U.S. 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 September 30, 1996

                                       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, Suite 830
                         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 equity, as of the latest practicable date.

As of November 12, 1996,  there were  13,917,266  shares of the issuer's  common
stock, par value $.001 per share, outstanding.

<PAGE>


Part l. - Financial Information

Item 1. Consolidated Financial Statements

Consolidated balance sheet as of  September 30, 1996 (unaudited)
and June 30, 1996                                                            1-3

Consolidated statements of operations for the three months
ended September  30, 1996 and 1995  (unaudited)                                4

Consolidated statements of cash flows for the three months
ended September 30, 1996 and 1995  (unaudited)                               5-6

Notes to consolidated financial statements                                  7- 8

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations                                         9-15

Part II. - Other Information


Item 6.  Exhibits and Reports on Form 8-K                                     16

Signatures                                                                    17





<PAGE>

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

                                                                                       Consolidated Balance Sheet
=================================================================================================================
<CAPTION>
                                                                                September                June 30,
                                                                                 30, 1996                    1996
-----------------------------------------------------------------------------------------------------------------
                                                                              (unaudited)
<S>                                                                           <C>                     <C>        
Assets

Current
  Cash and cash equivalents                                                   $   744,071             $   679,850
  Accounts receivable, less allowance for doubtful
    accounts and sales returns of $240,000 and
    $155,000                                                                    4,617,059               7,109,392
  Inventories                                                                   6,642,905               3,391,553
  Prepaid expenses and other current assets                                       537,645                 462,246
  Income tax receivable                                                         1,082,407                    --
  Deferred tax asset                                                            1,333,000               1,333,000
-----------------------------------------------------------------------------------------------------------------

Total current assets                                                           14,957,087              12,976,041

Furniture, fixtures and equipment, net                                          2,060,791               1,215,660

Intangible assets
  Excess of cost over net assets acquired of Weatherly
    Consumer Products Group, Inc., net of accumulated
    amortization of $109,491                                                   20,612,918                    --
  Excess of cost over net assets acquired of Easy
    Gardener, Inc., net of accumulated amortization
    of $946,752 and $828,289                                                   13,225,455              13,343,918
  Excess of cost over net assets acquired of Golden
    West Chemical Distributors, Inc., net of accumu-
    lated amortization of $433,196 and $406,903                                 1,664,407               1,690,700
  Excess of cost over net assets acquired of Emerald
    Products, LLC, net of accumulated amortization of
    $39,458 and $29,356                                                           751,880                 749,375
  Deferred financing costs, net of accumulated amor-
    tization of $38,872 and $467,193                                            1,360,534               1,004,614
  Product rights, patents and trademarks, net of
    accumulated amortization of $76,384 and $56,500                             1,965,160                 198,500
</TABLE>



                                       1
<PAGE>


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

                                                                                       Consolidated Balance Sheet

=================================================================================================================
<CAPTION>
                                                                                  September              June 30,
                                                                                   30, 1996                  1996
-----------------------------------------------------------------------------------------------------------------
                                                                                 (unaudited)
<S>                                                                          <C>                   <C>           
Assets (continued)

Intangible assets (continued)
  Non-compete agreement, net of accumulated amortiza-
    tion of $3,562                                                           $      496,438        $            -
  Package design, net of accumulated amortization of
    $67,831 and $56,016                                                             215,250               180,293

Deferred tax asset                                                                1,973,597                     -

Trade credits                                                                     1,293,120             1,294,560

Officer receivables                                                                 659,490               617,204

Other assets                                                                        233,258               313,117
-----------------------------------------------------------------------------------------------------------------

                                                                             $   61,469,385        $   33,583,982
=================================================================================================================

</TABLE>


          See accompanying notes to consolidated financial statements.


