SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, 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, 1998

                                       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 0-19899

                             U.S. HOME & GARDEN INC.
                          (Exact name of registrant as
                            specified in its charter)

            Delaware                                           77-0262908
  (State or other jurisdiction                                IRS Employer
of incorporation or organization)                        (Identification Number)


                              655 Montgomery Street
                         San Francisco, California 94111
                    (Address of Principal Executive Offices)

                                 (415) 616-8111
              (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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

As of  February  8, 1999 there were  19,349,787  shares of the  issuer's  common
stock, par value $.001 per share, outstanding.


<PAGE>


Part 1.  -    Financial Information

Item 1.  -    Consolidated Financial Statements

              Consolidated  balance  sheet as of June 30, 1998
              and December 31, 1998 (Unaudited)                              1-2

              Consolidated statements of income for the three
              months and six months ended December 31, 1997 
              and 1998 (Unaudited)                                             3

              Consolidated statements of cash flows for the
              three months and six months ended December 31,
              1997 and 1998 (Unaudited)                                      4-5

              Notes to consolidated financial statements                     6-7

Item 2.  -    Management's Discussion and Analysis of Financial
              Condition and Results of Operations.                          8-14


Part II. -    Other Information

Item 2.  -    Changes in Securities                                           15

Item 6.  -    Exhibits and Reports on Form 8-K                                15

Signatures                                                                    16


<PAGE>


<TABLE>
<CAPTION>
                                                                                            U.S. Home & Garden Inc. and Subsidiaries


                                                                                                         Consolidated Balance Sheets

====================================================================================================================================

                                                                                                    June 1998          December 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        (Unaudited)
                                                                                                                       -------------
<S>                                                                                              <C>                    <C>         
Assets

Current
   Cash and cash equivalents                                                                     $ 27,130,000           $  3,439,000
   Accounts receivable, less allowance for doubtful accounts and
     sales returns of $399,000 and $340,000                                                        17,350,000             13,377,000
   Inventories                                                                                     11,763,000             21,606,000
   Prepaid expenses and other current assets                                                        1,130,000              1,260,000
   Deferred tax asset                                                                                 522,000                522,000
------------------------------------------------------------------------------------------------------------------------------------

Total Current Assets                                                                               57,895,000             40,204,000

Property and Equipment, net                                                                         3,590,000             12,299,000

Intangible Assets
   Excess of cost over net assets acquired, net                                                    58,864,000             75,132,000
   Deferred financing costs, net of accumulated amortization of
     $21,000 and $84,000                                                                            3,186,000              3,533,000
   Product rights, patents and trademarks, net of accumulated
     amortization of $93,000 and $103,000                                                             165,000                493,000
   Non-compete agreement, net of accumulated amortization of
     $48,000 and $79,000                                                                              462,000              1,431,000
   Package design, net of accumulated amortization of $247,000
     and $369,000                                                                                     718,000              1,117,000

Trade Credits                                                                                         944,000                944,000

Officer Receivables                                                                                   850,000                718,000

Other Assets                                                                                          139,000                132,000
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                 $126,813,000           $136,003,000
====================================================================================================================================
                                                                        See accompanying notes to consolidated financial statements.
</TABLE>


                                                                               1
<PAGE>



<TABLE>
<CAPTION>
                                                                                            U.S. Home & Garden Inc. and Subsidiaries


                                                                                                         Consolidated Balance Sheets

====================================================================================================================================

                                                                                                   June 1998          December 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       (Unaudited)
                                                                                                                      --------------
<S>                                                                                            <C>                    <C>          
Liabilities and Stockholders' Equity

Current
     Line of credit                                                                            $          --          $   2,500,000
     Accounts payable                                                                              4,501,000              3,186,000
     Accrued expenses                                                                              3,922,000              4,329,000
     Accrued co-op advertising                                                                       645,000                863,000
     Accrued commissions                                                                           1,106,000                893,000
     Accrued purchase consideration                                                                  978,000                     --
------------------------------------------------------------------------------------------------------------------------------------

Total Current Liabilities                                                                         11,152,000             11,771,000

Deferred Tax Liability                                                                               812,000                950,000

Line of Credit                                                                                            --             15,500,000

Other Long-Term Liabilities                                                                               --                866,000

Company Obligated Mandatorily Redeemable Preferred
   Securities of Subsidiary Trust Holding Solely Junior
   Subordinated Debentures
                                                                                                  63,250,000             63,250,000
------------------------------------------------------------------------------------------------------------------------------------

Total Liabilities                                                                                 75,214,000             92,337,000
------------------------------------------------------------------------------------------------------------------------------------

Commitments, Contingency and Subsequent Events                                                            --                     --

