|U.S. SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
  EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2004
OR
|_| TRANSITION 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 |_|                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                     
|Indicate by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                     
|Yes  |_|         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. -Financial Information                                                                                                                                                        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                                                                      | 
|Item 1.  -Consolidated Financial Statements                                                                                                                                           | 
|                                                                                                                                                                                      | 
|Consolidated balance sheets as of December 31, 2004 and June 30, 2004                                                                                                                 | 
|                                                                                                                                                                                      | 
|Consolidated statements of operations for the three months ended December 31, 2004 and the two months ended December 31, 2003, and the one month ended October 31, 2003 (Predecessor) | 
|                                                                                                                                                                                      | 
|Consolidated statements of operations for the six months ended December 31, 2004 and the two months ended December 31, 2003, and the four months ended October 31, 2003 (Predecessor) | 
|                                                                                                                                                                                      | 
|Consolidated statements of cash flows for the six months ended December 31, 2004 and the two months ended December 31, 2003, and the four months ended October 31, 2003 (Predecessor) | 
|                                                                                                                                                                                      | 
|Notes to consolidated financial statements                                                                                                                                            | 
|                                                                                                                                                                                      | 
|Item 2. -Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                        | 
|                                                                                                                                                                                      | 
|Item 3. -Quantitative and Qualitative Disclosures About Market Risk                                                                                                                   | 
|                                                                                                                                                                                      | 
|Item 4.  Controls and Procedures                                                                                                                                                     | 
|                                                                                                                                                                                      | 
|Part II. -Other Information                                                                                                                                                           | 
|                                                                                                                                                                                      | 
|Item 1.  Legal Proceedings                                                                                                                                                           | 
|                                                                                                                                                                                      | 
|Item 6. -Exhibits and Reports on Form 8-K                                                                                                                                             | 
|                                                                                                                                                                                      | 
|Signatures                                                                                                                                                                            | 

|
|

|**Easy Gardener Products, Ltd. and SubsidiariesConsolidated Balance Sheets**
|----------------------------------------------------------------------------
|                                                                            
|                                                                            
|                                                                            

|                                                              | December 31,
    2004 |                 | June 30,
    2004 |  
|------------------------------------------------------------- | --------------------- | --------------- | ----------------- | -
|
|
|**Assets**                                                    |                       |                 |                   |  
|                                                              |                       |                 |                   |  
|**Current:**                                                 
|Cash and cash equivalents                                     | **$**                 | **270,000**     |                   | $
|Accounts receivable, less allowance for doubtful accounts    
|of $127,000 and $193,000                                      |                       | **9,374,000**   |                   |  
|Inventories                                                   |                       | **7,336,000**   |                   |  
|Prepaid expenses and other current assets                     |                       | **1,237,000**   |                   |  
|Current assets of discontinued operations                     |                       | ****           |                   |  
|                                                              |                       |                 |                   |  
|                                                              |                       |                 |                   |  
|**Total Current Assets**                                      |                       | **18,217,000**  |                   |  
|                                                              |                       |                 |                   |  
|**Property and Equipment,** net                               |                       | **3,554,000**   |                   |  
|                                                              |                       |                 |                   |  
|**Deferred Financing Costs,** net of accumulated amortization
|of $261,000 and $130,000                                      |                       | **1,290,000**   |                   |  
|                                                              |                       |                 |                   |  
|**Intangible Assets:**                                       
|Goodwill                                                      |                       | **48,174,000**  |                   |  
|Trademarks                                                    |                       | **23,587,000**  |                   |  
|Non-compete agreements, net of accumulated amortization      
|of $237,000 and $135,000                                      |                       | **1,333,000**   |                   |  
|Package tooling costs, net of accumulated amortization of    
|$631,000 and $352,000                                         |                       | **893,000**     |                   |  
|Other intangible assets, net of accumulated                  
|amortization of $107,000 and $61,000                          |                       | **869,000**     |                   |  
|                                                              |                       |                 |                   |  
|**Other Assets**                                              |                       | **3,482,000**   |                   |  
|                                                              |                       |                 |                   |  
|                                                              |                       |                 |                   |  
|**Total Assets**                                              | **$**                 | **101,399,000** |                   | $
|                                                              |                       |                 |                   |  

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

|1
|-

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

|                                                       | December 31,
    2004 |                 | June 30,
    2004 |  
|------------------------------------------------------ | --------------------- | --------------- | ----------------- | -
|
|
|
|**Liabilities and Capital**                            |                       |                 |                   |  
|                                                       |                       |                 |                   |  
|**Current:**                                          
|Revolving credit facility                              | **$**                 | **9,111,000**   |                   | $
|Accounts payable                                       |                       | **6,815,000**   |                   |  
|Accrued expenses                                       |                       | **2,166,000**   |                   |  
|Current portion of long-term debt                      |                       | **2,453,000**   |                   |  
|Current liabilities of discontinued operations         |                       | **663,000**     |                   |  
|                                                       |                       |                 |                   |  
|                                                       |                       |                 |                   |  
|**Total Current Liabilities**                          |                       | **21,208,000**  |                   |  
|                                                       |                       |                 |                   |  
|**Long Term Debt**                                     |                       | **25,341,000**  |                   |  
|**Deferred Tax Liability**                             |                       | **9,048,000**   |                   |  
|**Junior Subordinated Debentures, net of discount of**
|**$20,745,000 and $20,797,000**                        |                       | **46,992,000**  |                   |  
|                                                       |                       |                 |                   |  
|                                                       |                       |                 |                   |  
|**Total Liabilities**                                  |                       | **102,589,000** |                   |  
|                                                       |                       |                 |                   |  
|**Commitments and Contingencies**                      |                       |                 |                   |  
|                                                       |                       |                 |                   |  
|**Partners Capital (Deficit):**                       |                       |                 |                   |  
|                                                       |                       |                 |                   |  
|Capital                                                |                       | **2,675,000**   |                   |  
|                                                       |                       |                 |                   |  
|Retained earnings (deficit)                            |                       | **(3,865,000**  | **)**             |  
|                                                       |                       |                 |                   |  
|**Total Partners Capital (Deficit)**                  |                       | **(1,190,000**  | **)**             |  
|                                                       |                       |                 |                   |  
|**Total Liabilities and Partners Capital (Deficit)**  | **$**                 | **101,399,000** |                   | $
|                                                       |                       |                 |                   |  

