BIONOVA HOLDING CORP, 10-Q, 2000-05-15

BIONOVA HOLDING CORP
10-Q, 2000-05-15
AGRICULTURAL SERVICES

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 31, 2000

|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ________ to _________

Commission File Number: 0-12177

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

Delaware 75-2632242
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

6701 San Pablo Avenue
Oakland, California 94608
(Address of principal executive offices) (Zip Code)

(510) 547-2395
(Registrant's telephone number, including area code)

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
--- ---

As of May 10, 2000, 23,588,031 shares of common stock, par value $0.01 per
share, of Bionova Holding Corporation were outstanding.

<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIONOVA HOLDING CORPORATION

CONSOLIDATED BALANCE SHEET
THOUSANDS OF U.S. DOLLARS

<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------------ -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ......................................... $ 4,049 $ 4,510
Accounts receivable ............................................... 29,419 30,499
Advances to growers, net .......................................... 5,358 3,151
Inventories ....................................................... 13,046 17,218
Other current assets .............................................. 2,933 1,771
--------- ---------
Total current assets ......................................... 54,805 57,149
--------- ---------
Property, plant and equipment, net ................................ 38,266 38,379
Patents and trademarks, net ....................................... 14,962 15,374
Goodwill, net ..................................................... 27,775 28,210
Deferred income taxes ............................................. 673 611
Other assets ...................................................... 18,472 22,230
--------- ---------
Total assets ................................................. $ 154,953 $ 161,953
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans ............................................. $ 24,223 $ 22,653
Current portion of long-term debt ................................. 3,245 3,250
Accounts payable and accrued expenses ............................. 21,725 20,899
Accounts due to related parties ................................... 8,839 8,413
Deferred income taxes ............................................. 1,513 1,513
--------- ---------
Total current liabilities .................................... 59,545 56,728
Long-term debt .................................................... 100,031 100,252
--------- ---------
Total liabilities ............................................ 159,576 156,980
--------- ---------
Minority interest ................................................. 1,666 1,589
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value, 5,000 shares authorized, no shares
issued and outstanding .......................................... -- --
Common stock, $.01 par value, 50,000,000 shares authorized,
23,588,031 shares issued and outstanding ........................ 236 236
Additional paid-in capital ........................................ 107,918 107,918
Accumulated deficit ............................................... (114,174) (104,494)
Accumulated other comprehensive income (loss) ..................... (269) (276)
--------- ---------
Total stockholders' equity ........................................ (6,289) 3,384
--------- ---------
Total liabilities and stockholders' equity ........................ $ 154,953 $ 161,953
========= =========
</TABLE>

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

2
<PAGE>

BIONOVA HOLDING CORPORATION

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE INCOME AND LOSS
THOUSANDS OF U.S. DOLLARS
(EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Total revenues ....................................... $ 57,254 $ 58,348
------------ ------------

Cost of sales ........................................ 54,710 53,592
Selling and administrative expenses .................. 6,301 6,056
Research and development expenses .................... 1,538 1,507
Amortization of goodwill, patents and trademarks ..... 851 804
------------ ------------
63,400 61,959
------------ ------------

Operating income (loss) .............................. (6,146) (3,611)
------------ ------------

Interest expense ..................................... (4,560) (2,292)
Interest income ...................................... 584 702
Exchange gain (loss), net ............................ 59 137
Other non-operating income ........................... (8) --
------------ ------------
(3,925) (1,453)
------------ ------------

Income (loss) before income tax ...................... (10,071) (5,064)

Income tax benefit (expense) ......................... (112) (169)
------------ ------------

Net income (loss) before minority interest ........... (10,183) (5,233)

Minority interest in net loss (income) of subsidiaries 503 316
------------ ------------

Net income (loss) .................................... (9,680) (4,917)

Other comprehensive income (loss) net of tax:
Foreign currency translation adjustments ......... 7 (4)
------------ ------------

Comprehensive income (loss) .......................... $ ( 9,673) $ ( 4,921)
============ ============

Net income (loss) per share - basic and diluted ...... $ ( 0.41) $ ( 0.21)
============ ============

Weighted average number of common shares
outstanding .......................................... 23,588,031 23,588,031
</TABLE>

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

3
<PAGE>

BIONOVA HOLDING CORPORATION

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
THOUSANDS OF U.S. DOLLARS

<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) .............................................. $ (9,680) $ (4,917)
Items not affecting cash:
Minority interest ............................................ (503) (316)
Depreciation ................................................. 679 961
Amortization of goodwill, patents and trademarks ............. 847 804
Deferred income taxes ........................................ (62) --
Allowances for uncollectible receivables and slow moving
inventory ................................................. 1,268 --
Gain from sale of property, plant and equipment .............. 1
Net changes (exclusive of subsidiaries acquired or divested) in:
Accounts receivable and advances to growers, net ............. (865) (1,904)
Inventories .................................................. 4,172 5,614
Other assets ................................................. (1,301) (733)
Accounts payable and accrued expenses ........................ 826 (5,870)
-------- --------

NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES ..................................................... (4,619) (6,360)
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment ................... (566) (2,573)
-------- --------

NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES ..................................................... (566) (2,573)
-------- --------

CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings ............................ 1,565 (53,482)
Net change in long-term borrowings ............................. (221) 99,985
Accounts due to related parties ................................ 426 (2,546)
Restricted cash ................................................ 2,954 (12,438)
Debt issuance costs ............................................ -- (3,000)
-------- --------

NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES ..................................................... 4,724 28,519
-------- --------

Net increase (decrease) in cash and cash equivalents ........... (461) 19,586
Cash at beginning of year ...................................... 4,510 15,405
-------- --------
Cash at end of period .......................................... $ 4,049 $ 34,991
======== ========
</TABLE>

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

4
<PAGE>

BIONOVA HOLDING CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000

NOTE 1 - BASIS OF PRESENTATION

Bionova Holding Corporation (together with its subsidiaries, "Bionova
Holding" or the "Company") is a subsidiary of Bionova, S.A. de C.V., a Mexican
corporation ("Bionova Mexico"), and acts as a holding company for (i)
Agrobionova, S.A. de C.V., of which the Company owns 80% ("ABSA"), (ii)
International Produce Holding Company, of which the Company owns 100% ("IPHC"),
(iii) DNA Plant Technology Corporation, of which the Company owns 100% ("DNAP"),
and (iv) VPP Corporation, of which the Company owns 100% ("VPP").

