<PAGE>



                            UNITED STATES OF AMERICA
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20509

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended March 31, 2001.

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from ________ to ________

     Commission file number 0-26568



                              USA DETERGENTS, INC.
                              --------------------
             (Exact name of registrant as specified in its charter)



                   Delaware                                    11-2935430
                   --------                                    ----------
(State or other jurisdiction of incorporation                (IRS Employer
               or organization)                            Identification No.)



              1735 JERSEY AVENUE, NORTH BRUNSWICK, NEW JERSEY 08902
              -----------------------------------------------------
               (Address of principal executive offices -Zip code)



                                 (732) 828-1800
                                 --------------
              (Registrant's telephone number, including area code)



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


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

Yes  X    No
    ---      ---


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


CLASS OF STOCK                NO. OF SHARES OUTSTANDING                 Date
--------------                -------------------------                 ----
    Common                            14,192,776                    May 17, 2001




<PAGE>

                     USA DETERGENTS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)

                                     ASSETS




<TABLE>
<CAPTION>
                                                                       MARCH 31,     DECEMBER 31,
                                                                          2001           2000
                                                                      -----------   -------------
<S>                                                                   <C>           <C>
Current assets:
Cash                                                                   $      --      $     567
Restricted funds                                                           2,002          2,002
Accounts receivable, net of customer allowances and doubtful
 accounts of $823 and $977, respectively                                  23,013         23,304
Inventories                                                               12,370         18,665
Refundable income taxes                                                       42             42
Prepaid expenses and other current assets                                  7,884          5,047
                                                                       ---------      ---------
    Total current assets                                                  45,311         49,627
Property and equipment -- net                                             44,806         44,099
Deferred financing costs                                                     954          1,084
Other non-current assets                                                     645            769
                                                                       ---------      ---------
    Total assets                                                       $  91,716      $  95,579
                                                                       =========      =========

                            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt                                      $  18,026      $  36,671
Cash overdraft                                                             4,113             --
Accounts payable                                                          31,161         23,949
Accrued expenses                                                          20,543         13,290
Other current liabilities                                                    218            259
                                                                       ---------      ---------
    Total current liabilities                                             74,061         74,169
Deferred rent payable                                                        498            465
                                                                       ---------      ---------
    Total liabilities                                                     74,559         74,634
                                                                       ---------      ---------
Commitments and Contingencies

Stockholders' equity:
Preferred stock--no par value; authorized 1,000,000 shares, none
 issued                                                                       --             --
Common stock--$.01 par value; authorized 30,000,000 shares, issued
 and outstanding 14,192,776 shares at both March 31, 2001 and
 December 31, 2000                                                           142            142
Additional paid-in capital                                                31,907         31,907
Deficit                                                                  (14,822)       (11,034)
Note receivable from shareholder                                             (70)           (70)
                                                                       ---------      ---------
    Total stockholders' equity                                            17,157         20,945
                                                                       ---------      ---------
    Total liabilities and stockholders' equity                         $  91,716      $  95,579
                                                                       =========      =========
</TABLE>


                     See Notes to Consolidated Financial Statements.






                                       2
<PAGE>



                     USA DETERGENTS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  (IN THOUSANDS, EXCEPT PER SHARE INFORMATION)




<TABLE>
<CAPTION>
                                                                            THREE MONTHS
                                                                           ENDED MARCH 31,
                                                                     ---------------------------
                                                                         2001           2000
                                                                     ------------   ------------
<S>                                                                  <C>            <C>
Net revenues                                                           $ 68,886       $ 64,114
                                                                       --------       --------
Costs and expenses:
 Cost of goods sold                                                      61,294         43,932
 Selling, general and administrative                                     10,539         18,823
                                                                       --------       --------
                                                                         71,833         62,755
                                                                       --------       --------
(Loss) income from operations                                            (2,947)         1,359