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

|2
|-

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

|                                    | Three Months
      Ended
    December 31, 
    2004 |                | Two Months
      Ended
    December 31, 
    2003 |   | One Month
      Ended
    October 31, 
    2003 |  
|----------------------------------- | --------------------------------------------------- | -------------- | ------------------------------------------------- | - | ----------------------------------------------- | -
|
|
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Net Sales**                       | **$**                                               | **10,873,000** |                                                   | $ | 6,985,000                                       |  
|**Cost of Sales**                   |                                                     | **6,835,000**  |                                                   |   | 4,358,000                                       |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Gross Profit**                    |                                                     | **4,038,000**  |                                                   |   | 2,627,000                                       |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Operating Expenses:**             |                                                     |                |                                                   |   |                                                 |  
|Selling and shipping                |                                                     | **3,344,000**  |                                                   |   | 2,044,000                                       |  
|General and administrative          |                                                     | **1,270,000**  |                                                   |   | 855,000                                         |  
|Depreciation and amortization       |                                                     | **241,000**    |                                                   |   | 326,000                                         |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Total Operating Expenses**        |                                                     | **4,855,000**  |                                                   |   | 3,225,000                                       |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Loss From Operations**            |                                                     | **(817,000**   | **)**                                             |   | (598,000                                        | )
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Other Expense:**                 
|                                    |                                                     |                |                                                   |   |                                                 |  
|Interest expense                    |                                                     | **(2,696,000** | **)**                                             |   | (1,593,000                                      | )
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Loss From Continuing Operations**
|**Before Income Taxes**             |                                                     | **(3,513,000** | **)**                                             |   | (2,191,000                                      | )
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Income Tax Benefit (Expense)**    |                                                     | **1,135,000**  |                                                   |   | 758,000                                         |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Loss from Continuing Operations** |                                                     | **(2,378,000** | **)**                                             |   | (1,433,000                                      | )
|                                    |                                                     |                |                                                  
|                                    |                                                     |                |                                                   |   |                                                 |  
|Loss from discontinued operations   |                                                     | ****          |                                                   |   | (39,000                                         | )
|                                    |                                                     |                |                                                   |   |                                                 |  
|                                    |                                                     |                |                                                   |   |                                                 |  
|**Net Loss**                        | **$**                                               | **(2,378,000** | **)**                                             | $ | (1,472,000                                      | )
|                                    |                                                     |                |                                                   |   |                                                 |  

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

|3
|-

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

|                                    | Six Months
      Ended
    December 31, 
    2004 |                | Two Months
      Ended
    December 31, 
    2003 |   | Four Months
      Ended
    October 31, 
    2003 |  
|----------------------------------- | ------------------------------------------------- | -------------- | ------------------------------------------------- | - | ------------------------------------------------- | -
|
|
|
|**Net Sales**                       | **$**                                             | **25,098,000** |                                                   | $ | 6,985,000                                         |  
|**Cost of Sales**                   |                                                   | **15,815,000** |                                                   |   | 4,358,000                                         |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Gross Profit**                    |                                                   | **9,283,000**  |                                                   |   | 2,627,000                                         |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Operating Expenses:**             |                                                   |                |                                                   |   |                                                   |  
|Selling and shipping                |                                                   | **7,694,000**  |                                                   |   | 2,044,000                                         |  
|General and administrative          |                                                   | **2,584,000**  |                                                   |   | 855,000                                           |  
|Depreciation and amortization       |                                                   | **449,000**    |                                                   |   | 326,000                                           |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Total Operating Expenses**        |                                                   | **10,727,000** |                                                   |   | 3,225,000                                         |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Loss From Operations**            |                                                   | **(1,444,000** | **)**                                             |   | (598,000                                          | )
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Other Expense:**                  |                                                   |                |                                                   |   |                                                   |  
|Refinancing and transaction costs   |                                                   | ****          |                                                   |   |                                                  |  
|Interest expense                    |                                                   | **(5,334,000** | **)**                                             |   | (1,593,000                                        | )
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Loss From Continuing Operations**
|**Before Income Taxes**             |                                                   | **(6,778,000** | **)**                                             |   | (2,191,000                                        | )
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Income Tax Benefit (Expense)**    |                                                   | **2,139,000**  |                                                   |   | 758,000                                           |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Loss from Continuing Operations** |                                                   | **(4,639,000** | **)**                                             |   | (1,433,000                                        | )
|                                    |                                                   |                |                                                   |   |                                                   |  
|Loss from discontinued operations   |                                                   | ****          |                                                   |   | (39,000                                           | )
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                   |   |                                                   |  
|**Net Loss**                        | **$**                                             | **(4,639,000** | **)**                                             | $ | (1,472,000                                        | )
|                                    |                                                   |                |                                                   |   |                                                   |  
|                                    |                                                   |                |                                                  
|                                    |                                                   |                |                                                  

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

|4
|-

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

|                                               | Six months
      Ended
    December 31, 
    2004 |                | Two Months
      Ended
    December 31,
    2003 |   | Four months
      Ended
    October 31, 
    2003 |  
|---------------------------------------------- | ------------------------------------------------- | -------------- | ------------------------------------------------ | - | ------------------------------------------------- | -
|
|
|
|**Cash Flows from Operating Activities:**      |                                                   |                |                                                  |   |                                                   |  
|                                               |                                                   |                |                                                  |   |                                                   |  
|Net loss from continuing operations            | **$**                                             | **(4,639,000** | **)**                                            | $ | (1,433,000                                        | )
|Adjustments to reconcile net loss to net cash 
|provided by (used in) operating activities    
|Changes in operating assets and liabilities:  
|Accounts receivable                            |                                                   | **17,379,000** |                                                  |   | 112,000                                           |  
|Inventories                                    |                                                   | **(1,908,000** | **)**                                            |   | 128,000                                           |  
|Prepaid expenses, refundable income taxes      |                                                   |                |                                                  |   |                                                   |  
|and other current assets                       |                                                   | **(654,000**   | **)**                                            |   | (37,000                                           | )
|Other assets                                   |                                                   | **57,000**     |                                                  |   | (31,000                                           | )
|Accounts payable and accrued expenses          |                                                   | **(6,885,000** | **)**                                            |   | 587,000                                           |  
|Income taxes payable                           |                                                   | **(325,000**   | **)**                                            |   |                                                  |  
|Non-cash interest expense                      |                                                   | **3,166,000**  |                                                  |   | 202,000                                           |  
|Depreciation and other amortization            |                                                   | **1,109,000**  |                                                  |   | 540,000                                           |  
|Deferred income tax benefit                    |                                                   | **(1,814,000** | **)**                                            |   | (763,000                                          | )
|Compensation related to repriced stock options |                                                   | ****          |                                                  |   |                                                  |  
|Trademarks                                     |                                                   | **(21,000**    | **)**                                            |   |                                                  |  
|                                               |                                                   |                |                                                  |   |                                                   |  
|                                               |                                                   |                |                                                  |   |                                                   |  
|**Net Cash Provided by (Used in) Operating**  
|**Activities of Continuing Operations**        |                                                   | **5,465,000**  |                                                  |   | (695,000                                          | )
|                                               |                                                   |                |                                                  |   |                                                   |  
|                                               |                                                   |                |                                                  |   |                                                   |  
|**Cash Flows From Investing Activities:**      |                                                   |                |                                                  |   |                                                   |  
|                                               |                                                   |                |                                                  |   |                                                   |  
|Purchase of equipment                          |                                                   | **(712,000**   | **)**                                            |   | (51,000                                           | )
|Purchase of package design and tooling         |                                                   | **(270,000**   | **)**                                            |   | (55,000                                           | )
|                                               |                                                   |                |                                                  |   |                                                   |  
|                                               |                                                   |                |                                                  |   |                                                   |  
|**Net Cash Used in Investing Activities**      | **$**                                             | **(982,000**   | **)**                                            | $ | (106,000                                          | )
|                                               |                                                   |                |                                                  |   |                                                   |  

