<PAGE>
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                 ____________

                                   FORM 10-K
    (Mark one)

    [X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended September 30, 1996

                                      OR

    [ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to ________

                          Commission File No. 1-10492

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

                Oregon                                    93-0779127
          (State or other jurisdiction of           (I.R.S. employer
            incorporation or organization)          identification no.)

          8505 S.W. Creekside Place
                 Beaverton, Oregon                        97008
          (Address of principal executive offices)        (Zip code)

                                (503) 641-6115
             (Registrant's telephone number, including area code)

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

          Title of each class           Name of each exchange on which
                                        registered

          Common Stock, no par value    American Stock Exchange

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

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

    State the aggregate market value of voting stock held by non-affiliates
of the registrant, as of November 30, 1996:  $157,430,522

    Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of November 30, 1996:  Common Stock, no par value,
13,191,844

                     Documents Incorporated by Reference:

Definitive Proxy Statement for 1997 Annual Shareholders' Meeting  Part III
<PAGE>
                               Table of Contents


                                    PART I
                                                                          Page

ITEM 1.   Business                                                           3

ITEM 2.   Properties                                                        20

ITEM 3.   Legal Proceedings                                                 20

ITEM 4.   Submission of Matters to a Vote of Security Holders               20


                                    PART II


ITEM 5.   Market for the Registrant's Common Stock and Related Stockholder
          Matters                                                           21

ITEM 6.   Selected Financial Data                                           21

ITEM 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                             25

ITEM 8.   Financial Statements and Supplementary Data                       33

ITEM 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure                                              37


                                   PART III

ITEM 10.  Directors and Executive Officers of the Registrant                37

ITEM 11.  Executive Compensation                                            37

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management    37

ITEM 13.  Certain Relationships and Related Transactions                    37


                                    PART IV


ITEM 14.  Exhibits, Financial Statement Schedules, and Reports on 
          Form 8-K                                                          37
<PAGE>
                                    PART I

    ITEM 1.     Business.

    Epitope, Inc. ("Epitope" or the "Company"), is an Oregon corporation
incorporated in 1981.  Its Epitope Medical Products group ("Epitope Medical
Products") develops and markets oral specimen collection kits and related
diagnostic tests for the detection of the Human Immunodeficiency Virus
("HIV"), the cause of Acquired Immune Deficiency Syndrome ("AIDS"), and for
the detection of other medical conditions and analytes.  Epitope Medical
Products' oral specimen HIV testing system is marketed by the Company under
the name EpiScreen(TM) and by SmithKline Beecham plc ("SB") under the name
OraSure(R).  The Company's Agritope group ("Agritope") historically has
focused its efforts on the development of novel agricultural products using
plant genetic engineering and other modern methods.  Through its acquisition
of Andrew and Williamson Sales, Co. ("A&W") on December 12, 1996 and its
majority ownership of Vinifera, Inc. ("Vinifera"), Agritope now conducts
operations in each step of the production and distribution chain for a broad
range of fruits, vegetables and plants and has an established infrastructure
that will facilitate commercialization of the Company's genetically engineered
agricultural products.

                           Epitope Medical Products

    Epitope Medical Products' lead product, a patented collection device used
as part of an oral fluid diagnostic system ("EpiScreen/OraSure"), is designed
for use in the detection of HIV and other medical conditions and analytes. 
The Company markets the device under the brand name EpiScreen in the United
States for use in screening life insurance applicants, and in certain foreign
countries for use in professional markets.  In February 1995, the Company
entered into a Development, License and Supply Agreement with SB, under which
SB is marketing the device in the U.S. and certain foreign countries as part
of an integrated test system to physicians, hospitals and other healthcare
professionals under the brand name OraSure.  Subject to obtaining required
regulatory approvals, the Company intends to market the system for
over-the-counter sale through SB in the United States and through SB or other
distributors in international markets.

    The EpiScreen/OraSure device consists of a small, treated cotton-fiber
pad on a nylon handle that is placed in the patient's mouth for two minutes. 
The device collects oral mucosal transudate ("OMT"), a serum-derived fluid
that, unlike saliva, contains high concentrations of HIV antibodies in people
infected with the virus.  As a result, OMT testing is a highly accurate method
for detecting HIV infection.  Because EpiScreen/OraSure uses a noninvasive,
needle-free collection method, the Company believes that oral fluid testing
has several significant advantages over blood-based testing systems for both
healthcare professionals and patients.

    Epitope Medical Products also markets HIV-1 Western blot confirmatory
test kits used to confirm positive results of initial screening tests for
HIV-1 infection.  Its OraSure HIV-1 Western blot confirmatory test kit is used
in conjunction with oral-fluid based screening tests, while its EPIBlot(R)
HIV-1 Western blot confirmatory test kit is used in conjunction with
blood-based screening tests. The kits are distributed worldwide under an
exclusive agreement with Organon Teknika Corporation ("Organon Teknika"), a
member of the Akzo Pharma group of Akzo Nobel, NV.  

    The EpiScreen/OraSure HIV-1 device and the OraSure HIV-1 Western blot and
EPIBlot confirmatory tests have all received clearance from the U.S. Food and
Drug Administration ("FDA") for sale to professional markets in the United
States.

Background

    Acquired Immune Deficiency Syndrome is caused by the Human
Immunodeficiency Virus.  HIV attacks the immune system, slowly weakening the
body's ability to ward off infection and certain forms of cancer. When these
complications develop, the HIV infection has progressed to clinically
diagnosed AIDS.  HIV is spread through sexual contact, blood transfusions, the
sharing of intravenous needles, accidental needle sticks, or contact between a
mother and her child during gestation, childbirth, or breast-feeding.  There
is currently no known cure for HIV/AIDS.  However, the recent introduction of
a new class of anti-HIV drugs called protease inhibitors, when used in
combination with nucleoside analogs (e.g., AZT), has shown promising results
in slowing progress of the disease.  Clinical studies have demonstrated that
the early detection and treatment of HIV can help to curb the effects of the
disease and significantly prolong the life of the patient.  Other studies have
shown that treatment with AZT of an HIV-infected pregnant woman may prevent
the transmission of HIV from the mother to her child.

    According to the World Health Organization ("WHO"), an estimated 24
million adults and 1.5 million children have been infected with HIV worldwide,
and approximately 10,000 new infections occur each day.  WHO also estimates
that over 6 million cases of AIDS have occurred worldwide to date.  In North
America, an estimated 1.3 million people have been infected with HIV. AIDS is
currently the leading cause of death for Americans between the ages of 25 and
44.  It is estimated that approximately 800,000 people in the United States
are living with the HIV virus.  According to the Centers for Disease Control
and Prevention ("CDC"), total federal funding budgeted for HIV/AIDS in 1995
was over $2.7 billion.

    Based on industry estimates, the Company believes that approximately 60
million HIV tests were performed in the U.S. in 1995. Of these tests,
approximately 30 million were performed in connection with blood donor
screening, 20 million were performed in healthcare settings such as hospitals
and clinics, 5 million were performed in connection with life insurance
applications, and the balance were performed by public health departments and
the military.  Currently, substantially all HIV tests are performed by testing
a patient's blood.  There are a number of blood tests for HIV, the most common
of which is the enzyme-linked immunosorbent assay ("ELISA").  In order to
reduce the possibility that an individual without HIV will be diagnosed as
having the virus (a false positive), most countries require the retesting of
the blood sample using a second, more specific test to confirm an initial
positive test result.  The most commonly used confirmatory test is the Western
blot. 

    The Company believes that blood testing has a number of disadvantages
which increase healthcare costs and patient inconvenience, pose a risk of
infection to healthcare professionals and make testing uneconomic or
unavailable in certain applications or settings. The disadvantages of blood
testing include:

    Risk of HIV Infection.  Blood tests involve the use of needles or lancets
to obtain blood from the patient.  Healthcare professionals collecting blood
risk contracting HIV if accidentally stuck by the needle or lancet used to
obtain blood from an infected patient. 

    Limited Access.  Because blood must be collected by trained
professionals, its collection is often difficult or prohibitively expensive in
certain settings.  For example,  community-based outreach programs, homeless
shelters, rural communities, and other remote settings often lack healthcare
professionals trained in blood collection.  As a result, blood testing may not
be available in some of these settings.

    Higher Overall Cost.  The cost of collecting a blood specimen represents
a significant component of the total cost of HIV testing.  Furthermore, when a
healthcare professional must travel to the subject's office or home to collect
a blood sample, as is often the case with life insurance applicant testing,
the cost of collecting the blood specimen is substantially increased.

    Patient Discomfort.  Blood tests require the use of needles or lancets
that are uncomfortable for patients. In addition, patients with small or
damaged veins, such as intravenous drug users, the elderly and young children,
may require multiple needle sticks in order to obtain an adequate blood
sample.   

Epitope Oral Specimen Collection Technology

    In order to address the significant drawbacks associated with blood-based
tests, Epitope developed and patented a device to collect oral fluid instead
of blood.  The EpiScreen/OraSure device, shaped like a small toothbrush,
consists of a cotton-fiber pad treated with a proprietary salt solution.  The
pad, which is mounted on a nylon handle, is placed in the patient's mouth
between the lower cheek and gum for two minutes.  The pad collects oral
mucosal transudate, a serum-derived fluid that, unlike saliva, contains high
concentrations of antibodies.  OMT contains approximately four times the
amount of antibodies found in ordinary whole saliva.  Following collection,
the pad is sealed in a specimen vial containing a proprietary preservative
solution.  The treated pad enhances the collection, and the preservative
solution enhances the stabilization, of antibodies and other analytes
originating from the oral mucosae.  The specimen in the vial is stable for
three weeks at room temperature, although in most cases laboratory testing
takes place within one to three days.

    A schematic representation of the oral fluid collection procedure is
shown below.

    [Graphic material demonstrating specimen collection procedure,
    containing illustrations and the following captions:

          Peel open package.
          Place pad between lower cheek and gum.  Rub back and forth
    until moist.
          Keep the pad in place for 2 minutes (maximum 5 minutes) while
    timing.
          Open vial in upright position.
          Insert pad to bottom of vial.
          Break the pad handle by snapping it against the side of the
    vial.
          Replace the cap with a snap.]

Products

    EpiScreen/OraSure.  In December 1994, the Company received clearance from
the FDA to sell EpiScreen/OraSure to professional markets for the ELISA
screening of HIV-1 antibodies. The device is marketed directly by the Company
under the trade name EpiScreen for use by the U.S. life insurance industry and
in certain international markets, and is marketed by SB under the trade name
OraSure to healthcare professionals in the United States and a number of other
countries.  See "Epitope Medical Products--Marketing."

    The EpiScreen/OraSure oral specimen collection and HIV-1 testing system
is easily administered and involves three steps: (i) collection of an oral
specimen using the EpiScreen/OraSure collection device, (ii) ELISA screening
of the specimen for HIV antibodies at a laboratory, and (iii) laboratory
confirmation of positive screening test results with the FDA-cleared OraSure
Western blot kit.  A trained healthcare professional then conveys test results
and provides appropriate counseling to the patient.

    The EpiScreen/OraSure HIV-1 testing system represents a highly accurate
alternative to traditional blood tests. In clinical trials, EpiScreen/OraSure
provided the correct result or triggered appropriate follow-up testing in
3,569 out of 3,570 cases (99.97 percent).  The Company believes
EpiScreen/OraSure has several advantages over blood tests, as outlined in the
following table.


Feature                 Blood Test                   EpiScreen/OraSure
-------                 ----------                   -----------------

Safety                  Poses risk of HIV            Eliminates risk of
                        infection through            needle-stick accidents
                        accidental needle sticks

Invasiveness            Requires use of a            Uses noninvasive
                        needle or lancet             collection technique

Ease of use             Requires blood               Sample collection
                        collection by a              requires minimal
                        trained healthcare           training
                        professional

Portability             Generally performed in       Can be used rapidly and
                        a physician's office         efficiently in almost
                        or other healthcare          any setting
                        setting

Cost                    Requires a nurse or          Eliminates the need for
                        other trained healthcare     and costs associated
                        professional                 with a trained
                                                     healthcare professional

      Oral-based and Serum-based Western Blot Confirmatory Tests.  Epitope
Medical Products has also developed, and in June 1996 received FDA clearance
to market, an oral-based HIV-1 Western blot confirmatory test.  This test uses
the original oral specimen to confirm positive results of initial
EpiScreen/OraSure HIV-1 ELISA screening tests.  Epitope Medical Products has
also marketed EPIblot, a serum-based Western blot HIV-1 confirmatory test kit
since 1987.  The kit is used to confirm the positive results of initial blood-
based screening tests for HIV-1 infection.  

Markets

      Insurance Industry.  Epitope Medical Products believes there is a
significant need in the life insurance industry for an easy-to-administer,
noninvasive and cost-effective HIV testing system such as EpiScreen.  In the
United States, approximately 5 million HIV tests were administered in 1995 by
the life insurance industry in connection with the issuance of new policies. 
In addition, data from the American Council of Life Insurance and the Health
Insurance Association of America indicate that over $1.5 billion in
AIDS-related death benefits were paid in 1994. The organizations also
cautioned that, due to difficulty in identifying all AIDS-related claims, the
data may significantly understate the financial impact of AIDS on the
insurance industry.

      Current HIV testing of life insurance applicants involves the use of a
paramedic or other trained healthcare professional to obtain a blood sample. 
The cost to the insurance company for an HIV test includes the cost of the
paramedic as well as the cost of the collection kit and laboratory testing
services.  These costs average approximately $55 to $70, of which $35 to $50
is the cost of the paramedic.  As a result, insurance companies have generally
limited HIV testing to policies with face amounts of $100,000 or more.  Based
on industry statistics, Epitope Medical Products estimates that in 1994 over
9 million policies were issued for face amounts of less than $100,000,
representing 68 percent of all policies issued.  Epitope Medical Products
believes that the use of EpiScreen can significantly reduce the cost of HIV
testing to the insurance industry because collection of an oral fluid specimen
can be performed by insurance agents or other persons without professional
medical training, eliminating the cost of the paramedic and making testing at
policy levels below $100,000 a cost-effective practice.  Moreover, the Company
believes that insurance companies may adopt EpiScreen for use in connection
with applications for insurance policies with face amounts at and above
$100,000.

      Epitope Medical Products also believes that the use of EpiScreen will
allow the insurance industry to address "anti-selection."  Anti-selection
occurs when an individual who knows that he or she is infected with HIV
intentionally applies for one or more life insurance policies that do not
entail HIV testing. Epitope Medical Products believes that the availability of
two recently approved over-the-counter ("OTC") HIV blood tests may increase
the incidence of anti-selection. By allowing insurance companies to lower the
policy level at which HIV testing is cost-effective, the use of EpiScreen may
allow insurance companies to reduce their exposure to losses from anti-
selection and thereby to lower overall claims costs.

      An additional advantage of the EpiScreen testing system is that the oral
specimen used for HIV testing can also be used to identify smokers and users
of cocaine.  Cotinine, a metabolite of nicotine, can be detected using
OraSure/EpiScreen.  The FDA has advised Epitope Medical Products that
EpiScreen may be used for cocaine testing for the purpose of life insurance
risk assessment while a 510(k) notice is undergoing final review, and may be
used for cotinine testing generally.  In a presentation at the 105th annual
meeting of The American Academy of Insurance Medicine, a major life insurance
company reported results of the use of the EpiScreen testing system in Canada
and in the Bahamas from 1992 to 1995.  The life insurance company reported
that agent collection reduced its testing costs by $65 per application. 
During the four-year study period, the insurer found that it saved $1.7
million by using EpiScreen for HIV and cocaine testing.  In addition, the life
insurance company determined that it realized $1.6 million in increased
premiums as a result of identifying smokers who claimed on their applications
that they were nonsmokers.

      Physician and Clinical Market.  Through SB, Epitope Medical Products is
marketing its oral HIV testing system to the physician, hospital and other
professional healthcare provider markets under the brand name OraSure. OraSure
is now offered to physicians and hospitals in the United States by over 3,300
sales representatives in the SB distribution network.  In connection with the
introduction of OraSure to the physician community in August 1996, SB created
the OraSure Confidential Testing Network, a nationwide network for consumers
to identify doctors in their area who offer confidential HIV testing with
OraSure.  The Network is accessible to consumers through a toll-free number
(1-800-OraSure) and on the Internet (www.OraSure.com).  The SB product launch
was accompanied by an advertising campaign featuring two-page spreads in major
medical professional publications.  The OraSure brand was also a major sponsor
of the 1996 AIDS Candlelight March in Washington, D.C., conducted in
connection with the display of the National AIDS Quilts.

      OTC Market.  A recent study published in the New England Journal of
Medicine reported that 44 percent of Americans age 18 to 24 and 33 percent of
Americans age 25 to 44 were "very or somewhat likely" to purchase over-the-
counter home-collection HIV tests.  According to the United States Census
Bureau, as of July 1996 there were 24.7 million Americans in the 18 to 24 age
group and 83.7 million in the 25 to 44 age group.  Thus, based on the study,
the number of people "very or somewhat likely" to purchase OTC home-collection
HIV tests in the U.S. exceeds 35 million individuals.

      Epitope Medical Products and SB are currently conducting clinical trials
to support an application for FDA clearance to market OraSure as a home
collection testing system.  If FDA clearance is obtained, Epitope Medical
Products and SB plan to market the OraSure device for OTC sale as part of an
integrated system including laboratory testing and counseling.  Epitope
Medical Products believes the noninvasiveness and ease of use of OraSure
represent significant benefits to the home user over traditional blood-based
methods.  There can be no assurance that Epitope Medical Products will receive
FDA clearance to market OraSure to the OTC market on a timely basis, if at
all.  See "Description of Business--Epitope Medical Products--Government
Regulation."

      If Epitope Medical Products receives FDA clearance of the OraSure home
collection system, a consumer could purchase OraSure at retail outlets such as
pharmacies, drug stores, and other commercial facilities or through a mail
order program.  The consumer would collect the specimen and mail it in a
postage prepaid envelope to an SB laboratory for testing.  The consumer would
obtain his or her test results and counseling by calling a toll-free number
and providing a confidential identification number included with the test.  SB
has established an arrangement under which the American Social Health
Association ("ASHA") would provide test results and counseling to the caller. 
ASHA is the leading provider of AIDS counseling services in the United States,
handling over 4,000 calls per day on the National AIDS Hotline.

      International.  In light of the worldwide scope of the HIV epidemic,
Epitope Medical Products believes there are significant opportunities for sale
of EpiScreen/OraSure in international markets.  Epitope Medical Products
believes that the ease of use, portability, increased safety and lower cost of
oral fluid testing will provide significant advantages over blood tests in
international markets.  Epitope Medical Products has initiated an
international marketing program that offers a complete EpiScreen testing
system.  The program features direct assistance to distributors in
establishing EpiScreen programs that include laboratory services, cooperation
from screening test manufacturers, and provision of Western blot confirmatory
kits in each country.  Epitope is currently marketing EpiScreen to
distributors in Canada, Thailand, Argentina and South Africa for use in
professional markets.  SB also markets OraSure to the professional market in
several Latin American and African countries and the European Community
through its network of distributors.  See "Epitope Medical
Products--Marketing."
      
Products Under Development

      EpiScreen/OraSure.  Oral mucosal transudate contains many constituents
found in blood serum.  Because of this feature, the Company believes
EpiScreen/OraSure is a platform technology with a wide variety of potential
applications beyond HIV testing.  For example, the EpiScreen/OraSure device
may be useful for the diagnosis of a variety of infectious diseases in
addition to HIV, such as viral hepatitis and a number of childhood diseases. 
The Company recently applied for regulatory clearance in Canada to market
EpiScreen for the detection of measles, mumps and rubella.  In addition, the
Company believes that the use of oral specimens may allow physicians to
diagnose diseases more readily in children without subjecting them to the
discomfort of drawing a blood sample, thereby increasing the frequency of
testing for diseases.

      The Company believes the EpiScreen/OraSure device also has potential
application in the detection of drugs of abuse, such as cocaine.  A 510(k)
notification for this use is currently undergoing FDA review and, if approved,
will allow Epitope Medical Products to market EpiScreen/OraSure to
professional markets in addition to the life insurance industry.  Under an
agreement with STC Technologies, Inc., Epitope Medical Products is conducting
U.S. clinical trials for other drugs of abuse.  Physicians may also find the
device useful for monitoring levels and adjusting dosages of therapeutic
drugs, such as those that are toxic at levels only slightly above the level at
which they are effective.  Monitoring of these drugs currently requires
frequent blood tests to determine drug concentration.  The Company believes
oral fluid testing would eliminate the discomfort and inconvenience associated
with this frequent blood testing.

      OraQuick.  Epitope Medical Products is currently developing OraQuick(R)
HIV, a one-step, rapid-format oral fluid testing system designed to provide
test results within ten minutes.  Epitope Medical Products believes that
OraQuick has significant potential as a rapid laboratory-based HIV test and as
an OTC home-based HIV test.  Epitope Medical Products has substantially
completed a prototype of OraQuick HIV.  Like EpiScreen/OraSure, OraQuick is a
platform technology with a variety of potential applications in addition to
HIV testing.  Modifications of the basic OraQuick technology may allow use of
this approach for detection of antibodies against the ulcer-causing bacterium
Helicobacter pylori, as well as for a variety of infectious diseases such as
syphilis, viral hepatitis, and childhood infections.  There can be no
assurance that Epitope Medical Products will complete development of any of
these products or, in the event of successful development, will receive
applicable regulatory clearances or will profitably market the products.


Marketing

      Life Insurance Industry.  Epitope Medical Products currently markets its
EpiScreen device for use in screening life insurance applicants for HIV,
cocaine, and nicotine.  The Company maintains a six-member direct sales force
that markets and sells EpiScreen to the main insurance testing laboratories in
the United States and Canada.  The major laboratories currently using the
EpiScreen device include LabOne, Inc., Osborn Laboratories, Clinical Reference
Laboratory, Inc. and GIB Laboratories.  Epitope Medical Products also markets
the use of EpiScreen directly to life insurance companies.

      U.S. Professional and OTC.  In February 1995, Epitope Medical Products
entered into a Development, License and Supply Agreement with SB (the
"Agreement") for the OraSure HIV-1 oral specimen collection device and certain
future diagnostic products.  Under the Agreement, SB will sell the OraSure
device to the professional markets in the United States.  In addition, if and
when regulatory clearance is received, SB will market the OraSure device to
the U.S. OTC market.  SB paid Epitope Medical Products a one-time license fee
of $5 million for the rights granted under the Agreement.

      The Agreement provides that SB generally has responsibility for
advertising, promotion, distribution, and regulatory approval expenses in its
markets.  Epitope Medical Products will manufacture the OraSure devices for
sale to SB at predetermined transfer prices and will receive certain royalties
on SB product sales.  A portion of SB's costs in obtaining and maintaining
regulatory approvals will be credited against royalties payable to Epitope
Medical Products.

      The Agreement permits SB to fund Epitope Medical Products' ongoing
development of diagnostic products and technology for its term, which lasts
for a minimum of 15 years, subject to earlier termination on 60 days' notice
if SB elects to stop marketing the products in all markets.  SB has the option
to market those products developed with SB funding, which Epitope will
initially manufacture for agreed-upon prices and royalties.

      International.  Epitope Medical Products also employs a direct sales
force for the marketing and sale of EpiScreen in certain international
markets.  The Company complements its direct sales efforts through the use of
selected international distributors who have the expertise and capabilities
appropriate for marketing EpiScreen.  In addition, under the terms of the SB
Agreement, SB will act as exclusive director of the OraSure HIV-1 oral
specimen collection device in the professional markets in certain countries,
including the European Economic Community and certain African, Middle Eastern,
and Latin American countries.  Epitope Medical Products has retained all
rights to distribute products in markets other than those reserved to SB.

      Western Blot Distribution.  Epitope Medical Products has entered into
supply and distribution agreements with Organon Teknika Corporation, a member
of the Pharma Division of Akzo Nobel, NV, an international chemical and
pharmaceutical manufacturer based in Arnhem, The Netherlands.  The supply
agreement provides that Organon Teknika will supply the HIV-1 antigen used to
manufacture Western blot confirmatory test kits.  The distribution agreement
grants Organon Teknika the exclusive right to purchase Western blot
confirmatory test kits from Epitope Medical Products and to market them
worldwide.  Epitope Medical Products and Organon Teknika are negotiating terms
for continuing the supply and distribution arrangement after the existing
agreements expire on March 31, 1997.

Competition

      Competition in the emerging market for HIV testing is intense and is
expected to increase.  The Company believes that the principal competition
will come from existing blood-based HIV assays and from urine-based testing
assays.  Epitope Medical Products' competitors include specialized
biotechnology firms as well as pharmaceutical companies with biotechnology
divisions and medical diagnostic companies, many of which have considerably
greater financial, technical, and marketing resources than Epitope Medical
Products.  Competition may intensify as technological advances are made and
become more widely known and as products reach the market in greater numbers. 
Furthermore, new testing methodologies could be developed in the future that
render Epitope Medical Products' oral-based HIV test impractical, uneconomical
or obsolete.  There can be no assurance that Epitope Medical Products'
competitors will not succeed in developing or marketing technologies and
products that are more effective than those developed by Epitope Medical
Products or that would render its technologies or products obsolete or
otherwise commercially unattractive.  In addition, there can be no assurance
that competitors will not succeed in obtaining regulatory approval for these
products, or in introducing or commercializing them before Epitope Medical
Products.  Such developments could have a material adverse effect on the
Company's and Epitope Medical Products' business, financial condition and
results of operations.

      Three companies have submitted applications to the FDA for OTC HIV blood
testing:  Direct Access Diagnostics, Home Access Health Corp., and ChemTrak
Incorporated.  The FDA has approved a home collection kit for HIV blood
testing developed by Direct Access Diagnostics and another home collection kit
for HIV blood testing developed by Home Access Health Corp.

      Cambridge Biotech Corporation and BioRad Laboratories, Inc. manufacture
HIV Western blot confirmatory tests, and Waldheim Pharmazeutika manufactures
immunofluorescent HIV confirmatory tests, which compete with Epitope Medical
Products' EPIblot HIV-1 Western blot serum-based confirmatory test kits.

      Several other companies market or have announced plans to market oral
specimen collection devices and tests outside the United States and have
announced plans to seek FDA approval of such tests in the United States. 
Epitope Medical Products expects the number of devices competing with its
EpiScreen/OraSure device to increase as the benefits of oral specimen-based
testing become more widely accepted. Epitope Medical Products expects that FDA
approval of the EpiScreen device will also encourage potential competitors to
develop oral diagnostic products.  No such devices have yet been approved by
the FDA for HIV testing. See "Epitope Medical Products--Government
Regulation."

      The United States Food and Drug Administration ("FDA") recently approved
an HIV ELISA screening test for use with urine.  However, no Western blot or
other confirmatory test using urine has been approved by the FDA to date.  The
Company believes that absence of an FDA-approved confirmatory test for urine
poses a significant disadvantage to urine testing because a patient who
receives an initial positive screening result must return to give a second,
blood-based sample for confirmatory testing.  The Company also believes that
urine collection can be difficult, inconvenient and potentially embarrassing
for the patient, and that privacy and chain-of-custody issues are further
impediments to routine use of urine-based HIV tests.


Government Regulation

      General.  Many of Epitope Medical Products' proposed and existing
diagnostic products are subject to regulation by the FDA, other federal,
state, and local agencies, and comparable bodies in foreign countries.  Such
regulation governs almost all aspects of development and marketing, including
the introduction, advertising, promotion, manufacturing practices, labeling,
distribution, and record keeping for the products.  In the United States,
different types of diagnostic products are regulated differently by the FDA,
as discussed below.  As part of the FDA clearance process, Epitope Medical
Products often must demonstrate that its products are both safe and effective
for a particular indication or application.

      Drugs and Biological Products.  Generally, drugs and biological products
require FDA approval before marketing.  The steps required before a drug or
biological product may be marketed in the United States include:  (1)
preclinical laboratory and animal tests; (2) submission of an application for
an investigational new drug or biological product, which must become effective
before human clinical trials may commence; (3) human clinical trials; (4)
submission of a Product License Application ("PLA") for the biological product
or a New Drug Application ("NDA") for most other new drug products; and (5)
approval of the PLA or NDA.

      Preclinical safety and initial efficacy testing is usually undertaken in
animals.  Results of such preclinical and other laboratory tests are submitted
to the FDA before human clinical trials can begin.  Clinical trials are
typically conducted in three phases.  Phase I uses human subjects to determine
safety and tolerance.  Phase II uses a limited patient population to determine
effectiveness and dosage and to identify side effects.  Compounds found
effective and safe in Phase II are further tested in Phase III with an
expanded patient population at geographically dispersed clinical study sites. 
Each phase may last from one to two years or more.

      Most products are not approved because of the failure to demonstrate
safety, effectiveness, or both.  The FDA may suspend clinical trials at any
time if it is felt that subjects or patients are being exposed to an
unacceptable health risk.  Obtaining FDA approval requires substantial time
and effort.  There can be no assurance that any approval will be granted to
Epitope Medical Products on a timely basis, if at all.  As part of the
approval process, the FDA may require Epitope Medical Products to initiate
post-approval marketing studies.  

      Medical Devices.  Medical devices are classified either in Class I,
Class II, or Class III.  Class I devices are subject only to general control
provisions of the Federal Food, Drug, and Cosmetic Act, as amended (the "FDC
Act").  These provisions include requirements that a device not be adulterated
or misbranded.  Class II devices are those for which general controls are
insufficient to provide a reasonable assurance of safety and efficacy and for
which a "generic" performance standard or other special controls are
appropriate.  Devices that do not meet the criteria for Class I or II are
placed in Class III.  Class I and II devices, those Class III devices
initially marketed prior to passage of the Medical Device Amendments of 1976
("MDA") for which premarket approval applications ("PMAs") are not yet
required, and devices substantially equivalent to such devices, may be
marketed upon FDA clearance of a section 510(k) notification (a "510(k)
Notice").  Other Class III devices may be commercially marketed only after FDA
approval of a PMA.  Generally, the process of obtaining FDA approval of a PMA
is similar to that for obtaining approval of a biological or other drug
product.

      Based upon the information provided in a 510(k) Notice regarding the
device's intended use and technological features, the FDA will determine
whether the device is "substantially equivalent" to a predicate device, i.e.,
a device legally marketed which did not require a PMA.  If a device is found
to be substantially equivalent to a predicate device, it may be freely
marketed in the United States so long as the device is otherwise in compliance
with the FDC Act.  If it is not so found, it will be considered a Class III
device requiring a PMA.  Substantial equivalence means that the FDA has found
that the device has the same intended use as the predicate device, and either
has the same technological characteristics or has different characteristics,
but there is information in the 510(k) Notice that shows the device is as safe
and effective as the predicate and does not present different questions of
safety and effectiveness.

      EpiScreen/OraSure Collection Device.  Use of the EpiScreen/OraSure
collection device for applications involving the detection of antibodies to
HIV is regulated by the FDA as use of a Class III medical device requiring a
PMA.  In December 1994, the FDA approved Epitope Medical Products' PMA for use
of the Episcreen/Orasure device in HIV screening.  Post-approval marketing
studies are under way as required as part of the FDA's approval of the
EpiScreen/OraSure device.  In June 1996, the FDA approved the PMA for use of
the OraSure oral specimen-based Western blot confirmatory test kit for HIV-1
diagnosis.

      In February 1995, Epitope Medical Products submitted a 510(k) Notice for
use of EpiScreen for cocaine testing.  The submission is currently undergoing
FDA review.  See "Business--Epitope Medical Products--Products Under
Development--EpiScreen." In the meantime, the FDA has advised Epitope Medical
Products that EpiScreen may be used for cocaine testing for the purposes of
life insurance risk assessment. 

