, in
which APD was merged with and into a newly formed, wholly owned subsidiary of
the Company (the "Merger"). The


                                      F-13
<PAGE>

stockholders of APD received 30,619.067 shares of the Company's common stock for
each outstanding share of common stock of APD. In addition, on September 30,
1998, the Company issued 99,000 shares of common stock to certain stockholders
of APD for their entire 50% interest in Village Farms of Morocco, S.A., a
Moroccan company, as provided for in the Agreement and Plan of Merger. After the
Merger, the stockholders of APD owned approximately 80% of the outstanding
shares of the Company, on a fully diluted basis.

     The merger has been accounted for as a pooling of interests. Accordingly,
the consolidated financial statements give retroactive effect to the merger with
APD, accounted for as a pooling of interests, as if the merger had occurred at
the beginning of the earliest period presented.

     The effective date of the merger, September 30, 1998, was during the
transition period ended on January 3, 1999. The following table summarizes the
results of operations of EcoScience and APD on a separate company basis for the
period (July 1, 1998-September 30, 1998) before the combination was consummated
that is included within the consolidated statement of operations for the
transition period ended January 3, 1999.

                                                 (Unaudited)
                                       EcoScience             APD
                                       -------------        ------
Net revenues...........................  $6,028  (1)        $4,557
                                         ======             ======
Net loss............................... ($1,088) (1)       ($2,593)
                                         ======             ======
S Corporation distributions............  N/A                  $400
                                                            ======

(1)  The net revenues and net loss amounts for EcoScience above include
     transactions with APD during the period that resulted in approximately
     $1,877 in net revenues and $211 in gross profit, respectively.

     The following sets forth the reconciliations of net revenue and net income
(loss) previously reported by the Company to the combined amounts presented in
the accompanying historical consolidated statements of operations:

                                                Years Ended June 30,
                                       1998             1997             1996
                                     --------         --------         --------
Net revenues:
   EcoScience ...............        $ 22,317         $ 20,853         $ 14,151
   APD ......................          28,871           21,963           11,090
Eliminations ................          (5,011)          (2,954)            (573)
                                     --------         --------         --------
   Total ....................        $ 46,177         $ 39,862         $ 24,668
================================================================================
Net (loss) income:
   EcoScience ...............        ($   967)        $    385         ($   587)
   APD ......................          (3,010)             356              734
Eliminations ................            (260)            (221)             (20)
                                     --------         --------         --------
   Total ....................        ($ 4,237)        $    520         $    127
================================================================================

     On September 30, 1998, APD's S Corporation tax status was terminated as it
became a wholly-owned subsidiary of a C Corporation. The accumulated deficit of
$5,930 on the merger


                                      F-14
<PAGE>

date was reclassified to additional paid-in-capital in the accompanying
consolidated statement of stockholders' equity (deficit).

     The Company incurred approximately $1,500 of transaction costs in
connection with the merger, which were charged to operations during the
transition period.

     The financial statements, for periods prior to the September 30, 1998
merger are reported using EcoScience's historical financial reporting periods.
EcoScience's historical financial statements are presented for the years ended
June 30, 1998, 1997 and 1996. In addition, since APD's historical fiscal year,
for periods prior to the September 30, 1998 merger, ended on the Sunday nearest
December 31, the accompanying June 30, 1998 financial statements required APD to
recast its 1998 historical financial statements to conform to and be combined
with EcoScience's fiscal year ended June 30, 1998. The APD financial data
combined into the accompanying financial statements for the years ended June 30,
1997 and 1996 represent the historical financial statements for APD for the 52
week periods ended December 28, 1997 and December 29, 1996, respectively.

     Due to the periods being combined, the 26 week period ended December 28,
1997 for APD is included in the combined financial statements for both periods
ended June 30, 1998 and 1997. Revenues for the 26 week period ended December 28,
1997 totaled $8,656 and both loss before extraordinary item, of which there were
none, and net loss amounted to $94. S Corporation distributions of $220, which
occurred during the 26 week period ended December 28, 1997, were included for
both periods ended June 30, 1998 and 1997. Accordingly, the accompanying
consolidated statements of Stockholders' Equity (Deficit) for the year ended
June 30, 1998, reflects a $314 pooling adjustment to the accumulated deficit to
reverse the impact of including this historical activity twice.

4.   ACQUISITION

     On December 30, 1998, the Company acquired, through the acquisition of four
entities, the Cogentrix minority interests in certain investments of APD that
operate four of the Company's greenhouse operations. The purchase price of the
minority interests consisted of 1,000,000 shares of EcoScience common stock
valued at $4.00 per share, the market value at the time of the acquisition, and
a $20,600 note bearing interest at a rate of 11.25% per annum, which was
originally due and payable on March 15, 1999. On March 12, 1999, Cogentrix
agreed to extend the maturity date of the note to June 30, 1999. In connection
with the extension, the Company issued Cogentrix an additional note in the
principal amount of $1,000 which has terms similar to the original note and
becomes due on June 30, 1999. The notes are secured by all of the outstanding
capital stock of APD and the Acquired Companies. EcoScience is currently seeking
additional debt and equity financing to fulfill this obligation. If the Company
is not successful in refinancing the $21,600 aggregate principal amount of
notes, it will seek an extension of the due date or a restructuring of the terms
of the notes. There can be no assurances that EcoScience will be successful in
these efforts.

     As a condition to the acquisition, EcoScience agreed to register the
1,000,000 shares of common stock for public sale. In the event the stock is not
registered by June 15, 1999, EcoScience may be required, at the election of
Cogentrix, to repurchase the 1,000,000 shares


                                      F-15
<PAGE>

from Cogentrix at a price equal to the greater of $4.00 or the market price the
day prior to the repurchase demand, as provided.

     Additional consideration given in the transaction is as follows: (i)
termination of an option agreement with Cogentrix, pursuant to which APD granted
to Cogentrix certain rights to participate in future projects involving the
development, acquisition, owning of or operating by APD of any greenhouse
facility at which fruit or vegetables are to be grown, as defined; (ii)
Cogentrix assigned and contributed its note receivable of $643 along with its
accrued interest ($65), due from APD to Cogentrix Greenhouse Investment, Inc.
(one of the entities acquired) and (iii) one of the greenhouse limited
partnerships cancelled its note receivable due from Cogentrix in the amount of
$1,838, along with its accrued interest ($191). Following the cancellation and
the acquisition of the minority interests by EcoScience, Cogentrix Greenhouse
Investment, Inc. issued a promissory note payable to that greenhouse limited
partnership in the same amount. The Company has estimated $325 in transaction
costs will be incurred in connection with this acquisition.

     The financial statements reflect the preliminary allocation of the $27,246
purchase price, which includes a $9,340 fair value increase of certain minority
interest assets acquired. The allocation has not been finalized due to ongoing
negotiations relating to the notes issued in connection with this acquisition
and all of the finalized appraisals regarding the fair values of the assets
acquired have not been received by the Company. Accordingly, in 1999 goodwill
associated with the acquisition may change. The excess of the purchase price
over the fair value of the net assets acquired is estimated to be approximately
$12,058 and is being amortized on a straight-line basis over 20 years (see also
Note 2h).