Stockholders' Equity
     Preferred stock, $.001 par value-shares authorized, 1,000,000;
       no shares outstanding                                                                              --                     --
     Common stock, $.001 par value-shares authorized,
       75,000,000; 20,133,000 and 20,196,000 shares issued at
       June 30, 1998 and December 31, 1998                                                            20,000                 20,000
     Additional paid-in capital                                                                   50,153,000             50,162,000
     Retained earnings                                                                             2,733,000                762,000
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                  52,906,000             50,944,000
Less: Treasury Stock, 236,000 and 1,522,000 shares at cost                                        (1,307,000)            (7,278,000)
------------------------------------------------------------------------------------------------------------------------------------

Total Stockholders' Equity                                                                        51,599,000             43,666,000
------------------------------------------------------------------------------------------------------------------------------------

                                                                                               $ 126,813,000          $ 136,003,000
====================================================================================================================================
                                                                        See accompanying notes to consolidated financial statements.
</TABLE>


                                                                               2
<PAGE>



<TABLE>
<CAPTION>
                                                                                            U.S. Home & Garden Inc. and Subsidiaries


                                                                                                   Consolidated Statements of Income

====================================================================================================================================


                                                              Three Months Ended December 31,         Six Months Ended December 31,
                                                              -------------------------------       --------------------------------
                                                                      1997              1998                1997               1998
------------------------------------------------------------------------------------------------------------------------

                                                                         Unaudited                              Unaudited
                                                              -------------------------------       --------------------------------
<S>                                                           <C>                <C>                <C>                <C>         
Net Sales                                                     $  8,513,000       $ 15,985,000       $ 15,538,000       $ 26,753,000

Cost of Sales                                                    3,857,000          7,751,000          7,379,000         13,063,000
------------------------------------------------------------------------------------------------------------------------------------

Gross Profit                                                     4,656,000          8,234,000          8,159,000         13,690,000
------------------------------------------------------------------------------------------------------------------------------------

Operating Expenses
   Selling and shipping                                          2,357,000          3,724,000          4,661,000          6,945,000
   General and administrative                                    2,232,000          4,006,000          3,891,000          7,224,000
------------------------------------------------------------------------------------------------------------------------------------

                                                                 4,589,000          7,730,000          8,552,000         14,169,000
------------------------------------------------------------------------------------------------------------------------------------

Income (Loss) from Operations                                       67,000            504,000           (393,000)          (479,000)

Other Income Expense
   Investment income                                                57,000            116,000            104,000            497,000
   Interest expense                                               (744,000)        (1,798,000)        (1,597,000)        (3,339,000)
------------------------------------------------------------------------------------------------------------------------------------

Loss before Income Taxes                                          (620,000)        (1,178,000)        (1,886,000)        (3,321,000)

Income tax benefit                                                 250,000            510,000            800,000          1,430,000
------------------------------------------------------------------------------------------------------------------------------------

Net Loss                                                      $   (370,000)      $   (668,000)      $ (1,086,000)      $ (1,891,000)
====================================================================================================================================

Basic and Diluted Loss per Common Share
                                                              $       (.02)      $       (.03)      $       (.07)      $       (.09)
====================================================================================================================================

Weighted Average Common and 
   Common Equivalent Shares 
   Outstanding                                                  16,384,000         19,837,000         15,552,000         19,926,000
====================================================================================================================================
                                                                        See accompanying notes to consolidated financial statements.
</TABLE>


                                                                               3
<PAGE>



<TABLE>
<CAPTION>
                                                                                            U.S. Home & Garden Inc. and Subsidiaries


                                                                                               Consolidated Statements of Cash Flows

====================================================================================================================================


Increase (Decrease) in Cash and Cash Equivalents


Six months ended December 31,                                                                          1997                    1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          (Unaudited)
<S>                                                                                            <C>                     <C>          
Cash Flows from Operating Activities
   Net loss                                                                                    $ (1,086,000)           $ (1,891,000)
   Adjustments to reconcile net income to net cash used in
     operating activities:
     Depreciation and amortization                                                                1,263,000               1,988,000
     Amortization of deferred financing costs                                                       232,000                  50,000
     Changes in operating assets and liabilities, net of assets
       acquired and liabilities assumed:
     Accounts receivable                                                                          4,008,000               3,740,000
     Inventories                                                                                 (2,419,000)             (6,494,000)
     Prepaid expenses and other current assets                                                     (255,000)               (179,000)
     Accounts payable and accrued expenses                                                         (651,000)             (4,262,000)
     Other assets                                                                                   118,000                 288,000
     Deferred tax asset                                                                            (528,000)                138,000
------------------------------------------------------------------------------------------------------------------------------------

Net Cash Used in Operating Activities                                                               682,000              (6,622,000)
------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities
   Payment for purchase of business, net of cash acquired                                          (561,000)            (26,202,000)
   Purchase of noncompete agreement                                                                      --              (1,000,000)
   Decrease (increase) in officer receivables                                                      (135,000)                  3,000
   Purchase of furniture, fixtures and equipment                                                   (486,000)             (1,040,000)
   Purchase of package design                                                                      (232,000)               (521,000)
------------------------------------------------------------------------------------------------------------------------------------