Interest and amortization of deferred financing costs -- net                766          1,088
                                                                       --------       --------
(Loss) income before provision for income taxes                          (3,713)           271
Provision for income taxes                                                   75             50
                                                                       --------       --------
Net (loss) income                                                      $ (3,788)      $    221
                                                                       ========       ========
Basic net (loss) income per share                                      $   (.27)      $    .02
                                                                       ========       ========
Weighted average shares outstanding                                      14,193         13,826
                                                                       ========       ========
Diluted net (loss) income per share                                    $   (.27)      $    .02
                                                                       ========       ========
Weighted average shares outstanding and common share equivalents         14,193         13,836
                                                                       ========       ========
</TABLE>

                See Notes to Consolidated Financial Statements.






                                       3



<PAGE>

                     USA DETERGENTS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  THREE MONTHS ENDED MARCH 31, 2001, AND 2000
                                 (IN THOUSANDS)




<TABLE>
<CAPTION>
                                                                          2001            2000
                                                                      ------------   -------------
<S>                                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net (loss)/income                                                     $  (3,788)       $   221
Adjustments to reconcile net (loss) income to net cash provided by
 operating activities:
 Depreciation and amortization                                             1,676          1,711
 Amortization of deferred financing costs                                    102            147
 Amortization of slotting                                                     --            718
 Other amortization                                                          191            202
 Change in the provision for customer allowances and doubtful
   accounts                                                                 (154)            31
 Change in deferred rent                                                      33            (54)
Changes in operating assets and liabilities:
 Decrease/(increase) in accounts receivable                                  445           (315)
 Decrease/(increase) in inventories                                        6,295         (1,455)
 Increase in prepaid expenses and other current assets                    (2,837)          (317)
 Increase in other non-current assets                                        (39)           (48)
 Increase in cash overdraft                                                4,113          1,656
 Increase/(decrease) in accounts payable and accrued expenses             14,465             (8)
 Decrease in other current liabilities                                       (41)           (37)
                                                                       ---------        -------
   Net cash provided by operating activities                              20,461          2,452
                                                                       =========        =======
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment                                       (2,383)          (362)
                                                                       ---------        -------
   Net cash used in investing activities                                  (2,383)          (362)
                                                                       =========        =======
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net repayments to credit facilities                                     (18,645)        (2,155)
 Increase in deferred financing costs                                         --             (3)
                                                                       ---------        -------
   Net cash used in financing activities                                 (18,645)        (2,158)
                                                                       =========        =======
Net decrease in cash                                                        (567)           (68)
Cash at beginning of period                                                  567            254
                                                                       =========        =======
Cash at end of period                                                  $      --        $   186
                                                                       =========        =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FOR
 OPERATING ACTIVITIES:
 Interest paid                                                         $     828        $   951
                                                                       =========        =======
 Income taxes paid                                                     $       8        $    43
                                                                       =========        =======
</TABLE>

                     See Notes to Consolidated Financial Statements.






                                       4

<PAGE>


                      USA DETERGENTS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2001


NOTE 1 -- BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements have been
prepared by the Company pursuant to the rules of the Securities and Exchange
Commission (the "SEC") and in the opinion of management, include all adjustments
(consisting of normal recurring accruals) necessary for the fair presentation of
the Company's financial position, results of operations and cash flows. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to such rules.
The Company believes the disclosures included herein are adequate to make these
financial statements not misleading. The results for the interim periods
presented are not necessarily indicative of the results to be expected for the
full year. These financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K, for the year ended December 31, 2000.

         In April 2001, Church & Dwight ("Church & Dwight") effected a tender
offer to purchase for $7.00 per share 100% of the outstanding shares of the
Company's common stock which would be followed by a merger of the companies (the
"Merger"). The offer to purchase is conditioned upon, among other things, a
minimum of 51% of the Company's outstanding common stock being tendered to
Church & Dwight and the satisfaction of certain regulatory approvals. There can
be no assurance that the conditions for the offer will be satisfied and that the
offer to purchase will be effected and the Merger consummated.