     The $1,838 note was previously issued in March 1997 by a subsidiary of APD.
The note was unsecured, interest was payable at 6.0% per annum and principal and
interest were due on demand and it was reflected in the accompanying financial
statements as a note receivable due from related party. See Note 10 for a
description of the note payable from APD to Cogentrix also affected by this
acquisition.

     The acquisition of minority interests described above was accounted for by
the purchase method of accounting for business combinations. Accordingly, the
accompanying consolidated statements of operations continued to reflect minority
interests through the December 30, 1998 closing date. The following unaudited
pro forma information presents the results of operations of the Company as if
the acquisition had taken place on July 1, 1997:

                                    Transition period ended      Year ended
                                        January 3, 1999        June 30, 1998
                                    -----------------------    -------------
Net revenues ....................          $ 26,194              $ 46,177
Net loss ........................          $(12,526)             $(13,467)
Net loss per share ..............          $  (0.99)             $  (1.07)

5.   ASSETS HELD FOR SALE

         The Company is attempting to sell a greenhouse property that was
damaged by a tornado. Estimated costs of approximately $500 to be incurred
through the estimated sale date (May


                                      F-16
<PAGE>

1999) were accrued by the Company. The assets, totaling $1,911, have been
disclosed as held for sale in the accompanying January 3, 1999 and June 30, 1998
Consolidated Balance Sheets.

6.   OTHER CURRENT ASSETS

     Other current assets consist of the following:

                                             January 3,           June 30,
                                             ----------     --------------------
                                               1999          1998          1997
                                              ------        ------        ------
Government grant .....................        $  400        $   --        $   --
Prepaid equipment project costs ......           322           838           653
Non-trade receivables ................           237           207           504
Interest receivable ..................            --           214            93
Merger costs .........................            --           653            --
Other ................................           253           499           506
                                              ------        ------        ------
                                              $1,212        $2,411        $1,756
                                              ======        ======        ======

     The $653 in merger costs (see Note 3) as of June 30, 1998, along with other
merger costs incurred during the period July 1, 1998 through the effective date
of the merger for a total of approximately $1,500, were expensed in the
transition period.

7.   PROPERTY, PLANT AND EQUIPMENT


     Propert, plant and equipment consist of the following:

                                         January 3,            June 30,
                                         ----------     ----------------------
                                            1999          1998          1997
                                          --------      --------      --------
Land ................................     $    973      $    986      $  1,102
Land improvements ...................        2,266         1,236         1,326
Greenhouses .........................       54,062        33,540        35,109
Greenhouse improvements .............          239           203           717
Greenhouse equipment ................       11,250         9,111         7,908
Computer and office equipment .......        1,808         1,779         1,154
Laboratory equipment ................           65            65            65
Leasehold improvements ..............           62            62            62
Construction in progress ............           --         9,837            --
                                          --------      --------      --------
                                            70,725        56,819        47,443
                                          --------      --------      --------
Less accumulated depreciation
 and amortization ...................       (5,525)       (3,683)       (2,218)
                                          --------      --------      --------
                                          $ 65,200      $ 53,136      $ 45,225
                                          ========      ========      ========

     Included in the amounts above are $435, $547 and $563 in assets held under
capital leases at January 3, 1999, June 30, 1998 and 1997, respectively.

8.   OTHER NONCURRENT ASSETS

     Other noncurrent assets consist of the following:

                                         January 3,             June 30,
                                         ----------      ----------------------
                                            1999           1998           1997
                                          -------        -------        -------
Debt issuance costs (1) ...........       $ 2,517        $ 2,558        $ 2,520
Security deposits .................            77             65             57
Notes receivable ..................           106            270            229
Other .............................            28            355            420
                                          -------        -------        -------
                                            2,728          3,248          3,226
Less accumulated amortization .....          (439)          (659)          (157)
                                          -------        -------        -------
                                          $ 2,289        $ 2,589        $ 3,069
                                          =======        =======        =======


                                      F-17
<PAGE>

(1)  Debt issuance costs represent amounts incurred in obtaining financing for
     various greenhouse construction facilities. Included in these costs are the
     unamortized premiums paid for the purchase of interest rate cap agreements
     (see Note 10). The premiums paid are being amortized to interest expense
     over the terms of the cap agreements (5 years).

9.   ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities consist of the following:

                                                        In Thousands
                                             January 3,           June 30,
                                             ----------     --------------------
                                               1999          1998          1997
                                              ------        ------        ------
Payroll related costs ................        $  540        $  622        $  309
Professional fees ....................           833           187           186
Accrued warranty costs ...............            50            72            59
Accrued inventory purchases ..........           546           344           620
Customer deposits ....................           415         1,209           971
Interest .............................         2,707         1,239           265
Rent .................................            --           651            --
Third party grower ...................            46            42           398
Insurance ............................           199           245           174
Utilities ............................           401           241            33
Restructuring ........................           344           198           307
Severance ............................           127            --            --
Repairs and maintenance ..............           257            --            --
Sales tax ............................           201            --            --
Greenhouse costs .....................            --           797            --
Other ................................         1,039         1,271           397
                                              ------        ------        ------
                                              $7,705        $7,118        $3,719
                                              ======        ======        ======

10.  DEBT

     (a)  Short-term borrowings

     Short-term borrowings consists of the following:

                                            January 3,           June 30,
                                            ----------     ---------------------
                                               1999          1998          1997
                                             -------       -------       -------
Revolving line of credit(1) ..........       $ 2,254       $ 1,091       $    --
VFT revolving line of credit(2) ......            --            --         2,000
VFIFA line of credit(3) ..............        13,226         6,057         1,950
Note payable to Cogentrix(4) .........        21,600            --            --
                                             -------       -------       -------
                                             $37,080       $ 7,148       $ 3,950
                                             =======       =======       =======


                                      F-18
<PAGE>

     (b)  Long-term debt

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                        January 3,           June 30,
                                                        ----------    ----------------------
                                                           1999         1998          1997
                                                         --------     --------      --------
<S>                                                      <C>          <C>           <C>
VFT term loan credit facility(2) ...................     $     --     $ 18,181      $ 18,414
VFIFA construction and term loan credit facility (3)       46,219       26,478        16,486
PVF non-revolving line of credit(5) ................          804        1,201         2,125
Notes payable to Cogentrix(6) ......................        1,071        1,743         1,949
Other long-term debt ...............................          243           88            94
                                                         --------     --------      --------
                                                           48,337       47,691        39,068
                                                         --------     --------      --------
Less-current maturities ............................      (47,557)      (5,043)       (3,878)
                                                         --------     --------      --------
                                                         $    780     $ 42,648      $ 35,190
                                                         ========     ========      ========
</TABLE>

(1)  On November 24, 1998, the lender to the biological and agricultural
     products segment notified the Company of its intention to terminate the
     revolving line of credit on December 24, 1998. The Company and the Bank
     have agreed to four extensions to the revolving line of credit, since
     November 24, 1998, which make the maturity date April 28, 1999.