Net Cash Used in Investing Activities                                                            (1,414,000)            (28,760,000)
------------------------------------------------------------------------------------------------------------------------------------
                                                                        See accompanying notes to consolidated financial statements.
</TABLE>


                                                                               4
<PAGE>



<TABLE>
<CAPTION>
                                                                                            U.S. Home & Garden Inc. and Subsidiaries


                                                                                               Consolidated Statements of Cash Flows

====================================================================================================================================


Six months ended December 31,                                                                          1997                    1998
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          (Unaudited)
<S>                                                                                            <C>                     <C>          
Cash Flows from Financing Activities
   Proceeds from issuances of stock                                                             $ 18,648,000           $    137,000
   Repurchase of common stock for treasury                                                                --             (5,970,000)
   Repurchase of unit purchase options                                                            (3,221,000)               (79,000)
   Payments of notes payable                                                                      (6,290,000)                    --
   Acquisition finance cost                                                                               --               (397,000)
   Proceeds from bank line of credit                                                               2,246,000             18,000,000
------------------------------------------------------------------------------------------------------------------------------------

Net Cash Provided by Financing Activities                                                         11,383,000             11,691,000
------------------------------------------------------------------------------------------------------------------------------------

Net (increase) decrease in cash and cash equivalents                                              10,651,000            (23,691,000)

Cash and Cash Equivalents, beginning of period                                                     2,083,000             27,130,000
------------------------------------------------------------------------------------------------------------------------------------

Cash and Cash Equivalents, end of period                                                        $ 12,734,000           $  3,439,000
====================================================================================================================================

Supplemental Disclosure of Cash Flow Information
   Cash paid for interest, including deferred financing costs and
     extraordinary expense                                                                      $  1,358,000           $  3,498,033
   Cash paid for taxes                                                                          $     30,000           $     18,000
====================================================================================================================================
                                                                        See accompanying notes to consolidated financial statements.
</TABLE>


                                                                               5
<PAGE>



                                        U.S. Home & Garden Inc. and Subsidiaries


                                      Notes to Consolidated Financial Statements

================================================================================

1.   The accompanying  consolidated  financial  statements at December 31, 1998,
     and for the six months ended December 31, 1997 and 1998 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.

2.   Refer to the audited  consolidated  financial statements for the year ended
     June 30, 1998,  for details of accounting  policies and detail notes to the
     consolidated financial statements.

3.   On February 28, 1998, Weed Wizard Acquisition  Corporation,  a wholly-owned
     subsidiary  of the  Company,  acquired  all the assets and assumed  certain
     liabilities  of  Weed  Wizard  Inc.,  a  lawn  and  garden   company,   for
     approximately $16.3 million.

     On October  16,  1998,  the  Company  completed  the  acquisition  of Ampro
     Industries,  Inc.,  a lawn and  garden  company,  for  approximately  $24.6
     million with  additional  purchase  price  payments over the next two years
     based upon its future  operating  cash flow.  An  additional $1 million was
     paid for a non compete agreement.

     The  acquisitions  were  accounted for as purchases and,  accordingly,  the
     results of operations have been included in the  consolidated  statement of
     the  operations  since the  acquisition  dates.  The  value of  intangibles
     purchased  and the  excess of the  purchase  price  over the fair  value of
     assets acquired totaled  approximately $28 million and will be amortized on
     a straight line basis over the estimated useful life of thirty years.

     The following unaudited pro forma summary combines the consolidated results
     of  operations  of the  Company,  Weed Wizard,  Inc.  and Ampro,  as if the
     acquisition  had occurred at the  beginning  of fiscal  1997,  after giving
     effect to certain  adjustments,  including the amortization of excess costs
     over assets  acquired,  increased  interest  expense and the elimination of
     certain  expenses  incurred by Weed Wizard,  Inc. and Ampro  related to the
     acquisition.  This pro  forma  summary  does not  necessarily  reflect  the
     results of operations, as they would have been if the Company, Weed Wizard,
     Inc. and Ampro had  constituted  a single  entity during such period and is
     not necessarily indicative of results, which may be obtained in the future.

     Six months ended December 31,                            1997         1998
     ---------------------------------------------------------------------------
                                                                           (000)
     Net sales                                              20,022       27,903
     Net loss                                               (3,403)      (3,240)
     Diluted net loss per common share                        (.22)        (.16)
     ===========================================================================