         Until the Merger is consummated, if at all, the Company is operating,
in part, under a joint venture agreement ("Armus") with Church & Dwight, entered
into in June 2000. The joint venture agreement provided for the establishment of
a limited liability entity into which the Company contributed its laundry
business which included its XTRA and Nice 'n' Fluffy brands and Church & Dwight
contributed its Arm & Hammer brand laundry care products. The Company's laundry
business approximated 88% of revenues for the year ended December 31, 2000. In
addition, the parties contributed certain operational functions and provided the
joint venture with licenses to use their related intellectual property. Armus
combined the separate sales staff of both companies into a single national sales
force supported by a single national broker organization.

         Under the Armus operating agreement, in early 2001, Church & Dwight
transferred its liquid laundry detergent production from its manufacturing
facility in Syracuse, New York to the Company's facilities in New Jersey and
Missouri.

         The Armus joint venture is structured to utilize the respective
strengths of each company in the manufacture, marketing, sales and distribution
of the various laundry care products. In addition, Armus may sell or distribute
any of the Company's or Church & Dwight's other product offerings. The Company's
annual share of Armus' profits will range from 35% to 45%, depending on the
Armus profit level, subject to specific adjustments. The joint venture has a
minimum five year duration and the Armus operating agreement grants to Church &
Dwight, after five years, the right to purchase the Company's interest in the
joint venture, based upon a specific formula related to the earnings of the
joint venture for the two years prior to the purchase. In addition, after ten
years, the Company may require Church & Dwight to buy the Company's interest in
Armus based on the same formula.

         The joint venture agreement required each of the Company and Church &
Dwight to make an initial capital contribution to Armus on January 1, 2001. The
Company's initial contribution was to include certain finished goods inventories
and cash in an amount to be determined unanimously by the Armus board of
directors. Subsequently, the Company and Church & Dwight agreed, among other
things, to waive the obligation of each of them to make their respective initial
cash contribution and that the finished gods inventories to be contributed by
the Company will instead be purchased by Armus. The Company was required, no
later than April 30, 2001, to make an initial cash contribution in an amount
equal to 66 2/3% of the total initial capital to be contributed by Church &
Dwight, up to a maximum of $3 million (or greater amount, if unanimously
approved by the Armus board of directors). However, this deadline has been
extended pending the outcome of the Church & Dwight tender offer. During the
three months ended March 31, 2001, sales to Armus at cost (included in Revenues)
approximated $47.5 million. Accounts receivable from Armus at March 31, 2001
were $19.5 million.

         The Company is accounting for its investment in the joint venture under
the equity method of accounting. Revenues for the three months ended March 31,
2001 includes $2.0 million of the Company's share of Armus net income.


                                       5


<PAGE>


NOTE 2 -- DEBT

         At March 31, 2001, the Company had a $20 million working capital line
of credit with a syndicate of lenders led by FINOVA Capital Corporation
("FINOVA"), subject to availability based on inventory and receivables, of which
$872,000 was outstanding, as well as $5.3 million in the aggregate owed under
term loans. The FINOVA Agreement contains various covenants that include, among
other things, specified levels of debt to equity, current ratios, a minimum net
worth and a minimum senior debt service coverage ratio. The FINOVA Agreement
also prohibits the payment of dividends and the incurrence of new debt. Amounts
outstanding under the FINOVA Agreement are secured by a first priority security
interest in substantially all of the assets of the Company and its subsidiaries,
except for certain real estate. At March 31, 2001, the Company did not meet the
financial covenants contained in the FINOVA Agreement. Additionally, FINOVA has
not given its consent to the Company's entering into the Armus joint venture. On
February 16, 2001, FINOVA proposed an amendment to the FINOVA Agreement
including the necessary waivers and their consent to the joint venture; however,
this proposed amendment contained certain terms and conditions that the Company
deems to be not in accordance with reasonable lending practices. FINOVA has
since notified the Company of the existence of certain events of default under
the financing agreement. This, coupled with FINOVA Group Inc.'s filing to
reorganize its own debt under Chapter 11 of the U.S. Bankruptcy Code on March 7,
2001, necessitates that the Company replace the FINOVA credit facility. As a
result of the above, the Company classified the entire debt due to FINOVA and
101 Realty as a current liability. Upon termination of its relationship with
FINOVA, unamortized deferred financing costs will be expensed. As of March 31,
2001, the unamortized deferred financing costs were approximately $954,000.