     The Company and the Bank have also agreed to the following modifications of
     the revolving line of credit pursuant to the extensions of the maturity
     date and forbearance period; (i) reduction of the $1,200 inventory based
     borrowing limit by $40 each week commencing the week of January 28, 1999
     and (ii) an increase to the interest rate to prime plus 5.0%. As of January
     3, 1999, the Company had $747 of additional borrowing availability under
     the revolving line of credit. The Company has received a term sheet from a
     financial institution in the amount of $4,000 to replace this existing
     revolving line of credit. Although no assurance can be given, the Company
     believes that it will finalize the replacement financing arrangement in
     April or May 1999.

(2)  On August 14, 1998, the VFT revolving line of credit was terminated, the
     Debt Service Reserve (restricted cash) was released and applied to
     outstanding principal under the Term loan, the Additional Debt Service
     Reserve (restricted cash) was released to VFT for working capital purposes
     and the remaining outstanding principal under the Term Loan ($16,681) was
     assigned by the lenders to Village Farms International Finance Association
     ("VFIFA"), a wholly-owned subsidiary of the Company. VFIFA repaid the
     $16,681 utilizing availability under the VFIFA construction and term loan
     credit facility (see below). A new repayment schedule for the $16,681, to
     reflect the $1,500 paydown, was provided to VFIFA by the Lenders. The final
     quarterly installment is due and payable on March 31, 2007.

     In October 1996, VFT purchased an interest rate cap ("Rate Cap") from a
     bank for $307. The Rate Cap protected VFT from increases in interest rates
     above 6.5% (excluding the applicable margin) for a period of five years on
     $10,000 of outstanding debt. The purchase is reflected in other noncurrent
     assets in the accompanying consolidated balance


                                      F-19
<PAGE>

     sheets  (see  Note 8) and is  being  amortized  to  interest  expense  on a
     straight-line basis over the life of the Rate Cap (sixty months).

(3)  In June 1997, VFIFA negotiated a $60,000 combined credit facility (the
     "VFIFA Facility") with a bank (the "Lender"). The combined VFIFA Facility
     consists of a term loan, construction loan ($50,000, with construction
     borrowings not to exceed $30,000) and revolving line of credit commitment
     ($10,000). The proceeds from the borrowings under the VFIFA Facility are
     loaned by VFIFA to its members, which are all wholly-owned subsidiaries of
     the Company. APD has guaranteed all obligations incurred under the VFIFA
     Facility. Advances under the VFIFA Facility are secured by the assets of
     APD, VFIFA and any underlying borrower. The maturity date of the VFIFA
     Facility is July 31, 2010.

     In April 1998, VFIFA completed the final advances under the construction
     loans for the VFM and VFB greenhouse facilities and converted the $26,478
     in aggregate construction financing into a term loan (the "VFIFA Term
     Loan"). The VFIFA Term Loan is being repaid in 40 quarterly installments
     which commenced on June 30, 1998. As previously discussed, the VFIFA Term
     Loan borrowings were increased by $16,681, when VFIFA purchased the VFT
     Term Loan on August 14, 1998. On August 31, 1998 and in connection with the
     formation of VFP, the remaining construction loan availability of $3,522
     was allocated for financing of the VFP greenhouse facility. On September
     29, 1998, the VFIFA Facility was amended to approve APD's merger with
     EcoScience and to change the availability under the revolving line of
     credit and term loan from $10,000 and $50,000, respectively, to $13,319 and
     $46,681, respectively. The aggregate commitment under the VFIFA Facility of
     $60,000 remained unchanged.

     Prior to December 1, 1998, interest rate options were selected by VFIFA on
     all or any portion of the borrowings at a base rate (prime), a fixed
     (LIBOR) rate or a quoted rate, as defined in the VFIFA Facility.
     Originally, interest was payable monthly at the maturity of an applicable
     LIBOR rate election period under all commitments outstanding under the
     VFIFA Facility. Each interest rate option has an applicable margin over
     such rate in determining the total interest rate associated with each
     borrowing. The applicable margin for each interest rate option is based
     upon the relationship between annual debt service (principal and interest
     payments) and total cash flow, as defined, with cash flow as the numerator
     and debt service as the denominator. As the aforementioned relationship
     increases, the applicable margin for each interest rate election decreases.
     At January 3, 1999, the term loan borrowings were at various fixed rate
     elections, which combined with the applicable margin and 4% default
     interest (see below), resulted in interest rates between 11.75% and 13.23%
     At January 3, 1999, the construction loan borrowings were at various fixed
     rate elections, which combined with the applicable margin and 4% default
     interest (see below), resulted in interest rates between 12.26% and 12.63%.
     The various LIBOR rate elections were to be reset periodically during the
     term of the construction and term loan borrowings. Interest on the
     revolving line of credit is payable at the variable prime rate, as defined,
     12.625% at January 3, 1999.

     As of January 3, 1999, $42,798, $3,421 and $13,226 of borrowings were
     outstanding under the VFIFA Term Loan, construction loan commitment and
     revolving line of credit commitment, respectively. The fair value of the
     VFIFA Facility was $59,347 as of


                                      F-20
<PAGE>

     January 3, 1999. The value of the VFIFA Facility at June 30, 1998 and 1997
     approximated its book value. On December 1, 1998, the VFIFA Facility
     lenders informed VFIFA and the "Underlying Borrowers" (including VFT, PVF,
     VFM, VFB, VFP and APD) through written correspondence that they were not in
     compliance with certain terms and conditions of the VFIFA Facility. The
     events of default included (1) VFIFA's default of certain interest payments
     due (2) the Underlying Borrower's principal and interest payment default
     with VFIFA and (3) APD's default on the financial covenant contained in the
     guaranty to the VFIFA Facility relating to equity to senior long-term debt.
     The letter of default referred to interest defaults totaling approximately
     $1,000. Following the receipt of the letter, further debt service payment
     defaults occurred including additional interest defaults and principal
     payment defaults on the December 31, 1998 VFIFA Term Loan installments. In
     December 1998, VFIFA began to make debt service payments against the
     defaults identified in the December 1, 1998 letter. The final installment
     of the series of payments, totaling approximately $2,005 in the aggregate,
     for approximately $460, was made on February 12, 1999, which brought VFIFA
     and the Underlying Borrowers into full principal and interest compliance
     under the VFIFA Facility. However, APD and the Underlying Borrowers still
     remain in violation of certain financial covenants. The VFIFA Facility
     lenders expressly stated in the December 1, 1998 letter of default that
     they were not exercising their right under the VFIFA Facility to accelerate
     payment of all outstanding amounts, however, they were reserving their
     right to do so. As a result, the entire amount outstanding under the VFIFA
     Facility, $46,219, has been reflected in the current portion of long-term
     debt in the accompanying balance sheet, which includes $44,756 in debt that
     would otherwise have been classified as long-term. The VFIFA Facility
     lenders have informed VFIFA and the Underlying Borrowers that no further
     advances will be made under the VFIFA Facility and all outstanding VFIFA
     Facility balances will, as of December 1, 1998, bear interest at the
     default rate (4% in addition to the stated rates), until the violations of
     the financial covenants are cured.