                                                                               6
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries


                                      Notes to Consolidated Financial Statements

================================================================================

     During the  quarter  ended  December  31,  1998,  the  Company  completed a
     financing agreement with Bank of America.  The agreement provides for a $25
     million revolving  acquisition line of credit ("the Acquisition  Facility")
     to finance acquisitions and a $20 million working capital revolving line of
     credit  ("the  Working  Capital  Facility").  Borrowings  under such credit
     facilities  bear  interest at variable  annual  rates chosen by the Company
     based on either (i) the London  Interbank  Offered Rate  ("LIBOR")  plus an
     applicable marginal rate, or (ii) the higher of 0.5% above the then current
     Federal Funds Rate or the Prime Rate of Bank of America, in each case, plus
     an applicable marginal rate. The Acquisition Facility terminates at October
     15,  2001 and the  outstanding  balance is payable  in  quarterly  payments
     starting  with  December 31, 2001 and ending with  December  31, 2004.  The
     Working  Capital  Facility  terminates  with the balance due on October 15,
     2001. The Company is required to maintain a zero balance, under the Working
     Capital  Facility,  for at least 30 consecutive days during the period from
     July 1 to  December  1 of each  year.  However,  if the  Company  elects to
     terminate  the  financing  agreement  prior  to the  expiration  date,  the
     outstanding  balance must be prepaid  together with a premium of 1% to 0.5%
     of the total facility.

     Subsequent to December 31, 1998, the Company  repurchased  44,000 shares of
     its common stock for approximately $210,000.


                                                                               7
<PAGE>


Item 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


"Safe Harbor  Statement under the Private  Securities  Litigation  Reform Act of
1995:

     Certain information included in this Item 2. and elsewhere in the Form 10-Q
that are not historical facts contain forward looking  statements that involve a
number of known and unknown  risks,  uncertainties  and other factors that could
cause the actual  results,  performance  or  achievements  of the  Company to be
materially  different  from  any  future  results,  performance  or  achievement
expressed  or  implied  by such  forward  looking  statements.  These  risks and
uncertainties  include,  but are not limited to, the Company's  growth strategy,
the  effect  of  recent  acquisitions,   customer   concentration,   outstanding
indebtedness, dependence on weather conditions, seasonality, expansion and other
activities of competitors,  changes in federal or state  environmental  laws and
the administration of such laws,  protection of trademarks and other proprietary
rights,  the general  condition  of the economy and other risks  detailed in the
Company's Securities and Exchange Commission filings.  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

     U.S. Home & Garden Inc., ("the Company"),  manufactures and markets a broad
range of brand-name  consumer lawn and garden products  through its wholly-owned
subsidiaries  Easy Gardener,  Inc. ("Easy  Gardener"),  Ampro  Industries,  Inc.
("Ampro"), and Golden West Agri-Products, Inc. ("Golden West"), and through Easy
Gardener's  wholly-owned  subsidiaries,  Weatherly Consumer Products Group, Inc.
("Weatherly") and Weed Wizard Acquisition,  Corp. ("Weed Wizard").  Between 1992
and  December  31,  1998,  the  Company   consummated   nine   acquisitions   of
complementary  lawn and garden  companies  and  product  lines for an  aggregate
consideration  of over $104 million in cash, notes and equity  securities.  As a
result of such  acquisitions,  the Company  recognized a  significant  amount of
goodwill,  which, in the aggregate,  was approximately $80.9 million at December
31,  1998.  The  Company  is  currently   amortizing  such  goodwill  using  the
straight-line method over various time periods ranging from 20 to 30 years.


                                       8
<PAGE>


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    Six Months Ended
                                            December 31,         December 31,
                                         ------------------    -----------------
                                           1997      1998       1997      1998
                                                              
  Net sales                               100.0%    100.0%     100.0%    100.0%
  Cost of sales                            45.3      48.5       47.5      48.8
                                          -----     -----      -----     -----
  Gross profit                             54.7      51.5       52.5      51.2
  Selling and shipping expenses            27.7      23.3       30.0      26.0
  General and administrative expenses      26.2      25.1       25.0      27.0
                                          -----     -----      -----     -----
  Income / (loss) from operations           0.8       3.1       (2.5)     (1.8)
  Interest expense, net                    (8.0)    (10.5)      (9.6)    (10.6)
  Income tax benefit                        2.9       3.2        5.1       5.3
                                          -----     -----      -----     -----
  Net loss                                 (4.3)%    (4.2)%     (7.0)%    (7.1)%
                                          =====     =====      =====     =====

                      Three Months Ended December 31, 1998
                Compared to Three Months Ended December 31, 1997

     Net sales.  Net sales  increased by $7.5 million,  or 87.8%, to $16 million
during the three  months ended  December  31, 1998 from $8.5 million  during the
comparable  period in 1997.  The increase in net sales was primarily a result of
the internal  growth of the Company's  pre-existing  product lines combined with
the  Company's  acquisition  of  substantially  all of the  assets  used  in the
businesses of Weed Wizard, Inc. in February 1998,  Landmaster Products,  Inc. in
March 1998, the acquisition in May 1998 of the Tensar(R)  consumer products line
from the Tensar  Corporation  and the acquisition of Ampro  Industries,  Inc. in
October 1998.