      Western Blot Test Kits.  Epitope Medical Products' HIV-1 Western blot
serum-based confirmatory test kits are used to confirm whether individuals are
infected with HIV-1.  They are regulated by the FDA as biological products,
unlike most other diagnostic tests which are regulated as medical devices.  In
March 1991, the FDA cleared the EPIblot HIV-1 serum-based confirmatory test
kit for commercial distribution.  As noted above, a PMA seeking permission to
market the OraSure oral specimen-based Western blot confirmatory test kit for
HIV-1 diagnosis was approved by the FDA in June 1996.

      Manufacturing Regulations.  Every company that manufactures drugs,
biological products, or medical devices distributed in the United States is
subject to inspections by the FDA and must comply with the FDA's Current Good
Manufacturing Practices regulations.  These regulations govern, among other
matters, manufacture, testing, release, packaging, distribution, and
documentation.

      Other.  Epitope Medical Products is also subject to regulation by the
Occupational Safety and Health Administration and may be subject to regulation
by the U.S. Environmental Protection Agency ("EPA") under the Toxic Substances
Control Act ("TSCA"), the Resource Conservation and Recovery Act, and other
legislation.  Epitope Medical Products is also subject to foreign regulations
governing, for example, human clinical trials and marketing with respect to
products distributed outside the United States.  Approval processes vary from
country to country, and the length of time required for approval or to obtain
other clearances may in some cases be longer than that required for U.S.
governmental approvals.  The extent of potentially adverse governmental
regulation affecting Epitope Medical Products that might arise from future
legislative or administrative action cannot be predicted.

                                   Agritope

      Historically, Agritope has focused on the development and
commercialization of novel agricultural products using plant genetic
engineering and other modern methods.  Through its acquisition of A&W and its
majority ownership of Vinifera, Agritope positioned itself as a vertically
integrated agribusiness with the production, distribution and marketing
infrastructure necessary to realize better the value of its proprietary
technology. Agritope's products now include a broad range of fruits,
vegetables and plants produced using technologically advanced farming and
plant propagation techniques designed to incorporate advances in
biotechnology, plant breeding, and crop production.
  
      Agritope consists of three major units:  Agritope Research and
Development, A&W, and Vinifera.  Agritope Research and Development contributes
biotechnology and product development efforts to A&W and Vinifera as well as
to its other business partners.  Through A&W, Agritope produces, markets,
distributes and sells a wide variety of fruits and vegetables throughout North
America. Through Vinifera, Agritope believes that it offers the most advanced
grapevine plant propagation and disease screening and elimination programs
available to the worldwide wine and table grape production industry.

Agritope Research and Development

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

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

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

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

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

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

      Agritope's ripening control technology is protected by a U.S. patent
covering the use of any gene that encodes S-adenosylmethionine hydrolase (the
enzyme expressed by the SAMase gene) in any plant species.  In addition to the
patent on the SAMase gene, utility claims have been allowed on the
promoter/gene combination used by Agritope in applications currently under
development as well as potential applications in all other fruit-bearing
plants.  In the area of regulated ripening control, Agritope has four
additional U.S. and foreign patents pending.  In addition, Agritope has three
U.S. and foreign patent applications pending in related areas.  See
"Description of Business--Epitope, Inc.--Patents and Proprietary Information."

      Development Programs.  Agritope's research and development programs are
directed toward several highly perishable fruit and vegetable crops described
below.  The development program comprises five stages, including gene
isolation, transformation, product evaluation, seed/plant production and
commercialization.

      The following chart shows the approximate progress Agritope has made to
date with various crops, which are described in more detail below.

      [Chart titled "Agritope Product Development Program" listing the
      stages of development (gene isolation, transformation, product
      evaluation, seed/plant production, and product launch).  The chart
      shows that the following products are in the stages indicated:

            Tomato                        Product Evaluation
            Raspberry                     Product Evaluation
            Melon                         Transformation
            Brassica                      Transformation
            Additional Crops              Gene Isolation]

            Gene Isolation:  The initial stage of genetic engineering. 
      Gene isolation involves the identification and characterization of
      genes and gene promoters for use in Agritope's development
      programs.  These genetic elements are then combined for use in
      genetically engineered plants.

            Transformation:  The stage at which the new genetic material
      is introduced into the plant.  The transgenic plants which result
      are then available for product evaluation.

            Product Evaluation:  The analysis of transgenic plants in
      both laboratory and field settings to determine commercial
      utility. This stage also involves the plant breeding and selection
      process to develop commercially competitive new varieties that
      incorporate the Agritope technology.  Regulatory data are also
      collected and submitted at this stage.

            Seed/Plant Production:  Propagation of selected plant
      material (either seed or plants) in quantities needed for
      commercial production.

            Product Launch:  Commercial production and sale, following
      regulatory clearance.

      Tomato.  The annual U.S. wholesale fresh market tomato business is
estimated at $1.7 billion.  In order to facilitate the commercialization of
its ethylene control technology into this market, Agritope and A&W formed
Superior Tomato Associates, L.L.C. ("STA"), a joint venture with Sunseeds
Company, the developer and producer of several leading fresh market tomato
varieties.

      Agritope provides genetic engineering technology and regulatory
expertise, has responsibility for managing the joint venture, and owns a two-
third equity ownership interest in STA.  Sunseeds provides elite tomato
germplasm and breeding expertise in the development of transgenic varieties. 
A&W contributes testing and production acreage and will oversee the production
and wholesale distribution of fresh tomatoes to the fresh produce industry.  

      STA is currently in the process of developing and testing transgenic
cherry, roma, and large fruited vine ripe tomato varieties.  Agritope has
developed lines of elite tomato germplasm provided by Sunseeds.  Recent field
trials have successfully demonstrated the transfer of Agritope's SAMase
ripening control technology to a number of Sunseeds' elite breeding lines. 
Sunseeds is conducting further breeding and field trials of these transgenic
lines.  These trials will be followed by production scale trials to be
conducted by A&W that, if successful, will lead to regulatory submissions and,
if regulatory clearances are received, commercial-scale seed production. 
Subsequently, A&W would commence commercial tomato production and sales to the
industry.  

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

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

      In a collaboration with Sweetbriar Development, Inc. ("Sweetbriar"), the
largest fresh raspberry producer in the U.S., Agritope has engineered several
of Sweetbriar's proprietary commercial raspberry varieties to contain the
SAMase gene.  Initial field trials of transgenic raspberries are currently
underway at Sweetbriar facilities in California and Agritope facilities in
Woodburn, Oregon. Agritope has already demonstrated the ability to reduce
ethylene synthesis in the fruit.  Successful development of a commercial
transgenic raspberry will require further demonstration of improved shelf life
as well as additional field trials to obtain the appropriate regulatory
clearances.  If these conditions are met, Sweetbriar would produce the new
raspberries for distribution and marketing by Driscoll Strawberry Associates
("Driscoll"), the largest distributor of fresh raspberries and strawberries in
the U.S.  Agritope would receive royalties on wholesale product sales.

      Separately, Agritope has integrated its ripening control technology into
commercially successful public domain varieties.  A&W would undertake
commercial production and distribution of any improved raspberry products
resulting from this program.  

      Melon.  The U.S. wholesale fresh melon market is estimated at $282
million annually. As with tomatoes, perishability results in substantial
product losses during the processes of production, harvesting, and
distribution.  Agritope believes that melons represent a substantial market
opportunity for implementation of its ripening control technology.  Recent
scientific reports have demonstrated a dramatic increase in shelf life for
specialty type melons in which the ability to produce ethylene has been
impaired.  Using proprietary seed varieties supplied by two units of the
French seed company Limagrain, Clause Semences, and its U.S. affiliate Harris
Moran Seed Company ("Harris Moran"), Agritope is developing commercial melon
varieties with controlled ripening and increased postharvest product life. 
Transgenic melons containing Agritope's ethylene control gene are currently
being evaluated jointly by Harris Moran and Agritope technicians.  If
successfully developed, the melons will be distributed by A&W and third party
distributors.

      Brassica.  Agritope has an agreement with Sakata Seed America ("Sakata")
to develop new varieties of certain Brassica species (broccoli and
cauliflower). Sakata is the leading hybrid broccoli and cauliflower seed
supplier in the U.S.  Sakata provided Agritope with germplasm from selected
breeding lines and funds to develop broccoli and cauliflower plants
integrating Agritope ripening control technology.  Agritope received payment
from Sakata upon the transfer of genetically engineered plants to be used for
the production of hybrid seeds.  If the seeds are commercialized, Agritope
will receive a royalty on sales made by Sakata.  

      Additional Crops.  Agritope is also pursuing research and development
programs to incorporate its SAMase technology into other crops where
perishability causes significant losses in the production and distribution
process.  These include strawberries, lettuce, bananas, peaches, pears, and
apples.  The estimated U.S. wholesale markets for these crops range from $325
million for pears to $2.4 billion for bananas.

Andrew and Williamson Sales, Co.

      As part of its vertical integration strategy, Agritope acquired A&W on
December 12, 1996.  A&W is a wholly owned operating subsidiary based in San
Diego, California with sales offices in San Diego and Bakersfield, California
and Nogales, Arizona.  A&W, founded in 1986, produces fruits and vegetables
and provides sales and distribution services for growers from both mainland
and Baja, Mexico and the San Joaquin Valley in California.  A&W produces and
distributes a diversified mix of fresh fruits and vegetables including vine
ripe cherry, roma and fresh market tomatoes, strawberries, raspberries,
melons, tree fruits, table grapes, cucumbers, squash, green, red and yellow
peppers, Brussels sprouts and asparagus.  In addition to fresh strawberries,
A&W processes and sells frozen strawberry products. A&W ships fresh produce
every day of the year from its facilities in San Diego and ships seasonally
from its other sites.  A&W is one of the United States' largest distributors
of vine ripe cherry and fresh market tomatoes.  It is also a major shipper of
fresh strawberries, melons and cucumbers throughout North America.  In
connection with its distribution operations, A&W also provides technical
support and short-term loans to certain growers.  See Note 13 to Financial
Statements included herein.

      The Company acquired A&W pursuant to an Acquisition and Merger Agreement
with A&W and its shareholders, under which a subsidiary of the Company was
merged into A&W.  The Company issued 520,000 shares of common stock of
Epitope, Inc., in exchange for all the outstanding common stock of A&W.  A&W
also repaid certain loans due to its shareholders.  The acquisition was
accounted for as a pooling of interest and qualifies as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended.  

      The Company has agreed to register for resale the shares issued to the
shareholders of A&W, who have represented that they have no present intention
to sell the shares.  Fifteen percent of the shares will bear a legend
prohibiting sale without the Company's consent.  The shareholders have agreed
that these shares will be returned to the Company to satisfy claims for breach
of representations and/or warranties arising within approximately one year
after closing.  

      The four principals of A&W have entered into three-year employment and
five-year noncompetition agreements with the Company.  Fred L. Williamson,
president of A&W, is an executive officer of the Company.

Vinifera, Inc.

      Vinifera, Inc. was incorporated in 1993 to participate in the grapevine
nursery business.  Through proprietary processes, Vinifera propagates and
grafts grape plants for sale to vineyards and to growers of table grapes. 
Industry sources have estimated that 44 million grafted wine grape plants were
produced in California in 1996.  This number is expected to increase to
between 70 and 90 million by the year 2000.  

      Traditionally, grapevine plants for sale to vineyards are produced
seasonally using field grown, dormant cuttings that are grafted. In contrast,
Vinifera uses year-round greenhouse propagation and a herbaceous grafting
method that employs very young, actively growing cuttings. As a result of
greenhouse propagation, Vinifera is able to develop in two years a quantity of
new plants that is approximately ten times larger than can be produced with
traditional techniques. In addition, herbaceous grafting with green cuttings
could allow a vineyard to begin commercial production of grapes from a newly
planted vineyard a year sooner than would otherwise be possible. This grafting
process also produces sturdier unions than dormant grafting, resulting in
significantly higher yields of successful grafts, both at the propagation
stage and in the survival of actual plantings in the field.  Agritope Research
and Development provides disease testing services for Vinifera.

      Vinifera is headquartered in Napa, California, with facilities in
Woodburn, Oregon and Petaluma, California.  Its library of grape plants
includes 32 different phylloxera-resistant types of rootstock, 88 different
wine varietal clones, and ten different table grape varietal clones.  In
addition, several French and Italian varietals are currently passing through
quarantine and, when released, will be available to the U.S. market
exclusively through Vinifera.  Vinifera believes that this collection of
different grapevine clones is one of the largest in the world.  Vinifera's
U.S. customer base consists of over 80 vineyards in California, Washington and
Oregon.  In 1995, Vinifera established a joint venture in Argentina (Vinifera
Sudamericana S.A.) to begin the propagation of plant material in that country. 
The first vines produced are expected to be sold in 1997.  Vinifera is
currently in the process of establishing similar ventures in other countries
with large grape and wine production industries.

      Vinifera was formed in 1993 as a wholly owned subsidiary of Agritope,
Inc.  In June 1995, Agritope, Inc. agreed to sell its equity interest in
Vinifera to a purchaser which subsequently failed to make scheduled payments
of the purchase price.  As part of a settlement of claims based on the
purchaser's default, the purchaser retained a minority interest in Vinifera
and relinquished the majority interest to Agritope, Inc. in August 1996.

Competition

      The agribusiness and plant biotechnology industry is highly competitive. 
Competitors include independent companies that specialize in agribusiness or
biotechnology; chemical, pharmaceutical and food companies that have
biotechnology laboratories; universities; and public and private research
organizations. Agritope believes that many companies including companies with
significantly greater financial resources, such as Monsanto Company,
Calgene Inc., DNAP Holding and Zeneca Seeds are engaged in the development of
mechanisms to control the ripening and senescence of fruit and vegetable
products.  Technological advances by others could render Agritope's products
less competitive.  The Company believes that, despite barriers to new
competitors such as patent positions and substantial research and development
lead time, competition will intensify, particularly from agricultural
biotechnology firms and major agrichemical, seed and food companies with
biotechnology laboratories.  Agritope believes that it can compete
successfully with companies in these markets by developing products that offer
unique and desirable attributes with superior quality.    

      The produce markets in which Agritope sells its products are highly
competitive.  For example, competition in the fresh tomato market is expected
to intensify as other companies introduce tomatoes developed through
biotechnology and as existing "gas green" tomato producers react to
competitive pressures by growing and marketing traditionally developed vine
ripe tomatoes.

      In other crops, competition may intensify as technological developments
occur within the agricultural biotechnology industry.  In competing with such 
companies,  Agritope relies primarily on the experience of its production,
sales and marketing staff at A&W, the qualifications of its scientific staff,
and its technological capabilities.


Government Regulation

      Regulation by federal, state and local government authorities in the
U.S. and by foreign governmental authorities will be a significant factor in
the future production and marketing of Agritope's genetically engineered fruit
and vegetable products.

      The federal government has implemented a coordinated policy for the
regulation of biotechnology research and products. The USDA has primary
federal authority for the regulation of specific research, product development
and commercial applications of certain genetically engineered plants and plant
products.  The FDA has principal jurisdiction over plant products that are
used for human or animal food. The EPA has jurisdiction over the field testing
and commercial application of plants genetically engineered to contain
pesticides. Other federal agencies have jurisdiction over certain other
classes of products or laboratory research.

      The USDA regulates the growing and transportation of most genetically
engineered plants and plant products. In March 1996 following a request from
Agritope, the USDA issued a determination that allows the growing and shipping
of its prototype variety of ripening controlled cherry tomato anywhere in the
U.S. in the same manner as conventionally developed tomatoes.  

      In May 1992, the FDA announced its policy on foods developed through
genetic engineering (the "FDA Policy"). The FDA Policy provides that the FDA
will apply the same regulatory standards to foods developed through genetic
engineering as applied to foods developed through traditional plant breeding.
Under the FDA Policy, the FDA will not ordinarily require premarket review of
genetically engineered plant varieties of traditional foods unless their
characteristics raise significant safety questions, such as elevated levels of
toxicants, the presence of allergens, or they are deemed to contain a food
additive.

      In March 1996, the FDA announced its determination, based on its review
of food safety data submitted by Agritope, that its prototype variety of
ripening controlled cherry tomato expressing the SAMase gene has not been
significantly altered with respect to food safety or nutritive value when
compared to conventional tomatoes. 

      The FDA has also issued a food additive regulation permitting the use of
the kanr selectable marker gene, which encodes for the enzyme APH(3')II in
genetically engineering tomatoes, cotton and canola.  Agritope tomato products
will fall under this regulation.  It is uncertain whether additional food
additive regulations will need to be issued to cover additional fruit and
vegetable products which use the kanr selectable marker gene.  

      Currently, the FDA Policy does not require that genetically engineered
products be labeled as such, provided that such products are as safe and have
the same nutritional characteristics as conventionally developed products.
However, there can be no assurance that the FDA will not reconsider its
position, or that local, state or international authorities will not enact
labeling requirements, any of which could have a material adverse effect on
marketing of products derived using the tools and techniques of genetic
engineering.

      The FDA is currently considering modifying its policy on foods developed
through genetic engineering to include a Premarket Notification ("PMN")
procedure. This policy modification could require companies that develop
genetically engineered foods to inform the FDA that its safety evaluation is
complete and that the company intends to commercialize the product. The
objective of the PMN is to make the FDA and the public aware of all new
genetically engineered food products entering the market. Agritope believes
that any future requirement for a PMN should not delay plans to commercialize
its genetically engineered fruit and vegetable products.

      Agritope's complete range of agribusiness and plant biotechnology
activities are subject to general FDA food regulations and are, or may be,
subject to regulation under various other laws and regulations.  These include
but are not limited to the Occupational Safety and Health Act, the Toxic
Substances Control Act, the National Environmental Policy Act, other Federal
water, air and environmental quality statutes, import/export control
legislation, and other laws. At the present time most states are generally
deferring to federal agencies (USDA or EPA) for the approval of genetically
engineered plant field trials, although states are provided a review period
prior to the issuance of a field trial permit. Failure to comply with
applicable regulatory requirements could result in enforcement action,
including withdrawal of marketing approval, seizure or recall of products,
injunction or criminal prosecution.

      The federal regulatory agencies most involved in the business of A&W,
the production and marketing of fresh fruit and vegetables, are the USDA and
the FDA. 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.  

      Almost every aspect of federal regulation is accompanied by regulation
on the state level.  In addition, in its Mexican operations, A&W must comply
with the requirements of Mexican law, most importantly Mexico's environmental
protection law.

      International regulatory policies for genetically engineered plants and
plant products are not complete. Consequently, it is possible that additional
data, labeling or other requirements will be required in countries where
Agritope intends to grow and/or commercialize its genetically engineered
products. Foreign regulatory agencies could require Agritope to conduct
further safety assessments and potentially delay product development programs
or commercialization of resulting products.

      To date, Agritope to the best of its knowledge has successfully
functioned within the scope of applicable laws and regulations, including
rules administered by the USDA, the FDA and the Mexican Ministry of
Agriculture.  Agritope believes it is in compliance with all applicable laws
and regulations pertaining to the development and commercialization of its
products.

                                 Epitope, Inc.
Supplies

      The HIV-1 antigen needed to manufacture Epitope Medical Products'
Western blot HIV confirmatory test kits is available from only a limited
number of sources.  Organon Teknika, the exclusive distributor of the test
kits, is required to supply Epitope Medical Products' requirements for antigen
for the term of its distribution agreement with Epitope Medical Products,
which ends in March 1997.  The parties are negotiating terms for continuing
the supply arrangement.  If for any reason Organon Teknika should no longer be
able to supply Epitope Medical Products' antigen needs, management believes
Epitope Medical Products would be able to obtain or produce its own supply of
antigen at a competitive cost.  Epitope Medical Products has obtained a
license from the National Technical Information Service which is required for
the production of the HIV-1 antigen currently used in Epitope Medical
Products' Western blot test kits.

      Other materials used by Agritope and Epitope Medical Products in
manufacturing, production, and research and development operations are widely
available from a variety of sources.

Grants and Contracts

      The Company participates in United States Small Business Innovation
Research ("SBIR") programs sponsored by either the Department of Health and
Human Services or the Department of Agriculture.  The SBIR programs have two
phases.  Phase I covers a six-month project period and a total award not to
exceed $100,000.  Phase II covers a two-year project period and a total award
not to exceed $750,000.  Epitope Medical Products has received funds in the
past from the National Institute of Allergy and Infectious Diseases ("NIAID")
for work in developing a rapid test to detect HIV antibodies in oral fluid
specimens and from the National Cancer Institute ("NCI") to fund research for
the treatment of cancer by exploiting a deficiency of certain compounds in
cancer cells.  

      Agritope was awarded from the USDA a Phase I grant of $50,000 in 1994
and a Phase II grant of $200,000 in 1995 for development of diagnostic tests
for the detection of grapevine leafroll virus.  Agritope has been awarded
grant support in the past from the Oregon Strawberry Commission and Oregon
Raspberry and Blackberry Commission for antifungal biocontrol research.  The
Company also receives funds for research and development programs from its
strategic partners.  

      The Company intends to continue to participate in the SBIR programs,
similar grant programs and projects with strategic partners, as it deems
appropriate.  The Company regularly makes applications for new grants, but
there is no assurance that grant support will be continued.

Patents and Proprietary Information

      Epitope Medical Products has obtained patents in the United States and
certain foreign countries for the EpiScreen/OraSure and OraQuick devices and
related technology.  Epitope Medical Products has applied for additional
patents, both in the United States and in certain foreign countries, on the
EpiScreen/OraSure collection device and a number of other technologies and
products.  In 1995, Agritope received a U.S. patent relating to its ethylene
control gene.  Agritope has also applied for additional U.S. and foreign
patent protection for its ethylene control technology.  Agritope's ability to
commercialize products depends in part on the ownership or right to use
relevant enabling technology as well as the ownership or right to use genes of
interest.  The Company anticipates filing patent applications for protection
on future products and technology.  United States patents generally have a
maximum term of 20 years from the date an application is filed or 17 years
from issuance, whichever is longer.

      Much of the technology developed by the Company is subject to trade
secret protection.  To reduce the risk of loss of trade secret protection
through disclosure, the Company requires its employees and consultants to
enter into confidentiality agreements.  The Company believes that patent and
trade secret protection is important to its business.  However, the issuance
of a patent or existence of trade secret protection does not in itself ensure
the Company's success.  Competitors may be able to produce products competing
with a patented Company product without infringing on the Company's patent
rights.  Issuance of a patent in one country generally does not prevent
manufacture or sale of the patented product in other countries.  The issuance
of a patent to the Company or to a licensor is not conclusive as to validity
or as to the enforceable scope of the patent.  The validity or enforceability
of a patent can be challenged by litigation after its issuance, and, if the
outcome of such litigation is adverse to the owner of the patent, the owner's
rights could be diminished or withdrawn.  Trade secret protection does not
prevent independent discovery and exploitation of the secret product or
technique.

Personnel

      At September 30, 1996, the Company and its subsidiaries had 113 full-
time employees, including 66 persons in Epitope Medical Products, 29 in
Agritope, and 18 in corporate administration and support.  Epitope Medical
Products employees included 18 persons in research and product development,
eight in administration and marketing, 29 in manufacturing and production, and
ten in regulatory affairs and quality assurance.  Agritope employees included
19 in research and development and ten at the Vinifera grape plant nursery
operation which also employs seasonal part-time employees as needed.  The
Company considers its relations with its employees to be excellent.  None of
its employees are represented by labor unions.

      The Company employs nine persons holding Ph.D. or M.D. degrees with
specialties in the following disciplines:  analytical chemistry, bacteriology
and public health, biochemistry, biophysics, hematology and internal medicine,
immunology, molecular biology, organic chemistry, plant biology and plant
pathology.  From time to time, the Company also engages the services of
scientists as consultants to augment the skills of its scientific staff.

Scientific Advisory Board

      The Company also utilizes the services of a Scientific Advisory Board. 
The Scientific Advisory Board meets periodically to review the Company's
research and development efforts and to apprise the Company of scientific
developments pertinent to the Company's business.  The Scientific Advisory
Board comprises chair Eugene W. Nester, Ph.D., Professor and Chair, Department
of Microbiology, University of Washington; Roger N. Beachy, Ph.D., Member,
Scripps Family Chair, and Head, Division of Plant Biology, The Scripps
Research Institute, and Co-Director of International Laboratory for Tropical
Agricultural Biotechnology; Peter R. Bristow, Ph.D., Associate Plant
Pathologist, Washington State University; J. Richard George, Ph.D., Vice
President of Scientific Affairs of Epitope Medical Products; Lesley M.
Hallick, Ph.D., Vice President for Academic Affairs, Oregon Health Sciences
University; Daniel Malamud, Ph.D., Professor and Chair, Department of
Biochemistry, University of Pennsylvania School of Dental Medicine; and
James I. Mullins, Ph.D., Professor of Microbiology and Medicine, University of
Washington.


            ITEM 2.     Properties.

      The Company leases approximately 35,600 square feet of office,
manufacturing, and laboratory space in Beaverton, Oregon, under two leases
that terminate January 31, 2000.  Each lease calls for fixed monthly payments
over its term.  The Company also entered into a five-year lease, effective
October 1, 1996, for 2,265 square feet of warehouse space used to store
inventory and equipment.

      Agritope, Inc., owns a 15-acre farm which it leases to Vinifera, Inc.,
for use in connection with Vinifera, Inc.'s grapevine micropropagation
operations.  Greenhouse capacity at the farm currently totals 60,000 square
feet.  Agritope, Inc., also uses a portion of the Company's office space and
research and development facilities in Beaverton, Oregon.

      In addition to leasing Agritope, Inc.'s Oregon farm and greenhouse,
Vinifera leases 2,000 square feet of office space in Napa, California under a
lease that expires August 31, 1998 and 250,000 square feet of greenhouse space
in Petaluma, California under a lease that expires January 31, 2001.

      A&W leases its main distribution facility in San Diego, California, from
Fred Andrew and Fred L. Williamson, under a lease agreement expiring
August 31, 2001, with an option to extend the lease term for an additional
five years.  A&W also leases a 1,000 square foot sales office in Bakersfield,
California, on a month-to-month basis.  A&W utilizes 10,000 square feet of a
cold storage facility in San Diego, California, for its frozen strawberry
operations.  A&W has the right to use the cold storage space through January
18, 1998.


      ITEM 3.     Legal Proceedings.

      None.

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

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

<PAGE>
                                    PART II

      ITEM 5.     Market for the Registrant's Common Stock and Related
                  Stockholder Matters.

      The Company's Common Stock is listed for trading on the American Stock
Exchange ("AMEX") under the symbol EPT.  High and low sales prices reported by
AMEX during the periods indicated are shown below.  The Company has applied
for inclusion of the Common Stock on the national market tier of The Nasdaq
Stock Market.
<TABLE>
<CAPTION>

Year ended September 30       1996              1995
----------------------------------------------------------------------------------------------
<S>                              <C>            <C>            <C>                 <C>
Sales price per share     High         Low        High         Low

First Quarter             $ 18     $ 9-1/2       $  26    $ 18-1/2

Second Quarter          19-1/2      13-7/8      21-7/8      13-5/8

Third Quarter           22-7/8      15-1/2      18-3/8      13-5/8

Fourth Quarter          16-1/8      11-3/4          18      13-3/4
</TABLE>

      On November 30, 1996, there were 1,080 holders of record of the Common
Stock, and the closing price of the Common Stock was $12-1/4.  The Company has
never paid any cash dividends, and the Board of Directors does not anticipate
paying cash dividends in the foreseeable future.  The Company intends to
retain any future earnings to provide funds for the operation and expansion of
its business.

      ITEM 6.     Selected Financial Data.

      The following table sets forth selected historical consolidated income
and balance sheet data of Epitope, Inc. and its subsidiaries; selected
historical combined income and balance sheet data of Epitope Medical Products;
and selected historical combined income and balance sheet data of Agritope. 
The balance sheet data at September 30, 1996 and 1995 and the operating
results data for the years ended September 30, 1996, 1995, and 1994 have been
derived from audited consolidated financial statements and notes thereto
included in this Annual Report on Form 10-K.  The balance sheet data at
September 30, 1994, 1993 and 1992 and operating results data for the years
ended September 30, 1993 and 1992 are unaudited, but, in the opinion of
management, include all adjustments necessary for fair presentation.  The
following historical financial information has not been restated to give
effect to the merger with Andrew & Williamson Sales, Co. on December 12, 1996. 
The merger has been accounted for as a pooling of interests.  See Supplemental
Comparative Financial Data below.
<PAGE>
<TABLE>
<CAPTION>
                     Historical Comparative Financial Data
              (In thousands, except net profit (loss) per share)
<S>                                  <C>         <C>        <C>          <C>         <C>
Year ended September 30      1996     1995    1994     1993     1992
Epitope Medical Products
Combined operating results
Revenues. . . . . . . . . . . . .$  5,594$  2,856$  2,605$  2,759$  2,985
Operating costs and expenses. . .10,88114,4638,890    9,376    8,312
Other income (expense), net . . .6,027 756     236   (1,276)     221
Net profit (loss). . . . . . .. .739(10,851)(6,048)  (7,893)  (5,106)
Pro forma net profit (loss) per share...06(.91)(.60)   (.89)    (.59)
Pro forma shares used in per share
 calculations . . . . . . . . . .13,44011,88610,050   8,828    8,628
Combined balance sheet data
Working capital . . . . . . . . .$ 20,366$  15,449$  13,474$  7,029$  5,255
Total assets. . . . . . . . . . .24,35021,83117,183  10,381    7,954
Accumulated deficit . . . . . . .(41,705)(42,444)(31,593)(25,545)(17,652)
Group equity. . . . . . . . . . .22,53218,03515,661   9,280    7,178
 
Agritope
Combined operating results
Revenues. . . . . . . . . . . . .$    585$  2,110$ 2,213$    524$    58
Operating costs and expenses. . .2,8219,92011,703     7,331    2,790
Other income (expense), net . . .97    166     (94)     (29)      72
Net loss. . . . . . . . . . . . .(2,139)(7,645)(9,584)(6,836) (2,660)
Pro forma net loss per share. . .(.34)(1.29) (1.91)   (1.55)    (.62)
Pro forma shares used in per share
 calculations . . . . . . . . . .6,3315,943 5,026     4,414    4,314
Combined balance sheet data
Working capital . . . . . . . . .$  1,264$  5,082$ 3,710$ 1,673$ 4,368
Total assets. . . . . . . . . . .10,0978,303 7,372    3,764    6,177
Long-term debt. . . . . . . . . .-      22      38       57        -
Convertible notes, due 1997 . . .3,6203,620  4,070    4,630    5,495
Accumulated deficit . . . . . . .(31,280)(29,141)(21,497)(11,912)(5,076)
Group equity (deficit). . . . . .5,4354,312  2,810   (1,310)     482

Epitope, Inc. and Subsidiaries
Consolidated operating results
Revenues. . . . . . . . . . . . .$ 6,179$  4,965$  4,819$  3,283$  3,043
Operating costs and expenses. . .13,70224,38320,593  16,707   11,102
Other income (expense), net . . .6,123 922     141   (1,305)     293
Net loss. . . . . . . . . . . . .(1,400)(18,496)(15,633)(14,729)(7,765)
Net loss per share. . . . . . . .(.11)(1.56) (1.56)   (1.67)    (.90)
Shares used in per share
 calculations . . . . . . . . . .12,66111,88610,050   8,828    8,628
Consolidated balance sheet data
Working capital . . . . . . . . .$ 21,630$ 20,532$ 17,184$  8,703$  9,623
Total assets. . . . . . . . . . .34,44730,13424,555  14,145   14,130
Long-term debt. . . . . . . . . .-      22      38       57        -
Convertible notes, due 1997 . . .3,6203,620  4,070    4,630    5,495
Accumulated deficit . . . . . . .(72,985)(71,585)(53,090)(37,457)(22,728)
Shareholders' equity. . . . . . .27,96722,34718,470   7,970    7,660

</TABLE>
<PAGE>
      The following table sets forth selected supplemental consolidated income
and balance sheet data of Epitope, Inc. and its subsidiaries; selected
supplemental combined income and balance sheet data of Epitope Medical
Products; and selected supplemental combined income and balance sheet data of
Agritope.  The balance sheet data at September 30, 1996 and 1995 and the
operating results data for the years ended September 30, 1996, 1995, and 1994
have been derived from audited consolidated financial statements and notes
thereto included in this Annual Report on Form 10-K.  The balance sheet data
at September 30, 1994, 1993 and 1992 and operating results data for the years
ended September 30, 1993 and 1992 are unaudited, but, in the opinion of
management, include all adjustments necessary for fair presentation.  The
following supplemental financial information has been restated to give effect
to the merger with Andrew & Williamson Sales, Co. on December 12, 1996.  The
merger has been accounted for as a pooling of interests.