     APD and VFIFA will be negotiating new terms to the existing VFIFA Facility
     in connection with the planned restructuring of the VFIFA Facility and the
     Company's capital raising efforts that are intended to bring VFIFA and the
     Underlying Borrowers into compliance with all defaults. There can be no
     assurance that APD and VFIFA will be able to renegotiate more favorable
     terms.

     In October 1997, VFIFA purchased two interest rate caps ("Rate Caps") from
     a bank for $436. The Rate Caps protect VFIFA from increases in interest
     rates above 6.5% for a period of five years commencing on December 31, 1997
     on up to approximately $26,500 of debt under the VFIFA Facility. The
     purchases are reflected in other noncurrent assets in the accompanying
     consolidated balance sheets (see Note 8), and are being amortized to
     interest expense on a straight-line basis over the life of the Rate Caps
     (sixty months).

(4)  On December 30, 1998, the Company entered into a promissory note payable to
     Cogentrix  in the amount of $20,600  bearing  an  interest  rate of 11.25%,
     originally  payable at  maturity on March 15,  1999.  The  financing  was a
     result of the acquisition discussed in Note 4. On March 12, 1999, Cogentrix
     agreed to extend the maturity date of the note to June 30, 1999 for $1,000.
     The notes are secured by all of the  outstanding  capital  stock of APD and
     VFM, VFT, VFB and PVF. The Company is currently seeking additional debt


                                      F-21
<PAGE>

     and equity financing to fulfill this obligation, or alternatively will seek
     to renegotiate the terms of the notes. There can be no assurance that the
     Company will be successful in these efforts.

(5)  In March 1997, PVF entered into a $2,200 loan agreement with a bank. As of
     January 3, 1999, there were no additional borrowings available under this
     loan. The loan was required to be repaid in sixty quarterly installments of
     $37 of interest and principal beginning on July 1, 1997, plus a final
     installment of any amount necessary to pay the indebtedness in full. The
     loan bears interest at a variable rate, as defined 9.25% at January 3,
     1999, subject to the lender's applicable interest rate tier. The loan is
     secured by a real estate mortgage in the PVF property and a first lien on
     all assets, excluding inventory and accounts receivable, as defined. As of
     January 3, 1999, PVF was in violation of a financial covenant of the loan
     agreement. As such the entire amount outstanding under the loan agreement,
     $804 has been reflected in the current portion of long-term debt in the
     accompanying January 3, 1999 balance sheet. PVF was also required to
     maintain $750 of cash as replacement collateral for the portion of the PVF
     greenhouse assets sold to VFB during 1997. This amount was classified as
     restricted cash in the accompanying financial statements.

     As discussed in Note 5, the assets of PVF are held for sale as of January
     3, 1999. The proceeds from the sale will be utilized to repay the remaining
     outstanding amounts under this loan agreement. PVF has already prepaid $750
     and $425 of the outstanding borrowings with the replacement collateral and
     insurance proceeds, respectively.

(6)  In March 1997, APD borrowed $643 from Cogentrix. The note was unsecured,
     interest was payable at 6.0% per annum and principal and interest were due
     on demand. On December 30, 1998, in connection with the acquisition of
     certain minority interests (see Note 4) by the Company, this note, and its
     accrued interest, of approximately $65, became payable to one of the
     entities acquired. Thus the amount is no longer payable to Cogentrix and
     all related amounts to this note eliminate in consolidation beginning on
     December 30, 1998. In March, 1997, APD borrowed $1,375 from Cogentrix. The
     note matures on June 2, 2002 with quarterly principal and interest payments
     of $69. Borrowings under the note bear interest at 6.0%.

     The aggregate maturities of debt as of January 3, 1999 are as follows:

                    1999                   $47,557
                    2000                       321
                    2001                       302
                    2002                       157
                                           -------
                                           $48,337
                                           =======

11.  LEASES

     (a)  Capital Leases

     The Company leases certain  equipment under capital leases.  Future minimum
lease payments are as follows:


                                      F-22
<PAGE>

                                 1999                       $  67
                                 2000                          64
                                 2001                          64
                                 2002                          49
                                 2003                          30
                              Thereafter                      255
                                                            -----
                     Total minimum lease payments             529
                   Less amount representing interest         (149)
                                                            -----
                                                              380
                        Less current maturities               (42)
                                                            -----
                                                            $ 338
                                                            =====
     (b)  Operating Leases

     The future minimum lease payments as of January 3, 1999 are as follows:

                                 1999                     $ 3,986
                                 2000                       3,976
                                 2001                       3,944
                                 2002                       3,911
                                 2003                       3,944
                              Thereafter                   15,301
                                                          -------
                                                          $35,062
                                                          =======

     The above amounts reflect future minimum lease payments under an agreement
executed on March 23, 1999, for the Company's new corporate office and warehouse
space (approximately 20,000 square feet). The expected commencement date of the
ten year lease is September 1, 1999.

     Rent expense under the Company's various lease agreements totaled
approximately $2,114, $4,061, $1,830 and $2,262 for the transition period ended
January 3, 1999 and the years ended June 30, 1998, 1997 and 1996, respectively.

     Included in noncurrent liabilities in the accompanying consolidated balance
sheet is $876, $868 and $860 at January 3, 1999, June 30, 1998 and June 30,
1997, respectively, related to the effect of accounting for the scheduled rent
increases on a straight-line basis over the applicable lease terms.

12.  STOCKHOLDERS' EQUITY (DEFICIT)

     (a)  Amendment of Certificate of Incorporation  for Reverse Stock Split and
          Increase in Authorized Capital Stock

     On September 30, 1998 the Company's certificate of incorporation was
amended to effect a one for five reverse stock split of the Company's common
stock, to increase the number of authorized shares of the Company's common stock
from 25,000,000 shares to 100,000,000 shares and to increase the number of
authorized preferred stock from 1,000,000 shares to


                                      F-23


<PAGE>


<PAGE>

10,000,000 shares. The accompanying financial statements give retroactive effect
to the one for five reverse stock split for all periods presented.

     (b)  Private Placement

     In September 1996, the Company sold 208,000 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. In connection with the
offering, the Company also issued a warrant to purchase 31,200 shares of its
common stock at $10.00 per share to the placement agent.

