|                                                                                          
|------------------------------------------------------------------------------------------
|U.S. SECURITIES AND EXCHANGE COMMISSION
        WASHINGTON, D.C. 20549                    
|                                                                                          
|FORM 10-Q                                                                                 
|                                                                                          
|xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
|                                                                                          
|For the quarterly period ended December 31, 2005                                          
|                                                                                          
|OR                                                                                        
|                                                                                          
|oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                                                          
|From the transition period from_______________________to______________________            
|                                                                                          
|Commission File Number 333-102296                                                         
|                                                                                          
|Easy Gardener Products, Ltd.                                                              
|                                                                                          
|(Exact name of registrant as specified in its charter)                                    

|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Texas                                                              |  | 37-1433686                              
|(State or other jurisdiction
    of incorporation or organization) |  | IRS Employer
    (Identification Number)

|                                         |  |           
|---------------------------------------- |  | ----------
|3022 Franklin Avenue Waco, Texas         |  | 76710     
|                                         |  |           
|(Address of Principal Executive Offices) |  | (Zip Code)

|                                                                                                                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(254) 753-5353                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                     
|(Registrants Telephone Number, Including Area Code)                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                     
|Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

|                                                                                                                 |  |      
|---------------------------------------------------------------------------------------------------------------- |  | -----
|Yes  x                                                                                                           |  | No  o
|                                                                                                                 |  |      
|Indicate by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
|                                                                                                                 |  |      
|Yes  o                                                                                                           |  | No  x

|                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------
|Indicate the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date.
|                                                                                                                              
|Not applicable, registrant is a limited partnership                                                                           

|
|



|                                                                                                           
|-----------------------------------------------------------------------------------------------------------
|Part I.                                                                                                    
|                                                                                                           
|Item 1.                                                                                                    
|                                                                                                           
|Consolidated balance sheets as of December 31, 2005 and June 30, 2005                                      
|                                                                                                           
|Consolidated statements of operations for the three months 
  ended December 31, 2005 and December 31, 2004
|                                                                                                           
|Consolidated statements of operations for the six months 
  ended December 31, 2005 and December 31, 2004  
|                                                                                                           
|Consolidated statements of cash flows for the six months 
  ended December 31, 2005 and December 31, 2004  
|                                                                                                           
|Notes to consolidated financial statements                                                                 
|                                                                                                           
|Item 2.                                                                                                    
|                                                                                                           
|Item 3.                                                                                                    
|                                                                                                           
|Item 4.                                                                                                    
|                                                                                                           
|Part II.                                                                                                   
|                                                                                                           
|Item 1.                                                                                                    
|                                                                                                           
|Item 6.                                                                                                    
|                                                                                                           
|Signatures                                                                                                 

|
|



|Easy Gardener Products, Ltd. and Subsidiaries
|---------------------------------------------
|                                             
|Consolidated Balance Sheets                  
|                                             

|                                                                                                      |  | December 31,
      2005 |             | June 30,
      2005 |  
|----------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------- | ------------------- | -
|
|
|Assets                                                                                                |  |                         |             |                     |  
|                                                                                                      |  |                         |             |                     |  
|Current:                                                                                              |  |                         |             |                     |  
|Cash and cash equivalents                                                                             |  | $                       | 172,000     |                     | $
|Accounts receivable, less allowance for doubtful accounts
             of $176,000 and $153,000       |  |                         | 12,890,000  |                     |  
|Inventories                                                                                           |  |                         | 7,483,000   |                     |  
|Prepaid expenses and other current assets                                                             |  |                         | 609,000     |                     |  
|                                                                                                      | 
|                                                                                                      |  |                         |             |                     |  
|Total Current Assets                                                                                  |  |                         | 21,154,000  |                     |  
|                                                                                                      |  |                         |             |                     |  
|Property and Equipment, net of accumulated depreciation
             of $2,634,000 and $1,971,000     |  |                         | 2,911,000   |                     |  
|                                                                                                      |  |                         |             |                     |  
|Deferred Financing Costs, net of accumulated amortization
             of $645,000 and $400,000       |  |                         | 915,000     |                     |  
|                                                                                                      |  |                         |             |                     |  
|Intangible Assets:                                                                                    |  |                         |             |                     |  
|Goodwill                                                                                              |  |                         | 48,174,000  |                     |  
|Trademarks                                                                                            |  |                         | 23,587,000  |                     |  
|Non-compete agreements, net of accumulated amortization
                    of $439,000 and $338,000  |  |                         | 1,131,000   |                     |  
|Package tooling costs, net of accumulated amortization of
                    $1,207,000 and $920,000 |  |                         | 684,000     |                     |  
|Other intangible assets, net of accumulated
                    amortization of $198,000 and $152,000 |  |                         | 778,000     |                     |  
|                                                                                                      |  |                         |             |                     |  
|Other Assets                                                                                          |  |                         | 4,150,000   |                     |  
|                                                                                                      | 
|                                                                                                      |  |                         |             |                     |  
|Total Assets                                                                                          |  | $                       | 103,484,000 |                     | $
|                                                                                                      | 

|                                                            
|------------------------------------------------------------
|See accompanying notes to consolidated financial statements.
|1                                                           



|Easy Gardener Products, Ltd. and Subsidiaries
|---------------------------------------------
|                                             
|Consolidated Balance Sheets                  
|                                             

|                                                                                          |  | December 31,
      2005 |             | June 30,
      2005 |  
|----------------------------------------------------------------------------------------- |  | ----------------------- | ----------- | ------------------- | -
|                                                                                          | 
|                                                                                          |  |                         | (Unaudited) |                     |  
|Liabilities and Capital                                                                   |  |                         |             |                     |  
|                                                                                         
|Current:                                                                                  |  |                         |             |                     |  
|Revolving credit facility                                                                 |  | $                       | 11,364,000  |                     | $
|Accounts payable                                                                          |  |                         | 5,330,000   |                     |  
|Outstanding checks in excess of book balance                                              |  |                         | 1,127,000   |                     |  
|Accrued rebates                                                                           |  |                         | 612,000     |                     |  
|Accrued expenses                                                                          |  |                         | 2,390,000   |                     |  
|Current debt                                                                              |  |                         | 3,039,000   |                     |  
|                                                                                          | 
|                                                                                          |  |                         |             |                     |  
|Total Current Liabilities                                                                 |  |                         | 23,862,000  |                     |  
|                                                                                         
|Long Term Debt                                                                            |  |                         | 21,782,000  |                     |  
|                                                                                         
|Deferred Tax Liability                                                                    |  |                         | 8,051,000   |                     |  
|                                                                                         
|Junior Subordinated Debentures, net of discount of
          $20,630,000  and $20,689,000 |  |                         | 53,821,000  |                     |  
|                                                                                          | 
|                                                                                          |  |                         |             |                     |  
|Total Liabilities                                                                         |  |                         | 107,516,000 |                     |  
|                                                                                          | 
|                                                                                          |  |                         |             |                     |  
|Commitments and Contingencies                                                             |  |                         |             |                     |  
|                                                                                         
|Partners Capital (Deficit):                                                              |  |                         |             |                     |  
|                                                                                         
|Capital                                                                                   |  |                         | 2,675,000   |                     |  
|                                                                                         
|Accumulated deficit                                                                       |  |                         | (6,707,000  | )                   |  
|                                                                                          | 
|                                                                                          |  |                         |             |                     |  
|Total Partners Capital (Deficit)                                                         |  |                         | (4,032,000  | )                   |  
|                                                                                          | 
|                                                                                         
|Total Liabilities and Partners Capital (Deficit)                                         |  | $                       | 103,484,000 |                     | $
|                                                                                          | 

|                                                            
|------------------------------------------------------------
|See accompanying notes to consolidated financial statements.