|                                                            
|------------------------------------------------------------
|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,
    2004 |                | Two Months
      Ended
    December 31,
    2003 |   | Four months
      Ended
    October 31,
    2003 |  
|---------------------------------------------------- | ------------------------------------------------ | -------------- | ------------------------------------------------ | - | ------------------------------------------------ | -
|
|
|
|**Cash Flows From Financing Activities:**            |                                                  |                |                                                  |   |                                                  |  
|                                                     |                                                  |                |                                                  |   |                                                  |  
|Net payments on revolving credit facility            | **$**                                            | **(4,076,000** | **)**                                            | $ | 1,965,000                                        |  
|Payments on long-term debt                           |                                                  | **(695,000**   | **)**                                            |   | (208,000                                         | )
|Deferred financing costs                             |                                                  | **(87,000**    | **)**                                            |   | (8,000                                           | )
|                                                     |                                                  |                |                                                  |   |                                                  |  
|                                                     |                                                  |                |                                                 
|                                                     |                                                  |                |                                                  |   |                                                  |  
|**Net Cash Provided by (Used In) Financing**         |                                                  |                |                                                  |   |                                                  |  
|**Activities**                                       |                                                  | **(4,858,000** | **)**                                            |   | 1,749,000                                        |  
|                                                     |                                                  |                |                                                  |   |                                                  |  
|                                                     |                                                  |                |                                                 
|                                                     |                                                  |                |                                                  |   |                                                  |  
|Net increase (decrease) in cash and cash equivalents |                                                  |                |                                                  |   |                                                  |  
|from continuing operations                           |                                                  | **(375,000**   | **)**                                            |   | 948,000                                          |  
|                                                     |                                                  |                |                                                 
|                                                     |                                                  |                |                                                  |   |                                                  |  
|Net cash provided by (used in) discontinued          |                                                  |                |                                                  |   |                                                  |  
|operations                                           |                                                  | **204,000**    |                                                  |   | (434,000                                         | )
|                                                     |                                                  |                |                                                  |   |                                                  |  
|                                                     |                                                  |                |                                                 
|                                                     |                                                  |                |                                                  |   |                                                  |  
|Net increase (decrease) in cash and cash equivalents |                                                  | **(171,000**   | **)**                                            |   | 514,000                                          |  
|                                                     |                                                  |                |                                                 
|                                                     |                                                  |                |                                                  |   |                                                  |  
|**Cash and Cash Equivalents,**beginning of period    |                                                  | **441,000**    |                                                  |   | 467,000                                          |  
|                                                     |                                                  |                |                                                  |   |                                                  |  
|                                                     |                                                  |                |                                                 
|                                                     |                                                  |                |                                                  |   |                                                  |  
|**Cash and Cash Equivalents,**end of period          | **$**                                            | **270,000**    |                                                  | $ | 981,000                                          |  
|                                                     |                                                  |                |                                                  |   |                                                  |  
|                                                     |                                                  |                |                                                 
|                                                     |                                                  |                |                                                  |   |                                                  |  
|**Supplemental Disclosure of Cash Flow**             |                                                  |                |                                                  |   |                                                  |  
|**Information**                                      |                                                  |                |                                                  |   |                                                  |  
|Cash paid for interest                               | **$**                                            | **2,139,000**  |                                                  | $ | 1,506,000                                        |  
|Cash received for taxes                              | **$**                                            | **57,000**     |                                                  | $ | 78,000                                           |  
|                                                     |                                                  |                |                                                  |   |                                                  |  
|                                                     |                                                  |                |                                                 

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

|6
|-

|**Easy Gardener Products, Ltd. and Subsidiaries
    Notes to Consolidated Financial Statements**
|------------------------------------------------------------------------------------------------
|                                                                                                
|                                                                                                
|                                                                                                

|1. | The accompanying consolidated financial statements include the unaudited consolidated statements of
operations and cash flows for the month and four months ended October 31, 2003 of U.S. Home &
Garden, Inc. (the Predecessor) from whom Easy Gardener Products, Ltd., (the Company)
acquired its operations effective November 1, 2003. The accompanying consolidated financial statements
at December 31, 2004 and for the three months ended and six months ended December 31, 2004 and two
months ended December 31, 2003 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, 2004 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, 2004, for details
of accounting policies and detailed notes to the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Inventories consist of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| |                             |       |               |  |  
| | --------------------------- | ----- | ------------- |  | -
|
|
| |                            
| | Raw and packaging materials | **$** | **2,668,000** |  | $
| | Finished goods              |       | **4,668,000** |  |  
| |                             |       |               |  |  
| |                             |       |               |  |  
| |                             | **$** | **7,336,000** |  | $
| |                             |       |               |  |  