         On February 21, 2001, the Company entered into an agreement to sell a
distribution facility in North Brunswick, New Jersey for $11,250,000. The
closing occurred in May 2001. The funds generated by the sale were used to pay
off the FINOVA real estate debt of approximately $8.0 million. The Company
realized proceeds in excess of its carrying value.


NOTE 3 -- GOING CONCERN

         The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. On March 31, 2001, the Company
did not meet financial covenants contained in the FINOVA Agreement.

         The financial statements do not include any adjustments relating to the
recoverability and classification or recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent on its ability to generate sufficient cash flow from
operations to meet its obligations on a timely basis, to obtain additional
financing and/or successfully refinance the FINOVA debt as may be required and
continue to receive support from Armus.

         Management has commenced efforts to refinance its debt. The Company has
received interim financial support from Armus; pursuant to a commitment received
from Armus, Armus has been paying the invoiced amounts for products sold to the
joint venture prior to the invoiced due date. The payment of these invoices by
Armus has effectively substantially reduced the Company's borrowing under
FINOVA's revolving line of credit.

         There can be no assurance that the Company will be able to generate
sufficient cash flow from operations to meet its obligations on a timely basis,
continue to obtain financial support from Armus or that FINOVA will not demand
the immediately repayment of its debt.

                                       6

<PAGE>


NOTE 4 -- NET (LOSS) INCOME PER SHARE

         Basic net (loss) income per share is based on the weighted average
number of shares outstanding during the periods presented. Diluted net (loss)
income per share also includes potential Common Stock for options and warrants
that are dilutive. With respect to March 31, 2001, all options and warrants have
been excluded from the computation of dilutive loss per share because the impact
would be antidilutive.


NOTE 5 -- NEW ACCOUNTING PRONOUNCEMENTS

         Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," is effective
beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. Under SFAS
133, certain contracts that were not formerly considered derivatives may now
meet the definition of a derivative. The Company had adopted SFAS 133 effective
January 1, 2001. The adoption of SFAS 133 has not had a significant impact on
the financial position, results of operations, or cash flows of the Company.

         In December 1999, the SEC issued Staff Accounting Bulletin No. 101
("SAB 101"), "Revenue Recognition in Financial Statements". SAB 101 summarizes
certain of the SEC's views in applying generally accepted accounting principles
to revenue recognition in financial statements. The Company adopted the
provisions of SAB 101 during the fourth quarter ending December 31, 2000. The
adoption of SAB 101 has not had material impact on the Company's consolidated
results of operations, financial position or cash flows.

         In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44 (FIN No. 44), Accounting for Certain Transactions
Involving Stock Compensation-an interpretation of APB 25. FIN No. 44 clarifies
(i) the definition of employees for purposes of applying APB Opinion No. 25,
(ii) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (iii) the accounting consequences of various modification to the terms of
a previously fixed stock option or award, and (iv) the accounting for an
exchange of stock compensation awards in a business combination. FIN No. 44 was
effective July 1, 2000. This standard has not had a significant impact on the
Company's consolidated results of operations, financial position or cash flows.











