UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

 
  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

  or

  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)

 
  Delaware

  75-2632242

  (State or other jurisdiction

  of incorporation or organization)

  (I.R.S. Employer

  Identification No.

  P.
  O. Box 1586

  Nogales, Arizona

  85628-1586

  (Address of principal executive offices)

  (Zip Code)

  (609) 744-8105

  (Registrant’s telephone number, including area
  code)

  9255 Customhouse Plaza, Suite
  I

  San Diego, California 92154

  (Former name, former address and former fiscal
  year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended).

Yes o No ý

As of August 13, 2003, 23,012,753 shares of common stock, par value $0.01 per share, of Bionova Holding Corporation were outstanding.

Explanatory Note

Bionova Holding Corporation (“Bionova Holding” or the “Company”) is filing this Quarterly Report on Form 10-Q/A to amend its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 which was originally filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2003. This Quarterly Report on Form 10-Q/A amends certain pages of Item 1 “Consolidated Financial Statements” and Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the original Quarterly Report.

The Company is filing this Quarterly Report on Form 10-Q/A to reflect the presentation of discontinued operations of the Company’s research and development business segment for the period ended June 30, 2002. The following amended Quarterly Report on Form 10-Q/A reflects the separate basis for reporting discontinued operations of the research and development business segment that were properly reported on as discontinued operations in the December 31, 2002 Annual Report on Form 10-K and the June 30 and September 30, 2002 Quarterly Reports on Form 10-Q. The reporting changes had no effect on the Company’s net loss or stockholders’ equity for the periods presented. The Company has not updated the information contained herein to reflect events and transactions occurring subsequent to the date of the original filing, September 11, 2003 or update those disclosures in any way other than to reflect the discontinued operations of the research and development business segment that were originally reported on a separate basis. Events have taken place that would have been reflected in the Original Form 10-Q if they had taken place prior to the date of the original filing. The Company recommends that this report be read in conjunction with the Company’s reports filed with the SEC subsequent to September 11, 2003.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BIONOVA HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

Thousands of U.S. Dollars

(except share and per share amounts)

	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
Net assets of discontinued operations	—			1,165
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			34,772
Property, plant and equipment, net	31,900			34,150
Patents and trademarks	1,097			—
Other assets	10,558			11,828
Total assets	$	86,255		$	80,750

LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	20,112		$	16,006
Accounts due to related parties	102,228			96,857
Short-term bank loans	4,525			9,818
Total current liabilities	126,865			122,681
Long-term liabilities with third parties	1,872			—
Total liabilities	128,737			122,681
Minority interest	447			401
Commitments and contingencies
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, 23,012,753 shares outstanding at June 30, 2003 and December 31, 2002	230			230
Additional paid-in capital	171,573			171,573
Accumulated deficit	(215,008		)	(213,914		)
Accumulated other comprehensive income (loss)	276			(221		)
Total stockholders’ deficit	(42,929		)	(42,332		)
Total liabilities, minority interest, and stockholders’ deficit	$	86,255		$	80,750

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

BIONOVA HOLDING CORPORATION

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME AND LOSS

Thousands of U.S. Dollars

(except share and per share amounts)

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

Total revenues	$	28,300		$	42,447		$	56,394		$	88,334

Cost of sales	24,948			42,961			50,909			82,035
Selling and administrative expenses	3,183			3,921			6,395			7,733
Amortization of patents and trademarks	62			—			152			—
	28,193			46,882			57,456			89,768

Operating income (loss)	107			(4,435		)	(1,062		)	(1,434		)

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			(308		)	5,117			64
	4,124			(2,228		)	1,347			(3,667		)

Income (loss) from continuing operations before discontinued operations	4,231			(6,663		)	285			(5,101		)
Discontinued operations:
Loss from operations of research and development business segment	—			(394		)	—			(898		)

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 (loss) per common share	$	0.06		$	(0.32	)	$	(0.05	)	$	(0.29	)

Weighted average number of common shares outstanding	23,012,753			23,587,753			23,012,753			23,587,753
Weighted average number of common shares outstanding, assuming dilution	46,168,869			46,743,869			46,168,869			46,743,869