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | All shipping and handling expenses are included in the selling and shipping caption and totaled approximately
$1,115,000, $3,047,000, and $736,000, for the three months ended and six months ended December 31,
2004 and the two months ended December 31, 2003, respectively and $385,000, and $2,075,000 for the
one month ended October 31, 2003 (Predecessor), and the four months ended October 31, 2003 (Predecessor),
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5. | The Company and its parent, EYAS International, Inc., and their subsidiaries have a revolving credit facility with LaSalle Business Credit, L.L.C. who is the Agent for and one of the lenders on the facility, and a term loan facility with CapitalSource Finance, L.L.C. The revolving credit facility has a maximum borrowing level of $25 million. Interest is at variable annual rates based upon the prime rate plus 0.5% or LIBOR plus 3.25%. The interest rate on the revolving credit facility was 5.25% at December 31, 2004. The revolving credit facility has various financial covenants including minimum EBITDA, minimum EBITDA to pay interest on the Junior Subordinated Debentures, a Fixed Charge Coverage Ratio, a Funded Senior Debt Ratio/Leverage Ratio and limits on Capital Expenditures. Borrowings on the revolving credit facility were $9,111,000 at December 31, 2004 and
are based on eligible borrowing base of $10,746,000 including a $2,000,000 over advance line available at December 31, 2004. There are two term loans. The term loan A had $12,250,000 outstanding at December 31, 2004 and term loan B had $9,500,000 outstanding at December 31, 2004 plus accrued interest. Term loan A bears interest at the greater of 5.75% over the prime rate or 10.00% and has monthly repayment of principal of $104,167 per month in year one, and $166,667 per month in year two. Year one began on October 29, 2003. Term Loan B bears interest at the greater of 8.75% over the prime rate or 13.00% plus 7.00% of non-cash interest which is to be paid at the maturity of Term Loan B on October 29,
2008. The variable interest rates on Term Loans A and B were 10.90% and 13.90%, respectively, at December 31, 2004. Term Loans A and B also require mandatory pre-payments from the excess cash flow as defined in the loan agreement. The principal pre-payments range from 50% to 75% of the excess cash flow. The facility has financial covenants identical to those of the revolving credit facility described above.

|7
|-

|**Easy Gardener Products, Ltd. and Subsidiaries
      Notes to Consolidated Financial Statements**
|--------------------------------------------------------------------------------------------------
|                                                                                                  
|                                                                                                  
|                                                                                                  

|   | 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. The deferred interest and interest on the deferred interest are included in the caption,
Junior Subordinated Debentures, net of discount.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|6. | The Companys previous business combinations were accounted for using the purchase method. As
a result of such combinations, the Company has recognized a significant amount of goodwill, which,
in the aggregate, was $48,174,000 at December 31, 2004 and June 30, 2004. Intangible assets acquired
and related accumulated amortization were as follows:                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                                   | December 31, 2004 |           
| | --------------------------------- | ----------------- | ----------
|
|
| | **Amortized Intangible Assets**   |                   |           
| | Non-compete agreements            | $                 | 1,570,000 
| | Package Tooling Costs             |                   | 1,524,000 
| | Other Intangible Assets           |                   | 976,000   
| |                                   |                   |           
| | Total                             | $                 | 4,070,000 
| |                                   |                   |           
| |                                   |                   |           
| | **Unamortized Intangible Assets** |                   |           
| | Trademarks                        | $                 | 23,587,000
| |                                   |                   |           

|
|
|

|8
|-

|**Easy Gardener Products, Ltd. and Subsidiaries
      Notes to Consolidated Financial Statements**
|--------------------------------------------------------------------------------------------------
|                                                                                                  
|                                                                                                  
|                                                                                                  

| | Amortization expense for all intangible assets and deferred financing amortization expense during the
three months and the six months ended December 31, 2004 and the two months ended December 31, 2003
was $283,000, $556,000 and $352,000, respectively, and the one month and four months ended October
31, 2003 (Predecessor) was $89,000 and $531,000, respectively. These amounts include deferred financing
amortization expense during the three months and the six months ended December 31, 2004 and the two
months ended December 31, 2003 of $67,000, $102,000 and $47,000, respectively, and the one month
and four months ended October 31, 2003 (Predecessor) of $8,000 and $69,000, respectively. Estimated
amortization expense for each of the five succeeding fiscal years is as follows, such amounts include
annual deferred financing amortization expense of $260,000:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | Year Ended June 30, |  | Amount |          
| | ------------------- |  | ------ | ---------
|
| | 2005                |  | $      | 1,112,000
| | 2006                |  |        | 1,112,000
| | 2007                |  |        | 1,112,000
| | 2008                |  |        | 924,000  
| | 2009                |  |        | 924,000  

|9
|-

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

|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
believe, expect, anticipate, intend and plan
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,
    2004 |    |               | Two months
      ended 
      December 31,
    2003 |    |  | One month
      ended
      October 31,
    2003 |               |  | Six months
      ended
      December 31,
    2004 |    |  | Two months
      ended
      December 31,
    2003 |    |  | Four months
      ended
      October 31,
    2003 |    | 
|---------------------------------------------------- | ---------------------------------------------------- | -- | ------------- | --------------------------------------------------- | -- |  | ------------------------------------------------ | ------------- |  | -------------------------------------------------- | -- |  | -------------------------------------------------- | -- |  | -------------------------------------------------- | -- | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|                                                     |                                                      |    | (Predecessor) |                                                     |    |  |                                                  | (Predecessor) |  |                                                   
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|Net sales                                            | 100.0                                                | %  |               | 100.0                                               | %  |  | 100.0                                            | %             |  | 100.0                                              | %  |  | 100.0                                              | %  |  | 100.0                                              | %  | 
|Cost of sales                                        | 62.9                                                 | %  |               | 62.4                                                | %  |  | 73.4                                             | %             |  | 63.0                                               | %  |  | 62.4                                               | %  |  | 62.7                                               | %  | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|Gross profit                                         | 37.1                                                 | %  |               | 37.6                                                | %  |  | 26.6                                             | %             |  | 37.0                                               | %  |  | 37.6                                               | %  |  | 37.3                                               | %  | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|Selling and shipping expenses                        | 30.8                                                 | %  |               | 29.3                                                | %  |  | 40.6                                             | %             |  | 30.7                                               | %  |  | 29.3                                               | %  |  | 33.4                                               | %  | 
|General and administrative expenses                  | 11.6                                                 | %  |               | 12.2                                                | %  |  | 25.0                                             | %             |  | 10.3                                               | %  |  | 12.2                                               | %  |  | 14.6                                               | %  | 
|Depreciation and amortization                        | 2.2                                                  | %  |               | 4.7                                                 | %  |  | 2.5                                              | %             |  | 1.8                                                | %  |  | 4.7                                                | %  |  | 2.5                                                | %  | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|Loss from operations                                 | (7.5                                                 | %) |               | (8.6                                                | %) |  | (41.5                                            | %)            |  | (5.8                                               | %) |  | (8.6                                               | %) |  | (13.2                                              | %) | 
|Refinancing and transaction costs                    |                                                     |    |               |                                                    |    |  |                                                 |               |  |                                                   |    |  |                                                   |    |  | (0.9                                               | %) | 
|Interest expense                                     | (24.8                                                | %) |               | (22.8                                               | %) |  | (23.0                                            | %)            |  | (21.2                                              | %) |  | (22.8                                              | %) |  | (16.4                                              | %) | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|Loss from continuing
   operations before income tax | (32.3                                                | %) |               | (31.4                                               | %) |  | (64.5                                            | %)            |  | (27.0                                              | %) |  | (31.4                                              | %) |  | (30.5                                              | %) | 
|Income tax benefit/(expense)                         | 10.4                                                 | %  |               | 10.9                                                | %  |  | (1.7                                             | %)            |  | 8.5                                                | %  |  | 10.9                                               | %  |  | (0.3                                               | %) | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|Loss from continuing operations                      | (21.9                                                | %) |               | (20.5                                               | %) |  | (66.2                                            | %)            |  | (18.5                                              | %) |  | (20.5                                              | %) |  | (30.8                                              | %) | 
|Loss from discontinued operations                    |                                                     |    |               | (0.6                                                | %) |  |                                                 |               |  |                                                   |    |  | (0.6                                               | %) |  | (0.4                                               | %) | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 
|Net loss                                             | (21.9                                                | %) |               | (21.1                                               | %) |  | (66.2                                            | %)            |  | (18.5                                              | %) |  | (21.1                                              | %) |  | (31.2                                              | %) | 
|                                                     |                                                      |    |               |                                                     |    |  |                                                  |               |  |                                                    |    |  |                                                    |    |  |                                                    |    | 