                                       2
<PAGE>


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

                                                                                       Consolidated Balance Sheet

=================================================================================================================
<CAPTION>
                                                                                  September              June 30,
                                                                                   30, 1996                  1996
-----------------------------------------------------------------------------------------------------------------
                                                                                 (unaudited)
<S>                                                                          <C>                   <C>           
Liabilities and Shareholders' Equity

Current
  Line of credit                                                             $      942,394        $    1,288,146
  Current maturities of notes payable                                             3,840,000             2,361,798
  Accounts payable                                                                2,132,961             1,285,585
  Accrued expenses                                                                2,774,352             1,085,797
  Accrued commissions                                                               183,690               545,670
  Accrued interest                                                                        -               592,271
  Accrued purchase consideration                                                  3,981,295               488,888
-----------------------------------------------------------------------------------------------------------------

Total current liabilities                                                        13,854,692             7,648,155

Deferred tax liability                                                              328,000               328,000

Notes payable, less current maturities                                           20,840,000             6,238,200
-----------------------------------------------------------------------------------------------------------------

Total liabilities                                                                35,022,692            14,214,355
-----------------------------------------------------------------------------------------------------------------

Commitments, contingency and subsequent event

Shareholders' equity
  Preferred stock, $.001 par value - shares authorized,
    1,000,000; no shares outstanding                                                     --                    --
  Common stock, $.001 par value - shares authorized,
    30,000,000; 10,507,381 and 13,914,516 shares issued
    and outstanding at June 30, 1996 and September 30,
    1996                                                                             13,915                10,507
  Additional paid-in capital                                                     30,099,198            21,413,422
  Accumulated deficit                                                            (3,666,420)           (2,054,302)
-----------------------------------------------------------------------------------------------------------------

Total shareholders' equity                                                       26,446,693            19,369,627
-----------------------------------------------------------------------------------------------------------------

                                                                             $   61,469,385        $   33,583,982
=================================================================================================================
</TABLE>


          See accompanying notes to consolidated financial statements.



                                       3
<PAGE>


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

                                                                            Consolidated Statements of Operations

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

<CAPTION>
Three months ended September 30,                                                        1996                 1995
-----------------------------------------------------------------------------------------------------------------
                                                                                            (unaudited)
<S>                                                                          <C>                    <C>          
Net sales                                                                    $     5,522,793        $   3,264,636

Cost of sales                                                                      2,607,167            1,555,186
-----------------------------------------------------------------------------------------------------------------

Gross profit                                                                       2,915,626            1,709,450
-----------------------------------------------------------------------------------------------------------------

Operating expenses
  Selling and shipping                                                             1,759,480            1,189,024
  General and administrative                                                       1,504,531            1,021,906
-----------------------------------------------------------------------------------------------------------------

                                                                                   3,264,011            2,210,930
-----------------------------------------------------------------------------------------------------------------

Loss from operations                                                                (348,385)            (501,480)

Other income (expense)
  Investment income                                                                   25,927               23,871
  Interest expense                                                                  (562,768)            (457,259)
-----------------------------------------------------------------------------------------------------------------

Loss before income taxes and extraordinary expense                                  (885,226)            (934,868)

Income tax benefit                                                                   280,000              100,000
-----------------------------------------------------------------------------------------------------------------

Loss before extraordinary expense                                                   (605,226)            (834,868)

Extraordinary expense of $1,459,266 on debt
  refinancing, net of income taxes of $452,372                                    (1,006,894)                  --
-----------------------------------------------------------------------------------------------------------------

Net loss                                                                     $    (1,612,120)       $    (834,868)
=================================================================================================================


Loss per common share before extraordinary expense                           $          (.04)       $        (.08)

Extraordinary expense                                                                   (.08)                  --
-----------------------------------------------------------------------------------------------------------------

Loss per common share                                                        $          (.12)       $        (.08)
-----------------------------------------------------------------------------------------------------------------

Weighted average common and common equivalent
  shares outstanding                                                              12,915,000            9,944,000
=================================================================================================================
</TABLE>


          See accompanying notes to consolidated financial statements.