NOTE 2 - GENERAL

In management's opinion, the accompanying unaudited consolidated
financial statements for Bionova Holding for the three month periods ended March
31, 2000 and 1999 have been prepared in accordance with generally accepted
accounting principles for interim financial statements and include all
adjustments (consisting only of normal recurring accruals) that the Company
considers necessary for a fair presentation of its financial position, results
of operations, and cash flows for such periods. However, the accompanying
financial statements do not contain all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. All such financial statements are unaudited except the December 31,
1999 balance sheet. This report and the accompanying unaudited and audited
financial statements should be read in conjunction with the Company's audited
financial statements and notes thereto presented in its 1999 10-K for the fiscal
year ended December 31, 1999. Footnotes which would substantially duplicate
disclosures in the Company's audited financial statements for the fiscal year
ended December 31, 1999 contained in the 1999 10-K report have been omitted. The
interim financial information contained herein is not necessarily indicative of
the results to be expected for any other interim period or the full fiscal year
ending December 31, 2000.

NOTE 3 - NET LOSS PER COMMON SHARE

The weighted average number of common shares outstanding during the three
month periods ended March 31, 2000 and 1999 was 23,588,031.

NOTE 4 - INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------- -----------
<S> <C> <C>
Finished produce .................... $ 3,939 $ 1,708
Growing crops ....................... 4,167 8,851
Advances to suppliers ............... 336 281
Spare parts and materials ........... 3,291 3,834
Merchandise in transit and other .... 1,506 3,813
-------- --------
13,239 18,487
Allowance for slow moving inventories (193) (1,269)
-------- --------
$ 13,046 $ 17,218
======== ========
</TABLE>

NOTE 5 - FINANCING

On March 22, 1999, the Company issued $100 million of Senior Guaranteed
Floating Rate Notes due 2002. The interest rate on this debt during the first
quarter of 2000 was 12.28%. In addition, the Company was charged a service fee
of 1% by Savia, S.A. de C.V. ("Savia"), the ultimate parent company of Bionova
Holding, relating to its guarantee on these notes. On April 13, 2000 the entire
amount of the

5
<PAGE>

$100 million of Senior Guaranteed Floating Rate Notes was retired. Financing
for this early retirement of the notes was provided by Savia. Savia agreed to
provide this $100 million of financing on terms no less favorable than the
terms of the Floating Rate Notes. Savia also agreed that Bionova Holding may
defer all interest payments until the final maturity date of March 23, 2002,
and that Bionova Holding will not be required to maintain any funds in an
interest reserve account. Bionova Holding expects to record a charge of
approximately $2 million in the second quarter of 2000 to recognize the
remaining balance of up front fees paid for the Floating Rate Note facility
that had not previously been amortized.

NOTE 6 - LIQUIDITY

Savia has committed at least through December 31, 2000 to financially
support the Company and its subsidiaries so that they can continue with their
business plans and the fulfillment of their financial obligations. In addition,
Savia has committed to continue to guarantee the short-term bank loans of the
Company. There can be no assurance that any of the alternatives being considered
by management will result in sufficient working capital to significantly improve
the Company's current financial position or its results of operations.

NOTE 7 - RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the
current year presentation.

NOTE 8 - SEGMENT REPORTING

The Company classifies its business into three fundamental areas:
FARMING, which consists principally of interests in Company-owned fresh produce
production facilities and joint ventures with other growers; DISTRIBUTION,
consisting principally of interests in sales and distribution companies in
Mexico, the United States, and Canada; and RESEARCH AND DEVELOPMENT, consisting
of business units focused on the development of fruits and vegetables and
intellectual properties associated with these development efforts.

Information pertaining to the operations of these different business
segments is set forth below. The Company evaluates performance based on several
factors. The most significant financial measure used to evaluate business
performance is business segment operating income. Inter-segment sales are
accounted for at fair value as if the sales were to third parties. Segment
information includes the allocation of corporate overhead to the various
segments, as looked at from the point of view of the segment presidents. All
acquired goodwill has been pushed down to the companies and segments that have
made the acquisitions.

6
<PAGE>

<TABLE>
<CAPTION>
($000'S)
Total of
Research and Reportable
Farming Distribution Development Segments
--------- ----------- --------------- ----------
<S> <C> <C> <C> <C>
JANUARY 1 - MARCH 31, 2000
Revenues from unaffiliated customers $ 196 $ 55,564 $ 1,494 $ 57,254
Inter-segment revenues ............. 19,165 -- -- 19,165
--------- --------- --------- ---------
Total revenues ..................... 19,361 55,564 1,494 76,419
========= ========= ========= =========

Operating income (loss) ............ (3,162) (1,608) (961) (5,731)
Depreciation and amortization ...... 473 279 600 1,352
Identifiable assets at March 31 (1) 74,290 44,392 43,539 162,221
Acquisition of long-lived assets ... 504 53 9 566

JANUARY 1 - MARCH 31, 1999
Revenues from unaffiliated customers $ 329 $ 56,175 $ 1,844 $ 58,348
Inter-segment transfers ............ 20,527 -- -- 20,527
--------- --------- --------- ---------
Total revenues ..................... 20,856 56,175 1,844 78,875
========= ========= ========= =========

Operating income (loss) ............ (2,596) (257) (758) (3,611)
Depreciation and amortization ...... 942 339 484 1,765
Identifiable assets at March 31 (1) 76,070 56,456 50,377 182,903
Acquisition of long-lived assets ... 2,106 439 28 2,573
</TABLE>

NOTES:
1. IDENTIFIABLE ASSETS for segments are defined as total assets less cash in
banks, deferred income taxes and investment in shares.