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

BIONOVA HOLDING CORPORATION

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

Thousands of U.S. Dollars

	Six Months Ended June 30,
	2003			2002

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,094	)	$	(6,825	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Minority interest	46			191
Depreciation	1,372			1,431
Amortization and write off of patents and trademarks	152			—
Other	(47		)	(4		)
Net changes (exclusive of subsidiaries acquired or divested) in:
Accounts receivable and advances to growers, net	(7,166		)	3,641
Inventories	1,602			2,899
Net assets of discontinued operations	—			3
Other assets	1,845			(275		)
Accounts payable and accrued expenses	4,022			2,082
NET CASH PROVIDED BY OPERATING ACTIVITIES	732			3,143

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			2,227
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	4,247			(976		)

Net increase in cash and cash equivalents	4,101			1,204
Cash at beginning of period	2,130			2,177
Cash at end of period	$	6,231		$	3,381

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		)	—

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

BIONOVA HOLDING CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2003

Note 1 – Basis of Presentation

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; (2) Distribution, consisting principally of interests in sales and distribution companies in Mexico, the United States, and Canada; and (3) Research and Development (or Technology), 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 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.

In management’s opinion, the accompanying unaudited consolidated financial statements for Bionova Holding for the three and six month periods ended Juner 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 adjustments) 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.

Going Concern

The Company incurred a net loss of $20.4 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.

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. 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.

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

Note 2 – Bank Debt

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

In December 2002, Bionova Produce, Inc., Bionova Produce of Texas, Inc. and R.B. Packing of California, Inc., the Company’s 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 $1.75 million, which will be amortized over 10 years. Interest is charged at the Wells Fargo prime rate of interest plus 1.5% (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” with a maximum availability of $1.75 million. 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 third component is a $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 $1.5 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 credit agreement that permit 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 2003 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 was in compliance with all of the covenants of the credit 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.

In addition to these credit facilities Bionova Produce, Inc. has a five-year loan secured by an airplane and is 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.

On October 3, 2001 ABSA (as 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 institution in conjunction with certain pieces of land being 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 October 3, 2001 agreement to the Mexican financial institution in exchange for a release from the $2.3 million mortgage obligation. The transfer of the 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.

Note 3 - Net Income or Loss per Common Share

The weighted average number of common shares outstanding during the three and six month periods ended June 30, 2003 and 2002 was 23,012,753 and 23,587,753, 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 46,168,869 and 46,743,869, respectively.

	(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

Note 4 - Inventories

Inventories were comprised of the 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

Agrobionova, S.A. de C.V. (“ABSA”), the Company’s Mexican farming subsidiary, advances money to suppliers towards the purchase of materials, and these amounts are reflected as Advances to Suppliers. Due to 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 purchase prices for the materials they are providing to ABSA to pay down a portion of the overdue payables.

Note 5 – Assets Held for Sale

Assets held for sale were comprised of the following:

	(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

Note 6 – Reclassifications

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 six month periods ended June 30, 2002 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.

Note 7 - Segment Reporting

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.

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.

	(Thousands of U.S. Dollars)
	Farming			Distribution		Research 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

(1) Identifiable assets for segments are defined as total assets less cash in banks, deferred income taxes and investment in shares.

Reconciliation of the segments to total consolidated amounts is set forth 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		)
Revenues from discontinued operations	—			(1,920		)
Total revenues	$	56,394		$	88,334

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 profit (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

Notes:

(1) Certain expenses, such as shareholder litigation, investor relations, and Board and professional fees have not been allocated to the segments. Management determined that these types of expenses have not been associated with, nor did the results of these activities benefit the operating segments.

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

(3) Consists principally of inter-segment intercompany balances.

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

	(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 8 – Legal Actions and Contingencies