                                       4
<PAGE>

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

                                                                            Consolidated Statements of Cash Flows

=================================================================================================================
<CAPTION>
Increase (decrease) in Cash

Three months ended September 30,                                                       1996                  1995
-----------------------------------------------------------------------------------------------------------------
                                                                                           (unaudited)
<S>                                                                          <C>                   <C>            
Cash flows from operating activities
  Net loss                                                                   $   (1,612,120)       $     (834,868)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Extraordinary expense                                                       1,006,894                    --
      Depreciation and amortization                                                 450,862               240,358
      Changes in operating assets and liabilities, net of
        assets acquired and liabilities assumed:
         Accounts receivable                                                      3,834,772             2,156,579
         Inventories                                                             (1,445,324)             (501,719)
         Prepaid expenses and other current assets                                   40,524              (158,707)
         Accounts payable and accrued expenses                                      325,401               342,672
         Other assets                                                                79,859              (134,105)
         Deferred tax asset                                                        (735,694)                   --
-----------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities                                         1,945,174             1,110,210
-----------------------------------------------------------------------------------------------------------------

Cash flows from investing activities
  Payment for purchase of business, net of cash acquired                        (20,823,042)             (979,870)
  Payment for non-compete                                                          (500,000)                   --
  Increase in officer receivables                                                   (42,286)               (9,176)
  Purchase of furniture, fixtures and equipments                                    (39,654)              (32,326)
  Purchase of package design                                                             --               (41,846)
-----------------------------------------------------------------------------------------------------------------

Net cash used in investing activities                                           (21,404,982)           (1,063,218)
-----------------------------------------------------------------------------------------------------------------

Cash flows from financing activities
  Proceeds from warrants exercised                                                5,189,186               661,437
  Proceeds from bank line of credit                                               7,436,533                    --
  Payment on bank line of credit                                                 (7,782,285)                   --
  Proceeds from notes payable                                                    16,783,335                    --
  Payments of notes payable                                                        (703,333)             (400,001)
  Acquisition finance costs                                                      (1,399,407)                   --
-----------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                                        19,524,029               261,436

</TABLE>


                                       5
<PAGE>


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

                                                                            Consolidated Statements of Cash Flows

=================================================================================================================
                                                                                           (unaudited)
Three months ended September 30,                                                       1996                  1995
-----------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                   <C>           
Net increase in cash                                                         $       64,221        $      308,428

Cash and cash equivalents, beginning of period                                      679,850               970,310
-----------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                            744,071        $    1,278,738
=================================================================================================================



<CAPTION>

Three months ended September 30,                                                       1996                  1995
-----------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                   <C>           
Supplemental disclosure of cash flow information
  Cash paid for interest, including deferred financing
    costs                                                                    $    2,773,328        $      323,497
  Cash paid for taxes                                                        $        3,322        $            -
=================================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       6
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

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

1.   The accompanying  consolidated  financial statements at September 30, 1996,
     and for the three months ended  September 30, 1996 and 1995 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 financial statements for the year ended June 30, 1996,
     for details of accounting policies and accounts.

3.   On August 9, 1996, Easy Gardener Acquisition Corporation (Easy Gardener), a
     wholly-owned  subsidiary  of the Company,  acquired all of the  outstanding
     stock of Weatherly  Consumer Products Group, Inc.  (Weatherly),  a lawn and
     garden care  company,  for 1,000,000  shares of the Company's  common stock
     (valued  at $3 per  share)  and  $22,937,321,  less an amount  required  to
     discharge certain  outstanding  indebtedness of the acquired  company,  and
     adjusted  dollar for dollar based upon the  ultimate  value of the acquired
     company's net current assets  (approximately  $2.4 million at September 30,
     1996).  The Company  operates the acquired  company as a subsidiary of Easy
     Gardener.