                                       7



<PAGE>


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

         The Company's quarterly and annual operating results are affected by a
wide variety of factors that could materially and adversely affect revenues and
profitability, including competition from other suppliers of laundry and
household cleaning products; changes in consumer preferences and spending
habits; commodity price increases; the inability to successfully manage growth;
the inability to successfully manage the implementation of the Armus joint
venture; seasonality; the ability to introduce and the timing of the
introduction of new products; the inability to obtain adequate supplies or
materials at acceptable prices; and the inability to reduce expenses to a level
commensurate with revenues. As a result of these and other factors, the Company
may experience material fluctuations in future operating results on a quarterly
or annual basis, which could materially and adversely affect its business,
financial condition, operating results, and stock price. Furthermore, this
document and other documents filed by the Company with the Securities and
Exchange Commission (the "SEC") contain certain forward-looking statements with
respect to the business of the Company. These forward-looking statements are
subject to certain risks and uncertainties, including the factors mentioned
above, which may cause actual results to differ significantly from these
forward-looking statements. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements that may be necessary
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. An investment in the Company involves
various risks, including the factors mentioned above and those that are detailed
from time to time in the Company's SEC filings.


CURRENT DEVELOPMENTS

         In April 2001, Church & Dwight effected a tender offer to purchase for
$7.00 per share 100% of the outstanding shares of the Company's common stock
which would be followed by a merger of the companies (the "merger"). The offer
to purchase is conditioned upon, among other things, a minimum of 51% of the
Company's outstanding common stock being tendered to Church & Dwight and the
satisfaction of certain regulatory approvals. There can be no assurance that the
conditions for the offer will be satisfied and that the offer to purchase will
be effected and the merger consummated.

         Until the merger is consummated, if at all, the Company is operating,
in part, under a joint venture agreement ("Armus") with Church & Dwight Co.,
Inc. ("Church & Dwight"), enetered into in June 2000. The joint venture
agreement provided for the establishment of a limited liability entity into
which the Company contributed its laundry business which included its XTRA and
Nice `n' Fluffy brands and Church & Dwight contributed its Arm & Hammer brand
laundry care products. The Company's laundry business approximated 88% of
revenues for the year ended December 31, 2000. In addition, the parties
contributed certain operational functions and provided the joint venture with
licenses to use their related intellectual property. Armus combined the separate
sales staff of both companies into a single national sales force supported by a
single national broker organization.

         Under the Armus operating agreement, in early 2001, Church & Dwight
transferred its liquid laundry detergent production from its manufacturing
facility in Syracuse, New York to the Company's facilities in New Jersey and
Missouri.


                                       8
<PAGE>


         The Armus joint venture is structured to utilize the respective
strengths of each company in the manufacture, marketing, sales and distribution
of the various laundry care products. In addition, Armus may sell or distribute
any of the Company's or Church & Dwight's other product offerings. The Company's
annual share of Armus' profits will range from 35% to 45%, depending on the
Armus profit level, subject to specific adjustments. The joint venture has a
minimum five year duration and the Armus operating agreement grants to Church &
Dwight, after five years, the right to purchase the Company's interest in the
joint venture, based upon a specific formula related to the earnings of the
joint venture for the two years prior to the purchase. In addition, after ten
years, the Company may require Church & Dwight to buy the Company's interest in
Armus based on the same formula.

         The joint venture agreement required each of the Company and Church &
Dwight to make an initial capital contribution to Armus on January 1, 2001. The
Company's initial contribution was to include certain finished goods inventories
and cash in an amount to be determined unanimously by the Armus board of
directors. Subsequently, the Company and Church & Dwight agreed, among other
things, to waive the obligation of each of them to make their respective initial
cash contribution and that the finished goods inventories to be contributed by
the Company will instead be purchased by Armus. The Company was required, no
later than April 30, 2001, to make an initial cash contribution in an amount
equal to 66 2/3% of the total initial capital to be contributed by Church &
Dwight, up to a maximum of $3 million (or greater amount, if unanimously
approved by the Armus board of directors). However, this deadline has been
extended pending the outcome of the Church & Dwight tender offer. During the
three months ended March 31, 2001, sales to Armus at cost (included in Revenues)
approximated $47.5 million. Accounts receivable from Armus at March 31, 2001
were $19.5 million.

