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

Washington, D.C. 20549

Form 10-Q

ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2002
or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to

ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2003

o 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)

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

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

9255 Customhouse Plaza, Suite I San Diego, California		92154
(Address of principal executive offices)		(Zip Code)

(609) 744-8105
(Registrant’s telephone number, including area code)

Delaware (State or other jurisdiction of incorporation or organization)		75-2632242 (I.R.S. Employer Identification No.)
9255 Customhouse Plaza, Suite I San Diego, California,		91909
(Address of principal executive offices)		(Zip Code)
(609) 744-8105 (Registrant's telephone number, including area code)
6701 San Pablo Avenue Oakland, California		94608
(Former address, if changed since last report)		(Zip 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.

AsIndicate ofby ~~November 18,~~check ~~2002,~~mark ~~23,480,408~~whether ~~shares~~the ofregistrant ~~common~~is ~~stock,~~an ~~par~~accelerated ~~value~~filer ~~$0.01~~(as ~~per~~defined ~~share,~~by Rule 12b-2 of ~~Bionova~~the ~~Holding~~Securities ~~Corporation~~Exchange ~~were~~Act ~~outstanding.~~of 1934, as amended).

~~PART I—FINANCIAL INFORMATION~~ Yes o No ý

As of August 13, 2003, 22,905,408 shares of common stock, par ~~Item~~value 1$0.01 ~~Financial~~per ~~Statements~~ share, of Bionova Holding Corporation were outstanding.

PART ~~BIONOVA~~I ~~HOLDING~~- ~~CORPORATION UNAUDITED~~FINANCIAL ~~CONSOLIDATED BALANCE SHEET Thousands of U.S. Dollars (except share and per share amounts)~~ INFORMATION

		September 30, 2002			December 31, 2001
ASSETS
Current assets:
	Cash and cash equivalents	$	1,330		$	2,177
	Accounts receivable, net		10,071			19,978
	Advances to growers, net		5,281			8,999
	Net assets of discontinued operations		1,542			3,325
	Inventories, net		9,926			12,785
	Assets held for sale (see Note 5)		4,080			4,245
	Other current assets		1,381			931
	Total current assets		33,611			52,440
Property, plant and equipment, net			32,433			32,995
Other assets			10,751			10,729
Total assets		$	76,795		$	96,164
LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS' DEFICIT
Current liabilities:
	Accounts payable and accrued expenses	$	16,144		$	18,528
	Accounts due to related parties		95,194			89,184
	Short-term bank loans		1,416			9,389
	Current portion of long-term bank debt		161			161
	Total current liabilities		112,915			117,262
Long-term bank debt			479			558
	Total liabilities		113,394			117,820
Minority interest			284			164
Contingencies (see Note 9)
Stockholders' deficit:
	Preferred stock, $0.01 par value, 5,000 shares authorized, 200 shares issued and outstanding at both September 30, 2002 and December 31, 2001, liquidation value of $10,000 per share		—			—
	Common stock, $0.01 par value, 50,000,000 shares authorized, 23,480,408 and 23,588,031 shares issued and outstanding on September 30, 2002 and December 31, 2001, respectively		236			236
	Additional paid-in capital		171,597			171,597
	Accumulated deficit		(208,530	)		(193,499	)
	Accumulated other comprehensive income (loss)		(186	)		(154	)
	Total stockholders' deficit		(36,883	)		(21,820	)
Total liabilities, minority interest, and stockholders' deficit		$	76,795		$	96,164

Item 1. Financial Statements

~~The accompanying~~BIONOVA ~~notes~~HOLDING ~~are an integral part of these unaudited consolidated financial statements.~~ CORPORATION

2CONSOLIDATED BALANCE SHEETS

~~BIONOVA HOLDING CORPORATION UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME AND LOSS~~ Thousands of U.S. Dollars ~~(except per share amounts)~~

		Three Months Ended September 30,						Nine Months Ended September 30,
		2002			2001			2002			2001
Total revenues		$	17,697		$	41,507		$	106,031		$	168,644
Cost of sales			18,205			38,468			100,240			153,093
Selling and administrative expenses			3,777			6,739			11,510			16,222
Amortization of goodwill, patents and trademarks			—			375			—			1,012
			21,982			45,582			111,750			170,327
Operating loss			(4,285	)		(4,075	)		(5,719	)		(1,683	)
Interest expense			(2,314	)		(1,429	)		(7,007	)		(2,767	)
Interest income			382			412			1,003			1,337
Exchange gain (loss), net			(1,097	)		(396	)		(756	)		(651	)
Shareholder litigation expense												(6,379	)
Other non-operating income, net			211			403			275			128
			(2,818	)		(1,010	)		(6,485	)		(8,332	)
Loss from continuing operations before discontinued operations			(7,103	)		(5,085	)		(12,204	)		(10,015	)
Discontinued operations (see Note 8):
Loss from operations of research and development business segment			(1,185	)		(1,888	)		(2,083	)		(7,413	)
Loss before income taxes			(8,288	)		(6,973	)		(14,287	)		(17,428	)
Income tax expense			(57	)		48			624			1,131
Loss before minority interest			(8,231	)		(7,021	)		(14,911	)		(18,559	)
Minority interest in net loss (profit) of subsidiaries, net.			35			532			(120	)		289
Net loss			(8,196	)		(6,489	)		(15,031	)		(18,270	)
Other comprehensive income (expense) net of tax:
	Foreign currency translation adjustment		(28	)		157			(32	)		—
Comprehensive income		$	(8,224	)	$	(6,332	)	$	(15,063	)	$	(18,270	)
Basic and diluted loss per common share		$	(0.35	)	$	(0.28	)	$	(0.64	)	$	(0.77	)
Weighted average number of common shares outstanding			23,480,408			23,588,031			23,480,408			23,588,031

(except share and per share amounts)

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

	June 30, 2003			December 31, 2002
ASSETS:
Current assets:
Cash and cash equivalents	$	6,231		$	2,130
Accounts receivable, net	21,181			13,644
Advances to growers, net	2,942			3,313
Inventories, net	9,616			11,218
Assets held for sale (see Note 5)	1,727			1,727
Other current assets	1,003			1,575
Total current assets	42,700			33,607
Property, plant and equipment, net	31,900			34,150
Patents and trademarks	1,097			1,249
Other assets	10,558			11,828
Total assets	$	86,255		$	80,834

LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	20,112		$	16,090
Accounts due to related parties	102,228			96,857
Short-term bank loans	4,525			9,818
Total current liabilities	126,865			122,765
Long-term liabilities with third parties	1,872			—
Total liabilities	128,737			122,765
Minority interest	447			401
Commitments and contingencies (see Note 8 and Note 12)
Stockholders’ equity (deficit):
Preferred stock, $0.01 par value, 5,000 shares authorized, 200 shares issued and outstanding at both June 30, 2003 and December 31, 2002, liquidation value of $10,000 per share	—			—
Common stock, $0.01 par value, 50,000,000 shares authorized, 22,905,408 and 23,588,031 shares issued and outstanding at June 30, 2003 and December 31, 2002, respectively	229			229
Additional paid-in capital	171,574			171,574
Accumulated deficit	(215,008		)	(213,914		)
Accumulated other comprehensive income (loss)	276			(221		)
Total stockholders’ equity (deficit)	(42,929		)	(42,332		)
Total liabilities, minority interest, and stockholders’ equity (deficit)	$	86,255		$	80,834

3The accompanying notes are an integral part of these consolidated financial statements

~~BIONOVA HOLDING CORPORATION UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Thousands of U.S. Dollars~~ 2

		Nine Months Ended September 30,
		2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(15,031	)	$	(18,270	)
Adjustments to reconcile net income to net cash provided by operating activities:
	Minority interest		120			(289	)
	Depreciation		2,126			2,038
	Amortization of goodwill, patents and trademarks		—			986
	Gain on sale of land		(247	)		—
	Loss on sale of subsidiaries		—			1,331
	Other non-cash items		(32	)		478
Net changes (exclusive of subsidiaries acquired or divested) in:
	Accounts receivable and advances to growers, net		13,625			4,073
	Inventories		2,859			3,640
	Net assets of discontinued operations		1,783			10,929
	Deferred income taxes		—			(894	)
	Other assets		(472	)		(764	)
	Accounts payable and accrued expenses		(2,384	)		(6,121	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			2,347			(2,863	)
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchases of property, plant and equipment			(1,564	)		(3,904	)
Proceeds from sale of property, plant and equipment			412			(30	)
NET CASH USED IN INVESTING ACTIVITIES			(1,152	)		(3,934	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings			141			774
Repayments of short-term debt			(8,114	)		(17,095	)
Proceeds from long-term borrowings			—			661
Repayments of long-term debt			(79	)		45
Accounts due to related parties			6,010			22,923
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			(2,042	)		7,308
Net increase (decrease) in cash and cash equivalents			(847	)		511
Cash at beginning of period			2,177			3,466
Cash at end of period		$	1,330		$	3,977

BIONOVA HOLDING CORPORATION

~~The accompanying~~UNAUDITED ~~notes~~CONSOLIDATED ~~are~~STATEMENT ~~an integral part of these unaudited consolidated financial statements.~~ OF OPERATIONS

4AND COMPREHENSIVE INCOME AND LOSS

Thousands of ~~BIONOVA~~U.S. ~~HOLDING CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002~~ Dollars

~~Note 1—Basis~~(except ofper ~~Presentation~~ share amounts)

For operating and financial reporting purposes, Bionova Holding Corporation (together with its subsidiaries, unless the context requires otherwise, "Bionova Holding" or the "Company") historically has classified its business into three fundamental areas: (1) Farming, which consists principally of interests in 100% Company-owned fresh produce production facilities and joint ventures or contract growing arrangements with other growers in Mexico; (2) Distribution, consisting principally of interests in sales and distribution companies in the United States, and Canada; and (3) Research and Development (or Technology), which until its shut down in June 2002 consisted of business units focused on the development of fruits and vegetables and intellectual properties associated with these development efforts.

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002

Total revenues	$	28,300		$	43,805		$	56,394		$		90,254

Cost of sales	24,948			42,961			50,909			82,035
Selling and administrative expenses	3,183			4,157			6,395			8,081
Research and development expenses	—			1,257			—			2,086
Amortization of goodwill, patents and trademarks	62			125			152			250
	28,193			48,500			57,456			92,452

Operating income (loss)	107			(4,695		)	(1,062		)	(2,198			)

Interest expense	(2,320		)	(2,427		)	(4,747		)	(4,693			)
Interest income	690			299			977			621
Exchange gain (loss), net	(10		)	208			—			341
Other non-operating income (expense), net	5,764			(442		)	5,117			(70			)
	4,124			(2,362		)	1,347			(3,801			)

Income (loss) before income taxes	4,231			(7,057		)	285			(5,999			)
Income tax expense	1,232			488			1,333			681

Income (loss) before minority interest	2,999			(7,545		)	(1,048		)	(6,680			)
Minority interest in net loss (profit) of subsidiaries, net	(55		)	(57		)	(46		)	(145			)

Net income (loss)	2,944			(7,602		)	(1,094		)	(6,825			)

Other comprehensive income (expense) net of tax:
Foreign currency translation adjustment	498			(80		)	497			(4			)

Comprehensive income (loss)	3,442			$	(7,682	)	$	(597	)	$		(6,829	)

Basic earnings (loss) per common share	$	0.13		$	(0.32	)	$	(0.05	)	$		(0.29	)

Diluted earnings per common share	$	0.06		$	(0.32	)	$	(0.05	)	$	(0.29		)

Weighted average number of common shares outstanding	22,905,408			23,480,408			22,905,408			23,480,408
Weighted average number of common shares outstanding, assuming dilution	46,061,524			23,480,408			22,905,408			23,480,408

~~In management's~~The ~~opinion, the~~ accompanying ~~unaudited consolidated financial statements for Bionova Holding for the three and nine month periods ended September 30, 2002 and 2001~~ ~~have~~notes ~~been~~are ~~prepared~~an inintegral ~~accordance~~part ~~with accounting principles generally accepted in the United States~~ of ~~America~~these 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 unaudited ~~consolidated~~ ~~financial statements do not contain all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited~~ consolidated financial ~~statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto presented in its 2001 10-K for the fiscal year ended~~ ~~December 31, 2001. Footnotes which would substantially duplicate disclosures in the Company's audited consolidated financial~~ statements ~~for the fiscal year ended December 31, 2001 contained in the 2001 10-K report have been omitted~~. The interim consolidated 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, 2002.

~~Going Concern~~ 3

~~The~~BIONOVA ~~Company~~HOLDING incurred a net loss of $56.6 million and an operating cash flow deficiency of $3.5 million for the year ended December 31, 2001. The Company also sustained significant operating losses and operating cash flow deficiencies from 1997 through 2000. At September 30, 2002 the Company had a negative working capital position of $79.3 million and has incurred a net loss of $15.0 million for the nine months ended September 30, 2002. CORPORATION

~~Management has~~UNAUDITED ~~been~~CONSOLIDATED ~~and~~STATEMENT ~~is continuing to address the Company's financial condition by postponing the sale of its fresh produce business, selling non-core assets of the fresh produce~~OF ~~business,~~CASH and selling and licensing its intellectual property. The Company also decided during the first week of May 2002 to close down its research and development operations to eliminate the ongoing expense involved in this segment of the business (see Note 8). The Company still must find a solution to the $95.2 million of debt plus additional interest accruing from September 30, 2002 that is due to Savia and its subsidiaries during 2002. Further, Bionova Produce, Inc., one of the Company's fresh produce subsidiary companies, must secure its new lending facilities to support growing and harvesting activities for the current crop season (see Note 2). There can be no assurance that these actions will result in sufficient working capital to significantly improve the Company's current financial position or its results of operations nor can there be any assurance the Company will be able to meet its obligations in 2002 nor secure or generate the funds to take it beyond the 2002 calendar year. This raises substantial doubt about the Company's ability to continue as a going concern. FLOWS

5Thousands of U.S. Dollars

The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

	Six Months Ended June 30,
	2003				2002

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(1,094		)	$	(6,825	)
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest	46				145
Depreciation	1,372				1,539
Amortization of patents and trademarks	152				250
Other	(47			)	573
Net changes (exclusive of subsidiaries acquired or divested) in:
Accounts receivable and advances to growers, net	(7,166			)	3,145
Inventories	1,602				2,899
Other assets	1,845				(164		)
Accounts payable and accrued expenses	4,022				1,520

NET CASH PROVIDED BY OPERATING ACTIVITIES	732				3,082

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment	(878			)	(963		)
NET CASH USED IN INVESTING ACTIVITIES	(878			)	(963		)

CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowing	(2,993			)	(3,159		)
Net change in long-term borrowing	1,870				(44		)
Accounts due to related parties	5,370				2,114

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	4,247				(1,089		)

Net increase (decrease) in cash and cash equivalents	4,101				1,030
Cash at beginning of period	2,130				2,463
Cash at end of period	$	6,231			$	3,493

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Transfer of land to a Mexican financial institution to satisfy a mortgage obligation		$	2,300			—
Release of a mortgage obligation from a Mexican financial institution		(2,300		)		—

~~Note 2—Bank~~The ~~Debt~~ accompanying notes are an integral part of these unaudited consolidated financial statements.

There currently are two components to this debt, both of which are guaranteed by Savia. All of this debt is associated with Bionova Produce, Inc., which is a distribution subsidiary located in Nogales, Arizona. The first component of the debt is a five-year loan secured by real property and is due August 30, 2006. The second component of the bank debt is a $6 million revolving line of credit. 4

~~As of~~BIONOVA ~~July 31,~~HOLDING 2002 Bionova Produce was in default on certain covenants relating to its revolving line of credit. Bionova Produce was able to cure this default and came back into compliance with the covenants of this loan facility in August. The principal on this $6 million revolving line (on which $1.4 million was outstanding on September 30, 2002) originally was due in full on September 30, but was extended to November 14, 2002, to permit Bionova Produce to complete a new set of financing facilities with its bank. While Bionova Produce is working with the bank on a further extension, since November 14th has now passed, this facility is past due, though the bank has not yet declared an event of default. CORPORATION

~~Bionova Produce~~NOTES ~~has~~TO ~~been~~UNAUDITED ~~in negotiations with the bank to secure new credit facilities with an aggregate limit of $10.5 million, including a new revolving line of credit. Though~~CONSOLIDATED ~~the~~FINANCIAL ~~bank has approved the loan facilities on a preliminary basis, certain terms are still being negotiated, and the facilities have not yet been secured.~~ STATEMENTS

~~Note 3—Net~~June ~~Loss~~30, ~~per Common Share~~ 2003

~~The~~Note ~~weighted~~1 ~~average~~– ~~number~~Basis of common shares outstanding during the three and nine month periods ended September 30, 2002 and 2001 was 23,480,408 and 23,588,031, respectively. On a diluted basis, assuming Savia were to convert the 200 shares of preferred stock it currently holds into common, the weighted average number of common shares outstanding during the three and nine month periods ended September 30, 2002 and 2001 would have been 46,636,524 and 46,744,147, respectively. Presentation

InFor operating and ~~addition~~financial reporting purposes, Bionova Holding Corporation (together with its subsidiaries, unless the ~~following~~context ~~table~~requires ~~sets~~otherwise, ~~forth~~“Bionova Holding” or the “Company”) ~~potential~~historically ~~shares~~has classified its business into three fundamental areas: (1) Farming, which consists principally of ~~common~~interests ~~stock~~in ~~related~~100% toCompany-owned ~~stock~~fresh ~~options~~produce ~~that~~production facilities ~~are~~and ~~not~~joint ~~included~~ventures or contract growing arrangements with other growers; (2) Distribution, consisting principally of interests in sales and distribution companies in Mexico, the ~~diluted~~United ~~net~~States, ~~income~~and Canada; and (3) Research and Development (or ~~loss~~Technology), ~~per~~consisting ~~share~~of ~~attributable~~business units tofocused ~~common~~on ~~stockholders~~the ~~because~~development toof dofruits soand ~~would~~vegetables beand ~~anti-dilutive~~intellectual ~~for~~properties associated with these development efforts. On June 30, 2002 the ~~periods~~operations ~~indicated:~~of the Research and Development segment were shut down and the remaining assets as of January 1, 2003, which consist solely of patents and trademarks with a valuation of $1.2 million, have been merged into the activity of the holding company which will continue to try to license and sell these assets as opportunities become available.