|2
|-



|Easy Gardener Products, Ltd. and Subsidiaries           
|--------------------------------------------------------
|                                                        
|Consolidated Statements of Operations
       (Unaudited)
|                                                        

|                              |  | Three Months
      Ended
      December 31,
      2005 |            | Three Months
      EndedDecember 31,
      2004 |  
|----------------------------- |  | ------------------------------------------------------ | ---------- | ----------------------------------------------- | -
|                              |  |                                                        |            |                                                 |  
|                             
|Net Sales                     |  | $                                                      | 15,731,000 |                                                 | $
|Cost of Sales                 |  |                                                        | 9,447,000  |                                                 |  
|                              | 
|                             
|Gross Profit                  |  |                                                        | 6,284,000  |                                                 |  
|                              | 
|                             
|Operating Expenses:           |  |                                                        |            |                                                 |  
|Selling and shipping          |  |                                                        | 3,321,000  |                                                 |  
|General and administrative    |  |                                                        | 1,590,000  |                                                 |  
|Depreciation and amortization |  |                                                        | 290,000    |                                                 |  
|                              | 
|                             
|Total Operating Expenses      |  |                                                        | 5,201,000  |                                                 |  
|                              | 
|                             
|Profit (Loss) From Operations |  |                                                        | 1,083,000  |                                                 |  
|                             
|Interest expense              |  |                                                        | (2,978,000 | )                                               |  
|                              | 
|Loss Before Income Taxes      |  |                                                        | (1,895,000 | )                                               |  
|                             
|Income Tax Benefit            |  |                                                        | 604,000    |                                                 |  
|                              | 
|                             
|Net Loss                      |  | $                                                      | (1,291,000 | )                                               | $
|                              | 

|                                                            
|------------------------------------------------------------
|See accompanying notes to consolidated financial statements.

|3
|-



|Easy Gardener Products, Ltd. and Subsidiaries              
|-----------------------------------------------------------
|                                                           
|Consolidated Statements of Operations
          (Unaudited)
|                                                           

|                               |  | Six
      Months
      EndedDecember 31,
      2005 |            | Six
      Months
      Ended
      December 31,
      2004 |  
|------------------------------ |  | --------------------------------------------------- | ---------- | ---------------------------------------------------------- | -
|                               |  |                                                     |            |                                                            |  
|                              
|Net Sales                      |  | $                                                   | 28,428,000 |                                                            | $
|Cost of Sales                  |  |                                                     | 18,304,000 |                                                            |  
|                               | 
|                              
|Gross
      Profit             |  |                                                     | 10,124,000 |                                                            |  
|                               | 
|                              
|Operating Expenses:            |  |                                                     |            |                                                            |  
|Selling and shipping           |  |                                                     | 7,045,000  |                                                            |  
|General and administrative     |  |                                                     | 3,021,000  |                                                            |  
|Depreciation and amortization  |  |                                                     | 595,000    |                                                            |  
|                               | 
|                              
|Total Operating Expenses       |  |                                                     | 10,661,000 |                                                            |  
|                               | 
|                              
|Loss From
      Operations     |  |                                                     | (537,000   | )                                                          |  
|                               |  |                                                     |            |                                                            |  
|Interest expense               |  |                                                     | (5,805,000 | )                                                          |  
|                               | 
|                              
|Loss Before
      Income Taxes |  |                                                     | (6,342,000 | )                                                          |  
|                               |  |                                                     |            |                                                            |  
|Income Tax Benefit             |  |                                                     | 2,009,000  |                                                            |  
|                               | 
|                              
|Net
      Loss                 |  | $                                                   | (4,333,000 | )                                                          | $
|                               | 

|                                                            
|------------------------------------------------------------
|See accompanying notes to consolidated financial statements.

|4
|-



|Easy Gardener Products, Ltd. and Subsidiaries   
|------------------------------------------------
|                                                
|Consolidated Statements of Cash Flows(Unaudited)
|                                                

|                                                                                           |  |   | Six months 
      Ended
      December 31, 2005 |   | Six Months 
      Ended
      December 31,
 2004 |           
|------------------------------------------------------------------------------------------ |  | - | ----------------------------------------------- | - | ------------------------------------------------ | ----------
|                                                                                           |  |   |                                                 |   |                                                 
|                                                                                          
|Cash Flows from Operating Activities:                                                      |  |   |                                                 |   |                                                  |           
|                                                                                          
|Net loss                                                                                   |  | $ | (4,333,000                                      | ) | $                                                | (4,639,000
|Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities |  |   |                                                 |   |                                                  |           
|Non-cash interest expense                                                                  |  |   | 3,826,000                                       |   |                                                  | 3,166,000 
|Depreciation and other amortization                                                        |  |   | 1,358,000                                       |   |                                                  | 1,109,000 
|Loss on sale of equipment                                                                  |  |   | 8,000                                           |   |                                                  |          
|Deferred income tax benefit                                                                |  |   | (2,009,000                                      | ) |                                                  | (1,814,000
|Changes in operating assets and liabilities:                                               |  |   |                                                 |   |                                                  |           
|Accounts receivable                                                                        |  |   | 15,042,000                                      |   |                                                  | 17,379,000
|Inventories                                                                                |  |   | 47,000                                          |   |                                                  | (1,908,000
|Prepaid expenses, refundable income taxes
              and other current assets           |  |   | 173,000                                         |   |                                                  | (654,000  
|Other assets                                                                               |  |   |                                                |   |                                                  | 57,000    
|Accounts payable and accrued expenses                                                      |  |   | (6,367,000                                      | ) |                                                  | (6,884,000
|Income taxes payable                                                                       |  |   |                                                |   |                                                  | (325,000  
|Trademarks                                                                                 |  |   |                                                |   |                                                  | (22,000   
|                                                                                           | 
|Net Cash Provided by OperatingActivities of Continuing Operations                          |  |   | 7,745,000                                       |   |                                                  | 5,465,000 
|                                                                                           | 
|                                                                                          
|Cash Flows From Investing Activities:                                                      |  |   |                                                 |   |                                                  |           
|                                                                                          
|Purchase of equipment                                                                      |  |   | (333,000                                        | ) |                                                  | (712,000  
|Proceeds from sale of equipment                                                            |  |   | 5,000                                           |   |                                                  |          
|Purchase of package design and tooling                                                     |  |   | (172,000                                        | ) |                                                  | (270,000  
|                                                                                           | 
|                                                                                          
|Net Cash Used in Investing Activities                                                      |  |   | (500,000                                        | ) |                                                  | (982,000  
|                                                                                           | 

|                                                            
|------------------------------------------------------------
|See accompanying notes to consolidated financial statements.