         The Company is accounting for its investment in the joint venture under
the equity method of accounting. Revenues for the three months ended March 31,
2001 includes $2.0 million of the Company's share of Armus net income.

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

         Net revenues for the three months ended March 31, 2001 increased 7.4%
to $68.9 million from $64.1 million for the three months ended March 31, 2000.
The increase was primarily the result of an increase in unit sales of liquid
laundry products. Gross profit for the three months ended March 31, 2001
decreased 62.4% to $7.6 million from $20.2 million for the three months ended
March 31, 2000. Gross profit as a percentage of net revenues decreased to 11.0%
for the three months ended March 31, 2001 from 31.5% for the same period in
2000. The decrease in gross profit as a percentage of net revenues for the
quarter ended March 31, 2001 is primarily due to Armus being used as the sales
channel for the majority of the Company's sales, with the sale of manufactured
laundry products being sold to Armus at cost. During the three months ended
March 31, 2001, sales to Armus at cost (included in Revenues) approximated $47.5
million. Accounts receivable from Armus at March 31, 2001 were $19.5 million.
Revenues for the three months ended March 31, 2001 includes $2.0 million of the
Company's share of Armus net income.

         Selling, general and administrative expenses decreased 44.0% to $10.5
million in the three months ended March 31, 2001 from $18.8 million for the
three months ended March 31, 2000. As a percentage of net revenues, these
expenses decreased to 15.3% for the three months ended March 31, 2001 from 29.4%
for the first quarter of 2000, primarily due to a decrease in selling related
expenses of approximately $8.5 million as Armus is being used as the sales
channel for the majority of the Company's sales. This decrease is offset by an
increase in general and administrative expenses due primarily to increased
professional fees in connection with the proposed merger with Church & Dwight.


                                       9
<PAGE>


         Interest expense and amortization of deferred financing costs decreased
to $0.8 million in the three months ended March 31, 2001 from $1.1 million for
the three months ended March 31, 2000, primarily due to a reduction of debt
caused by a reduced borrowing base in connection with the start up of the Armus
joint venture.

         Provision for income taxes for the three-month periods ended March 31,
2001 and March 31, 2000 are based on actual tax computations for each of the
periods. The difference between the effective rates and the statutory rate
relates primarily to the Company's net operating loss carry forward, for which
the Company has not provided a tax benefit, and the alternative minimum tax.


LIQUIDITY AND CAPITAL RESOURCES

         As of March 31, 2001, the Company's working capital deficit was $28.8
million compared to a working capital deficit of $24.5 million at December 31,
2000.

         Net cash provided by operating activities for the three months ended
March 31, 2001 was $20.5 million, compared to $2.5 million for the three months
ended March 31, 2000. The cash provided by operating activities in the three
months ended March 31, 2001 resulted primarily from an increase in accounts
payable and accrued expenses of $14.5 million, a decrease in inventory of $6.3
million, and an increase in cash overdraft of $4.1 million. Offsetting this, in
part, was a net loss of $3.8 million, and an increase in prepaid expenses and
other current assets of $2.8 million.

         Net cash used in investing activities for the three months ended March
31, 2001 was $2.4 million relating to the acquisition and upgrades of production
equipment and information systems, and the expanded distribution center at
Harrisonville, Missouri, necessary for increased volume as a result of the Armus
joint venture.

         Net cash used in financing activities for the three months ended March
31, 2001 was $18.6 million resulting primarily from repayment of the revolving
credit line of $17.8 million due to the decreased lending base resulting from
the transfer of assets to Armus, and scheduled installment repayments of the
Company's existing credit facilities of $0.8 million.