<PAGE>
<TABLE>
<CAPTION>

                    Supplemental Comparative Financial Data
       (In thousands, except net profit (loss) and dividends per share)
<S>                                   <C>         <C>        <C>        <C>         <C>
Year ended September 30      1996     1995    1994     1993     1992
Epitope Medical Products
Combined operating results
Revenues. . . . . . . . . . . . .$  5,594$  2,856$  2,605$  2,759$  2,985
Operating costs and expenses. . .10,88114,4638,890    9,376    8,311
Other income (expense), net . . .6,027 756     236   (1,276)     221
Net profit (loss). . . . . . .. .739(10,851)(6,048)  (7,893)  (5,106)
Pro forma net profit (loss) per share...05(.87)(.57)   (.84)    (.56)
Pro forma shares used in per share
 calculations . . . . . . . . . .13,96012,40610,570   9,348    9,148
Combined balance sheet data
Working capital . . . . . . . . .$ 20,366$  15,449$  13,474$  7,030$  5,255
Total assets. . . . . . . . . . .24,35021,83117,182  10,381    7,953
Accumulated deficit . . . . . . .(41,705)(42,444)(31,593)(25,545)(17,652)
Group equity. . . . . . . . . . .22,53218,03515,660   9,281    7,179

Agritope
Combined operating results
Revenues. . . . . . . . . . . . .$ 63,057$ 54,289$ 62,918$ 39,796$30,348
Operating costs and expenses. . .63,39062,05971,024  45,503   32,745
Other income (expense), net . . .(671)(252)   (444)    (184)     (76)
Net loss. . . . . . . . . . . . .(1,004)(8,022)(8,550)(5,891) (2,473)
Pro forma net loss per share. . .(.15)(1.29) (1.62)   (1.26)    (.54)
Pro forma dividends per share . ..20   .05     .10      .15      .03
Pro forma shares used in per share
 calculations . . . . . . . . . .6,5916,203  5,285    4,674    4,574
Combined balance sheet data
Working capital . . . . . . . . .$    754$  5,764$ 5,185$ 2,553$ 4,845
Total assets. . . . . . . . . . .20,86115,59711,500  9,554    10,103
Long-term debt. . . . . . . . . .528 1,648   1,714    1,648    1,080
Convertible notes, due 1997 . . .3,6203,620  4,070    4,630    5,495
Accumulated deficit . . . . . . .(30,584)(28,255)(19,900)(10,809)(4,219)
Group equity (deficit). . . . . .6,1525,219  4,429     (186)  1,360 

Epitope, Inc. and Subsidiaries
Consolidated operating results
Revenues. . . . . . . . . . . . .$68,650$ 57,144$ 65,523$ 42,554$ 33,333
Operating costs and expenses. . .74,27176,52279,913  54,878   41,057
Other income (expense), net . . .5,356 504    (208)  (1,460)     145
Net loss. . . . . . . . . . . . .(265)(18,874)(14,598)(13,784)(7,578)
Net loss per share. . . . . . . .(.02)(1.52) (1.38)   (1.47)    (.83)
Dividends per share . . . . . . ..10   .03     .05      .07      .02
Shares used in per share
 calculations . . . . . . . . . .13,18112,40610,570   9,348    9,148
Consolidated balance sheet data
Working capital . . . . . . . . .$ 21,120$ 21,213$ 18,659$  9,583$ 10,100
Total assets. . . . . . . . . . .45,21137,42728,682  19,935   18,056
Long-term debt. . . . . . . . . .528 1,648   1,714    1,648    1,080
Convertible notes, due 1997 . . .3,6203,620   4,07    4,630    5,495
Accumulated deficit . . . . . . .(72,290)(70,700)(51,492)(36,354)(21,871)
Shareholders' equity. . . . . . .28,68423,25420,089   9,095    8,539
</TABLE>
<PAGE>
ITEM 7.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations.

At the 1997 annual meeting, the shareholders will vote on a proposal to create
two new classes of common stock, one that will track the performance of the
Company's agricultural operations and one that will track the performance of
the Company's medical products business.  The accompanying consolidated
financial statements have been prepared to reflect the operating results and
financial condition of the Company and its subsidiaries.  In addition,
combined proforma financial statements have been prepared to reflect, on a
separate basis, assuming shareholder approval of the proposal, the operating
results and financial condition of the two business groups.

Under the proposed plan, a new class of common stock called Agritope Common
Stock (Agritope Stock) will be distributed to Epitope shareholders in the
ratio of one-half share of Agritope Stock for each outstanding share of
existing common stock.  In addition, Epitope shareholders will retain their
existing common stock which will be redesignated as Epitope Medical Products
Common Stock (Epitope Medical Products Stock) on a share-for-share basis.  The
approval of the distribution will not result in any transfer of assets or
liabilities of the Company.  The Company and its subsidiaries will continue to
hold title to all its assets and be responsible for all its liabilities. 
Holders of the Epitope Medical Products and Agritope common stock will have no
specific claim against the assets attributed for financial statement
presentation purposes to the group whose performance is associated with the
class of stock they hold.  Liabilities or contingencies of either group that
affect the Company's resources or financial condition could affect the
financial condition or results of operations of both groups.

The combined operating statements include the cost of certain services which
are provided on a centralized basis for the benefit of both groups (Shared
Services).  Such expenses have been allocated to each group using activity
indicators which, in the opinion of management, represent a reasonable measure
of the respective group's utilization of or benefit from such Shared Services. 
Interest earned on investments has been allocated to each group in direct
proportion to the allocation of Shared Services.  See Note 2 to Historical
Financial Statements.

On December 12, 1996, the Company merged with Andrew and Williamson Sales, Co.
(A&W) in a transaction accounted for as a pooling of interests.  Accordingly,
this Annual Report on Form 10-K includes both historical financial statements
and supplemental financial statements which are restated to include the
financial position and results of operations of A&W as if the merger had
occurred on the first day of the earliest period presented. See Note 13 to
Supplemental Financial Statements.

The following discussion is a summary of key factors management considers
necessary in reviewing the results of operations, liquidity and capital
resources of the Company and its Epitope Medical Products and Agritope groups.

<PAGE>
                        Historical Financial Statements

                           Epitope Medical Products

Results of Operations

The table below shows the percentage of Epitope Medical Products' total
revenue contributed by each of its principal products and by grants and
contracts.


Fiscal Year                            1996           1995           1994

Percentage of Revenues from:
Oral Specimen Collection Devices.       59%            34%            34%
HIV Confirmatory Tests. . . . . .       28%            64%            65%
Grants and Contracts. . . . . . .       13%             2%             1%

Revenues.  Epitope Medical Products' product sales increased 73% in 1996, to
$4.9 million, and 9% in 1995 as a result of expanded sales volume of its lead
product, the EpiScreen/OraSure oral specimen collection device. Approximately
39% of 1996 sales were attributable to shipments in the fourth quarter.  Grant
and contract revenues amounted to $729,000 in 1996 due to funding of research
projects by the group's marketing partner, SmithKline Beecham plc. (SB). 
Revenues in 1994 were $2.6 million.

The oral specimen collection device, which is sold by the Company under the
trade name EpiScreen(R) and by SB under the trade name OraSure(TM), accounted
for revenues of $3.3 million in 1996, as compared to $981,000 in 1995, and
$833,000 in 1994.  The significant increase in sales volume resulted from FDA
clearances for expanded use of EpiScreen/OraSure.

Epitope Medical Products' Western blot HIV confirmatory test produced sales
revenues of $1.5 million for 1996, 15% below prior year levels.  Reduced sales
to international markets accounted for the decline. In 1995, on the strength
of increased market share in the U.S., confirmatory tests produced revenues of
$1.8 million, representing a 7% increase over the prior fiscal year.

As of September 30, 1996, Epitope Medical Products had firm orders totaling
$1.8 million and $450,000, respectively, for delivery within 90 days of oral
specimen collection devices and HIV confirmatory tests, as compared to
$488,000 and $329,000, respectively, of firm orders for delivery within 90
days as of September 30, 1995.

Gross Margins.  Gross margins on product sales improved to 44.9% of sales in
1996 as a result of increased sales volume of EpiScreen/Orasure devices. 
Margins on EpiScreen/OraSure sales were negative in 1995 and 1994.

Research and Development Expenses.  Research and development expenses declined
31% to $3.2 million in 1996 as a result of cost reductions associated with the
Company's September 1995 restructuring program as well as lower levels of
clinical trials activity.  Research and development expenses increased from
$3.7 million in 1994 to $4.6 million in 1995.  The increase resulted primarily
from increased research projects and clinical trial activities.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses declined 25% to $5.0 million in 1996 primarily due to
cost reductions implemented in the Company's restructuring program.  Selling,
general and administrative expenses increased by $3.6 million to $6.7 million
in 1995 as a result of increased sales and marketing expenses associated with
product launch following the December 1994 FDA approval of the
EpiScreen/OraSure device for use in HIV screening.  Selling, general and
administrative expenses for 1995 included approximately $607,000 for severance
payments and other costs associated with implementing the restructuring
program.  Selling, general and administrative expenses also included $3.0
million, $3.6 million and $1.9 million for the allocation of Shared Services
in 1996, 1995 and 1994, respectively.

Other Income, Net.  Other income for 1996 included $5.2 million related to
license fees earned from SB as a result of FDA approval of an extension of
dating for the OraSure/EpiScreen device.  Other income increased from $236,000
in 1994 to $756,000 in 1995, primarily from higher levels of investment
income.

Liquidity and Capital Resources

Cash, cash equivalents and marketable securities allocated to Epitope Medical
Products as of year-end totaled $19.6 million in 1996 and $17.1 million in
1995.  At September 30, 1996, Epitope Medical Products had working capital of
$20.4 million, as compared to $15.4 million at September 30, 1995.  

In the combined financial statements, cash equal to 20% of the Company's cash,
cash equivalents and marketable securities has been allocated to Agritope. 
Historically, cash was transferred to the Agritope operations in the form of
intercompany loans.  For the purpose of preparing the separate statements of
Epitope Medical Products and Agritope, such transfers and intercompany
balances have been reflected as equity investments in Agritope.  If the
creation of a second class of common stock is approved, the Company will
allocate at least $5 million of cash to Agritope as additional contributed
capital.

Proceeds from the issuance of equity securities of the Company, augmented by
funding from strategic partners and other research grants, have represented
the primary sources of funds for meeting Epitope Medical Products'
requirements for operations, working capital and business expansion.  

Epitope Medical Products anticipates that it will continue to need funds to
support its operations and ongoing research and development projects as well
as to provide additional manufacturing capacity and related increases in
working capital.  Epitope Medical Products intends to utilize cash reserves,
cash generated from sales of products and research funding from SB and other
strategic partners to provide the necessary funds.  Epitope may also receive
additional funds from the sale of equity securities or from the exercise of
outstanding stock options and warrants.

<PAGE>
                        Historical Financial Statements

                                   Agritope
Results of Operations

The table below shows the percentage of Agritope's total revenue contributed
by each of its principal products and by grants and contracts:

Fiscal Year                            1996           1995           1994

Percentage of Revenues from:
Grape Plants. . . . . . . . . . .       --%             4%             1%
Packaged Fresh Flowers. . . . . .       --%            91%            97%
Grants and Contracts. . . . . . .      100%             5%             2%

Revenues.  Revenues declined from $2.1 million in 1995 to $585,000 in 1996. 
Revenues for 1994 were $2.2 million.  Revenues in 1995 and 1994 included
product sales of $2.0 and $2.2 million, respectively, from the Company's
unprofitable wholesale fresh flower packaging and distribution operations
which were divested in the third quarter of fiscal 1995.  A grant from the
U.S. Department of Agriculture plus grants from strategic partners accounted
for the increase of grant and contract revenues from $94,000 in 1995 to
$585,000 in 1996.  

Research and Development Expenses.  Research and development expenses in 1996,
1995 and 1994 totaled $1.3 million, $2.2 million and $2.4 million,
respectively.  The decrease from 1995 to 1996 resulted from the divestiture of
certain businesses.  See Note 3 to Historical Financial Statements.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses in 1996, 1995, and 1994 were $1.5 million, $4.5
million and $4.8 million, respectively.  The higher cost levels in 1995 and
1994 resulted from increased costs at Agritope's Agrimax and Vinifera business
units.  Selling, general and administrative expenses include $1.1 million,
$1.9 million and $1.7 million for the allocation of Shared Services in 1996,
1995 and 1994, respectively.

Liquidity and Capital Resources

Cash allocated to Agritope totaled $4.9 million at September 30, 1996 and $4.2
million at September 30, 1995.  At September 30, 1996, Agritope had working
capital of $1.3 million, as compared to $5.1 million at September 30, 1995. 
The decrease in working capital was principally attributable to the
reclassification to current liabilities of $3.6 million of convertible notes
which are due June 30, 1997.  In November 1996, the Company accepted an offer
from a representative of the holders of $3.4 million principal amount of such
notes to convert them into 250,367 shares of common stock of the Company at a
reduced conversion price of $13.50 per share.  Accordingly, the Company will
recognize a charge of approximately $1.1 million representing the conversion
expense in the first quarter of fiscal year 1997.  See Note 13 to Historical
Financial Statements.

In the combined financial statements, cash equal to 20% of the Company's cash,
cash equivalents and marketable securities has been allocated to Agritope. 
Historically, cash was transferred to the Agritope operations in the form of
intercompany loans.  For the purpose of preparing the separate statements of
Epitope Medical Products and Agritope, such transfers and intercompany
balances have been reflected as equity investments in Agritope.  If the
creation of a second class of common stock is approved, the Company will
allocate at least $5 million of cash to Agritope as additional contributed
capital.

Proceeds from the issuance of equity securities of the Company, augmented by
funding from strategic partners and other research grants, have represented
the primary sources of funds for meeting Agritope's requirements for
operations, working capital and business expansion.

Agritope expects to continue to require funds to support its operations and
research activities. Agritope intends to utilize cash reserves, cash generated
from sales of products and research funding from strategic partners and other
research grants to provide the necessary funds.  Agritope may also receive
additional funds from the sale of equity securities or the exercise of
outstanding stock options and warrants.

Agritope's investments include the book value of the investment in two
affiliates.  Agritope holds an equity interest of approximately 9% in UAF,
Limited Partnership, a fresh flower distributor in Tampa, Florida and a 19.5%
interest in Petals, USA, Inc., which operates a similar business in St. Paul,
Minnesota.  These equity interests were obtained in connection with
divestiture of the fresh flower distribution business.  See Note 3 to
Historical Financial Statements.

                        Historical Financial Statements

                        Epitope, Inc. and Subsidiaries

Results of Operations

The Company reported revenues of $6.2 million, $5.0 million and $4.8 million,
respectively, for the years ended September 30, 1996, 1995 and 1994.  Product
sales in 1996 increased due to higher sales volume for Epitope Medical
Products, which more than offset a $2.0 million reduction in product sales for
Agritope.  Grant and contract revenues increased $681,000 for Epitope Medical
Products due to research funding received from SB and $491,000 for Agritope
which was attributable primarily to a Phase II SBIR grant.

Net losses for 1996, 1995 and 1994 amounted to $1.4 million, $18.5 million and
$15.6 million, respectively.  The significant improvement in operating results
in 1996 was due to (1) increased sales volumes and improved gross margins for
Epitope Medical Products' EpiScreen/OraSure oral specimen collection device,
(2) a $5.2 million fee and accrued interest from SB to Epitope Medical
Products, (3) cost reductions realized as a result of a September 1995
restructuring program, and (4) reduced operating losses as a result of
divestiture of two Agritope business units. 

The Company incurred expenses of $4.1 million, $5.5 million and $3.6 million
in 1996, 1995 and 1994, respectively, to provide Shared Services to Epitope
Medical Products and Agritope.  The decrease in such costs in 1996 represented
cost savings realized from the restructuring program implemented in September
1995.  Such costs increased in 1995 over 1994 levels as the Company increased
its infrastructure to respond to current growth and anticipated levels of
activity for both groups.  See Note 2 to Historical Financial Statements.

Liquidity and Capital Resources

Cash, cash equivalents and marketable securities on hand as of September 30,
1996 and 1995 totaled $24.5 million and $21.3 million.  At September 30, 1996,
the Company had working capital of $21.6 million, as compared to $20.5 million
at September 30, 1995.  

Proceeds from the issuance of equity securities of the Company, augmented by
funding from strategic partners and other research grants, have represented
the primary sources of funds for meeting the Company's requirements for
operations, working capital and business expansion.  During 1996, the Company
received proceeds of $5.9 million from the exercise of warrants and options to
purchase common stock, as compared to $21.1 million in 1995.

The Company anticipates that it will continue to need funds to support ongoing
research and development projects as well as to provide additional
manufacturing capacity and related increases in working capital.  The Company
intends to utilize cash reserves, cash generated from sales of products and
research funding from SB and other strategic partners to provide the necessary
funds.  The Company may also receive additional funds from the sale of equity
securities or the exercise of outstanding stock options and warrants.


                       Supplemental Financial Statements

                           Epitope Medical Products

The only modification to the Historical Financial Statements of Epitope
Medical Products appearing in the Supplemental Financial Statements are those
required to reflect the agreed issuance of 520,000 shares of common stock of
the Company in connection with the merger with A&W.  The Supplemental
Financial Statements are presented as if the shares were outstanding on the
first day of the earliest period presented.  See "Historical Financial
Statements--Epitope Medical Products."


                       Supplemental Financial Statements

                                   Agritope 
   (merged with Andrew and Williamson Sales, Co. in a pooling of interests)

Results of Operations

The table below shows the percentage of Agritope's total revenue contributed
by each of its principal products and by grants and contracts:

Fiscal Year                            1996           1995           1994

Percentage of Revenues from:
Fresh or Frozen Produce. . . . .        99%            96%            97%
Grape Plants. . . . . . . . . . .       --%            --%            --%
Packaged Fresh Flowers. . . . . .       --%             4%             3%
Grants and Contracts. . . . . . .        1%            --%            --%

Revenues.  Revenues increased to $63.1 million in 1996 as compared to $54.3
million in 1995 and $62.9 in 1994, primarily attributable to produce sales of
A&W.  Produce sales increased 20% in 1996 due to increased sales volume of
vine ripe tomatoes, peppers and strawberries.  For 1995, produce sales
declined as compared to 1994 as a result of scaling back volume of vine ripe
tomatoes, coupled with the loss of one contract grower.  Revenues in 1995 and
1994 also included packaged fresh flower sales of $2.0 and $2.2 million,
respectively, from the Company's unprofitable wholesale fresh flower packaging
and distribution operations which were divested in the third quarter of fiscal
1995.  A grant from the U.S. Department of Agriculture plus grants from
strategic partners accounted for the increase of grant and contract revenues
from $94,000 in 1995 to $585,000 in 1996.

Gross Profits.  A&W realized gross profit margins of 8%, 6% and 8% in 1996,
1995 and 1994, respectively.  The decline in 1995 gross profits was due to a
tomato crop failure experienced by one of A&W's contract growers.  Gross
profits in 1995 and 1994 were adversely affected by negative margins of
Agritope's former fresh flower packaging operations.

Research and Development Expenses.  Research and development expenses in 1996,
1995 and 1994 totaled $1.3 million, $2.2 million and $2.4 million,
respectively.  The decrease from 1995 to 1996 resulted from the divestiture of
certain businesses.  See Note 3 to  Supplemental Financial Statements.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses in 1996, 1995 and 1994 were $4.8 million, $7.5 million
and $8.3 million, respectively.  The higher cost levels in 1995 and 1994
resulted from increased costs at Agritope's Agrimax and Vinifera business
units.  Selling, general and administrative expenses include $1.1 million,
$1.9 million and $1.7 million for the allocation of Shared Services in 1996,
1995 and 1994, respectively.

Other Expense.  The primary component of other expense is net interest expense
of $467,000, $274,000 and $440,000 in 1996, 1995 and 1994, respectively.  Net
interest expense in 1996 increased primarily due to an increase in borrowings
under the A&W bank credit line.  Net interest expense decreased in 1995 as
compared to 1994 due to increased interest income.

Liquidity and Capital Resources

Cash allocated to Agritope totaled $4.9 million at September 30, 1996 and $4.2
million at September 30, 1995.  At September 30, 1996, Agritope had working
capital of $0.8 million, as compared to $5.8 million at September 30, 1995. 
The decrease in working capital was principally attributable to the
reclassifications to current liabilities of $3.6 million of convertible notes
which are due June 30, 1997, and $2.2 million of subordinated notes which the
Company intends to repay in fiscal 1997.  In November 1996, the Company
entered into an agreement with holders of $3.4 million of convertible notes to
convert them into 250,367 shares of common stock of the Company at a reduced
conversion price of $13.50 per share.  Accordingly, the Company will recognize
a charge of approximately $1.1 million representing the conversion expense in
the first quarter of fiscal 1997.  See Note 13 to Supplemental Financial
Statements.

In the combined financial statements, cash equal to 20% of the Company's cash,
cash equivalents and marketable securities has been allocated to Agritope. 
Historically, cash was transferred to the Agritope operations in the form of
intercompany loans.  For the purpose of preparing the separate statements of
Epitope Medical Products and Agritope, such transfers and intercompany
balances have been reflected as equity investments in Agritope.  If the
creation of a second class of common stock is approved, the Company will
allocate at least $5 million of cash to Agritope as additional contributed
capital.

Proceeds from the issuance of equity securities of the Company, A&W cash flow
from operations and A&W bank borrowings, augmented by funding from strategic
partners and other research grants, have represented the primary sources of
funds for meeting Agritope's requirements for operations, working capital and
business expansion.

Agritope expects to continue to require funds to support its operations and
research activities. Agritope intends to utilize cash reserves, cash generated
from sales of products and research funding from strategic partners and other
research grants to provide the necessary funds.  Agritope may also receive
additional funds from the sale of equity securities or the exercise of
outstanding stock options and warrants.

Agritope's investments include the book value of the investment in two
affiliates.  Agritope holds an equity interest of approximately 9% in UAF,
Limited Partnership, a fresh flower distributor in Tampa, Florida and a 19.5%
interest in Petals, USA, Inc., which operates a similar business in St. Paul,
Minnesota. These equity interests were obtained in connection with divestiture
of the fresh flower distribution business.  See Note 3 to Supplemental
Financial Statements.

                       Supplemental Financial Statements

                        Epitope, Inc. and Subsidiaries
   (merged with Andrew and Williamson Sales, Co. in a pooling of interests)

Results of Operations

The Company reported revenues of $68.7 million, $57.1 million and $65.5
million, respectively, for the years ended September 30, 1996, 1995 and 1994. 
A&W recorded sales of $62.5 million, $52.2 million and $60.7 million,
respectively for such periods.  Grant and contract revenues increased $681,000
for Epitope Medical Products due to research funding received from SB and
$491,000 for Agritope which was attributable primarily to a Phase II SBIR
grant.

Net losses for 1996, 1995 and 1994 amounted to $0.3 million, $18.9 million and
$14.6 million, respectively.  The significant improvement in operating results
in 1996 was due to (1) increased sales volumes and improved gross margins for
Epitope Medical Products' EpiScreen/OraSure oral specimen collection device,
(2) a $5.2 million fee and accrued interest from SB to Epitope Medical
Products, (3) cost reductions realized as a result of a September 1995
restructuring program, (4) reduced operating losses as a result of divestiture
of two Agritope business units and (5) operating profits from A&W.  The
Company incurred expenses of $4.1 million, $5.5 million and $3.6 million in
1996, 1995 and 1994, respectively, to provide Shared Services to Epitope
Medical Products and Agritope.  The decrease in such costs in 1996 represented
costs savings realized from the restructuring program implemented in September
1995.  Such costs increased in 1995 over 1994 levels as the Company increased
its infrastructure to respond to current growth and anticipated levels of
activity for both groups.  See Note 2 to Supplemental Financial Statements.

Liquidity and Capital Resources

Cash, cash equivalents and marketable securities on hand as of September 30,
1996 and 1995 totaled $24.5 million and $21.3 million.  At September 30, 1996,
the Company had working capital of $21.1 million, as compared to $21.2 million
at September 30, 1995.  

Proceeds from the issuance of equity securities of the Company, augmented by
funding from strategic partners and other research grants, have represented
the primary sources of funds for meeting the Company's requirements for
operations, working capital and business expansion.  During 1996, the Company
received proceeds of $5.9 million from the exercise of warrants and options to
purchase common stock, as compared to $21.1 million in 1995.

The Company anticipates that it will continue to need funds to support ongoing
research and development projects as well as to provide additional
manufacturing capacity and related increases in working capital.  The Company
intends to utilize cash reserves, cash generated from sales of products and
research funding from SB and other strategic partners to provide the necessary
funds.  The Company may also receive additional funds from the sale of equity
securities or the exercise of outstanding stock options and warrants.

<PAGE>
      ITEM 8.     Financial Statements and Supplementary Data.

      Information with respect to this Item is (i) set forth below and (ii)
contained in the Company's Consolidated Financial Statements included in Item
14 of this Annual Report on Form 10-K.  

      The following table presents summarized historical quarterly results of
operations for each of the fiscal quarters in the Company's fiscal years ended
September 30, 1996 and 1995.  These quarterly results are unaudited, but, in
the opinion of management, have been prepared on the same basis as the
Company's audited financial information and include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the information set forth therein.  The summarized historical
quarterly results of operations have not been restated to give effect to the
merger with Andrew & Williamson Sales, Co. on December 12, 1996.  The merger
has been accounted for as a pooling of interests.  See Supplemental Quarterly
Results of Operations below.  The data should be read in conjunction with the
Financial Statements and related notes included in Item 14 of this Annual
Report on Form 10-K.

<PAGE>
<TABLE>
<CAPTION>

            HISTORICAL QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
              (In thousands, except net income (loss) per share)
<S>                        <C>      <C>     <C>      <C>      <C>
                            First   Second   Third   Fourth
Epitope Medical Products  Quarter  Quarter Quarter  Quarter    Total
Year ended September 30, 1996                                                             
Revenues. . . . . . . . . . . . . . .$ 1,225$ 1,207$ 1,107$ 2,055$ 5,594
Operating costs and expenses. . .2,5102,819  2,507    3,045   10,881
Other income, net. . . . . . . . . .224218   5,345      240    6,027
Net income (loss). . . . . . . . . .(1,061)(1,394)3,945(751)     739
Pro forma net income (loss)
  per share . . . . . . . . . . . . . .(.08)(.11).29   (.06)     .06
Year ended September 30, 1995 
Revenues. . . . . . . . . . . . . . .$  715722 873      546    2,856
Operating costs and expenses. . .2,6793,288  3,823    4,673   14,463
Other income net. . . . . . . . . .101 149     277      227       56
Net loss. . . . . . . . . . . . . . . .(1,863)(2,417)(2,673(3,898)(10,851)
Pro forma net loss per share. . .(.17)(.21)   (.22)    (.31)    (.91)

                            First   Second   Third   Fourth
Agritope                  Quarter  Quarter Quarter  Quarter    Total
Year ended September 30, 1996
Revenues. . . . . . . . . . . . . .$    87$  263$  165$   70  $  585
Operating costs and expenses. . .675   690     690      766    2,821
Other income (expense), net. . .(3)      5      79       16       97
Net loss. . . . . . . . . . . . . . .(591)(423)(446)   (679)  (2,139)
Pro forma net loss per share. . .(.09)(.07)   (.06)    (.11)    (.34)

Year ended September 30, 1995                                                              
Revenues. . . . . . . . . . . . . .$   419$  953$  695$   43 $ 2,110
Operating costs and expenses. . .2,8913,433  2,201    1,395    9,920
Other income, net. . . . . . . . .33    65      31       37      166
Net loss. . . . . . . . . . . . . . .(2,439)(2,415)(1,475)(1,316)(7,645)
Pro forma net loss per share. . .(.44)(.41)   (.24)    (.21)   (1.29)

                            First   Second   Third   Fourth
Epitope, Inc. and SubsidiariesQuarterQuarterQuarter Quarter    Total
Year ended September 30, 1996
Revenues. . . . . . . . . . . . . . .$ 1,311$ 1,470$ 1,272$ 2,126$ 6,179
Operating costs and expenses. . .3,1853,510  3,197    3,810   13,702
Other income, net. . . . . . . . .222  223   5,425      253    6,123
Net income (loss). . . . . . . . . .(1,652)(1,817)3,500(1,431)(1,400)
Net income (loss) per share. . . .(.13)(.14)   .25     (.11)    (.11)

Year ended September 30, 1995
Revenues. . . . . . . . . . . . . . .$ 1,135$ 1,675$ 1,569$   586$ 4,965
Operating costs and expenses. . .5,5716,721  6,025    6,066   24,383
Other income, net. . . . . . . . .134  214     308      266      922
Net loss. . . . . . . . . . . . . . .(4,302)(4,832)(4,148)(5,214)(18,496)
Net loss per share. . . . . . . . .(.39)(.41) (.34)    (.42)   (1.56)
</TABLE>

<PAGE>
The following table presents summarized supplemental quarterly results of
operations for each of the fiscal quarters in the Company's fiscal years ended
September 30, 1996 and 1995.  These quarterly results are unaudited, but, in
the opinion of management, have been prepared on the same basis as the
Company's audited financial information and include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the information set forth therein.  The summarized
supplemental quarterly results of operations have been restated to give effect
to the merger with Andrew and Williamson Sales, Co. on December 12, 1996.  The
merger has been accounted for as a pooling of interests.  The data should be
read in conjunction with the Financial Statements and related notes included
in Item 14 of this Annual Report on Form 10-K.