On January 7, 1999, a class action lawsuit styled Gordon K. Aaron et al. v. Empresas la Moderna, S.A. de C.V., et al. was filed in the U.S. federal district court for the Northern District of California. On January 28, 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. federal district court for the Northern District of California, and these two cases were then consolidated. The plaintiffs allege that, prior to the Merger of DNAP with a subsidiary of Bionova Holding on September 26, 1996, they owned shares of DNAP’s Preferred Stock. In connection with the Merger, all of the shares of common stock and Preferred Stock of DNAP were converted into the number of shares of common stock of Bionova Holding specified in the Merger Agreement. The plaintiffs allege that the Proxy Statement/Prospectus distributed to DNAP’s stockholders in connection with the merger contained material misrepresentations and omitted to state material facts. Both DNAP and Bionova Holding, as well as certain former and current directors of DNAP and Bionova Holding, have been named as defendants in this matter. The plaintiffs claim to have been damaged by the alleged actions of the defendants and therefore the plaintiffs seek unspecified actual damages, reimbursement of their litigation costs and expenses, and equitable relief, including rescission of the Merger. The plaintiffs also allege that they were entitled to receive, and seek specific performance of, special conversion privileges under the terms of the Certificate of Designation that established the Preferred Stock. On March 8, 2000, the court dismissed nearly all of the plaintiffs’ claims, and subsequently the plaintiffs filed an amended complaint with respect to some of the dismissed claims. On September 19, 2000, the court ruled in favor of Bionova Holding and DNAP and dismissed all of the plaintiffs’ claims. The plaintiffs appealed this judgment to the U.S. Court of Appeals for the Ninth Circuit, which heard arguments on the matter on February 12, 2002. On September 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 were remanded to the trial court for further proceedings. Bionova Holding and DNAP deny any wrongdoing and liability in this matter and intend to vigorously contest the remaining claims in this lawsuit.

DNAP has been named as a defendant in several lawsuits asserting claims against DNAP relating to research DNAP performed from 1983 through 1994 for Brown & Williamson Tobacco Company (“B&W”). In general, the cases allege that DNAP engaged in unfair business practices under California law and/or participated in an alleged conspiracy among cigarette manufacturers to deceive the public regarding the hazards of smoking. All of the pending cases are in California state courts. In December 1999, B&W agreed to indemnify DNAP against all costs (including costs of defense and of costs of any judgment or settlement) incurred by DNAP in connection with these cases and any similar cases in the future. Therefore, management no longer believes that these cases could have a material adverse effect on the Company’s financial condition or results of operations. DNAP denies any wrongdoing or liability in these matters and intends to vigorously contest these lawsuits.

On June 16, 2000, a lawsuit styled Santa Cruz Empacadora, S. de R.L. de C.V., v. R.B. Packing of California, Inc. was filed in the United States District Court for the Southern District of California. R.B. Packing of California, Inc., a subsidiary of Bionova Holding, had been the United States distributor of fresh produce sold by the plaintiff. The plaintiff alleges that R.B. Packing of California, Inc. sold Santa Cruz produce to related companies at below market prices and 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.

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

make additional 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.

Please see the Company’s Form 10-K for the year ended December 31, 2002 that was filed on April 30, 2003 for further discussion on the Company’s pending litigation and contingencies.

Note 9 – Accounting for stock-based compensation

The Company accounts for its stock-based compensation plans in accordance with SFAS No. 123, Accounting for Stock-Based Compensation as amended by SFAS No. 148, “Accounting for Stock-Based Compensation Transition and Disclosure.” As permitted under SFAS No. 148, the Company uses the intrinsic value-based method of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for its employee stock-based compensation plans. Under APB Opinion No. 25, compensation expense is based on the difference, if any, on the date of grant, between the fair value of the Company’s shares and the exercise price of the option. Compensation cost for stock options, if any, is realized ratably over the vesting period.

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. 123, the Company’s net income (loss) and net income (loss) per share would have been as follows:

	Thousands of U.S. dollars (except per share data)
	Three Months Ended				Six Months Ended
	June 30, 2003		June 30, 2002		June 30, 2003		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 model with the following weighted average assumptions: dividend yield of 0%, expected volatility of 114%, risk free interest rate of 5.2%, and an expected life of 7 years. No options were granted in 2002 or 2003.

Note 10 – Sale of Mexican Subsidiary

$5.4 million in cash on June 13 and could receive up to an additional $0.6 million, which currently is being held in escrow, during the third quarter of 2003 upon verification by an independent auditor of the historical financial statements of Biionova Holding’s Mexican farming subsidiaries. The Company recorded only the $5.4 million as Other Income in the second quarter of 2003 along with estimated tax expense associated with this transaction of $0.8 million and transaction fees of $0.3 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

Note 11 - Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board ( FASB ) issued FASB Interpretation No. 46 ( FIN 46 ), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the 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, 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 ending after December 31, 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.