		September 30
		2002	2001
		(Thousands of Shares)
Effect of dilutive securities:
	Stock options outstanding	143	326

In management’s opinion, the accompanying unaudited consolidated financial statements for Bionova Holding for the three and six month periods ended June 30, 2003 and 2002 have been prepared in accordance with accounting principles generally accepted in the United States of America 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 unaudited consolidated financial statements do not contain all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto presented in its 2002 10-K for the fiscal year ended December 31, 2002. Footnotes which would substantially duplicate disclosures in the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2002 contained in the 2002 10-K report have been omitted. The interim consolidated 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, 2003.

6Going Concern

~~Note~~ The Company incurred a net loss of $20.4~~—Inventories~~ million for the year ended December 31, 2002. The Company also sustained significant operating losses and operating cash flow deficiencies from 1997 through 2002. At June 30, 2003 the Company had a negative working capital position of $84.2 million.

~~Inventories~~Management ~~were~~has ~~comprised~~been and is continuing to address the Company’s financial condition by selling non-core assets of the ~~following:~~fresh produce business, and by selling and licensing its intellectual property. The Company also must find a solution to the $102.2 million of debt plus the interest accruing in 2003 that is due to Savia and its subsidiaries during 2003. There can be no assurance that these actions will result in sufficient working capital to significantly improve the Company’s current financial position or its results of operations nor can there be any assurance the Company will be able to meet its obligations in 2003 nor secure funds to take it beyond the 2003 calendar year. This raises substantial doubt about the Company’s ability to continue as a going concern.

	September 30, 2002			December 31, 2001
	(Thousands of U.S. Dollars)
Finished produce	$	400		$	844
Growing crops		4,148			5,691
Advances to suppliers		1,566			727
Spare parts and materials		2,461			2,875
Merchandise in transit and other		1,448			2,836
		10,023			12,973
Allowance for slow moving inventory		(97	)		(188	)
	$	9,926		$	12,785

The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Note~~ 5~~—Assets Held for Sale~~

~~Assets~~Note ~~held~~2 ~~for~~– ~~sale~~Bank ~~were comprised of the following:~~ Debt

	September 30, 2002		December 31, 2001
	(Thousands of U.S. Dollars)
Agricultural land in Sinaloa, Mexico	$	3,255	$	3,255
Agricultural land in Guerrero, Mexico		825		825
Land and greenhouse facilities in Brentwood, California		—		165
	$	4,080	$	4,245

At June 30, 2003 all of the Company’s $6.4 million of bank debt was associated with its fresh produce business.

In ~~July~~ December 2002, ~~the~~Bionova Produce, ~~land~~Inc., Bionova Produce of Texas, Inc. and ~~greenhouse~~R.B. ~~facilities~~Packing inof ~~Brentwood~~California, Inc., ~~California~~the ~~were~~Company’s ~~sold~~major distributors of fresh produce in the United States, signed agreements for a new set of credit facilities with Wells Fargo Business Credit, Inc. (“WFBC”) which run through April 2006. There are three separate, but related loan components associated with these credit facilities. First, Bionova Produce, Inc. was extended a “permanent term loan” of $01.4 75 million, which will be amortized over 10 years. Interest is charged at the Wells Fargo prime rate of interest plus 1.5% (~~net~~5.5% at June 30, 2003), and interest and principal amortization payments are made on a monthly basis. The second component is a “seasonal term loan” of ~~commission~~$1.75 million, although only $1.0 million will be extended at this time. Interest is charged at the Wells Fargo prime rate of interest plus 1.5% (5.5% at June 30, 2003), and interest payments are made on a monthly basis. The outstanding principal balance on the seasonal term loan is amortized each year during the months of January through April, and may then be borrowed again in full on May 1. The ~~Company~~third ~~recorded~~component is a ~~gain~~$7 million revolving line of credit to support working capital requirements of the fresh produce business. The revolving line of credit must be paid down to a maximum of $01.25 million for a 30 day period between July 1 and September 30 each year. Interest on this revolving line of credit is charged at the Wells Fargo prime rate of interest plus 1.0% (5.0% at June 30, 2003). All three components of the credit facilities are collateralized by all of the real and intangible assets of the three U.S. distributing companies and are guaranteed by both Bionova Holding and its parent company, Savia. The key covenants associated with these credit facilities are that the three distributing companies as a group must maintain a minimum net worth of $8.75 million, a debt service coverage ratio of at least 1.25 to 1, achieve minimum levels of quarterly earnings before taxes to be agreed between the Company and WFBC annually, and the distributing group may not experience a net loss during any month that exceeds $0.5 million or a net loss for a two month period that exceeds $0.3 million. Also, there are provisions in the ~~third~~credit agreement that permits WFBC to declare an event of default if Savia fails to complete the restructuring of its debt facilities with its banks. An event of default was declared in the second quarter of ~~2002~~2003 ~~associated~~because Savia had failed to complete its restructuring by March 31, 2003, which was the date originally established in the credit agreement. On June 13, 2003 the U.S distributing companies, Bionova Holding, Savia, and WFBC signed the “First Amendment to Credit and Security Agreement and Waiver of Defaults” which extended the date for Savia to complete its restructuring to September 30, 2003. WFBC and Bionova Holding also agreed to renegotiate in good faith certain financial covenants relating to operating performance in the third and fourth quarters of 2003. As of the date of these financial statements, the Company now is in compliance with all of the ~~sale~~covenants of ~~this~~the credit ~~land~~facilities. At June 30, 2003 the principal outstanding in connection with the permanent term loan, the seasonal term loan, and the revolving line of credit was $1.7 million, $1.0 million, and $3.2 million, respectively.

~~Note 6—Goodwill~~In addition to these credit facilities Bionova Produce, Inc. has a five-year loan secured by an airplane and ~~Intangible~~is ~~Assets~~ guaranteed by Savia. The loan is for $0.7 million and is due August 30, 2006. Principal and interest payments of approximately $15,000 are due monthly. The interest rate on this debt is 8.25% per annum. At June 30, 2003 the principal outstanding under this five year loan agreement was $0.5 million.

~~The~~On ~~Company~~October ~~conducted~~3, a2001 Agrobionova, ~~comprehensive~~S.A. ~~impairment~~de ~~review~~C.V. at(as the ~~end~~Mexican designee of ~~2001~~Bionova Produce, Inc.) entered ~~Based~~into onan ~~the~~agreement ~~review~~with ~~significant~~Libra ~~impairment~~Exportaciones, ~~charges~~S.A. ~~were~~de ~~recorded~~C.V. in(“Libra”) whereby ~~the~~ABSA ~~fourth~~assumed ~~quarter~~a $2.3 million mortgage obligation to a Mexican financial institution in conjunction with certain pieces of ~~2001~~land being transferred to ABSA. On March 7, ~~which~~2003, ~~reduced~~a new agreement was signed by Libra, the ~~Company's~~Alvarez family ~~goodwill~~(the toformer ~~zero~~owners of Libra), and ~~the~~ABSA ~~net~~whereby ~~value~~ABSA would transfer certain pieces of ~~its~~land ~~patents~~it ~~and~~received ~~trademarks~~from Libra stemming from the October 3, 2001 agreement to the Mexican financial institution in exchange for a release from the $32.0 3 million atmortgage ~~December~~obligation. 31 The transfer of the land and the release of the mortgage obligation were completed on May 13, ~~2001~~2003. In ~~The~~the financial ~~patents~~statements ~~and~~for ~~trademarks~~the ~~are~~year ~~included~~ended inDecember ~~net~~31, 2002 the total debt ~~assets~~obligation of ~~discontinued operations~~$2.3 million was classified as a component of short-term bank loans.

~~Annual amortization~~Note ~~expense~~3 on- ~~the~~Net ~~Company's~~Income ~~patents~~or ~~and~~Loss ~~trademarks is expected to be approximately $0.5 million in 2002. Pro forma net income and pro forma net income~~ per ~~share, excluding~~Common ~~amortization, were the following:~~ Share

	September 30, 2002			September 30, 2001
	(Thousands of U.S. Dollars)
Net loss, as reported	$	(8,196	)	$	(18,270	)
Add back: goodwill amortization		—			1,303
Pro forma net loss	$	(8,196	)	$	(16,967	)
Basic and diluted net loss per share, as reported	$	(0.64	)	$	(0.77	)
Add back: goodwill amortization per share		—			(0.06	)
Pro forma basic and diluted net loss per share	$	(0.64	)	$	(0.71	)

The weighted average number of common shares outstanding during the three and six month periods ended June 30, 2003 and 2002 was 22,905,408 and 23,480,408, respectively. On a diluted basis, assuming Savia were to convert the 200 shares of preferred stock it currently holds into common, the weighted average number of common shares outstanding during the three and six month periods ended June 30, 2003 and 2002 would have been 46,061,524 and 46,636,524, respectively.

~~DNAP completed~~The afollowing ~~major~~table ~~transaction~~sets forth inthe ~~June 2002~~potential inshares ~~which it provided a non-exclusive license for its Transwitch technology and sold one~~ of ~~its~~common ~~patents.~~stock Inthat ~~return,~~are ~~DNAP~~not ~~received $1 million~~included in ~~cash.~~the ~~Since~~diluted net ~~these~~loss ~~patents~~per ~~were~~share aattributable ~~significant~~to ~~component~~common ofstockholders for the ~~value~~quarter ofending June ~~DNAP's patents and trademarks~~30, ~~DNAP~~2003 ~~recorded~~because ~~a $1 million reduction~~ to ~~this~~do ~~asset~~so ~~account~~would ~~to recognize~~be ~~the sale and value remaining in these assets~~anti-dilutive.

Note 7—Segment Reporting

	(Thousands of Shares)
	Three and Six Months Ended June 30, 2003	Three and Six Months Ended June 30, 2002

Effect of dilutive securities:
Convertible preferred stock outstanding	23,156	23,156
Stock options outstanding	215	216

~~For~~Note ~~operating~~4 and financial reporting purposes, Bionova Holding Corporation (together with its subsidiaries, unless the context requires otherwise, "Bionova Holding" or the "Company") historically has classified its business into three fundamental areas: (1) Farming, which consists principally of interests in 100% Company-~~owned~~ fresh produce production facilities and joint ventures or contract growing arrangements with other growers in Mexico; (2) Distribution, consisting principally of interests in sales and distribution companies in the United States, and Canada; and (3) Research and Development (or Technology), which until its shut down in June 2002 consisted of business units focused on the development of fruits and vegetables and intellectual properties associated with these development efforts. Inventories

~~Information pertaining~~Inventories 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~~comprised ~~includes the allocation~~ of ~~corporate overhead to~~ the ~~various segments. All acquired goodwill prior to December 31, 2001 was pushed down to the companies and segments that had made the acquisitions. At~~ following:

	(Thousands of U.S. Dollars)
	June 30, 2003		December 31, 2002
Finished produce	$	230	$	762
Growing crops	295		2,660
Advances to suppliers	2,359		1,732
Spare parts and materials	1,990		2,340
Merchandise in transit and other	4,742		3,724
	$	9,616	$	11,218

~~December 31~~ABSA, ~~2001~~the ~~Bionova~~Company’s Mexican ~~Holding~~farming ~~determined~~subsidiary, ~~its~~advances ~~goodwill~~money ~~had~~to ~~become~~suppliers ~~impaired~~towards the purchase of materials, and athese ~~charge~~amounts ~~was~~are ~~recorded~~reflected as Advances to ~~write~~Suppliers. Due ~~off~~to ~~all~~ABSA’s financial condition, it has a large number of accounts payable to suppliers that are seriously past due. Certain suppliers have required that ABSA pay amounts over and above the ~~goodwill~~purchase ofprices for the ~~Company~~materials asthey are providing to ABSA to pay down a portion of ~~that~~the ~~date.~~overdue payables.

	Farming			Distribution		Research and Development (Discontinued Operations)			Total of Reportable Segments
	(Thousands of U.S. Dollars)
January 1-September 30, 2002
Revenues from unaffiliated customers	$	11,147		$	94,884	$	1,920		$	107,951
Inter-segment revenues		35,161			—		—			35,161
Total revenues		46,308			94,884		1,920			143,112
Operating profit (loss)		(5,619	)		1,524		(1,972	)		(6,067	)
Depreciation and amortization		1,852			270		4			2,126
Identifiable assets(1)		63,975			24,217		1,542			89,734
Acquisition of long-lived assets		1,447			117		—			1,564
January 1-September 30, 2001
Revenues from unaffiliated customers	$	2,485		$	166,159	$	1,742		$	170,386
Inter-segment revenues		45,095			—		—			45,095
Total revenues		47,580			166,159		1,742			215,481
Operating profit (loss)		(4,081	)		4,413		(6,667	)		(6,313	)
Depreciation and amortization		1,554			228		1,242			3,024
Identifiable assets(1)		108,444			25,413		21,808			155,665
Acquisition of long-lived assets		2,348			1,464		92			3,904

Note 5 – Assets Held for Sale

9Assets held for sale were comprised of the following:

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

	(Thousands of U.S. Dollars)
	June 30, 2003		December 31, 2002
Agricultural land in Sinaloa, Mexico	$	322	$	322
Agricultural land in Guerrero, Mexico	825		825
Commercial land in San Diego, California	580		580
	$	1,727	$	1,727

	January 31-September 30
	2002			2001
	Thousands of U.S. Dollars
Revenues
Revenues from unaffiliated customers	$	143,112		$	215,481
Inter-segment revenues		(35,161	)		(45,095	)
Revenues from discontinued operations		(1,920	)		(1,742	)
Total revenues		106,031			168,644
Loss before taxes
Total operating loss from reportable segments		(6,067	)		(6,313	)
Total operating loss from Bionova Holding Corporation(1)		(1,624	)		(2,787	)
Interest, net		(6,004	)		(1,430	)
Exchange gain (loss), net		(756	)		(651	)
Shareholder litigation expense		—			(6,379	)
Other non-operating (expense) income, net		164			132
Consolidated loss before taxes		(14,287	)		(17,428	)
Assets
Total segment identifiable assets		89,734			155,665
Unallocated and corporate assets(2)		1,556			4,084
Eliminations(3)		(14,495	)		(25,790	)
Consolidated assets		76,795			133,969

~~Notes:~~Note 6 – Reclassifications

10Certain prior year amounts have been reclassified to conform to the current year presentation.

~~Revenue from~~Note ~~external~~7 ~~customers~~- bySegment ~~product/service category is set forth below:~~ Reporting

	Farming		Distribution		Research and Development (Discontinued Operations)		Total of Reportable Segments
	(Thousands of U.S. Dollars)
January 1-September 30, 2002
Core vegetables(1)	$	7,827	$	47,682			$	55,509
Fruits and other fresh produce(2)		3,320		47,202				50,522
Contracted R&D revenue					$	521		521
Licensed technology and royalties						1,399		1,399
January 1-September 30, 2001
Core vegetables(1)				80,407				80,407
Fruits and other fresh produce(2)		1,736		86,501				88,237
Contracted R&D revenue						1,324		1,324
Licensed technology and royalties						418		418

The Company historically classified 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. On June 30, 2002 the operations of the Research and Development segment were shut down and the remaining assets as of January 1, 2003, which consisted solely of patents and trademarks with a valuation of $1.2 million, were merged into the activity of the holding company which is continuing to try to license and sell these assets as opportunities become available.

~~Notes:~~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.

Note 8—Closing of Research and Development Operations (Discontinued Operations)

	(Thousands of U.S. Dollars)
	Farming			Distribution		Research and Development			Total of Reportable Segments

January 1 – June 30, 2003
Revenues from unaffiliated customers	$	2,483		$	53,911	—			$	56,394
Inter-segment revenues	11,654			—		—			11,654
Total revenues	14,137			53,911		—			68,048
Operating profit (loss)	(1,333		)	1,206		—			(127		)
Depreciation and amortization	1,184			188		—			1,372
Identifiable assets (1)	68,078			33,518		—			101,596
Acquisition of long-lived assets	—			878		—			878

January 1 – June 30, 2002
Revenues from unaffiliated customers	$	9,529		$	78,805	$	1,920		$	90,254
Inter-segment revenues	33,454			—		—			33,454
Total revenues	42,983			78,805		1,920			123,708
Operating profit (loss)	(340		)	1,333		(264		)	729
Depreciation and amortization	1,251			180		305			1,736
Identifiable assets (1)	66,937			28,471		15,657			111,065
Acquisition of long-lived assets	846			117		—			963

On(1) Identifiable ~~May 13,~~assets 2002 Bionova Holding announced it had begun closing down its research and development operations, including all of the activities carried out through its wholly owned DNAP and VPP subsidiary companies. The focus of DNAP's research during the past year had been the production of transgenic plants which provide improved disease resistance for ~~fruit~~segments ~~and~~are ~~vegetable~~defined ~~crops.~~as ~~Concerns~~total ~~about~~assets ~~public~~less ~~acceptance~~cash ~~of transgenic products~~ in ~~these markets made producers reluctant to invest in the development of transgenic fruits and vegetables. Further~~banks, ~~the~~ ~~agricultural~~deferred ~~industry~~income ~~has suffered from low prices for its products over the past few years, leading growers, food companies~~ taxes and ~~other providers to delay new research and development~~ investment~~. Despite~~ anin intensive search, these factors made it difficult for DNAP to develop new customers; and, with the absence of a customer base, DNAP was not able to obtain venture capital or other financing sufficient to continue operationsshares. Accordingly, the research and development operations were closed down during May and June, including the Oakland facility, and all personnel were laid off. DNAP shifted its focus to the licensing and sale of its intellectual property. The shutdown of operations was completed on June 30, 2002.

In conjunction with the closing of the Company's research and development operations, DNAP and Seminis Vegetable Seeds agreed to terminate their long-term funded research agreement, which was entered into in January 1997. Seminis made a cash payment as part of the termination agreement, and DNAP acquired certain technology rights which bring value to its technology licensing and sale activities. 8

~~In October 2001,~~Reconciliation ~~the FASB issued Statement~~ of ~~Financial Accounting Standards No. 144 ("SFAS No. 144"), "Accounting for~~ the ~~Impairment or Disposal of Long-Lived~~ ~~Assets,"~~segments which is effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal periods. This Statement supersedes FASB Statement No. 121 and APB 30, however, this Statement retains the requirement of Opinion 30 to ~~report~~total ~~discontinued~~consolidated ~~operations~~amounts ~~separately~~is ~~from~~set ~~continuing~~forth ~~operations and extends that reporting to a component of an entity that either has been disposed of (by sale, by~~ below:

	Thousands of U.S. Dollars
	January 1 – June 30
	2003			2002

Revenues
Revenues from unaffiliated customers	$	68,048		$	123,708
Inter-segment revenues	(11,654		)	(33,454		)
Total revenues	$	56,394		$	90,254

Income before taxes
Total operating profit (loss) from reportable segments	$	(127	)	$	729
Total operating loss from Bionova Holding Corporation (1)	(935		)	(2,927		)
Interest, net	(3,770		)	(4,072		)
Exchange gain (loss), net	—			341
Other non-operating (expense) income, net	5,117			(70		)
Consolidated income (loss) before taxes	$	285		$	(5,999	)

Assets
Total segment identifiable assets	$	101,596		$	111,065
Unallocated and corporate assets (2)	5,825			3,779
Eliminations (3)	(21,166		)	(24,255		)
Consolidated assets	$	86,255		$	90,589

abandonment, or in a distribution to owners) or is classified as held for sale. Management has been working on the plan and structure to enable the transfer of the remaining patents and trademarks of DNAP and VPP to Bionova Holding and/or its other subsidiaries. Notes:

~~Revenues~~(1) Certain ~~and~~expenses, ~~losses~~such ofas ~~the~~shareholder ~~Company's~~litigation, ~~research~~investor relations, and ~~development~~Board ~~operations~~and professional ~~for~~fees have not been allocated to the ~~quarter~~segments. Management ~~and~~determined ~~nine~~that ~~months~~these ~~ended~~types ~~September 30~~of expenses have not been associated with, ~~2002~~nor ~~(in~~did ~~thousands~~the results of ~~dollars)~~these ~~were~~activities benefit asthe ~~follows:~~operating segments.