|11
|--

|Three Months Ended December 31, 2004 Compared to Two Months Ended December 31, 2003 and the One Month
Ended October 31, 2003 (Predecessor)
|------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                          

| | Net sales.   Net sales increased by $932,000, or 9.4%, to $10,873,000 during the three months ended
December 31, 2004, from $6,985,000 during the two months ended December 31, 2003 and $2,956,000 during
the one month ended October 31, 2003, for a combined net sales of $9,941,000 during the comparable
period in 2003. Net sales are gross sales less adjustments for discounts, rebates, returns and allowances
given to customers and such adjustments are collectively referred to as sales adjustments. The increase
in net sales was the result of an increase in the volume of products sold of $622,000, and a decrease
in rebates to customers of $360,000. The increase was offset in part by the Predecessors $25,000
in net sales for operations not acquired by the Company and also by $25,000 in net sales for the
Ampro division during the one month ended October 31, 2003. The Company disposed of the Ampro division
in June 2004.                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Cost of sales. Cost of sales increased by $308,000, or 4.7% to $6,835,000 for the three months ended December 31,
2004 from $4,358,000 during the two months ended December 31, 2003 and $2,169,000 during the one
month ended October 31, 2003, for a combined cost of sales of $6,527,000 during the comparable period
in 2003. The increase was a result of increases in the volume of products sold of $405,000 and in
material costs, primarily purchase price increases on a number of petroleum based products of $40,000,
offset in part by $16,000 in cost of sales for operations of the Predecessor not acquired by the
Company and by $121,000 in cost of sales for the Ampro division during the one month ended October
31, 2003. Cost of sales as a percentage of net sales decreased to 62.9% during the three months ended
December 31, 2004 from 65.7% during the comparable period in 2003. The decrease in cost of sales
as a percentage of sales was due to plant expenses staying constant in dollars on a higher volume
of sales. Depreciation and amortization included in cost of sales for the three months ended December
31, 2004 and during the two months ended December 31, 2003 and the one month ended October 31, 2003
were $321,000, $122,000, and $214,000, respectively.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Gross profit.   Gross profit increased by $624,000, or 18.3%, to $4,038,000 for the three months ended
December 31, 2004 from $2,627,000 during the two months ended December 31, 2003 and $787,000 during
the one month ended October 31, 2003, for a combined gross profit of $3,414,000 during the comparable
period in 2003. Gross profit as a percentage of net sales increased to 37.1% during the three months
ended December 31, 2004, from 34.3% during the comparable period in 2003. This increase in gross
profit dollars and as a percentage of net sales results from the matters described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | Selling and shipping expenses.  Selling and shipping expenses increased by $99,000, or 3.1% to $3,344,000 during the three months
ended December 31, 2004 from $2,044,000 during the two months ended December 31, 2003 and $1,201,000
during the one month ended October 31, 2003, for a combined selling and shipping expense of $3,245,000
during the comparable period in 2003. This increase in expense dollars was attributable to an increase
in marketing and new product development costs of $139,000, warehousing costs of $44,000, offset
in part by a decrease in other selling costs of $5,000 and the elimination of costs not assumed from
the Predecessor of $35,000 and by $44,000 in costs for the Ampro division during the one month ended
October 31, 2003.As a percentage of net sales, selling and shipping expenses decreased to 30.8% during
the three months ended December 31, 2004 from 32.6% during the comparable period in 2003 as a result
of net sales increasing at a greater rate than selling and shipping expenses.                                                                                                                                                                                                                                                    