     (c)  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, 1998 and the transition period ended January
3, 1999:

<TABLE>
<CAPTION>
                                                                                                       Weighted Average
                                                       Number of Warrants     Price Per Share Range     Exercise Price
                                                       ------------------     ---------------------    ----------------
<S>                                                          <C>                <C>                         <C>
Outstanding at June 30, 1995 ....................             72,009            $ 1.88  -  $55.00           $33.01
   Granted ......................................             50,000              6.88  -   15.00            10.76
   Cancelled ....................................            (30,217)             1.88  -   47.75            20.35
                                                             -------            -----------------           ------
Outstanding at June 30, 1996 ....................             91,792              6.88  -  $55.00            25.06
   Granted ......................................             56,311              5.00  -   18.75            11.51
   Cancelled ....................................            (15,792)            30.00  -   55.00            51.51
                                                             -------            -----------------           ------
Outstanding at June 30, 1997 ....................            132,311              5.00  -   48.75            16.18
   Granted ......................................                 --             --     -   --               --
   Cancelled ....................................             (8,000)            34.38  -   35.00            34.53
                                                             -------                                        ------
Outstanding at June 30, 1998 ....................            124,311              5.00  -   48.75           $15.00
                                                             =======                                        ======
Outstanding at January 3, 1999 ..................            124,311              5.00  -   48.75           $15.00
                                                             =======            =================           ======
Exercisable at January 3, 1999 ..................            124,311            $ 5.00  -  $48.75           $15.00
                                                             =======            =================           ======
</TABLE>

     (d)  Stock Option Plans

     In December 1998, the Board of Directors approved a stock option plan (the
"1999 Plan") to grant options to acquire up to 1,800,000 shares of common stock,
less the number of option shares issued under the Company's 1991 stock option
plan (1991 plan), outstanding to employees and consultants. Options granted
under the 1999 Plan vest over various periods and expire no later than 10 years
from the date of grant. Options are to be granted at the fair value of the
Company's common stock on the date of grant. The Board of Directors has agreed
not to issue future options under the 1991 plan.

     Option activity for the three years ended June 30, 1998 and the transition
period ended January 3, 1999, is summarized as follows:


                                      F-24
<PAGE>

<TABLE>
<CAPTION>
                                                                                                     Weighted Average
                                                          Number of Options   Price Per Share Range  Exercise Price
                                                          -----------------   ---------------------  --------------
<S>                                                            <C>               <C>                     <C>
Outstanding at June 30, 1995 .......................            92,207           $1.88  - $56.88         $22.41
   Granted .........................................           110,100            2.81  -   8.13           4.87
   Exercised .......................................              (333)                     2.25           2.25
   Cancelled .......................................           (34,771)           3.00  -  56.88          22.67
                                                               -------           ---------------         ------
Outstanding at June 30, 1996 .......................           167,203            1.88  -  56.88          10.84
   Granted .........................................            68,036            4.69  -  12.50           6.07
   Exercised .......................................            (3,800)                     4.38           4.38
   Cancelled .......................................           (54,363)           1.88  -  56.88          19.93
                                                               -------           ---------------         ------
Outstanding at June 30, 1997 .......................           177,076            2.81  -  35.00           6.35
   Granted .........................................             6,680            4.06  -   8.13           6.51
   Exercised .......................................           (17,456)           4.38  -   5.00           4.80
   Cancelled .......................................            (9,120)           4.38  -  10.63           5.30
                                                               -------           ---------------         ------
Outstanding at June 30, 1998 .......................           157,180           $2.81  - $35.00           6.60
                                                               =======           ===============         ======
   Exercised .......................................            (1,100)           4.38  -   4.38           4.38
   Cancelled .......................................            (4,880)           4.38  -  12.50           2.13
                                                               -------           ---------------         ------
Outstanding at January 3, 1999 .....................           151,200           $2.81  - $35.00         $ 6.57
                                                               =======           ===============         ======
Exercisable at January 3, 1999 .....................           134,898           $2.81  - $35.00         $ 6.55
                                                               =======           ===============         ======
</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 loss and net loss per
share for the transition period ended January 3, 1999 and the fiscal years ended
June 30, 1998, 1997 and 1996 would have been as follows:

<TABLE>
<CAPTION>
                                                 Transition
                                                Period Ended
                                                  January 3,          Years ended June 30,
                                                ------------    -----------------------------
                                                    1999          1998       1997       1996
                                                   ------       -------     ------     ------
<S>                                                <C>          <C>          <C>       <C>
Net income (loss) ...........................      (8,574)      ($4,462)     $  29     ($  13)
                                                   ------       -------     ------     ------
Net loss per share, basic and diluted .......      ($0.74)      ($ 0.38)    ($0.00)    ($0.00)
                                                   ------       -------     ------     ------
</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-Scholes option pricing model with the weighted
average assumptions for the fiscal years ended June 30, 1998, 1997, and 1996,
respectively as follows: (i) risk free interest rate of 6% for all years; (ii)
expected life of approximately eight years for all years; and (iii) expected
volatility of 67%, 70%, and 70% for the fiscal years ended June 30, 1998, 1997,
and 1996, respectively. The weighted average fair value of the options granted
during the fiscal years ended June 30, 1998, 1997, and 1996 was $0.85, $0.86,
and $0.69, respectively. No options were granted during the transition period
ended January 3, 1999.


                                      F-25
<PAGE>

13.  INCOME TAXES

     As of January 3, 1999, the Company had available net operating loss
carryforwards of approximately $10,700 and research and development tax credit
carryforwards of approximately $900 to reduce future federal income taxes, if
any. These carryforwards expire through 2013 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 recently completed a merger with APD which has
resulted in a change in ownership in excess of 50%, as defined. Therefore,
utilization of net operating loss and tax credit carryforwards will be limited
due to ownership changes. As discussed in Note 2, APD was taxed as an S
Corporation prior to the merger on September 30, 1998 and as such no Federal
income taxes were paid by APD. Therefore, APD recorded no deferred tax assets or
liabilities prior to September 30, 1998. State deferred income taxes were not
material.

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

                                    January 3,                 June 30,
                                    ----------        -------------------------
                                       1999             1998              1997
                                     --------         --------         --------
Deferred tax assets .........        $  5,400         $ 16,500         $ 16,000
Valuation allowance .........          (5,400)         (16,500)         (16,000)
                                     --------         --------         --------
                                     $     --         $     --         $     --
                                     ========         ========         ========

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


                                            January 3,           June 30,
                                            ----------     ---------------------
                                               1999          1998          1997
                                             -------       -------       -------
Net operating losses .................       $ 4,300       $15,400       $15,000
Other temporary differences ..........           200           200           100
Research and development credits .....           900           900           900
                                             -------       -------       -------
                                             $ 5,400       $16,500       $16,000
                                             =======       =======       =======

     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 recorded a valuation allowance against its otherwise recognizable
deferred tax assets.