     Gross profit.  Gross profit  increased by $3.6 million,  or 76.8%,  to $8.2
million for the three  months ended  December 31, 1998 from $4.7 million  during
the comparable  period in 1997.  This increase was due primarily to the increase
in net sales.  Gross  profit as a  percentage  of net sales  decreased  to 51.5%
during the three months ended December 31, 1998 from 54.7% during the comparable
period in 1997.  The decrease in gross  profit as a percentage  of net sales was
primarily attributable to an increase in sales of lower-margin products.

     Selling and shipping expenses. Selling and shipping expenses increased $1.4
million, or 58%, to $3.7 million during the three months ended December 31, 1998
from $2.4  million  during the  comparable  period in 1997.  This  increase  was
primarily the result of an increase in the amount of products shipped, which was
a consequence of the internal growth of the Company's pre-existing product lines
combined  with the  acquisition  of the  Tensar(R)  consumer  products  line and
substantially  all of the assets used in the  businesses  of Weed Wizard,  Inc.,
Landmaster  Products,  Inc.  and Ampro  Industries,  Inc.  Selling and  shipping
expenses as a percentage of net sales decreased to 23.3% during the three months
ended  December 31, 1998 from 27.7% during the comparable  period in 1997.  This
decrease was primarily as a result of economies of scale gained from the sale of
new products to existing customers.



                                       9
<PAGE>



     General and administrative  expenses.  General and administrative  expenses
increased  $1.8  million or 79.5%,  to $4 million  during the three months ended
December 31, 1998 from $2.2 million during the comparable  period in 1997.  This
increase  was   primarily  due  to  increased   amortization   of  goodwill  and
depreciation  as a  result  of the  asset  acquisitions  of Weed  Wizard,  Inc.,
Landmaster Products, Inc. and Ampro Industries,  Inc. and the acquisition of the
Tensar(R)  consumer  product  line.  Furthermore,  the  increase  is  due to the
addition of certain  administrative  personnel related to the Company's internal
growth and recent  acquisitions.  As a  percentage  of net  sales,  general  and
administrative  expenses  decreased  to 25.1%  during  the  three  months  ended
December 31, 1998 from 26.2% during the comparable period in 1997.

     Income from operations.  Income from operations  increased by $437,000,  or
652.2%, to $504,000 during the three months ended December 31, 1998 from $67,000
during the comparable period in 1997. The increase in income from operations for
the 1998  period was  primarily  attributable  to the  increase in net sales and
reduced selling and shipping and general and administrative costs resulting from
economies of scale  gained from the sale of new products to existing  customers.
As a percentage of net sales,  income from operations  increased to 3.1% for the
three months ended December 31, 1998 from 0.8% during the  comparable  period in
1997.

     Interest expense. Interest expense increased by $1.1 million, or 141.7%, to
$1.8  million  during the three months ended  December 31, 1998,  from  $744,000
during the  comparable  period in 1997.  The  increase  in  interest  expense is
primarily  related to the interest  associated with the increase in Company debt
in April 1998,  associated  with the  issuance by U.S.  Home & Garden Trust I, a
subsidiary  of the  Company,  of certain  trust  preferred  securities,  and the
October  1998  borrowings  under the  Company's  credit  facility to finance the
acquisition of Ampro Industries, Inc.

     Income  taxes.  Income tax benefit  increased to $510,000  during the three
months  December 31, 1998 from $250,000  during the  comparable  period in 1997,
primarily due to the increase in net loss before  taxes.  The income tax benefit
or  expense  for each  interim  period  is based  upon the  Company's  estimated
effective income tax rate for the year.

     Net loss. Net loss increased by $298,000,  or 80.5%, to $668,000 during the
three months ended December 31, 1998 from $370,000 during the comparable  period
in 1997.  Diluted net loss per common share increased $.01 to $.03 per share for
the three  months  ended  December  31,  1998 from  $.02 per  share  during  the
comparable  period in 1997.  The increase in diluted loss per share is primarily
attributable  to the  increase in net loss,  partially  offset by more  weighted
average  common and common  equivalent  shares  outstanding  in the three months
ended December 31, 1998 compared to the comparable  period in the prior year due
to the Company  selling 4.3 million  shares of common  stock in a December  1997
public offering.

                       Six Months Ended December 31, 1998
                 Compared to Six Months Ended December 31, 1997

     Net sales. Net sales increased by $11.2 million, or 72.2%, to $26.8 million
during the six months  ended  December  31, 1998 from $15.5  million  during the
comparable  period in 1997.  The increase in net sales was primarily a result of
the internal  growth of the Company's  pre-existing  product lines combined with
the  Company's  acquisition  of  substantially  all of the  assets  used  in the
businesses of Weed Wizard, Inc. in February 1998,  Landmaster Products,  Inc. in
March 1998, the acquisition in May 1998 of the Tensar(R)  consumer products line
from the Tensar  Corporation  and the acquisition of Ampro  Industries,  Inc. in
October 1998.