|12
|--

| | General and administrative expenses.  General and administrative expenses decreased by $325,000 or 20.4%, to $1,270,000 during the
three months ended December 31, 2004 from $855,000 during the two months ended December 31, 2003
and $740,000 during the one month ended October 31, 2003, for a combined general and administrative
expense of $1,595,000 during the comparable period in 2003. This decrease is the result of costs
of the Predecessor not assumed by the Company of $323,000 and costs for the Ampro division of $6,000,
offset in part by cost increases during the quarter ended December 31, 2004 of $4,000. As a percentage
of net sales, general and administrative expenses decreased to 11.6% during the three months ended
December 31, 2004 from 16.0% during the comparable period in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Depreciation and amortization.  Depreciation and amortization expenses decreased by $157,000 or 39.4% to $241,000 during the
three months ended December 31, 2004 from $326,000 during the two months ended December 31, 2003
and $72,000 during the one month ended October 31, 2003, for a combined expense of $398,000 during
the comparable period in 2003. This decrease is primarily as a result of the Predecessor having a
shorter life on its amortizable intangible assets. As a percentage of net sales, depreciation and
amortization expenses decreased to 2.2% during the three months ended December 31, 2004 from 4.0%
during the comparable period in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Loss from operations.  Loss from operations decreased by $1,007,000 or 55.2% to $817,000 during the three months ended
December 31, 2004, from $598,000 during the two months ended December 31, 2003 and $1,226,000 during
the one month ended October 31, 2003, for a combined net loss of $1,824,000 during the comparable
period in 2003. The decrease in loss from continuing operations was primarily due to increased sales
and reduced operating expenses as noted above. As a percentage of net sales, loss from operations
decreased to 7.5% for the three months ended December 31, 2004 from 18.3% during the comparable period
in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Interest expense.   Net interest expense increased $423,000, or 18.6% to $2,696,000 during the three months ended December 31, 2004, from $1,593,000 during the two months ended December 31, 2003 and $680,000 during the one month ended October 31, 2003, for a combined expense of $2,273,000 during the comparable period in 2003. Interest on the revolving credit facility increased $27,000 as a result of increased borrowing levels. Interest expense on the term loans increased $160,000 as a result of increased average borrowing levels in the current period and higher interest rates. The Company has approximately $22,576,000 in term loans outstanding at December 31, 2004 compared to $23,410,000 at December 31, 2003 and $12,121,000 for the Predecessor at October 31, 2003. The interest expense of the Company on its term loans for the three months ended December 31, 2004 was $884,000 of which $183,000 is
due on October 29, 2008 and is considered non-cash interest in the current period. Interest expense on the term loans for the two months ended December 31, 2003 was $585,000, including non-cash interest of $119,000. Interest on the term loans is due in cash on October 29, 2008. The Predecessor had interest expense of $139,000 on its term loan for the one month ended October 31, 2003. The Company also has two subordinated loans, with non-cash interest expense in the current period, which increased $39,000, to $108,000 during the three months ended December 31, 2004 from $69,000 during the two months ended December 31, 2003. Interest on the subordinated loans is due in cash on May 29, 2009. Interest on the Junior Subordinated Debentures increased $194,000 to $1,561,000 from $1,367,000 in the comparable quarter. The increase is interest 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, 2004. 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 together with the interest on the accrued interest is included in the caption Junior Subordinated Debentures, net of discount. By deferring the interest on the Junior Subordinated Debentures, the Company has improved its cash flow by the amount of interest deferred. This improvement will exist until such time as the deferred interest is paid. Miscellaneous interest expense increased $3,000. The total non-cash interest for the December 31, 2004 quarter was $1,852,000. 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
|--

| | Income taxes.  The income tax benefit increased $426,000, or 60.1% to $1,135,000 during the three months ended
December 31, 2004 from $758,000 during the two months ended December 31, 2003 and an income tax expense
of $49,000 for the one month ended October 31, 2003, for a combined benefit amount of $709,000 for
the three months ended December 31, 2003. The Company has deferred tax credits, which permits it
to currently recognize deferred tax benefits on pre-tax losses. The Predecessor had a tax loss carry
forward and no net deferred tax credits, which impacted its taxes for the one month ended October
31, 2003.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Discontinued Operations.  Loss from discontinued operations decreased from $40,000 to $0 during the three months ended
December 31, 2004, from the comparable period in 2003. The Company recorded a loss on its discontinued
Ampro division operations of $39,000 during the two months ended December 31, 2003. The Predecessors
loss of $1,000 in October 2003 was due to its discontinued Weed Wizard operations.                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Net loss.   Net loss decreased by $1,050,000, or 30.6% to $2,378,000 during the three months ended
December 31, 2004 from a net loss of $1,472,000 during the two months ended December 31, 2003 and
$1,956,000 during the one month ended October 31, 2003, for a combined net loss of $3,428,000 during
the comparable period in 2003. The decrease in net loss is due to the matters described above. As
a percentage of net sales, net loss decreased to 21.9% for the three months ended December 31, 2004
from 34.5% during the comparable period in 2003.                                                                           

|                                                                                                                                          
|------------------------------------------------------------------------------------------------------------------------------------------
|Six Months Ended December 31, 2004 Compared to Two Months Ended December 31, 2003 and the Four Months
Ended October 31, 2003 (Predecessor)
|                                                                                                                                          

| | Net sales.   Net sales increased by $640,000, or 2.6%, to $25,098,000 during the six months ended December
31, 2004, from $6,985,000 during the two months ended December 31, 2003 and $17,473,000 during the
four months ended October 31, 2003, for a combined amount of $24,458,000 during the comparable period
in 2003. Net sales are gross sales less adjustments for discounts, rebates, returns and allowances
given to customers and such adjustments are collectively referred to as sales adjustments. The increase
in net sales was the result of an increase in the volume of products sold of $143,000, and a decrease
in rebates to customers of $301,000, and a decrease of $477,000 of returns recorded during the four
months ended October 31, 2004 by the Predecessor for the Ampro division. The Company disposed of
the Ampro division in June 2004. The increase in net sales described above was offset in part by
$66,000 of additional discounts given during the six months ended December 31, 2004 and by $215,000
of the Predecessors net sales for operations not acquired by the Company.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14
|--