     A reconciliation of the provision for (benefit from) income taxes for the
transition period ended January 3, 1999 and the fiscal year ended June 30, 1998,
1997 and 1996 with the statutory federal income tax rate follows:


                                      F-26
<PAGE>

<TABLE>
<CAPTION>
                                                   Transition
                                                  Period Ended        Years Ended June 30,
                                                   January 3,    -------------------------------
                                                      1999        1998        1997         1996
                                                     ------      ------      ------       ------
<S>                                                  <C>         <C>         <C>          <C>
(Benefit) provision at nominal rate ...........       (34.0%)     (34.0%)      34.0%       (34.0%)
Increases (reductions) in taxes resulting from:
     Net operating loss carryforward ..........        --          --         (34.0)        --
     Valuation allowance ......................        34.0        34.0        --           34.0
     Foreign income taxes .....................        --          --          10.8         22.0
     State income taxes .......................         0.1         0.1         4.2         69.3
                                                     ------      ------      ------       ------
Provision for income taxes-% ..................         0.1%        0.1%       15.0%        91.3%
                                                     ------      ------      ------       ------
Provision for income taxes-$ ..................      $   67      $   21      $   78       $  116
                                                     ------      ------      ------       ------
</TABLE>

     The provision for (benefit from) income taxes for the transition period
ended January 3, 1999 and the fiscal year ended June 30, 1998, 1997 and 1996 is
primarily composed of foreign and state income taxes.

14.  SALES, LICENSE AND DEVELOPMENT AGREEMENTS

     AGRO has a distribution agreement with an unrelated company for a term of
three years ending in December 2000, with automatic one-year extensions unless
either party elects to terminate the agreement. The agreement grants AGRO the
exclusive right to sell the unrelated company's product in the United States,
Canada, Mexico, and the Caribbean. 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 18%, 17%, 20% and 25% of the Company's total net
revenues for the transition period ended January 3, 1999 and the fiscal years
ended June 30, 1998, 1997 and 1996, 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, which granted 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 through September 1999. The sale of
products under this agreement accounted for 14%, 8%, 12% and 11% of total net
revenues for the transition period ended January 3, 1999 and the fiscal years
ended June 30, 1998, 1997 and 1996, respectively.

     On February 1, 1999, the Company's postharvest equipment division of Agro
Dynamics, Inc., which was the exclusive distributor in North America for Aweta
B.V.'s sorting and grading equipment, was sold to Autoline, Inc.

15.  SEGMENT AND GEOGRAPHIC INFORMATION

     The Company has two reportable segments: greenhouse tomatoes and biological
and agricultural products. The greenhouse tomatoes segment operates seven
greenhouse facilities in the United States, representing approximately 190 acres
of growing capacity. Through these facilities, the Company produces, harvests,
packages and distributes premium vine-ripened tomatoes. The tomatoes are
marketed under the Village Farms(R) brandname and sold to retail supermarket
chains, dedicated wholesalers, distributors and food service clients throughout
the United States.


                                      F-27
<PAGE>

     The biological and agricultural products segment distributes various
products under written distribution agreements and relations with specific
vendors. The Company's biological and agricultural products include (1) growing
medium products and computerized environmental and irrigational control systems;
(2) postharvest coating products and (3) biological pest control products.

     The accounting policies of the segments described above are the same as
those described in the summary of significant accounting policies. The Company's
reportable segments are strategic business units that offer different products.
The Company is not dependent on any single customer for its net revenues.

<TABLE>
<CAPTION>
                                                                 Transition
                                                                period ended                      Year ended June 30,
Company data by operating segment (1)                          January 3, 1999         1998               1997              1996
-------------------------------------                          ---------------       ---------          ---------         ---------
<S>                                                               <C>                <C>                <C>               <C>
Net revenues
     Greenhouse tomatoes ................................         $  15,453          $  28,871          $  21,963         $  11,090
     Biological and agricultural products ...............         $  10,741          $  17,306          $  17,899         $  13,578
                                                                  ---------          ---------          ---------         ---------
     Total ..............................................         $  26,194          $  46,177          $  39,862         $  24,668
                                                                  =========          =========          =========         =========
Total Assets
     Greenhouse tomatoes ................................         $  93,539          $  69,971          $  62,072         $  26,279
     Biological and agricultural products ...............         $   8,325          $   9,537          $   8,520         $   9,970
                                                                  ---------          ---------          ---------         ---------
     Total ..............................................         $ 101,864          $  79,508          $  70,592         $  36,249
                                                                  =========          =========          =========         =========
Capital Expenditures
     Greenhouse tomatoes ................................         $   4,568          $  25,554          $  28,154         $  17,372
     Biological and agricultural products ...............                64                545                 90               127
                                                                  ---------          ---------          ---------         ---------
     Total ..............................................         $   4,632          $  26,099          $  28,244         $  17,499
                                                                  =========          =========          =========         =========
Operating (loss) income
     Greenhouse tomatoes ................................         ($  6,272)         ($  5,276)         $     295         ($    541)
     Biological and agricultural products ...............            (1,317)            (1,195)               278               744
                                                                  ---------          ---------          ---------         ---------
     Total ..............................................         ($  7,589)         ($  6,471)         $     573         $     203
                                                                  =========          =========          =========         =========
Depreciation and amortization expense
     Greenhouse tomatoes ................................         $   1,979          $   2,891          $   1,504         $     283
     Biological and agricultural products ...............               167                332                402               580
                                                                  ---------          ---------          ---------         ---------
     Total ..............................................         $   2,146          $   3,223          $   1,906         $     863
                                                                  =========          =========          =========         =========
Company data by geographic segments (2)
     Net revenues
         United States ..................................         $  23,135          $  39,243          $  34,219         $  20,247
         Canada .........................................             3,059              6,934              5,643             4,421
                                                                  ---------          ---------          ---------         ---------
     Total ..............................................         $  26,194          $  46,177          $  39,862         $  24,668
                                                                  =========          =========          =========         =========
</TABLE>

(1)  All research and development expenses and restructuring reversals were a
     result from operations of the biological and agricultural products segment.

(2) The long-lived assets in Canada are immaterial for all periods presented.


                                      F-28



<PAGE>


                             ECOSCIENCE CORPORATION

                                  EXHIBIT INDEX

  Exhibit
   Number    Exhibit Description

     2.1       Amended and Restated Agreement and Plan of Merger dated as of
               July 31, 1998 among EcoScience Corporation, Agro Acquisition
               Corporation and Agro Power Development, Inc. [incorporated herein
               by reference to the Registrant's Proxy Statement dated August 10,
               1998 - Appendix A].

     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].

     3.3       Certificate of Amendment of Restated Certificate of Incorporation
               of the Registrant dated September 28, 1998. [incorporated by
               reference to Exhibit 10.60 to the Registrant's September 30, 1998
               quarterly report on form 10-Q].

     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].

     4.2       Registration Rights Agreement between EcoScience Corporation and
               the Shareholders identified on Schedule I thereto dated September
               30, 1998. [incorporated by reference to Exhibit 10.60 to the
               registrant's September 30, 1998 quarterly report on form 10-Q].

     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 1999 Stock Option Plan. [filed herewith]


     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


                                       E-1
<PAGE>


               June 30, 1993].

     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].

     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].

     10.20     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].

     10.24     Agreement between Agro Dynamics, Inc. and Grodania A/S
               [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]. **

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

     10.49     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


                                       E-2
<PAGE>


               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].

