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 December 31, 2002

                                       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 001-14015

                             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)                        (Zip Code)

                                 (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 by check whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act).

                                Yes [_]  No [X]

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

As of January 29, 2003 there were 17,951,090 shares of the issuer's common
stock, par value $.001 per share, outstanding.
<PAGE>

Part I. - Financial Information

Item 1. - Consolidated Financial Statements

Consolidated balance sheets as of December 31, 2002
(Unaudited) and June 30, 2002                                                1-2

Consolidated statements of operations for the three months
and six months ended December 31, 2002 and 2001 (Unaudited)                    3

Consolidated statements of cash flows for the six months
ended December 31, 2002 and 2001 (Unaudited)                                 4-5

Notes to consolidated financial statements                                  6-11

Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operations                                        12-20

Item 3. - Quantitative and Qualitative Disclosures About
Market Risk                                                                   20

Item 4. - Controls and Procedures                                             20

Part II. - Other Information

Item 2. - Changes of Securities and Use of Proceeds                           20

Item 5. - Other Information                                                   21

Item 6. - Exhibits and Reports on Form 8-K                                 21-22

Signatures                                                                    22

Certifications                                                             23-24
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                                     Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                   December 31,    June 30,
                                                                       2002          2002
                                                                   -----------   -----------
                                                                   (Unaudited)
<S>                                                                <C>           <C>
Assets

Current
     Cash and cash equivalents                                     $ 1,119,000   $   219,000
     Accounts receivable, less allowance for doubtful
         accounts and sales returns of $1,003,000 and $1,635,000    12,055,000    26,243,000
     Inventories                                                    10,439,000     8,023,000
     Prepaid expenses and other current assets                       1,293,000       988,000
     Refundable income taxes                                           137,000       405,000
     Deferred tax asset                                                688,000       688,000
     Current assets of discontinued operations                         180,000     1,052,000
--------------------------------------------------------------------------------------------

Total Current Assets                                                25,911,000    37,618,000

Property and Equipment, net                                          4,577,000     4,850,000

Intangible Assets
     Goodwill, net                                                  49,878,000    49,861,000
     Deferred financing costs, net of accumulated
         amortization of $791,000 and $578,000                       4,130,000     3,570,000
     Non-compete agreements, net of accumulated
         amortization of $586,000 and $407,000                         924,000     1,103,000
     Package tooling costs, net of accumulated
         amortization of $2,125,000 and $1,860,000                   1,159,000     1,216,000
     Product rights, patents and trademarks, net of
         accumulated amortization of $184,000 and $163,000             488,000       509,000

Officer Receivables                                                    512,000       512,000

Property and Equipment of Discontinued Operations
     Held For Sale                                                          --       100,000

Other Assets                                                            26,000        26,000
--------------------------------------------------------------------------------------------

Total Assets                                                       $87,605,000   $99,365,000
============================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               1
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                                     Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                   December 31,    June 30,
                                                                       2002          2002
                                                                   -----------   -----------
                                                                   (Unaudited)
<S>                                                                <C>           <C>
Liabilities and Stockholders' Equity (Deficit)
Current
     Revolving credit facility                                   $  4,610,000    $ 15,036,000
     Accounts payable                                               8,561,000       7,180,000
     Accrued co-op advertising                                        538,000         740,000
     Accrued commissions                                              455,000       1,437,000
     Accrued rebates                                                  424,000         931,000
     Accrued expenses                                               1,569,000       1,577,000
     Current portion of long-term debt                                     --       7,712,000
     Current liabilities of discontinued operations                   212,000         277,000
---------------------------------------------------------------------------------------------

Total Current Liabilities                                          16,369,000      34,890,000

Revolving Credit Facility                                           6,000,000              --
Long-Term Debt                                                     12,020,000              --
Deferred Tax Liability                                                542,000         542,000
Company Obligated Mandatorily Redeemable
     Preferred Securities of Subsidiary Trust Holding
     Solely Junior Subordinated Debentures                         56,979,000      56,951,000
---------------------------------------------------------------------------------------------
Total Liabilities                                                  91,910,000      92,383,000
---------------------------------------------------------------------------------------------

Stockholders' Equity (Deficit)
     Preferred stock, 1,000,000 shares authorized and unissued             --              --
     Common stock, $0.001 par value - shares authorized,
         75,000,000; 21,841,000 and 21,641,000 shares issued           22,000          22,000
     Additional paid-in capital                                    52,411,000      52,351,000
     Retained deficit                                             (43,910,000)    (32,563,000)
---------------------------------------------------------------------------------------------
                                                                    8,523,000      19,810,000