         At March 31, 2001, the Company had a $20 million working capital line
of credit with a syndicate of lenders led by FINOVA Capital Corporation
("FINOVA"), subject to availability based on inventory and receivables, of which
$872,000 was outstanding, as well as $5.3 million in the aggregate owed under
term loans. The FINOVA Agreement contains various covenants that include, among
other things, specified levels of debt to equity, current ratios, a minimum net
worth and a minimum senior debt service coverage ratio. The FINOVA Agreement
also prohibits the payment of dividends and the incurrence of new debt. Amounts
outstanding under the FINOVA Agreement are secured by a first priority security
interest in substantially all of the assets of the Company and its subsidiaries,
except for certain real estate. At March 31, 2001, the Company did not meet the
financial covenants contained in the FINOVA Agreement. Additionally, FINOVA has
not given its consent to the Company's entering into the Armus joint venture. On
February 16, 2001, FINOVA proposed an amendment to the FINOVA Agreement
including the necessary waivers and their consent to the joint venture; however,
this proposed amendment contained certain terms and conditions that the Company
deems to be not in accordance with reasonable lending practices. FINOVA has
since notified the Company of the existence of certain events of default under
the financing agreement. This, coupled with FINOVA Group Inc.'s filing to
reorganize its own debt under Chapter 11 of the U.S. Bankruptcy Code on March 7,
2001, necessitates that the Company replace the FINOVA credit facility. As a
result of the above, the


                                       10
<PAGE>


Company classified the entire debt due to FINOVA and 101 Realty as a current
liability. Upon termination of its relationship with FINOVA, unamortized
deferred financing costs will be expensed. As of March 31, 2001, the unamortized
deferred financing costs were approximately $954,000.

         On February 21, 2001, the Company entered into an agreement to sell a
distribution facility in North Brunswick, New Jersey for $11,250,000. The
closing occurred in May 2001. The funds generated by the sale were used to pay
off the FINOVA real estate debt of approximately $8.0 million. The Company
realized proceeds in excess of its carrying value.


GOING CONCERN

         The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. On March 31, 2001, the Company
did not meet financial covenants contained in the FINOVA Agreement.

         The financial statements do not include any adjustments relating to the
recoverability and classification or recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent on its ability to generate sufficient cash flow from
operations to meet its obligations on a timely basis, to obtain additional
financing and/or successfully refinance the FINOVA debt as may be required and
continue to receive support from Armus.

         Management has commenced efforts to refinance its debt. The Company has
received interim financial support from Armus; pursuant to a commitment received
from Armus, Armus has been paying the invoiced amounts for products sold to the
joint venture prior to the invoiced due date. The payment of these invoices by
Armus has effectively substantially reduced the Company's borrowing under
FINOVA's revolving line of credit.

         There can be no assurance that the Company will be able to generate
sufficient cash flow from operations to meet its obligations on a timely basis,
continue to obtain financial support from Armus or that FINOVA will not demand
the immediately repayment of its debt.

















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<PAGE>


INFLATION

         The cost of commodity related items (resin, paperboard, chemicals and
fuels) continue to impact the cost to manufacture and deliver the Company's
products. There can be no assurance that future price increases from the
Company's vendors will not have a material adverse effect on the Company or that
the Company will be able to react with price or product changes or other
manufacturing efficiencies of its own to offset these price increases.

         Other than the commodity related items described above, the Company
does not believe that the relatively moderate rates of inflation which recently
have been experienced in the United States have had a significant effect on net
sales or profitability.


SEASONALITY

         The Company has experienced, and may experience in the future, quarter
to quarter fluctuations in its operating results as a result of the timing and
introduction of new products and the tendency of certain retailers to provide
reduced or less desirable display space for the Company's laundry detergent
products during the holiday shopping season.


NEW ACCOUNTING PRONOUNCEMENTS

         Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," is effective
beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. Under SFAS
133, certain contracts that were not formerly considered derivatives may now
meet the definition of a derivative. The Company had adopted SFAS 133 effective
January 1, 2001. The adoption of SFAS 133 has not had a significant impact on
the financial position, results of operations, or cash flows of the Company.