| | Cost of sales. Cost of sales increased by $504,000, or 3.3% to $15,815,000 for the six months ended December 31,
2004 from $4,358,000 during the two months ended December 31, 2003 and $10,953,000 during the four
months ended October 31, 2003, for a combined amount of $15,311,000 during the comparable period
in 2003. The increase was a result of an increase in the volume of products sold of $72,000, increases
in material costs, primarily purchase price increases on a number of petroleum based products of
$326,000, and by a reduction in cost of sales in the comparable period last year related to the return
of inventory of the Ampro Division of $168,000. There were no such returns in the current period.
The increase was offset in part in the current period by a reduction in cost of sales of $62,000
for operations not acquired by the Company. Cost of sales as a percentage of net sales increased
to 63.0% during the six months ended December 31, 2004 from 62.6% during the comparable period in
2003. Depreciation and amortization included in cost of sales for the six months ended December 31,
2004, the two months ended December 31, 2003, and the four months ended October 31, 2004 were $632,000,
$176,000 and $496,000, respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Gross profit.   Gross profit increased by $136,000, or 1.5%, to $9,283,000 for the six months ended December
31, 2004 from $2,627,000 during the two months ended December 31, 2003 and $6,520,000 during the
four months ended October 31, 2003, for a combined gross profit of $9,147,000 during the comparable
period in 2003. Gross profit as a percentage of net sales decreased to 37.0% during the six months
ended December 31, 2004, from 37.4% during the comparable period in 2003. This decrease in gross
profit as a percentage of net sales results from the matters described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Selling and shipping expenses.  Selling and shipping expenses decreased by $188,000, or 2.4% to $7,694,000 during the six months
ended December 31, 2004 from $2,044,000 during the two months ended December 31, 2003 and $5,838,000
during the four months ended October 31, 2003, for a combined expense of $7,882,000 during the comparable
period in 2003. As a percentage of net sales, selling and shipping expenses decreased to 30.7% during
the six months ended December 31, 2004 from 32.2% during the comparable period in 2003. This decrease
in expense and as a percentage of net sales was attributable to a decrease in cooperative advertising,
commission and store service costs of $433,000, the elimination of costs of the Predecessor of $122,000
for the four months ended October 31, 2003 not assumed and costs related to the Ampro division in
the prior period of $141,000, offset in part by an increase of $294,000 in outbound freight and warehousing
costs and an increase in marketing and new product development costs of $214,000.                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | General and administrative expenses.  General and administrative expenses decreased by $828,000 or 24.3%, to $2,584,000 during the
six months ended December 31, 2004 from $855,000 during the two months ended December 31, 2003 and
$2,557,000 during the four months ended October 31, 2003 for a combined amount of $3,412,000 during
the comparable period in 2003. This decrease results from costs of the Predecessor not assumed by
the Company of $977,000 and costs of the Ampro division of $27,000, offset in part by cost increases
during the six months ended December 31, 2004 of $176,000 related to expenses of being a separate
company. As a percentage of net sales, general and administrative expenses decreased to 10.3% during
the six months ended December 31, 2004 from 14.0% during the comparable period in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Depreciation and amortization.  Depreciation and amortization expenses decreased by $308,000 or 40.7% to $449,000 during the
six months ended December 31, 2004 from $326,000 during the two months ended December 31, 2003 and
$431,000 during the four months ended October 31, 2003, for a combined amount of $757,000 during
the comparable period in 2003. This decrease is primarily as a result of the Predecessor having a
shorter life on its amortizable intangible assets. As a percentage of net sales, depreciation and
amortization expenses decreased to 1.8% during the six months ended December 31, 2004 from 3.1% during
the comparable period in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|15
|--

| | Loss from operations.  Loss from operations decreased by $1,460,000 or 50.3% to $1,444,000 during the six months ended December 31, 2004, from $598,000 during the two months ended December 31, 2003 and $2,306,000 during the four months ended October 31, 2003 for a combined loss from operations of $2,904,000 during the comparable period in 2003. The decrease in loss from continuing operations was primarily due to increased sales and reduced operating expenses as noted above. As a percentage of net sales, loss from operations decreased to 5.8% for the six months ended December 31, 2004 from 11.9% during the comparable period in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Refinancing and transaction costs.The Company did not incur refinancing and transaction costs during the six months ended December 31,
2004 or the two months ended December 31, 2003. In the four months ended October 31, 2003, the Predecessor
incurred $159,000 in refinancing and transaction costs, related to the sale of assets to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Interest expense.   Net interest expense increased $873,000, or 19.6% to $5,334,000 during the six months
ended December 31, 2004, from $1,593,000 during the two months ended December 31, 2003 and $2,868,000
during the four months ended October 31, 2003 for a combined interest expense of $4,461,000 for the
comparable period in 2003. Interest on the revolving credit facility decreased $144,000 as a result
of reduced borrowing levels and lower interest rates during most of the period. Interest expense
on the term loans increased $539,000 as a result of increased average borrowing levels in the current
period and higher interest rates. The Company has approximately $22,576,000 in term loans outstanding
at December 31, 2004 compared to $23,410,000 at December 31, 2003 and $12,121,000 for the Predecessor
at October 31, 2003. The interest expense of the Company on its term loans for the six months ended
December 31, 2004 was $1,737,000 of which $362,000 is due on October 29, 2008 and is considered non-cash
interest in the current period. Interest expense on the term loans for the two months ended December
31, 2003 was $585,000, including non-cash interest of $119,000 in the two-month period. The Predecessor
had interest expense of $612,000 on its term loan for the four months ended October 31, 2003. The
Company also has two subordinated loans with non-cash interest expense, which increased $145,000,
to $214,000 during the six months ended December 31, 2004 from $69,000 during the two months ended
December 31, 2003. The interest on the subordinated loans is due in cash on May 29, 2009. Interest
on the Junior Subordinated Debentures increased $318,000 to $3,065,000 from $2,747,000 in the comparable
period. The increase is interest on the deferred interest. 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 together with the interest on the accrued interest is included in the
caption Junior Subordinated Debentures, net of discount. Deferred interest and interest thereon of
$2,590,000 is included in non-cash interest expense in the current period. By deferring the interest
on the Junior Subordinated Debentures, the Company has improved its cash flow by the amount of interest
deferred. This improvement will exist until such time as the deferred interest is paid. The remaining
$15,000 increase in interest is related to miscellaneous interest expense. The total non-cash interest
for the six months ended December 31, 2004 was $3,166,000. 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.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Income taxes.  Income tax benefit increased $1,425,000 to $2,139,000 during the six months ended December 31, 2004 from $758,000 during the two months ended December 31, 2003 and an income tax expense of $44,000 during the four months ended October 31, 2003 for a combined income tax benefit of $714,000 for the six months ended December 31, 2003. The Company has deferred tax credits, which permits it to currently recognize deferred tax benefits on pre-tax losses.   The Predecessor had a tax loss carry forward and no net deferred tax credits, which impacted its taxes for the four months ended October 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|16
|--

| | Discontinued Operations.  Loss from discontinued operations decreased $114,000 to $0 during the six months ended December
31, 2004 from $39,000 during the two months ended December 31, 2003 and $75,000 during the four months
ended October 31, 2003 for a combined amount of $114,000 from the comparable period in 2003. The
Companys loss during the two months ended December 31, 2003 was due to its discontinued Ampro
division. The Predecessors loss during the four months ended October 31, 2003 was due to its
discontinued Weed Wizard operations.                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Net loss.   Net loss decreased by $2,285,000 to $4,639,000 during the six months ended December 31,
2004 from a net loss of $1,472,000 during the two months ended December 31, 2003 and $5,452,000 during
the four months ended October 31, 2003 for a combined net loss of $6,924,000 during the comparable
period in 2003. The decrease in net loss is due to matters described above. As a percentage of net
sales, net loss decreased to 18.5% for the six months ended December 31, 2004 from 28.3% during the
comparable period in 2003.                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 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.                                                                                                                                                                                                                                                                                                                                                                