     Gross profit.  Gross profit  increased by $5.5 million,  or 67.8%, to $13.7
million for the six months ended  December 31, 1998 from $8.2 million during the
comparable  period in 1997.  This  increase was due primarily to the increase in
net sales.  Gross profit as a percentage of net sales  decreased to 51.2% during
the six months ended December 31, 1998 from 52.5% during the  comparable  period
in 1997. The decrease in gross profit as a percentage of net sales was primarily
attributable to an increase in sales of lower-margin products.


                                       10
<PAGE>


     Selling and shipping expenses. Selling and shipping expenses increased $2.3
million,  or 49%, to $6.9 million  during the six months ended December 31, 1998
from $4.7  million  during the  comparable  period in 1997.  This  increase  was
primarily the result of an increase in the amount of products shipped, which was
a consequence of the internal growth of the Company's pre-existing product lines
combined  with the  acquisition  of the  Tensar(R)  consumer  products  line and
substantially  all of the assets used in the  businesses  of Weed Wizard,  Inc.,
Landmaster  Products,  Inc.  and Ampro  Industries,  Inc.  Selling and  shipping
expenses as a  percentage  of net sales  decreased  to 26% during the six months
ended  December 31, 1998 from 30.0% during the comparable  period in 1997.  This
decrease was primarily as a result of economies of scale gained from the sale of
new products to existing customers.

     General and administrative  expenses.  General and administrative  expenses
increased  $3.3 million or 85.7%,  to $7.2  million  during the six months ended
December 31, 1998 from $3.9 million during the comparable  period in 1997.  This
increase  was   primarily  due  to  increased   amortization   of  goodwill  and
depreciation  as a  result  of the  asset  acquisitions  of Weed  Wizard,  Inc.,
Landmaster Products, Inc. and Ampro Industries,  Inc. and the acquisition of the
Tensar(R)  consumer  product  line.  Furthermore,  the  increase  is  due to the
addition of certain  administrative  personnel related to the Company's internal
growth and recent  acquisitions.  As a  percentage  of net  sales,  general  and
administrative  expenses  increased to 27% during the six months ended  December
31, 1998 from 25% during the comparable period in 1997.

     Loss from operations.  Loss from operations increased by $86,000, or 21.9%,
to $479,000  during the six months ended December 31, 1998 from $393,000  during
the comparable  period in 1997.  The loss from  operations in actual dollars was
primarily due to the seasonal nature of the Company's business.  The increase in
the loss for the 1998 period was primarily attributable to the increased general
and administrative costs resulting from increased amortization of goodwill. As a
percentage  of net sales,  loss from  operations  decreased  to 1.8% for the six
months ended December 31, 1998 from 2.5% during the comparable period in 1997.

     Interest  expense.  Interest expense  increased by $1.7, or 109.1%, to $3.3
million during the six months ended December 31, 1998,  from $1.6 million during
the  comparable  period in 1997.  The increase in interest  expense is primarily
related to the  interest  associated  with the increase in Company debt in April
1998,  associated  with the issuance by U.S. Home & Garden Trust I, a subsidiary
of the Company, of certain trust preferred securities,  and borrowings under the
Company's credit facility to finance the acquisition of Ampro Industries, Inc.

     Income taxes.  Income tax benefit  increased to $1.4 million during the six
months  December 31, 1998 from $800,000  during the  comparable  period in 1997,
primarily due to the increase in net loss before  taxes.  The income tax benefit
or  expense  for each  interim  period  is based  upon the  Company's  estimated
effective income tax rate for the year.

     Net loss. Net loss increased by $805,000,  or 74.1%, to $1.9 million during
the six months ended  December 31, 1998 from $1.1 million  during the comparable
period in 1997.  Diluted net loss per common  share  increased  $.02 to $.09 per
share for the six months ended  December 31, 1998 from $.07 per share during the
comparable  period in 1997.  The increase in diluted loss per share is primarily
attributable  to the  increase in net loss,  partially  offset by more  weighted
average common and common equivalent shares  outstanding in the six months ended
December 31, 1998 compared to the comparable period in the prior year due to the
Company  selling 4.3 million  shares of common  stock in a December  1997 public
offering.

Seasonality

     The  Company's  sales are seasonal due to the nature of the lawn and garden
business,  in parallel with the annual growing  season.  The Company's sales and
shipping  are most  active  from late  December  through  May when home lawn and
garden  customers are purchasing  supplies for spring planting and retail stores
are increasing  their  inventory of lawn and garden  products.  Sales  typically
decline by early to mid-summer.


                                       11
<PAGE>


     Sales of the Company's agriculture products, which were not material during
the three months ended  December 31, 1998,  are also  seasonal.  Most  shipments
occur during the agriculture cultivation period from March through October.

Liquidity and Capital Resources

     Since inception,  the Company has financed its operations primarily through
cash generated by operations, net proceeds from the Company's private and public
sales of securities and borrowings from lending institutions.