	Quarter Ended September 30			Nine Months Ended September 30
Revenues	$	0		$	1,920
Loss before provision for income taxes		(1,185	)		(2,083	)
Income tax expense		—			—
Net loss		(1,185	)		(2,083	)

(2) Includes Bionova Holding’s and segments’ cash in banks, deferred income taxes and other corporate assets.

~~Summary~~(3) Consists ~~data~~principally ~~relating to the assets and liabilities~~ of ~~the~~inter-segment ~~Company's~~intercompany ~~research and development operations (in thousands of dollars) at September 30, 2002 is shown below~~balances.

Current assets	$	0
Total assets		1,626
Current liabilities		84
Total liabilities		84
Net assets of Research and Development		1,542

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

The Company has been, and continues to work on the licensing and sale of its patents and trademarks. During the first nine months of 2002 the Company received more than $1 million in revenue associated with these activities.

	(Thousands of U.S. Dollars)
	Farming		Distribution		Research and Development		Total of Reportable Segments
January 1 – June 30, 2003
Core vegetables (1)	$	2,260	$	18,158	$	—	$	20,418
Fruits and other fresh produce (2)	223		35,753		—		35,976

January 1 – June 30, 2002
Core vegetables (1)	$	7,827	$	47,682	$	—	$	55,509
Fruits and other fresh produce (2)	1,702		31,123		—		32,825
Contracted R&D revenue	—		—		521		521
Licensed technology and royalties	—		—		1,399		1,399

~~Note 9—Legal Actions and Contingencies~~ Notes:

~~The~~(1) Core ~~Company,~~vegetables ~~DNAP, and former directors of DNAP are defendants in one remaining shareholder litigation styled Gordon K. Aaron et al. v.~~include ~~Empresas la Moderna~~tomatoes, ~~S.A.~~vine desweet ~~C.V.,~~mini et al. This action was filed in the U.S. federal district court for the Northern District of California action and stemmed from the 1996 merger of DNAP and the fresh produce business of Bionova Holding. A substantially identical class action lawsuit styled Robert Kaczak v. Empresas la Modernapeppers, ~~S.A.~~bell depeppers ~~C.V., et al. was filed in the U.S. federal district court for the Northern District of California,~~ and ~~these two cases were then consolidated~~cucumbers. The trial court dismissed all of the plaintiffs' claims, but the Court of Appeals for the Ninth Circuit reinstated some of the claims against Bionova Holding and the individuals who were named as defendants. Bionova Holding denies any wrongdoing and liability in these matters and intends to vigorously contest these lawsuits.

~~ABSA owns one hundred hectares~~ (~~approximately 247 acres~~2) Fruits ofand ~~rural~~other ~~land in the State of Sinaloa, Mexico, which is the subject of a judicial proceeding pending in Mexico initiated by a~~fresh ~~group~~produce ofinclude ~~campesinos. The petitioners asserted that a previous owner of the subject land~~papayas, ~~Miguel Angel Suárez~~mangoes, ~~owned rural land in excess of the maximum that was then allowed by law and that therefore the land rightfully belonged to them. On September 25~~grapes, ~~1996~~melons, ~~the~~watermelons ~~court upheld the petition~~ and ~~ordered the land turned over to the petitioners~~others. The court also ruled that the transfer of the property to Olga Elena Batiz Esquer on June 2, 1990 was null and void, which would mean that the transfer of the land by Ms. Batiz to ABSA in 1993 was ineffective. On October 23, 1996, Ms. Batiz, who was a party to the

129

~~trial~~Note ~~court~~8 ~~proceeding,~~– ~~filed~~Legal aActions ~~challenge to the judicial determination based on alleged violations of her constitutional rights~~ and procedural and substantive errors in the trial court proceedings. If ABSA is ultimately required to transfer the subject land, which constitutes approximately 7.7% of the total agricultural land owned by ABSA, Mexican law gives ABSA limited indemnification rights against the State of Sinaloa and Ms. Batiz. Contingencies

On ~~June 16~~ January 7, ~~2000~~1999, a class action lawsuit styled ~~Santa~~Gordon ~~Cruz~~K. ~~Empacadora,~~Aaron Set al. dev. REmpresas la Moderna, S.LA. de C.V., vet al. Rwas filed in the U.BS. ~~Packing~~federal district court for the Northern District of California. On January 28, ~~Inc~~ 1999, a substantially identical class action lawsuit styled Robert Kaczak v. Empresas la Moderna, S.A. de C.V., et al. was filed in the U.S. ~~United~~federal ~~States~~district ~~District~~court ~~Court~~ for the ~~Southern~~Northern District of California., ~~R.B.~~and ~~Packing~~these two ofcases ~~California, Inc~~were then consolidated. The plaintiffs allege that, prior to the Merger of DNAP with a subsidiary of Bionova Holding on September 26, ~~had~~1996, ~~been~~they owned shares of DNAP’s Preferred Stock. In connection with the ~~United~~Merger, all ~~States~~of ~~distributor~~the shares of ~~fresh~~common stock and Preferred Stock of DNAP were converted ~~produce~~into ~~sold~~the bynumber of shares of common stock of Bionova Holding specified in the Merger ~~plaintiff~~Agreement. The ~~plaintiff~~plaintiffs ~~alleges~~ allege that Rthe Proxy Statement/Prospectus distributed to DNAP’s stockholders in connection with the merger contained material misrepresentations and omitted to state material facts.B. Both ~~Packing~~DNAP and Bionova Holding, as well as certain former and current directors of ~~California~~DNAP and Bionova Holding, ~~Inc.~~ ~~sold~~have ~~Santa~~been ~~Cruz~~named ~~produce~~as defendants in this matter. The plaintiffs claim to ~~related~~have ~~companies~~been atdamaged ~~below~~by the ~~market~~alleged ~~prices~~actions of the defendants and ~~thereby~~therefore ~~engaged~~the inplaintiffs ~~unfair~~seek ~~conduct~~unspecified actual damages, ~~fraud~~reimbursement of their litigation costs and expenses, ~~breach~~and equitable relief, including rescission of ~~statutory~~the Merger. The plaintiffs also allege that they were entitled to receive, and ~~fiduciary~~seek ~~duties~~specific performance of, special conversion privileges under the terms of the Certificate of Designation that established the Preferred Stock. On ~~The~~March ~~plaintiff~~8, ~~seeks~~2000, the court dismissed nearly all of the plaintiffs’ claims, and subsequently the plaintiffs filed an ~~unspecified~~amended ~~amount~~complaint with respect to some of ~~compensatory~~the dismissed claims. On September 19, 2000, the court ruled in favor of Bionova Holding and ~~punitive~~DNAP ~~damages~~and dismissed all of the plaintiffs’ claims. RThe plaintiffs appealed this judgment to the U.BS. ~~Packing~~Court of Appeals ~~California~~for the Ninth Circuit, ~~Inc~~ which heard arguments on the matter on February 12, 2002. On ~~denies~~September ~~any~~13, 2002, the Ninth Circuit affirmed the dismissal of some of the claims, including all of the claims against DNAP, and reversed the dismissal of others. The remaining claims have been remanded to the trial court for further proceedings. Bionova Holding and DNAP deny any wrongdoing orand liability in this matter and ~~intends~~intend to vigorously contest the remaining claims in this lawsuit.

~~On December 30,~~DNAP ~~1998,~~has ~~Bionova~~been ~~Holding,~~named ~~through~~as ~~its~~a defendant ~~subsidiary,~~in ~~VPP,~~several ~~acquired~~lawsuits ~~Monsanto~~asserting ~~Company's~~claims ~~strawberry~~against ~~development~~DNAP ~~program.~~relating ~~The original purchase price was~~to ~~$5.0 million.~~research ~~The~~DNAP ~~purchase~~performed ~~contract~~from ~~stipulated~~1983 ~~that~~through if1994 ~~Monsanto~~for ~~was~~Brown ~~able~~& toWilliamson Tobacco ~~satisfy~~Company ~~certain~~(“B&W”). In general, ~~conditions~~the tocases ~~grant~~allege ~~certain~~that ~~additional~~DNAP ~~licenses,~~engaged ~~VPP~~in ~~would~~unfair bebusiness ~~obligated~~practices ~~to make additional payments.~~under InCalifornia ~~2000~~law ~~VPP~~and/or ~~paid~~participated ~~Monsanto~~in an ~~additional~~alleged ~~$3.0 million~~conspiracy ~~when~~among ~~Monsanto~~cigarette manufacturers ~~was able~~ to ~~grant~~deceive ~~one~~the ofpublic ~~these~~regarding ~~licenses.~~the Ifhazards ~~Monsanto~~of issmoking. All ~~able~~of tothe ~~fulfill~~pending ~~the~~cases ~~conditions~~are toin ~~grant~~California state ~~the~~courts. In ~~additional~~December ~~licenses~~1999, ~~VPP~~B&W ~~would~~agreed ~~be obligated~~ to ~~make~~indemnify ~~additional~~DNAP ~~payments~~against inall ancosts ~~amount~~(including ascosts ~~great~~of asdefense ~~$4.0 million~~and inof costs ~~the future. The granting~~ of ~~these~~any ~~additional~~judgment ~~licenses~~or issettlement) ~~contingent~~incurred onby ~~the~~DNAP ~~resolution~~in ofconnection awith ~~patent~~these ~~interference~~cases ~~case~~and ~~involving~~any ~~Monsanto~~similar ~~and~~cases ~~several~~in ~~other~~the ~~companies~~future. Therefore, ~~The~~management ~~Company~~no ~~does~~longer ~~not~~believes ~~believe~~that ~~this~~these ~~case~~cases iscould ~~likely~~have toa material beadverse ~~decided~~effect ~~for~~on atthe ~~least~~Company’s ~~two~~financial tocondition ~~three~~or ~~years,~~results ~~and~~of itoperations. DNAP isdenies ~~not~~any ~~possible~~wrongdoing toor ~~predict~~liability ~~with~~in ~~any~~these ~~certainty~~matters ~~whether~~and ~~Monsanto~~intends ~~will~~to ~~win~~vigorously orcontest ~~lose~~these ~~the case~~lawsuits.

~~Please~~On June 16, 2000, a ~~see~~lawsuit ~~the~~styled ~~Company's~~Santa ~~Form 10-K~~Cruz ~~for~~Empacadora, ~~the~~S. ~~year~~de ~~ended~~R.L. ~~December 31~~de C.V., ~~2001~~v. ~~that~~R.B. Packing of California, Inc. was filed onin ~~April~~the United States District Court for the Southern District of California. 12 R.B. Packing of California, ~~2002~~Inc., ~~for~~a ~~further~~subsidiary ~~discussion~~of onBionova Holding, had been the ~~Company's~~United ~~pending~~States distributor of fresh produce sold by the plaintiff. The plaintiff alleges that R.B. Packing of ~~litigation~~California, Inc. sold Santa Cruz produce to related companies at below market prices and ~~contingencies~~thereby engaged in unfair conduct, fraud and breach of statutory and fiduciary duties. The plaintiff seeks an unspecified amount of compensatory and punitive damages. R.B. Packing of California, Inc. denies any wrongdoing or liability in this matter and intends to vigorously contest this lawsuit.

~~Note 10—Reclassifications~~ On December 30, 1998, Bionova Holding, through its subsidiary, VPP, acquired Monsanto Company’s strawberry development program. The program included breeding assets and exclusive rights to certain of Monsanto’s genetic and gene technology for berry development, and a non-exclusive right to future Monsanto berry technology, including strawberries, cranberries, raspberries, blackberries, boysenberries, and blueberries. In January, 1999, VPP paid Monsanto $5.0 million for those assets. The purchase contract stipulated that if Monsanto was able to satisfy certain conditions to grant certain additional licenses, VPP would be obligated to make payments of an additional $7.0 million. In 2000 VPP paid Monsanto an additional $3.0 million when Monsanto was able to grant one of these licenses. If Monsanto is able to fulfill the conditions to grant the additional licenses, then VPP would be obligated to

Certain prior year amounts have been reclassified to conform to the current year presentation. Further, the unaudited consolidated financial statements for Bionova Holding presented for the three and nine month periods ended September 30, 2002 and 2001 were prepared in accordance with FASB 144 to reflect the effects of the discontinued operations of the research and development business and the continuing operations of the Company's fresh produce farming and distribution business. 10

~~Note 11—New~~make ~~Accounting~~additional ~~Pronouncements~~ payments in an amount as great as $4.0 million in the future. The granting of these additional licenses is contingent on the conclusion of a lawsuit in which Monsanto is involved. The Company does not believe this case is likely to be decided for at least two to three years, and it is not possible to predict with any certainty whether Monsanto will win or lose the case.

InPlease ~~June 2002,~~see the ~~FASB~~Company’s Form ~~issued~~10-K ~~SFAS No. 146, "Accounting~~ for ~~Costs~~the ~~Associated~~year ~~with~~ended ~~Exit~~December ~~or Disposal Activities" ("SFAS No. 146"). SFAS No. 146 addresses significant issues regarding the recognition~~31, ~~measurement,~~2002 ~~and reporting of costs~~ that ~~are~~was ~~associated~~filed ~~with~~on ~~exit~~April ~~and disposal activities~~30, ~~including~~2003 ~~restructuring activities that are currently accounted~~ for ~~under~~further ~~EITF~~discussion ~~No. 94-3,~~on "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The scope of SFAS No. 146 also includes costs related to terminating a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated receive under the ~~terms~~Company’s ofpending alitigation one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS No. 146 will be effective for exit or disposal activities that are initiated after December 31, 2002 and ~~early application is~~ contingencies.

13Note 9 – Accounting for stock-based compensation

~~encouraged.~~ The Company ~~will~~accounts ~~adopt~~for its ~~SFAS~~stock-based ~~No. 146~~compensation ~~during~~plans ~~the~~in ~~first~~accordance ~~quarter~~with ofSFAS ~~2003~~No. ~~The~~123, ~~provisions~~Accounting offor ~~EITF~~Stock-Based Compensation as amended by SFAS No. ~~94-3~~ ~~shall~~148, ~~continue~~“Accounting tofor Stock-Based ~~apply~~Compensation ~~for~~Transition anand ~~exit~~Disclosure.” As ~~activity~~permitted ~~initiated~~ under anSFAS ~~exit~~No. ~~plan~~148, ~~that~~the ~~met~~Company uses the ~~criteria~~intrinsic value-based method of ~~EITF~~Accounting Principles Board (“APB”) Opinion No. ~~94-3~~ ~~prior~~25, to“Accounting ~~the~~for ~~adoption~~Stock ofIssued ~~SFAS~~to ~~No. 146.~~Employees,” ~~The~~to ~~effect~~account onfor ~~adoption~~its employee ofstock-based ~~SFAS~~compensation Noplans. ~~146~~ Under ~~will~~APB ~~change~~Opinion onNo. a25, ~~prospective basis~~compensation ~~the~~expense ~~timing~~is ofbased ~~when~~on ~~restructuring~~the difference, ~~charges~~if ~~are~~any, ~~recorded~~on ~~from~~the ~~a commitment~~ date ~~approach~~of togrant, ~~when~~between the ~~liability~~fair isvalue ~~incurred;~~of ~~however,~~ the Company’s ~~does~~shares ~~not~~and ~~expect~~ the ~~adoption~~exercise price of ~~SFAS~~the Nooption. ~~146 will~~ Compensation ~~have~~cost afor ~~material~~stock ~~impact~~options, onif ~~the~~any, is ~~Company's~~realized ~~financial~~ratably ~~position~~over ~~and~~the ~~results~~vesting ~~of operations~~period.

~~Note~~The Company provides additional proforma disclosures required by SFAS No. 123 as amended by SFAS No. 148, “Accounting for Stock-Based Compensation- Transition and Disclosure – An Amendment of SFAS No. 123”. Had compensation cost for the Company’s stock option plans been determined based on the fair market value of the options at the grant dates, as prescribed in SFAS No. ~~12—Related~~123, ~~Party~~the ~~Transactions~~ Company’s net income (loss) and net income (loss) per share would have been as follows:

Beginning in the third quarter of 2002, and continuing into the fourth quarter, four of the Company's senior managers deferred receipt of their salary compensation because of the Company's tight cash situation. At September 30, 2002 this deferred salary compensation amounted to $0.1 million. In addition, the president of the Company's fresh produce business loaned the Company $0.2 million in the month of August 2002. 11

InThousands ~~the third quarter~~ of ~~2002 DNAP executed a transaction with Seminis Vegetables Seeds, Inc~~U.~~, a majority owned subsidiary of Savia~~S. ~~This transaction provided Seminis with a~~dollars ~~non-exclusive~~(except ~~right~~per toshare produce on a worldwide basis, and an exclusive right to sell in Europe and Asia DNAP's patented bell peppers. DNAP received an advance cash payment of $2 million against future royalty payments. The agreement provides that after two years Seminis has the right to terminate the agreement and that DNAP would be required to reimburse Seminis for any unearned portion of the royalty advance. Accordingly, DNAP recorded this advance on royalties as Accounts due to Related Parties. data)


	Three Months Ended				Six Months Ended
	June 30, 2003		June 30, 2002		June 30, 2002		June 30, 2002

Net income (loss) as reported…	2,944		(7,602	)	(1,094	)	(6,825	)
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards	(7	)	(21	)	(28	)	(42	)
Net income (loss) pro forma	2,937		(7,623	)	(1,122	)	(6,867	)
Net income (loss) per share:
As reported — basic	0.13		(0.32	)	(0.06	)	(0.29	)
Pro forma — basic	0.13		(0.32	)	(0.06	)	(0.29	)
As reported — diluted	0.06		(0.32	)	(0.06	)	(0.29	)
Pro forma — diluted	0.06		(0.32	)	(0.06	)	(0.29	)

The fair value of options granted in 1999 was estimated using the Black-Scholes ~~Item~~model 2.with ~~Management's~~the ~~Discussion~~following ~~and~~weighted ~~Analysis~~average assumptions: dividend yield of ~~Financial~~0%, ~~Condition~~expected volatility of 114%, risk free interest rate of 5.2%, and ~~Results~~an expected life of ~~Operations~~ 7 years. No options were granted in 2002 or 2003.