     In connection with the above acquisition,  the Company's  outstanding notes
     payable  were  refinanced  and  a  new  line  of  credit   arrangement  was
     established.  Under the  terms of the new loan  agreement,  two  promissory
     notes were issued in the principal  amount of $23,000,000  and  $2,250,000,
     respectively.  The $23,000,000 note requires  quarterly  principal payments
     ranging from  $570,000 to $1,350,000  beginning  September 30, 1996 through
     June 30, 2002 and bears  interest at the lower of prime or LIBOR rates,  as
     defined. The $2,250,000 note requires quarterly principal payments totaling
     $140,625 beginning September 30, 1998, through December 30, 1999, and bears
     interest at prime plus 6%. The line of credit  agreement  calls for maximum
     borrowings  totaling  $13,000,000  with  interest  at the lower of prime or
     LIBOR  rates.  As a result  of this  refinancing,  the  entire  balance  of
     deferred  finance costs at June 30, 1996, net of accumulated  amortization,
     plus  certain  prepayment  penalties,  was written off as an  extraordinary
     expense during the quarter ended September 30, 1996. Extraordinary expense,
     net of  $452,000  tax  benefit,  totaled  approximately  $1,007,000  in the
     quarter ended September 30, 1996.

     In conjunction  with the debt  refinancing,  a warrant to purchase  400,000
     shares  of stock at $2.50 per  share  was  issued  to one of the  financial
     institutions which provided the financing.



                                       7
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

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

     Subsequent  to June  30,  1996,  warrants  and a unit  purchase  option  to
     purchase  common  stock were  exercised  resulting  in net  proceeds to the
     Company of  approximately  $5,300,000.  These  proceeds were used to fund a
     portion of the Weatherly acquisition.

     Subsequent  to June 30, 1996,  the Company  granted  stock options (with an
     exercise  price equal to the current  market  price) to purchase  1,300,000
     shares  of common  stock to  various  employees  and  consultants  as bonus
     compensation   for  fiscal  1996   operating   results  and  the  Weatherly
     acquisition.  In  addition,  the Company also granted an option to purchase
     200,000  shares of common  stock to a  financial  consultant  for  services
     relating to the Weatherly  acquisition.  The option has a nominal  exercise
     price and will be recorded  as a cost of the  acquisition  (estimated  fair
     value approximately $500,000),  thus increasing the excess of cost over net
     assets acquired of Weatherly.

     The  acquisition  was  accounted for as a purchase  and,  accordingly,  the
     results of operations have been included in the  consolidated  statement of
     the operations since August 9, 1996. The value of intangibles purchased and
     the excess of the  purchase  price  over the fair value of assets  acquired
     totalled  approximately  $20.7  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 and  Weatherly  as if the  acquisition  had
     occurred at the  beginning of fiscal 1995,  after giving  effect to certain
     adjustments,  including  the  amortization  of  excess  costs  over  assets
     acquired  and the  elimination  of certain  expenses  incurred by Weatherly
     related to the  acquisition.  This pro forma  summary does not  necessarily
     reflect  the results of  operations  as they would have been if the Company
     and Weatherly had constituted a single entity during such period and is not
     necessarily indicative of results which may be obtained in the future.

     Three months ended September 30,                     1996             1995
     ---------------------------------------------------------------------------
     Net sales                                     $ 6,265,000      $ 4,553,000
     Net (loss) before extraordinary expense        (1,008,000)      (2,264,000)
     Net loss                                       (2,606,000)      (3,790,000)
     Net (loss) per common share before
           extraordinary expense                          (.08)            (.17)
     Net (loss) per common share                          (.19)            (.28)
     ---------------------------------------------------------------------------



                                       8
<PAGE>


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



General

     On August 9, 1996, Easy Gardener  Acquisition Corp.  ("EGAC"), a subsidiary
of the Company,  acquired  all of the  outstanding  stock of Weatherly  Consumer
Products Group, Inc., ("Weatherly"),  a lawn and garden care company. See Note 3
of Notes to the Consolidated  Financial  Statements for a description of certain
terms of the acquisition.

THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

     The Company's  consolidated  net sales  increased to $5,522,793  during the
three months ended  September  30, 1996 from  $3,264,636  during the  comparable
period in 1995.  Approximately  $900,000  of the  increase  in net sales for the
three months ended  September  30, 1996 resulted  from the  introduction  of new
products  during the second  quarter in fiscal 1996.  In  addition,  the Company
believes that its sales were positively affected by the continued penetration in
existing markets,  expansion into new markets and a higher recognition of EGAC's
brand name and  products.  Furthermore,  the increase in net sales also resulted
from the inclusion of Weatherly's  sales of  approximately  $768,000  during the
three months ended September 30, 1996 compared to $0 in the comparable period in
1995.

     The Company's  consolidated  cost of goods sold and gross profit  generated
during the quarter ended September 30, 1996 were also higher than the comparable
period in 1995  primarily  due to the increase in net sales and the inclusion of
Weatherly's  costs of goods sold and gross profit.  Gross profit as a percentage
of net sales, for the three months ended September 30, 1996 and 1995 was 53% and
52%, respectively.

     The  Company's  consolidated  selling and  shipping  expenses  increased to
$1,759,480  during the three months  ended  September  30, 1996 from  $1,189,024
during the  comparable  period in 1995  primarily as a result of the increase in
net sales.  In addition,  the  increase in selling and  shipping  expenses was a
result of the  inclusion  of  approximately  $314,000 of  Weatherly's  expenses.
Selling and shipping  expenses as a percentage of net sales for the three months
ended September 30, 1996



                                       9
<PAGE>


decreased from 36% to 32% compared to the comparable period in 1995 primarily as
a result of economies of scales gained from the sale of new products to existing
customers.

     The Company's consolidated general and administrative expenses increased to
$1,504,531  during the three months  ended  September  30, 1996 from  $1,021,906
during the  comparable  period in 1995 primarily as a result of the inclusion of
Weatherly  expenses of  approximately  $214,000.  In  addition,  the increase in
general and administrative  expenses was due to the overhead expenses associated
with the overall increase in the size of the Company. General and administrative
expenses, as a percentage of net sales, for the three months ended September 30,
1996 decreased from 31% to 27% compared to the comparable period in 1995.

     The Company's  consolidated  interest expense  increased to $562,768 during
the three months ended  September 30, 1996 from $457,259  during the  comparable
period in 1995 primarily due to the increase in outstanding  indebtedness  which
was incurred in connection with the purchase of Weatherly.

     The Company's  consolidated income tax benefit increased to $280,000 during
the three months ended  September 30, 1996 from $100,000  during the  comparable
period in 1995  primarily  due to the Company's  available  net  operating  loss
carryforwards to eliminate Federal income taxes.

     In connection with the Weatherly acquisition, during the three months ended
September  30,  1996,  the  Company  incurred  an  extraordinary  expense on the
refinancing,  at a more  favorable  rate,  of  outstanding  notes payable and an
outstanding  revolving  credit  facility.  As a result of the  refinancing,  the
Company  incurred an  extraordinary  expense of  $1,006,894  ($1,459,266  net of
$452,372 of tax benefit),  or $.08 per share. There was no comparable expense in
the corresponding 1995 period. The extraordinary expense consists of the balance
of  deferred  finance  costs,  net of  accumulated  amortization,  plus  certain
prepayment penalties. See " Liquidity and Capital Resources".

     As a result of the foregoing,  the Company incurred a consolidated net loss
of  $1,612,120  in the three  months  ended  September  30,  1996  compared to a
consolidated net loss of $834,868 in the comparable 1995 period.