|5
|-



|Easy Gardener Products, Ltd. and Subsidiaries   
|------------------------------------------------
|                                                
|Consolidated Statements of Cash Flows(Unaudited)
|                                                

|                                                                              |  |   | Six months
 Ended
      December 31,  2005 |   | Six Months
      Ended
      December 31,
 2004 |           
|----------------------------------------------------------------------------- |  | - | ------------------------------------------ | - | ----------------------------------------------- | ----------
|                                                                              |  |   |                                            |   |                                                
|                                                                              |  |   |                                            |   |                                                 |           
|Cash Flows From Financing Activities:                                         |  |   |                                            |   |                                                 |           
|                                                                             
|Net payments on revolving credit facility                                     |  | $ | (6,729,000                                 | ) | $                                               | (4,076,000
|Payments on long-term debt                                                    |  |   | (633,000                                   | ) |                                                 | (695,000  
|Deferred financing costs                                                      |  |   | (1,000                                     | ) |                                                 | (87,000   
|                                                                              | 
|                                                                             
|Net Cash Used In Financing Activities                                         |  |   | (7,363,000                                 | ) |                                                 | (4,858,000
|                                                                              | 
|                                                                             
|Net decrease in cash and cash equivalents from
         continuing operations |  |   | (118,000                                   | ) |                                                 | (375,000  
|                                                                              |  |   |                                            |   |                                                
|Net cash used in discontinued operations                                      |  |   |                                           |   |                                                 | 204,000   
|                                                                              | 
|                                                                             
|Net decrease in cash and cash equivalents                                     |  |   | (118,000                                   | ) |                                                 | (171,000  
|Cash and Cash Equivalents,  beginning of period                               |  |   | 290,000                                    |   |                                                 | 441,000   
|                                                                              | 
|                                                                             
|Cash and Cash Equivalents,  end of period                                     |  | $ | 172,000                                    |   | $                                               | 270,000   
|                                                                              | 
|                                                                             
|Supplemental Disclosure of Cash Flow
    Information                          |  |   |                                            |   |                                                 |           
|Cash paid for interest                                                        |  | $ | 1,944,000                                  |   | $                                               | 2,139,000 
|Cash paid for income taxes                                                    |  | $ | 7,000                                      |   | $                                               | 572,000   
|                                                                              | 

|                                                            
|------------------------------------------------------------
|See accompanying notes to consolidated financial statements.

|6
|-



|Easy Gardener Products, Ltd. and Subsidiaries             
|----------------------------------------------------------
|                                                          
|Notes to Consolidated Financial Statements
    (Unaudited)
|                                                          

|1. | The accompanying consolidated financial statements at December 31, 2005 and for the three and six months
  ended December 31, 2005 are unaudited, but, in the opinion of management, include all adjustments
  necessary for a fair presentation of consolidated financial position and results of operations for
  the periods presented. The results for the six months ended December 31, 2005 are not necessarily
  indicative of the results of operations for a full year.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | Refer to the audited consolidated financial statements for the year ended June 30, 2005, for details
  of accounting policies and detailed notes to the consolidated financial statements.                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | Inventories consist of:                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                              | December 31, 2005 |           | June 30, 2005
| | ---------------------------- | ----------------- | --------- | -------------
| |                              |                  
|
| | Raw and packaging  materials | $                 | 3,343,000 |              
| | Finished goods               |                   | 4,140,000 |              
| |                              |                  
| |                              | $                 | 7,483,000 |              
| |                              |                  
| |                             

|4. | All shipping and handling expenses are included in the selling and shipping caption and totaled approximately $1,551,000, $3,297,000, $1,115,000, and $3,047,000 for the three months ended and six months ended
    December 31, 2005 and December 31, 2004, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | The Company and its parent, EYAS International, Inc., and their subsidiaries have entered into four credit arrangements to finance the acquisition of the assets of the Predecessor, U.S. Home & Garden, Inc., and to provide working capital. The Company also assumed from the Predecessor its obligation under the Junior Subordinated Debentures and related obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On April 27, 2004, the Company and its parent and subsidiaries entered into a senior revolving credit facility with the LaSalle Business Credit, L.L.C. who is the Agent for and one of the lenders on the facility. The asset based lending revolving credit facility has a maturity date of September 30, 2006. The facility has a maximum borrowing level of $25 million. The facility is secured by all the assets of the Company and its parent and subsidiaries. The actual borrowing level is limited based upon having eligible accounts receivable, inventory and for parts of the year, the seasonal availability amount. Interest is at variable annual rates based upon the prime rate plus 0.5% or LIBOR plus 3.25% for the period July 1, 2005 through September 30, 2005. The actual interest rate on the facility at December 31, 2005 was 7.25%. Effective October 1, 2005 the interest rate increased to prime plus 1.0%. When certain conditions are met the 0.5% increase effective October 1, 2005 will be eliminated. The Company met those requirements as of December 31, 2005. Consequently, the rate will decrease for the quarter beginning January 1, 2006 to prime plus 0.5%. The facility has various financial covenants including minimum EBITDA (EBITDA is Earnings Before, Interest, Taxes, Depreciation, and Amortization), minimum EBITDA to pay interest on the Junior

|7
|-



|Easy Gardener Products, Ltd. and Subsidiaries                 
|--------------------------------------------------------------
|                                                              
|Notes to Consolidated Financial Statements
        (Unaudited)
|                                                              