     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].

     10.57     Agreement between Agro Dynamics, Inc. and Grodania A/S, dated
               September 29, 1997. [incorporated by reference to Exhibit 10.57
               to the Registrant's Form 10-Q for the Quarter Ended September 30,
               1997]. **

     10.59     Amendment to Loan Documents dated September 25, 1998, by and
               among the Registrant, EcoScience Produce Systems Corp., Agro
               Dynamics, Inc., Agro Dynamics Canada Inc. and Silicon Valley
               Bank. [ filed herewith].


     10.61     Ground Lease dated September 4, 1997 between the Buffalo
               Enterprise Development Corporation and Agro Power Development,
               Inc. [incorporated by reference to Exhibit 10.61 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]


     10.62     Commercial Greenhouse Lease and Operating Agreement dated July
               22, 1992 between Oxbow Power of North Tonawanda, New York, Inc.
               and Village Farms of Wheatfield, Inc. [incorporated by reference
               to Exhibit 10.62 to the registrant's September 30, 1998 quarterly
               report on form 10-Q]


                                       E-3
<PAGE>


     10.63     Operating Agreement dated as of November 14, 1997 between
               Greenhost, Inc. and Village Farms of Virginia, Inc for Birchwood,
               Virginia greenhouse facility. [incorporated by reference to
               Exhibit 10.63 to the registrant's September 30, 1998 quarterly
               report on form 10-Q]


     10.64     Lease Agreement dated as of September 21, 1993 between Cogentrix
               of Pennsylvania, Inc. and Keystone Village Farms, Inc. for
               Ringgold, Pennsylvania greenhouse facility. [incorporated by
               reference to Exhibit 10.64 to the registrant's September 30, 1998
               quarterly report on form 10-Q] **

     10.65     Amended Ground Lease effective March 14, 1997 between the
               Presidio County Commissioners Court and Agro Power Development,
               Inc. [incorporated by reference to Exhibit 10.65 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]

     10.66     Lease Agreement dated as of January 29, 1998 between Ripe Touch
               Greenhouses, Inc., and Village Farms of Colorado, Inc.
               [incorporated by reference to Exhibit 10.66 to the registrant's
               September 30, 1998 quarterly report on form 10-Q] **


     10.71     Agreement of Limited Partnership of Village Farms of Marfa, L.P.,
               dated as of June 4, 1997. [incorporated by reference to Exhibit
               10.71 to the registrant's September 30, 1998 quarterly report on
               form 10-Q] **

     10.72     Management, Operating and Maintenance Contract between Village
               Farms of Marfa and Village Farms of Delaware, LLC, dated June 4,
               1997. [incorporated by reference to Exhibit 10.72 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]

     10.73     Marketing and Sales Agreement between Village Farms of Marfa,
               L.P. and Village Farms of Delaware dated June 4, 1997.
               [incorporated by reference to Exhibit 10.73 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]

     10.74     Amended and Restated Agreement of Limited Partnership of Village
               Farms of Buffalo, L.P., dated as of September 4, 1997.
               [incorporated by reference to Exhibit 10.74 to the registrant's
               September 30, 1998 quarterly report on form 10-Q] **

     10.75     Management, Operating and Maintenance Contract between Village
               Farms of Delaware and Village Farms of Buffalo, dated September
               4, 1997 and amendment thereto dated as of April 17, 1998.
               [incorporated by _reference to Exhibit 10.75 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]


     10.76     Marketing and Sales Agreement between Village Farms of Delaware
               and Village Farms of Buffalo, L.P. dated September 4, 1997.
               [incorporated by reference to Exhibit 10.76 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]


                                      E-4
<PAGE>


     10.78     Marketing Agreement by and between Foster Farms, Inc. and Agro
               Power Development, Inc. dated January 1, 1995. [incorporated by
               reference to Exhibit 10.78 to the registrant's September 30, 1998
               quarterly report on form 10-Q] **

     10.79     Credit Agreement (Line of Credit Facility) by and between CoBank,
               ACB, as Agent and as a Syndication Party and Village Farms
               International Financing Association dated as of June 24, 1997
               [incorporated by reference to Exhibit 10.79 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]

     10.80     Promissory Note (Line of Credit Facility) of Village Farms
               International Financing Association dated June 24, 1997 in
               principal amount of $10,000,000. [incorporated by reference to
               Exhibit 10.80 to the registrant's September 30, 1998 quarterly
               report on form 10-Q]

     10.81     First Amendment to Credit Agreement (Line of Credit Facility)
               [Regarding EcoScience Merger] by and between Village Farms
               International Finance Association and CoBank, ACB dated September
               29, 1998. [incorporated by reference to Exhibit 10.81 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]

     10.82     Second Amendment to Credit Agreement (Line of Credit Facility) by
               and between CoBank, Village Farms International Finance
               Association and Agro Power Development Inc. dated September 29,
               1998. [incorporated by reference to Exhibit 10.82 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]

     10.83     Line of Credit Security Agreement by and between Village Farms
               International Finance Association, and CoBank, ACB dated June 24,
               1997 with a line of credit of $10,000,000. [incorporated by
               reference to Exhibit 10.83 to the registrant's September 30, 1998
               quarterly report on form 10-Q]

     10.84     Credit Agreement (Construction Loan Funding) by and between
               CoBank, ACB as Agent and Syndicated Party and Village Farms
               International Financing Association dated as of June 24, 1997.
               [incorporated by reference to Exhibit 10.84 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]

     10.85     First Amendment to Credit Agreement (Construction Loan Funding)
               [Regarding EcoScience Merger] by and between Village Farms
               International Finance Association and CoBank, ACB dated September
               29, 1998. [incorporated by reference to Exhibit 10.85 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]

     10.86     Promissory note (Construction Loan Funding) of Village Farms
               International Financing Association dated June 24, 1997 in
               principal amount of $30,000,000. [incorporated by reference to
               Exhibit 10.86 to the registrant's September 30, 1998 quarterly
               report on form 10-Q]


                                      E-5
<PAGE>


     10.87     Construction Loan Security Agreement by and between Village Farms
               International Finance Association, and CoBank, ACB dated June 24,
               1997. [incorporated by reference to Exhibit 10.87 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]

     10.88     Credit Agreement (Term Loan Funding) by and between CoBank, ACB
               as Agent and Syndication Party and Village Farms International
               Financing Association dated as of June 24, 1997. [incorporated by
               reference to Exhibit 10.88 to the registrant's September 30, 1998
               quarterly report on form 10-Q]

     10.89     Promissory Note (Term Loan Funding) of Village Farms
               International Financing Association dated June 24, 1997 in
               principal amount of $50,000,000. [incorporated by reference to
               Exhibit 10.89 to the Registrant's September 30, 1998 quarterly
               report on form 10-Q]

     10.90     Guaranty of Agro Power Development, Inc. dated as of June 24,
               1997 to Construction Lenders, Term Lenders and Line of Credit
               Lenders. [incorporated by reference to Exhibit 10.90 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]