TheNote Company 10 – Sale of Mexican Subsidiary

~~Bionova~~On ~~Holding~~June ~~Corporation~~13, a2003 Bionova ~~Delaware~~Holding ~~corporation~~and ~~(together~~Agromod, ~~with~~S.A ~~its~~de ~~subsidiaries~~C.V., ~~unless~~a ~~the~~minority ~~context~~owner ~~requires~~of ~~otherwise~~ABSA, ~~"Bionova~~entered into ~~Holding"~~an oragreement to sell all of the ~~"Company"), was~~shares ~~formed~~of inTechnologia ~~January 1996~~Aplicada en Procesos, ~~and~~S. ~~acts~~de asR.L. de C.V. (“TAP”), a ~~holding~~Mexican ~~company~~subsidiary ~~for~~of ~~(i) Agrobionova~~Bionova Holding to Promo-Tow, S.A de R.L. de C.V., (“PROMOTOW”), a ~~corporation~~Mexican ~~organized~~company. The ~~under~~shares ~~the~~of ~~laws~~this new ofcompany ~~the~~had ~~United~~value ~~Mexican~~to ~~States,~~PROMOTOW because of ~~which~~certain ~~the~~financial ~~Company~~benefits ~~owns~~PROMOTOW ~~98.6%~~felt ~~("ABSA"),~~it ~~(ii) International~~could ~~Produce~~derive from ownership of TAP. Bionova Holding ~~Company,~~received a$5.4 ~~Delaware~~million ~~corporation,~~in ofcash ~~which~~on ~~the~~June ~~Company~~13 ~~owns~~and could ~~100%~~receive ~~("IPHC"),~~up ~~(iii) DNA~~to ~~Plant~~an ~~Technology~~additional ~~Corporation~~$0.6 million, awhich ~~Delaware~~currently is being held ~~corporation~~in escrow, ofduring ~~which~~ the ~~Company~~third ~~owns~~quarter ~~100%~~of ~~("DNAP"),~~2003 ~~and~~upon ~~(iv) VPP~~verification ~~Corporation,~~by aan ~~Delaware~~independent auditor ~~corporation,~~of the historical financial statements of ~~which~~Bionova ~~the~~Holding’s Mexican farming subsidiaries. The Company recorded ~~owns~~only ~~100%~~the ~~("VPP")~~$5.4 ~~Approximately~~million ~~77%~~as ofOther Income in the ~~outstanding~~second ~~common~~quarter ~~stock~~ of ~~the~~2003 along ~~Company~~with isestimated ~~indirectly~~tax ~~owned~~expense byassociated ~~Savia,~~with Sthis transaction of $0.A.8 million deand Ctransaction fees of $0.V3 million. The accounting for this transaction is shown below.

	(U.S. Dollars)

Gross proceeds from sale of Mexican subsidiary	$	5,449,000
Transaction fees	255,000
Net proceeds (Other Income) from sale of Mexican subsidiary	5,194,000
Net book assets of Mexican subsidiary	11,000
Gain on sale	$	5,183,000

ResultsNote of11 Operations – Recent Accounting Pronouncements

~~Three~~ In January ~~Months~~2003, ~~Ended~~the ~~September 30~~Financial Accounting Standards Board (FASB) issued Interpretation No. 46 (FIN 46), ~~2002~~Consolidation ~~Compared~~of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 requires certain variable interest entities to be consolidated by the ~~Three~~primary beneficiary ~~Months~~of ~~Ended~~the ~~September 30~~entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, ~~2001~~ 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of FIN 46 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

~~Consolidated~~ In ~~total~~May ~~revenues~~2003, ~~declined~~the toFASB ~~$17~~issued Statement of Financial Accounting Standards No.~~7 million~~ 150 (SFAS 150), Accounting for ~~the~~Certain ~~quarter~~Financial Instruments ~~ended~~with ~~September 30,~~Characteristics ~~2002~~of ~~from~~both ~~$41~~Liabilities and Equity.~~5 million~~ SFAS in150 ~~the~~establishes ~~same~~standards ~~quarter~~for ofthe ~~2001,~~classification ~~consolidated~~and ~~gross~~measurement ~~profit~~of ~~(sales~~financial ~~less~~instruments ~~cost~~with characteristics of both ~~sales)~~liabilities ~~declined~~and toequity. This Statement ais ~~loss~~effective offor ~~$0.5 million~~financial ~~for~~instruments ~~the~~entered ~~quarter~~into ~~ended~~or ~~September 30~~modified after May 31, ~~2002~~2003, ~~from~~and aotherwise ~~profit~~is ofeffective ~~$3.0 million~~at inthe beginning of the ~~same~~first interim ~~quarter~~period ofbeginning ~~2001,~~after ~~and~~June ~~the~~15, ~~Company's~~2003, ~~consolidated~~except ~~operating~~for ~~loss~~mandatorily ~~declined~~redeemable financial toinstruments $4of nonpublic entities.~~3 million~~ The ~~for~~adoption ~~the~~of ~~quarter~~this ~~ended~~standard is ~~September 30,~~not ~~2002~~expected ~~from~~to have a ~~loss~~material ofimpact ~~$4.1 million~~on in the ~~same~~Company’s ~~quarter~~financial ofposition, ~~2001.~~results of operations or cash flows.

FARMING segmentNote revenues,12 the– majority of which are eliminated in consolidation, were down slightly from $3.3 million in the quarter ended September 30, 2002 as compared with $3.5 million in the same quarter of 2001. While total production volumes were relatively equal across the corresponding quarters, yields were down significantly from the third quarter of 2001 to the third quarter of 2002. This was a consequence of poor market conditions and crop quality associated with grape production in Hermosillo and tomato production in Todo Santos and Obregon in 2002. These poor yields translated directly through to the higher 2002 operating loss in this segment of the business, as the Farming segment operating loss in the third quarter of 2001 was $1.8 million as compared with a loss of $3.0 million in the same quarter of 2002. Commitments

~~Revenues~~ As of June 30, 2003, the ~~DISTRIBUTION~~Company ~~segment~~has ~~declined~~agreements bywhereby ~~$23.0 million~~it toindemnifies its ~~$16.1 million~~officers and directors for certain events or occurrences while the ~~quarter~~officer or ~~ended~~director ~~September 30,~~is ~~2002~~serving ~~from~~at ~~$39.1 million~~the Company’s request in ~~the~~such ~~same~~capacity. The term of ~~quarter~~the indemnification period shall continue until and terminate upon the latter of: ~~2002.~~(a) ~~This~~10 ~~decline~~years ~~was~~after ~~entirely~~the ~~attributable~~date tothat the ~~divestiture~~officer ofor ~~Interfruver~~director dehas ~~Mexico,~~ceased ~~S.A.~~to serve dethe ~~C.V.~~Company inas ~~November 2001,~~an ~~which~~officer ~~accounted~~or ~~for~~director; ~~$24.8 million~~or of(b) ~~sales~~one inyear after the final, ~~third~~nonappealable ~~quarter~~termination of ~~2001~~any legal proceeding. ~~(Interfruver~~The ~~still~~maximum ~~serves~~potential asamount of future payments the Company's ~~distributor~~could ofbe ~~fresh~~required ~~produce~~to ~~harvested~~make byunder ~~ABSA,~~these indemnification ~~but~~agreements ~~sales~~cannot tobe ~~Interfruver~~reasonably ~~are~~measured ~~now~~and estimated and accordingly, the Company has no liabilities recorded for these agreements as of June 30, 2003.

15Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

as revenues from unaffiliated customers of the Farming segment). Revenues of the U.S. distribution companies decreased by $1.4 million, or 27%, for the quarter ended September 30, 2002 as compared with the same quarter of 2001 due to a 46% decline in production volumes. Partially offsetting the impact of this decline in volumes on gross margin was 36% higher average selling prices due to a better product mix. (Vine Sweet mini peppers, which sell at significantly higher prices with higher margins represented a much higher percentage of revenues in the third quarter of 2002 than the same quarter in 2001.) Revenues of Premier Fruits & Vegetables, BBL Inc. in Canada increased by $3.2 million, or 35%. Gross profit of the Distribution Segment decreased by $1.8 million in the third quarter of 2002 as compared with the third quarter of 2001 due to (i) the impact of the divestiture of Interfruver (gross profit in the third quarter of 2001 was $1.5 million); (ii) a decrease of $0.7 million in the gross profit generated by the U.S. distribution companies; and (iii) offset in part by a $0.4 million increase in the gross profit of Premier Fruits & Vegetables, BBL Inc. in Canada. Selling and administrative expenses of the Distribution segment decreased by $2.3 million for the quarter ended September 30, 2002 as compared with the same quarter in 2001. The decrease was a result of (i) the divestiture of Interfruver and (ii) a $0.8 million reduction in expenses, mainly related to salaries. The combination of these factors contributed to a $0.8 million decrease in the operating loss of the Distribution segment for the quarter ended September 30, 2002 as compared with the same quarter of 2001 ($1.1 million operating loss in the third quarter of 2001 as compared with a $0.3 million operating loss in the third quarter of 2002). Company

~~Amortization of~~Bionova ~~goodwill~~Holding Corporation, ~~patents~~a ~~and~~Delaware ~~trademarks~~corporation (together with its subsidiaries, ~~which~~unless ~~are~~the context ~~expensed~~requires inotherwise, ~~each~~“Bionova ofHolding” or the ~~segments~~“Company”), ~~declined~~was ~~from~~formed ~~$0.7 million~~ in January ~~the~~1996, ~~third~~and ~~quarter~~acts ofas ~~2001~~a toholding $0company for (i) Agrobionova, S.1A. inde C.V., a corporation organized under the ~~third~~laws ~~quarter~~ of ~~2002~~the ~~($0.3 million~~United Mexican States, of which the ~~2001~~Company ~~expense~~owns ~~and~~98.6% ~~all~~(“ABSA”), (ii) International ofProduce ~~the~~Holding ~~2002~~Company, ~~expense~~a ~~are~~Delaware ~~reflected~~corporation, inof which the Company ~~results~~owns of100% ~~discontinued~~(“IPHC”), ~~operations~~(iii). ~~This~~DNA ~~decline~~Plant ~~was~~Technology ~~due~~Corporation, toa Delaware corporation, of which the ~~significant~~Company ~~impairment~~owns ~~charges recorded~~100% in(“DNAP”), ~~the~~and ~~fourth~~(iv) ~~quarter~~VPP ofCorporation, a ~~2001~~Delaware corporation, of which ~~reduced~~ the Company's ~~goodwill~~owns to100% ~~zero~~(“VPP”). Approximately ~~and~~79% of the ~~value~~outstanding common stock of ~~its~~the ~~patents~~Company ~~and~~is ~~trademarks~~indirectly toowned ~~$3.0 million~~by ~~at December 31~~Savia, ~~2001~~S.A. de C.V.

~~Corporate~~The Company historically ~~administrative~~classified ~~expenses~~its ~~declined~~business ~~from~~into ~~$1.6 million~~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 ~~third~~United ~~quarter~~States, and Canada; and Research and Development, consisting of ~~2001~~business tounits $0focused on the development of fruits and vegetables and intellectual properties associated with these development efforts.7 ~~million~~ On inJune 30, 2002 the ~~same~~operations ~~period~~of the Research and Development segment were shut down and the remaining assets as of ~~2002.~~January ~~This~~1, ~~decline~~2003, ~~was~~which ~~attributable~~consisted solely toof patents and trademarks with a valuation of $1.2 million, were merged ~~reduction~~into inthe ~~legal~~activity of the holding company which is continuing to try to license and ~~other~~sell ~~administrative~~these ~~expenses.~~assets as opportunities become available.

~~Interest expense~~Results ~~increased from $1.4 million in the third quarter~~ of ~~2001 to $2.3 million in the third quarter of 2002.~~ Operations

~~The loss~~Three ~~from~~Months ~~the~~Ended ~~discontinued~~June ~~operations~~30, of2003 ~~the~~Compared ~~research and development segment declined from $1.9 million in the third quarter of 2001~~ to ~~$1.2 million in~~ the ~~third~~Three Months ~~quarter~~Ended ~~of 2002. This reduction was the result of the shut down of the Company's research and development operations in~~ June ~~2002~~ ~~and a reduction in amortization expense associated with goodwill and patents and trademarks. While the shut down of operations eliminated most of the costs in this business segment~~30, ~~the Company recognized certain costs in the third quarter of~~ 2002 ~~carrying over from the shut down and to license and sell some of its technology patents.~~

~~The~~Consolidated total ~~share~~revenues ofdeclined ~~the~~to ~~loss~~$28.3 inmillion ~~subsidiaries~~for ~~allocable~~the toquarter ~~minority~~ended ~~interests~~June ~~was~~30, ~~almost~~2003 ~~zero~~from $43.8 million in the ~~third~~same quarter of 2002, asconsolidated ~~compared~~gross ~~with~~profit ~~$0.5 million~~(sales less incost ~~the~~of ~~same~~sales) ~~quarter~~increased ofto ~~2001~~$3.3 ~~These allocations~~million offor the ~~share~~quarter ofended ~~profits~~June ~~and~~30, 2003 ~~losses~~from ~~were~~$0.8 ~~consistent~~million ~~with~~in the ~~minority~~same ~~positions~~quarter ~~held~~of ~~across~~2002, and the Company’s consolidated operating ~~subsidiaries~~loss ofdeclined ~~the~~to ~~Company~~$0.1 ~~and~~million ~~reflect~~for the ~~impact~~quarter ofended ~~the divestiture of~~June ~~Interfruver~~30, on2003 ~~minority~~from ~~interest~~$4.7 ~~income~~million in the ~~third~~same quarter of ~~2001~~2002.

1612

~~Nine~~FARMING ~~Months~~segment ~~Ended~~revenues, the ~~September 30~~majority of which are eliminated in consolidation, declined from $16.1 million in the second quarter of 2002 ~~Compared~~to $2.4 million in the second quarter of 2003. The lower sales volumes were largely a consequence of the Company’s decision to forego tomato production in Todos Santos in the ~~Nine~~second ~~Months~~quarter ~~Ended~~of ~~September 30~~2003 due to limited cash resources and the relatively low margins typically available during this season of the year. Despite the lower volumes, ~~2001~~ the operating loss of the Farming segment declined from $2.0 million in the second quarter of 2002 to $0.5 million in the second quarter of 2003, which was attributable to the very poor grape harvest experienced in the second quarter of 2002 caused by poor weather conditions and significantly lower than average prices.

~~Consolidated~~DISTRIBUTION ~~total~~ segment revenues declined tofrom $~~106~~37.0 1 million ~~for~~in the ~~nine~~second ~~month~~quarter ~~period~~of ~~ended September 30,~~ 2002 ~~from~~to $~~168~~30.6 1 million ~~for~~in the same quarter of 2003. ~~nine~~This ~~month~~decline ~~period~~was consistent with the curtailed production of ~~2001~~the Farming segment, ~~consolidated~~and ~~gross~~U.S. ~~profit (~~sales ~~less~~were ~~cost~~further ofimpacted ~~sales)~~by ~~declined~~a toreduction ~~$5.8 million~~in ~~for~~supply of third party grape growers in the ~~nine~~second ~~month~~quarter ~~period~~of ~~ended~~2003. Distribution ~~September 30,~~segment ~~2002~~operating profit improved from a loss of $150.6 million in the ~~same~~second ~~nine~~quarter ~~month~~of ~~period~~2002 to a profit of ~~2001,~~$0.9 ~~and~~million in the second ~~Company's~~quarter ~~consolidated~~of ~~operating~~2003. This improvement ~~loss~~was ~~totaled~~driven by a $50.7 million ~~for~~increased in the ~~nine~~operating ~~month~~profit ~~period~~of Premier ~~ended~~Fruits ~~September 30~~and Vegetables BBL, ~~2002~~Inc., asthe ~~compared~~Company’s ~~with~~distributor ain ~~$1.7 million~~Montreal, ~~loss~~Quebec, and a significant reduction in ~~the~~selling ~~same~~and ~~nine~~administrative ~~month~~expenses ~~period~~that stems from an ongoing restructuring of ~~2001~~the U.S. distribution companies that began in the second half of 2002.

~~FARMING~~The ~~segment~~Company ~~revenues,~~closed ~~the~~down ~~majority~~its ofresearch ~~which~~and ~~are~~development ~~eliminated~~operations in ~~consolidation,~~June ~~decreased by $1.3 million to $46.3 million for the nine month period ended September 30,~~ 2002 ~~as compared with $47~~.~~6 million~~ Because ~~for the same nine month period~~ of ~~2001.~~this ~~Production~~shut ~~volumes~~down ~~increased by 3.8% from~~ the ~~nine month period ended September 30, 2001 to the same period in 2002, while the average selling prices for the~~ Company's ~~fresh~~had ~~produce declined by 6.3% between these corresponding nine month periods. The decline in selling prices more than~~no ~~offset~~revenues ~~the~~or ~~improvement~~expenses inassociated ~~production~~with ~~volumes~~this ~~which~~former ~~accounted~~business ~~for~~segment ~~a worsening of Farming gross profit (sales less cost of sales) from a loss of $0.8 million~~ in the ~~first~~second quarter ~~nine months~~ of ~~2001~~2003 toas ~~a loss~~compared ofwith $21.4 6 million ~~in the same period~~ of ~~2002.~~revenues ~~Selling~~ and ~~administrative~~an ~~expenses~~operating profit of ~~the Farming segment for the first nine months of 2002 declined by 10.7%, or~~ $0.~~3 million,~~2 ~~as compared with the first nine months of 2001. The consequence of these combined factors caused the Farming operating loss to increase by 38% from $4.1~~ million ~~for~~in the ~~first~~second ~~nine~~quarter ~~months~~ of ~~2001 to $5.6 million for the same period of~~ 2002.