| | Subordinated
Debentures, a Fixed Charge Coverage Ratio, a Maximum Senior Leverage Ratio and limits
      on Capital Expenditures. Additionally the senior lenders have required as a condition of receiving
      waivers on the June 30, 2005 covenant defaults, that the Company hire an investment banker to explore
      strategic alternatives to repay the term loan, increased the interest rate on the term loan by 2%
      per annum and 0.5% per annum on the revolving credit facility under certain conditions. The lenders
      are entitled to a performance fee of $2 million on the term loan, due at the repayment of the loan,
      however the performance fee will be reduced in part or in total if certain conditions are met. The
      revolving credit lender has required a repayment fee of up to $250,000 under certain conditions.
      The Company has hired an Investment Banking firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | The second credit facility was
entered into on October 29, 2003 and is with CapitalSource Finance LLC.
      This facility includes two term loans. Term Loan A in the amount of $14,315,000 of which $14,000,000
      has been borrowed and Term Loan B in the amount of $9,713,750 of which $9,500,000 has been borrowed.
      Both Term Loans A and B mature on September 30, 2006 and are secured by all of the assets of the
      Company and its parent and subsidiaries. Effective October 1, 2005 term Loan A bears interest of
      the greater of 7.75% over the prime rate or 10%. As of December 31, 2005, the actual rate was 14.90%.
      Term Loan A also has monthly repayment of principal of $104,167 per month in year one, $166,667 per
      month in year two and $291,667 per month in year three. These amounts are reduced by mandatory pre-payments
      as described in the fourth following sentence. Effective October 1, 2005 term Loan B bears interest
      of the greater of 10.75% over the prime rate or 13% plus 7.0% of accrued interest which is to be
      paid at the maturity of Term Loan B. As of December 31, 2005, the actual rate was 17.90%. Since such
      interest is not due until maturity, it is considered non-cash interest in the current period. Term
      Loans A and B also require mandatory pre-payments equal to 75% of the excess cash flow as defined
      in the loan agreements.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | The Company
continued to be below the minimum EBITDA level required by the senior lenders to continue
      to pay the interest on the Junior Subordinated Debentures. As permitted by the Amended and Restated
      Junior Subordinated Indenture, the Company has notified the Trustee that it has exercised its right
      to defer the monthly interest payment commencing with the August 2004 payment as described below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | The third credit
facility the Company entered into were two subordinated loan agreements, one with
      the Predecessor aggregating $1,600,000 plus accrued interest and one with Central Garden & Pet
      Company aggregating $2,675,000 plus accrued interest. The subordinated Predecessor loan is the more
      junior of the subordinated loans. Both of these subordinated loans bear interest at 9% per annum
      due at maturity except for the repayment feature described below. The loans mature April 29, 2008
      and interest is payable at maturity. Since such interest is not due until maturity, it is considered
      non-cash in the current period and included in long term liabilities. The Predecessor loan has a
      repayment feature based upon excess cash flow as defined in the second credit facility described
      in the second preceding paragraph. The                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|8
|-



|Easy Gardener Products, Ltd. and Subsidiaries                 
|--------------------------------------------------------------
|                                                              
|Notes to Consolidated Financial Statements
        (Unaudited)
|                                                              

|   | $2,675,000
subordinated loan gives Central Garden & Pet Company the right to convert the loan plus
      accrued interest into a 49% ownership interest in the Company.                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                               
|6. | In connection
with the acquisition of the assets of the Predecessor, the Company recognized a significant amount
of goodwill, which, in the aggregate, was $48,174,000 at December 31, 2005 and June 30, 2005. The
balance of intangible assets acquired and related accumulated amortization were as follows:
|   |                                                                                                                                                                                                                                                                                                               

| |                               | December 31, 2005 |           
| | ----------------------------- | ----------------- | ----------
|
| |                               |                  
| | Amortized Intangible Assets   |                   |           
| | Non-compete agreements        | $                 | 1,570,000 
| | Package Tooling Costs         |                   | 1,891,000 
| | Other Intangible Assets       |                   | 976,000   
| |                               |                   |           
| | Total                         | $                 | 4,437,000 
| |                               |                  
| | Unamortized Intangible Assets |                   |           
| | Trademarks                    | $                 | 23,587,000
| |                               |                  

| |                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Amortization expense for
all intangible assets during the three months and the six months ended December
31, 2005 and the three months and the six months ended December 31, 2004 was $213,000, $434,000,
$216,000, and $670,000, respectively. Estimated amortization expense on intangible assets for each
of the five succeeding fiscal years is as follows:
| |                                                                                                                                                                                                                                                                                                                                                                

| | Year Ended June 30, |  |   | Amount  | 
| | ------------------- |  | - | ------- | 
| |                     | 
|
| | 2006                |  | $ | 868,000 | 
| | 2007                |  |   | 867,000 | 
| | 2008                |  |   | 867,000 | 
| | 2009                |  |   | 294,000 | 
| | 2010                |  |   | 294,000 | 

|9
|-



|Item 2.                                                                             
|------------------------------------------------------------------------------------
|                                                                                    
|MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                                    

|Special Cautionary Notice Regarding Forward-Looking Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. Certain information included in this Report contains statements that are forward-looking,
such as statements relating to plans for future activities. Such forward-looking information involves
important known and unknown risks and uncertainties that could significantly affect actual results,
performance or achievements in the future and, accordingly, such actual results, performance or achievements
may materially differ from those expressed or implied in any forward-looking statements made by or
on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating
to the Companys growth strategy, customer concentration, outstanding indebtedness, dependence
on weather conditions, seasonality, expansion, changes in interest rates, ability to service debt,
activities of competitors, ability to successfully introduce new products and product lines, changes
in federal or state environmental laws and the administration of such laws, protection of trademarks
and other proprietary rights, the ability to maintain adequate financing arrangements necessary to
fund operations and the general condition of the economy and its effect on the securities markets
and other risks detailed in other filings with the Securities and Exchange Commission. The words
believes, expects, anticipates, intends, plans,
may, might, could, should and similar expressions
identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date the statement was made.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|General                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Easy Gardener
Products, Ltd., (the Company), manufactures and markets a broad range of
brand-name consumer lawn and garden products through its own operations and through its wholly owned
subsidiaries, Weatherly Consumer Products Group, Inc. which owns Weatherly Consumer Products, Inc.,
and Easy Gardener UK Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|10
|--



|                     
|---------------------
|Results of Operations
|                     

| |                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------
| | The following table sets forth, for the periods indicated, certain selected financial data as a percentage
      of net sales:
| |                                                                                                                               

|                                       | Three months
      ended
      December 31,
      2005 |       | Three months
      ended
      December 31,
      2004 |  | Six months
      ended
      December 31,
      2005 |    | Six months
      ended 
      December 31,
      2004 |      
|-------------------------------------- | ------------------------------------------------------ | ----- | ------------------------------------------------------ |  | ---------------------------------------------------- | -- | ----------------------------------------------------- | -----
|                                       |                                                       
|                                      
|Net sales                              |                                                        | 100.0 | %                                                      |  | 100.0                                                | %  |                                                       | 100.0
|Cost of sales                          |                                                        | 60.1  | %                                                      |  | 62.9                                                 | %  |                                                       | 64.4 
|                                       |                                                        |      
|Gross profit                           |                                                        | 39.9  | %                                                      |  | 37.1                                                 | %  |                                                       | 35.6 
|                                       |                                                        |      
|Selling and shipping                   |                                                        | 21.1  | %                                                      |  | 28.4                                                 | %  |                                                       | 24.8 
|General and administrative             |                                                        | 10.1  | %                                                      |  | 14.0                                                 | %  |                                                       | 10.6 
|Depreciation and amortization          |                                                        | 1.8   | %                                                      |  | 2.2                                                  | %  |                                                       | 2.1  
|                                       |                                                        |      
|Income (loss) from operations          |                                                        | 6.9   | %                                                      |  | (7.5                                                 | %) |                                                       | (1.9 
|Interest expense                       |                                                        | (18.9 | %)                                                     |  | (24.8                                                | %) |                                                       | (20.4
|                                       |                                                        |      
|Loss from operations before income tax |                                                        | (12.0 | %)                                                     |  | (32.3                                                | %) |                                                       | (22.3
|Income tax benefit                     |                                                        | 3.8   | %                                                      |  | 10.4                                                 | %  |                                                       | 7.1  
|                                       |                                                        |      
|Net loss                               |                                                        | (8.2  | %)                                                     |  | (21.9                                                | %) |                                                       | (15.2
|                                       |                                                        |      

|11
|--



|                                                                                     
|-------------------------------------------------------------------------------------
|Three Months Ended December 31, 2005
Compared to Three Months Ended December 31, 2004
|                                                                                     