     At December  31, 1998,  the Company had  consolidated  cash and  short-term
investments  totaling $3.4 million and working capital of $28.4 million. At June
30, 1998, the Company had consolidated cash and short-term  investments totaling
$27.1 million and working capital of $46.7 million.  In addition to the decrease
in  working  capital  associated  with  the  seasonal  nature  of the  Company's
business,  $24.6  million  was used for the  purchase of  substantially  all the
assets used in the  business of Ampro  Industries,  Inc. and $6 million was used
for the  repurchase  of common  stock for  treasury  during the six months ended
December  31, 1998.  This  decrease was  partially  offset by proceeds  from the
Company's bank line of credit of $18 million.

     Net cash used in operating  activities during the six months ended December
31, 1998 was $6.6 million  consisting  primarily of an increase in inventory,  a
decrease in accounts  payable and accrued  expenses and the net loss for the six
months,  partially  offset by depreciation  and  amortization  and a decrease in
accounts receivable.

     Net cash used in investing  activities during the six months ended December
31, 1998 was $28.8 million consisting primarily of cash used for the purchase of
Ampro Industries Inc., and cash used for the purchase of furniture, fixtures and
equipment and package design.

     Net cash  provided  by  financing  activities  during the six months  ended
December 31, 1998 was $11.7  million  consisting  primarily of proceeds from the
Company's  bank  line  of  credit,   partially   offset  by  the  repurchase  of
approximately 1,286,000 shares of common stock for treasury.

     On October 13,  1998,  the Company  entered  into a credit  agreement  (the
"Credit  Agreement") with Bank of America  National Trust & Savings  Association
(the "Bank").  The credit agreement  provides for a revolving credit facility of
up to $25  million to  finance  the cost of  acquisitions  by the  Company  (the
"Acquisition  Facility") and a revolving credit facility of up to $20 million to
finance  the  Company's  working  capital  requirements  (the  "Working  Capital
Facility").  Both of such credit facilities expire on October 15, 2001, at which
time borrowings under the Acquisition  Facility are payable on a term loan basis
in  quarterly  installments   commencing  December  31,  2001,  with  the  final
installment  maturing on September 30, 2004 and, unless  refinanced,  borrowings
under the Working Capital  Facility mature on such expiration date. In addition,
borrowings  under the Acquisition  Facility are subject to mandatory  prepayment
from the net proceeds of certain  dispositions of assets,  and certain losses or
condemnation of property,  from excess cash (as defined in the Credit Agreement)
generated by the Company and its subsidiaries and 50% of the net proceeds of any
new  issuances  of the  Company's  capital  stock  after such  expiration  date.
Mandatory prepayments by the Company prior to such expiration have the effect of
reducing the Acquisition Facility by the prepayment amount. In addition,  during
a period of 30  consecutive  days during the period July 1 to December 1 in each
year, no borrowings can be outstanding under the Working Capital  Facility.  The
Company has the right under the Credit  Agreement to  terminate  or  permanently
reduce the Bank's commitments under such credit facilities in the minimum amount
of $1.0  million  and  multiples  thereof  subject to the payment to the Bank of
"reduction  fees"  of 1% of the  amount  terminated  or  reduced  on or prior to
December  31, 1999 and 0.5% of the  amounts  terminated  or reduced  thereafter.
Borrowings  under such credit  facilities bear interest at variable annual rates
selected by the Company based on LIBOR ("London Interbank Offered Rate"), or the
higher of 0.5% above the then  current  Federal  Funds Rate or the Bank's  prime
rate plus, in each case, an applicable marginal rate of interest.


                                       12
<PAGE>


     The Company's  obligations under the Credit Agreement are guaranteed by its
subsidiaries  and  secured  by a  security  interest  in  favor  of the  Bank in
substantially  all of the assets of the Company and its  subsidiaries.  Upon the
occurrence  of an  event of  default  specified  in the  Credit  Agreement,  the
maturity of loans  outstanding  under the Credit Agreement may be accelerated by
the Bank,  which may also  foreclose its security  interest on the assets of the
Company and its subsidiaries.

     Under the Credit Agreement,  the Company and its subsidiaries are required,
among  other  things,  to  comply  with (a)  certain  limitations  on  incurring
additional  indebtedness,  liens and  guaranties,  on  dispositions  of  assets,
payment of cash dividends and cash redemption and repurchases of securities, and
(b)  certain   limitations  on  merger,   liquidations,   changes  in  business,
investments,   loans  and   advances,   affiliate   transactions   and   certain
acquisitions.  In addition, the Company must comply with certain financial tests
and  ratios.  A  violation  of any of these  covenants  constitutes  an event of
default under the Credit Agreement.

     The Company believes that its operations will generate sufficient cash flow
to service the debt  incurred.  However,  if such cash flow is not sufficient to
service  such debt,  the Company will be required to seek  additional  financing
which may not be available on commercially acceptable terms or at all.