7
<PAGE>

Reconciliation of the segments to total consolidated amounts is set
forth below:

<TABLE>
<CAPTION>
($000'S)
JANUARY 1 - MARCH 31
2000 1999
---------- ----------
<S> <C> <C>
REVENUES
Total segment revenues ............................... $ 76,419 $ 78,875
Eliminations of inter-segment revenues ............... (19,165) (20,527)
--------- ---------
Consolidated revenues ................................ 57,254 58,348
========= =========

INCOME BEFORE TAXES
Total operating income (loss) from reportable segments (5,731) (3,611)
Total operating income (loss) from
Bionova Holding Corp (1) ........................ (416) --
Interest, net ........................................ (3,975) (1,590)
Exchange gain (loss) ................................. 59 137
Other non-operating income (loss), net ............... (8) --
--------- ---------
Consolidated income (loss) before taxes .................. (10,071) (5,064)
========= =========

ASSETS
Total segment identifiable assets .................... 162,221 182,903
Unallocated and corporate assets (2) ................ 14,091 59,136
Eliminations (3) .................................... (21,359) (40,991)
--------- ---------
Consolidated assets .................................. 154,953 201,048
========= =========
</TABLE>

NOTES:
1. Certain expenses, such as shareholder litigation, investor relations, and
Board and professional fees that were allocated in the first quarter of
2000 to the operating segments were not allocated to these segments in the
first quarter of 1999. This change was made because management determined
that these types of expenses were not associated with, nor did the results
of these activities benefit the operating segments. Management further
determined that it was impractical to restate the first quarter of 1999 to
exclude these types of expenses from the operating segments in the prior
years.
2. Includes Bionova Holding's and segments' cash in banks, deferred income
taxes and other corporate assets.
3. Consists principally of inter-segment intercompany balances.

8
<PAGE>

Revenue from external customers by product / service category is set forth
below:

<TABLE>
<CAPTION>
($000'S)
Total of
Research and Reportable
Farming Distribution Development Segments
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
JANUARY 1 - MARCH 31, 2000
Core vegetables (1)......................... $33,549 $33,549
Fruits and other fresh produce (2).......... $196 22,015 22,211
Contracted R&D revenue...................... $1,219 1,219
Licensed technology and royalties........... 275 275

JANUARY 1 - MARCH 31, 1999
Core vegetables (1)......................... $34,019 $34,019
Fruits and other fresh produce (2).......... $329 22,156 22,485
Contracted R&D revenue...................... $1,631 1,631
Licensed technology and royalties........... 213 213
</TABLE>

NOTES:
1. Core vegetables include tomatoes, bell peppers and cucumbers.
2. Fruits and other fresh produce include papayas, mangoes, grapes, melons,
watermelons and others.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

THE COMPANY

Bionova Holding Corporation (formerly known as DNAP Holding
Corporation), a Delaware corporation (together with its subsidiaries, unless the
context requires otherwise, "Bionova Holding" or the "Company"), was formed in
January 1996, and acts as a holding company for (i) Agrobionova, S.A. de C.V., a
corporation organized under the laws of the United Mexican States, of which the
Company owns 80% ("ABSA"), (ii) International Produce Holding Company, a
Delaware corporation, of which the Company owns 100% ("IPHC"), (iii) DNA Plant
Technology Corporation, a Delaware corporation, of which the Company owns 100%
("DNAP"), and (iv) VPP Corporation, a Delaware corporation, of which the Company
owns 100% ("VPP"). As of October 6, 1999, approximately 76.6% of the outstanding
common stock of the Company is indirectly owned by Savia, S.A. de C.V.

The Company classifies its business into three fundamental business
segments. The FARMING segment consists principally of ABSA's interests in
Company-owned fresh produce production facilities and joint ventures with other
growers. The DISTRIBUTION segment consists of Interfruver de Mexico, S.A. de
C.V. ("Interfruver"), which engages in the business of marketing and
distributing fresh produce in Mexico, and IPHC, which owns total or majority
interests in sales and distribution companies in the United States and Canada.
The RESEARCH AND DEVELOPMENT segment consists of DNAP and VPP, two companies
which are focused on the development and application of genetic engineering and
transformation technologies to fruits and vegetables and the intellectual
properties associated with these development efforts.

9
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999

Consolidated total revenues decreased by 2% from $58.3 million in the
first quarter of 1999 to $57.3 million in the first quarter of 2000.
Consolidated gross profit (revenues less cost of sales) was $4.8 million for the
first quarter of 1999, as compared with $2.5 million for the first quarter 2000.
The Company's consolidated operating loss increased from $3.6 million in the
first quarter of 1999 to $6.1 million in the first quarter of 2000.

FARMING segment revenues, the majority of which are eliminated in
consolidation, declined from $20.9 million in the first quarter of 1999 to $19.4
million in the first quarter of 2000 due to the very heavy production of
tomatoes from Florida, which kept prices very low throughout the first quarter
of 2000. Also, as a consequence of the low prices and generally high quality
available in the market, production volumes had to be curtailed during several
weeks in the first quarter of 2000, as the U.S. fresh produce market could not
absorb any more shipments from Mexico during these weeks. These factors led to
an operating loss during the first quarter of 2000 of $3.2 million, as compared
with an operating loss of $2.6 million during the same quarter in 1999.

Revenues of the DISTRIBUTION segment decreased from $56.2 million in
the first quarter of 1999 to $55.6 million in the first quarter of 2000.
Production volumes from the Company's farming operations fell short of
forecast even though volumes during the first quarter of 2000 were 12% higher
than first quarter a year ago. Despite this, Bionova Holding's distributing
companies, in the aggregate, turned in a strong performance in the first
quarter due to the companies' continuing efforts to develop new grower
relationships and source product from outside of the Company's farming
operations. Several of the companies turned in particularly strong
performances, including Premier Fruits and Vegetables in Montreal, which
achieved an 11% increase in this year's first quarter versus a year ago, and
Interfruver in Mexico which achieved an increase of 5% from the first quarter
of 1999 to the same quarter in 2000.

Distribution gross margins decreased from $4.0 million in the first
quarter of 1999 to $2.7 million in the first quarter of 2000, and as a percent
of sales from 7.8% to 4.7%, respectively. This decline was due entirely to
write-offs of growers and accounts receivables during the first quarter of 2000.
The operating loss of the Distribution segment was $1.6 million in the first
quarter of 2000 as compared to an operating loss of $0.3 million in the first
quarter of 1999. Sales and administrative expenses of $4.3 million were the
same in both the first quarters of 1999 and 2000.