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
believes there were shifts in sales from the quarter ended September 30, 2005 to the quarter
ended December 31, 2005. Consequently, the Company believes that the six-month results are more indicative
of its operating performance than are the three months ended December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Net sales.Net
sales increased by $4,858,000, or 44.7%, to $15,731,000 during the three months ended December
31, 2005, from $10,873,000 during the three months ended December, 2004. Net sales are gross sales
less adjustments for discounts, rebates, returns and allowances given to customers. The increase
in net sales was the result of an increase in the volume of products sold and price increases aggregating
$5,322,000. Of this increase, it is estimated that the price increase was approximately $200,000.
The increase in net sales was offset in part by increased rebates of $268,000 and increased customer
allowances. Of the increased rebates $206,000 is a result of increased sales and $62,000 is from
increases in rebate levels. The increase in customer allowances of $196,000 results from a significant
customer of the Company now providing its own store service through its own independent contractor.
The costs of the independent contractor in the comparable period were included in selling and shipping.
The customer allowance is a sales allowance reducing net sales.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Cost of sales.Cost
of sales increased by $2,612,000, or 38.2% to $9,447,000 for the three months ended December 31,
2005 from $6,835,000 during the three months ended December 31, 2004. The increase was a result of
increases in the volume of products sold of $2,834,000 and by increased inbound freight costs of
$70,000 and depreciation expense of $56,000, offset by reduced variable and fixed overhead expense
of $49,000 and increased overhead absorption due to increased volume of $299,000. Cost of sales as
a percentage of net sales decreased to 60.1% during the three months ended December 31, 2005 from
62.9% during the comparable period in 2004 as a result of the decrease in costs described above.
Depreciation and amortization expense included in cost of sales for the three months ended December
31, 2005 and 2004 was $377,000, and $321,000, respectively.                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Gross profit.Gross
profit increased by $2,246,000, or 55.6%, to $6,284,000 for the three months ended December 31,
2005 from $4,038,000 during the three months ended December 31, 2004. Gross profit as a percentage
of net sales increased to 39.9% during the three months ended December 31, 2005, from 37.1% during
the comparable period in 2004. This increase in gross profit dollars and increase as a percentage
of net sales resulted from the matters described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Selling and shipping
expenses.Selling and shipping expenses increased by $230,000, or 7.4% to $3,321,000 during the three months
ended December 31, 2005 from $3,091,000 during the three months ended December 31, 2004. Of this
increase in expense, $793,000 was attributable to increased sales volume. The volume increase is
offset in part by no longer providing store service through an independent contractor and instead
giving a significant customer an allowance in place of store service fees of $196,000. Other expense
reductions include reduced tradeshow and related expenses of $157,000 and other reduced variable
expenses as a percentage of sales of $210,000. As a percentage of net sales, selling and shipping
expenses decreased to 21.1% during the three months ended December 31, 2005 from 28.4% during the
comparable period in 2004.                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | General
and administrative expenses.General and administrative expenses increased by $67,000 or 4.4%, to $1,590,000 during the three months
ended December 31, 2005 from $1,523,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|12
|--



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | during the three months ended
December 31, 2004. This increase is the result of an increase in costs
associated with consultants and an Investment Banker hired to identify alternatives to repaying the
term loans of $108,000 as required by the senior lenders, offset in part by reduced employee related
costs and other expenses of $41,000. As a percentage of net sales, general and administrative
expenses decreased to 10.1% during the three months ended December 31, 2005 from 14.0% during the
comparable period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Depreciation and
amortization.Depreciation and amortization expenses increased by $49,000 or 20.3% to $290,000 during the three months
ended December 31, 2005 from $241,000 during the three months ended December 31, 2004. This increase
was primarily due to purchases of depreciable assets during the last fiscal year, which are now being
depreciated for the full three months. As a percentage of net sales, depreciation and amortization
expenses decreased to 1.8% during the three months ended December 31, 2005 from 2.2% during the comparable
period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Income (Loss) from
operations.Income from operations increased by $1,900,000 to $1,083,000 during the three months ended December
31, 2005, from a loss of $817,000 during the three months ended December 31, 2004. The increased
income from operations was primarily due to increased sales volume and gross profit and by reductions
in other operating expenses as noted above. As a percentage of net sales, income from operations
increased to 6.9% for the three months ended December 31, 2005 from a net loss of 7.5 % during the
comparable period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Interest
expense.Interest expense increased $282,000, or 10.5% to $2,978,000 during the three months ended December
31, 2005, from $2,696,000 during the three months ended December 31, 2004. Interest on the revolving
credit facility increased $70,000 as a result of increased borrowing levels and an increased interest
rate. Interest expense on the term loans increased $128,000 as a result of higher interest rates
offset in part by reduced borrowing levels. The Company has approximately $19,342,000 loans outstanding
at December 31, 2005 compared to $22,576,000 at December 31, 2004. The interest expense of the Company
on its term loans for the three months ended December 31, 2005 was $1,012,000 of which $196,000 is
due on September 30, 2006 and is considered non-cash interest in the current period. Interest expense
on the term loans for the three months ended December 31, 2004 was $884,000 including non-cash interest
of $183,000, which is due on September 30, 2006. The Company also has two subordinated loans, with
non-cash interest expense in the current period. The interest expense increased $9,000, to $117,000
during the three months ended December 31, 2005 from $108,000 during the three months ended December
31, 2004. Interest on the subordinated loans is due in cash on May 29, 2009 when the loans mature.
Net interest on the Junior Subordinated Debentures increased $67,000 to $1,628,000 from $1,561,000
in the comparable quarter as a result of the interest expense on the deferred interest. The interest
related to the Junior Subordinated Debentures is included in non-cash interest during the three months
ended December 31, 2005. As permitted by the Amended and Restated Junior Subordinated Indentures,
the Company has elected to defer payment of the interest on the Junior Subordinated Debentures beginning
in August 2004. While the interest payment is deferred, the interest continues to be accrued and
is included in the caption Junior Subordinated Debentures. By deferring the interest payment on the
Junior Subordinated Debentures, the Company has improved its cash flow by the amount of interest
deferred. This improvement will exist until the deferred interest is paid. Miscellaneous interest
expense increased $8,000 mainly on borrowing in the UK. The total non-cash interest for the December
31, 2005 quarter was $1,941,000. A portion of the Companys interest expense is based upon variable
interest rates. Increases in such rates would have a negative impact on operating performance and cash flow.