     10.91     First Amendment to Credit Agreement (Term Loan Funding)
               [Regarding EcoScience Merger] by and between Village Farms
               International Finance Association and CoBank, ACB dated September
               29, 1998. [incorporated by reference to Exhibit 10.91 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]


     10.92     Second Amendment to Credit Agreement (Term Loan Funding) by and
               between CoBank, Village Farms International Finance Association
               and Agro Power Development Inc. dated September 29, 1998.
               [incorporated by reference to Exhibit 10.92 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]


     10.93     Term Loan Security Agreement by and between Village Farms
               International Finance Association, and CoBank, ACB dated June 24,
               1997. [incorporated by reference to Exhibit 10.93 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]


     10.94     Amendment to Loan Documents by and between CoBank, Village Farms
               International Finance Association and Agro Power Development,
               Inc. dated September 29, 1998. [incorporated by reference to
               Exhibit 10.94 to the registrant's September 30, 1998 quarterly
               report on form 10-Q]

     10.95     First Amendment to Guarantor Security and Pledge Agreement
               [Regarding EcoScience Merger] by and between Agro Power
               Development, Inc. and CoBank, ACB dated September 29, 1998.
               [incorporated by reference to Exhibit 10.95 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]


                                       E-6
<PAGE>


     10.96     First Amendment to Guaranty of Agro Power Development, Inc.
               [Regarding EcoScience Merger] by and between Agro Power
               Development, Inc. and The Lender Group dated September 29, 1998.
               [incorporated by reference to Exhibit 10.96 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]

     10.99     Agreement of Limited Partnership of Village Farms of Presidio,
               L.P. dated as of August 31, 1998. [incorporated by reference to
               Exhibit 10.99 to the registrant's September 30, 1998 quarterly
               report on form 10-Q]

     10.100    Commercial Greenhouse Design and Construction Contract between
               Agro Power Development and Dalsem Kassenboyw B.V. dated as of
               August 31, 1998. [incorporated by reference to Exhibit 10.100 to
               the registrant's September 30, 1998 quarterly report on form
               10-Q]

     10.101    Commercial Design and Construction Contract between Village Farms
               of Presidio, L.P. and Agro Power Development, Inc. dated as of
               August 31, 1998. [incorporated by reference to Exhibit 10.101 to
               the registrant's September 30, 1998 quarterly report on form
               10-Q]

     10.102    Commercial Packing House Design and Construction Contract dated
               July 10, 1998 between Agro Power Development, Inc. and NC
               Sturgeon, Inc. [incorporated by reference to Exhibit 10.102 to
               the registrant's September 30, 1998 quarterly report on form
               10-Q]

     10.103    Marketing and Sales Agreement between Village Farms of Presidio,
               L.P. and Village Farms, Inc. dated as of August 31, 1998.
               [incorporated by reference to Exhibit 10.103 to the registrant's
               September 30, 1998 quarterly report on form 10-Q]

     10.104    Management, Operation and Maintenance Contract dated as of August
               31, 1998 among New Amsterdam Joint Venture, L.L.C. and Village
               Farms of Presidio, L.P. incorporated by reference to Exhibit
               10.104 to the registrant's September 30, 1998 quarterly report on
               form 10-Q]


     10.105    $1,375,000 Promissory Note and Security Agreement dated March 10,
               1997 among Agro Power Development, Inc., Village Farms of
               Delaware LLC, Village Farms LLC and Cogentrix Delaware Holdings,
               Inc. [incorporated by reference to Exhibit 10.105 to the
               registrant's September 30, 1998 quarterly report on form 10-Q]


     10.106    Loan Agreement by and between Pocono Village and First Pioneer
               Farm Credit, ACA, dated March 5, 1997. [incorporated by reference
               to Exhibit 10.106 to the registrant's September 30, 1998
               quarterly report on form 10-Q]


     10.107    Installment Promissory Note for $2,200,000.00 from Pocono Village
               to First Pioneer Farm Credit, ACA, dated March 10, 1997.
               [incorporated by reference to Exhibit 10.107 to the registrant's
               September 30, 1998 quarterly report on form


                                       E-7
<PAGE>


               10-Q]

     10.108    Construction Loan Agreement between Pocono Village and First
               Pioneer Farm Credit, dated March 10, 1997. [incorporated by
               reference to Exhibit 10.108 to the registrant's September 30,
               1998 quarterly report on form 10-Q]

     10.109    Security Agreement between Pocono Village and First Pioneer Farm
               Credit, ACA, dated March 10, 1997. [incorporated by reference to
               Exhibit 10.109 to the registrant's September 30, 1998 quarterly
               report on form 10-Q]

     10.112    Stock Purchase Agreement, dated as of December 7, 1998, Stock
               Pledge Agreement, dated as of December 30, 1998, and Registration
               Rights Agreement, dated as of December 30, 1998 between the
               Registrant and Cogentrix Delaware Holdings. Inc. and $20.6
               million Promissory Note dated December 30, 1998 issued by
               Registrant to Cogentrix Delaware Holdings, Inc. [incorporated by
               reference to Exhibit 10.112 to Registrant's Form 8-K dated
               December 7, 1998]

     10.113    Amendment to Loan Documents dated February 26, 1999 by and among
               Registrant, EcoScience Produce Systems Corp., Agro Dynamics, Inc.
               Agro Dynamics Canada, Inc. and Silicon Valley Bank.[incorporated
               by reference to Exhibit 10.113 to Registrant's September 30, 1998
               quarterly report on Form 10-Q]


     10.114    First Amendment to Registration Rights Agreement dated as of
               March 11, 1999 between the Registrant and Cogentrix Delaware
               Holdings, Inc. [incorporated by reference to Exhibit 10.114 to
               Registrant's September 30, 1998 quarterly report on form 10-Q].

     10.115    Extension Agreement dated as of March 15, 1999 between Registrant
               and Cogentrix Delaware Holdings, Inc. [filed herewith]


     10.116    Allonge to Promissory Note dated December 30, 1998 of Registrant,
               payable to Cogentrix Delaware Holdings, Inc. [filed herewith]

     10.117    Promissory Note dated March 15, 1999 issued by Registrant to
               Cogentrix Delaware Holdings, Inc. in the amount of $1 million.
               [filed herewith]

     10.118    Amendment to Stock Pledge Agreement dated as of March 15, 1999
               between Registrant and Cogentrix Delaware Holdings, Inc. [filed
               herewith]

     21        Subsidiaries of the Registrant. [filed herewith]

     23        Consent of Arthur Andersen LLP. [filed herewith]

     24        Powers of Attorney of officers and directors of the Company
               [included in the signature page to this report].


                                      E-8
<PAGE>


     27        Financial Data Schedule for the transition period ended January
               3, 1999. [filed herewith]

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

     ** Information has been omitted from this exhibit and is subject to a
     request or such a request has been approved for confidential treatment.


                                      E-9