Revenues of the RESEARCH AND DEVELOPMENT segment declined from $1.8
million in the first quarter of 1999 to $1.5 million in the first quarter of
2000. This decline in revenues was due to a partial "catchup" payment made by
Savia to DNAP during the first quarter of 1999, offset in part by an increase in
contract revenues of VPP. Under the long-term founded research agreement between
Savia and DNAP, Savia is obligated to fund DNAP at least $9.0 million in
research payments over each three year period, the first of which ended on
September 30, 1999. To meet this obligation Savia paid DNAP $1.5 million in
1999, and $0.5 million was earned during the first quarter. The decline in
revenues translated directly to lower gross profit generation in this segment of
the business. Research expenses were $1.5 million and amortization of patents
and trademarks amounted to $0.5 million in the first quarters of 1999 and 2000.
This combination of factors caused the Research and Development segment to
experience an operating loss of $1.0 million in the first quarter of 2000, which
was $0.2 million higher than the same quarter a year ago.

Interest expense increased to $4.6 million in the first quarter of 2000
from $2.3 million in the same quarter of 1999. This $2.3 million increase was
due to a higher overall level of debt outstanding and the higher interest rates
and amortization of the debt issuance costs associated with the Senior
Guaranteed Floating Rate Notes issued on March 22, 1999.

Interest income decreased from $0.7 million in the first quarter of
1999 to $0.6 million in the same quarter of 2000. Interest earned on the
restricted interest reserve account associated with the Floating Rate Notes was
offset by lower interest earnings due to a reduction in grower receivables.

10
<PAGE>

During the first quarter of 2000, the share of losses allocable to
minority interests was $0.5 million as compared to $0.3 million in the same
quarter of 1999. The 2000 and 1999 allocations of losses are consistent with the
minority positions held across the operating subsidiaries of the Company.

CAPITAL EXPENDITURES

During the first three months of 2000, the Company made capital
investments of $0.6 million in property, plant and equipment. The majority of
the funds were spent by the Farming segment ($0.5 million) for equipment in
Hermosillo and La Paz, Mexico. Minor investments of $0.1 million were made in
the Company's distribution operations.

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended March 31, 2000, the Company used $4.6
million of cash in operating activities. Cash used in the results of
operations amounted to $7.5 million (i.e., net income as adjusted for items
not affecting cash, including minority interest, depreciation, and
amortization). Working capital requirements decreased by $2.8 million during
the first three months of 2000. Accounts receivable and advances to growers
used $0.9 million of cash in the three months of 2000, as $2.2 million of
financing was provided to growers (net of loss accruals) and customer
receivables decreased by $1.3 million. Inventories declined by $4.2 million
and accounts payable and accrued expenses increased by $0.8 million, both of
which were consistent with the end of the Culiacan growing season. The $1.3
million cash requirement for other assets reflected a payment of a collateral
receipt for the import of Chilean product into Mexico.

Cash generated from financing activities during the first three months
of 2000 was $4.7 million. The majority of these funds were made available from
the interest reserve account and used to make the first quarter interest payment
on the Senior Guaranteed Floating Rate Notes.

On April 13, 2000 the entire amount of the $100 million of Senior
Guaranteed Floating Rate Notes was retired. Financing for this early retirement
of the notes was provided by Savia. Savia agreed to provide this $100 million of
financing on terms no less favorable than the terms of the Floating Rate Notes.
Savia also agreed that Bionova Holding may defer all interest payments until the
final maturity date of March 23, 2002, and that Bionova Holding will not be
required to maintain any funds in an interest reserve account. Bionova Holding
expects to record a charge of approximately $2 million in the second quarter of
2000 to recognize the remaining balance of up front fees paid for the Floating
Rate Note facility that had not previously been amortized.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-Q includes "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, and Section 21E of the
Securities Exchange Act of 1934. All statements, including without limitation
statements contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" other than statements of historical facts
included in this Form 10-Q, including statements regarding our financial
position, business strategy, prospects, plans and objectives of our management
for future operations, and industry conditions, are forward-looking statements.
Although we believe that the expectations reflected in these forward-looking
statements are reasonable, we can give you no assurance that these expectations
will prove to be correct. In addition to important factors described elsewhere
in this report, the following "Risk Factors," sometimes have affected, and in
the future could affect, our actual results and could cause these results during
2000, and beyond, to differ materially from those expressed in any
forward-looking statements made by us or on

11
<PAGE>

our behalf. When we use the terms "Bionova," "we," "us," and "our," these
terms refer to the Company and its subsidiaries.

RISKS RELATING TO OUR FINANCIAL CONDITION

WE MAY CONTINUE TO SUSTAIN LOSSES AND ACCUMULATE DEFICITS IN THE FUTURE

We have sustained losses in 1996, 1997, 1998, 1999, and in the first
quarter of 2000. As of March 31, 2000 our accumulated deficit was $114.2
million. For the quarter ended March 31, 2000, we had a net loss of $9.7
million. The factors that caused these losses, including factors described in
this section, may continue to limit our ability to make a profit in the future.

WE MAY NEED ADDITIONAL FINANCING TO EXECUTE OUR ACQUISITION STRATEGY, WHICH
COULD HURT OUR GROWTH AND FINANCIAL CONDITION

We may need additional capital to meet our working capital
requirements. Our projected cash flows from operations and existing capital
resources, including our existing credit lines, may not be sufficient to allow
us to pursue proposed business strategies to acquire additional producers,
distributors, marketers and additional rights to technologies. Therefore, our
ability to pursue these acquisitions may depend on our ability to obtain
additional capital, which could cause us to incur additional debt or issue
additional equity securities. We cannot assure you that additional capital will
be available on satisfactory terms, if at all, and, as a result, we may be
restricted in our pursuit of future growth and acquisition strategies.

OUR LEVERAGED POSITION COULD CAUSE US TO BE UNABLE TO MEET OUR CAPITAL NEEDS,
WHICH COULD HURT OUR FINANCIAL CONDITION.

At March 31, 2000 we had $127.5 million of indebtedness and
stockholders' equity was negative $6.3 million. This level of indebtedness may
pose substantial risks to our company, including the possibility that we may not
generate sufficient cash flow to pay our outstanding debts. Our level of
indebtedness may also adversely affect our ability to incur additional
indebtedness and finance our future operations and capital needs, and may limit
our ability to pursue other business opportunities.