<PAGE>
<TABLE>
<CAPTION>

           SUPPLEMENTAL QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
              (In thousands, except net income (loss) per share)
<S>                             <C>       <C>        <C>    <C>      <C>
                                   First   Second    Third    Fourth
Epitope Medical Products          Quarter  Quarter  Quarter   Quarter   Total
Year ended September 30, 1996                                                             
Revenues . . . . . . . . . . . . . .$ 1,225$ 1,207$ 1,107   $ 2,055  $ 5,594
Operating costs and expenses . .  2,510    2,819    2,507     3,045   10,881
Other income, net . . . . . . . . . 224      218    5,345       240    6,027
Net income (loss) . . . . . . . . .(1,061)(1,394)   3,945      (751)     739
Pro forma net income (loss)
  per share . . . . . . . . . . . . .(.08)  (.11)     .27      (.06)     .05

Year ended September 30, 1995 
Revenues . . . . . . . . . . . . . .$    715    $  722$  873 $  546  $ 2,856
Operating costs and expenses . .  2,679    3,288    3,823     4,673   14,463
Other income net . . . . . . . . .  101      149      277       229      756
Net loss . . . . . . . . . . . . . . .(1,863)(2,417)(2,673)  (3,898) (10,851)
Pro forma net loss per share . .   (.16)    (.20)    (.21)     (.30)    (.87)

                                   First   Second    Third    Fourth
Agritope                          Quarter  Quarter  Quarter   Quarter   Total
Year ended September 30, 1996
Revenues . . . . . . . . . . . . . .$12,978$10,291$26,658   $13,131  $63,057
Operating costs and expenses . . 13,671    9,917   26,323    13,479   63,390
Other expense, net . . . . . . . . (132)    (189)    (181)     (169)    (671)
Net income (loss) . . . . . . . . .(825)     184      154      (518)  (1,004)
Pro forma net income (loss)
  per share . . . . . . . . . . . . .(.13)   .03      .02      (.08)    (.15)

Year ended September 30, 1995                                                              
Revenues . . . . . . . . . . . . . .$15,120$ 9,682$17,080   $12,406  $54,289
Operating costs and expenses . . 18,217   11,499   18,912    13,430   62,059
Other expense, net . . . . . . . .  (78)     (19)     (77)      (78)    (252)
Net loss . . . . . . . . . . . . . . .(3,175)(1,836)(1,909)  (1,102)  (8,022)
Pro forma net loss per share . .   (.55)    (.30)    (.30)     (.17)   (1.29)

                                   First    Second   Third    Fourth
Epitope, Inc. and Subsidiaries    Quarter  Quarter  Quarter   Quarter   Total
Year ended September 30, 1996
Revenues . . . . . . . . . . . . . .$14,202$11,498$27,765   $15,185  $68,650
Operating costs and expenses . . 16,181   12,737   28,830    16,523   74,271
Other income, net . . . . . . . . .  93       29    5,165        70    5,356
Net income (loss) . . . . . . . . .(1,886)(1,210)   4,100    (1,268)    (265)
Net income (loss) per share . . .  (.14)    (.09)     .29      (.09)    (.02)

Year ended September 30, 1995
Revenues . . . . . . . . . . . . . .$15,836$10,404$17,954   $12,951  $57,144
Operating costs and expenses . . 20,896   14,788   22,736    18,102   76,522
Other income, net . . . . . . . . .  22      130      200       151      504
Net loss . . . . . . . . . . . . . . .(5,038)(4,253)(4,582)  (5,000) (18,874)
Net loss per share . . . . . . . . .(.44)   (.35)    (.36)     (.39)   (1.52)
</TABLE>
<PAGE>
      ITEM 9.     Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure.

      None.

                                   PART III

      The Company has omitted from Part III the information that will appear
in the Company's definitive proxy statement for its 1997 annual meeting of
shareholders (the "Proxy Statement"), which will be filed within 120 days
after the end of the Company's fiscal year pursuant to Regulation 14A.

      ITEM 10.    Directors and Executive Officers of the Registrant.

      The information required by this Item is incorporated by reference to
the information under the captions "Proposal 1:  Election of Class 1
Directors" and "Executive Officers" in the Proxy Statement.

      ITEM 11.    Executive Compensation.

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

      ITEM 12.    Security Ownership of Certain Beneficial Owners and
                  Management.

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

      ITEM 13.    Certain Relationships and Related Transactions.

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

                                    PART IV

      ITEM 14.    Exhibits, Financial Statement Schedules, and Reports on Form
                  8-K.

      (a)(1) and (a)(2)  Consolidated Financial Statements and Schedules.

<PAGE>
Index to Financial Statements                                             Page

Historical Financial Statements

Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . .39

Epitope Medical Products
Combined Balance Sheets at September 30, 1996 and 1995 . . . . . . . . . . .40
Combined Statements of Operations for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Combined Statements of Changes in Group Equity for years ended September 30,
1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Combined Statements of Cash Flows for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Agritope
Combined Balance Sheets at September 30, 1996 and 1995 . . . . . . . . . . .44
Combined Statements of Operations for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Combined Statements of Changes in Group Equity for years ended September 30,
1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Combined Statements of Cash Flows for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

Epitope, Inc. and Subsidiaries
Consolidated Balance Sheets at September 30, 1996 and 1995 . . . . . . . . .48
Consolidated Statements of Operations for years ended September 30, 1996,
1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Consolidated Statements of Changes in Shareholders' Equity for years ended
September 30, 1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . . . .50
Consolidated Statements of Cash Flows for years ended September 30, 1996,
1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Notes to Historical Financial Statements . . . . . . . . . . . . . . . . . .52


Supplemental Financial Statements

Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . .65

Epitope Medical Products
Combined Balance Sheets at September 30, 1996 and 1995 . . . . . . . . . . .66
Combined Statements of Operations for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
Combined Statements of Changes in Group Equity for years ended September 30,
1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Combined Statements of Cash Flows for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

Agritope (merged with Andrew and Williamson Sales, Co. in a pooling of
interests)
Combined Balance Sheets at September 30, 1996 and 1995 . . . . . . . . . . .70
Combined Statements of Operations for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Combined Statements of Changes in Group Equity for years ended September 30,
1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
Combined Statements of Cash Flows for years ended September 30, 1996, 1995,
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73


Epitope, Inc. and Subsidiaries (merged with Andrew and Williamson Sales, Co.
in a pooling of interests)
Consolidated Balance Sheets at September 30, 1996 and 1995 . . . . . . . . .74
Consolidated Statements of Operations for years ended September 30, 1996,
1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Consolidated Statements of Changes in Shareholders' Equity for years ended
September 30, 1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . . . .76
Consolidated Statements of Cash Flows for years ended September 30, 1996,
1995, and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

Notes to Supplemental Financial Statements . . . . . . . . . . . . . . . . .78


<PAGE>
                        Historical Financial Statements

Report of Independent Accountants

To the Board of Directors and Shareholders of Epitope, Inc.

In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in shareholders'/group equity, and of cash flows
present fairly, in all material respects, the financial position of Epitope
Medical Products group and Agritope group (as described in Note 1 to these
financial statements) and Epitope, Inc. and its subsidiaries at September 30,
1996 and 1995, and the results of their operations and their cash flows for
each of the three years in the period ended September 30, 1996, in conformity
with generally accepted accounting principles.  These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits.  We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Portland, Oregon
October 28, 1996, except for Note 13 as to which the date is November 14,
1996, November 25, 1996, December 12, 1996, and December 26, 1996.
<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Epitope Medical Products
Combined Balance Sheets
<S>                                      <C>         <C>  
SEPTEMBER 30                                                   1996               1995
Assets
Current assets
Cash and cash equivalents (Note 2) . . . . . . . . . . .$   795,787$    13,210
Marketable securities (Note 2)  . . . . . . . . .. . . .18,818,12017,080,246
Trade accounts receivable, net (Note 2)  . . . . . . . .1,147,599231,621
Other accounts receivable  . . . . . . . . . . . . . . .174,083382,753
Inventories (Note 2) . . . . . . . . . . . . . . . . . .1,157,9301,433,746
Prepaid expenses . . . . . . . . . . . . . . . . . . . .89,518103,399
                                  ----------------------------
Total current assets . . . . . . . . . . . . . . . . . .22,183,03719,244,975

Property and equipment, net (Notes 2 and 4)  . . . . . .1,542,7571,989,769
Patents and proprietary technology, net (Note 2) . . . .601,234415,010
Investments in affiliated companies  . . . . . . . . . .-142,510
Other assets and deposits (Note 5) . . . . . . . . . . .22,75838,328
                                 -----------------------------
                                      $24,349,786  $21,830,592

Liabilities and Group Equity
Current liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . .$   449,170$   819,424
Salaries, benefits and other accrued liabilities
  (Notes 2 and 9)  . . . . . . . . . . . . . . . . . . .1,368,1662,976,167
                                 -----------------------------
Total current liabilities  . . . . . . . . . . . . . . .1,817,3363,795,591

Commitments and Contingencies (Notes 6,8,9,10 and 11). .-    -

Group equity (Note 6)
Contributed capital  . . . . . . . . . . . . . . . . . .64,237,35060,479,315
Accumulated deficit  . . . . . . . . . . . . . . . . . .(41,704,900)(42,444,314)
                                 -----------------------------
                                       22,532,450   18,035,001
                                 -----------------------------
                                      $24,349,786  $21,830,592

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

Historical Financial Statements
Epitope Medical Products
Combined Statements of Operations
<S>                              <C>        <C>         <C>
FOR THE YEAR ENDED SEPTEMBER 30       1996     1995       1994
Revenues
Product sales . . . . . . . . . . . . . . .$ 4,864,378$ 2,806,850$ 2,580,798
Grants and contracts  . . . . . . . . . . .729,27148,672  24,560
                    --------------------------------------------
                                5,593,649   2,855,522  2,605,358

Costs and expenses
Product costs . . . . . . . . . . . . . . .2,681,4293,163,0122,141,319
Research and development costs  . . . . . .3,165,8384,617,2463,681,326
Selling, general and administrative expenses5,033,4916,682,8603,066,896
                    --------------------------------------------
                               10,880,758  14,463,118  8,889,541

Loss from operations           (5,287,109)(11,607,596)(6,284,183)

Other income, net . . . . . . . . . . . . .6,026,523756,424235,926
                    --------------------------------------------
Net income (loss) . . . . . . . . . . . . .$   739,414$(10,851,172)$(6,048,257)

Pro forma net income (loss) per share . . .$       .06$       (.91)$      (.60)

Pro forma weighted average number of shares
 outstanding  . . . . . . . . . . . . . . .13,440,39611,886,23410,050,129

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Epitope Medical Products
Combined Statements of Changes in Group Equity
<S>                           <C>          <C>         <C>
                                 Contributed  Accumulated
                                   capital      deficit      Total
Balances at September 30, 1993. . . . . . .$34,167,582$(25,544,885)$  8,622,697
Common stock issued upon
  exercise of options . . . . . . . . . . .636,293  -     636,293
Common stock issued as
  compensation. . . . . . . . . . . . . . .318,386  -     318,386
Compensation expense for
  stock option grants . . . . . . . . . . .823,350  -     823,350
Common stock issued upon
  exercise of warrants. . . . . . . . . . .9,718,259-   9,718,259
Common stock issued in
  private placement . . . . . . . . . . . .17,057,563- 17,057,563
Equity issuance costs . . . . . . . . . . .(3,335,261)-(3,335,261)
Net cash to Agritope  . . . . . . . . . . .(12,132,173)(12,132,173)
Net loss for the year . . . . . . . . . . .-(6,048,257)(6,048,257)
                    ---------------------------------------------

Balances at September 30, 1994. . . . . . .47,253,999(31,593,142)15,660,857
Common stock issued upon
  exercise of options . . . . . . . . . . .2,145,673-   2,145,673
Common stock issued as
  compensation. . . . . . . . . . . . . . .196,802  -     196,802
Compensation expense for 
  stock option grants . . . . . . . . . . .1,056,335-   1,056,335
Common stock issued upon
  exercise of warrants. . . . . . . . . . .18,892,750- 18,892,750
Equity issuance costs . . . . . . . . . . .(735,390)-    (735,390)
Net cash to Agritope. . . . . . . . . . . .(8,330,854) (8,330,854)
Net loss for the year . . . . . . . . . . .-(10,851,172)(10,851,172)
                    ---------------------------------------------
Balances at September 30, 1995  . . . . . .60,479,315(42,444,314)18,035,001
Common stock issued upon
  exercise of options . . . . . . . . . . .4,886,118-   4,886,118
Common stock issued as compensation. . . . .249,086 -     249,086
Compensation expense for stock
  option grants. . . . . . . . . . . . . . .815,019 -     815,019
Common stock issued upon
  exercise of warrants . . . . . . . . . . .826,600 -     826,600
Equity issuance costs. . . . . . . . . . . .(152)   -        (152)
Net cash to Agritope . . . . . . . . . . . .(3,018,636)-(3,018,636)
Net income for the year. . . . . . . . . . .- 739,414     739,414
                    ---------------------------------------------
Balances at September 30, 1996. . . . . . .$64,237,350$(41,704,900)$22,532,450

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

Historical Financial Statements
Epitope Medical Products
Combined Statements of Cash Flows
<S>                                    <C>         <C>          <C>
FOR THE YEAR ENDED SEPTEMBER 30             1996         1995        1994
Cash flows from operating activities
 Net income (loss)  . . . . . . . . . . . . . . . . .$   739,414$(10,851,172)$(6,048,257)
Adjustments to reconcile net income (loss) 
  to net cash used in operating activities:
Depreciation and amortization . . . . . . . . . . . .792,885795,295651,076
(Gain) loss on disposition of property  . . . . . . .(1,098)319      1,541
Increase in accounts receivable and
  other receivables . . . . . . . . . . . . . . . . .(707,308)(76,549)(180,767)
Increase (decrease) in inventories  . . . . . . . . .275,816(375,640)(272,279)
Decrease in prepaid expenses  . . . . . . . . . . . .13,88138,031   43,354
Decrease (increase) in other assets and deposits15,570(42,658)      (6,227)
Increase (decrease) in accounts payable and
 accrued liabilities  . . . . . . . . . . . . . . . .(2,151,110)2,273,364329,875
Common stock issued as compensation for services249,086196,802     318,386
Compensation expense for stock option grants and
 deferred salary increases  . . . . . . . . . . . . .815,0191,056,335915,351
                          ------------------------------------------------
Net cash provided by (used in) operating 
activities  . . . . . . . . . . . . . . . . . . . . .42,155(6,985,873)(4,247,947)     
         
Cash flows from investing activities
Investment in marketable securities . . . . . . . . .(47,608,270)(16,194,994)(5,603,414)
Proceeds from sale of marketable securities . . . . .45,870,3964,718,162- 
Additions to property and equipment . . . . . . . . .(180,112)(1,112,292)(461,914)
Proceeds from sale of property  . . . . . . . . . . .7,4321,085      1,000
Expenditures for patents and proprietary
 technology . . . . . . . . . . . . . . . . . . . . .(358,319)(126,927)(185,805)
Investment in affiliated companies  . . . . . . . . .142,51042,552  64,938
                         -------------------------------------------------
Net cash used in investing
 activities . . . . . . . . . . . . . . . . . . . . .(2,126,363)(12,672,414)(6,185,195)

Cash flows from financing activities
Proceeds from issuance of common stock . . . . . . . .5,885,57321,060,91224,387,702
Cost of common stock issuance  . . . . . . . . . . . .(152)(757,877)(310,849)
Cash to Agritope  . . . . . . . . . . . . . . . . . .(3,018,636)(8,330,854)(12,132,173)
                             --------------------------------
Net cash provided by financing activities . . . . . .2,866,78511,972,18111,944,680
Net increase (decrease) in cash and cash
 equivalents . . . . . . . . . . . . . . . . . . . . .782,577(7,686,106)1,511,538
Cash and cash equivalents at beginning of year . . . .13,2107,699,3166,187,778
                         -------------------------------------------------
Cash and cash equivalents at end of year . . . . . .$     795,787$    13,210$7,699,316

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

Historical Financial Statements
Agritope
Combined Balance Sheets
<S>                                       <C>           <C>
SEPTEMBER 30                                  1996           1995
Assets
Current assets
Cash and cash equivalents (Note 2) . . . . . . . . . . .$ 4,903,476$ 4,246,687
Trade accounts receivable, net (Note 2) . . . . . . . . .264,986135,866
Other accounts receivable . . . . . . . . . . . . . . . .32,337993,790
Inventories (Note 2) . . . . . . . . . . . . . . . . . . .509,745-
Prepaid expenses . . . . . . . . . . . . . . . . . . . . .81256,064
                                ---------------------------------

Total current assets . . . . . . . . . . . . . . . . . . .5,711,3565,432,407

Property and equipment, net (Notes 2 and 4) . . . . . . . .1,286,196555,003
Patents and proprietary technology, net (Note 2) . . . . . .510,244140,757
Investment in affiliated companies (Note 3) . . .. . . . . .2,448,6231,974,833
Other assets and deposits (Note 5) . . . . . . . . . . . . .140,513200,430
                                 --------------------------------
                                       $10,096,932    $ 8,303,430

Liabilities and Group Equity
Current liabilities
Current portion of installment notes payable . . . . . . .$         -$   17,758
Convertible notes, due 1997 (Notes 5 and 13) . . . . . . .3,620,003-
Accounts payable . . . . . . . . . . . . . . . . . . . . .91,474125,971
Salaries, benefits and other accrued liabilities
  (Notes 2 and 9) . . . . . . . . . . . . . . . . . . . . .735,478206,349
                                ---------------------------------

Total current liabilities . . . . . . . . . . . . . . . . .4,446,955350,078

Long-term portion of installment notes payable . . . . . . .-21,749
Convertible notes, due 1997 (Notes 5 and 13) . . . . . . . .-3,620,003
Commitments and Contingencies (Notes 6,8,9, and 10) . . . . .-  -
Minority interest . . . . . . . . . . . . . . . . . . . . . .215,407-

Group equity (Note 6)
Contributed capital . . . . . . . . . . . . . . . . . . .36,714,93233,452,632
Accumulated deficit . . . . . . . . . . . . . . . . . . .(31,280,362)(29,141,032)
                               ----------------------------------

                                         5,434,570      4,311,600
                               ----------------------------------

                                       $10,096,932    $ 8,303,430

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Agritope
Combined Statements of Operations
<S>                                <C>       <C>          <C>
FOR THE YEAR ENDED SEPTEMBER 30        1996        1995       1994
Revenues
Product sales . . . . . . . . . . . . .$      -$ 2,015,318$ 2,179,742
Grants and contracts . . . . . . . . . .585,485  94,370     33,642
                        ------------------------------------------
                                    585,485   2,109,688  2,213,384

Costs and expenses
Product costs . . . . . . . . . . . . . . .-  3,235,675  4,575,149
Research and development costs . . . . . .1,338,7032,204,9932,368,880
Selling, general and administrative expenses1,482,6944,479,4984,759,219
                        ------------------------------------------
                                  2,821,397   9,920,166 11,703,248

Loss from operations . . . . . . . . . . . .(2,235,912)(7,810,478)(9,489,864)
Other income (expense), net . . . . . . . . .96,582165,822 (94,467)
                        ------------------------------------------
Net loss . . . . . . . . . . . . . . . . . .$(2,139,330)$(7,644,656)$(9,584,331)

Pro forma net loss per share . . . . . . . .$      (.34)$    (1.29)$     (1.91)

Pro forma weighted average number of shares
Outstanding . . . . . . . . . . . . . . . .6,330,7105,943,1175,025,064


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

<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Agritope
Combined Statements of Changes in Group Equity
<S>                               <C>        <C>        <C>
                                    Contributed    Accumulated
                                      capital        deficit         Total
Balances at September 30, 1993 . . . . . . . . .$11,259,717$(11,912,045)$   (652,328)
Common stock issued as
  compensation . . . . . . . . . . . . . . . . .50,392-   50,392
Compensation expense for
  stock option grants . . . . . . . . . . . . . .343,922-343,922
Common stock issued upon
  exchange of convertible notes . . . . . . . . .559,964-559,964
Equity issuance costs . . . . . . . . . . . . . .(40,267)-(40,267)
Net cash from Epitope Medical Products . . . . .12,132,173-12,132,173
Net loss for the year . . . . . . . . . . . . . .(9,584,331)(9,584,331)
                        ----------------------------------------
Balances at September 30, 1994 . . . . . . . . . .24,305,901(21,496,376)2,809,525
Common stock issued as
  compensation . . . . . . . . . . . . . . . . . .69,998- 69,998
Compensation expense for
  stock option grants . . . . . . . . . . . . . .318,375-318,375
Common stock issued upon
  exchange of convertible notes . . . . . . . . .449,991-449,991
Equity issuance costs . . . . . . . . . . . . . .(22,487)-(22,487)
Net cash from Epitope Medical Products . . . . . .8,330,854-8,330,854
Net loss for the year . . . . . . . . . . . . . .(7,644,656)(7,644,656)
                        ----------------------------------------
Balances at September 30, 1995 . . . . . . . . . .33,452,632(29,141,032)4,311,600
Common stock issued as compensation . . . . . . .14,500-  14,500
Compensation expense for stock
  option grants . . . . . . . . . . . . . . . . .229,164-229,164
Net cash from Epitope Medical Products . . . . . .3,018,636-3,018,636
Net loss for the year . . . . . . . . . . . . . .-(2,139,330)(2,139,330)
                        ----------------------------------------
Balances at September 30, 1996 . . . . . . . . .$36,714,932$(31,280,362)$ 5,434,570


The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Agritope
Combined Statements of Cash Flows
<S>                                   <C>        <C>       <C>
FOR THE YEAR ENDED SEPTEMBER 30                           1996            1995             1994
Cash flows from operating activities
Net loss . . . . . . . . . . . . . . . . . . . . .$(2,139,330)$(7,644,656)$(9,584,331)
Adjustments to reconcile net loss to net cash
  used in operating activities:
Depreciation and amortization . . . . . . . . . . .294,045663,380505,135
Loss on disposition of property . . . . . . . . . .-  500     74,130
Decrease (increase) in accounts receivable and
  other receivables . . . . . . . . . . . . . . . .832,333(945,501)(140,268)
Decrease (increase) in inventories . . . . . . . .(509,745)88,737(385,928)
Decrease (increase) in prepaid expenses . . . . .55,252(55,639)36,965
Decrease (increase) in other assets and deposits(36,219)9,137  6,562
Increase (decrease) in accounts payable and
 accrued liabilities . . . . . . . . . . . . . . .494,632(104,680)67,457
Common stock issued as compensation for services14,50069,998  50,392
Compensation expense for stock option grants and
 deferred salary increases . . . . . . . . . . . .229,164318,375343,922
                          ------------------------------------------
Net cash used in operating activities . . . . . . .(765,368)(7,600,349)(9,025,964)

Cash flows from investing activities
Additions to property and equipment . . . . . . . .(886,646)(238,558)(2,128,835)
Proceeds from sale of property . . . . . . . . . . .13,258
Expenditures for patents and proprietary
 technology . . . . . . . . . . . . . . . . . . . .(411,943)(178,208)135
Investment in affiliated companies . . . . . . . .(473,790)610,146
Minority Interest in affiliated companies . . . . .215,407-        -
                          ------------------------------------------
Net cash (used in) provided by investing
 activities . . . . . . . . . . . . . . . . . . . .(1,556,972)206,638(2,128,700)

Cash flows from financing activities
Principal payments under installment purchase
 and capital lease obligations . . . . . . . . . . . .(39,507)(16,137)(20,726)
Cash from Epitope Medical Products . . . . . . . . . .3,018,6368,330,85412,132,173
                          ------------------------------------------
Net cash provided by financing activities . . . . . .2,979,1298,314,71712,111,447

Net increase (decrease) in cash and cash
 equivalents . . . . . . . . . . . . . . . . . . . .656,789921,006956,783
Cash and cash equivalents at beginning of year . .4,246,6873,325,6812,368,898
                          ------------------------------------------
Cash and cash equivalents at end of year . . . .$4,903,476$4,246,687$3,325,681

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

<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Balance Sheets

SEPTEMBER 30                                                     1996             1995
<S>                                                        <C>          <C>
Assets
Current assets
Cash and cash equivalents (Note 2) . . . . . . . . . . .$ 5,699,263$ 4,259,897
Marketable securities (Note 2) . . . . . . . . . . . . . .18,818,12017,080,246
Trade accounts receivable, net (Note 2) . . . . . . . .1,412,585367,487
Other accounts receivable . . . . . . . . . . . . . . . . .206,4201,376,543
Inventories (Note 2) . . . . . . . . . . . . . . . . . . . .1,667,6751,433,746
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . .90,330159,463
                                   --------------------------
Total current assets . . . . . . . . . . . . . . . . . . . .27,894,39324,677,382

Property and equipment, net (Notes 2 and 4) . . . . .2,828,9532,544,772
Patents and proprietary technology, net (Note 2) . . .1,111,478555,767
Investment in affiliated companies (Note 3) . . . . . .2,448,6232,117,343
Other assets and deposits (Note 5) . . . . . . . . . . .163,271238,758
                                   --------------------------
                                        $34,446,718$30,134,022

Liabilities and Shareholders' Equity
Current liabilities
Current portion of installment notes payable . . . . . .           $-$    17,758
Convertible notes, due 1997 (Notes 5 and 13) . . . .3,620,003-
Accounts payable . . . . . . . . . . . . . . . . . . . . . .540,644945,395
Salaries, benefits and other accrued liabilities
(Notes 2 and 9) . . . . . . . . . . . . . . . . . . . . . .2,103,6443,182,516
                                  ---------------------------
Total current liabilities . . . . . . . . . . . . . . . . .6,264,2914,145,669

Long-term portion of installment notes payable . . . . . . .-21,749

Convertible notes, due 1997 (Notes 5 and 13) . . . . . . . .-3,620,003

Commitments and contingencies (Notes 6, 8, 9, 10 and 11)-   -
Minority Interest . . . . . . . . . . . . . . . . . . . . . .215,407-

Shareholders' equity (Note 6)
Preferred stock, no par value - 1,000,000 shares authorized;
  no shares issued or outstanding . . . . . . . . . . . .-  -
Common stock, no par value - 30,000,000 shares
  authorized; 12,937,383 and 12,485,130 shares issued and
  outstanding, respectively . . . . . . . . . . . . . . . .100,952,28293,931,947
Accumulated deficit . . . . . . . . . . . . . . . . . . . .(72,985,262)(71,585,346)
                                   --------------------------
                                         27,967,02022,346,601
                                   --------------------------
                                        $34,446,718$30,134,022

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Statements of Operations

FOR THE YEAR ENDED SEPTEMBER 30         1996        1995       1994
<S>                                             <C>              <C>             <C>
Revenues
Product sales . . . . . . . . . . . . . . .$  4,864,378$  4,822,168$  4,760,540
Grants and contracts . . . . . . . . . . .1,314,756143,042   58,202
                       --------------------------------------------
                                   6,179,134   4,965,210  4,818,742

Costs and expenses
Product costs . . . . . . . . . . . . . . .2,681,4296,398,6876,716,468
Research and development costs . . . .4,504,5416,822,239  6,050,206
Selling, general and administrative expenses6,516,18511,162,3587,826,115
                      ---------------------------------------------
                                  13,702,155  24,383,284 20,592,789

Loss from operations              (7,523,021)(19,418,074)(15,774,047)

Other income, net . . . . . . . . . . . .6,123,105922,246   141,459
                     ----------------------------------------------
Net loss . . . . . . . . . . . . . . . . . .$ (1,399,916)$(18,495,828)$(15,632,588)

Net loss per share . . . . . . . . . . . .$       (.11)$      (1.56)$      (1.56)

Weighted average number of shares
  outstanding . . . . . . . . . . . . . . .12,661,42011,886,23410,050,129

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

<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity

                               Common Stock            Accumulated
                                     Shares     Dollars    deficit     Total
<S>                                              <C>            <C>            <C>             <C>   
Balances at September 30, 1993 . . . . . . . .9,091,922$ 45,427,299$ (37,456,930)$ 7,970,369
Common stock issued upon
  exercise of options . . . . . . . . . . . . . . .52,488636,293 -   636,293
Common stock issued as
  compensation . . . . . . . . . . . . . . . . . .19,678368,778  -   368,778
Compensation expense for
  stock option grants . . . . . . . . . . . . . . .-1,167,272    - 1,167,272
Common stock issued upon
  exercise of warrants . . . . . . . . . . . . . .618,2919,718,259-9,718,259
Common stock issued upon
  exchange of convertible notes . . . . . . . .28,672559,964     -   559,964
Common stock issued in
  private placement . . . . . . . . . . . . . . . .1,115,50017,057,563-7,057,563
Equity issuance costs . . . . . . . . . . . . . .-(3,375,528)    -(3,375,528)
Net loss for the year . . . . . . . . . . . . . . .-  -(15,632,588)(15,632,588)
                    --------------------------------------------------------
Balances at September 30, 1994 . . . . . . . .10,926,55171,559,900(53,089,518)18,470,382
Common stock issued upon
  exercise of options . . . . . . . . . . . . . . .183,5252,145,673-2,145,673
Common stock issued as
  compensation . . . . . . . . . . . . . . . . . .16,013266,800  -   266,800
Compensation expense for
  stock option grants . . . . . . . . . . . . . . .-1,374,710    - 1,374,710
Common stock issued upon
  exercise of warrants . . . . . . . . . . . . . .1,336,00018,892,750-18,892,750
Common stock issued upon
  exchange of convertible notes . . . . . . . .23,041449,991     -   449,991
Equity issuance costs . . . . . . . . . . . . . . .-(757,877)    -  (757,877)
Net loss for the year . . . . . . . . . . . . . . .-  -(18,495,828)(18,495,828)
                    --------------------------------------------------------
Balances at September 30, 1995 . . . . . . . .12,485,13093,931,947(71,585,346)22,346,601
Common stock issued upon
  exercise of options . . . . . . . . . . . . . . .386,5504,886,118-4,886,118
Common stock issued as compensation . . . .19,353263,586         -   263,586
Compensation expense for stock
  option grants . . . . . . . . . . . . . . . . . .-1,044,183    - 1,044,183
Common stock issued upon
  exercise of warrants . . . . . . . . . . . . . .46,350826,600  -   826,600
Equity issuance costs . . . . . . . . . . . . . . .-(152)        -      (152)
Net loss for the year . . . . . . . . . . . . . . .-  - (1,399,916)(1,399,916)
                    --------------------------------------------------------
Balances at September 30, 1996 . . . . . . . .12,937,383$ 100,952,282$(72,985,262)$ 27,967,020


The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Historical Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

FOR THE YEAR ENDED SEPTEMBER 30                          1996           1995           1994
<S>                                                 <C>            <C>             <C>
Cash flows from operating activities
Net loss . . . . . . . . . . . . . . . . . . . . .$(1,399,916)$(18,495,828)$(15,632,588)
Adjustments to reconcile net loss to net cash
  used in operating activities:
Depreciation and amortization . . . . . . . . . . .1,086,9301,458,6751,156,211
(Gain) loss on disposition of property . . . . . . .(1,098)81975,671
Decrease (increase) in accounts receivable and
  other receivables . . . . . . . . . . . . . . . . .125,025(1,022,050)(321,035)
Increase in inventories . . . . . . . . . . . . . . .(233,929)(286,903)(658,207)
Decrease (increase) in prepaid expenses . . . . . . .69,133(17,608)80,319
Decrease (increase) in other assets and deposits . . .20,649(33,521)335
Increase in accounts payable and accrued 
  liabilities . . . . . . . . . . . . . . . . . . . .(1,656,478)2,168,684397,332
Common stock issued as compensation for services263,586266,800368,778
Compensation expense for stock option grants and
  deferred salary increases . . . . . . . . . . . . .1,044,1831,374,7101,259,273
                          ------------------------------------------
Net cash used in operating activities . . . . . . . .(723,213)(14,586,222)(13,273,911)
 
Cash flows from investing activities
Investment in marketable securities . . . . . . . .(47,608,270)(16,194,994)(5,603,414)
Proceeds from sale of marketable securities . . . . .45,870,3964,718,162-
Additions to property and equipment . . . . . . . .(1,066,758)(1,350,850)(2,590,751)
Proceeds from sale of property . . . . . . . . . . . .7,43214,3431,000
Expenditures for patents and proprietary
  technology . . . . . . . . . . . . . . . . . . . . .(770,262)(305,135)(185,670)
Investment in affiliated companies . . . . . . . . . .(331,280)652,69864,938
Minority interest in affiliated companies . . . . . .215,407-      -
                          ------------------------------------------
Net cash used in investing
 activities . . . . . . . . . . . . . . . . . . . . . . .(3,683,335)(12,465,776)(8,313,897)
 
Cash flows from financing activities
Principal payments under installment purchase and
  capital lease obligations . . . . . . . . . . . .(39,507)(16,137)(20,724)
Proceeds from issuance of common stock . . . . . .5,885,57321,060,91224,387,702
Cost of common stock issuance . . . . . . . . . .(152)(757,877)(310,849)
                          ------------------------------------------
Net cash provided by financing activities . . . . . .5,845,91420,286,89824,056,129
 
Net increase (decrease) in cash and cash
  equivalents . . . . . . . . . . . . . . . . . . . .1,439,366(6,765,100)2,468,321
 
Cash and cash equivalents at beginning of year . . .4,259,89711,024,9978,556,676
                          ------------------------------------------
Cash and cash equivalents at end of year . . . . . . .$ 5,699,263$ 4,259,897$ 11,024,997


The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
Notes to Historical Financial Statements

Note 1      The Company

Epitope, Inc. (the Company or Epitope) is an Oregon corporation utilizing
biotechnology to develop and market medical diagnostic products through its
Epitope Medical Products group (Epitope Medical Products) and superior new
plants and related products through its Agritope group (Agritope). Upon
approval of the proposal to create a new class of common stock (the Agritope
Stock Proposal), the capital structure of Epitope will be modified to include
two classes of common stock, Epitope Medical Products Common Stock and
Agritope Common Stock.  The Epitope Medical Products group (Epitope Medical
Products) will include the medical products business conducted by the Company. 
The Agritope group (Agritope) will include the agribusiness and agricultural
biotechnology operations of the Company.