                                       10
<PAGE>

Liquidity and Capital Resources

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

     At September 30, 1996,  the Company had  consolidated  cash and  short-term
investments  totalling  $744,071 and working capital of $1,102,395.  At June 30,
1996, the Company had  consolidated  cash and short-term  investments  totalling
$679,850 and working capital of $5,327,886. The decrease in working capital from
June 30, 1996 is due primarily to the  additional  notes payable and  additional
accrued purchase  consideration  for the acquisition of the outstanding stock of
Weatherly.

     Net cash  provided  by  operating  activities  for the three  months  ended
September 30, 1996 was $1,945,174 consisting primarily of a net loss, a decrease
in inventory  offset by, the  extraordinary  expense and an increase in accounts
receivable.  Net cash used in  investing  activities  for the three months ended
September  30, 1996 was  $21,204,982  consisting  primarily of cash used for the
acquisition  of  Weatherly.  Net cash provided by financing  activities  for the
three months ended  September 30, 1996 was $19,524,029  consisting  primarily of
the  additional  proceeds  from the notes  payable used in  connection  with the
purchase of Weatherly and the  exercising  of warrants to purchase  common stock
which was also used for the purchase of Weatherly.

     At September 30, 1996 the Company had consolidated term debt of $24,680,000
million which was incurred in connection  with the purchase of Weatherly and the
refinancing of the outstanding notes payable. In connection with the acquisition
of Weatherly, EGAC entered into a new credit agreement ("Credit Agreement") with
certain  institutional  lenders  under  which  its  outstanding  term  loan  and
revolving credit indebtedness were refinanced. Pursuant to the Credit Agreement,
the lenders have  provided the Company with the following  revolving  credit and
term loan facilities:

     (a) Revolving Credit  Facility:  The maximum amount available for borrowing
under this  facility from time to time is equal to the lesser of $13 million and
a borrowing  base  determined  by reference to specified  percentages  of EGAC's
consolidated  accounts  receivable and inventory  deemed to be "eligible" by the
lenders.  As of  September  30,  1996,  based  on  this  formula,  approximately
$4,978,384 was available for borrowing and $942,394 was outstanding.




                                       11
<PAGE>



     Revolving credit loans bear interest at an annual rate chosen by EGAC based
on the prime rate of one of the lenders or LIBOR (the London inter-bank  offered
rate) plus an  applicable  marginal  rate.  At September  30, 1996 the effective
annual rate for the outstanding  revolving  credit loans was 9.5%. The revolving
credit  facility  expires  on June  30,  2002  (the "Expiration  Date")  and all
outstanding  revolving credit loans are then due, unless such loans are required
to be repaid earlier by the terms of the Credit Agreement. In addition, for a 10
day period in each year, all outstanding revolving credit loans must be paid and
no  revolving  credit  loans  may be  borrowed.  Revolving  credit  loans may be
voluntarily  prepaid at any time.  Subject to the  availability  formula and the
Expiration  Date,  amounts  repaid  may be  reborrowed  and,  subject to certain
restrictions, outstanding prime rate loans may be converted to LIBOR rate loans.
EGAC is also  required  to pay  certain  commitment,  service  and other fees in
connection  with this  facility.  If EGAC  determines to terminate the revolving
credit facility prior to the Expiration  Date, the outstanding  revolving credit
loan  must be  prepaid  together  with a premium  from 1% to 3% of the  "Average
Yearly Loan  Balance"  (as  defined in the Credit  Agreement)  of the  revolving
credit loans.