~~Revenues~~Corporate administrative ofexpenses ~~the DISTRIBUTION segment~~ declined byfrom $710.~~3 million~~5 ~~to $94.9~~ million for the nine month period ended September 30, 2002 from $166.2 million for the same nine month period of 2001. This decline was entirely attributable to the divestiture of Interfruver de Mexico, S.A. de C.V. in ~~November 2001, which accounted for $71.2 million of sales for~~ the ~~nine~~second ~~month~~quarter ~~period ended September 30, 2001. (Interfruver still serves as the Company's distributor~~ of fresh produce harvested by ABSA, but sales to Interfruver are now recorded as revenues from unaffiliated customers of the Farming segment). Revenues of the U.S. distribution companies decreased by $6.1 million, or 10%, for the nine month period ended September 30, 2002 ~~as compared with the same nine month period of 2001, and this decrease was due largely~~ to ~~lower prices. Revenues of Premier Fruits & Vegetables, BBL Inc. in Canada increased by~~ $6.0 ~~million, or 18~~.2~~%. Gross~~ ~~profit relating to the Distribution Segment decreased by $7.5~~ million, orin ~~47.7% for~~ the ~~nine~~second ~~month~~quarter ~~period ended September 30, 2002 as compared with the same nine month period~~ of ~~2001 due to (i), the impact of the divestiture of Interfruver (gross profit for the nine months of 2001 was $5~~2003.6 ~~million);~~ Interest ~~(ii) a~~expense ~~decrease~~decreased offrom $2.~~9 million~~4 ~~in the gross profit generated by the U.S. distribution companies; and (iii) offset in part by a $1.0~~ million ~~increase~~ in the ~~gross~~second ~~profit~~quarter of ~~Premier Fruits & Vegetables, BBL Inc. in Canada. Selling and~~ ~~administrative expenses relating to the Distribution segment decreased by $4.4 million for the nine month period ended September 30,~~ 2002 ~~as compared with the same nine month period of 2001. The decrease was a result of (i) the divestiture of Interfruver and (ii) a reduction of $0.5 million in expenses, mainly related~~ to ~~salaries. The combination of these factors contributed to a~~ $2.9 3 million ~~decrease~~ in the ~~operating~~second ~~profit~~quarter of ~~the~~2003 ~~Distribution~~while ~~segment~~interest income increased from $40.~~4 million~~3 ~~for the first nine months of 2002 as compared with $1.5~~ million ~~for~~to ~~the same period of 2001. The divestiture of Interfruver accounted for the majority of this decline, as Interfruver generated an operating profit of~~ $10.~~9 million during the first nine months of 2001. As a percentage of sales, operating profit decreased to 1.6% for the first nine months of 2002 as compared with 2.~~7% ~~for~~million ~~the~~between ~~first~~these ~~nine~~two ~~months of 2001~~periods.

~~Amortization of~~The ~~goodwill,~~increase ~~patents~~in other non-operating income and ~~trademarks,~~expense ~~which~~from ~~are~~a ~~expensed~~negative $0.4 million in ~~each~~the second quarter of ~~the~~2002 ~~segments,~~to ~~declined~~a ~~from~~positive $25.3 8 million in the ~~first~~second ~~nine~~quarter ~~months~~of 2003 was driven primarily by a transaction completed at the end of ~~2001~~the tosecond quarter in which the Company sold a Mexican subsidiary and received $05.42 million in ~~the~~net proceeds. This ~~first~~transaction ~~nine~~is described ~~months~~in ofgreater ~~2002~~detail in the Liquidity and Capital Resources section below.

17Tax expense increased from $0.5 million in the second quarter of 2002 to $1.2 million in the second quarter of 2003. This increase was an outgrowth of the taxes due in Mexico and the United States from the sale of the Mexican subsidiary at the end of the second quarter.

($1.4 million of the 2001 expense and all of the 2002 expense are reflected in the results of discontinued operations). This decline was due to the significant impairment charges recorded in the fourth quarter of 2001, which reduced the Company's goodwill to zero and the value of its patents and trademarks to $3.0 million at December 31, 2001. 13

~~Corporate administrative~~Six ~~expenses~~Months ~~declined~~Ended ~~from~~June ~~$2.8 million~~30, in2003 ~~the~~Compared ~~first nine months of 2001~~ to ~~$1.6 million in~~ the ~~same~~Six ~~period of 2002. This decline was attributable to a~~Months ~~reduction~~Ended inJune ~~legal~~30, ~~and other administrative expenses.~~ 2002

~~Interest~~Consolidated total ~~expense~~revenues ~~increased~~declined ~~from~~to $256.8 4 million for the six months ended June 30, 2003 from $90.3 million in the ~~first~~same ~~nine~~period ~~months~~of 2002, consolidated gross profit (sales less cost of ~~2001~~sales) declined to $5.1 million for the six months ended June 30, 2003 from $78.0 2 million in the ~~first~~same ~~nine~~period of 2002, and the Company’s consolidated operating loss declined to $1.4 million for the six months ofended ~~2002~~June 30, 2003 from $2.2 million in the same period of 2002.

AFARMING segment revenues, the majority of which are eliminated in consolidation, declined from $643.4 0 million ~~charge~~in the first six months of 2002 to $14.1 million in the same period of 2003. This reduction was ~~recorded~~driven largely by the cash strains the Company faced in the ~~second~~fourth quarter of ~~2001~~2002 ~~for~~because ~~shareholder~~of a ~~litigation~~reduction ~~expense~~in ~~due~~bank financing during the months of October and November. Due to the lack of cash, the farming segment concentrated a ~~court~~very ~~ruling~~significant ~~issued~~proportion byof its available resources on the production ~~California~~of ~~Superior~~the ~~Court~~Company’s patented vine sweet mini pepper and significantly curtailed production of tomatoes, peppers, and other commodity vegetables in Culiacan ~~favor~~and Todos Santos during the first half of 2003. The operating loss in the Farming segment ~~Grace~~increased ~~Brothers~~from ~~against~~$0.3 ~~DNAP~~million in the first six months of 2002 to $1.3 ~~DNAP~~million ~~settled~~in the ~~this~~same ~~dispute~~period ~~with~~of 2003. The increase in the ~~Grace~~operating ~~Brothers~~loss ~~during~~of the ~~fourth~~Farming segment stemmed largely from the first quarter results, which was driven by the much lower production volumes and very low grape tomato prices, which further impacted ABSA’s revenues and margins in the first quarter of ~~2001~~2003. Administrative expenses in the farming segment were reduced by $0.1 million from the first six months of 2002 to the same period of 2003.

~~The loss~~DISTRIBUTION ~~from the discontinued operations of the research and development~~ segment revenues declined from $778.4 8 million in the first ~~nine~~six months of ~~2001~~2002 to $253.~~1 million~~9 million in the same period of ~~2002~~2003. This decline ~~reduction~~ was consistent with the curtailed production of the Farming segment, ~~result~~and U.S. sales were further impacted by a reduction in supply of ~~staffing~~third ~~reductions~~party grape ~~undertaken~~growers ~~during~~in the second quarter of ~~2001~~2003. Premier inFruits an& ~~effort~~Vegetables, toBBL ~~conserve cash~~Inc., ~~resources~~the Company’s Canadian distribution subsidiary, continued to show strong sales gains with an 18.2% increase for the ~~subsequent~~first ~~shut~~six ~~down~~months of 2003 as compared with the ~~Company's~~same ~~research~~period ~~and~~of 2002. Operating ~~development~~profit ~~operations~~of inthe ~~June~~ Distribution segment for the first six months of 2003 declined by $0.1 million as compared with the same period of 2002,. The ~~and~~decline in gross margins of the U.S. distribution companies of $1.8 million was almost entirely offset by a ~~reduction~~$0.5 million improvement in ~~amortization~~the ~~expense~~gross margin ~~associated~~of Canada along with ~~goodwill~~a $1.2 million reduction in selling and administrative ~~patents~~expenses. This reduction in selling and ~~trademarks~~administrative expenses stems from an ongoing restructuring of the U.S. distribution companies that began in the second half of 2002.

The ~~decline~~Company inclosed ~~income~~down ~~tax~~its ~~expense~~research ~~from~~and ~~$1.1 million~~development operations in June 2002. Because of this shut down the ~~first~~Company ~~nine~~had ~~months~~no revenues ofor ~~2001~~expenses toassociated ~~$0.6 million~~with this former business segment in the ~~same~~first six ~~nine~~ months of ~~2002~~2003 ~~was~~as acompared ~~consequence~~with of$1.9 ~~the~~million ~~divestiture~~ of ~~Interfruver,~~ ~~which~~revenues ~~recorded~~and ~~income~~an ~~tax~~operating loss of $0.7 3 million in the ~~first~~same ~~nine~~period ~~months~~ of ~~2001~~2002.

~~The~~Corporate administrative ~~share~~expenses ofdeclined ~~income~~from in$1.1 ~~subsidiaries~~million ~~allocable~~in tothe ~~minority~~first ~~interests~~six ~~was~~months aof ~~loss~~2002 ofto $0.3 9 million in the ~~first~~same ~~nine~~period ~~months~~ of ~~2001~~2003. Interest asexpense ~~compared~~was ~~with~~unchanged ~~income~~at of $04.~~1million~~7 inmillion from the ~~same nine~~first ~~months~~six months of 2002. ~~These~~to ~~allocations~~the offirst ~~the~~six ~~share~~months of ~~profits~~2003 ~~were~~while ~~consistent~~interest ~~with~~income ~~the~~increased ~~minority~~from $0.6 ~~positions~~million ~~held~~to ~~across~~$1.0 ~~the~~million ~~operating~~between ~~subsidiaries~~these oftwo ~~the Company~~periods.

The increase in other non-operating income and expense from a negative $0.1 million in the first six months of 2002 to a positive $5.1 million in the first six months of 2003 was driven primarily by a transaction completed at the end of the second quarter in which the Company sold a Mexican subsidiary and received $5.2 million in net proceeds. This transaction is described in greater detail in the Liquidity and Capital ~~Expenditures~~ Resources section below.

~~During~~Tax expense increased from $0.7 million in the first ~~nine~~six months of 2002 ~~the~~to ~~Company~~$1.3 ~~made~~million ~~capital~~in ~~investments~~the first six months of $12003.~~6 million.~~ This ~~The~~increase ~~majority~~was an outgrowth of the ~~funds~~taxes ~~was~~due ~~spent~~in toMexico ~~purchase~~and ~~stakes~~the ~~used~~United ~~to grow~~States ~~ABSA's~~from ~~tomato~~the ~~and~~sale ~~pepper~~of the ~~products~~Mexican ~~and~~subsidiary ~~construct~~at ~~growing~~the ~~facilities~~end inof ~~Todo~~the ~~Santos.~~second quarter.

~~Liquidity and Capital Resources~~ 14

~~Statement~~Capital of Cash Flows. For the nine months ended September 30, 2002, the Company generated $2.4 million of cash from operating activities. Net income, minority interests share of profit, the addback of depreciation and other non-cash items accounted for the use of $13.1 million. Accounts receivable and advances to growers were reduced by $13.6 million, and inventories were reduced by $2.9 million, as the Company collected cash on the carryover of the Todo Santos harvest from year-end 2001 and had a very low level of grower receivables and inventories at the end of the third quarter of 2002 as compared with December 31, 2001. Accounts payable declined by $2.4 million. This pattern of decreases in receivables, inventories, and payables is consistent with the typical growing and harvesting periods within the year. Expenditures

18During the first six months of 2003 the Company made capital investments of $0.9 million. The great majority of the funds were spent by Premier Fruits & Vegetables, BBL Inc. in Montreal, Quebec to construct additional warehousing facilities and cold rooms to support its projected growth requirements over the next three to five years.

~~For the~~Liquidity ~~nine months ended September 30, 2002, the Company used $1.2 million in investing activities. Almost all of the cash used to purchase property, plant~~ and ~~equipment was~~Capital ~~spent on the fresh produce business. DNAP received net proceeds (after commission) of $0.4 million on the sale of its Brentwood land.~~ Resources

~~Net cash~~For ~~used~~the insix ~~financing~~months ~~activities~~ended June ~~during~~30, 2003, the ~~first~~Company ~~nine~~generated ~~months~~$0.7 million of ~~2002~~cash ~~totaled~~from operating activities (which includes the $25.0 2 million. Again ~~pay~~on ~~down~~the sale of ~~the~~a ~~preseason~~Mexican subsidiary). The ~~credit~~most ~~facility~~significant ~~from~~items contributing ~~U.S.~~to ~~banks~~this cash generation were the net loss of $31.2 1 million, which was offset by depreciation and aamortization ~~reduction~~that totaled $1.5 million during the six months, and the changes in the ~~Company's~~working ~~use~~capital ofaccount ~~its~~items. Accounts ~~revolving~~receivable ~~line~~and ofadvances ~~credit~~to ~~accounted~~growers increased ~~for~~by $7.2 million due to the ~~reduction~~lateness of this ~~cash~~year’s ~~usage,~~grape asharvest and the ~~fresh~~growth ~~produce~~in the Canadian business, inventories were reduced ~~its~~by ~~line~~$1.6 ofmillion which ~~credit~~was consistent with ~~its working~~the ~~capital~~winding ~~requirements.~~down ~~Accounts~~of ~~due~~the tospring ~~related~~growing ~~parties~~season, ~~increase~~and accounts payable increased by $64.0 million due again to ~~interest~~the ~~being~~lateness ~~charged~~of onthe grape harvest and payables due to growers, a higher level of payables in Canada associated with the ~~related~~warehouse ~~party~~construction in progress, and the payables. resulting from the expenses and taxes associated with the sale of the Mexican subsidiary in June.

~~Bank~~For ~~Debt. All of~~ the ~~Company's~~six ~~$2.1 million~~months ofended June ~~bank debt at September~~ 30, ~~2002 ($1.6 million of which was short-term) was associated with Bionova Produce~~2003, ~~Inc.,~~ the Company's ~~distribution~~used ~~subsidiary in Nogales, Arizona~~$0.9 There are two components to this debt, both of which are guaranteed by Savia. The first component of the debt is a five-year loan secured by real property and is due August 30, 2006. The second component of the bank debt is a $6 million ~~revolving~~in ~~line~~investing ~~of credit~~activities, ~~the~~all ~~principal~~ of which ~~originally~~ was ~~due~~spent ~~in full~~ on ~~September 30~~property, ~~2002~~plant, ~~but~~and ~~was extended to November 14, 2002, to permit Bionova Produce to complete a new set of financing facilities with its bank~~equipment. ~~While Bionova Produce is working with the bank on a further extension, since November 14th has now passed, this facility is past due, though the bank has not yet declared an event of default.~~

~~Bionova Produce~~Net ~~has~~cash ~~been~~provided inby financing ~~negotiations~~activities ~~with~~during the ~~bank~~first tosix ~~secure~~months ~~three~~of ~~new~~2003 ~~credit~~totaled ~~facilities with an aggregate limit of~~ $103.5 6 million. Accounts ~~These~~due ~~facilities~~to ~~consist of (i) a~~related ~~revolving~~parties ~~line~~increased ofby ~~credit in an amount up to~~ $75.0 4 million ~~secured~~as byinterest ~~accounts~~continued ~~receivable~~to ~~and~~accrue ~~inventories~~on ~~of Bionova Produce, (ii) a seasonal pre-harvest credit facility in an amount up to~~the ~~$1.75 million~~Company’s ~~secured~~debt ~~by certain physical assets, and (iii) a term credit facility secured by certain physical assets of Bionova Produce in an amount up~~ to $1Savia.~~75 million.~~ The ~~These~~Company ~~three~~reduced ~~facilities~~its ~~would~~seasonal ~~also~~term beloan ~~guaranteed~~ by ~~Savia in an amount up to~~ $~~10.~~0 ~~million~~.3 ~~Though~~million ~~the~~and ~~bank~~reduced ~~has~~its ~~approved~~revolving ~~the loan facilities on a preliminary basis, certain terms are still being~~line ~~negotiated,~~of ~~and~~credit ~~the~~by ~~facilities have not yet been secured~~$0.9 million.

~~Bionova Produce~~At ~~already~~June ~~has scaled back its plan to fund certain third party growers because of delays in completing these negotiations and receiving the funds on which it had been relying. As a result of these cutbacks~~30, ~~ABSA and Bionova Produce expect their revenues for the fourth quarter of 2002 and the first quarter of~~ 2003 toall ~~be lower than comparable periods in prior years.~~of ~~Furthermore, if Bionova Produce experiences any significant delay in securing its new bank facilities, its operations will be adversely affected and Bionova Produce may not have~~ the ~~funds~~Company’s ~~to advance to ABSA and the third party growers to which it and ABSA have already committed to harvest crops in December~~$6.4 Ifmillion ~~ABSA is not able to harvest the crops and Bionova Produce does not receive the produce it had planned to sell over the winter harvest season, the Company will be not generate all~~ of ~~the~~bank ~~cash~~debt itwas ~~had~~associated ~~forecast~~with ~~and in all likelihood, may not be able to meet all of~~ its ~~financial~~fresh ~~obligations~~produce business.