Note 2      Summary of Significant Accounting Policies

Basis of Presentation.  The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.  Assets and liabilities of majority-owned subsidiaries are
included in these statements.  Minority-owned investments and joint ventures
are accounted for using the equity method.  Investments of less than 20% are
carried at cost.

The accompanying combined financial statements of the Epitope Medical Products
and Agritope groups have been prepared using the amounts included in the
consolidated financial statements of the Company.  Assets and liabilities
directly attributable to each group are included in the respective balance
sheets of the applicable group.  Cash, cash equivalents and marketable
securities have been allocated 80% to Epitope Medical Products and 20% to
Agritope.  Cash advanced and allocated by the Company to business units of the
Agritope group has been reflected as paid-in-capital in the accompanying
combined financial statements.

Certain services such as accounting, finance, general management, human
resources, investor relations, information systems and payroll are provided by
the Company on a centralized basis for the benefit of both groups (Shared
Services).  Such expenses have been allocated between Epitope Medical Products
and Agritope in the accompanying combined financial statements using activity
indicators which, in the opinion of management, represent a reasonable measure
of the respective group's utilization of such shared services.  The activity
measurement indicators will be reviewed periodically and adjusted to reflect
changes in utilization.  The accompanying combined financial statements also
include an adjustment to allocate interest income in the same proportion as
the allocation of Shared Services between the two groups. Future interest
income will be based on amounts earned by each group.  Shared Services are
included under the caption "Selling, general and administrative expenses" as
follows:
<TABLE>
<CAPTION>

YEAR ENDED SEPTEMBER 30                         1996          1995          1994
<S>                                       <C>            <C>            <C>     
Epitope Medical Products . . .$3,028,181$3,575,069$1,899,969
Agritope . . . . . . . . . . . . .1,069,2491,892,3701,735,688
                   ----------------------------------------
Consolidated . . . . . . . . . . .$4,097,430$5,467,439$3,635,657

The allocation of interest income is included under the caption "Other income,
net" as follows:
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

YEAR ENDED SEPTEMBER 30                         1996           1995           1994
<S>                                        <C>           <C>            <C>
Epitope Medical Products . . .$1,025,030$  756,743$  237,467
Agritope . . . . . . . . . . . . .361,938 408,097   216,934
                   ----------------------------------------
Consolidated . . . . . . . . . . .$1,386,968$1,164,840$  454,401

</TABLE>


If the Agritope Stock Proposal is approved, the Company will provide holders
of Epitope Medical Products and Agritope common stock separate financial
statements, management's discussion and analysis of financial condition and
results of operations, descriptions of businesses and other relevant
information for each group.  Notwithstanding the attribution of assets and
liabilities (including contingent liabilities) to each group for the purposes
of preparing their respective historical and future financial statements, this
attribution and the change in capitalization contemplated in the Agritope
Stock Proposal will not affect legal title to such assets or responsibility
for such liabilities of the Company or any of its subsidiaries.  Holders of
each class of common stock will be common shareholders of the Company and
would be subject to risks associated with an investment in the Company and all
its businesses, assets, and liabilities.  Liabilities or contingencies of
either group that affect the Company's resources or financial condition could
affect the financial condition and results of operations of either group.  

Under the Agritope Stock Proposal, dividends to be paid to the holders of
either class of common stock will be limited to the lesser of funds of the
Company legally available for the payment of dividends or the Available
Medical Products Dividend Amount or Available Agritope Dividend Amount as
defined in the Company's Articles of Incorporation.  The Company has never
paid any cash dividends on shares of Epitope common stock.  The Company
currently intends to retain any of its earnings to finance future growth and,
therefore, does not anticipate paying any cash dividends on either class of
common stock in the foreseeable future.

Except as stated in the amended Articles of Incorporation, the accounting
policies applicable to preparation of financial statements of either group may
be modified or rescinded at the sole discretion of the Board of Directors of
the Company without the approval of shareholders, although there is no
intention to do so.  In addition, generally accepted accounting principles
require that any change in accounting policy be preferable (in accordance with
such principles) to the previous policy.

Cash and Cash Equivalents; Marketable Securities.  For purposes of the
consolidated balance sheets and statements of cash flows, the Company
considers all highly liquid investments with maturities at time of purchase of
three months or less to be cash equivalents.  At September 30, 1996,
marketable securities consisted of commercial paper and U.S. Treasury
securities with an original maturity period greater than three months, but
generally less than 12 months.  The Company's policy is to invest its excess
cash in securities that maximize (a) safety of principal, (b) liquidity for
operating needs, and (c) after-tax yields.

Effective October 1, 1994, the Company adopted Financial Accounting Standards
Board Statement No. 115 (SFAS 115), Accounting for Certain Investments in Debt
and Equity Securities.  Pursuant to SFAS 115, the Company has categorized all
of its investments as available-for-sale securities and, accordingly,
unrealized gains and losses on such investments, if material, will be carried
as a separate component of shareholders' equity.  Such unrealized gains and
losses were immaterial as of September 30, 1996 and 1995.
<PAGE>
Inventories.  Inventories are recorded at the lower of standard cost (which
approximates actual cost on a first-in, first-out basis) or market.  Inventory
components are summarized as follows:

September 30            1996      1995
Epitope Medical Products
Raw materials. . . . . . . .$  522,824$   657,568
Work-in-process. . . . . . .389,642379,470
Finished goods . . . . . . .192,882295,032
Supplies . . . . . . . . . .52,582101,676
              ------------------------
                  $1,157,930$ 1,433,746
Agritope
Work-in-process. . . . . . .$  471,208- 
Finished goods . . . . . . .38,537  - 
              ------------------------
                  $  509,745   $    - 
Consolidated
Raw materials. . . . . . . .$  522,824$   657,568
Work-in-process. . . . . . .860,850379,470
Finished goods . . . . . . .231,419295,032
Supplies . . . . . . . . . .52,582101,676
              ------------------------
                  $1,667,675$ 1,433,746

Depreciation and Capitalization Policies.  Property and equipment are stated
at cost less accumulated depreciation.  Expenditures for repairs and
maintenance are charged to operating expense as incurred. Expenditures for
renewals and betterments are capitalized.

Depreciation and amortization of property and equipment are calculated
primarily under the straight-line method over the estimated lives of the
related assets (three to seven years).  Leasehold improvements are amortized
over the shorter of estimated useful lives or the terms of related leases. 
When assets are sold or otherwise disposed, cost and related accumulated
depreciation or amortization are removed from the accounts and any resulting
gain or loss is included in operations.

Accounting for Long-Lived Assets.  The Company periodically reviews its long-
lived assets for impairment or as events or circumstances indicate that the
carrying amount of long-lived assets may not be recoverable.  If the estimated
net cash flows are less than the carrying amount of the long-lived assets, the
Company recognizes an impairment loss in an amount necessary to write down
long-lived assets to fair value as determined from expected discounted future
cash flows.  This accounting policy is consistent with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of."  There has been no
significant impact to the Company's financial position or results of
operations as the carrying amount of all long-lived assets is recoverable.

Patents and Proprietary Technology.  Direct costs associated with patent
submissions and acquired technology are capitalized and amortized over their
minimum estimated economic useful lives, generally five years.

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

Amortization and accumulated amortization are summarized as follows:

<PAGE>
                                     1996        1995         1994
Amortization for the year ended 
   September 30,
Epitope Medical Products . . . .$ 172,095$ 130,313$ 101,339
Agritope . . . . . . . . . . . . .42,45623,96413,487
               -----------------------------------
Consolidated          $ 214,551$ 154,277 $ 114,826

Accumulated Amortization at 
  September 30,  . . . . . . . . .
Epitope Medical Products . . . . .$ 621,110$ 449,015$ 318,702
Agritope . . . . . . . . . . . . .79,90737,45113,487
               -----------------------------------
Consolidated          $ 701,017$ 486,466 $ 332,189


Investments in Affiliated Companies.  Investments in affiliated companies are
stated at cost.  For reductions in the value of its investments in affiliated
companies that are more than temporary, the Company will write down the value
of its investments in affiliated companies to its recoverable value.

Revenue Recognition.  Product revenues are generally derived from the sale of
products and are recognized as revenue when the related products are shipped. 
Grant and contract revenues include funds received under research and
development agreements with various entities.  Such revenues are recognized in
accordance with contract terms.

Accounts receivable are stated net of an allowance for doubtful accounts as
follows:

SEPTEMBER 30                           1996         1995
Epitope Medical Products . . . . .$  6,872$  6,872
Agritope . . . . . . . . . . . . .19,57165,172
                    --------------------
Consolidated . . . . . . . . . . .$ 26,443$ 72,044


Research and Development.  Research and development expenditures are comprised
of those costs associated with the Company's own ongoing research and
development activities including the costs to prepare for, obtain and compile
clinical studies and other information to support product license
applications.  Expenditures for research and development also include costs
incurred under contracts to develop certain products, including those
contracts resulting in grant and contract revenues.  All research and
development costs are expensed as incurred.

Income taxes.  The Company accounts for certain revenue and expense items
differently for income tax purposes than for financial reporting purposes. 
These differences arise principally from methods used in accounting for stock
options and depreciation rates.  The Company accounts for income taxes under
SFAS No. 109 "Accounting for Income Taxes," (SFAS 109) which requires the use
of the asset and liability method approach for accounting for income taxes. 
Under SFAS 109, deferred tax assets and liabilities are recognized based on
temporary differences between the financial statement and the tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.

To date, both Epitope Medical Products and Agritope have experienced operating
losses.  Actual tax payment is a liability of Epitope as a whole.  The
Agritope Stock Proposal provides that either group may be allocated the tax
benefit of such losses and future losses to reduce current or deferred tax
expense and that such losses will not be carried forward to reduce the losses
of the group which incurred such losses.  Accordingly, either group may report
lower earnings than if such losses had been retained for the benefit of the
group which incurred such losses.

Net Income (Loss) Per Share.  Net income (loss) per share has been computed
using the weighted average number of shares of common stock and common stock
equivalents outstanding during the period.  Common stock equivalents consist
of the number of shares issuable upon exercise of outstanding warrants,
options and convertible notes less the number of shares assumed to have been
purchased for the treasury with the proceeds from the exercise of such.  Net
income (loss) per share for Epitope Medical Products and Agritope is presented
on a proforma basis assuming that the distribution of Agritope common stock
and redesignation of Epitope, Inc. common stock as Epitope Medical Products
common stock pursuant to the Agritope Stock Proposal had occurred on
October 1, 1993.

Common stock equivalents are excluded from the computation if their effect is
anti-dilutive.  Primary and fully diluted net income (loss) per share are the
same.

Supplemental Cash Flow Information.  Non-cash financing and investing
activities not included in the consolidated statements of cash flows are
summarized as follows:
<TABLE>
<CAPTION>

YEAR ENDED SEPTEMBER 30                   1996          1995           1994
<S>                                                         <C>           <C>                <C>
Epitope Medical Products
Discount on private placement of common stock . . . .-      -     3,024,413

Agritope
Conversion of notes to equity (Note 5) . . . . . . . .-$  427,496$   600,231
Investment in nonconsolidated subsidiary . . . . . . .-2,584,979          -

</TABLE>

Supplemental Profit and Loss Information.  In September 1995, management
announced a company-wide reduction in work force whereby 48 employees were
terminated.  The Company charged $607,000 to results of operations for
severance payments and related expenses for this program.  As of September 30,
1996 and 1995, $55,000 and $475,000, respectively, of these charges remain
accrued and are included in the accompanying balance sheets of the Company and
Epitope Medical Products under the caption "Salaries, benefits and other
accrued liabilities."

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

Note 3      Investment in Affiliated Companies

In June 1995, Agritope agreed to sell its wholly owned subsidiary, Vinifera,
Inc. to VF Holdings, Inc. ("VF"), an affiliate of a Swiss investment group,
pursuant to a stock purchase agreement.  VF subsequently failed to make all
the payments required under the VF Agreement.  As part of a settlement of
claims based on VF's default, VF retained a minority interest in Vinifera and
relinquished the majority interest to Agritope in August 1996.

In May 1995, Agrimax Floral Products, Inc. (Agrimax), a wholly owned
subsidiary, transferred control of its Charlotte facility to Universal
American Flowers, Inc. (UAF), a privately held importer of high quality fresh
flowers engaged in distribution to customers in the eastern U.S. from
facilities in Tampa, Florida and Hammond, Louisiana.  As of October 27, 1995,
Agrimax merged the Charlotte fresh flower operation with those of UAF in
return for an equity interest of approximately 18% in the merged entity, UAF,
Limited Partnership.  In addition to tangible operating assets, Agrimax
transferred to UAF, Limited Partnership, the rights to use its proprietary
floral preservative as well as the Fresche Blossoms(R), Everguard(R) and
Fresche Blossoms Express(TM) trademarks.  In May 1996, the equity interest of
Agrimax was reduced to 9% as a result of a recapitalization of UAF, Limited
Partnership.

The St. Paul, Minnesota, facility of Agrimax ceased operations in June 1995. 
In June 1996, Agrimax contributed inventory and operating assets to Petals
USA, Inc. ("Petals"), a newly formed affiliate of a Canadian fresh flower
wholesaler, in return for a 19.5% equity interest in Petals.

The investments by Agrimax are included in the accompanying consolidated
balance sheets of the Company and combined balance sheets of Agritope under
the caption "Investment in affiliated companies."  See Note 13.

For the years ended September 30, 1995, 1994 respectively, the accompanying
financial statements of the Company and Agritope include revenues of $2.0
million and $2.2 million, and operating losses of $3.8 million, and $6.4
million attributable to the Agrimax and Vinifera business units.  The
accompanying statements of operations of the Company and Agritope for the year
ended September 30, 1995, includes the results of operations of Agrimax and
Vinifera through May and also includes a charge of $500,000 primarily
attributable to the disposition of Agrimax which is included in the
accompanying consolidated balance sheets of the Company and combined balance
sheets of Agritope as of September 30, 1995 under the caption "Salaries,
benefits and other accrued liabilities."

Note 4      Property and Equipment

Property and equipment are summarized as follows:
<TABLE>
<CAPTION>

SEPTEMBER 30                             1996            1995  
<S>                                                  <C>                   <C>     
Epitope Medical Products 
Research and development laboratory equipment . . .$ 1,056,883$   898,716
Manufacturing equipment . . . . . . . . . . . . . .1,291,5461,296,416
Office furniture and equipment. . . . . . . . . . .1,899,9482,041,897
Leasehold improvements. . . . . . . . . . . . . . .1,084,6601,084,660
Construction in progress. . . . . . . . . . . . . .134,55770,961
                             ----------------------------------
                                      5,467,594       5,392,650
Less accumulated depreciation and amortization. . . .(3,924,837)(3,402,881)
                             ----------------------------------
                                    $ 1,542,757      $1,989,769

Agritope
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$     30,020$    30,020
Buildings and improvements. . . . . . . . . . . . . .717,508717,508
Research and development laboratory equipment . . . .220,919196,255
Manufacturing equipment . . . . . . . . . . . . . . .351,538  -
Office furniture and equipment. . . . . . . . . . . .140,45295,338
Leasehold improvements. . . . . . . . . . . . . . . .23,96223,962
Construction in progress. . . . . . . . . . . . . . .499,98034,650
                             ----------------------------------
                                      1,984,379       1,097,733
Less accumulated depreciation and amortization . . .(698,183)(542,730)
                             ----------------------------------
                                    $ 1,286,196     $   555,003
Consolidated
Land. . . . . . . . . . . . . . . . . . . . . . . .$     30,020$    30,020
Buildings and improvements. . . . . . . . . . . . .717,508717,508
Research and development laboratory equipment . . .1,277,8021,094,971
Manufacturing equipment . . . . . . . . . . . . . .1,643,0841,296,416
Office furniture and equipment. . . . . . . . . . .2,040,4002,137,235
Leasehold improvements. . . . . . . . . . . . . . .1,108,6221,108,622
Construction in progress. . . . . . . . . . . . . .634,537105,611
                             ----------------------------------
                                      7,451,973       6,490,383
Less accumulated depreciation and amortization . . .(4,623,020)(3,945,611)
                             ----------------------------------
                                    $ 2,828,953     $ 2,544,772
</TABLE>
<PAGE>
Note 5      Long-Term Debt

On June 30, 1992, Agritope completed a private placement with several European
institutional investors pursuant to which $5,495,000 of convertible notes were
issued.  The notes are unsecured, mature on June 30, 1997 and bear interest at
the rate of 4% per annum which is payable on each June 30 and December 31
until all outstanding principal and interest on the notes have been paid in
full.  The notes are convertible into common stock of the Company at a
conversion price of $19.53 per share.  In the event of an initial public
offering of Agritope common stock, the notes would be automatically converted
to shares of Agritope common stock at 90% of the public offering price.

During the years ended September 30, 1995 and 1994, respectively, investors
exchanged $449,991 and $559,964 principal amount of convertible notes for the
Company's common stock at a price of $19.53 per share.  In conjunction with
the exchanges, unamortized debt issuance costs of $22,487 and $40,267 related
to such notes were recognized as equity issuance costs during 1995 and 1994,
respectively.  Debt issuance costs are included in other assets and are being
amortized over the five-year life of the notes.  Amortization expense of debt
issuance costs for the years ended September 30, 1996, 1995 and 1994,
respectively, totaled $108,257, $96,136 and $91,715, leaving an unamortized
balance of $88,821 and $197,077 at September 30, 1996 and 1995, respectively.

Note 6      Shareholders' Equity

Authorized Capital Stock.  The Company's amended articles of incorporation
authorize 1,000,000 shares of preferred stock and 30,000,000 shares of common
stock.  The Company's Board of Directors has authority to determine
preferences, limitations and relative rights of the preferred stock.
      
Common Stock Reserved for Future Issuance.  As of September 30, 1996, the
following shares of the Company's common stock were reserved for future
issuance, as more fully described below:

Purpose                                                 Shares

Outstanding warrants. . . . . . . . . . . . . .2,000,640
Outstanding stock options . . . . . . . . . . .3,365,726
Employee Stock Purchase Plan subscriptions. . .42,820
Conversion of notes (Note 5). . . . . . . . . .185,356
                              --------------
                                   5,594,542

If the Agritope Stock Proposal is approved, the Company will issue to the
holders of the above rights to purchase shares of Epitope common stock or to
convert notes into such shares, as applicable, the equivalent rights with
respect to Agritope common stock on the basis of one-half share of Agritope
common stock for each right to purchase one share of Epitope common stock.

Common Stock Warrants.  As of September 30, 1996, the following warrants to
purchase shares of common stock were outstanding:

Date of Issuance    Shares     Price    Expiration Date
September 26, 1991. . . . .159,150$16.00September 30, 1997
December 23, 1992 . . . . .988,39018.50September 30, 1997
July 20, 1993 . . . . . . . .375,00020.00September 30, 1997
August 1, 1993. . . . . . . .200,00018.50September 30, 1997
October 17, 1994. . . . . . .50,00018.50September 30, 1997
November 22, 1994 . . . . .228,10018.50September 30, 1997
               -----------
                 2,000,640


Stock Award Plans.  The Company's 1991 Stock Award Plan (the 1991 Plan) was
approved by the shareholders during 1991, replacing the Company's Incentive
Stock Option Plan (ISOP).  The 1991 Plan provides for stock-based awards to
employees, outside directors and members of scientific advisory committees or
other consultants.  Awards which may be granted under the 1991 Plan include
qualified incentive stock options, nonqualified stock options, stock
appreciation rights, restricted awards, performance awards and other
stock-based awards.

Under the terms of the 1991 Plan, qualified incentive stock options on shares
of common stock may be granted to eligible employees, including officers, of
the Company at an exercise price not less than the fair market value of the
stock on the date of grant.  The maximum term during which any option may be
exercised is ten years from the date of grant.  To date, options have been
granted with four-year vesting schedules.

Options issued to employees under the Incentive Stock Option Plan (ISOP) were
issued at prices not less than the fair market value of a share of common
stock on the date of grant.  The options are exercisable after one year from
the date of grant at the rate of 25% per year cumulatively and expire ten
years from the date of grant.

The Agritope, Inc. 1992 Stock Award Plan (the 1992 Plan) was adopted by
Agritope and approved by the Company in 1992.  The 1992 Plan, which has
provisions similar to those of the Company's 1991 Plan, authorizes issuance of
2,000,000 shares of Agritope common stock.  Until Agritope is no longer a
wholly owned subsidiary of the Company, shares issued pursuant to exercise of
options under the 1992 Plan will be converted into shares of the Company's
common stock based on the ratio of the fair market value of the Company's
common stock to the fair market value of Agritope common stock on the date of
the grant.

The 1991 Plan and 1992 Plan also provide that nonqualified options may be
granted at a price not less than 75% of the fair market value of a share of
common stock on the date of grant.  The option term and vesting schedule of
such awards may either be unlimited or have a specified period in which to
vest and be exercised.  For the discounted nonqualified options issued, the
Company amortizes, on a straight-line basis over the vesting period of the
options, the difference between the exercise price and the fair market value
of a share of stock on the date of grant.  As of September 30, 1996, 197,181
shares of Epitope common stock remain available for grant under the Company's
stock award plans.

In October 1995, the Financial Accounting Standards Board issued SFAS 123,
"Accounting for Stock-Based Compensation."  SFAS 123 allows companies which
have stock-based compensation arrangements with employees to adopt a fair-
value basis of accounting for stock options and other equity instruments or to
continue to apply the existing accounting rules under APB Opinion 25,
"Accounting for Stock Issued to Employees," but with additional financial
statement disclosure. The Company plans to elect the disclosure-only
alternative commencing in fiscal 1997 and therefore does not anticipate that
SFAS 123 will have a material impact on its financial position or results of
operations.

Options granted and outstanding under the Company's stock option plans are
summarized as follows:
<TABLE>
<CAPTION>

                              1996              1995                   1994
                    Shares     Price    Shares        Price  Shares     Price
<S>                       <C>          <C>             <C>          <C>             <C>        <C>    
Outstanding at
 beginning of period3,636,103$1.09-$24.943,483,432$ 1.09-$24.943,052,653$1.09-$24.94
Granted . . . . . . . . .901,3799.81-18.13802,05014.94-18.88589,85014.38-22.94
Exercised. . . . . . . .(386,550)1.09-17.13(183,525)1.84-22.50(52,488)12.43-22.50
Canceled . . . . . . . .(785,206)14.38-24.00(465,854)7.38-22.94(106,583)8.50-22.94
                ---------------------------------------------------------------------
Outstanding at
 end of period . . . . .3,365,726$3.50-$24.943,636,103$1.09-$24.943,483,432$1.09-$24.94

Exercisable. . . . . . .2,302,212$3.50-$24.942,002,925$1.09-$24.941,557,505$1.09-$24.94

</TABLE>

Pursuant to the 1991 Plan, 973, 3,680 and 11,741 shares of common stock were
also awarded to consultants and members of the Company's scientific advisory
committees during 1996, 1995, and 1994, respectively.

Employee Stock Purchase Plans.  In 1991, the shareholders approved the
Company's adoption of the 1991 Employee Stock Purchase Plan (1991 ESPP)
covering a maximum of 100,000 shares of common stock for subscription over two
offering periods.  The purchase price for stock purchased under the 1991 ESPP
for each of the two 24-month subscription periods was the lesser of 85% of the
fair market value of a share of common stock at the commencement of the
subscription period or the fair market value at the close of each subscription
period.  An employee may also elect to withdraw at any time during the
subscription period and receive the amounts paid plus interest at the rate of
6%.  During April 1994, 676 shares, at a purchase price of $14.00 per share,
were issued to employees for the second 1991 ESPP purchase period which closed
March 31, 1994.

The 1993 Employee Stock Purchase Plan (1993 ESPP), as amended and restated
effective February 1, 1993, covers a maximum of 250,000 shares of common stock
for subscription over established offering periods.  The Company's Board of
Directors was granted authority to determine the number of offering periods,
the number of shares offered, and the length of each period, provided that no
more than three offering periods (other than Special Offering Subscriptions as
described below) may be set during each fiscal year of the Company.  Other
provisions of the 1993 ESPP are similar to the 1991 ESPP.  During April, 1996,
10,106 shares were issued at a price of $11.90 per share.  As of September 30,
1996, 42,820 shares of common stock were subscribed for during two offerings
under the 1993 ESPP.  Shares subscribed for under these 1993 ESPP offerings
may be purchased over 24 months and have initial subscription prices of $12.33
and $8.77 per share for the various offerings.

The 1993 ESPP was amended to allow the Company, at its discretion, to provide
Special Offering Subscriptions whereby an employee's annual increase in
compensation could be deferred for a one-year period.  At the end of the one-
year period, the employee can elect to receive the deferred compensation
amount in the form of cash or shares of the Company's common stock.  The
purchase price for stock issued under a Special Offering Subscription is the
lesser of 85% of the fair market value of a share of common stock on the first
day of the calendar month the employee's increase was effective or the fair
market value at the close of the one-year subscription period.  During 1995
and 1994, respectively, 5,569 and 2,314 Special Offering Subscription shares
were issued to employees at an average price of $15.26 and $15.24 per share.

Note 7      Income Taxes

As of September 30, 1996, the Company had net operating loss carryforwards of
approximately $66.7 million and $50.0 million, respectively, to offset federal
and state taxable income. Approximately $6.9 million of the Company's net
operating loss carryforwards were generated as a result of deductions related
to the exercise of stock options.  When utilized, such carryforwards, as tax
effected, will be reflected in the Company's financial statements as an
increase in shareholders' equity rather than a reduction of the provision for
income taxes.

As of September 30, 1996 the Company had total gross deferred tax assets of
approximately $28.4 million, consisting primarily of $24.5 million of net
operating loss carryforwards, $1.1 million of research and development tax
credit carryforwards and $2.0 million of accrued deferred compensation costs. 
No benefit for these assets has been reflected in the accompanying
consolidated financial statements as they do not satisfy the recognition
criteria set forth in Statement of Financial Accounting Standards No. 109
(SFAS 109).  Accordingly, a valuation allowance of $28.4 million, representing
a $1.1 million decrease since the prior fiscal year end, has been recorded.

The expected tax benefit of approximately $476,000 for the year ended
September 30, 1996 is increased by approximately $61,000 for the effect of
state and local taxes (net of federal impact),$1.1 million for the effect of
the decrease in valuation allowance, and $840,000 for the effect of stock
option deductions included in the valuation allowance and is reduced by
approximately $2.5 million for the effect of Vinifera Inc.'s net operating
loss carryforwards and certain state net operating loss carryforwards being
removed from the consolidated tax group.
<PAGE>
Note 8      Research and Development Arrangements

In February 1995, the Company entered into a Development, License and Supply
Agreement with SmithKline Beecham, plc (SB) pursuant to which the Company will
conduct research and development projects funded by SB.  Agritope also
performed research work in 1995 with respect to raspberries which was
partially funded by Sweetbriar Development, Inc. under a License Agreement
dated October 18, 1994 and with respect to grapevine disease diagnostics
funded by a Phase I grant from the U.S. Department of Agriculture under the
Small Business Innovation Research Program.

During 1994, the Company participated in a National Cancer Institute program
whereby the Company received funding for research toward the treatment of
cancer.  Agritope has also received grant support from the U.S. Department of
Agriculture, Oregon Strawberry Commission, and Oregon Raspberry & Blackberry
Commission for antifungal biocontrol research and from several strategic
partners.

Revenues from research and development arrangements are included in the
accompanying consolidated statements of operations under the caption "Grants
and Contracts."

Note 9      Distribution and Supply Contracts

The Company has entered into several contractual arrangements, including those
discussed in the following paragraphs, for distribution of certain of its
products to customers.

The Company continues to maintain supply and distribution agreements with
Organon Teknika Corporation (Organon Teknika), whereby Organon Teknika
supplies the Company's antigen requirements and exclusively distributes the
Company's EPIblot HIV confirmatory tests (EPIblot) on a worldwide basis.  As
of April 1, 1994, the Company renewed the agreements which have an initial
termination date of March 31, 1997 (with successive one-year renewal periods
thereafter) and include pricing incentives based on volumes purchased by
Organon Teknika and penalties for failure to purchase specified minimum
quarterly volumes.  For the years ended September 30, 1996, 1995 and 1994,
respectively, revenues generated from sales of EPIblot to Organon Teknika were
$1,539,164, $1,808,431, and $1,688,200, including export sales of $62,539,
$72,369 and $320,700.  The Company has notified Organon Teknika that it
intends to renew the agreements on mutually acceptable, but revised, terms
prior to the scheduled termination date.

LabOne, Inc. (previously Home Office Reference Laboratory, Inc.) purchases
oral specimen devices from the Company for use in insurance testing in return
for non-exclusive distribution rights in the United States and Canada under an
agreement which expires on March 13, 2000, with an automatic five-year
renewal, unless either party notifies the other of intent not to renew at
least 180 days prior to the initial expiration date.  For the years ended
September 30, 1996, 1995 and 1994, respectively, revenue generated from
product sales to LabOne, Inc. was $1,327,544, $525,628 and $477,186 including
export sales of $394,747, $58,500 and $110,933.

SB has an exclusive agreement to market the Company's oral specimen collection
device worldwide, except in several foreign countries and to the insurance
industry in the U.S., Canada and Japan.  

In 1995, SB made an initial license fee payment of $1 million to the Company. 
SB also placed $5 million in escrow for future payment to the Company, of
which $1 million was designated for reimbursement of future research project
work and $4 million was designated as an additional license fee to be paid
upon FDA approval of a pending request to amend the labeling of the Company's
oral specimen collection device to indicate a two-year shelf life.  The
initial $1 million license fee was included as deferred revenue under the
caption "Salaries, benefits and other accrued liabilities" in the accompanying
consolidated balance sheets as of September 30, 1995.  The escrowed funds are
not reflected in the Company's financial statements.  