     (b) Term Loan Facility:  Pursuant to this facility,  EGAC obtained two term
loans (the "Term Loans"), one in the principal amount of $23 million ("Term Loan
I") and the other in the  principal  amount of $2.25  million  ("Term Loan II"),
each of which  matures on the  Expiration  Date.  The Term Loans are  payable in
quarterly  installments of principal,  commencing as to Term Loan I in September
1996  and as to Term  Loan II in  September  1998.  Interest  on Term  Loan I is
payable,  at the  election  of EGAC,  at the  adjusted  prime rate of LIBOR rate
described above,  and EGAC from time to time , subject to certain  restrictions,
may  convert  Term  Loan I from a prime  rate  loan to a LIBOR  rate  loan.  The
effective  annual rate of interest  for Term loan I is 9.5%.  Term Loan II bears
interest at a floating  rate equal to prime rate of one of the lenders  plus 6%.
The  effective  annual rate of interest for Term loan II is 14.25%.  Interest is
payable  monthly in  arrears on prime rate loans and at the end of the  interest
period for a LIBOR rate loan if the interest period is 3 months or less. If EGAC
elects to prepay Term Loan I in full, at any time prior to the Expiration  Date,
EGAC is also obligated to prepay a premium from 1% to 3% of the amount  prepaid.
Term Loan I is subject to certain mandatory  prepayments of the principal amount
of such Term Loan from "excess  cash flow" (as defined in the Credit  Agreement)
of EGAC and  certain  net  proceeds  of asset  sales,  condemnation  awards  and
insurance  recoveries.  The next mandatory prepayment of the principal amount of
the Term Loan I on account of "excess cash flow", if any, will be due in October
1997.

     EGAC's obligation to pay the principal of, the interest on, and/or premium,
if any, and all other amounts  payable on account of the revolving  credit loans
and the Term Loans is secured by substantially all of the assets of EGAC and its


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<PAGE>

subsidiaries   and  the  irrevocable   guarantees  of  the  Company  and  EGAC's
subsidiaries  of such  obligations.  Upon the  occurrence  of events of  default
specified in the Credit  Agreement,  the maturity of the  outstanding  principal
amounts of the revolving  credit loans and the Term loans may be  accelerated by
the  lenders  who may  also  foreclose  on the  secured  assets  of EGAC and its
subsidiaries.

     Under the Credit  Agreement (a) EGAC is required,  among other  things,  to
comply with certain  limitations on incurring  additional  indebtedness,  liens,
guaranties, capital and operating lease expenses in excess of a specified amount
per year, and sales of assets and payment of dividends, (b) EGAC and the Company
must  comply  with  certain  limitations  on  merger,  liquidations,  changes in
business,   investments,   loans  and  advances,   or  certain   acquisition  of
subsidiaries.  In  addition,  EGAC must comply  with  certain  minimum  interest
coverage,  debt  service and fixed  change  rates,  not permit its Net Worth (as
defined) to be less than certain amounts and generate certain minimum amounts of
income  before  interest  expenses,  taxes,  depreciation  and  amortization.  A
violation of any of these  covenants  constitutes  an event of default under the
Credit Agreement.

     The Company's cash flow and capital  requirements are typically affected by
the seasonal nature of its business. Sales of the Company's lawn and garden care
products,  including EGAC's, are highly seasonal, with the shipments of products
heavily   concentrated  in  the  spring  and  summer.  Sales  of  the  Company's
agricultural products,  through its subsidiary Golden West Agri-Products,  Inc.,
("Golden  West"),  are also seasonal.  Most shipments of Golden West's  Products
occur  during  the  period  from  March  through  October  (  the   agricultural
cultivation period), with orders by agricultural distributors generally placed a
month prior to shipment.  The Company's  results of  operations  may be severely
adversely affected by poor weather conditions. Prolonged periods of poor weather
conditions could result in reduced consumer weekend  purchases of do-it-yourself
lawn and  garden  care  products  and  reduced  agricultural  planting,  thereby
reducing sales of the Company's products. In addition,  unexpected production or
transportation  difficulties  occurring  at a time of peak  production  on sales
could  cause  sales  losses  which  would not be  readily  reversed  before  the
following year.