In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 establishes standards for the classification and measurement of financial instruments with characteristics of both liabilities and equity. It requires companies to classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). SFAS 150 is effective beginning third quarter of fiscal 2003. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 12 - Commitments

As of June 30, 2003, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is serving at the company’s request in such capacity. The term of the indemnification period shall continue until and terminate upon the latter of: (a) 10 years after the date that the officer or director has ceased to serve the Company as officer or director; or (b) one year after the final, non-appealable termination of any legal proceeding. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements cannot be reasonably measured and estimated and accordingly, the Company has no liabilities recorded for these agreements as of June 30, 2003.

Note 13 – Discontinued Operations: Closing of Research and Development Operations

On May 13, 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 and vegetable crops. Concerns about public acceptance of transgenic products in these markets made producers reluctant to invest in the development of transgenic fruits and vegetables. Further, the agricultural industry has suffered from low prices for its products over the past few years, leading growers, food companies and other providers to

delay new research and development investment. Despite an 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 operations. 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.

In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (“SFAS No. 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets,” 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 discontinued operations separately from continuing operations and extends that reporting to a component of an entity that either has been disposed of (by sale, by abandonment, or in a distribution to owners) or is classified as held for sale.

Revenues and losses of the Company’s research and development operations for the quarter and six months ended June 30, 2002 (in thousands of dollars) were as follows:

	Quarter Ended June 30			Six Months Ended June 30
Revenues	$	1,358		$	1,920
Loss before provision for income taxes	(394		)	(898		)
Income tax expense	—			—
Net loss	(394		)	(898		)

Summary data relating to the assets and liabilities of the Company’s research and development operations (in thousands of dollars) at June 30, 2002 is shown below.

Current assets	$	572
Total assets	3,322
Net assets of Research and Development	3,322

On January 1, 2003 the remaining assets of the Research and Development segment, which consist 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. Accordingly, the Company ceased the accounting for the Research and Development segment as discontinued operations as of January 1, 2003.

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

The Company

Bionova Holding Corporation, a Delaware corporation (together with its subsidiaries, unless the context requires otherwise, “Bionova Holding” or the “Company”), was formed in January 1996, and acts as a holding company for (i) Agrobionova, S.A. de C.V., a corporation organized under the laws of the United Mexican States, of which the Company owns 98.6% (“ABSA”), (ii) International Produce Holding Company, a Delaware corporation, of which the Company owns 100% (“IPHC”), (iii) DNA Plant Technology Corporation, a Delaware corporation, of which the Company owns 100% (“DNAP”), and (iv) VPP Corporation, a Delaware corporation, of which the Company owns 100% (“VPP”). Approximately 79% of the outstanding common stock of the Company is indirectly owned by Savia, S.A. de C.V.

Results of Operations

Three Months Ended June 30, 2003 Compared to the Three Months Ended June 30, 2002

Consolidated total revenues declined to $28.3 million for the quarter ended June 30, 2003 from $42.4 million in the same quarter of 2002, consolidated gross profit (sales less cost of sales) increased to $3.3 million for the quarter ended June 30, 2003 from a loss of $0.5 million in the same quarter of 2002, and the Company’s consolidated operating income improved to $0.1 million for the quarter ended June 30, 2003 as compared with an operating loss of $4.4 million in the same quarter of 2002.

FARMING segment revenues, the majority of which are eliminated in consolidation, declined from $16.1 million in the second quarter of 2002 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 second quarter of 2003 due to limited cash resources and the relatively low margins typically available during this season of the year. Despite the lower volumes, 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.

DISTRIBUTION segment revenues declined from $37.1 million in the second quarter of 2002 to $30.1 million in the same quarter of 2003. This decline was consistent with the curtailed production of the Farming segment, and U.S. sales were further impacted by a reduction in supply of third party grape growers in the second quarter of 2003. Distribution segment operating profit improved from a loss of $0.6 million in the second quarter of 2002 to a profit of $0.9 million in the second quarter of 2003. This improvement was driven by a $0.7 million increase in the operating profit of Premier Fruits and Vegetables BBL, Inc., the Company’s distributor in Montreal, Quebec, and a significant reduction in selling and administrative expenses that stems from an ongoing restructuring of the U.S. distribution companies that began in the second half of 2002.