         In December 1999, the SEC issued Staff Accounting Bulletin No. 101
("SAB 101"), "Revenue Recognition in Financial Statements". SAB 101 summarizes
certain of the SEC's views in applying generally accepted accounting principles
to revenue recognition in financial statements. The Company adopted the
provisions of SAB 101 during the fourth quarter ending December 31, 2000. The
adoption of SAB 101 has not had a significant impact on the Company's
consolidated results of operations, financial position or cash flows.

         In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44 (FIN No. 44), Accounting for Certain Transactions
Involving Stock Compensation-an interpretation of APB 25. FIN No. 44 clarifies
(i) the definition of employees for purposes of applying APB Opinion No. 25,
(ii) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (iii) the accounting consequences of various modification to the terms of
a previously fixed stock option or award, and (iv) the accounting for an
exchange of stock compensation awards in a business combination. FIN No. 44 was
effective July 1, 2000. This standard has not had a significant impact on the
Company's consolidated results of operations, financial position or cash flows.


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<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company's carrying value of restricted funds, trade accounts
receivable, accounts payable, accrued expenses, existing revolving line of
credit facility, and term loans are a reasonable approximation of their fair
value.

         The Company has not entered into, and does not expect to enter into,
financial instruments for trading or hedging purposes.

         The Company is currently exposed to material future earnings or cash
flow exposures from changes in interest rates on long-term debt obligations
since a significant portion of the Company's debt obligations are at variable
rates. The Company does not currently anticipate entering into interest rate
swaps and/or other similar instruments.


PART II -- OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS:

         In connection with the quarterly and annual results of operations
originally reported by the Company for certain fiscal quarters in 1996 and 1997
and the fiscal year ended December 31, 1996, the Company has received a formal
request from the SEC for the production of various documents and the testimony
of certain current and former employees. The Company has been providing
documentation and other materials to the SEC in response to the request, and the
testimony of certain persons has been taken. The Company will continue to
cooperate with the SEC. On February 22, 2001, the staff of the SEC notified the
Company that it would recommend that the SEC bring a civil injunctive action
against the Company and certain former and present officers and directors under
Sections 10(b) and 13 of the Securities Exchange Act of 1934 seeking to bar
further violations of the securities laws and, as to certain individuals, the
imposition of unspecified civil money penalties. No civil money penalties are
being sought from the Company. It is possible that the individuals may seek
indemnification from the Company for their continued legal fees and costs, and
the payment of any civil money penalties. The amount of such indemnification
cannot be determined at this time. The Company intends to defend itself
vigorously should the SEC bring a civil action against the Company.

         The Company is also involved in various routine legal proceedings of a
nature it deems to be customary to a company its size. The Company believes the
ultimate disposition of these actions will not have a material adverse effect on
its business, financial condition or results of operations.


ITEM 2. CHANGES IN SECURITIES:

        None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES:

        None.


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<PAGE>


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

        None.


ITEM 5. OTHER INFORMATION:

        None.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:

        (a) EXHIBITS

                  27     Financial Data Schedule

        (b) Reports on Form 8-K

        None






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                                   SIGNATURES

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


                                                 USA DETERGENTS, INC.

May 21, 2001                                     By: /s/ Uri Evan
                                                 -----------------------------
                                                 Name: Uri Evan
                                                 Title: Chairman of the Board
                                                 of Directors and
                                                 Chief Executive Officer

May 21, 2001                                     By:/s/ Charles E. LaRosa
                                                 -----------------------------
                                                 Name:  Charles E. LaRosa
                                                 Title: President &
                                                 Chief Operating Officer


May 21, 2001                                     By: /s/ Richard D. Coslow
                                                 -----------------------------
                                                 Name: Richard D. Coslow
                                                 Executive Vice President and
                                                 Chief Financial Officer





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