In April 1996, the FDA granted the Company's request for extended dating and
SB disbursed $4 million plus interest from escrow.  Accordingly the Company
recognized income of $5 million in 1996 operating results.
<PAGE>
Note 10     Commitments

The Company leases office, manufacturing, warehouse and laboratory facilities
under operating lease agreements which require minimum annual payments as
follows:
<TABLE>
<CAPTION>

                                  Epitope
                                  Medical
YEAR ENDING SEPTEMBER 30          Products   Agritope Consolidated
<S>                                           <C>               <C>          <C>
1997. . . . . . . . . . . . . . . . . .$  345,577$189,551$  535,128
1998. . . . . . . . . . . . . . . . . .345,576185,394   530,970
1999. . . . . . . . . . . . . . . . . .346,356150,000   496,356
2000. . . . . . . . . . . . . . . . . .109,992150,000   259,992
2001. . . . . . . . . . . . . . . . . .--     50,000     50,000
                              ----------   ---------------------
                              $1,147,501    $724,945 $1,872,446

</TABLE>

Under the agreements for the lease of its office and laboratory facilities,
the Company is obligated to the lessor for its share of certain expenses
related to the use, operation, maintenance and insurance of the property. 
These expenses, payable monthly in addition to the base rent, are not included
in the amounts shown above.  Rent expense aggregated $538,665, $749,530 and
$616,750 for the years ended September 30, 1996, 1995 and 1994, respectively.

The Company is also contingently liable for a lease of which has been assigned
to UAF, Limited Partnership and the lease of property which has been subleased
to Petals USA, Inc. in the following amounts:

             YEAR ENDING SEPTEMBER 30
             1997. . . . . . . . . . . . . . . . . .         $   328,953
             1998. . . . . . . . . . . . . . . . . .             341,304
             1999. . . . . . . . . . . . . . . . . .             347,184
                                                            ------------
                                                              $1,017,441

Note 11     Profit Sharing and Savings Plan

The Company established a profit sharing and deferred salary savings plan in
1986 and restated the plan in 1991.  All employees are eligible to participate
in the plan.  In addition, the plan permits certain voluntary employee
contributions to be excluded from the employees' current taxable income under
the provisions of Internal Revenue Code Section 401(k) and the regulations
thereunder.  Effective October 1, 1991, the Company replaced a discretionary
profit sharing provision with a matching contribution (either in cash, shares
of Epitope common stock, or partly in both forms) equal to 50% of an
employee's basic contribution, not to exceed 2.5% of an employee's
compensation.  The Board of Directors has the authority to increase or
decrease the 50% match at any time.  During 1996, 1995 and 1994, respectively,
the Company contributed $73,315 (4,653 shares totaling $73,279 and the
remainder in cash),  $97,631 (5,562 shares totaling $97,607 and the remainder
in cash), and $79,981 (4,632 shares totaling $79,807 and the remainder in cash
to the plan.  As of September 30, 1996, 17,035 shares are held by the plan.

Note 12   Geographic Area Information
The Company's products are included in the medical products and agricultural
products industry segments.  (See Note 1 for a description of the Company's
business.)  The Company's products are sold principally in the United States,
Canada and Europe.  Operating loss represents revenues less operating
expenses.  In computing operating loss, allocated corporate administration
expenses have been included; however, other income and expense items such as
interest expense, miscellaneous income, and other charges have not been added
or deducted.  Other assets primarily represent cash and cash equivalents,
marketable securities, and prepaid insurance.
<PAGE>
<TABLE>
<CAPTION>

Epitope Medical Products
In thousands
Geographic                      Operating                Identifiable
Areas      Revenues             Loss                     Assets
           1996    1995   1994  1996      1995    1994   1996    1995  1994
<S>          <C>       <C>       <C>       <C>         <C>         <C>        <C>       <C>     <C>
United
 States . . .$4,903$2,630$2,062$ (5,287)$(11,608)$(6,284)$4,604$3,768$3,464
Canada . . .404     78    111               --      --            --    --
Latin 
 America . .100      -      -               --      --            --    --
Europe . . .65      72    329               --      --            --    --
Other . . . .122    76    103               --      --            --    --
-------------------------------------------------------------------------------------------------------
        $5,594  $2,856 $2,605$ (5,287)$(11,608)$(6,284)$4,604 $3,768$3,464


Agritope
In thousands
Geographic                      Operating                Identifiable
Areas      Revenues             Loss                     Assets
           1996    1995   1994  1996      1995    1994   1996    1995  1994
United
 States . . .$585$2,110$2,213 $(2,236) $(7,810)$(9,490)$5,351 $3,923$4,050
-------------------------------------------------------------------------------------------------------
           $585 $2,110 $2,213 $(2,236) $(7,810)$(9,490)$5,351 $3,923$4,050


Epitope, Inc. Consolidated
In thousands
Geographic                      Operating                Identifiable
Area       Revenues             Loss                     Assets
           1996    1995   1994  1996      1995    1994   1996    1995  1994
United
 States . . .$5,488$4,739$4,276$(7,523)$(19,418)$(15,774)$9,955$7,691$7,514
Canada . . .404     78    111               --      --            --    --
Latin 
 America . .100      -      -               --      --            --    --
Europe . . . 65     72    329               --      --            --    --
Other . . . .122    76    103               --      --            --    --
-------------------------------------------------------------------------------------------------------
         $6,179 $4,965 $4,819 $(7,523)$(19,418)$(15,774)$9,955$7,691$7,514

</TABLE>
<PAGE>
Note 13 Subsequent Events

On October 25, the Company received an offer from a representative of the
holders of the $3.6 million convertible notes due June 30, 1997, whereby the
holders proposed to convert such notes into common stock of the Company at a
reduced exchange price.  On November 14, 1996, the Company agreed to exchange
$3,380,000 principal amount of Agritope notes for 250,367 shares of common
stock of the Company at an exchange price of $13.50 per share.  Accordingly,
the Company will recognize a charge to income of approximately $1.1 million
representing the conversion expense in the first quarter of fiscal 1997.

On November 25, 1996, the Company negotiated an extension to the bank line of
credit previously maintained by Andrew and Williamson Sales, Co. (A&W).  Under
terms of the commitment letter, the $6.5 million revolving credit line will be
extended until February 5, 1998, and will bear interest at prime or LIBOR plus
2.5% at the Company's option.  The new line will be secured by A&W's accounts
receivable, inventory and equipment and will be guaranteed by Epitope, Inc. 
The new line will also contain various financial covenants including minimum
working capital and tangible net worth levels and maximum debt to net worth
ratios.

On December 12, 1996, the Company merged with A&W.  A&W is a producer and
wholesale distributor of fruits and vegetables based in San Diego, California. 
Under the terms of the merger, the Company issued 520,000 shares of common
stock of Epitope, Inc. in exchange for all of the outstanding common stock of
A&W.  The merger has been accounted for as a pooling of interests and will
qualify as a tax-free reorganization (see supplemental financial statements). 

Based on information available on December 26, 1996, and due to continued
operating losses at UAF, Limited Partnership in the four months ended
October 31, 1996, coupled with a shortfall in sales and larger operating loss
than expected at Petals USA, Inc. in the fourth quarter of calendar 1996, the
Company believes that the value of its investment in affiliated companies has
more than temporarily declined as both companies are now expected to show
operating losses in fiscal 1997.  Accordingly, the Company anticipates a
charge to results of operations of $1,900,000 in the first quarter of 1997,
reflecting the permanent impairment in the value of its investment in
affiliated companies.
<PAGE>
                       Supplemental Financial Statements

Report of Independent Accountants

To the Board of Directors and Shareholders of 
Epitope, Inc.

In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in shareholders'/group equity, and of cash flows
present fairly, in all material respects, the financial position of Epitope
Medical Products group and Agritope group (as described in Note 1 to these
financial statements) and Epitope, Inc. and its subsidiaries at September 30,
1996 and 1995, and the results of their operations and their cash flows for
each of the three years in the period ended September 30, 1996, in conformity
with generally accepted accounting principles.  These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits.  We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for the opinion expressed above.

As described in Note 13, on November 6, 1996, Epitope, Inc. agreed to a merger
with Andrew and Williamson Sales, Co. in a transaction to be accounted for as
a pooling of interests.  The accompanying supplemental financial statements
give retroactive effect to the merger. 

In our opinion, based upon our audits and the report of other auditors, the
accompanying supplemental balance sheets and the related supplemental
statements of operations, of changes in shareholders'/group equity and of cash
flows present fairly, in all material respects, the financial position of
Epitope Medical Products group, Agritope group and Epitope, Inc. and its
subsidiaries at September 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended September 30, 1996, in conformity with generally accepted accounting
principles.  These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits.  We did not audit the financial
statements of Andrew and Williamson Sales, Co., which statements reflect total
assets of $10,774,100 and $7,293,256 at September 30, 1996 and 1995,
respectively, and total revenues of $62,471,119, $52,178,973 and $62,704,601
for the years ended September 30, 1996, 1995 and 1994, respectively.  Those
statements were audited by other auditors whose report thereon has been
furnished to us, and our opinion expressed herein, insofar as it related to
the amounts included for Andrew and Williamson Sales, Co., is based solely on
the report of the other auditors.  We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits and the report
of other auditors provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Portland, Oregon
October 28, 1996, except for Note 13 as to which the date is November 14,
1996, November 25, 1996, December 12, 1996, and December 26, 1996.
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Epitope Medical Products
Combined Balance Sheets

      SEPTEMBER 30                            1996     1995
  <S>                                                      <C>          <C>  
  Assets
  Current assets
  Cash and cash equivalents (Note 2) . . . . . . . . . . .$795,787$13,210
  Marketable securities (Note 2) . . . . . . . . . . . . .18,818,12017,080,246
  Trade accounts receivable, net (Note 2) . . . . . . . .1,147,599231,621
  Other accounts receivable . . . . . . . . . . . . . . . .174,083382,753
  Inventories (Note 2) . . . . . . . . . . . . . . . . . . .1,157,9301,433,746
  Prepaid expenses . . . . . . . . . . . . . . . . . . . . .89,518103,399
                                 --------------------------
  Total current assets . . . . . . . . . . . . . . . . . . . .22,183,03719,244,975
  
  Property and equipment, net (Notes 2 and 4) . . . . . . .1,542,7571,989,769
  Patents and proprietary technology, net (Note 2) . . . . .601,234415,010
  Investments in affiliated companies . . . . . . . . . . .-142,510
  Other assets and deposits (Note 5) . . . . . . . . . . .22,75838,328
                                 --------------------------
                                       $24,349,786$21,830,592

  Liabilities and Group Equity
  Current liabilities
  Accounts payable . . . . . . . . . . . . . . . . . . . . . .$449,170$819,424
  Salaries, benefits and other accrued liabilities
    (Notes 2 and 9) . . . . . . . . . . . . . . . . . . . .1,368,1662,976,167
                                 --------------------------
  Total current liabilities . . . . . . . . . . . . . . . .1,817,3363,795,591

  Commitments and contingencies (Notes 6, 8, 9, 10 and 11)--

  Group equity (Note 6)
  Contributed capital . . . . . . . . . . . . . . . . . .64,237,35060,479,315
  Accumulated deficit . . . . . . . . . . . . . . . . . . .(41,704,900)(42,444,314)
                                ---------------------------
                                        22,532,45018,035,001
                                ---------------------------
                                       $24,349,786$21,830,592


The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Epitope Medical Products
Combined Statements of Operations

      FOR THE YEAR ENDED SEPTEMBER 30       1996      1995       1994
  <S>                                                  <C>          <C>              <C>
  Revenues
  Product sales . . . . . . . . . . . . . . . . .$ 4,864,378$ 2,806,850$ 2,580,798
  Grants and contracts . . . . . . . . . . . .729,27148,672    24,560
                           ------------------------------------------
                                       5,593,649 2,855,522  2,605,358

  Costs and expenses
  Product costs . . . . . . . . . . . . . . . . .2,681,4293,163,0122,141,319
  Research and development costs . . . . .3,165,8384,617,2463,681,326
  Selling, general and administrative expenses5,033,4916,682,8603,066,896
                          -------------------------------------------
                                      10,880,75814,463,118  8,889,541

  Loss from operations . . . . . . . . . . . . . .(5,287,109)(11,607,596)(6,284,183)

  Other income, net . . . . . . . . . . . . . .6,026,523756,424235,926
                          -------------------------------------------
  Net income (loss) . . . . . . . . . . . . . .$ 739,414$(10,851,172)$(6,048,257)

  Pro forma net income (loss) per share . . . .$     .05$       (.87) $        (.57)

  Pro forma weighted average number of shares
  outstanding . . . . . . . . . . . . . . . . . .13,960,39612,406,23410,570,129

  The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Epitope Medical Products
Combined Statements of Changes in Group Equity

                                 Contributed  Accumulated
                                     capital      deficit          Total
<S>                                               <C>             <C>                  <C>          
Balances at September 30, 1993. . . . . . . .$34,167,582$(25,544,885)$  8,622,697
Common stock issued upon
  exercise of options . . . . . . . . . . . .636,293    -        636,293
Common stock issued as
  compensation. . . . . . . . . . . . . . . .318,386    -        318,386
Compensation expense for
  stock option grants . . . . . . . . . . . .823,350    -        823,350
Common stock issued upon
  exercise of warrants. . . . . . . . . . . .9,718,259  -      9,718,259
Common stock issued in
  private placement . . . . . . . . . . . . .17,057,563 -     17,057,563
Equity issuance costs . . . . . . . . . . . .(3,335,261)-     (3,335,261)
Net cash to Agritope  . . . . . . . . . . . . . .(12,132,173)(12,132,173)
Net loss for the year . . . . . . . . . . . .- (6,048,257)    (6,048,257)
                     ---------------------------------------------------

Balances at September 30, 1994. . . . . . . .47,253,999(31,593,142)15,660,857
Common stock issued upon
  exercise of options . . . . . . . . . . . .2,145,673  -      2,145,673
Common stock issued as
  compensation. . . . . . . . . . . . . . . .196,802    -        196,802
Compensation expense for 
  stock option grants . . . . . . . . . . . .1,056,335  -      1,056,335
Common stock issued upon
  exercise of warrants. . . . . . . . . . . .18,892,750 -     18,892,750
Equity issuance costs . . . . . . . . . . . .(735,390)  -       (735,390)
Net cash to Agritope. . . . . . . . . . . . .(8,330,854)      (8,330,854)
Net loss for the year . . . . . . . . . . . .-(10,851,172)   (10,851,172)
                    ----------------------------------------------------
Balances at September 30, 1995 . . . . . . .60,479,315(42,444,314)18,035,001
Common stock issued upon
  exercise of options. . . . . . . . . . . .4,886,118   -      4,886,118
Common stock issued as compensation. . . . .249,086     -        249,086
Compensation expense for stock
  option grants. . . . . . . . . . . . . . .815,019     -        815,019
Common stock issued upon
  exercise of warrants . . . . . . . . . . .826,600     -        826,600
Equity issuance costs. . . . . . . . . . . .(152)       -           (152)
Net cash to Agritope . . . . . . . . . . . .(3,018,636) -     (3,018,636)
Net income for the year. . . . . . . . . . .-     739,414        739,414
                   -----------------------------------------------------
Balances at September 30, 1996. . . . . . .$64,237,350$(41,704,900)$22,532,450

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

Supplemental Financial Statements
Epitope Medical Products
Combined Statements of Cash Flows
 
   FOR THE YEAR ENDED SEPTEMBER 30                                1996          1995           1994
 <S>                                                      <C>          <C>             <C>
 Cash flows from operating activities
 Net income (loss) . . . . . . . . . . . . . . . . . . .$   739,414$(10,851,172)$(6,048,257)
 Adjustments to reconcile net income (loss) 
   to net cash used in operating activities:
 Depreciation and amortization . . . . . . . . . . . .792,885795,295651,076
 (Gain) loss on disposition of property . . . . . . .(1,098)319   1,541
 Increase in accounts receivable and
   other receivables . . . . . . . . . . . . . . . . .(707,308)(76,549)(180,767)
 Increase (decrease) in inventories . . . . . . . . . .275,816(375,640)(272,279)
 Decrease in prepaid expenses . . . . . . . . . . . .13,88138,03143,354
 Decrease (increase) in other assets and deposits15,570(42,658)  (6,227)
 Increase (decrease) in accounts payable and
  accrued liabilities . . . . . . . . . . . . . . . . .(2,151,110)2,273,364329,875
 Common stock issued as compensation for services249,086196,802 318,386
 Compensation expense for stock option grants and
  deferred salary increases . . . . . . . . . . . . . . .815,0191,056,335915,351
                              -----------------------------------------
 Net cash provided by (used in) operating 
 activities . . . . . . . . . . . . . . . . . . . . . . .42,155(6,985,873)(4,247,947)         


 Cash flows from investing activities
 Investment in marketable securities . . . . . . . . .(47,608,270)(16,194,994)(5,603,414)
 Proceeds from sale of marketable securities . . . .45,870,3964,718,162-
 Additions to property and equipment . . . . . . . .(180,112)(1,112,292)(461,914)
 Proceeds from sale of property . . . . . . . . . . .7,4321,085   1,000
 Expenditures for patents and proprietary
  technology . . . . . . . . . . . . . . . . . . . .(358,319)(126,927)(185,805)
 Investment in affiliated companies . . . . . . . . .142,51042,55264,938
                              -----------------------------------------

 Net cash used in investing
  activities . . . . . . . . . . . . . . . . . . . . .(2,126,363)(12,672,414)(6,185,195)
 
 Cash flows from financing activities
 Principal payments under installment purchase and
  capital lease obligations . . . . . . . . . . . . . . . 
 Proceeds from issuance of common stock . . . . . . . . .5,885,57321,060,91224,387,702
 Cost of common stock issuance . . . . . . . . . . . . .(152)(757,877)(310,849)
 Cash to Agritope . . . . . . . . . . . . . . . . . . . .(3,018,636)(8,330,854)(12,132,173)
                               ----------------------------------------
 Net cash provided by financing activities . . . . . . .2,866,78511,972,18111,944,680
 Net increase (decrease) in cash and cash
  equivalents . . . . . . . . . . . . . . . . . . . . . .782,577(7,686,106)1,511,538
 Cash and cash equivalents at beginning of year . . . . .13,2107,699,3166,187,778
                               ----------------------------------------
 Cash and cash equivalents at end of year . . . . . . . .$   795,787$    13,210$7,699,316
 
 The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Agritope
Combined Balance Sheets


  SEPTEMBER 30                                1996      1995
  <S>                                                   <C>            <C>      
  Assets
  Current assets
  Cash and cash equivalents (Note 2) . . . . . . . . . .$ 4,903,476$ 4,246,687
  Trade accounts receivable, net (Note 2) . . . . . . . .3,123,1721,995,244
  Other accounts receivable . . . . . . . . . . . . . . .32,3371,249,554
  Inventories (Note 2) . . . . . . . . . . . . . . . . . .6,570,1873,239,441
  Prepaid expenses . . . . . . . . . . . . . . . . . . . .90,656143,792
                                ---------------------------
  Total current assets . . . . . . . . . . . . . . . . . . . .14,719,82810,874,718
  
  Property and equipment, net (Notes 2 and 4) . . . . .2,658,6552,068,931
  Patents and proprietary technology, net (Note 2) . . .510,244140,757
  Investment in affiliated companies (Note 3) . . . . . .2,651,2942,185,630
  Other assets and deposits (Note 5) . . . . . . . . . . .321,011326,650
                                ---------------------------
                                      $20,861,032$15,596,686

  Liabilities and Group Equity
  Current liabilities
  Borrowings under bank line of credit (Note 5) . . . .$ 4,125,000$ 3,150,000
  Subordinated notes (Note 5) . . . . . . . . . . . . .2,236,628-
  Current portion of long-term debt (Note 5) . . . . . . 98,368196,134
  Convertible notes, due 1997 (Notes 5 and 13) . . . . .3,620,003-
  Accounts payable . . . . . . . . . . . . . . . . . . .2,677,8811,488,940
  Salaries, benefits and other accrued liabilities
    (Notes 2 and 9) . . . . . . . . . . . . . . . . . . .1,208,136274,959
                                ---------------------------
  Total current liabilities . . . . . . . . . . . . . . .13,966,0165,110,033

  Long-term debt, less current portion (Note 5) . . . . .527,973632,515
  Convertible notes, due 1997 (Notes 5 and 13) . . . . .-3,620,003
  Subordinated notes (Note 5) . . . . . . . . . . . . . .-1,015,461
  Commitments and contingencies (Notes 6, 8, 9, 10 and 11)--
  Minority interest . . . . . . . . . . . . . . . . . . .215,407-

  Group equity (Note 6)
  Contributed capital . . . . . . . . . . . . . . . . . .36,736,34333,474,043
  Accumulated deficit . . . . . . . . . . . . . . . . . . . .(30,584,707)(28,255,369)
                                ---------------------------
                                        6,151,636 5,218,674
                                ---------------------------
                                      $20,861,032$15,596,686

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

Supplemental Financial Statements
Agritope
Combined Statements of Operations

FOR THE YEAR ENDED SEPTEMBER 30                       1996             1995              1994
<S>                                                   <C>              <C>            <C>
Revenues
Product sales . . . . . . . . . . . . . . . . .$62,471,119$54,194,291$62,884,343
Grants and contracts . . . . . . . . . . . . .585,48594,370     33,642
                        ----------------------------------------------
                                     63,056,604  54,288,661 62,917,985

Costs and expenses
Product costs . . . . . . . . . . . . . . . . . . .57,262,34052,337,26660,374,171
Research and development costs . . . . . . . . . . .1,338,7032,204,9932,368,880
Selling, general and administrative expenses4,789,0967,516,4588,280,756
                       -----------------------------------------------
                                     63,390,139  62,058,717 71,023,807

Loss from operations . . . . . . . . . . . . . . . .(333,535)(7,770,056)(8,105,822)

Other expense, net . . . . . . . . . . . . . . . . .(670,803)(252,406)(443,962)
                        ----------------------------------------------
Net loss . . . . . . . . . . . . . . . . . . . . . .$(1,004,338)$(8,022,462)$(8,549,784)

Pro forma net loss per share . . . . . . . . . . . .$      (.15)$    (1.29)$     (1.62)

Pro forma weighted average number of shares
Outstanding . . . . . . . . . . . . . . . . . . . . .6,590,7106,203,1175,285,064

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Agritope
Combined Statements of Changes in Group Equity

                                 Contributed  Accumulated
                                    capital        deficit   Total
<S>                                        <C>             <C>               <C>
Balances at September 30, 1993 . . . . . .$11,281,128$(10,809,123)$    472,005
Common stock issued as
  compensation . . . . . . . . . . . . . . . .50,392-      50,392
Compensation expense for
  stock option grants  . . . . . . . . . . . .343,922-    343,922
Common stock issued upon
  exchange of convertible notes  . . . . . .559,964 -     559,964
Equity issuance costs  . . . . . . . . . . .(40,267)-     (40,267)
Net cash from Epitope Medical Products12,132,173    -  12,132,173
Dividends  . . . . . . . . . . . . . . . . .-(540,000)   (540,000)
Net loss for the year  . . . . . . . . . . . .(8,549,784)(8,549,784)

Balances at September 30, 1994 . . . . . .24,327,312(19,898,907)4,428,405
Common stock issued as
  compensation . . . . . . . . . . . . . . . .69,998-      69,998
Compensation expense for
  stock option grants  . . . . . . . . . . . .318,375-    318,375
Common stock issued upon
  exchange of convertible notes  . . . . . .449,991 -     449,991
Equity issuance costs  . . . . . . . . . . . .(22,487)-   (22,487)
Net cash from Epitope Medical Products . . . .8,330,854-8,330,854
Dividends  . . . . . . . . . . . . . . . . . .-(334,000) (334,000)
Net loss for the year  . . . . . . . . . . . .(8,022,462)(8,022,462)
                      -------------------------------------------
Balances at September 30, 1995 . . . . . .33,474,043(28,255,369)5,218,674
Common stock issued as compensation14,500           -      14,500
Compensation expense for stock
  option grants  . . . . . . . . . . . . . .229,164 -     229,164
Net cash from Epitope Medical Products . . .3,018,636-  3,018,636
Dividends  . . . . . . . . . . . . . . . . .-(1,325,000)(1,325,000)
Net loss for the year  . . . . . . . . . . .-(1,004,338)(1,004,338)
                     --------------------------------------------
Balances at September 30, 1996   . . . . .$36,736,343$(30,584,707)$ 6,151,636


The accompanying notes are an integral part of these statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Agritope
Combined Statements of Cash Flows

   FOR THE YEAR ENDED SEPTEMBER 30   1996       1995        1994
 <S>                                           <C>             <C>             <C> 
 Cash flows from operating activities
  Net loss . . . . . . . . . . . . . .$(1,004,338)$(8,022,462)$(8,549,784)
 Adjustments to reconcile net loss to net cash
   used in operating activities:
 Depreciation and amortization . . . . . .474,256859,641   714,420
 Loss on disposition of property and investments64,12629,56074,130
 Decrease (increase) in accounts receivable and
   other receivables . . . . . . . . . . . . .(166,475)(630,054)1,306,977
 Decrease (increase) in inventories . . . . .(3,330,746)222,991(5,260,547)
 Decrease (increase) in prepaid expenses . . .53,136(100,940)31,402
 Decrease (increase) in other assets and deposits(36,219)9,1376,562
 Increase (decrease) in accounts payable and
  accrued liabilities . . . . . . . . . . . . .2,122,118(12,991)1,678,494
 Common stock issued as compensation for services14,50069,99850,392
 Compensation expense for stock option grants and
  deferred salary increases . . . . . . . . . .229,164318,375343,922
                     ---------------------------------------------
 Net cash used in operating activities . . . . .(1,580,478)(7,256,745)(9,604,032)
 
 Cash flows from investing activities
 Additions to property and equipment . . . . .(925,388)(308,136)(2,240,743)
 Proceeds from sale of property . . . . . . . .-13,258           -
 Expenditures for patents and proprietary
  technology . . . . . . . . . . . . . . . . . .(411,943)(178,208)135
 Investment in affiliated companies . . . . . .(529,790)548,876(81,750)
 Minority Interest in affiliated companies . . .215,407-         -
 Other investments . . . . . . . . . . . . . . .(54,278)48,990(99,122)
                     ---------------------------------------------
 Net cash (used in) provided by investing
  activities . . . . . . . . . . . . . . . . . .(1,705,992)124,780(2,421,480)
 
 Cash flows from financing activities
 Net borrowings under bank line of credit . . .975,000500,0001,075,000
 Issuance of long-term debt . . . . . . . . . . .15,57583,03478,760
 Principal payments on long-term debt . . . . . .(217,883)(166,955)(116,020)
 Dividends . . . . . . . . . . . . . . . . . . .(1,325,000)(334,000)(540,000)
 Net borrowings from stockholders . . . . . .1,476,931(359,962)352,382
 Cash from Epitope Medical Products . . . . . .3,018,6368,330,85412,132,173
                     ---------------------------------------------
 Net cash provided by financing activities . . .3,943,2598,052,97112,982,295
 
 Net increase (decrease) in cash and cash
  equivalents . . . . . . . . . . . . . . . . . . .656,789921,006956,783
 Cash and cash equivalents at beginning of year .4,246,6873,325,6812,368,898
                      --------------------------------------------
 Cash and cash equivalents at end of year . .$4,903,476$4,246,687$3,325,681

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

Supplemental Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Balance Sheets

   SEPTEMBER 30                                                      1996           1995
   <S>                                                        <C>               <C>
   Assets
   Current assets
   Cash and cash equivalents (Note 2) . . . . . . . . . . .$ 5,699,263$ 4,259,897
   Marketable securities (Note 2) . . . . . . . . . . . . .18,818,12017,080,246
   Trade accounts receivable, net (Note 2) . . . . . . . .4,270,7712,226,865
   Other accounts receivable . . . . . . . . . . . . . . .206,4201,632,307
   Inventories (Note 2) . . . . . . . . . . . . . . . . . .7,728,1174,673,187
   Prepaid expenses . . . . . . . . . . . . . . . . . . . .180,174247,191
                                    ------------------------------
   Total current assets . . . . . . . . . . . . . . . . . .36,902,86530,119,693
   
   Property and equipment, net (Notes 2 and 4) . . . . .4,201,4124,058,700
   Patents and proprietary technology, net (Note 2) . . .1,111,478555,767
   Investment in affiliated companies (Note 3) . . . . . .2,651,2942,328,140
   Other assets and deposits (Note 5) . . . . . . . . . .343,769364,978
                                    ------------------------------
                                           $45,210,818 $37,427,278
   Liabilities and Shareholders' Equity
   Current liabilities
   Borrowings under bank line of credit (Note 5) . . . . . .$ 4,125,000$ 3,150,000
   Subordinated notes (Note 5) . . . . . . . . . . . . . . .2,236,628-
   Current portion of long-term debt . . . . . . . . . . . .98,368196,134
   Convertible notes, due 1997 (Notes 5 and 13) . . . . . .3,620,003-
   Accounts payable . . . . . . . . . . . . . . . . . . . .3,127,0512,308,364
   Salaries, benefits and other accrued liabilities
     (Notes 2 and 9) . . . . . . . . . . . . . . . . . . . .2,576,3023,251,126
                                     -----------------------------
   Total current liabilities . . . . . . . . . . . . . . . .15,783,3528,905,624
   
   Long-term debt, less current portion (Note 5) . . . . . .527,973632,515
   Convertible notes, due 1997 (Notes 5 and 13) . . . . . .-3,620,003
   Subordinated notes (Note 5) . . . . . . . . . . . . . . .-1,015,461
   Commitments and contingencies (Notes 6, 8, 9, 10 and 11)--
   Minority Interest . . . . . . . . . . . . . . . . . . .215,407-

   Shareholders' equity (Note 6)
   Preferred stock, no par value - 1,000,000 shares authorized;
    no shares issued or outstanding . . . . . . . . . . . . .-   -
   Common stock, no par value - 30,000,000 shares
    authorized; 13,457,383 and 13,085,130 shares issued and
    outstanding, respectively . . . . . . . . . . . . . . .100,973,69393,953,358
   Accumulated deficit . . . . . . . . . . . . . . . . . . .(72,289,607)(70,699,683)

                                            28,684,086  23,253,675
                                    ------------------------------
                                           $45,210,818 $37,427,278
 
The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Statements of Operations

   FOR THE YEAR ENDED SEPTEMBER 30                     1996            1995             1994
   <S>                                                  <C>            <C>            <C>   
   Revenues
   Product sales . . . . . . . . . . . . . . . . . . . $ 67,335,497$ 57,001,141$ 65,465,141
   Grants and contracts . . . . . . . . . . . . . . .1,314,756143,04258,202
                          ---------------------------------------------
                                       68,650,253 57,144,183 65,523,343
 
   Costs and expenses
   Product costs . . . . . . . . . . . . . . . . . . .59,943,76955,500,27862,515,490
   Research and development costs . . . . . . .4,504,5416,822,2396,050,206
   Selling, general and administrative expenses9,822,58714,199,31811,347,652
                          ---------------------------------------------
                                       74,270,897 76,521,835 79,913,348
 
   Loss from operations                (5,620,644)(19,377,652)(14,390,005)
 