RISKS RELATING TO OUR FARMING AND DISTRIBUTION BUSINESS

BAD WEATHER AND CROP DISEASE CAN AFFECT THE AMOUNT OF PRODUCE WE CAN GROW, WHICH
CAN DECREASE OUR REVENUES AND PROFITABILITY

Weather conditions greatly affect the amount of fresh produce we bring
to market, and, accordingly, the prices we receive for our produce. Storms,
frosts, droughts, and particularly floods, can destroy a crop and less severe
weather conditions, such as excess precipitation, cold weather and heat, can
kill or damage significant portions of a crop. Crop disease and pestilence can
be unpredictable and can have a devastating effect on our crops, rendering them
unsalable and resulting in the loss of all or a portion of the crop for that
harvest season. Even when only a portion of our crops are damaged, the profits
we could have made on the crop will be severely affected because the costs to
plant and cultivate the entire crop will have been incurred although we may
experience low yields or may only be able to sell a portion of our crop. In 1998
and 1999, Agrobionova's significant losses were in large measure due to very
cold weather and diseases that severely affected outputs in its Culiacan
operations and in its joint venture in Baja California Norte.

A RECENT CHANGE IN ABSA'S RELATIONSHIP WITH ITS JOINT VENTURE IN BAJA CALIFORNIA
NORTE WILL AFFECT THE AMOUNT OF PRODUCE WE GROW, WHICH CAN DECREASE REVENUES AND
PROFITS

One grower in Baja California, Santa Cruz Empacadora, S. de R.L. de C.V.,
accounted in 1999 for approximately 11% of our consolidated sales. Due to losses
incurred during the 1999 growing season, ABSA recently negotiated an agreement
with this grower whereby the grower has pledged certain assets as collateral to
secure its outstanding receivable. ABSA currently is looking for alternative
sources to supply

12
<PAGE>

the needs of the U.S., Canadian, and Mexican markets during the months of
July through November, the season during which Santa Cruz provided a large
proportion of ABSA's supply. While ABSA expects to secure relationships with
other growers, it cannot predict with any certainty the amount of produce it
will be able to source or the relative cost to grow or purchase this product
as compared with Santa Cruz. If ABSA is not able to source as much product as
it expected to grow in its association with Santa Cruz, this likely will
result in lower overall sales of the Company and lower total operating profit
as compared with what previously had been projected for future years.

LABOR SHORTAGES AND UNION ACTIVITY CAN AFFECT OUR ABILITY TO HIRE WORKERS TO
HARVEST AND DISTRIBUTE OUR CROPS, WHICH CAN HURT OUR FINANCIAL CONDITION

The production of fresh produce is heavily dependent upon the
availability of a large labor force to harvest crops. The turnover rate among
the labor force is high due to the strenuous work, long hours, necessary
relocation and relatively low pay. If it becomes necessary to pay more to
attract labor to farm work, our labor costs will increase.

The Mexican farm work force retained by ABSA is unionized. If the union
attempts to disrupt production and is successful on a large scale, labor costs
will likely increase and work stoppages may be encountered, which would be
particularly damaging in our industry where harvesting crops at peak times and
getting them to market on a timely basis is critical. The majority of fresh
produce is shipped by truck. In the United States and in Mexico, the trucking
industry is largely unionized and therefore susceptible to labor disturbances.
As a result, delivery delays caused by labor disturbances in the trucking
industry or any other reason could limit our ability to get fresh produce to
market before it spoils.

ABSA'S RELIANCE ON LEASES AND PRODUCTION ASSOCIATIONS COULD RESULT IN INCREASED
COSTS, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS

ABSA relies on agricultural land leased from others and production
associations with other growers for a large part of its supply. The average term
of these land leases is two years and we expect to renew 100% of these land
leases as they expire. If the other parties to these leases and other
arrangements were to choose not to renew their agreements with ABSA, ABSA would
be required to locate alternate sources of supply and/or land or, in some cases,
to pay increased rents for land. In addition to increased rental rates,
increases in land costs could result from increases in water charges, property
taxes and related expenses.

RISKS RELATING TO OUR SCIENTIFIC RESEARCH AND DEVELOPMENT BUSINESS

GOVERNMENT REGULATION CAN CAUSE DELAYS AND INCREASED COSTS, WHICH DECREASE OUR
REVENUES AND PROFITABILITY

Our subsidiaries' activities in the United States are extensively
regulated by the Food and Drug Administration, the United States Department of
Agriculture, the Environmental Protection Agency, and other federal and state
regulatory agencies in the United States. Similarly, our subsidiaries'
activities in Mexico are extensively regulated by the Secretaria de Agricultura,
Ganaderia y Desarrollo Rural, the Secretaria de Salud, and other federal and
state regulatory agencies in Mexico. Also, our products may require regulatory
approval or notification in the United States or in other countries in which
they are tested, used or sold. The regulatory process may delay research,
development, production, or marketing and require more costly and time-consuming
procedures, and there can be no assurance that requisite regulatory approvals or
registration of our current or future genetically engineered products will be
granted on a timely basis.

IF THE PRODUCTS WE DEVELOP AND MARKET ARE NOT COMMERCIAL SUCCESSES, WE WILL NOT
RECOUP OUR DEVELOPMENT AND PRODUCTION COSTS, WHICH WILL HURT OUR FINANCIAL
CONDITION

We are currently in the early stages of marketing several of our new
products, and there can be no assurance that any of these products will be
successful or will produce significant revenues or profits. In addition, a
number of our product development projects are in the early stages, and these
projects may not

13
<PAGE>

be successful. The success of these and future products depends on many
variables, including the ability to produce and make available to the market
consistent, premium quality fruits and vegetables on a year-round basis,
consumers' willingness to pay higher prices for premium quality fruits and
vegetables, and retailers' willingness to carry such fruits and vegetables.

IF THE PUBLIC IS UNWILLING TO ACCEPT GENETICALLY ENGINEERED PRODUCTS, WE WILL
NOT RECOUP OUR DEVELOPMENT AND PRODUCTION COSTS, WHICH WILL HURT OUR FINANCIAL
CONDITION

Our second generation products are being developed through the use of
genetic engineering. The commercial success of these products will depend in
part on public acceptance of the cultivation and consumption of genetically
engineered products. We cannot assure you that these products will gain
sufficient public acceptance to be profitable, even if these products obtain the
required regulatory approvals.