The Company closed down its research and development operations in June 2002. Because of this shut down the Company had no revenues or expenses associated with this former business segment in the second quarter of 2003 as compared with $1.4 million of revenues and an operating loss of $0.4 million in the second quarter of 2002.

Corporate administrative expenses declined from $0.5 million in the second quarter of 2002 to $0.2 million in the second quarter of 2003. Interest expense decreased from $2.4 million in the second quarter of 2002 to $2.3 million in the second quarter of 2003 while interest income increased from $0.3 million to $0.7 million between these two periods.

The increase in other non-operating income and expense from a negative $0.4 million in the second quarter of 2002 to a positive $5.8 million in the second quarter of 2003 was driven 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 Resources section below.

Tax 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.

Six Months Ended June 30, 2003 Compared to the Six Months Ended June 30, 2002

Consolidated total revenues declined to $56.4 million for the six months ended June 30, 2003 from $88.3 million in the same period of 2002, consolidated gross profit (sales less cost of sales) declined to $5.5 million for the six months ended June 30, 2003 from $6.3 million in the same period of 2002, and the Company’s consolidated operating loss declined to $1.1 million for the six months ended June 30, 2003 from $1.4 million in the same period of 2002.

FARMING segment revenues, the majority of which are eliminated in consolidation, declined from $43.0 million in the first six months of 2002 to $14.1 million in the same period of 2003. This reduction was driven largely by the cash strains the Company faced in the fourth quarter of 2002 because of a reduction in bank financing during the months of October and November. Due to the lack of cash, the farming segment concentrated a very significant proportion of its available resources on the production of the Company’s patented vine sweet mini pepper and significantly curtailed production of tomatoes, peppers, and other commodity vegetables in Culiacan and Todos Santos during the first half of 2003. The operating loss in the Farming segment increased from $0.3 million in the first six months of 2002 to $1.3 million in the same period of 2003. The increase in the operating loss of the 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 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.

DISTRIBUTION segment revenues declined from $78.8 million in the first six months of 2002 to $53.9 million in the same period of 2003. This decline was consistent with the curtailed production of the Farming segment, and U.S. sales were further impacted by a reduction in supply of third party grape growers in the second quarter of 2003. Premier Fruits & Vegetables, BBL Inc., the Company’s Canadian distribution subsidiary, continued to show strong sales gains with an 18.2% increase for the first six months of 2003 as compared with the same period of 2002. Operating profit of the Distribution segment for the first six months of 2003 declined by $0.1 million as compared with the same period of 2002. The decline in gross margins of the U.S. distribution companies of $1.8 million was almost entirely offset by a $0.5 million improvement in the gross margin of Canada along with a $1.2 million reduction in selling and administrative expenses. This reduction in selling and administrative expenses stems from an ongoing restructuring of the U.S. distribution companies that began in the second half of 2002.

The Company closed down its research and development operations in June 2002. Because of this shut down the Company had no revenues or expenses associated with this former business segment in the first six months of 2003 as compared with $1.9 million of revenues and an operating loss of $0.3 million in the same period of 2002.

Corporate administrative expenses declined from $1.1 million in the first six months of 2002 to $0.9 million in the same period of 2003. Interest expense was unchanged at $4.7 million from the first six months of 2002 to the first six months of 2003 while interest income increased from $0.6 to $1.0 million between these two periods.

The increase in other non-operating income and expense from $0.1 million in the first six months of 2002 to $5.1 million in the first six months of 2003 was driven 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 Resources section below.

Tax expense increased from $0.7 million in the first six months of 2002 to $1.3 million in the first six months 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.

Capital Expenditures

During 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.

Liquidity and Capital Resources

For the six months ended June 30, 2003, the Company generated $0.7 million of cash from operating activities (which includes the $5.2 million gain on the sale of a Mexican subsidiary). The most significant items contributing to this were the net loss of $1.1 million, which was offset by depreciation and amortization that totaled $1.5 million during the six months, and the changes in the working capital account items. Accounts receivable and advances to growers increased by $7.2 million due to the lateness of this year’s grape harvest and the growth in the Canadian business, and accounts payable increased by $4.0 million due again to the lateness of the grape harvest and payables due to growers, a higher level of payables in Canada associated with the warehouse construction in progress, and the payables resulting from the expenses and taxes associated with the sale of the Mexican subsidiary in June.