   Other income (expense), net . . . . . . . . . .5,355,720504,018(208,036)
                          ---------------------------------------------
   Net loss . . . . . . . . . . . . . . . . . . . . . .$   (264,924)$(18,873,634)$(14,598,041)
 
   Net loss per share . . . . . . . . . . . . . . . .$       (.02)$      (1.52)$      (1.38)
 
   Weighted average number of shares
   outstanding . . . . . . . . . . . . . . . . . . . .13,181,42012,406,23410,570,129
 
The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity

                                   Common Stock            Accumulated
                           Shares   Dollars    deficit     Total
<S>                                 <C>         <C>           <C>            <C>
Balances at September 30, 1993. . .9,611,922$ 45,448,710$ (36,354,008)$ 9,094,702
Common stock issued upon
  exercise of options . . . . . . .52,488636,293     -   636,293
 Common stock issued as
   compensation. . . . . . . . . . .19,678368,778    -   368,778
 Compensation expense for
   stock option grants . . . . . . .-1,167,272       - 1,167,272
 Common stock issued upon
   exercise of warrants. . . . . . .618,2919,718,259 - 9,718,259
 Common stock issued upon
   exchange of convertible notes . .28,672559,964    -   559,964
 Common stock issued in
   private placement . . . . . . . .1,115,50017,057,563-17,057,563
 Equity issuance costs . . . . . . .-(3,375,528)     -(3,375,528)
 Dividends . . . . . . . . . . . . .-     -   (540,000) (540,000)
 Net loss for the year . . . . . . .-     -(14,598,041)(14,598,041)
           -----------------------------------------------------
 Balances at September 30, 1994. . .11,446,55171,581,311(51,492,049)20,089,262
 Common stock issued upon
   exercise of options . . . . . . .183,5252,145,673 - 2,145,673
 Common stock issued as
   compensation. . . . . . . . . . .16,013266,800    -   266,800
 Compensation expense for
   stock option grants . . . . . . .-1,374,710       - 1,374,710
 Common stock issued upon
   exercise of warrants. . . . . . .1,336,00018,892,750-18,892,750
 Common stock issued upon
   exchange of convertible notes . .23,041449,991    -   449,991
 Equity issuance costs . . . . . . .-(757,877)       -  (757,877)
 Dividends . . . . . . . . . . . . .-     -   (334,000) (334,000)
 Net loss for the year . . . . . . .-     -(18,873,634)(18,873,634)
            ----------------------------------------------------
 Balances at September 30, 1995. . .13,005,13093,953,358(70,699,683)23,253,675
 Common stock issued upon
   exercise of options . . . . . . .386,5504,886,118 - 4,886,118
 Common stock issued as compensation19,353263,586    -   263,586
 Compensation expense for stock
   option grants . . . . . . . . . .-1,044,183       - 1,044,183
 Common stock issued upon
   exercise of warrants. . . . . . .46,350826,600    -   826,600
 Equity issuance costs . . . . . . .-  (152)         -      (152)
 Dividends . . . . . . . . . . . . .-     - (1,325,000)(1,325,000)
 Net loss for the year . . . . . . .-     -   (264,924) (264,924)
            ----------------------------------------------------
 Balances at September 30, 1996. . .13,457,383$ 100,973,693$(72,289,607)$ 28,684,086

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Supplemental Financial Statements
Epitope, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

FOR THE YEAR ENDED SEPTEMBER 30        1996       1995      1994
 <S>                                             <C>           <C>           <C>
 Cash flows from operating activities
 Net loss . . . . . . . . . . . . . . . . . .$  (264,924)$(18,873,634)$(14,598,041)
 Adjustments to reconcile net loss to net cash
   used in operating activities:
 Depreciation and amortization . . . . . . . .1,267,1411,654,9361,365,496
 (Gain) loss on disposition of property . . . .63,02829,87975,671
 Decrease (increase) in accounts receivable and
   other receivables . . . . . . . . . . . . .(873,783)(706,603)1,126,210
 Increase in inventories . . . . . . . . . . .(3,054,930)(152,649)(5,532,826)
 Decrease (increase) in prepaid expenses . . .67,017(62,909)74,756
 Decrease (increase) in other assets and deposits(20,649)(33,521)335
 Increase in accounts payable and accrued 
  liabilities . . . . . . . . . . . . . . . . .(28,992)2,260,3732,008,369
 Common stock issued as compensation for services263,586266,800368,778
 Compensation expense for stock option grants and
  deferred salary increases . . . . . . . . . .1,044,1831,374,7101,259,273
                       -----------------------------------------
 Net cash used in operating activities . . . . .(1,538,323)(14,242,618)(13,851,979)
 Cash flows from investing activities
 Investment in marketable securities . . . . . .(47,608,270)(16,194,994)(5,603,414)
 Proceeds from sale of marketable securities . .45,870,3964,718,162-
 Additions to property and equipment . . . . . .(1,105,500)(1,420,428)(2,702,657)
 Proceeds from sale of property . . . . . . . .7,43214,343 1,000
 Expenditures for patents and proprietary
  technology . . . . . . . . . . . . . . . . . . (770,262)(305,135)(185,670)
 Investment in affiliated companies . . . . . .(387,280)591,428(16,812)
 Other investments . . . . . . . . . . . . . . . .(54,278)48,990(99,122)
 Minority interest in affiliated companies . . .215,407-       -
                       -----------------------------------------
 Net cash used in investing activities . . . . .(3,832,355)(12,547,634)(8,606,675)
 
 Cash flows from financing activities
 Net borrowings under bank line of credit . . .975,000500,0001,075,000
 Issuance of long-term debt . . . . . . . . . .15,57583,03478,760
 Principal payments on long-term debt . . . . .(217,883)(166,955)(116,020)
 Proceeds from issuance of common stock . . . .5,885,57321,060,91224,387,702
 Cost of common stock issuance . . . . . . . .(152)(757,877)(310,849)
 Net borrowings from stockholders . . . . . . .1,476,931(359,962)352,382
 Dividends . . . . . . . . . . . . . . . . . . .(1,325,000)(334,000)(540,000)
                        ----------------------------------------
 Net cash provided by financing activities . . .6,810,04420,025,15224,926,975
 
 Net increase (decrease) in cash and cash
  equivalents . . . . . . . . . . . . . . . . .1,439,366(6,765,100)2,468,321
 
 Cash and cash equivalents at beginning of year .4,259,89711,024,9978,556,676
                        ----------------------------------------
 Cash and cash equivalents at end of year . . .$ 5,699,263$ 4,259,897$ 11,024,997

The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
Notes to Supplemental Financial Statements

Note 1      The Company

Epitope, Inc. (the Company or Epitope) is an Oregon corporation utilizing
biotechnology to develop and market medical diagnostic products through its
Epitope Medical Products group (Epitope Medical Products) and superior new
plants and related products through its Agritope group (Agritope). Agritope 
is also in the business of growing, marketing, selling, and distributing fresh
and frozen produce, primarily tomatoes and strawberries.  Upon approval of the
proposal to create a new class of common stock (the Agritope Stock Proposal),
the capital structure of Epitope will be modified to include two classes of
common stock, Epitope Medical Products Common Stock and Agritope Common Stock. 
The Epitope Medical Products group (Epitope Medical Products) will include the
medical products business conducted by the Company.  The Agritope group
(Agritope) will include the agribusiness and agricultural biotechnology
operations of the Company. 

Note 2      Summary of Significant Accounting Policies

Basis of Presentation.  The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.  Assets and liabilities of majority-owned subsidiaries are
included in these statements.  Minority-owned investments and joint ventures
are accounted for using the equity method.  Investments of less than 20% are
carried at cost.

The accompanying combined financial statements of the Epitope Medical Products
and Agritope groups have been prepared using the amounts included in the
consolidated financial statements of the Company.  Assets and liabilities
directly attributable to each group are included in the respective balance
sheets of the applicable group.  Cash and marketable securities have been
allocated 80% to Epitope Medical Products and 20% to Agritope.  Cash advanced
and allocated by the Company to business units of the Agritope group has been
reflected as paid-in-capital in the accompanying combined financial
statements.

On November 6, 1996 the Company agreed to merge with Andrew and Williamson
Sales, Co. (A&W) in a transaction to be accounted for as a pooling of
interests (Note 13).  The accompanying consolidated financial statements and
the combined financial statements of the Agritope Group have been restated to
reflect the merger as if it had occurred at the beginning of the earliest
period presented.

Certain services such as accounting, finance, general management, human
resources, investor relations, information systems and payroll are provided by
the Company on a centralized basis for the benefit of both groups (Shared
Services).  Such expenses have been allocated between Epitope Medical Products
and Agritope in the accompanying combined financial statements using activity
indicators which, in the opinion of management, represent a reasonable measure
of the respective group's utilization of such shared services.  The activity
measurement indicators will be reviewed periodically and adjusted to reflect
changes in utilization.  The accompanying combined financial statements also
include an adjustment to allocate interest income in the same proportion as
the allocation of Shared Services between the two groups. Future interest
income will be based on amounts earned by each group.  Shared Services are
included under the caption "Selling, general and administrative expenses" as
follows:

<PAGE>
<TABLE>
<CAPTION>

YEAR ENDED SEPTEMBER 30           1996       1995       1994
<S>                                        <C>            <C>            <C>
Epitope Medical Products . . .$3,028,181$3,575,069$1,899,969
Agritope . . . . . . . . . . .1,069,249 1,892,370  1,735,688

                  ------------------------------------------
Consolidated . . . . . . . . .$4,097,430$5,467,439$3,635,657

</TABLE>

        The allocation of interest income is included under the caption "Other
income, net" as follows:



YEAR ENDED SEPTEMBER 30                   1996           1995           1994
Epitope Medical Products . . .$1,025,030$  756,743$  237,467
Agritope . . . . . . . . . . .361,938408,097   216,934
           -------------------------------------------
Consolidated . . . . . . . . .$1,386,968$1,164,840$  454,401


If the Agritope Stock Proposal is approved, the Company will provide holders
of Epitope Medical Products and Agritope common stock separate financial
statements, management's discussion and analysis of financial condition and
results of operations, descriptions of businesses and other relevant
information for each group.  Notwithstanding the attribution of assets and
liabilities (including contingent liabilities) to each group for the purposes
of preparing their respective historical and future financial statements, this
attribution and the change in capitalization contemplated in the Agritope
Stock Proposal will not affect legal title to such assets or responsibility
for such liabilities of the Company or any of its subsidiaries.  Holders of
each class of common stock will be common shareholders of the Company and
would be subject to risks associated with an investment in the Company and all
its businesses, assets, and liabilities.  Liabilities or contingencies of
either group that affect the Company's resources or financial condition could
affect the financial condition and results of operations of either group.  

Under the Agritope Stock Proposal, dividends to be paid to the holders of
either class of common stock will be limited to the lesser of funds of the
Company legally available for the payment of dividends or the Available
Medical Products Dividend Amount or Available Agritope Dividend Amount as
defined in the Company's Articles of Incorporation.  The Company has never
paid any cash dividends on shares of Epitope common stock.  The Company
currently intends to retain any of its earnings to finance future growth and,
therefore, does not anticipate paying any cash dividends on either class of
common stock in the foreseeable future.  The dividends reflected in these
financial statements were paid by A&W to its shareholders prior to the merger
of A&W with the Company.

Except as stated in the amended Articles of Incorporation, the accounting
policies applicable to preparation of financial statements of either group may
be modified or rescinded at the sole discretion of the Board of Directors of
the Company without the approval of shareholders, although there is no
intention to do so.  In addition, generally accepted accounting principles
require that any change in accounting policy be preferable (in accordance with
such principles) to the previous policy.

Cash and Cash Equivalents; Marketable Securities.  For purposes of the
consolidated balance sheets and statements of cash flows, the Company
considers all highly liquid investments with maturities at time of purchase of
three months or less to be cash equivalents.  At September 30, 1996,
marketable securities consisted of commercial paper and U.S. Treasury
securities with an original maturity period greater than three months, but
generally less than 12 months.  The Company's policy is to invest its excess
cash in securities that maximize (a) safety of principal, (b) liquidity for
operating needs, and (c) after-tax yields.

Effective October 1, 1994, the Company adopted Financial Accounting Standards
Board Statement No. 115 (SFAS 115), Accounting for Certain Investments in Debt
and Equity Securities.  Pursuant to SFAS 115, the Company has categorized all
of its investments as available-for-sale securities and, accordingly,
unrealized gains and losses on such investments, if material, will be carried
as a separate component of shareholders' equity.  Such unrealized gains and
losses were immaterial as of September 30, 1996 and 1995.

Inventories.  Medical products inventories are recorded at the lower of
standard cost (which approximates actual cost on a first-in, first-out basis)
or market.  Growing crops (included in work-in-process) are valued at the
lower of cost or estimated market.  Frozen strawberry inventories (included in
finished goods) are valued at the lower of average cost or market.  Inventory
components are summarized as follows:

September 30                                           1996            1995
Epitope Medical Products
Raw materials. . . . . . . .   $  522,824  $   657,568
Work-in-process. . . . . . .      389,642      379,470
Finished goods . . . . . . .      192,882      295,032
Supplies . . . . . . . . . .       52,582      101,676
                           ---------------------------
                               $1,157,930  $ 1,433,746
Agritope
Work-in-process. . . . . . .   $4,466,880   $2,201,073
Finished goods . . . . . . .    1,740,689      741,424
Supplies . . . . . . . . . .      362,618      296,944
                           ---------------------------
                               $6,570,187   $3,239,441
Consolidated
Raw materials. . . . . . . .   $  522,824   $  657,568
Work-in-process. . . . . . .    4,856,522    2,580,543
Finished goods . . . . . . .    1,933,571    1,036,456
Supplies . . . . . . . . . .      415,200      398,620
                           ---------------------------
                               $7,728,117  $ 4,673,187

The Company grows crops primarily in Mexico in cooperation with various
Mexican farmers.  Under the agreements, the Company generally shares in the
costs of growing, picking, packing, and distribution.  The Company recovers
its costs plus a gross profit percentage of approximately ten percent from the
sale of the crops in the United States.  Cost of sales is charged for costs in
excess of estimated market.  During 1996, 1995, and 1994, the Company charged
to cost of sales growing costs in excess of estimated market of approximately
$1,811,000, $2,544,037, and $2,106,181, respectively.

Depreciation and Capitalization Policies.  Land is stated at cost.  Property
and equipment are stated at cost less accumulated depreciation.  Expenditures
for repairs and maintenance are charged to operating expense as incurred.
Expenditures for renewals and betterments are capitalized.

Depreciation and amortization of property and equipment are calculated
primarily under the straight-line method over the estimated lives of the
related assets (three to seven years).  Leasehold improvements are amortized
over the shorter of estimated useful lives or the terms of related leases. 
When assets are sold or otherwise disposed, cost and related accumulated
depreciation or amortization are removed from the accounts and any resulting
gain or loss is included in operations.

Accounting for Long-Lived Assets.  The Company periodically reviews its long-
lived assets for impairment or as events or circumstances indicate that the
carrying amount of long-lived assets may not be recoverable.  If the estimated
net cash flows are less than the carrying amount of the long-lived assets, the
Company recognizes an impairment loss in an amount necessary to write down
long-lived assets to fair value as determined from expected discounted future
cash flows.  This accounting policy is consistent with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of."  There has been no
significant impact to the Company's financial position or results of
operations as the carrying amount of all long-lived assets is recoverable.

Patents and Proprietary Technology.  Direct costs associated with patent
submissions and acquired technology are capitalized and amortized over their
minimum estimated economic useful lives, generally five years.

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

Amortization and accumulated amortization are summarized as follows:

                                       1996          1995          1994

 Amortization for the year ended 
   September 30,
 Epitope Medical Products . . . .$ 172,095$ 130,313$ 101,339
 Agritope . . . . . . . . . . . .42,45623,96413,487
               ------------------------------------
 Consolidated . . . . . . . . . .$ 214,551$ 154,277$ 114,826

 Accumulated Amortization at 
   September 30,  
 Epitope Medical Products . . . .$ 621,110$ 449,015$ 318,702
 Agritope . . . . . . . . . . . .79,90737,45113,487
               ------------------------------------
Consolidated. . . . . . . . . . .$ 701,017$ 486,466$ 332,189 

Investments in Affiliated Companies.  Investments in affiliated companies are
stated at cost.  For reductions in the value of its investments in affiliated
companies that are more than temporary, the Company will write down the value
of its investments in affiliated companies to its recoverable value.

Revenue Recognition.  Product revenues are generally derived from the sale of
products and are recognized as revenue when the related products are shipped. 
Grant and contract revenues include funds received under research and
development agreements with various entities.  Such revenues are recognized in
accordance with contract terms.

Accounts receivable are stated net of an allowance for doubtful accounts as
follows:

September 30                               1996        1995

Epitope Medical Products . . . . . . .$  6,872$  6,872
Agritope . . . . . . . . . . . . . . .64,571119,172
                      --------------------
Consolidated . . . . . . . . . . . . .$ 71,443$126,044

Research and Development.  Research and development expenditures are comprised
of those costs associated with the Company's own ongoing research and
development activities including the costs to prepare for, obtain and compile
clinical studies and other information to support product license
applications.  Expenditures for research and development also include costs
incurred under contracts to develop certain products, including those
contracts resulting in grant and contract revenues.  All research and
development costs are expensed as incurred.

Income Taxes.  The Company accounts for certain revenue and expense items
differently for income tax purposes than for financial reporting purposes. 
These differences arise principally from methods used in accounting for stock
options and depreciation rates.  The Company accounts for income taxes under
SFAS No. 109 "Accounting for Income Taxes,"(SFAS 109) which requires the use
of the asset and liability method approach for accounting for income taxes.
Under SFAS 109, deferred tax assets and liabilities are recognized based on
temporary differences between the financial statement and the tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.

As a separate company, A&W had elected S-Corporation tax treatment.  As an S-
Corporation, income or losses passed through to A&W's shareholders, and no
provision for federal income taxes was reflected in the financial statements. 
State income taxes applicable to A&W were provided at a reduced rate under S-
Corporation status.  Following the merger (see Note 13), A&W will be taxed as
a C-Corporation and will join with the Company in filing a consolidated
federal income tax return.  

To date, both Epitope Medical Products and Agritope have experienced operating
losses.  Actual tax payment is a liability of Epitope as a whole.  The
Agritope Stock Proposal provides that either group may be allocated the tax
benefit of such losses and future losses to reduce current or deferred tax
expense and that such losses will not be carried forward to reduce the losses
of the group which incurred such losses.  Accordingly, either group may report
lower earnings than if such losses had been retained for the benefit of then
group which incurred such losses.

Net Income (Loss) Per Share.  Net income (loss) per share has been computed
using the weighted average number of shares of common stock and common stock
equivalents outstanding during the period.  Common stock equivalents consist
of the number of shares issuable upon exercise of outstanding warrants,
options and convertible notes less the number of shares assumed to have been
purchased for the treasury with the proceeds from the exercise of such.  Net
income (loss) per share for Epitope Medical Products and Agritope is presented
on a proforma basis assuming that the distribution of Agritope common stock
and redesignation of Epitope, Inc. common stock as Epitope Medical Products
common stock pursuant to the Agritope Stock Proposal had occurred on
October 1, 1993.

Common stock equivalents are excluded from the computation if their effect is
anti-dilutive.  Primary and fully diluted earnings per share are the same.

Supplemental Cash Flow Information.  Non-cash financing and investing
activities not included in the consolidated statements of cash flows are
summarized as follows:

<TABLE>
<CAPTION>

YEAR ENDED SEPTEMBER 30               1996        1995        1994
<S>                                                  <C>          <C>               <C>      
Epitope Medical Products
Discount on private placement of common stock-       -     $3,024,413

Agritope
Conversion of notes to equity (Note 5). . .-$  427,496       $600,231
Investment in nonconsolidated subsidiary. .- 2,584,979              -
</TABLE>


In addition, Agritope paid $568,835; $455,783; and $407,929, for interest
during the years ended September 30 1996, 1995, and 1994, respectively.

Supplemental Profit and Loss Information.  In September 1995, management
announced a company-wide reduction in work force whereby 48 employees were
terminated.  The Company charged $607,000 to results of operations for
severance payments and related expenses for this program.  As of September 30,
1996 and 1995, $55,000 and $475,000, respectively, of these charges remain
accrued and are included in the accompanying balance sheets of the Company and
Epitope Medical Products under the caption "Salaries, benefits and other
accrued liabilities."

Management Estimates.  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates relating to assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements as well as the reported amounts of revenues
and expenses during the reporting period. Actual results could vary from these
estimates.
<PAGE>
Note 3     Investment in Affiliated Companies

In June 1995, Agritope agreed to sell its wholly owned subsidiary, Vinifera,
Inc. to VF Holdings, Inc. ("VF"), an affiliate of a Swiss investment group,
pursuant to a stock purchase agreement.  VF subsequently failed to make all
the payments required under the VF Agreement.  As part of a settlement of
claims based on VF's default, VF retained a minority interest in Vinifera and
relinquished the majority interest to Agritope in August 1996.

In May 1995, Agrimax Floral Products, Inc. (Agrimax), a wholly owned
subsidiary, transferred control of its Charlotte facility to Universal
American Flowers, Inc. (UAF), a privately held importer of high quality fresh
flowers engaged in distribution to customers in the eastern U.S. from
facilities in Tampa, Florida and Hammond, Louisiana.  As of October 27, 1995,
Agrimax merged the Charlotte fresh flower operation with those of UAF in
return for an equity interest of approximately 18% in the merged entity, UAF,
Limited Partnership.  In addition to tangible operating assets, Agrimax
transferred to UAF, Limited Partnership, the rights to use its proprietary
floral preservative as well as the Fresche Blossoms(R), Everguard(R) and
Fresche Blossoms Express(TM) trademarks.  In May 1996, the equity interest of
Agrimax was reduced to 9% as a result of a recapitalization of UAF, Limited
Partnership.

The St. Paul, Minnesota, facility of Agrimax ceased operations in June 1995. 
In June 1996, Agrimax contributed inventory and operating assets to Petals
USA, Inc. ("Petals"), a newly formed affiliate of a Canadian fresh flower
wholesaler, in return for a 19.5% equity interest in Petals.  

The investments by Agrimax are included in the accompanying consolidated
balance sheets of the Company and combined balance sheets of Agritope under
the caption "Investment in affiliated companies."  See Note 13.

For the years ended September 30, 1995, 1994 respectively, the accompanying
financial statements of the Company and Agritope include revenues of $2.0
million and $2.2 million, and operating losses of $3.8 million, and $6.4
million attributable to the Agrimax and Vinifera business units.  The
accompanying statements of operations of the Company and Agritope for the year
ended September 30, 1995, includes the results of operations of Agrimax and
Vinifera through May and also includes a charge of $500,000 primarily
attributable to the disposition of Agrimax which is included in the
accompanying consolidated balance sheets of the Company and combined balance
sheets of Agritope as of September 30, 1995 under the caption "Salaries,
benefits and other accrued liabilities."
<PAGE>
Note 4      Property and Equipment

Property and equipment are summarized as follows:

SEPTEMBER 30                                           1996          1995
Epitope Medical Products
Research and development laboratory equipment .$ 1,056,883$   898,716
Manufacturing equipment . . . . . . . . . . . .1,291,5461,296,416
Office furniture and equipment. . . . . . . . .1,899,9482,041,897
Leasehold improvements. . . . . . . . . . . . .1,084,6601,084,660
Construction in progress. . . . . . . . . . . .134,55770,961
                            ------------------------
                                  5,467,5945,392,650
Less accumulated depreciation and amortization(3,924,837)(3,402,881)
                            ------------------------
                               $  1,542,7571,989,769

Agritope
Land. . . . . . . . . . . . . . . . . . . . . .$    420,817$   420,817
Buildings and improvements. . . . . . . . . . .717,508717,508
Research and development laboratory equipment .220,919196,255
Manufacturing and transportation equipment . .2,088,6691,789,933
Office furniture and equipment. . . . . . . . .188,251196,119
Leasehold improvements. . . . . . . . . . . . .166,398173,262
Construction in progress. . . . . . . . . . . .499,98034,650
                          --------------------------
                                  4,302,5423,528,544
Less accumulated depreciation and amortization(1,643,887)(1,459,613)
                          --------------------------
                               $  2,658,655$ 2,068,931

Consolidated
Land. . . . . . . . . . . . . . . . . . . . . .$   420,817$   420,817
Buildings and improvements. . . . . . . . . . .717,508717,508
Research and development laboratory equipment .1,277,8021,094,971
Manufacturing and transportation equipment. . .3,380,2153,086,349
Office furniture and equipment. . . . . . . . .2,088,1992,238,016
Leasehold improvements. . . . . . . . . . . . .1,251,0581,257,922
Construction in progress. . . . . . . . . . . .634,537105,611
                          --------------------------
                                  9,770,1368,921,194
Less accumulated depreciation and amortization(5,568,724)(4,862,494)
                                          --------------------------
                                $ 4,201,412$ 4,058,700

Note 5      Debt

Bank Line of Credit.  At September 30, 1996, the Company had a bank line of
credit which provided for borrowings of up to $6,500,000 and was to expire in
August 1997.  Borrowings under the line bore interest at the bank's prime
interest rate plus .5%; were collateralized by substantially all of the assets
of A&W; and were guaranteed by A&W's shareholders.  The Company had the option
to fix the interest rate for a specified period of time at the LIBOR rate for
such period.  See Note 13, Subsequent Events.

Convertible Notes.  On June 30, 1992, Agritope completed a private placement
with several European institutional investors pursuant to which $5,495,000 of
convertible notes were issued.  The notes are unsecured, mature on June 30,
1997 and bear interest at the rate of 4% per annum which is payable on each
June 30 and December 31 until all outstanding principal and interest on the
notes have been paid in full.  The notes are convertible into common stock of
the Company at a conversion price of $19.53 per share.  In the event of an
initial public offering of Agritope common stock, the notes would be
automatically converted to shares of Agritope common stock at 90% of the
public offering price.

During the years ended September 30, 1995 and 1994, respectively, investors
exchanged $449,991 and $559,964 principal amount of convertible notes for the
Company's common stock at a price of $19.53 per share.  In conjunction with
the exchanges, unamortized debt issuance costs of $22,487 and $40,267 related
to such notes were recognized as equity issuance costs during 1996 and 1995,
respectively.  Debt issuance costs are included in other assets and are being
amortized over the five-year life of the notes.  Amortization expense of debt
issuance costs for the years ended September 30, 1996, 1995 and 1994,
respectively, totaled $108,257, $96,136 and $91,715, leaving an unamortized
balance of $88,821 and $197,077 at September 30, 1996 and 1995, respectively. 
See Note 13, Subsequent Events.

LONG-TERM DEBT.  Long-term debt is summarized as follows:

SEPTEMBER 30                                       1996          1995
Agritope
Note payable, interest at 7%,
 due on demand, unsecured . . . . . . . . . .$       -$  50,000
Installment notes, interest at 5.9% to 12.75%
 due various, secured by equipment. . . . . . .59,824138,976
Installment note, interest at 9.25%,
 due June 1997, secured by equipment. . . . . .263,717319,973
Note payable, interest at prime,
 due October 1997, unsecured. . . . . . . . . .100,000100,000
Bank installment note, interest at prime plus
 1.25%, due March 1998, secured by property . .202,800219,700
                           -----------------------
                                 626,341   828,649
Less current portion. . . . . . . . . . . . .(98,368)(196,134)
                           -----------------------
                               $ 527,973 $ 632,515

The installment note payable of $263,717 at September 30, 1996 has a balloon
payment of $217,989 due in June 1997.  The amount of the balloon payment has
been classified as long-term based on the Company's intent and ability to
refinance this borrowing on a long-term basis.  Certain of the notes above
have been guaranteed by the shareholders of A&W.  Certain of the note
agreements provide various financial and other covenants including minimum
working capital and net worth levels and restricted capital expenditures.

As of September 30, 1996, maturities for long-term debt are as follows:

YEAR ENDING SEPTEMBER 30
1997. . . . . . . . . . . . . . . . . .$ 98,368
1998. . . . . . . . . . . . . . . . . .525,532
1999. . . . . . . . . . . . . . . . . .2,441
                        --------
                        $626,341

Subordinated Notes.  The Company has notes payable to shareholders which are
subordinated to the claims of its bank.  These notes are due on demand and
bear interest at 10%.  The Company intends to pay these notes in full
following the effective date of the merger (see Note 13).

<PAGE>
Note 6      Shareholders' Equity

Authorized Capital Stock.  The Company's amended articles of incorporation
authorize 1,000,000 shares of preferred stock and 30,000,000 shares of common
stock.  The Company's Board of Directors has authority to determine
preferences, limitations and relative rights of the preferred stock.

Common Stock Reserved for Future Issuance.  As of September 30, 1996, the
following shares of the Company's common stock were reserved for future
issuance, as more fully described below:

Purpose                              Shares

Outstanding warrants. . . . . . . . . . . . .2,000,640
Outstanding stock options . . . . . . . . . .3,365,726
Employee Stock Purchase Plan subscriptions.42,820
Conversion of notes (Notes 5 and 13). . . . .185,356
                                  ---------
                                  5,594,542

If the Agritope Stock Proposal is approved, the Company will issue to the
holders of the above rights to purchase shares of Epitope common stock or to
convert notes into such shares, as applicable, the equivalent rights with
respect to Agritope common stock on the basis of one-half share of Agritope
common stock for each right to purchase one share of Epitope common stock.

Common Stock Warrants.  As of September 30, 1996, the following warrants to
purchase shares of common stock were outstanding:

<TABLE>
<CAPTION>


DATE OF ISSUANCE         Shares     Price           Expiration Date
<S>                   <C>          <C>             <C>
September 26, 1991. . . . .159,150 $16.00           September 30, 1997
December 23, 1992 . . . . .988,390  18.50           September 30, 1997
July 20, 1993 . . . . . . .375,000  20.00           September 30, 1997
August 1, 1993. . . . . . .200,000  18.50           September 30, 1997
October 17, 1994. . . . . .50,000   18.50           September 30, 1997
November 22, 1994 . . . . .228,100  18.50           September 30, 1997
                       --------
                      2,000,640
</TABLE>


Stock Award Plans.  The Company's 1991 Stock Award Plan (the 1991 Plan) was
approved by the shareholders during 1991, replacing the Company's Incentive
Stock Option Plan (ISOP).  The 1991 Plan provides for stock-based awards to
employees, outside directors and members of scientific advisory committees or
other consultants.  Awards which may be granted under the 1991 Plan include
qualified incentive stock options, nonqualified stock options, stock
appreciation rights, restricted awards, performance awards and other stock-
based awards.

Under the terms of the 1991 Plan, qualified incentive stock options on shares
of common stock may be granted to eligible employees, including officers, of
the Company at an exercise price not less than the fair market value of the
stock on the date of grant.  The maximum term during which any option may be
exercised is ten years from the date of grant.  To date, options have been
granted with four-year vesting schedules.

Options issued to employees under the Incentive Stock Option Plan (ISOP) were
issued at prices not less than the fair market value of a share of common
stock on the date of grant.  The options are exercisable after one year from
the date of grant at the rate of 25% per year cumulatively and expire ten
years from the date of grant.

The Agritope, Inc. 1992 Stock Award Plan (the 1992 Plan) was adopted by
Agritope and approved by the Company in 1992.  The 1992 Plan, which has
provisions similar to those of the Company's 1991 Plan, authorizes issuance of
2,000,000 shares of Agritope common stock.  Until Agritope is no longer a
wholly owned subsidiary of the Company, shares issued pursuant to exercise of
options under the 1992 Plan will be converted into shares of the Company's
common stock based on the ratio of the fair market value of the Company's
common stock to the fair market value of Agritope common stock on the date of
the grant.