     As of December  31, 1998,  the Company has a net deferred tax  liability of
$950,000  primarily  relating to depreciation  and amortization in excess of the
book amount.  The deferred tax asset of $522,000  relates to the  allowance  for
accounts receivable, vacation accrual and certain other balance sheet reserves.

New Accounting Pronouncements

     In June 1998,  the Financial  Accounting  Standards  Board issued SFAS 133,
"Accounting  for  Derivative  Instruments  and Hedging  Transactions".  SFAS 133
requires  companies to recognize all  derivatives  contracts as either assets or
liabilities  in the balance sheet and to measure them at fair value.  If certain
conditions are met, a derivative may be specifically  designated as a hedge, the
object  of which is to  match  the  timing  of gain or loss  recognition  on the
hedging  derivative with the recognition of (i) the changes in the fair value of
the hedged asset or liability that are  attributable  to the hedged risk or (ii)
the earnings' effect of the hedged forecasted transaction.  For a derivative not
designated as a hedging instrument,  the gain or loss is recognized in income in
the period of change.  SFAS 133 is effective  for all fiscal  quarters of fiscal
years beginning after June 15, 1999.

     Historically, the Company has not entered into derivatives contracts either
to hedge existing risks or for speculative  purposes.  Accordingly,  the Company
does not  expect  adoption  of this new  standard  on July 1, 1999 to affect its
financial statements.

Inflation

     Inflation  has  historically  not had a  material  effect on the  Company's
operations.

Year 2000

     The Company  has  appointed  an internal  task force to assess its state of
readiness for possible "Year 2000" issues. The task force is evaluating internal
business systems,  software and other components which affect the performance of
the Company's  products and the Company's  vulnerability to possible "Year 2000"
exposures due to suppliers and other third parties lack of preparedness  for the
year 2000.


                                       13
<PAGE>


     In addition,  the Company has been in contact with its  suppliers and other
third  parties to  determine  the extent which they may be  vulnerable  to "Year
2000" issues. As this assessment  progresses,  matters may come to the Company's
attention which could give rise to the need for remedial measures which have not
yet been identified.  The Company cannot currently  predict the potential effect
of third  parties  "Year  2000"  issues on its  business.  It is  expected  that
assessment,  remediation  and contingency  planning  activities will be on-going
throughout 1999 with the goal of appropriately  resolving all material  internal
systems and third party issues. The Company intends to utilize both internal and
external resources to reprogram,  replace and test the systems for the year 2000
modifications.

     The Company does not expect  expenditures  relating to the year 2000 issues
to be material and does not expect costs associated with the year 2000 to have a
significant impact on the Company's results of operations or financial position.
However,  there  can be no  assurance  that  the  Company  will  not  experience
unexpected  difficulties in connection with the year 2000 or that the systems of
other companies on which the Company's systems rely will be timely converted.


                                       14
<PAGE>



          Part II - OTHER INFORMATION


Item 2.  Changes in Securities and Use of Proceeds.

During the quarter ended  December 31, 1998 the Company issued to certain of its
officers,  employees  (including new employees  obtained in connection  with the
Ampro  acquisition)  and a consultant  and advisor to the Company (i)  five-year
options to  purchase an  aggregate  of 43,000  shares of its common  stock at an
exercise  price of $3.813 per share;  (ii)  five-year  options  to  purchase  an
aggregate of 345,000  shares of its common stock at an exercise  price of $3.948
per share and (iii) ten-year  options to purchase an aggregate of 470,000 shares
at an exercise  price of $4.125 per share.  The options  were granted in private
transactions  which  were  exempt  from  the  registration  requirements  of the
Securities Act of 1933 by virtue of Section 4(2) thereunder.




Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits:

               10.1 Purchase  Agreement,  dated as of October 15,  1998,  by and
                    among the Company,  Kenneth W.  Hilbert,  E. Scott  Hilbert,
                    Omer Messer and Charles J. Holton (incorporated by reference
                    to the exhibit  filed with the Company's  Current  Report on
                    Form 8-K for the event dated October 16, 1998).

               27   Financial Data Schedule*

          (b)  During the quarter  ended  December 31, 1998 the Company  filed a
               current  report on Form 8-K (under  Item 2 of Form 8-K),  for the
               event  dated  October  16,  1998 to report the  purchase of Ampro
               Industries,  Inc.  and  Amendments  Nos. 1 and 2 to said Form 8-K
               (under  Item  7) to  report  the  financial  information  of  the
               business acquired.

          ----------

          *    (For SEC use only)


                                       15
<PAGE>


                                   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.

Dated February 12, 1999
                                         U.S. Home & Garden Inc.
                                              (Registrant)


                                         /s/   Robert Kassel
                                         ---------------------------------------
                                         President, Chief Executive Officer and
                                         Treasurer


                                         /s/   Lynda Gustafson  
                                         ---------------------------------------
                                         Vice President of Finance (Principal
                                         Accounting Officer)