~~Debt~~In toDecember ~~Savia. At~~2002, ~~September 30~~Bionova Produce, ~~2002~~Inc., Bionova ~~Holding~~Produce of Texas, Inc. and ~~its~~R.B. ~~subsidiaries~~Packing ~~were~~of ~~indebted~~California, Inc., tothe ~~Savia~~Company’s ~~and~~major ~~its~~distributors ~~subsidiaries~~of fresh produce in the United States, signed agreements for a new set of credit facilities with Wells Fargo Business Credit, Inc. (~~other~~“WFBC”) ~~than~~which run through April 2006. There are three separate, but related loan components associated with these credit facilities. First, Bionova ~~Holding)~~Produce, inInc. was extended a ~~total~~“permanent ~~amount~~term loan” of $951.2 75 million, which will be amortized over 10 years. Interest Ofis charged ~~this~~at ~~total~~the ~~$20~~Wells Fargo prime rate of interest plus 1.~~7 million~~5% ~~was~~(5.5% ~~owed~~at byJune ~~ABSA~~30, 2003), and interest and principal amortization payments are made on a monthly basis. The second component is ~~accruing~~a “seasonal ~~interest~~term loan” of $1.75 million, although only $1.25 million will be extended at athis time. Interest is charged at the Wells Fargo prime rate of ~~approximately~~interest 9plus 1.5% ~~per~~(5.5% ~~annum~~at June 30, 2003), and interest payments are made on a monthly basis. The ~~Bionova~~outstanding principal balance on the seasonal term loan is amortized ~~Holding~~each ~~had~~year ~~debt~~during the months of January through April, and may then be borrowed again in full on May 1. The third component is a $697 million revolving line of credit to support working capital requirements of the fresh produce business.0 ~~million~~ The revolving line of credit must be paid down to ~~Savia~~a maximum of $1.5 ~~The~~million for ~~Bionova~~a ~~Holding~~30 ~~debt~~day ~~currently~~period isbetween ~~accruing~~July ~~interest~~1 and September 30 each year. Interest on this revolving line of credit is charged at athe Wells Fargo prime rate of ~~approximately~~interest 12plus 1.0% (5.0% ~~per~~at ~~annum~~June 30, 2003). All ~~Other~~three ~~subsidiaries~~components of ~~Bionova~~the credit ~~Holding~~facilities ~~had~~are ~~related~~collateralized by all of the real and intangible assets ~~party~~of ~~accounts~~the ~~due~~three toU.S. ~~Savia~~distributing companies and are guaranteed by both Bionova Holding and its ~~subsidiaries~~parent ~~that~~company, ~~accounted~~Savia. The ~~for~~key covenants associated with these credit facilities are that the three ~~balance~~distributing companies as a group must maintain a minimum net worth of $8.75 million, a debt service coverage ratio of at least 1.25 to 1, achieve minimum levels of quarterly earnings before taxes to be agreed between the Company and WFBC annually, and the distributing group may not experience a net loss during any month that exceeds $50.5 million or a net loss for a two month period that exceeds $0.3 ~~All~~million. Also, there are provisions in the credit agreement that permits WFBC to declare an event of default if Savia fails to complete the ~~Bionova~~restructuring ~~Holding~~of its debt facilities ~~originally~~with its banks. An event of default was ~~due~~declared in the second quarter of 2003 because Savia had failed to complete beits ~~paid~~restructuring by March 23 31, ~~2002~~2003, ~~but was~~ which

1915

~~extended~~was bythe date originally established in the credit agreement. On ~~between~~June 30, 2003 the U.S distributing companies, Bionova Holding, Savia, and ~~Savia~~WFBC ~~until~~signed ~~December 31,~~the ~~2002.~~“First Amendment ~~The~~to ~~other~~Credit ~~related~~and ~~party~~Security ~~accounts~~Agreement ~~due~~and toWaiver of Defaults” which extended the date for Savia ~~and~~to complete its ~~subsidiaries~~restructuring ~~have~~to ~~varying~~September ~~maturities~~30, 2003. WFBC and ~~all~~Bionova ~~are~~Holding ~~due~~also atagreed to ~~various~~renegotiate ~~times~~in good faith certain financial covenants relating to operating performance in ~~2002~~the third and fourth quarters of 2003. As of the date of these financial statements, the Company now is in compliance with all of the covenants of the credit facilities. At ~~this~~June ~~time~~30, ~~Bionova~~2003 ~~Holding~~the ~~does~~principal outstanding ~~not~~in ~~know~~connection ~~how~~with ~~this~~the ~~indebtedness~~permanent ~~will~~term beloan, ~~handled~~the seasonal term loan, and the revolving line of credit was $1.7 million, $1.0 million, and $3.2 million, respectively.

~~Going~~In ~~Concern~~addition ~~Issues. As~~to athese ~~result~~credit offacilities ~~the Company's operating losses during the past five years and its current financial~~Bionova ~~structure~~Produce, ~~there~~Inc. ~~continues~~has ~~to be substantial doubt about the Company's ability to continue as~~ a ~~going~~five-year ~~concern.~~loan ~~Management~~secured ~~has~~by ~~been~~an airplane and is ~~continuing~~guaranteed ~~to address the Company's financial condition~~ by ~~shutting~~Savia. The ~~down~~loan ~~the~~is ~~operations~~for of$0.7 ~~its~~million ~~research~~ and is ~~development~~due ~~business,~~August ~~selling non-core assets of the fresh produce business~~30, ~~and~~2006. Principal ~~selling~~ and interest ~~licensing~~payments ~~its intellectual property. (Since the end~~ of ~~the third~~approximately ~~quarter~~$15,000 ~~ABSA~~are ~~sold~~due ~~some land in Culiacan for $2~~monthly.~~5 million~~ The ~~and~~interest ~~several~~rate ~~licenses have been granted~~ on ~~patents~~this ~~held~~debt byis ~~DNAP~~8.)25% ~~The Company still must find a solution to the~~per ~~$95~~annum.~~2 million~~ At ofJune ~~debt plus additional interest accruing from September~~ 30, ~~2002~~2003 that is due to Savia and its subsidiaries during 2002 as well as securing new credit facilities with its bank. There can be no assurance that these actions will result in sufficient working capital to significantly improve the ~~Company's current financial position or its results of operations nor can~~ ~~there~~principal beoutstanding ~~any~~under ~~assurance~~this ~~the~~five ~~Company~~year ~~will~~loan beagreement ~~able~~was ~~to meet its obligations in 2002 or beyond~~$0.5 ~~This raises substantial doubt about the Company's ability to continue as a going concern~~million.

~~The~~On October 3, 2001 ABSA ~~unaudited~~(as ~~consolidated~~the Mexican designee of Bionova Produce, Inc.) entered into an agreement with Libra Exportaciones, S.A. de C.V. (“Libra”) whereby ABSA assumed a $2.3 million mortgage obligation to a Mexican financial ~~statements~~institution doin ~~not~~conjunction with ~~include~~certain ~~any~~pieces ~~adjustments~~of ~~that~~land ~~might~~being ~~result~~transferred to ABSA. On March 7, 2003, a new agreement was signed by Libra, the Alvarez family (the former owners of Libra), and ABSA whereby ABSA would transfer certain pieces of land it received from Libra stemming from the ~~outcome~~October 3, 2001 agreement to the Mexican financial institution in exchange for a release from the $2.3 million mortgage obligation. The transfer of ~~this~~the ~~uncertainty~~land and the release of the mortgage obligation were completed on May 13, 2003. In the financial statements for the year ended December 31, 2002 the total debt obligation of $2.3 million was classified as a component of short-term bank loans.

~~Disclosure~~At ~~Regarding~~June ~~Forward-Looking~~30, ~~Statements~~ 2003 Bionova Holding and its subsidiaries were indebted to Savia and its subsidiaries (other than Bionova Holding) in a total amount of $102.2 million. Of this total $20.7 million was owed by ABSA and is accruing interest at a rate of approximately 9% per annum. Bionova Holding had debt of $75.5 million to Savia. The Bionova Holding debt currently is accruing interest at a rate of approximately 12.5% per annum. Other subsidiaries of Bionova Holding had related party accounts due to Savia and its subsidiaries that accounted for the balance of the $6.0 million. All of the Bionova Holding debt is due to be paid by December 31, 2003. The other related party accounts due to Savia and its subsidiaries have varying maturities, most of which are due at various times in 2003. In addition to ABSA’s significant debt to Savia, ABSA also had $8.7 million of payables outstanding to vendors at June 30, 2003, many of which are significantly past due. At this time, Bionova Holding does not know how this indebtedness will be handled.

~~This~~On ~~report~~June on13, ~~Form 10-Q~~2003 ~~includes~~Bionova Holding ~~"forward-looking"~~and ~~statements~~Agromod, ~~within~~S.A ~~the~~de ~~meaning~~C.V., ofa ~~Section 27A~~minority ofowner ~~the Securities Act~~ of ~~1933~~ABSA, ~~and Section 21E~~entered ofinto ~~the~~an agreement ~~Securities~~to ~~Exchange~~sell ~~Act~~all of ~~1934.~~the ~~All~~shares ~~statements,~~of ~~including~~Technologia ~~without~~Aplicada ~~limitation~~en ~~statements~~Procesos, ~~contained~~S. inde R.L. ~~this~~de ~~"Management's~~C.V. ~~Discussion and Analysis of Financial Condition and~~(“TAP”), ~~Results~~a ofMexican ~~Operations"~~subsidiary ~~other than statements~~ of ~~historical~~Bionova ~~facts~~Holding ~~included~~to ~~in this Form 10~~Promo-QTow, ~~including~~S. ~~statements~~de ~~regarding~~R.L. ~~our~~de ~~financial~~C.V. ~~position~~(“PROMOTOW”), ~~business~~a ~~strategy, prospects, plans and~~Mexican ~~objectives~~company. The shares of ~~our~~this ~~management~~new ~~for~~company had ~~future~~value ~~operations,~~to ~~and~~PROMOTOW ~~industry~~because ~~conditions,~~of ~~are~~certain ~~forward-looking~~financial ~~statements.~~benefits ~~Although~~PROMOTOW felt weit ~~believe~~could ~~that~~derive ~~the~~from ~~expectations~~ownership ~~reflected~~of ~~in these forward-looking statements are~~TAP. ~~reasonable,~~Bionova weHolding ~~can~~received ~~give~~$5.4 ~~you~~million noin ~~assurance~~cash ~~that~~on ~~these~~June ~~expectations~~13 ~~will~~and ~~prove~~could receive up to bean ~~correct~~additional $0.6 Inmillion, ~~addition~~which tocurrently ~~important~~is ~~factors~~being ~~described~~held ~~elsewhere~~ in ~~this report~~ escrow, during the ~~following~~third ~~"Risk~~quarter ~~Factors,"~~of ~~sometimes have~~2003 ~~affected,~~upon ~~and~~verification inby ~~the~~an ~~future~~independent auditor ~~could~~of ~~affect,~~the ~~our~~historical ~~actual~~financial ~~results~~statements ~~and~~of ~~could~~Bionova ~~cause~~Holding’s ~~these~~Mexican farming ~~results~~subsidiaries. The ~~during~~Company recorded ~~2002~~only ~~and~~the ~~beyond,~~$5.5 tomillion ~~differ~~as ~~materially~~Other ~~from~~Income ~~those expressed~~ in ~~any~~the ~~forward-looking~~second ~~statements~~quarter ~~made~~of 2003 byalong uswith orestimated ontax ~~our~~expense ~~behalf.~~associated ~~When~~with wethis ~~use~~transaction ~~the~~of ~~terms~~$0.8 million ~~"Bionova," "we," "us,"~~ and ~~"our,"~~transaction ~~these~~fees ~~terms~~of ~~refer to the Company and its subsidiaries~~$0.3 million.

~~RISKS~~The ~~RELATING~~resulting TOcash ~~OUR~~from this ~~FINANCIAL~~transaction ~~CONDITION~~ has provided a temporary respite to permit the Company to pay down some of its long overdue payables and continue operations, albeit on a significantly reduced level as compared with past years. Management has recognized that it still does not have the cash reserves to enable it to take significant risk in the foreseeable future in its own agricultural activities or the funding of third party growers. Consequently, the Company’s Mexican subsidiary currently is in the process of seeking a partnership arrangement with a large Mexican grower to enable it to plant and harvest production during the Todos Santos growing season from August through November of 2003. At this time the Company does not plan to grow, nor fund any third party growers in Culican, which would typically harvest in late December 2003 through April 2004, other than its vine sweet mini-pepper product. The

~~We may continue to sustain losses and accumulate deficits in the future~~ 16

Weconsequence ~~have sustained losses in every year~~ of ~~our existence from 1996 through 2001. As of September 30, 2002 our accumulated deficit was $208.5 million.~~this ~~For~~reduced ~~the~~production ~~year~~will ~~ended~~be ~~December 31, 2001, we had~~ a ~~net~~lower ~~loss~~level of ~~$56.6 million.~~sales ~~The~~in ~~factors~~the ~~that~~United ~~caused~~States ~~these losses, including factors described~~ in ~~this section, may continue to limit our~~the ~~ability~~first toquarter ~~make~~of a2004 ~~profit~~as incompared ~~the~~with ~~future~~2003.

20As a result of the Company’s operating losses during the past six years and its current financial structure, there continues to be substantial doubt about the Company’s ability to continue as a going concern. Management has been and is continuing to address the Company’s financial condition by selling non-core assets of the fresh produce business, and by selling and licensing its intellectual property. R.B. Packing of California, Inc. currently has a contract pending to sell its real estate in California, Bionova Holding recently sold its TAP subsidiary in Mexico, and the Company completed a license of its Transwitch technology during the second quarter. The Company also must find a solution to the $101.5 million of debt plus the interest accruing in 2003 that is due to Savia and its subsidiaries during 2003. There can be no assurance that these actions will result in sufficient working capital to significantly improve the Company’s current financial position or its results of operations nor can there be any assurance the Company will be able to meet its obligations in 2003 nor secure funds to take it beyond the 2003 calendar year. This raises substantial doubt about the Company’s ability to continue as a going concern.

WeThe ~~will~~unaudited consolidated ~~need~~financial ~~additional~~statements ~~financing~~do tonot ~~achieve~~include ~~our~~any ~~growth~~adjustments ~~objectives,~~that ~~which~~might result ~~could~~from ~~hurt~~the ~~our~~outcome ~~financial~~of ~~condition~~ this uncertainty.

WeDisclosure ~~will~~Regarding ~~need~~Forward-Looking additional capital to meet our growth objectives and working capital requirements. Our projected cash flows from operations and existing capital resources, including our existing credit lines, may not be sufficient. Therefore, our ability to pursue these objectives 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 strategies. Statements

~~Our~~This ~~leveraged~~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, ~~could~~business ~~cause~~strategy, usprospects, 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 ~~unable~~addition to ~~meet~~important factors ~~our~~described ~~capital~~elsewhere ~~needs~~in this report, ~~which~~the following “Risk Factors,” sometimes have affected, and in the future could ~~hurt~~affect, our ~~financial~~actual ~~condition~~ results and could cause these results during 2003 and beyond, to differ materially from those expressed in any forward-looking statements made by us or on our behalf. When we use the terms “Bionova,” “we,” “us,” and “our,” these terms refer to the Company and its subsidiaries.

AtRISKS ~~September 30,~~RELATING ~~2002~~TO weOUR ~~had~~FINANCIAL a working capital deficit of $79.3 million and a stockholders deficit of $36.9 million. We had $2.1 million of debt with banks and $95.2 million of debt with Savia and Savia's subsidiaries. This level of indebtedness may pose substantial risks to our company and to our stockholders, 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. CONDITION

~~RISKS~~We ~~RELATING~~may not TOhave ~~OUR~~enough ~~FARMING~~cash ~~AND~~to ~~DISTRIBUTION~~maintain ~~BUSINESS~~ our operations during the upcoming months

~~Bad~~Our ~~weather~~fresh produce business requires cash to harvest crops that have been planted and ~~crop~~to ~~disease~~make advances ~~can~~to ~~affect~~growers for crops to be planted in the ~~amount~~next ofseason. Our produce webusiness ~~can~~does ~~grow~~not have cash reserves, ~~which~~so ~~can~~it ~~decrease~~depends ~~our~~on continued sales revenues and ~~profitability~~ bank borrowings to generate the required cash to support these needs. If sales revenues are below projected levels during the second half of 2003 (which might be caused by low production volumes, lower than forecast customer demand for the Company’s vine sweet mini pepper, or low commodity prices), or if the lender to the distribution companies does not continue to provide financing, the produce business will not have sufficient cash to maintain its operations. In that event, the produce business would be required to curtail or possibly even to suspend its operations and to make other expense reductions.

~~Weather~~We ~~conditions~~may ~~greatly~~continue ~~affect the amount of fresh produce we bring~~ to ~~market,~~sustain ~~and,~~losses ~~accordingly, the prices we receive for our produce. Storms, frosts, droughts,~~ and ~~particularly~~accumulate ~~floods,~~deficits 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. future

~~Labor~~We ~~shortages~~have ~~and~~sustained ~~union~~losses in ~~activity~~every ~~can~~year ~~affect~~of our ~~ability~~existence tofrom ~~hire~~1996 ~~workers~~through to2002. As ~~harvest~~of ~~and~~June ~~distribute~~30, 2003 our ~~crops~~accumulated deficit was $215.0 million. For the year ended December 31, ~~which~~2002 ~~can~~and ~~hurt~~the six months ended June 30, 2003, we had a net loss of $20.4 million and $1.1 million, respectively. The factors that caused these losses, including factors described in this section, may continue to limit our ~~financial~~ability ~~condition~~ to make a profit in the future.

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. 17

~~The Mexican~~We ~~farm~~will ~~work~~need ~~force~~additional ~~retained~~financing ~~by ABSA is unionized. If the union attempts~~ to ~~disrupt~~achieve ~~production~~our ~~and is successful on a large scale, labor costs will likely increase and work~~growth ~~stoppages may be encountered~~objectives, which ~~would~~could behurt ~~particularly damaging in~~ our ~~industry~~financial 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 condition

21We will need additional capital to meet our growth objectives and working capital requirements. Our projected cash flows from operations and existing capital resources, including our existing credit lines, may not be sufficient. Therefore, our ability to pursue these objectives 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 strategies.

~~trucking~~Our ~~industry~~leveraged orposition ~~any~~could ~~other~~cause ~~reason~~us ~~could~~to ~~limit~~be ~~our~~unable ~~ability~~ to ~~get~~meet our ~~fresh~~capital ~~produce~~needs, towhich ~~market~~could ~~before~~hurt itour ~~spoils.~~financial condition

~~ABSA's~~At ~~reliance~~June on30, ~~leases~~2003 we had a working capital deficit of $84.2 million and ~~production~~a ~~associations~~stockholders ~~could~~deficit ~~result~~of in$42.9 million. We ~~increased~~had ~~costs~~$6.4 million of debt with banks and $102.2 million of debt with Savia and Savia’s subsidiaries. This level of indebtedness may pose substantial risks to our company and to our stockholders, ~~which~~including ~~could~~the possibility that we may not generate sufficient cash flow to pay our outstanding debts. Our level of indebtedness may also adversely affect our ~~financial~~ability ~~results~~ to incur additional indebtedness and finance our future operations and capital needs, which may limit our ability to pursue other business opportunities.

~~ABSA~~If relies on agricultural land leased from others, production associations with other growers, and contract production with third party growers for a large part of its supply. The average term of the land leases is two years and we ~~expect~~do ~~to renew most of these land leases as they expire. If the other parties to these leases were to choose~~ not tomeet ~~renew~~our ~~their agreements~~debt ~~with ABSA~~covenants, ~~ABSA~~we 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. Production associations and contract production with third party growers are generally arranged three to six months prior to each growing season. The provisions of the contracts with these growers may ~~change~~not ~~from year to year, which can affect the amount of supply, the prices of the produce, and the cost~~have ~~and~~sufficient ~~profit~~funds ~~sharing arrangements among the parties. If these other growers choose not~~ to ~~renew~~continue ~~their contracts, ABSA would be required to locate alternate sources of supply, which may or may not be available.~~ operations

~~RISKS~~Our ~~RELATING~~U.S. TOdistributing companies ~~OUR~~hold ~~INTERNATIONAL~~bank ~~OPERATIONS~~ debt which require that they achieve certain levels of financial performance and that Savia complete the restructuring of its bank debt by September 30, 2003. Any failure to meet these covenants could result in an event of default and the calling in of these loan facilities. If such an event were to occur, it would significantly affect the current and future operations and financial performance of the Company and possibly even require that we shut down all operations.