WE MAY NOT BE SUCCESSFUL IN OBTAINING PATENTS, PROTECTING OUR TRADE SECRETS AND
CONDUCTING OUR BUSINESS WITHOUT INFRINGING ON THE RIGHTS OF OTHERS, WHICH COULD
ADVERSELY AFFECT OUR BUSINESS

Our success depends, in part, on our ability to obtain and enforce
patents, maintain trade secret protection, and conduct our business without
infringing the proprietary rights of others. If others develop competing
technologies and market competing products, our sales could be adversely
affected. If we are not able to maintain our trade secrets or to enforce our
patents, our competitive position could be adversely affected. In addition, we
license technology from third parties. If we cannot maintain these licenses, or
if we cannot obtain licenses to other useful technology on commercially
reasonable terms, our research efforts could be adversely affected.

RISKS RELATING TO OUR INTERNATIONAL OPERATIONS

LEGAL LIMITATIONS COULD AFFECT OUR OWNERSHIP OF RURAL LAND IN MEXICO, WHICH
COULD DECREASE OUR SUPPLY OF PRODUCE CAUSING A DECREASE IN OUR REVENUES AND
PROFITABILITY

ABSA owns a substantial amount of rural land in Mexico, which it uses
to grow fresh fruits and vegetables. Historically, the ownership of rural land
in Mexico has been subject to legal limitations and claims by residents of rural
communities, which in some cases could lead to the owner being forced to
surrender its land. ABSA has been, and continues to be, involved in land dispute
proceedings as part of its ordinary course of business. If ABSA is required to
surrender any of its land, the volume of fresh fruits and vegetables it produces
would decline and adversely affect our profitability. There are currently
pending in Mexico two lawsuits challenging the ownership rights of ABSA to rural
land it owns in Mexico. If both of these lawsuits were decided against ABSA,
ABSA could lose a total of 30% of all the rural land it owns in Mexico.

CURRENCY FLUCTUATIONS AND INFLATION CAN INCREASE THE COST OF OUR PRODUCTS IN THE
UNITED STATES AND ABROAD, WHICH DECREASES OUR REVENUES AND PROFITABILITY

The currency exchange rates in Mexico have historically been volatile.
For example, in December 1994, the Mexican government announced its intention to
float the Mexican peso against the United States dollar and, as a result, the
peso devalued over 40% relative to the dollar during that month. Since January
1995, the value of the peso has decreased approximately 90%. These exchange rate
fluctuations impact our subsidiaries' business. If the value of the peso
decreases relative to the value of the dollar, then:

1. imports of produce into Mexico for distribution by our Mexican
subsidiary become more expensive in peso terms and therefore more
difficult to sell in the Mexican market; and

2. inflation that generally accompanies reductions in the value of the
peso reduces the purchasing power of Mexican consumers, which reduces
the demand for all products including produce and, in particular,
imported, branded or other premium-quality produce.

14
<PAGE>

Conversely, if the value of the peso increases relative to the value of
the dollar, Mexican production costs increase in dollar terms, which results in
lower margins or higher prices with respect to produce grown in Mexico and sold
in the United States and Canada.

VOLATILE INTEREST RATES IN MEXICO CAN INCREASE OUR CAPITAL COSTS

Historically, interest rates in Mexico have been volatile, particularly
in times of economic unrest and uncertainty. High interest rates restrict the
availability and raise the cost of capital for our Mexican subsidiaries and for
growers and other Mexican parties with whom we do business, both for borrowings
denominated in pesos and for borrowings denominated in dollars.
Costs of operations for our Mexican subsidiaries are higher as a result.

TRADE DISPUTES BETWEEN THE UNITED STATES AND MEXICO CAN RESULT IN TARIFFS,
QUOTAS AND BANS ON IMPORTS, INCLUDING OUR PRODUCTS, WHICH CAN HURT OUR FINANCIAL
CONDITION

Despite the enactment of the North American Free Trade Agreement,
Mexico and the United States from time to time are involved in trade disputes.
The United States has, on occasion, imposed tariffs, quotas, and importation
bans on products produced in Mexico. U.S. tomato growers have brought dumping
claims against Mexican tomato growers and may do so again. Because some of our
subsidiaries produce products in Mexico, which we sell in the United States,
such actions, if taken, could adversely affect our business.

GENERAL BUSINESS RISKS

BIONOVA INTERNATIONAL, INC. HAS SUBSTANTIAL CONTROL OVER OUR COMPANY AND CAN
AFFECT VIRTUALLY ALL DECISIONS MADE BY OUR STOCKHOLDERS

Bionova International beneficially owns 18,076,839 shares of our common
stock accounting for 76.6% of all issued and outstanding shares. As a result,
Bionova International has the requisite voting power to significantly affect
virtually all decisions made by Bionova and our stockholders, including the
power to elect all of our directors and to block corporate actions such as an
amendment to most provisions of our certificate of incorporation. This ownership
and management structure will inhibit the taking of any action by Bionova which
is not acceptable to Bionova International.

WE MAY NOT BE ABLE TO ADAPT OUR MANAGEMENT INFORMATION SYSTEMS AND CONTROLS TO
KEEP PACE WITH OUR RAPID GROWTH, WHICH COULD HURT OUR FINANCIAL CONDITION

Our business has undergone rapid growth through acquisition of
complementary businesses. In 1996, we acquired DNA Plant Technology and its
subsidiaries. In 1997, we created VPP Corporation to acquire most of the assets
of United Agricorp, Inc. Also in 1997, we increased our ownership in ABSA to 80%
and acquired full ownership of International Produce Holding Company. As a
result of these acquisitions, significant strains have been placed on the
management, operations and financial resources of our subsidiaries. The
realization of our business strategy depends on, among other things, our ability
to adapt management information systems and controls and to hire, train and
retain qualified employees to allow these operations to be effectively managed.
The geographic separation of our subsidiaries' operations exacerbates these
issues.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

The table below provides information about the Company's derivative
financial instruments and consisting primarily of debt obligations that are
sensitive to changes in interest rates. For debt obligations, the table presents
principal cash flows and related weighted average interest rates by expected
(contractual) maturity dates. Notional amounts are used to calculate the
contractual payments to be exchanged under the contracts. Weighted average
variable rates are based on implied forward rates in the yield curve on December
31, 1999. The information is presented in U.S. dollar equivalents, which is the
Company's

15
<PAGE>

reporting currency. The instrument's actual cash flows are denominated in
both U.S. dollars and Mexican pesos, and are indicated accordingly in the
tables below.