The 1991 Plan and 1992 Plan also provide that nonqualified options may be
granted at a price not less than 75% of the fair market value of a share of
common stock on the date of grant.  The option term and vesting schedule of
such awards may either be unlimited or have a specified period in which to
vest and be exercised.  For the discounted nonqualified options issued, the
Company amortizes, on a straight-line basis over the vesting period of the
options, the difference between the exercise price and the fair market value
of a share of stock on the date of grant.  As of September 30, 1996, 197,181
shares of Epitope common stock remain available for grant under the Company's
stock award plans.

In October 1995, the Financial Accounting Standards Board issued  SFAS 123,
"Accounting for Stock-Based Compensation."  SFAS 123 allows companies which
have stock-based compensation arrangements with employees to adopt a fair-
value basis of accounting for stock options and other equity instruments or to
continue to apply the existing accounting rules under APB Opinion 25,
"Accounting for Stock Issued to Employees," but with additional financial
statement disclosure. The Company plans to elect the disclosure-only
alternative commencing in fiscal 1997 and therefore does not anticipate that
SFAS 123 will have a material impact on its financial position or results of
operations.

Options granted and outstanding under the Company's stock option plans are
summarized as follows:
<TABLE>
<CAPTION>

                                   1996                    1995                               1994
                          Shares       Price       Shares          Price           Shares            Price
<S>                  <C>          <C>            <C>          <C>             <C>         <C>
Outstanding at
 beginning of period .3,636,103$1.09-$24.943,483,432$ 1.09-$24.943,052,653$1.09-$24.94
Granted. . . . . . . .901,3799.81-18.13802,05014.94-18.88589,85014.38-22.94
Exercised. . . . . . .(386,550)1.09-17.13(183,525)1.84-22.50(52,488)12.43-22.50
Canceled . . . . . . .(785,206)14.38-24.00(465,854)7.38-22.94(106,583)8.50-22.94
            ----------          ----------           ----------
Outstanding at
 end of period . . . . .3,365,726$3.50-$24.943,636,103$1.09-$24.943,483,432$1.09-$24.94

Exercisable. . . . . . .2,302,212$3.50-$24.942,002,925$1.09-$24.941,557,505$1.09-$24.94
</TABLE>


Pursuant to the 1991 Plan, 973, 3,680 and 11,741 shares of common stock were
also awarded to consultants and members of the Company's scientific advisory
committees during 1996, 1995, and 1994, respectively.

Employee Stock Purchase Plans.  In 1991, the shareholders approved the
Company's adoption of the 1991 Employee Stock Purchase Plan (1991 ESPP)
covering a maximum of 100,000 shares of common stock for subscription over two
offering periods.  The purchase price for stock purchased under the 1991 ESPP
for each of the two 24-month subscription periods was the lesser of 85% of the
fair market value of a share of common stock at the commencement of the
subscription period or the fair market value at the close of each subscription
period.  An employee may also elect to withdraw at any time during the
subscription period and receive the amounts paid plus interest at the rate of
6%.  During April 1994, 676 shares, at a purchase price of $14.00 per share,
were issued to employees for the second 1991 ESPP purchase period which closed
March 31, 1994.

The 1993 Employee Stock Purchase Plan (1993 ESPP), as amended and restated
effective February 1, 1993, covers a maximum of 250,000 shares of common stock
for subscription over established offering periods.  The Company's Board of
Directors was granted authority to determine the number of offering periods,
the number of shares offered, and the length of each period, provided that no
more than three offering periods (other than Special Offering Subscriptions as
described below) may be set during each fiscal year of the Company.  Other
provisions of the 1993 ESPP are similar to the 1991 ESPP.  During April, 1996,
10,106 shares were issued at a price of $11.90 per share.  As of September 30,
1996, 42,820 shares of common stock were subscribed for during two offerings
under the 1993 ESPP.  Shares subscribed for under these 1993 ESPP offerings
may be purchased over 24 months and have initial subscription prices of $12.33
and $8.77 per share for the various offerings.

The 1993 ESPP was amended to allow the Company, at its discretion, to provide
Special Offering Subscriptions whereby an employee's annual increase in
compensation could be deferred for a one-year period.  At the end of the one-
year period, the employee can elect to receive the deferred compensation
amount in the form of cash or shares of the Company's common stock.  The
purchase price for stock issued under a Special Offering Subscription is the
lesser of 85% of the fair market value of a share of common stock on the first
day of the calendar month the employee's increase was effective or the fair
market value at the close of the one-year subscription period.  During 1995
and 1994, respectively, 5,569 and 2,314 Special Offering Subscription shares
were issued to employees at an average price of $15.26 and $15.24 per share.

Note 7      Income Taxes

As of September 30, 1996, the Company had net operating loss carryforwards of
approximately $66.7 million and $50.0 million, respectively, to offset federal
and state taxable income. Approximately $6.9 million of the Company's net
operating loss carryforwards were generated as a result of deductions related
to the exercise of stock options.  When utilized, such carryforwards, as tax
effected, will be reflected in the Company's financial statements as an
increase in shareholders' equity rather than a reduction of the provision for
income taxes.

As of September 30, 1996 the Company had total gross deferred tax assets of
approximately $28.4 million, consisting primarily of $24.5 million of net
operating loss carryforwards, $1.1 million of research and development tax
credit carryforwards and $2.0 million of accrued deferred compensation costs. 
No benefit for these assets has been reflected in the accompanying
consolidated financial statements as they do not satisfy the recognition
criteria set forth in Statement of Financial Accounting Standards No. 109
(SFAS 109).  Accordingly, a valuation allowance of $28.4 million, representing
a $1.1 million decrease since the prior fiscal year end, has been recorded.

The expected tax benefit of approximately $476,000 for the year ended
September 30, 1996 is increased by approximately $61,000 for the effect of
state and local taxes (net of federal impact),$1.1 million for the effect of
the decrease in valuation allowance, and $840,000 for the effect of stock
option deductions included in the valuation allowance and is reduced by
approximately $2.5 million for the effect of Vinifera Inc.'s net operating
loss carryforwards and certain state net operating loss carryforwards being
removed from the consolidated tax group.

Note 8      Research and Development Arrangements

In February 1995, the Company entered into a Development, License and Supply
Agreement with SmithKline Beecham, plc (SB) pursuant to which the Company will
conduct research and development projects funded by SB.  Agritope also
performed research work in 1995 with respect to raspberries which was
partially funded by Sweetbriar Development, Inc. under a License Agreement
dated October 18, 1994 and with respect to grapevine disease diagnostics
funded by a Phase I grant from the U.S. Department of Agriculture under the
Small Business Innovation Research Program.

During 1994, the Company participated in a National Cancer Institute program
whereby the Company received funding for research toward the treatment of
cancer.  Agritope has also received grant support from the U.S. Department of
Agriculture, Oregon Strawberry Commission, and Oregon Raspberry & Blackberry
Commission for antifungal biocontrol research and from several strategic
partners.

Revenues from research and development arrangements are included in the
accompanying consolidated statements of operations under the caption "Grants
and Contracts."

Note 9      Distribution and Supply Contracts

The Company has entered into several contractual arrangements, including those
discussed in the following paragraphs, for distribution of certain of its
products to customers.

The Company continues to maintain supply and distribution agreements with
Organon Teknika Corporation (Organon Teknika), whereby Organon Teknika
supplies the Company's antigen requirements and exclusively distributes the
Company's EPIblot HIV confirmatory tests (EPIblot) on a worldwide basis.  As
of April 1, 1994, the Company renewed the agreements which have an initial
termination date of March 31, 1997 (with successive one-year renewal periods
thereafter) and include pricing incentives based on volumes purchased by
Organon Teknika and penalties for failure to purchase specified minimum
quarterly volumes.  For the years ended September 30, 1996, 1995 and 1994,
respectively, revenues generated from sales of EPIblot to Organon Teknika were
$1,539,164, $1,808,431, and $1,688,200, including export sales of $62,539,
$72,369 and $320,700.  The Company has notified Organon Teknika that it
intends to renew the agreements on mutually acceptable, but revised, terms
prior to the scheduled termination date.

LabOne, Inc. (previously Home Office Reference Laboratory, Inc.) purchases
oral specimen devices from the Company for use in insurance testing in return
for non-exclusive distribution rights in the United States and Canada under an
agreement which expires on March 13, 2000, with an automatic five-year
renewal, unless either party notifies the other of intent not to renew at
least 180 days prior to the initial expiration date.  For the years ended
September 30, 1996, 1995 and 1994, respectively, revenue generated from
product sales to LabOne, Inc. was $1,327,544, $525,628 and $477,186 including
export sales of $394,747, $58,500 and $110,933.

SB has an exclusive agreement to market the Company's oral specimen collection
device worldwide, except in several foreign countries and to the insurance
industry in the U.S., Canada and Japan.  

In 1995, SB made an initial license fee payment of $1 million to the Company. 
SB also placed $5 million in escrow for future payment to the Company, of
which $1 million was designated for reimbursement of future research project
work and $4 million was designated as an additional license fee to be paid
upon FDA approval of a pending request to amend the labeling of the Company's
oral specimen collection device to indicate a two-year shelf life.  The
initial $1 million license fee was included as deferred revenue under the
caption "Salaries, benefits and other accrued liabilities" in the accompanying
consolidated balance sheets as of September 30, 1995.  The escrowed funds are
not reflected in the Company's financial statements.  

In April 1996, the FDA granted the Company's request for extended dating and
SB disbursed $4 million plus interest from escrow.  Accordingly the Company
recognized income of $5 million in 1996 operating results.

Note 10     Commitments and Contingencies

The Company leases office, manufacturing, warehouse and laboratory facilities,
and equipment under operating lease agreements which require minimum annual
payments as follows:




<TABLE>
<CAPTION>
                           Epitope
                           Medical
YEAR ENDING SEPTEMBER 30  Products   AgritopeConsolidated
<S>                                   <C>              <C>            <C>
1997. . . . . . . . . . . . . . . . . .$  345,577$399,731$  745,308
1998. . . . . . . . . . . . . . . . . .345,576317,394662,970
1999. . . . . . . . . . . . . . . . . .346,356282,000628,356
2000. . . . . . . . . . . . . . . . . .109,992282,000391,992
2001. . . . . . . . . . . . . . . . . .-182,000    182,000
                         ---------    --------  ----------
                        $1,147,501  $1,463,125  $2,610,626

Under the agreements for the lease of its office and laboratory facilities,
the Company is obligated to the lessor for its share of certain expenses
related to the use, operation, maintenance and insurance of the property. 
These expenses, payable monthly in addition to the base rent, are not included
in the amounts shown above.  The Company also incurs rent expense for the
short-term storage of produce.  Rent expense aggregated $1,466,368, $1,336,021
and $1,441,940 for the years ended September 30, 1996, 1995 and 1994,
respectively.  Rent expense and the future minimum lease commitments above
include rent of $132,000 for facilities leased from certain shareholders. The
Company is also contingently liable for a lease of which has been assigned to
UAF, Limited Partnership and the lease of property which has been subleased to
Petals USA, Inc. in the following amounts:

YEAR ENDING SEPTEMBER 30
1997. . . . . . . . . . . . . . . . . .          $    328,953
1998. . . . . . . . . . . . . . . . . .               341,304
1999. . . . . . . . . . . . . . . . . .               347,184
                                                   --------------
                                                   $ 1,017,441

Certain produce growers in the United States have alleged that Mexican growers
of tomatoes are illegally dumping their crops into United States markets. 
United States regulatory authorities are investigating the allegations. 
Although it is not possible to determine the final outcome of this matter, the
Company believes that its resolution will not have a material adverse effect
on its operations or financial position.

Note 11     Profit Sharing and Savings Plan

The Company established a profit sharing and deferred salary savings plan in
1986 and restated the plan in 1991.  All employees are eligible to participate
in the plan.  In addition, the plan permits certain voluntary employee
contributions to be excluded from the employees' current taxable income under
the provisions of Internal Revenue Code Section 401(k) and the regulations
thereunder.  Effective October 1, 1991, the Company replaced a discretionary
profit sharing provision with a matching contribution (either in cash, shares
of Epitope common stock, or partly in both forms) equal to 50% of an
employee's basic contribution, not to exceed 2.5% of an employee's
compensation.  The Board of Directors has the authority to increase or
decrease the 50% match at any time.  During 1996, 1995 and 1994, respectively,
the Company contributed $73,315 (4,653 shares totaling $73,279 and the
remainder in cash),  $97,631 (5,562 shares totaling $97,607 and the remainder
in cash), and $79,981 (4,632 shares totaling $79,807 and the remainder in cash
to the plan.  As of September 30, 1996, 17,035 shares are held by the plan.

Note 12     Geographic Area Information

The Company's products are included in the medical products and agricultural
products industry segments.  (See Note 1 for a description of the Company's
business.)  The Company's products are sold principally in the United States,
Canada and Europe.  Operating loss represents revenues less operating
expenses.  In computing operating loss, allocated corporate administration
expenses have been included; however, other income and expense items such as
interest expense, miscellaneous income, and other charges have not been added
or deducted.  Other assets primarily represent cash and cash equivalents,
marketable securities, and prepaid insurance. 


</TABLE>
<TABLE>
<CAPTION>

Epitope Medical Products
In thousands
Geographic
Areas       Revenues                  Operating Loss      Identifiable Assets
           1996   1995   1994     1996  1995   1994    1996   1995     1994
<S>           <C>        <C>       <C>      <C>        <C>        <C>        <C>      <C>         <C>
United
 States . . . .$4,903$2,630$2,062$ (5,287)$(11,608)$(6,284)$4,604$3,768$3,464
Canada . . . .404   78    111              --     --            --       --
Latin 
 America . . .100    -      -              --     --            --       --
Europe . . . .65    72    329              --     --            --       --
Other . . . . .122  76    103              --     --            --       --
--------------------------------------------------------------------------------------------
         $5,594 $2,856 $2,605 $ (5,287)$(11,608)$(6,284)$4,604$3,768 $3,464


Agritope
In thousands
Geographic
Areas            Revenues           Operating Loss        Identifiable Assets
           1996   1995   1994     1996  1995   1994    1996   1995     1994
United
 States . . . .$63,057$54,289$62,918$ (333)$(7,770)$(8,106)$16,875$13,396$8,197
Latin 
 America . . .-      -      -        -      -      -    3,996 2,201   3,303
---------------------------------------------------------------------------------------------
        $63,057$54,289$62,918   $ (333)$(7,770)$(8,106)$20,871$15,597$11,500


Epitope, Inc. Consolidated
In thousands
Geographic
Areas            Revenues            Operating Loss       Identifiable Assets
           1996   1995   1994     1996  1995   1994    1996   1995     1994
United
 States . . . .$67,959$56,918$64,981$ (5,621)$(19,377)$(14,390)$41,825$35,226$25,379
Canada . . . .404   78    111        -      -       -       -      -       -
Latin 
 America . . .100    -      -        -      -       -   3,396  2,201   3,303
Europe . . . .65    72    329        -      -       -       -      -       -
Other . . . . .122  76    103        -      -       -       -      -       -
----------------------------------------------------------------------------------------
        $68,650$57,144$65,523 $ (5,621)$(19,377)$(14,390)$45,221$37,427$28,682
</TABLE>
<PAGE>
Note 13     Subsequent Events

On October 25, the Company received an offer from a representative of the
holders of the $3.6 million convertible notes due June 30, 1997, whereby the
holders proposed to convert such notes into common stock of the Company at a
reduced exchange price.  On November 14, 1996, the Company agreed to exchange
$3,380,000 principal amount of Agritope notes for 250,367 shares of common
stock of the Company at an exchange price of $13.50 per share.  Accordingly,
the Company will recognize a charge to income of approximately $1.1 million
representing the conversion expense in the first quarter of fiscal 1997.

On November 25, 1996, the Company negotiated an extension to the bank line of
credit previously maintained by Andrew and Williamson Sales, Co. (A&W).  Under
terms of the commitment letter, the $6.5 million revolving credit line will be
extended until February 5, 1998, and will bear interest at prime or LIBOR plus
2.5% at the Company's option.  The new line will be secured by A&W's accounts
receivable, inventory and equipment and will be guaranteed by Epitope, Inc. 
The new line will also contain various financial covenants including minimum
working capital and tangible net worth levels and maximum debt to net worth
ratios.

On December 12, 1996, the Company merged with A&W.  A&W is a producer and
wholesale distributor of fruits and vegetables based in San Diego, California. 
Under the terms of the merger, the Company issued 520,000 shares of common
stock of Epitope, Inc. in exchange for all of the outstanding common stock of
A&W.  The merger has been accounted for as a pooling of interests in the
accompanying financial statements which have been restated as if the merger
occurred on the first day of the earliest period presented.  The merger will
qualify as a tax-free reorganization for income tax purposes.

Based on information available on December 26, 1996, and due to continued
operating losses at UAF, Limited Partnership in the four months ended October
31, 1996, coupled with a shortfall in sales and larger operating loss than
expected at Petals USA, Inc. in the fourth quarter of calendar 1996, the
Company believes that the value of its investment in affiliated companies has
more than temporarily declined as both companies are now expected to show
operating losses in fiscal 1997.  Accordingly, the Company anticipates a
charge to results of operations of $1,900,000 in the first quarter of 1997,
reflecting the permanent impairment in the value of its investment in
affiliated companies.

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

      (a)(3) Exhibits.

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

      (b)    Reports on Form 8-K.  None.
<PAGE>
                                  SIGNATURES


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on December 26, 1996.


                                    EPITOPE, INC.


                                    By /s/ GILBERT N. MILLER
                                    Gilbert N. Miller
                                    Executive Vice President and Chief
                                    Financial Officer


      Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on December 26, 1996, by the following persons on
behalf of the Registrant and in the capacities indicated.


            SIGNATURE               TITLE


      *ADOLPH J. FERRO, PH.D.       President, Chief Executive Officer
      Adolph J. Ferro, Ph.D.              and Director
                                    (Principal Executive Officer)

      /S/ GILBERT N. MILLER         Executive Vice President and
      Gilbert N. Miller             Chief Financial Officer
                                    (Principal Financial Officer)

      *MARK V. ALLRED               Controller
      Mark V. Allred                (Principal Accounting Officer)

      *W. CHARLES ARMSTRONG         Director
      W. Charles Armstrong

      *RICHARD K. DONAHUE           Director
      Richard K. Donahue

      *ANDREW S. GOLDSTEIN          Director
      Andrew S. Goldstein

      *MARGARET H. JORDAN           Director
      Margaret H. Jordan

      *R. DOUGLAS NORBY             Director
      R. Douglas Norby

      *MICHAEL J. PAXTON            Director
      Michael J. Paxton

      *ROGER L. PRINGLE             Director
      Roger L. Pringle

      *G. PATRICK SHEAFFER          Director
      G. Patrick Sheaffer

      By*/S/ GILBERT N. MILLER
      Gilbert N. Miller
      (Attorney-in-Fact)
<PAGE>
                               INDEX TO EXHIBITS

Exhibit
Number      Exhibit
-------     -------

2.1         Stock Purchase Agreement among Vinifera, Inc., Agritope, Inc.,
            Epitope, Inc., and VF Holding, Inc., dated May 31, 1995. 
            Incorporated by reference to Exhibit 2.1 to the Registrant's
            Current Report on Form 8-K dated June 1, 1995.

2.2         Operating and Transition Agreement dated as of May 1, 1995, among
            Agrimax Floral Products, Inc., William C. McClure, Gary W. Butler,
            Dorothea J. Owens, Timothy C. Finn, John W. Suber, and Anthony J.
            Wright.  Incorporated by reference to Exhibit 2.2 to the
            Registrant's Current Report on Form 8-K dated June 1, 1995.

2.3         Agreement and Plan of Reorganization dated as of October 27, 1995,
            by and among Fresche Blossoms L.L.C., UAF, L.P., Agrimax Floral
            Products, Inc., Universal American Flowers, Inc., William C.
            McClure, Gary W. Butler, Dorothea J. Owens, Timothy C. Finn,
            John W. Suber, Jr., Anthony J. Wright, Doug Bauer, and Roxanne E.
            Bakula.  Incorporated by reference to Exhibit 2.3 to the
            Registrant's Annual Report on Form 10-K for the fiscal year ended
            September 30, 1995 (the "1995 10-K").

2.4         Acquisition and Merger Agreement among Epitope, Inc., Thamscoe,
            Inc., Andrew and Williamson Sales, Co., and the shareholders of
            Andrew and Williamson Sales, Co., dated November 6, 1996. 
            Incorporated by reference to Exhibit 2 to the Company's Current
            Report on Form 8-K dated November 6, 1996.

3.1         Restated Articles of Incorporation, as amended, of Registrant. 
            Incorporated by reference to Exhibit 3.1 to the Registrant's
            Current Report on Form 8-K dated May 29, 1991.

3.2         Restated Bylaws of Registrant.  

4.1         Stock Purchase Agreement dated November 9, 1990, between certain
            investors and Registrant.  Copies of the agreements with
            individual investors shall be filed with the Commission upon
            request pursuant to Instruction 2 of Item 601 of Regulation S-K
            ("Item 601, Instruction 2").  Incorporated by reference to
            Exhibit 4.2 to the Registrant's Annual Report on Form 10-K for the
            year ended September 30, 1994 (the "1994 10-K"). 

4.2         Unit Purchase Agreement dated September 1991 between certain
            investors and Registrant.  Copies of the agreements with
            individual investors shall be filed with the Commission upon
            request pursuant to Item 601, Instruction 2.  Incorporated by
            reference to Exhibits 4.1 and 4.2 to the Registrant's Current
            Report on Form 8-K dated September 17, 1991.

4.3         Note Purchase Agreement dated June 10, 1992, among Agritope, Inc.,
            Registrant, and certain investors.  Copies of the agreements with
            individual investors shall be filed with the Commission upon
            request pursuant to Item 601, Instruction 2.  Incorporated by
            reference to Exhibit 4.2 to the Registrant's Quarterly Report on
            Form 10-Q for the fiscal quarterly period ended June 30, 1992.

4.4         Warrant Purchase Agreement dated as of November 25, 1992, between
            certain investors and Registrant.  Copies of the agreements with
            individual investors shall be filed with the Commission upon
            request pursuant to Item 601, Instruction 2.  Incorporated by
            reference to Exhibit 4.5 to the Registrant's Annual Report on Form
            10-K for the year ended September 30, 1992 (the "1992 10-K").

4.5         1993 Technology Transfer Warrant Issuance Agreement dated as of
            June 15, 1993, between certain investors and Registrant.  Copies
            of the agreements with individual investors shall be filed with
            the Commission upon request pursuant to Item 601, Instruction 2. 
            Incorporated by reference to Exhibit 4.3 to the Registrant's
            Registration Statement on Form S-3 (No. 33-68510) ("Registration
            Statement No. 33-68510").

4.6         Form of Letter dated August 1, 1993, from Registrant regarding
            modification of the terms of the 1993 Technology Transfer
            Warrants.  Incorporated by reference to Exhibit 4.5 to
            Registration Statement No. 33-68510.

4.7         1993 Warrant Purchase Agreement dated as of July 6, 1993, between
            certain investors and Registrant.  Copies of the agreements with
            individual investors shall be filed with the Commission upon
            request pursuant to Item 601, Instruction 2.  Incorporated by
            reference to Exhibit 4.6 to Registration Statement No. 33-68510.

4.8         Forms of Notice to Warrantholders and Agreement Regarding
            Extension of Expiration Date.  Incorporated by reference to
            Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated
            March 29, 1995.

4.9         Notice to warrantholders and current form of warrant certificate
            for warrants issued in September 1991 offering, reflecting
            extension of expiration date.  Incorporated by reference to
            Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated
            September 17, 1996.

4.10        Notice to warrantholders and current form of warrant certificate
            for warrants issued in December 1992 offering, reflecting
            extension of expiration date.  Incorporated by reference to
            Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated
            September 17, 1996.

4.11        Notice to warrantholders and current form of warrant certificate
            for warrants issued in July 1993 offering, reflecting extension of
            expiration date.  Incorporated by reference to Exhibit 4.3 to the
            Registrant's Current Report on Form 8-K dated September 17, 1996.

4.12        Notice to warrantholders and current form of warrant certificate
            for warrants issued in August 1993 offering, reflecting extension
            of expiration date.  Incorporated by reference to Exhibit 4.4 to
            the Registrant's Current Report on Form 8-K dated September 17,
            1996.

10.1        Incentive Stock Option Plan of Registrant, as amended. 
            Incorporated by reference to Exhibit 10.1 to the 1994 10-K.*

10.2        Amended and Restated Epitope, Inc., 1991 Stock Award Plan. 
            Incorporated by reference to Exhibit 10.2 to the 1994 10-K.*

10.3        Agritope, Inc., 1992 Stock Award Plan.  Incorporated by reference
            to Exhibit 10.3 to the 1992 10-K.*

10.4        Form of Nonqualified Stock Option Agreement to be issued to
            certain officers and directors of Registrant pursuant to Agritope,
            Inc., 1992 Stock Award Plan.  Incorporated by reference to Exhibit
            10.4 to the 1992 10-K.*

10.5        Lease dated July 17, 1990, among Registrant, Koll Woodside
            Associates, a California general partnership, and Petula
            Associates, Ltd., an Iowa corporation.  Incorporated by reference
            to Exhibit 10.5 to the 1994 10-K.

10.6        Fourth Amendment dated May 20, 1994, to Lease dated July 17, 1990,
            among Registrant, Koll Woodside Associates, a California general
            partnership, and Petula Associates, Ltd., an Iowa corporation. 
            Incorporated by reference to Exhibit 10.1 to the Registrant's
            Quarterly Report on Form 10-Q for the fiscal quarterly period
            ended June 30, 1994 ("June 1994 10-Q").

10.7        Business Park Lease dated May 5, 1994, among Registrant, Koll
            Woodside Associates, a California general partnership, and Petula
            Associates, Ltd., an Iowa corporation.  Incorporated by reference
            to Exhibit 10.2 to the June 1994 10-Q.

10.8        Business Park Lease dated as of December 16, 1994, among
            Registrant, Petula Associates Ltd., an Iowa corporation, and Koll
            Portland Associates, a California general partnership. 
            Incorporated by reference to Exhibit 10.1 to the Registrant's
            Quarterly Report on Form 10-Q for the fiscal quarterly period
            ended December 31, 1994.

10.9        Lease Agreement dated as of October 15, 1993, between Kathryne L.
            Brown and Agrimax Floral Products, Inc.  Incorporated by reference
            to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
            for the fiscal quarterly period ended December 31, 1993 ("December
            1993 10-Q").

10.10       Building Lease dated as of October 1, 1993, between Hermes Land
            Company and Agrimax Floral Products, Inc.  Incorporated by
            reference to Exhibit 10.2 to the December 1993 10-Q.

10.11       Office/Warehouse Lease dated as of August 25, 1994, between Tonka
            Bay Associates as agent for M Corp. of Illinois and Agrimax Floral
            Products, Inc.  Incorporated by reference to Exhibit 10.10 to the
            1994 10-K.

10.12       Lease dated as of December 12, 1996, between Williamson and Andrew
            and Andrew and Williamson Sales, Co.*

10.13       Agreement dated December 9, 1987, between Registrant and Adolph
            Ferro, Ph.D.  Incorporated by reference to Exhibit 4.3 to the 1988
            S-1.*

10.14       Amendment to Agreement of December 9, 1987, dated November 11,
            1996, between Registrant and Adolph J. Ferro, Ph.D.*

10.15       Agreement dated October 3, 1989, between Sakata Seed America, Inc.
            and Agritope, Inc.  Incorporated by reference to Exhibit 10.13 to
            the 1994 10-K.

10.16       Distribution Agreement dated as of April 1, 1994, between
            Registrant and Organon Teknika Corporation.  Incorporated by
            reference to Exhibit 10.3 to the June 1994 10-Q.

10.17       Supply Agreement dated as of April 1, 1994, between Registrant and
            Organon Teknika Corporation.  Incorporated by reference to Exhibit
            10.4 to the June 1994 10-Q.

10.18       Superior Tomato Associates, L.L.C. Operating Agreement dated as of
            February 19, 1996, among Sunseeds Company, Andrew and Williamson
            Sales, Co., and Agritope, Inc.

10.19       Development and Marketing Agreement dated as of February 19, 1996,
            among Superior Tomato Associates, L.L.C., Agritope, Inc., Sunseeds
            Company, and Andrew and Williamson Sales, Co.

10.20       Form of Indemnification Agreement for directors and officers. 
            Incorporated by reference to Exhibit 10.4 to the Registrant's
            Registration Statement on Form S-4 (No. 333-15705).*

10.21       Amended and Restated Employment Agreement dated January 8, 1991
            between Andrew S. Goldstein and Registrant.  Incorporated by
            reference to Exhibit 10.28 to the Registrant's Annual Report on
            Form 10-K for the year ended September 30, 1991 (the "1991
            10-K").*

10.22       Amended and Restated Employment Agreement dated January 9, 1991,
            between Adolph J. Ferro, Ph.D., and Registrant.  Incorporated by
            reference to Exhibit 10.29 to the 1991 10-K.*

10.23       Employment Agreement dated January 28, 1990, between Gilbert N.
            Miller and Registrant.  Incorporated by reference to Exhibit 10.19
            to the 1994 10-K.*

10.24       Employment Agreement dated July 1, 1990, between John H. Fitchen,
            M.D. and Registrant.  Incorporated by reference to Exhibit 10.20
            to the 1994 10-K.*

10.25       Employment Agreement dated July 15, 1995, between Byron A.
            Allen, Jr., and Registrant.  Incorporated by reference to Exhibit
            10.23 to the 1995 10-K.*

10.26       Employment Agreement dated August 17, 1992, between Richard K.
            Bestwick, Ph.D., and Agritope, Inc.  Incorporated by reference to
            Exhibit 10.21 to Registrant's Registration Statement on Form S-4
            (No. 333-15705).*

10.27       Employment Agreement dated May 31, 1995, between Joseph A.
            Bouckaert and Vinifera, Inc.  Incorporated by reference to Exhibit
            10.20 to Registrant's Registration Statement on Form S-4 (No. 333-
            15705).*

10.28       Employment Agreement dated December 12, 1996, between Fred L.
            Williamson and Andrew and Williamson Sales, Co.*

10.29       Credit Agreement dated August 5, 1996, between Wells Fargo Bank,
            National Association and Andrew and Williamson Sales, Co.

10.30       Development, License and Supply Agreement between Registrant and
            SmithKline Beecham plc dated February 24, 1995, as amended. 
            Portions of this agreement have been granted confidential
            treatment.  Incorporated by reference to Exhibit 10.1 to Amendment
            No. 2 to the Registrant's Quarterly Report on Form 10-Q for the
            fiscal quarterly period ended June 30, 1995.

21.         The Registrant's subsidiaries are Agritope, Inc., an Oregon
            corporation, Vinifera, Inc., an Oregon corporation, Andrew and
            Williamson Sales, Co., a California corporation, and Agrimax
            Floral Products, Inc., a Minnesota corporation.  The Registrant
            also owns a 67 percent interest in Superior Tomato Associates,
            L.L.C., a Delaware limited liability company, and a 60 percent
            interest in Epitope KK, a Japanese limited liability company. 

23.1        Consent of Price Waterhouse LLP.

23.2        Consent of Boros and Farrington, APC.

24.         Powers of Attorney.

27.         Financial Data Schedules.

99.         Report of Boros and Farrington, APC, dated November 6, 1996.

*     Management contract or compensatory plan or arrangement.