~~Legal~~RISKS ~~limitations~~RELATING ~~could~~TO ~~affect~~OUR ~~our~~FARMING ~~ownership~~AND ofDISTRIBUTION ~~rural land in Mexico, which could decrease our supply of produce causing a decrease in our revenues and profitability~~ BUSINESS

~~ABSA~~Bad ~~owns~~weather aand ~~substantial~~crop ~~amount~~disease ofcan ~~rural~~affect ~~land in Mexico, which it uses to grow fresh fruits and vegetables. Historically,~~ the ~~ownership~~amount of ~~rural land in Mexico has~~produce ~~been~~we ~~subject~~can ~~to legal limitations and claims by residents of rural communities~~grow, which incan ~~some~~decrease ~~cases~~our ~~could~~revenues ~~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 is currently pending in Mexico a lawsuit challenging the ownership rights of ABSA to rural land it owns in Mexico. If this lawsuit was to be decided against ABSA, ABSA could lose a total of 7.7% of all the rural land it owns in Mexico.

~~Currency~~Weather ~~fluctuations~~conditions greatly affect the amount of fresh produce we bring to market, and, accordingly, ~~inflation~~the prices we receive for our produce. Storms, frosts, droughts, and particularly floods, can ~~increase~~destroy ~~the~~a crop ~~cost~~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 ~~products~~crops, rendering them unsalable and resulting in the ~~United~~loss ~~States~~of ~~and~~all ~~abroad,~~or ~~which~~a ~~decreases~~portion of the crop for that harvest season. Even when only a portion of our ~~revenues~~crops are damaged, the profits we could have made on the crop will be severely affected because the costs to plant and ~~profitability~~ 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.

~~While~~Labor ~~currency~~shortages ~~exchange~~and ~~rates~~union inactivity ~~Mexico have been relatively stable over the past three years, previous history has shown that these rates~~ can beaffect highly 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. Exchange rate fluctuations impact our ~~subsidiaries'~~ability ~~businesses. If the value of the peso decreases relative~~ to ~~the value~~ ofhire ~~the~~workers ~~dollar, then (i) imports of produce into Mexico for distribution become more expensive in peso terms and therefore more difficult~~ to ~~sell~~harvest ~~in the Mexican market;~~ and ~~(ii) inflation that~~distribute ~~generally~~our ~~accompanies reductions in the value of the peso reduces the purchasing power of Mexican consumers~~crops, which ~~reduces~~can ~~the~~hurt ~~demand~~our ~~for all products including produce and, in particular,~~financial imported, branded or other premium-quality produce. 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. condition

22The 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.

~~Volatile~~The ~~interest~~Mexican ~~rates~~farm inwork force ~~Mexico~~retained ~~can~~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 ~~capital~~industry ~~costs~~ 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

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. 18

~~Trade~~labor ~~disputes~~disturbances. As ~~between~~a ~~the~~result, ~~United~~delivery ~~States~~delays ~~and~~caused ~~Mexico~~by ~~can~~labor disturbances ~~result~~ in ~~tariffs,~~the ~~quotas~~trucking ~~and~~industry ~~bans~~or onany ~~imports,~~other ~~including~~reason could limit our ability ~~products,~~to ~~which~~get ~~can~~fresh ~~hurt~~produce ~~our~~to ~~financial~~market ~~condition~~ before it spoils.

~~Despite~~ABSA’s ~~the~~reliance ~~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,~~leases ~~imposed tariffs, quotas,~~ and ~~importation~~production ~~bans~~associations ~~on products produced in Mexico. U.S. tomato growers have brought dumping claims against Mexican tomato growers and may do so again.~~could ~~Because~~result ~~some of our subsidiaries produce products~~ in ~~Mexico~~increased costs, which ~~we sell in the United States, such actions, if taken,~~ could adversely affect our ~~business.~~financial results

~~GENERAL~~ABSA ~~BUSINESS~~relies ~~RISKS~~ on agricultural land leased from others, production associations with other growers, and contract production with third party growers for a large part of its supply. The average term of the land leases is two years and we expect to renew most of these land leases as they expire. If the other parties to these leases 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. Production associations and contract production with third party growers are generally arranged three to six months prior to each growing season. The provisions of the contracts with these growers may change from year to year, which can affect the amount of supply, the prices of the produce, and the cost and profit sharing arrangements among the parties. If these other growers choose not to renew their contracts, ABSA would be required to locate alternate sources of supply, which may or may not be available.

~~Savia~~Legal ~~and~~limitations ~~Ag-Biotech~~could ~~Capital,~~affect ~~LLC~~our ~~have~~ownership ~~substantial~~of ~~control~~rural ~~over~~land ~~the~~in Mexico, ~~Company~~which ~~and~~could ~~can~~decrease ~~affect~~our ~~virtually~~supply ~~all~~of ~~decisions~~produce ~~made~~causing bya ~~its~~decrease ~~stockholders~~in our revenues and ~~directors~~ profitability

~~Ag-Biotech~~ABSA ~~Capital, LLC beneficially~~ owns ~~18,076,839~~a ~~shares~~substantial amount of ~~our~~rural ~~common~~land ~~stock~~in ~~accounting~~Mexico, ~~for~~which ~~77.0%~~it ofuses ~~all~~to ~~issued~~grow ~~and~~fresh ~~outstanding~~fruits ~~shares~~and vegetables. Historically, Asthe aownership of ~~result,~~rural ~~Ag-Biotech Capital,~~land ~~LLC~~in Mexico has ~~the~~been ~~requisite voting~~subject ~~power~~ to ~~significantly~~legal ~~affect~~limitations ~~virtually~~and ~~all~~claims ~~decisions~~by residents ~~made~~of byrural ~~the~~communities, ~~Company~~which ~~and~~in ~~its~~some ~~stockholders,~~cases ~~including~~could lead to the ~~power~~owner being forced to ~~elect~~surrender ~~all~~its ~~directors~~land. ABSA ~~and~~has tobeen ~~block~~involved ~~corporate~~in ~~actions~~land ~~such~~dispute proceedings as anpart ~~amendment~~of toits ~~most~~ordinary ~~provisions~~course of ~~the~~business. ABSA ~~Company's~~has never ~~certificate~~lost ofany ~~incorporation.~~money ~~This~~in ~~ownership~~these ~~and~~land ~~management~~disputes, ~~structure~~but ~~will~~if ~~inhibit~~ABSA ~~the~~were ~~taking~~ever ofrequired to surrender any ~~action~~of byits land, the ~~Company~~volume ~~that~~of isfresh ~~not~~fruits ~~acceptable~~and tovegetables ~~Ag-Biotech~~it ~~Capital,~~produces ~~LLC.~~would decline and adversely affect our profitability.

WeRISKS ~~may~~RELATING ~~incur~~TO ~~significant~~OUR ~~liability~~INTERNATIONAL ~~as a result of stockholder lawsuits~~ OPERATIONS

~~The~~Currency ~~Company~~fluctuations and ~~its~~inflation ~~subsidiary,~~can ~~DNA~~increase ~~Plant Technology Corporation, have been sued in several lawsuits relating to~~ the ~~1996~~cost ~~merger transaction (the "Merger") in~~of ~~which~~our ~~DNAP~~products ~~became a subsidiary of the Company. In those lawsuits, the former preferred stockholders of DNAP alleged they should have received much more consideration for their shares~~ in the ~~Merger than~~United ~~they~~States ~~did.~~and ~~One of these cases is still pending. If the Company is ultimately found to be liable in this case~~abroad, ~~the~~which ~~value~~decreases ofour ~~the~~revenues ~~potential judgment could be far more than the Company could afford to~~and ~~pay.~~ profitability

WeWhile ~~may~~currency ~~not~~exchange rates in Mexico have been relatively stable over the past three years, previous history has shown that these rates can be ~~able~~highly volatile. For example, in December 1994, the Mexican government announced its intention to ~~adapt~~float ~~our~~the ~~management~~Mexican ~~information~~peso ~~systems~~against the United States dollar and, ~~controls~~as a result, the peso devalued over 40% relative to ~~keep~~the dollar ~~pace~~during ~~with~~that month. Exchange rate fluctuations impact our ~~future~~subsidiaries’ ~~business~~businesses. If ~~strategy~~the value of the peso decreases relative to the value of the dollar, then (i) imports of produce into Mexico for distribution become more expensive in peso terms and therefore more difficult to sell in the Mexican market; and (ii) inflation that generally accompanies reductions in the value of the peso reduces the purchasing power of Mexican consumers, which ~~could~~reduces ~~hurt~~the ~~our~~demand ~~financial~~for all ~~condition~~ products including produce and, in particular, imported, branded or other premium-quality produce. 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.

~~The~~Volatile ~~realization~~interest ofrates ~~our~~in ~~business~~Mexico ~~strategy~~can ~~depends~~increase ~~on, among other things,~~ our ~~ability to adapt management information systems and controls and to hire, train and~~capital ~~retain qualified employees to allow these operations to be effectively managed. The geographic separation of our subsidiaries' operations exacerbates these issues.~~ costs

~~All~~Historically, interest ~~subsequent~~rates ~~written~~in Mexico have been volatile, particularly in times of economic unrest and ~~oral~~uncertainty. High ~~forward-looking~~interest ~~statements~~rates restrict ~~attributable~~the toavailability and raise the ~~Company~~cost orof ~~persons~~capital ~~acting~~for onour ~~its~~Mexican subsidiaries ~~behalf~~and ~~are~~for ~~expressly~~growers ~~qualified~~and inother ~~their~~Mexican ~~entirety~~parties bywith ~~the~~whom ~~cautionary~~we do ~~statements~~business, ~~disclosed~~both infor ~~this~~borrowings ~~section~~denominated in pesos and ~~otherwise~~for borrowings denominated in ~~this report~~dollars. Costs of operations for our Mexican subsidiaries are higher as a result.

2319

Trade disputes between the United States and Mexico can ~~Item~~result 3.in ~~Quantitative~~tariffs, quotas and ~~Qualitative~~bans ~~Disclosures~~on ~~about~~imports, ~~Market~~including ~~Risk~~ our products, which can hurt our financial condition

~~Interest~~Despite ~~Rate~~the ~~Risk~~ 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.

~~The~~GENERAL ~~table~~BUSINESS below provides information about the Company's derivative financial instruments 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 September 30, 2002. The information is presented in U.S. dollar equivalents, which is the Company's reporting currency. The instrument's actual cash flows are denominated in both U.S. dollars and Mexican pesos, and are indicated accordingly in the table below. RISKS

			Expected maturity date
			2002			2003			2004			2005			2006			Total		Fair Value
			(Millions of Dollars)
Short-term debt:
	U.S. dollar variable rate		$	1.6														$	1.6	$	1.6
		Average interest rate		6	%
Long-term debt:
	U.S. dollar fixed rate		$	0.0		$	0.1		$	0.1		$	0.2		$	0.1		$	0.5	$	0.5
		Average interest rate		9	%		9	%		9	%		9	%		9	%

Savia and Ag-Biotech Capital, LLC have substantial control over the Company and can affect virtually all decisions made by its stockholders and directors

~~The Company~~Ag-Biotech ~~tries~~Capital, toLLC beneficially ~~use~~owns ~~the~~18,076,839 ~~most~~shares ~~cost-effective~~of ~~means~~our tocommon ~~fund~~stock ~~its~~accounting ~~operating~~for ~~and capital needs~~78.9% ~~Fixed~~of all oroutstanding ~~variable~~shares. As ~~debt~~a ~~will~~result, Ag-Biotech beCapital, ~~borrowed~~LLC inhas ~~both~~the ~~U.S.~~requisite ~~dollars~~voting ~~and~~power ~~Mexican~~to ~~pesos.~~significantly ~~The~~affect ~~Company~~virtually ~~borrows~~all ~~Mexican~~decisions ~~pesos~~made toby ~~provide~~the ~~for~~Company ~~its~~and ~~working capital needs in~~ its ~~Mexican operations. At September 30~~stockholders, ~~2002~~including the power ~~Company~~to ~~had~~elect noall ~~debt~~directors ~~denominated~~and into ~~Mexican~~block ~~pesos.~~corporate Toactions ~~minimize exchange~~such ~~risk~~as ~~associated~~an amendment ~~with~~to ~~the~~most ~~importation~~provisions of ~~products,~~ the Company’s ~~will~~certificate ~~enter~~of incorporation. This ~~into~~ownership ~~forward~~and management ~~exchange~~structure ~~contracts~~will ~~where~~inhibit the ~~functional~~taking ~~currency~~of toany beaction ~~used~~by in the ~~transaction~~Company that is ~~dollars.~~not acceptable to Ag-Biotech Capital, LLC.

~~Exchange~~We ~~Rate~~may ~~Risk~~ incur significant liability as a result of stockholder lawsuits

AtThe ~~September 30~~Company and its subsidiary, ~~2002~~DNA Plant Technology Corporation, have been sued in several lawsuits relating to the 1996 merger transaction (the “Merger”) in which DNAP became a subsidiary of the Company. In those lawsuits, the former preferred stockholders of DNAP alleged they should have received much more consideration for their shares in the Merger than they did. One ~~not~~of ~~hold~~these ~~any~~cases ~~financial~~is ~~instruments~~still pending. If ~~subject~~the Company is ultimately found to ~~exchange~~be ~~rate~~liable ~~risk.~~in this case, the value of the potential judgment could be far more than the Company could afford to pay.

~~The Company~~We ismay ~~exposed~~not tobe ~~U.S.~~able ~~dollar-~~to~~-Mexican~~ ~~peso~~adapt ~~currency~~our ~~exchange~~management ~~risk~~information systems ~~due to revenues~~ and ~~costs~~controls ~~denominated~~to inkeep ~~Mexican~~pace ~~pesos associated~~ with ~~its~~our ~~Mexican~~future ~~subsidiary~~business strategy, ~~ABSA. The~~which ~~Company~~could ~~expects~~hurt itour ~~will~~financial ~~continue to be exposed to currency exchange risks in the future.~~ condition

~~Commodity~~The ~~Price~~realization ~~Risk~~ 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.

~~The~~We ~~table below provides information about the Company's fresh produce growing crops inventory and fixed price contracts that~~ are ~~sensitive to changes in~~ ~~commodity~~not ~~prices. For inventory, the table presents the carrying amount and fair value at December 31, 2001. For the fixed price contracts, the table presents the notional amounts~~ in ~~Boxes,~~compliance ~~the weighted~~with ~~average contract prices, and~~ the ~~total~~listing ~~dollar~~standards ~~contract~~of ~~amount by expected maturity dates,~~ the ~~latest~~American ofStock ~~which occurs within one year from the~~ Exchange

24Our common stock is listed on the American Stock Exchange. On September 9, 2002, the American Stock Exchange advised us of its intent to file an application to delist our common stock from the Exchange. We have submitted a plan to the Exchange to come back into compliance by June 30, 2003, which the Exchange has accepted. However, our listing is being continually subjected to this extension and is still under review by the Exchange staff. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards could result in the Company being delisted from the Exchange.

All subsequent written ~~reporting~~and ~~date.~~oral ~~Contract~~forward-looking ~~amounts~~statements attributable to the Company or persons acting on its behalf are ~~used~~expressly toqualified ~~calculate~~in ~~the~~their ~~contractual~~entirety ~~payments~~by ~~and~~the cautionary ~~quantity~~statements ofdisclosed ~~fresh~~in ~~produce~~this tosection beand ~~exchanged~~otherwise ~~under~~in ~~futures~~this ~~contracts~~report.

		At December 31, 2001
		Carrying Amount		Fair Value
On-balance sheet commodity position:
	Fresh produce crops in process inventory ($US in millions)	$	5.7	$	5.7
Fixed price contracts:
	Contract volumes (3,038,000 boxes)
	Weighted average unit price (per 3,038,000 boxes)	$	8.76	$	8.76
	Contract amount ($US in millions)	$	26.6	$	26.6

~~In order~~ITEM to3. ~~manage~~Quantitative ~~the~~and ~~exposure~~Qualitative toDisclosures ~~commodity~~about ~~price~~Market 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. Risk

Interest Rate ~~Item 4. Controls and Procedures~~ Risk

The table below provides information about the Company’s derivative financial instruments 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 (acontractual) ~~Evaluation~~maturity ofdates. Notional ~~disclosure~~amounts ~~controls~~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 June 30, 2003. The information is presented in U.S. dollar equivalents, which is the Company’s reporting currency. The instrument’s actual cash flows are denominated in both U.S. dollars and ~~procedures~~ Mexican pesos, and are indicated accordingly in the table below.

Under the supervision and with the participation of our management, including our principal executive officer, we conducted an evaluation of our 'disclosure controls and procedures' (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) within 90 days of the filing date of this report. Based on this evaluation, our principal executive officer concluded that our disclosure controls and procedures need improvement. (See Item 4(b) below) 21

(b) Changes in internal controls

	2003			2004		2005		2006		2007	2008-2012	Total			Fair Value
Short-term debt:
($US equivalent in millions)
U.S. dollar variable rate	$	4.5		—		—		—		—	—	$	4.5		$	4.5
Average interest rate	5.5		%									5.5		%	5.5		%
Peso variable rate (in $US)	—			—		—		—		—	—	—			—
Long-term debt:
U.S. dollar fixed rate	0.1			0.1		0.2		0.1		—	—	0.5			0.5
Average interest rate	8		%	8	%	8	%	8	%
U.S. dollar variable rate	0.2			0.2		0.2		0.2		0.2	0.5		1.9			1.9
(Prime plus 1.5%)

InThe ~~connection with the preparation of the~~ Company's ~~financial~~tries ~~statements~~to ~~as of and for quarter ended September 30, 2002, management in conjunction with our~~use ~~financial~~the ~~advisors~~most ~~identified~~cost-effective ~~certain~~means ~~deficiencies~~to infund ~~the~~its ~~Company's~~operating ~~internal~~and ~~control~~capital ~~procedures~~needs. Fixed ~~that~~or ~~would~~variable bedebt ~~deemed~~will to be aborrowed ~~material~~in both ~~weakness~~U.S. ~~under~~dollars ~~standards~~and ~~established~~Mexican ~~by the American Institute of Certified Public Accountants~~pesos. The ~~deficiencies relate to the~~ Company's ~~accounting~~borrows ~~and~~Mexican ~~financial~~pesos ~~reporting~~to ~~infrastructure~~provide for ~~collecting,~~its ~~analyzing,~~working ~~and consolidating information to prepare the~~capital ~~financial~~needs ~~statements~~in ~~for~~its ~~the~~Mexican ~~consolidated Company~~operations. To minimize ~~These~~exchange ~~matters~~risk ~~have~~associated ~~been discussed~~ with ~~our independent accountants and with~~ the ~~Audit~~importation ~~Committee~~ of ~~the~~products, ~~Board of Directors of~~ the Company~~. To address~~ ~~the~~will ~~weakness,~~enter ~~the~~into ~~Company~~forward ~~plans~~exchange tocontracts ~~review,~~where ~~and~~the iffunctional ~~necessary,~~currency ~~develop~~to abe used ~~new~~in ~~set~~the oftransaction ~~consolidating~~is ~~systems and procedures for financial statement preparation prior to year-end 2002~~dollars.