|17
|--

| | At December 31 2004, the Company had cash and short-term investments totaling $270,000 and a working
capital deficit of $2,991,000. At June 30, 2004, the Company had cash and short-term investments
totaling $441,000 and working capital of $1,385,000. The change in working capital deficit for the
six months ended December 31, 2004 of $4,376,000 was primarily attributable to the loss from continuing
operations of $4,639,000 for the six months ended December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Net cash provided by operating activities for the six months ended December 31, 2004 was $5.5 million
resulting from a net loss from continuing operations of $4.6 million, such loss as reduced by non-cash
interest expense and deferred income tax benefit of $2.5 million, a decrease in accounts receivable
of $17.4 million, offset by an increase in inventory and a decrease in accounts payable and accrued
expenses, prepaid expenses and other current assets of $9.8 million. These changes are consistent
with the seasonal nature of the Companys business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Net cash used in investing activities for the six months ended December 31, 2004 of $1.0 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, 2004 of $4.9 million is
primarily due to repayments made on the revolving credit facility as accounts receivable are collected
and scheduled principal repayment on the term loan with cash provided from operating activities of
$5.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The Company and its parent, EYAS International, Inc., and their subsidiaries have a revolving credit facility with LaSalle Business Credit, L.L.C. who is the Agent for and one of the lenders on the facility, and a term loan facility with CapitalSource Finance, L.L.C. The revolving credit facility has a maximum borrowing level of $25 million. Interest is at variable annual rates based upon the prime rate plus 0.5% or LIBOR plus 3.25%. The interest rate on the revolving credit facility was 5.25% at December 31, 2004. The revolving credit facility has various financial covenants including minimum EBITDA, minimum EBITDA to pay interest on the Junior Subordinated Debentures, a Fixed Charge Coverage Ratio, a Funded Senior Debt Ratio/Leverage Ratio and limits on Capital Expenditures. Borrowings on the revolving credit facility were $9,111,000 at December 31, 2004 and are based on eligible borrowing base of $10,746,000
including a $2,000,000 over advance line available at December 31, 2004. There are two term loans. The term loan A had $12,250,000 outstanding at December 31, 2004 and term loan B had $9,500,000 outstanding at December 31, 2004 plus accrued interest. Term loan A bears interest at the greater of 5.75% over the prime rate or 10.00% and has monthly repayment of principal of $104,167 per month in year one, and $166,667 per month in year two. Year one began on October 29, 2003. Term Loan B bears interest at the greater of 8.75% over the prime rate or 13.00% plus 7.00% of non-cash interest which is to be paid at the maturity of Term Loan B on October 29, 2008. The variable interest rates on Term Loans A and B were 10.90% and 13.90%, respectively, at December 31, 2004. Term Loans A and B also require mandatory pre-payments from the excess cash flow as defined in the loan agreement. The principal pre-payments range from 50% to 75% of the excess cash flow. The facility has financial covenants identical to those of  the revolving credit facility described above.

|18
|--

| | Commitments                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                           
| | The Company leases office and warehouse space, certain office equipment and automobiles under operating
leases expiring through 2008. The future minimum annual lease payments under these non-cancelable
operating leases are as follows:
| |                                                                                                                                                                                                                                           

| | Year Ended June 30, |  | Amount |        
| | ------------------- |  | ------ | -------
|
| |                     |  |        |        
| | 2005                |  | $      | 602,000
| | 2006                |  |        | 268,000
| | 2007                |  |        | 9,000  
| | 2008                |  |        | 6,000  
| |                     | 
| |                     |  | $      | 885,000
| |                     | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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). The Company is studying the implications of this Statement on its financial
reporting and does not expect that it will have an effect on its financial statements.                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In December 2004, the FASB revised Statement No. 123 entitled Share-Based Payment. This Statement,
which is effective as of the beginning of the first interim or annual reporting period, that begins
after June 15, 2005, establishes standards for the accounting for transactions in which an entity
exchanges its equity instruments for goods or services. The Statement focuses primarily on accounting
for transactions in which an entity obtains employee services in share-based payment transactions.
The Company has not exchanged equity instruments for goods or services and currently does not expect
to do so in the future.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Inflation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Inflation has historically not had a material effect on the Companys operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|19
|--

| | 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. The following information relates to the Companys fixed maturity debt as of December
31, 2004 that are sensitive to changes in interest rates. A 1% point increase in the variable interest
rate at the beginning of the quarter would have increased interest expense $81,000. Actual interest
expense on the debt subject to variable interest was $2,168,000 for the six months ended December
31, 2004.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The Revolving Credit Facility with LaSalle Business Credit L.L.C. had a variable interest rate ranging
from 4.75% to 5.25% for the period ended                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|
|
|
|

| | The Term Loan A with Capital Source Finance, L.L.C. had a variable interest rate ranging from 10.33%
to 10.9% for the period ended
| | ----------------------------------------------------------------------------------------------------------------------------------

|
|
|
|

| | The Term Loan B with Capital Source Finance, LLC had a variable interest rate component ranging from
13.33% to 13.9% for the period ended
| | -----------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                          

| | December 31, 2004 | $10.3 million
| | ----------------- | -------------
| |                  

| | Item 4.  Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (a)  Evaluation of disclosure controls and procedures. As of the end of the period covered by this report, have 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)  Changes in internal control over financial reporting. There have been no changes in the Companys internal control over financial reporting that occurred during the six months ended December 31, 2004 that have materially affected or are reasonably likely to materially affect the internal controls over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|20
|--

|
|
|

| | 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, 2005 |     |                              |                      
|----------------- | --- | ---------------------------- | ---------------------
|                  |     | Easy Gardener Products, Ltd.
|                  |     |                              | (Registrant)         
|                  |     |                              |                      
|                  | By  | :                            | /s/ Richard M. Grandy
|                  |     |           
|                  |     | Richard M. Grandy           
|                  |     | Manager / CEO               
|                  |     |                             
|                  | By: |                              | /s/ Richard M. Kurz  
|                  |     |           
|                  |     | Richard M. Kurz             
|                  |     | Manager/ CFO                

|21
|--