     The Company believes that the consolidated operations of EGAC will generate
sufficient  cash  flow to  service  the debt  incurred  in  connection  with the
acquisition of the assets of Easy Gardener, Inc. ("EGI"), and the acquisition of
Weatherly. However, if such cash flow is not sufficient to service the debt, the
Company will be required to seek additional financing which may not be available
on


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<PAGE>

commercially  acceptable terms or at all. In addition, the Company has commenced
amortizing over 30 years  approximately  $14,170,000 of goodwill  related to the
purchase of the assets of EGI (being the value of the cost over the value of the
assets  acquired).  Furthermore,  the company has commenced  amortizing  over 20
years  approximately  $792,000  of goodwill  related to the  purchase of Emerald
Products, LLC. The Company is already amortizing approximately $105,000 per year
of goodwill relating to the acquisition of Golden West. As of August 9, 1996, in
connection  with the purchase of  Weatherly, the Company is required to commence
amortizing approximately $20,613,000 of goodwill over 30 years.

     In April 1996, the Company  entered into an agreement with an  unaffiliated
company  pursuant  to  which  it sold all of the  remaining  inventory  of Power
Gardener units, as well as, the  manufacturing  rights and  manufacturing  molds
relating to the Power Gardener product in consideration  for $1,600,000 of trade
credits.  To the extent the  unaffiliated  company sells Power Gardener units it
will remit a specified  percentage of the net cash proceeds of such sales to the
Company  which  will  proportionately  reduce  the  value of the  trade  credits
received by the Company. The trade credits are for advertising media,  equipment
and  services.  The  trade  credits  expire  three  years  from  the date of the
agreement.

     As of  September  30,  1996,  the  Company  has a  deferred  tax  asset  of
$3,306,597,  (of which  $1,333,000 is a current asset) the majority  relating to
the tax  benefit  associated  with  the  accumulated  net  operating  losses  of
approximately  $5,110,000  for Federal  income tax purposes which expire in 2009
and  approximately  $1.2  million  of tax  benefits  acquired  in the  Weatherly
acquisition. The Company believes that with the successful implementation of the
September 1994  acquisition  of the assets of EGI and the most recent  Weatherly
acquisition  in August 1996,  realization of this asset is more likely than not.
For California  income tax purposes,  the Company has  accumulated net operating
losses of  approximately  $2,903,000  which expire through 2000.  Based upon the
estimated  taxable  income to be  apportioned  to  California  over the next few
fiscal years and  considering  the  expiration  date of the net  operating  loss
carryovers, the Company has established a valuation reserve of $223,000 relating
to the estimated  $275,000 benefit  associated with the California net operating
loss carryovers.

     The Company  believes that the cash  generated from  operations,  available
borrowings  and net proceeds from warrants  exercised to purchase  common stock,
will be sufficient to fund its operations at least through fiscal 1997.


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<PAGE>

However, the Company intends to pursue a growth strategy through the acquisition
of products  and/or  companies.  The Company  anticipates  that it will  require
additional financing to fund any additional acquisitions.




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<PAGE>


                           PART II - OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K

a.    Exhibits

     10.1  Purchase  Agreement,  dated as of  August 9,  1996,  by and among the
Company,  Easy Gardener  Acquisition  Corp.,  Weatherly Consumer Products Group,
Inc.  and  the  stockholders  of  Weatherly   Consumer   Products  Group,   Inc.
(incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K for
the event dated August 9, 1996).


b.  During the quarter  ended  September  30,  1996 the Company  filed a current
report on Form 8- K, (under  Item 2 of Form 8-K) for the event  dated  August 9,
1996, to report the purchase of Weatherly Consumer Products Group, Inc.




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<PAGE>


                                   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.



                                                U.S. HOME & GARDEN INC.
                                                (Registrant)


Date:  November 12, 1996                        By:  /s/  Robert Kassel
                                                     ---------------------------
                                                       Robert Kassel, President,
                                                     Chief Executive Officer and
                                                      Treasurer (Duly Authorized
                                                           Officer and Principal
                                                        Financial and Accounting
                                                                        Officer)


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