<TABLE>
<CAPTION>
- ----------------------------------- ------------------------------------------------------------------------------------------
EXPECTED MATURITY DATE
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Fair
2000 2001 2002 2003 2004 Thereafter Total Value
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Short-term debt:
($US equivalent in millions)
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
U.S. dollar variable rate.... $ 21.6 $ 21.6 $ 21.6
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Average interest rate....... 9%
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Peso variable rate (in $US). 1.1 1.1 1.1
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Average interest rate....... 26%
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Long-term debt:
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
U.S. dollar fixed rate........ $ 2.9 $ 2.9 $ 2.9
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Average interest rate....... 10%
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
U.S. dollar variable rate..... $ 0.3 $ 0.1 $ 100.1 $ 0.1 $ 100.6 $ 100.6
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Average interest rate....... 12% 12% 13% 12%
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
</TABLE>

The Company tries to use the most cost-effective means to fund its
operating and capital needs. Fixed or variable debt will be borrowed in both
U.S. dollars and Mexican pesos. The Company borrows Mexican pesos to provide for
its working capital needs in its Mexican operations. To minimize exchange risk
associated with the importation of products, the Company will enter into forward
exchange contracts where the functional currency to be used in the transaction
is dollars. At December 31, 1999, approximately 3% of the Company's long-term
debt was fixed rate debt and 97% was variable rate debt. All of the fixed rate
long-term debt is denominated in U.S. dollars. All of the long-term variable
rate debt is denominated in U.S. dollars.

EXCHANGE RATE RISK

The table below provides information about the Company's financial
instruments by functional currency that are subject to exchange risk. This
information is presented in U.S. dollar equivalents. The table summarizes
information on instruments that are sensitive to foreign currency exchange
rates, including peso-denominated debt obligations. For debt obligations, the
table presents principal cash flows and related weighted average interest rates
by expected maturity dates.

- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Peso short-term debt:
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Variable rate (in $US)..... $ 1.1 $ 1.1 $ 1.1
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Average interest rate....... 26%
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
Expected maturity or
transaction date............ Dec. 31
- ----------------------------------- --------- ---------- ---------- ---------- --------- ------------- ----------- -----------
</TABLE>

The Company had no firmly committed forward sales contracts in Mexican
pesos as of December 31, 1999.

16
<PAGE>

The Company is exposed to U.S. dollar-to-Mexican peso currency exchange
risk due to revenues and costs denominated in Mexican pesos associated with its
Mexican subsidiaries, ABSA and Interfruver. The Company expects it will continue
to be exposed to currency exchange risks in the near future.

The Company's subsidiaries, Interfruver and Premier, from time to time
enter into foreign exchange forward contracts to manage their exposure to
fluctuations in foreign currency denominated payables. These contracts generally
mature within three months. As of December 31, 1999, the Company had foreign
exchange forward contracts outstanding in the amount of $1.883 million. Gains
and losses arising from foreign currency transactions are included in the line
item entitled "Exchange (loss) gain, net" in the Consolidated Statement of
Operations when realized.

COMMODITY PRICE RISK

The table below provides information about the Company's fresh produce growing
crops inventory and fixed price contracts that are sensitive to changes in
commodity prices. For inventory, the table presents the carrying amount and fair
value at December 31, 1999. For the fixed price contracts, the table presents
the notional amounts in Boxes, the weighted average contract prices, and the
total dollar contract amount by expected maturity dates, the latest of which
occurs within one year from the reporting date. Contract amounts are used to
calculate the contractual payments and quantity of fresh produce to be exchanged
under futures contracts.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 1999

--------------------------------------------------------------------- ----------------- -----------------
Carrying Fair
Amount Value
--------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
On-balance sheet commodity position:
Fresh produce crops in process inventory ($US in millions).... $8.9 $8.9

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

--------------------------------------------------------------------- ----------------- -----------------
Fixed price contracts:
Contract volumes (158,141 boxes)
Weighted average unit price (per 158,141 boxes)............... $ 8.50 $ 8.50
Contract amount ($US in millions)................................. $1.3 $1.3

--------------------------------------------------------------------- ----------------- -----------------
</TABLE>

<PAGE>

In order to manage the exposure to commodity price sensitivity
associated with fresh produce products, the Company enters into fixed price
contracts with certain customers which guarantee specified volumes for the
growing season or the year at a fixed price. The Company believes that its
efforts to assure a high level of product quality along with efforts to develop
and market differentiated, added value products also reduce to some extent its
exposure to commodity price sensitivity.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As previously reported in the Company's annual report on Form 10-K for
the year ended December 31, 1999, on January 7, 1999, a class action lawsuit
styled GORDON K. AARON ET AL. V. EMPRESAS LA MODERNA, S.A. DE C.V., ET AL. was
filed in the U.S. federal district court for the Northern District of
California. The plaintiffs allege that, prior to the Merger of DNAP with a
subsidiary of Bionova Holding on September 26, 1996, they owned shares of DNAP's
Preferred Stock. In connection with the Merger, all of the shares of common
stock and Preferred Stock of DNAP were converted into the number of shares of
common stock of Bionova Holding specified in the Merger Agreement. The
plaintiffs allege that the Proxy Statement/Prospectus distributed to DNAP's
stockholders in connection with the merger contained material misrepresentations
and omitted to state material facts. On March 8, 2000, the court dismissed
nearly all of the plaintiffs' claims, and subsequently the plaintiffs filed an
amended complaint with respect to some of the dismissed claims. Bionova Holding
and DNAP deny any wrongdoing and liability in this matter and intend to
vigorously contest this lawsuit.

ITEM 5. OTHER INFORMATION

BUSINESS RESTRUCTURING

At the Company's Board of Directors Meeting on May 1, 2000, the Board
determined that it would be in the best interests of shareholders to restructure
the Company and focus on some new technology initiatives currently under
development. The Board also concluded that the Company's fresh produce
agricultural and distribution operations are not a critical vehicle to generate
and deliver the value from its core technology to customers and consumers.
Company management currently is developing and evaluating alternatives for the
fresh produce business, including the possible divestiture of parts or all of
this business segment.