For the six months ended June 30, 2003, the Company used $0.9 million in investing activities, all of which was spent on property, plant and equipment.

Net cash from financing activities during the first six months of 2003 totaled $3.6 million. Accounts due to related parties increased by $5.4 million as interest continued to accrue on the Company’s debt to Savia. The Company reduced its seasonal term loan by $0.3 million and reduced its revolving line of credit by $0.9 million.

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

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 was in compliance with all of the covenants of the credit 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.

At June 30, 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 including accrued interest 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.

On June 13, 2003 Bionova Holding and Agromod, S.A de C.V., a minority owner of ABSA, entered into an agreement to sell all of the shares of Technologia Aplicada en Procesos, S. de R.L. de C.V. (“TAP”), a Mexican subsidiary of Bionova Holding to Promo-Tow, S. de R.L. de C.V. (“PROMOTOW”), a Mexican company. The shares of this new company had value to PROMOTOW because of certain financial benefits PROMOTOW felt it could derive from ownership of TAP. Bionova Holding received $5.4 million in cash on June 13 and could receive up to an additional $0.6 million, which currently is being held in escrow, during the third quarter of 2003 upon verification by an independent auditor of the historical financial statements of Biionova Holding’s Mexican farming subsidiaries. The Company recorded only the $5.4 million as Other Income in the second quarter of 2003 along with estimated tax expense associated with this transaction of $0.8 million and transaction fees of $0.3 million.

The resulting cash from this transaction 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 farming subsidiary, ABSA, is 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. The most significant terms call for each partner to recover its cash and non-cash investments first, and then the partners will share at a rate of 50/50 for any profit generated from the sale of tomatoes and 55/45 (55 being ABSA) on the sale of the vine sweet mini peppers being grown in Todos Santos. At this time the Company does not plan to grow,

nor fund any third party growers in Culiacan, which would typically harvest in late December 2003 through April 2004, other than its vine sweet mini-pepper product. The consequence of this reduced production will be a lower level of sales in the United States in the first quarter of 2004 as compared with 2003.

As 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. sold its real estate in California in the third quarter of 2003, 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.

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

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and have continued to make quarterly reviews since then. Based on these evaluations, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures need improvement. (See Item 4(b) below.)

(b) Changes in internal controls

In connection with the preparation of the Company’s consolidated financial statements as of and for the year ended December 31, 2002, and based on more recent reviews in the preparation of the Company’s consolidated financial statements for the quarters ended June 30, 2003 and September 30, 2003, management in conjunction with our independent accountants identified certain deficiencies in the Company’s internal control procedures over financial reporting that would be deemed to be a material weakness under standards established by the American Institute of Certified Public Accountants. The deficiencies relate to (i) the Company’s accounting and financial reporting infrastructure for collecting, analyzing, and consolidating information to prepare the consolidated financial statements for the Company (ii) issues associated with timely and consistent reconciliation of the Company’s and its subsidiaries’ bank accounts, inventories, and intercompany accounts, (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 has (i) made certain changes to the consolidating systems and procedures for financial statement preparation and the timely and consistent reconciliation of bank accounts, inventories, and intercompany accounts during 2003, (ii) added another accounting manager in Mexico to support this activity, and (iii) improved the communication such that material contracts are now being reported in a timely manner. Despite these changes, serious weaknesses are still being encountered, and the Company’s controller in Mexico and in its Todos Santos farming operations resigned in the fall of 2003. Efforts will continue to improve the consolidating systems and procedures for financial statement preparation over the next several months. The Company also will continue to focus on recruiting the appropriate personnel to overcome the deficiencies created by the recent resignations.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

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.

(b) Reports on Form 8-K

The company did not file any reports on Form 8-K during the second quarter of 2003.

SIGNATURES

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

BIONOVA HOLDING CORPORATION


Date: January 19, 2004	By: /s/ ARTHUR H. FINNEL
		Arthur H. Finnel
		Chief Financial Officer

INDEX TO EXHIBITS

(a) Exhibits

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.

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

P. O. Box 1586
Nogales, Arizona		85628-1586
(Address of principal executive offices)		(Zip Code)

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

9255 Customhouse Plaza, Suite I San Diego, California 92154
(Former name, former address and former fiscal year, if changed since last report)

BIONOVA HOLDING CORP 10-Q/A