|13
|--



| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As a percentage of
net sales, interest expense decreased to 18.9% for the three months ended December
31, 2005 from 24.8% during the comparable period in 2004.                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Income
taxes. The income tax benefit decreased by $531,000, or 46.8% to $604,000 during the three months ended
December 31, 2005 from $1,135,000 during the three months ended December 31, 2004 primarily as a
result of the decreased loss before income taxes from continuing operations to 12.0% of net sales
from 32.3% during the comparable period in 2004.                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Net Loss.Net
loss decreased by $1,087,000, or 45.7% to $1,291,000 during the three months ended December 31,
2005 from a net loss of $2,378,000 during the three months ended December 31, 2004. The decrease
in net loss is due to the matters described above. As a percentage of net sales, net loss decreased
to 8.2% for the three months ended December 31, 2005 from 21.9% during the comparable period in 2004.

|                                                                                 
|---------------------------------------------------------------------------------
|Six Months Ended December 31, 2005 Compared to Six Months Ended December 31, 2004
|                                                                                 

| | Net sales.Net sales
increased by $3,330,000, or 13.3%, to $28,428,000 during the six months ended December 31,
2005, from $25,098,000 during the six months ended December, 2004. Net sales are gross sales less
adjustments for discounts, rebates, returns and allowances given to customers. The increase in net
sales was the result of a increase in the volume of products sold and price increases of $4,351,000.
Of this increase, it is estimated that the price increase was approximately $200,000. The increase
in net sales was offset in part by increased rebates of $234,000 and increased customer allowances.
Of the increased rebates $210,000 is a result of increased sales and $24,000 is from increases in
rebate levels. The increase in customer allowances of $454,000 results from a significant customer
of the Company now providing its own store service through its own independent contractor. The costs
of the independent contractor in the comparable period were included in selling and shipping. The
customer allowance is a sales allowance reducing net sales. Also impacting the quarter is an increase
in discounts of $333,000.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Cost of sales.Cost
of sales increased by $2,489,000, or 15.7% to $18,304,000 for the six months ended December 31,
2005 from $15,815,000 during the six months ended December 31, 2004. The increase was a result of
increases in the volume of products sold of $2,264,000 and by increased inbound freight costs of
$158,000, depreciation expense of $130,000, offset by reduced variable and fixed overhead expenses
of $5,000 and increased overhead absorption due to volume of $58,000. Cost of sales as a percentage
of net sales increased to 64.4% during the six months ended December 31, 2005 from 63.0% during the
comparable period in 2004 as a result of the increase in costs described above. Depreciation and
amortization expense included in cost of sales for the six months ended December 31, 2005 and 2004
was $763,000, and $632,000, respectively.                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Gross profit.Gross
profit increased by $841,000, or 9.1%, to $10,124,000 for the six months ended December 31, 2005
from $9,283,000 during the six months ended December 31, 2004. Gross profit as a percentage of net
sales decreased to 35.6% during the six months ended December 31, 2005, from 37.0% during the comparable
period in 2004. This increase in gross profit dollars and decrease in gross profit as a percentage
of net sales resulted from the matters described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Selling and shipping
expenses.Selling and shipping expenses decreased by $147,000, or 2.0% to $7,045,000 during the six
months ended December 31, 2005 from $7,192,000 during the six months ended December 31, 2004. The
increase in the volume of products sold resulted in increased selling and shipping expenses of $740,000.
This amount was offset by no longer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|14
|--



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | providing store service
through an independent contractor and instead giving an allowance to
a customer in place of store service fees of $454,000. Other reductions include reduced warehouse
department expenses of $75,000 and reduced variable expenses as a percentage of net sales of $358,000.
As a percentage of net sales, selling and shipping expenses decreased to 24.8% during the six months
ended December 31, 2005 from 28.7% during the comparable period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | General
and administrative expenses.General and administrative expenses decreased by $65,000 or 2.1%, to $3,021,000 during the six months
ended December 31, 2005 from $3,086,000 during the six months ended December 31, 2004. This decrease
is the result of reduced employee related costs and other expenses of $91,000 and by an exchange
rate gain of $131,000 offset in part by an increase in costs associated with consultants and an Investment
Banker hired to identify alternatives to repaying the Capital Source term loans of $144,000 and in
other miscellaneous costs of $13,000. As a percentage of net sales, general and administrative expenses
decreased to 10.6% during the six months ended December 31, 2005 from 12.3% during the comparable
period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Depreciation and amortization.Depreciation and amortization expenses increased by $146,000 or 32.5% to $595,000 during the six
 months ended December 31, 2005 from $449,000 during the six months ended December 31, 2004. This
 increase was primarily due to purchases of depreciable assets during the last fiscal year, which
 are now being depreciated for the full six months. As a percentage of net sales, depreciation and
 amortization expenses increased to 2.1% during the six months ended December 31, 2005 from 1.8% during
   the comparable period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Loss from operations.Loss from operations decreased by $907,000 or 62.8% to $537,000 during the six months ended December
31, 2005, from $1,444,000 during the six months ended December 31, 2004. The decreased loss from
operations was primarily due to increased gross profit and by reductions in other operating expenses
as noted above. As a percentage of net sales, loss from operations decreased to 1.9% for the six
   months ended December 31, 2005 from 5.8 % during the comparable period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | Interest expense.Interest expense increased $471,000, or 8.8% to $5,805,000 during the six months ended December 31,
  2005, from $5,334,000 during the six months ended December 31, 2004. Interest on the revolving credit
  facility increased $132,000 as a result of increased borrowing levels and increased interest rates.
  Interest expense on the term loans increased $163,000 as a result of higher interest rates offset
  in part by reduced borrowing levels. The Company has approximately $19,342,000 in term loans outstanding
  at December 31, 2005 compared to $22,576,000 at December 31, 2004. The interest expense of the Company
  on its term loans for the six months ended December 31, 2005 was $1,900,000 of which $389,000 is
  due on September 30, 2006 and is considered non-cash interest in the current period. Interest expense
  on the term loans for the six months ended December 31, 2004 was $1,737,000 including non-cash interest
  of $362,000, which is due on September 30, 2006. The Company also has two subordinated loans, with
  non-cash interest expense in the current period. The interest expense increased $4,000 to $218,000
  during the six months ended December 31, 2005 from $214,000 during the six months ended December
  31, 2004. Interest on the subordinated loans is due in cash on May 29, 2009 when the loans mature.
  Net interest on the Junior Subordinated Debentures increased $154,000 to $3,219,000 from $3,065,000
  in the comparable six months as a result of the interest expense on the deferred interest. The interest
  related to the Junior Subordinated Debentures is included in non-cash interest during the six months
  ended December 31, 2005. As permitted by the Amended and Restated Junior Subordinated Indentures,
   the Company has elected to defer payment of the interest on the Junior