Savia has indicated that it may be interested in acquiring the fresh
produce business from Bionova Holding and in re-capitalizing a portion of the
Company's debt. To assist in these negotiations the Board of Directors formed a
Special Committee of independent directors to review proposals and oversee the
negotiations with Savia and other prospective buyers. This Special Committee is
in the process of retaining an investment banker and legal counsel to support it
in these activities.

18
<PAGE>

RIGHTS OFFERING

On May 4, 2000 Bionova Holding filed with the SEC an amendment to the
registration statement relating to its shareholder rights offering and is now
awaiting approval from the SEC to make this registration statement effective.
Bionova Holding's Board of Directors recently approved an extension of the
expiration date for these rights to December 29, 2000.

MANAGEMENT APPOINTMENT

The Board has appointed Mr. Eugenio Najera to serve as the interim head
of the Company's fresh produce business through the forthcoming re-structuring
period. Mr. Najera currently is a director of Bionova Holding and brings with
him over 25 years of experience as a senior executive of consumer products and
agricultural businesses in Mexico. Mr. Jorge Fenyvesi, Executive Vice President
for Technology, will continue to be in charge of the Company's technology
operation and will focus his efforts on emerging technology initiatives.

CONTROLLING STOCKHOLDER; CONFLICTS OF INTEREST

Approximately 76.6% of the outstanding shares of common stock of the
Company are owned of record by Bionova International, Inc., an indirect,
wholly-owned subsidiary of Savia. Therefore, Savia has the power to elect a
majority of the Company's board of directors and to determine the outcome of any
action requiring the approval of the holders of the Company's common stock. This
ownership and management structure will inhibit the taking of any action by the
Company which is not acceptable to the controlling stockholder.

Certain of the Company's directors and executive officers are also
currently serving as board members or executive officers of Savia or companies
related to Savia, and it is expected that each will continue to do so. Such
management interrelationships and intercorporate relationships may lead to
possible conflicts of interest.

The Company and other entities that may be deemed to be controlled by
or affiliated with Savia sometimes engage in (i) intercorporate transactions
such as guarantees, management and expense sharing arrangements, shared fee
arrangements, joint ventures, partnerships, loans, options, advances of funds on
open account and sales, leases and exchanges of assets, including securities
issued by both related and unrelated parties and (ii) common investment and
acquisition strategies, business combinations, reorganizations,
recapitalizations, securities repurchases and purchases and sales (and other
acquisitions and dispositions) of subsidiaries, divisions or other business
units, which transactions have involved both related and unrelated parties. The
Company continuously considers, reviews and evaluates, and understands that
Savia and related entities consider, review and evaluate, transactions of the
type described above. Depending upon the business, tax and other objectives then
relevant, it is possible that the Company might be a party to one or more of
such transactions in the future in addition to those currently in force, such as
the Long Term Funded Research Agreement dated January 1, 1997 between Seminis
Vegetable Seeds, Inc., an indirect subsidiary of Savia, and DNAP. In connection
with these activities the Company might consider issuing additional equity
securities or incurring additional indebtedness. The Company's acquisition
activities may in the future include participation in the acquisition or
restructuring activities conducted by other companies that may be deemed to be
controlled by Savia.

19
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3.1 Certificate of Incorporation of the Company (filed as an exhibit to the
Company's Registration Statement on Form S-4 (No. 333-09975) and
incorporated herein by reference).

3.2 Certificate of Amendment to the Certificate of Incorporation of the
Company effective September 26, 1996 (filed as an exhibit to the
Company's quarterly report on Form 10-Q for the quarterly period ended
June 30, 1996 and incorporated herein by reference).

3.3 Certificate of Amendment to the Certificate of Incorporation of the
Company effective April 28, 1999 (filed as an exhibit to the Company's
Quarterly report on Form 10-Q for the quarterly period ended March 31,
1999 and incorporated herein by reference)

3.4* Bylaws of the Company

4.1* Note Acquisition Agreement dated as of March 22, 1999 among Savia, S.A.
de C.V., the Company, the Holders referred to therein, Morgan Guaranty
Trust Company of New York, as Administrative Agent and Documentation
Agent, Bankers Trust Company, as Paying Agent and Registrar, and
Citibank, N.A., as Collateral Agent.

27.1 Financial Data Schedule
----------

* Filed as an exhibit to the Company's annual report on Form 10-K for the
year ended December 31, 1999 and incorporated herein by reference.

(b) Reports on Form 8-K

None.

20
<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.

BIONOVA HOLDING CORPORATION

Date: May 10, 2000 By: /s/ ARTHUR H. FINNEL
----------------------------
Arthur H. Finnel,
Executive Vice President,
Treasurer and Chief Financial Officer

<PAGE>

INDEX TO EXHIBITS

(a) Exhibits

3.1 Certificate of Incorporation of the Company (filed as an exhibit to the
Company's Registration Statement on Form S-4 (No. 333-09975) and
incorporated herein by reference).

3.4* Bylaws of the Company

27.1 Financial Data Schedule

- ----------

* Filed as an exhibit to the Company's annual report on Form 10-K for the
year ended December 31, 1999 and incorporated herein by reference.

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE COMPANY'S
FINANCIAL STATEMENTS AT AND FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000
INCLUDED IN THE COMPANY'S FORM 10-Q QUARTERLY REPORT FOR SUCH PERIOD AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,049
<SECURITIES> 0
<RECEIVABLES> 39,711
<ALLOWANCES> 4,934
<INVENTORY> 13,046
<CURRENT-ASSETS> 54,805
<PP&E> 54,905
<DEPRECIATION> 16,639
<TOTAL-ASSETS> 154,953
<CURRENT-LIABILITIES> 59,545
<BONDS> 0
0
0
<COMMON> 236
<OTHER-SE> (6,525)
<TOTAL-LIABILITY-AND-EQUITY> 154,953
<SALES> 57,254
<TOTAL-REVENUES> 57,254
<CGS> 54,710
<TOTAL-COSTS> 63,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,560
<INCOME-PRETAX> (10,071)
<INCOME-TAX> 112
<INCOME-CONTINUING> (10,183)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,680)
<EPS-BASIC> (0.41)
<EPS-DILUTED> (0.41)

</TABLE>