Exchange Rate ~~PART II—OTHER INFORMATION~~ Risk

At June 30, 2003 the ~~Item~~Company 1.did ~~Legal~~not ~~Proceedings~~ hold any financial instruments subject to exchange rate risk.

The Company, ~~DNAP,~~is ~~and~~exposed ~~former~~to U.S. ~~directors~~dollar-to-Mexican ofpeso ~~DNAP~~currency ~~are~~exchange ~~defendants~~risk indue ~~one~~to ~~remaining~~revenues ~~shareholder~~and ~~litigation~~costs denominated ~~styled~~in ~~Gordon~~Mexican K.pesos ~~Aaron~~associated etwith ~~al.~~its ~~v. Empresas~~Mexican ~~la Moderna~~subsidiary, SABSA.A. The deCompany ~~C.V.,~~expects etit ~~al.~~will ~~This~~continue ~~action~~to ~~was~~be exposed ~~filed~~to incurrency ~~the~~exchange ~~U.S.~~risks ~~federal~~in ~~district court for~~ the ~~Northern District of California action and~~ future.

25Commodity Price Risk

~~stemmed~~The ~~from~~table ~~the~~below ~~1996~~provides information ~~merger~~about ~~of DNAP and~~ the Company’s fresh produce ~~business~~growing ofcrops ~~Bionova~~inventory ~~Holding.~~and Afixed price ~~substantially~~contracts ~~identical~~that ~~class~~are ~~action~~sensitive ~~lawsuit~~to ~~styled~~changes ~~Robert~~in ~~Kaczak~~commodity vprices. For ~~Empresas la Moderna~~inventory, ~~S.A.~~the detable ~~C.V.,~~presents etthe ~~al.~~carrying amount ~~was~~and ~~filed~~fair invalue ~~the~~at ~~U.S.~~December ~~federal~~31, ~~district~~2002. For ~~court for~~ the ~~Northern~~fixed ~~District~~price ~~of California~~contracts, ~~and~~the ~~these~~table ~~two~~presents ~~cases~~the ~~were~~notional ~~then consolidated. The trial court~~amounts ~~dismissed~~in ~~all~~Boxes, of the ~~plaintiffs'~~weighted ~~claims~~average contract prices, ~~but~~and the ~~Court~~total ofdollar ~~Appeals~~contract amount ~~for~~by ~~the~~expected ~~Ninth~~maturity ~~Circuit~~dates, ~~reinstated~~the ~~some~~latest of ~~the~~which ~~claims~~occurs ~~against~~within ~~Bionova~~one ~~Holding~~year from ~~and~~ the ~~individuals~~reporting ~~who were named as defendants~~date. ~~Bionova~~ Contract ~~Holding~~amounts ~~denies~~are ~~any~~used ~~wrongdoing~~to ~~and~~calculate ~~liability~~the incontractual ~~these~~payments ~~matters~~ and ~~intends~~quantity of fresh produce to ~~vigorously~~be ~~contest~~exchanged ~~these~~under ~~lawsuits.~~futures contracts.

At December ~~Item~~31, ~~4. Submission of Matters to a Vote of Security Holders~~ 2002

The annual meeting of stockholders of the Company was held on August 27, 2002. At the meeting, the stockholders elected five directors of the Company. The results of the voting were as follows:

	Carrying Amount		Fair Value
On-balance sheet commodity position:
Fresh produce crops in process inventory ($US in millions)	$	1.870	$	1.870

Fixed price contracts:
Contract volumes (456,000 boxes)
Weighted average unit price	$	20.21	$	20.21
Contract amount ($US in millions)	$	9.216	$	9.216

Election of Directors	Number of Shares Voted For	Number of Shares Withheld
Bernardo Jiménez	22,507,474	37,464
Adrian Rodriguez	22,507,647	37,291
Alejandro Perez	22,506,584	38,354
Alejandro Sanchez	22,507,637	37,301
Dr. Eli Shlifer	22,507,357	37,581

In order to manage the exposure to commodity price sensitivity associated with fresh produce products, ~~Item~~the 5.Company ~~Other~~enters ~~Information~~ into fixed price contracts with certain customers which guarantee specified volumes for the growing season or the year at a fixed price.

~~Continued~~Item ~~Listing~~4. onControls ~~the~~and ~~American Stock Exchange~~ Procedures

~~By letter dated, September 9, 2002, Bionova Holding was informed of the intention of the American Stock Exchange~~ (~~"AMEX"~~a) ~~to proceed to file an application~~ Evaluation with the Securities and Exchange Commission to strike the Company's common stock from listing and registration on the Exchange. Bionova Holding subsequently requested an oral hearing before a Listing Qualifications Panel of ~~the~~disclosure ~~AMEX.~~controls ~~The Company then proceeded to submit certain information to the AMEX~~ and held some discussions with members of the AMEX staff. On October 31, 2002 Bionova Holding was advised that based on the information the Company had provided, the Staff was reviewing whether to withdraw its September 9, 2002 determination to remove the Company's common stock from listing and registration on the Exchange. As a consequence, the oral hearing has been delayed for an indeterminate period. procedures

~~Related~~Under ~~Party~~the ~~Transactions~~ supervision and with the participation of our management, including our principal executive officer, we conducted an evaluation of our “disclosure controls and procedures” (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) within 90 days of the filing date of this report. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures need improvement. (See Item 4(b) below.)

~~Beginning~~(b) Changes in ~~the~~internal third quarter of 2002, and continuing into the fourth quarter, four of the Company's senior managers deferred receipt of their salary compensation because of the Company's tight cash situation. At September 30, 2002 this deferred salary compensation amounted to $0.1 million. In addition, the president of the Company's fresh produce business loaned the Company $0.2 million in the month of August 2002. controls

In connection with the preparation of the ~~third~~Company’s ~~quarter~~consolidated financial statements as of and for the year ended December 31, 2002, ~~DNAP~~and ~~executed~~based on a ~~transaction~~more ~~with~~recent ~~Seminis~~review ~~Vegetables~~in ~~Seeds~~the preparation of the Company’s consolidated financial statements for the quarter ended June 30, ~~Inc.~~ 2003, management in conjunction with our independent accountants identified certain deficiencies in the Company’s internal control procedures that would be deemed to be a ~~majority~~material ~~owned~~weakness ~~subsidiary~~under standards established by the American Institute of ~~Savia~~Certified Public Accountants. The ~~This~~deficiencies ~~transaction~~relate ~~provided~~to ~~Seminis~~(i) ~~with~~the aCompany’s ~~non-exclusive~~accounting ~~right~~and financial reporting infrastructure for collecting, analyzing, and consolidating information to ~~produce~~prepare onthe aconsolidated ~~worldwide~~financial ~~basis~~statements for the Company (ii) issues associated with timely and consistent reconciliation of the Company’s and its subsidiaries’ bank accounts, inventories, and anintercompany ~~exclusive~~accounts, ~~right~~(iii) the timely and complete revelation of material contracts entered into by subsidiaries of the Company, and (iv) the impact of the resignations of certain accounting personnel during the past year on the historical knowledge and understanding of accounting and consolidation information. These matters have been discussed with our independent accountants and with the Audit Committee of the Board of Directors of the Company. To address these weaknesses, the Company plans to ~~sell~~(i) develop a new set of consolidating systems and procedures for financial statement preparation by the end of the third quarter of 2003, (ii) reinforce the procedures already in ~~Europe~~place requiring reconciliation of all accounts and ~~Asia~~review ~~DNAP'~~these reconciliations in conjunction with its independent accountants during the quarterly reviews of the Company’s consolidated ~~patented~~financial ~~bell~~statements, ~~peppers.~~(iii) ~~DNAP~~hold ~~received~~regular anmeetings ~~advance~~with ~~cash~~officers ~~payment~~of subsidiary companies to update and review all contracts being entered into and reinforce the requirement of ~~$2 million~~the ~~against~~Company to immediately inform the Chief ~~future~~Executive ~~royalty~~Officer ~~payments.~~and ~~The~~the Chief Financial Officer of such contracts, and (iv) develop a documented, historical data base for financial information by December 31, 2003 so the critical accounting and financial information is independent of the memory of specific individuals developing and preparing such information.

26PART II – OTHER INFORMATION

~~agreement~~Item ~~provides that after two years Seminis has the right to terminate the agreement and that DNAP would be required to reimburse Seminis for any unearned portion of the royalty advance~~5. Other Information

~~Controlling~~Indemnification ~~Stockholder;~~Agreements ~~Conflicts~~with ofOfficers ~~Interest~~ and Directors

~~Approximately~~During ~~77% of~~ the ~~outstanding~~second ~~shares~~ quarter of ~~common~~2003 ~~stock of~~ the Company ~~are~~entered ~~owned~~into ofindemnification ~~record~~agreements bywith ~~Ag-Biotech~~officers ~~Capital~~and directors ~~LLC,~~of athe ~~wholly-owned~~Company ~~subsidiary~~which ofgenerally ~~Savia. Therefore,~~require ~~Savia has~~ the ~~power~~company to ~~elect~~pay acertain costs ~~majority~~and ofexpenses ~~the~~incurred ~~Company's~~by ~~board~~such ofindividuals ~~directors~~in ~~and~~connection towithlawsuits brought ~~determine~~against ~~the~~them ~~outcome~~in oftheir ~~any~~capacities ~~action~~as ~~requiring~~officers ~~the~~and ~~approval~~directors of the Company.and ~~holders~~its ofsubsidiaries.Given the ~~Company's~~current ~~common~~regulatory ~~stock.~~environment and the ~~This~~reduced ~~ownership~~availability ~~and~~of ~~management~~directors’ ~~structure~~and ~~will~~officers’ ~~inhibit~~insurance coverage, the Company’s ~~taking~~board of ~~any~~directors ~~action~~determined bythat these agreements were necessary for the Company ~~which~~to isretain ~~not~~its ~~acceptable~~current management and to ~~the~~attract ~~controlling~~additional ~~stockholder.~~directors and officers.

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. 23

~~The Company~~Controlling ~~and~~Stockholder; ~~other~~Conflicts 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. 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. Interest

27Approximately 78.9% of the outstanding shares of common stock of the Company are owned of record by Ag-Biotech Capital LLC, a 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 ~~Item~~executive 6officers of Savia or companies related to Savia, and it is expected that each will continue to do so. ~~Exhibits~~Such management interrelationships and intercorporate ~~Reports~~relationships onmay ~~Form 8-K~~ lead to possible conflicts of interest.

OnThe Company and other ~~August 20~~entities that may be deemed to be controlled by or affiliated with Savia sometimes engage in (i) intercorporate transactions such as guarantees, management ~~2002~~and expense sharing arrangements, ~~the~~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 ~~filed~~continuously considers, areviews ~~Form 8-K~~and ~~containing~~evaluates, and understands that Savia and related entities consider, review and evaluate, transactions of the ~~officer~~type ~~certifications~~described above. ~~submitted~~Depending toupon the ~~Securities~~business, tax and ~~Exchange~~other ~~Commission~~objectives ~~pursuant~~then relevant, it is possible that the Company might be a party to ~~Section 906~~one or more of such transactions in the future in addition to those currently in force. In connection with these activities the ~~Sarbanes-Oxley~~Company ~~Act~~might ofconsider ~~2002~~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.

~~SIGNATURES~~ Item 6. Exhibits and Reports on Form 8-K

~~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.~~ (a) Exhibits

	BIONOVA HOLDING CORPORATION
Date: November 19, 2002
	By:	/s/ BERNARDO JIMENEZ Bernardo Jiménez Chief Executive Officer

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).

283.2 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 ~~Certification~~28, ~~Pursuant~~1999 (filed as an exhibit to ~~Rules 13a-14~~ ~~and~~the ~~15d-14~~Company’s ~~under~~Quarterly report on Form 10-Q for the ~~Securities~~quarterly ~~Exchange~~period ~~Act~~ended ofMarch ~~1934~~ 31, 1999 and incorporated herein by reference).

I,3.4 Bylaws ~~Bernardo~~of ~~Jimenez~~the Company (filed as an exhibit to the Company’s annual report on Form 10-K for the year ended December 31, ~~certify~~1998 ~~that:~~and incorporated herein by reference).

~~Date:~~4.1 Certificate ~~November~~of ~~19,~~Designations ~~2002~~for /Series A Convertible Preferred Stock (filed as an exhibit to the Company’s/ ~~BERNARDO~~current report ~~JIMENEZ~~on ~~Bernardo~~Form ~~Jiménez~~8-K ~~Chief~~filed ~~Executive~~on ~~Officer~~January 12, 2001 and incorporated herein by reference).

2910.1 Form of Indemnification Agreement between the Company and its directors and officers (filed as an exhibit to the Company's current report on Form 8-K dated September 5, 2003 and incorporated herein by reference).

~~Certification Pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934~~ 24

I10.2 Transfer Agreement of Equity Participations dated June 13, 2003 among the Company, Agromod, S.A. de ~~Fernando~~C.V., ~~Menendez~~Agrobionova, ~~certify~~S.A. ~~that:~~de C.V., Tecnología Aplicada en Procesos, S. de R.L. de C.V., Grupo Metalsa, S.A. de C.V., and Promo-Tow, S. de R.L. de C.V (filed as an exhibit to the Company's current report on Form 8-K dated September 5, 2003 and incorporated herein by reference).

~~Date:~~10.3 Credit ~~November~~and 19Security Agreement among Bionova Produce, Inc., R.B. Packing of California, Inc., Bionova Produce of Texas, Inc. (collectively, jointly and severally the Borrower), and Wells Fargo Credit, Inc. dated December 5, 2002 /(filed as an exhibit to the Company's/ ~~FERNANDO~~current report ~~MENENDEZ~~on ~~Fernando~~Form ~~Menendez~~8-K ~~Principal~~dated ~~Financial~~September ~~Officer~~5, 2003 and incorporated herein by reference).

3010.4 First Amendment to Credit and Security Agreement dated June 13, 2003 (filed as an exhibit to the Company's current report on Form 8-K dated September 5, 2003 and incorporated herein by reference).

31.1 Certification of Jose ~~CERTIFICATION~~Manuel ~~PURSUANT~~Garcia ~~TO SECTION~~pursuant ~~906~~to OFExchange ~~THE~~Act ~~SARBANES-OXLEY~~Rules ~~ACT OF 2002~~ 13a-15(18e) ~~U.S.C.~~and ~~SECTION 1350~~15d-15(e)

In31.2 Certification ~~connection~~of ~~with~~Arthur H. ~~the~~Finnel ~~accompanying~~pursuant ~~Quarterly~~to ~~Report~~Exchange ofAct ~~Bionova~~Rules ~~Holding Corporation~~ 13a-15(~~the "Company"~~e) onand ~~Form 10~~15d-~~Q for the period ended September 30, 2002~~ 15(~~the "Report"~~e)~~, I, Bernardo Jimenez, Chief Executive Officer of the Company, hereby certify that to my knowledge:~~

~~Dated:~~32.1 Certification ~~November~~of ~~19,~~Jose ~~2002~~Manuel ~~/s/~~Garcia ~~BERNARDO~~pursuant to ~~JIMENEZ~~Section ~~Bernardo~~906 ~~Jiménez~~of ~~Chief~~the ~~Executive~~Sarbanes-Oxley ~~Officer~~Act of 2002.

3132.2 Certification of Arthur H. Finnel pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002~~ (18b) Reports ~~U.S.C.~~on ~~SECTION~~Form ~~1350)~~ 8-K

InThe ~~connection~~Company ~~with~~did ~~the~~not ~~accompanying~~file any ~~Quarterly~~reports ~~Report of Bionova Holding Corporation (the "Company")~~ on Form 10 8-QK ~~for~~during the ~~period~~second ~~ended~~quarter ~~September 30, 2002 (the "Report"), I, Fernando Menendez, Chief Financial Officer~~ of ~~the Company, hereby certify that to my knowledge:~~ 2003.

~~Dated: November 19, 2002 /s/ FERNANDO MENENDEZ Fernando Menendez Principal Financial Officer~~25

32SIGNATURES

~~INDEX~~Pursuant TOto ~~EXHIBITS~~ 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: September 11, 2003	By: /s/ ARTHUR H. FINNEL
		Arthur H. Finnel
		Chief Financial Officer

~~QuickLinks~~26

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).

3.2 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 (filed as an exhibit to the Company’s annual report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference)

4.1 Certificate of Designations for Series A Convertible Preferred Stock (filed as an exhibit to the Company’s current report on Form 8-K filed on January 12, 2001 and incorporated herein by reference).

10.1 Form of Indemnification Agreement between the Company and its directors and officers (filed as an exhibit to the Company's current report on Form 8-K dated September 5, 2003 and incorporated herein by reference).

10.2 Transfer Agreement of Equity Participations dated June 13, 2003 among the Company, Agromod, S.A. de C.V., Agrobionova, S.A. de C.V., Tecnología Aplicada en Procesos, S. de R.L. de C.V., Grupo Metalsa, S.A. de C.V., and Promo-Tow, S. de R.L. de C.V (filed as an exhibit to the Company's current report on Form 8-K dated September 5, 2003 and incorporated herein by reference).

10.3 Credit and Security Agreement among Bionova Produce, Inc., R.B. Packing of California, Inc., Bionova Produce of Texas, Inc. (collectively, jointly and severally the Borrower), and Wells Fargo Credit, Inc. dated December 5, 2002 (filed as an exhibit to the Company's current report on Form 8-K dated September 5, 2003 and incorporated herein by reference).

10.4 First Amendment to Credit and Security Agreement dated June 13, 2003 (filed as an exhibit to the Company's current report on Form 8-K dated September 5, 2003 and incorporated herein by reference).

31.1 Certification of Jose Manuel Garcia pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e)

31.2 Certification of Arthur H. Finnel pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e)

32.1 Certification of Jose Manuel Garcia pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Arthur H. Finnel pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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