|15
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Subordinated Debentures
beginning in August 2004. While the interest payment is deferred, the interest
continues to be accrued and is included in the caption Junior Subordinated Debentures. By deferring
the interest payment on the Junior Subordinated Debentures, the Company has improved its cash flow
by the amount of interest deferred. This improvement will exist until the deferred interest is paid.
Miscellaneous interest expense increased $18,000. The total non-cash interest for the six months
ended December 31, 2005 was $3,826,000. A portion of the Companys interest expense is based
upon variable interest rates. Increases in such rates would have a negative impact on operating performance
and cash flow. As a percentage of net sales, interest expense decreased to 20.4% for the six months
ended December 31, 2005 from 21.2% during the comparable period in 2004.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Income taxes. The
income tax benefit decreased by $130,000, or 6.1% to $2,009,000 during the six months ended
December 31, 2005 from $2,139,000 during the six months ended December 31, 2004 primarily as a result
of reduced loss from continuing operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Net Loss.Net loss
decreased by $306,000, or 6.6% to $4,333,000 during the six months ended December 31, 2005
from a net loss of $4,639,000 during the six months ended December 31, 2004. The decreased net loss
is due to the matters described above. As a percentage of net sales, net loss decreased to 15.2%
   for the six months ended December 31, 2005 from 18.5% during the comparable period in 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Seasonality                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The Companys sales
are seasonal due to the nature of the lawn and garden business. The Companys
seasonality generally parallels the annual growing season. The Companys sales and shipping
are usually most active from late March through May when home lawn and garden customers are purchasing
supplies for spring planting and retail stores are replenishing their inventory of lawn and garden
products. These patterns are affected by a number of events; weather being the largest single event.
The buying pattern of retailers, including the Companys retail customers, is changing. Retailers
are buying enough product to begin the season just prior to the beginning of the season and stores
are replenishing their inventory when sales are made by them rather than buying large quantities
of inventory in advance of the selling season. Sales typically decline in mid-summer. 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Due to the seasonality of
the Companys business as described above, a substantial portion of
the Companys sales, Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) and cash flows are generated in the peak growing season of the year which are
the March 31 quarter and most significantly the June 30 quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Liquidity and Capital Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Since inception, the
Company has financed its operations primarily through cash generated by operations,
and net borrowings from lending institutions. As noted below, the Companys senior lenders have
required that the Company finance part of its operations by deferring the interest on the Junior
Subordinated Debentures since the senior loan requirements to pay such interest have not been met.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The Company is below the
minimum EBITDA level required by the senior lenders to continue to pay the
interest on the Junior Subordinated Debentures. As permitted by the Amended and Restated Junior Subordinated
Indenture, the Company has notified the Trustee that it has exercised its right to defer (not cancel)
the monthly interest payment commencing with the August 2004 payment. The Trustee uses the interest
on the Junior Subordinated Debentures to pay the interest on the 9.40% Cumulative Trust Preferred
Securities. At December 31, 2005, the Company had cash and short-term investments totaling $172,000
   and a working capital deficit of                                                                                                                                                                                                                                     

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| |                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | $2.7 million. At June 30, 2005,
the Company had cash and short-term investments totaling $290,000 and
working capital of $371,000. The change in working capital deficit for the six months ended December
31, 2005 of $3.1 million was primarily attributable to the net loss of $4.3 million for the six months
      ended December 31, 2005.
| |                                                                                                                                                                                                                                                                                                                                                 

| | Net cash provided by
operating activities for the six months ended December 31, 2005 was $7.7 million
resulting from a decrease in accounts receivable, inventory, prepaid expenses and other current assets
of $15.3, offset in part by a net loss from continuing operations of $4.3 million, such loss was
reduced by the sum of non-cash interest expense, depreciation and amortization expense and deferred
income tax benefit of $3.1 million, and a decrease in accounts payable and accrued expenses of $6.4
million. These changes are generally consistent with the seasonal nature of the Companys business.
Net cash provided by operating activities for the six months ended December 31, 2004 was $5.5 million.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Net cash
used in investing activities for the six months ended December 31, 2005 of $.5 million is
due to capital purchases of equipment and package tooling costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | Net cash used in financing
activities for the six months ended December 31, 2005 of $7.4 million is
primarily due to repayments on the revolving credit facility of $6.7 million and principal payments
on the term loan of $0.7 million.                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                              
| | The Company and
its parent, EYAS International, Inc., and their subsidiaries have entered into four
credit arrangements to finance the acquisition of the assets of the Predecessor, U.S. Home & Garden, Inc., and to
provide working capital. The Company also assumed from the Predecessor its
obligation under the Junior Subordinated Debentures and related obligations.
| |                                                                                                                                                                                                                                                                                                                                                                              

| | On April 27, 2004,
the Company and its parent and subsidiaries entered into a senior revolving credit
facility with the LaSalle Business Credit, L.L.C. who is the Agent for and one of the lenders on
the facility. The asset based lending revolving credit facility has a maturity date of September
30, 2006. The facility has a maximum borrowing level of $25 million. The facility is secured by
all the assets of the Company and its parent and subsidiaries. The actual borrowing level is limited
based upon having eligible accounts receivable, inventory and for parts of the year, the seasonal
availability amount. Interest is at variable annual rates based upon the prime rate plus 0.5% or
LIBOR plus 3.25% for the period July 1, 2005 through September 30, 2005. The actual interest rate
on the facility at December 31, 2005 was 7.25%. Effective October 1, 2005 the interest rate increased
to prime plus 1.0%. When certain conditions are met the 0.5% increase effective October 1, 2005
will be eliminated. The Company met those requirements as of December 31, 2005. Consequently, the
rate will decrease for the quarter beginning January 1, 2006 to prime plus 0.5%. The facility has
various financial covenants including minimum EBITDA (EBITDA is Earnings Before, Interest, Taxes, Depreciation,
and Amortization), minimum EBITDA to pay interest on the Junior Subordinated Debentures, a Fixed Charge
Coverage Ratio, a Maximum Senior Leverage Ratio and limits on Capital Expenditures. Additionally
the senior lenders have required as a condition of receiving waivers on the June 30, 2005 covenant
defaults, that the Company hire an investment banker to explore strategic alternatives to repay the
term loan, increased the interest rate on the term loan by 2% per annum and 0.5% per annum on the
revolving credit facility under certain conditions. The lenders are entitled to a performance fee
of $2 million on the term loan, due at the repayment of the loan, however the performance fee will
be reduced in part or in total if certain conditions are met. The revolving credit lender has required
a repayment fee of up to $250,000 under certain conditions. The Company has hired an Investment Banking firm.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The second credit facility was
entered into on October 29, 2003 and is with CapitalSource Finance LLC.
This facility includes two term loans. Term Loan A in the amount of $14,315,000 of which $14,000,000
has been borrowed and Term Loan B in the amount of $9,713,750 of which $9,500,000 has been borrowed.
Both Term Loans A and B mature on September 30, 2006 and are secured by all of the assets of the
Company and its parent and subsidiaries. Effective October 1, 2005 term Loan A bears interest of
the greater of 7.75% over the prime rate or 10%. As of December 31, 2005, the actual rate was 14.90%.
Term Loan A also has monthly repayment of principal of $104,167 per month in year one, $166,667 per
month in year two and $291,667 per month in year three. These amounts are reduced by mandatory pre-payments
as described in the fourth following sentence. Effective October 1, 2005 term Loan B bears interest
of the greater of 10.75% over the prime rate or 13% plus 7.0% of accrued interest which is to be
paid at the maturity of Term Loan B. As of December 31, 2005, the actual rate was 17.90%. Since such
interest is not due until maturity, it is considered non-cash interest in the current period. Term
Loans A and B also require mandatory pre-payments equal to 75% of the excess cash flow as defined
in the loan agreements The Company continued to be below the minimum EBITDA level required by the
senior lenders to continue to pay the interest on the Junior Subordinated Debentures. As permitted
by the Amended and Restated Junior Subordinated Indenture, the Company has notified the Trustee that
it has exercised its right to defer the monthly interest payment commencing with the August 2004 payment as described below.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The third
  credit facility the Company entered into were two subordinated loan agreements, one with
  the Predecessor aggregating $1,600,000 plus accrued interest and one with Central Garden & Pet
  Company aggregating $2,675,000 plus accrued interest. The subordinated Predecessor loan is the more
  junior of the subordinated loans. Both of these subordinated loans bear interest at 9% per annum
  due at maturity except for the repayment feature described below. The loans mature April 29, 2008
  and interest is payable at maturity. Since such interest is not due until maturity, it is considered
  non-cash in the current period and included in long term liabilities. The Predecessor loan has a
  repayment feature based upon excess cash flow as defined in the second credit facility described
  in the second preceding paragraph. The $2,675,000 subordinated loan gives Central Garden & Pet
   Company the right to convert the loan plus accrued interest into a 49% ownership interest in the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The Company leases office and warehouse space, certain office equipment and automobiles under operating leases expiring through 2010. The future minimum annual lease payments under these non-cancelable operating leases are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| |                     |  |   |         |  | 
| | ------------------- |  | - | ------- |  | 
| | Year Ended June 30, |  |   | Amount  |  | 
| |                     |  |  
|
| | 2006                |  | $ | 444,000 |  | 
| | 2007                |  |   | 298,000 |  | 
| | 2008                |  |   | 207,000 |  | 
| | 2009                |  |   | 30,000  |  | 
| | 2010                |  |   | 3,000   |  | 
| |                     |  |  
| |                     |  | $ | 982,000 |  | 
| |                     |  |  

| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The amounts listed above do not
include required principal repayments on the Capital Source term loans,
which is detailed in Note 5 and in the liquidity section listed above.

|18
|--



| |                              
| | -----------------------------
| | New Accounting Pronouncements
| |                              

| | In November 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No.151 entitled Inventory Costs  an amendment of ARB No. 43, Chapter 4. This Statement, which is
effective for fiscal years beginning after June 15, 2005, clarifies the accounting for inventory
costs, in particular, abnormal amounts of idle facility expense, freight, handling costs and wasted
      material (spoilage). This Statement had no significant impact on the Companys financial statements.                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Inflation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Inflation has historically not had a material
effect on the Companys operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Item 3. Quantitative
and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | As a result of its
variable rate revolving credit line and term debt, the Company is exposed to the
risk of rising interest rates. The Company also has minor exposure to changes in foreign exchange
rates. A 1% point increase in the variable interest rate at the beginning of the fiscal year would
have increased interest expense by $122,000. Actual interest expense on the debt subject to variable
interest was $1,025,000 and $1,952,000, for the three and six months ended December 31, 2005, respectively.
The following information relates to the Companys fixed maturity debt as of December 31, 2005
that are sensitive to changes in interest rates.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The Revolving Credit Facility
with LaSalle Business Credit L.L.C. had a variable interest rate ranging
        from 6.75% to 7.25% for the period ended December 31, 2005 and an outstanding balance of $11.4 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| | The Term Loan A with Capital Source Finance, L.L.C.
had a variable interest rate ranging from 14.50%
to 14.90% for the period ended December 31, 2005 and an outstanding balance of $8.3 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                  

| | The Term Loan B with Capital Source Finance, LLC had a variable interest rate ranging from 17.50% to
17.90% for the period ended December 31, 2005 and a outstanding balance of $11.1 million.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                               
| | Item 4. Controls and Procedures                                                                                                                                                               
| |                                                                                                                                                                                               

| | (a) | Evaluation of disclosure controls and procedures.
As of the end of the period covered by this report, the Company has carried out an evaluation, under the supervision and with the participation of the
Companys Chief Executive Officer and Chief Financial Officer of the effectiveness of the design
and operation of the Companys disclosure controls and procedures. Based on the evaluation of
the effectiveness of the design and operation of the Companys disclosure controls and procedures,
the Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys
disclosure controls and procedures were effective in timely alerting them to material information
required to be included in the Companys periodic SEC filings at a reasonable assurance level.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | Prior to the filing of the
Companys Form 10-K for the year ended June 30, 2005, the Companys
  independent accountant communicated to the Company that the income relating to the sale of product
  to a particular customer under unique terms should be recognized only when all contingencies were
satisfied. Based upon this view of the independent accountant,                                                                                                                                                                                                                                                                                                                                                                                                                                    

|19
|--



| | (c) | the proper amount of revenue was
reflected in the Companys financial statements as of June 30,
      2005 included in its filed Form 10-K. Subsequent to the Companys filing its Form 10-K                                                                                                                                                                                                                                              
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (d) | for the year ended June 30, 2005,
the Companys independent accountant notified the Companys
 Audit Committee that the internal accounting control relating to the recognition of revenue for the
 unique sale described above was incorrect and that the error resulted from a significant internal
 control deficiency. Due to the unique nature of the sale, no additional actions are required to correct
   this control deficiency.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (e) | PART II  OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | Item 1.        Legal Proceedings               
| | -----------------------------------------------
| |                                                
| | Not applicable                                 
| |                                                
| | Item 6.        Exhibits and Reports on Form 8-K
| |                                                

| | (a) | Exhibits
| | --- | --------
| |     |         

| |  | 31.1 | Certification of Chief Executive Officer pursuant
to Securities Exchange Act Rules 13a-14 and 15d-14 implementing Section 302 of the Sarbanes-Oxley act of 2002.
| |  | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | 31.2 | Certification of Chief Financial Officer pursuant
to Securities Exchange Act Rules 13a-14 and 15d-14 implementing Section 302 of the Sarbanes-Oxley Act of 2002.
| |  |      |                                                                                                                                                                 
| |  | 32.1 | Certification of the Chief Executive Officer pursuant
to section 906 of the Sarbanes-Oxley Act of 2002                                                          
| |  |      |                                                                                                                                                                 
| |  | 32.2 | Certification of the Chief Financial Officer pursuant
to section 906 of the Sarbanes-Oxley Act of 2002                                                          

|                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SIGNATURES                                                                                                                                                                             
|                                                                                                                                                                                       
|Pursuant to the requirement 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.
|                                                                                                                                                                                       
|February 14, 2006                                                                                                                                                                      
|                                                                                                                                                                                       

| |  | Easy Gardener
      Products, Ltd.
| |  | ----------------------------------
| |  | (Registrant)                      
| |  | By:                               
| |  |                                   
| |  |                                   
| |  |                                   
| |  |                                   
| |  | By:                               
| |  |                                   
| |  |                                   
| |  |                                   

|20
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