Less: Treasury Stock, 3,890,000 shares at cost                    (12,828,000)    (12,828,000)
---------------------------------------------------------------------------------------------
Total Stockholders' Equity (Deficit)                               (4,305,000)      6,982,000
---------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity (Deficit)             $ 87,605,000    $ 99,365,000
=============================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               2
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                           Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                             Three Months Ended               Six Months Ended
                                                                 December 31,                    December 31,
                                                            2002             2001            2002            2001
                                                                  Unaudited                       Unaudited
                                                        ------------------------------------------------------------
<S>                                                     <C>             <C>             <C>             <C>
Net sales                                               $ 12,351,000    $ 11,762,000    $ 25,502,000    $ 25,245,000
Cost of Sales                                              7,167,000       7,011,000      15,353,000      14,953,000
--------------------------------------------------------------------------------------------------------------------
Gross Profit                                               5,184,000       4,751,000      10,149,000      10,292,000
--------------------------------------------------------------------------------------------------------------------
Operating Expenses
      Selling and shipping                                 3,400,000       3,326,000       7,556,000       7,217,000
      General and administrative                           1,848,000       1,891,000       4,080,000       4,040,000
      Depreciation                                           183,000         187,000         363,000         374,000
      Other amortization                                     226,000         190,000         473,000         288,000
--------------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                   5,657,000       5,594,000      12,472,000      11,919,000
--------------------------------------------------------------------------------------------------------------------
Loss from Continuing Operations                             (473,000)       (843,000)     (2,323,000)     (1,627,000)
Other Expenses
      Refinancing and transaction costs                   (3,869,000)       (254,000)     (4,063,000)       (254,000)
      Interest expense, net                               (1,826,000)     (1,740,000)     (3,660,000)     (3,507,000)
--------------------------------------------------------------------------------------------------------------------
Loss from Continuing Operations Before Income
      Tax and Cumulative Effect of a Change in
      Accounting Principle                                (6,168,000)     (2,837,000)    (10,046,000)     (5,388,000)
Income Tax Expense                                          (108,000)             --        (108,000)             --
--------------------------------------------------------------------------------------------------------------------
Loss from Continuing Operations Before Cumulative
       Effect of a Change in Accounting Principle         (6,276,000)     (2,837,000)    (10,154,000)     (5,388,000)
Discontinued Operations -
      Loss from discontinued operations                     (215,000)       (488,000)     (1,193,000)       (758,000)
--------------------------------------------------------------------------------------------------------------------
Loss Before Cumulative Effect of a
      Change In Accounting Principle                      (6,491,000)     (3,325,000)    (11,347,000)     (6,146,000)
Cumulative effect of a change in accounting principle             --              --              --      (9,882,000)
--------------------------------------------------------------------------------------------------------------------
Net Loss                                                $ (6,491,000)   $ (3,325,000)   $(11,347,000)   $(16,028,000)
====================================================================================================================
Per Share Amounts:
Weighted Average Common Shares
      Outstanding - Basic and Diluted                     17,879,000      17,543,000      17,806,000      17,543,000
Loss from Continuing Operations per Common
      Share Before Cumulative Effect of a Change in
      Accounting Principle - Basic and Diluted          $      (0.35)   $      (0.16)   $      (0.57)   $      (0.31)
Discontinued operations                                        (0.01)          (0.03)          (0.07)          (0.04)
Cumulative effect of a change in accounting principle             --              --              --           (0.56)
--------------------------------------------------------------------------------------------------------------------
Net Loss                                                $      (0.36)   $      (0.19)   $      (0.64)   $      (0.91)
====================================================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.


                                                                               3
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                           Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
Six months ended December 31,                                          2002           2001
------------------------------------------------------------------------------------------
                                                                        Unaudited
                                                               ---------------------------
<S>                                                            <C>             <C>
Cash Flows from Operating Activities:
     Net loss from continuing operations before cumulative
         effect of a change in accounting principle            $(10,154,000)   $(5,388,000)
     Adjustments to reconcile net loss from continuing
          operations before cumulative effect of a change in
         accounting principle to net cash provided
         by operating activities:
         Depreciation and amortization                            1,610,000      1,379,000
         Write-off of deferred finance costs and discounts        1,928,000        254,000
         Compensation related to stock options                       60,000         60,000
         Changes in operating assets and liabilities:
             Accounts receivable                                 14,188,000      9,996,000
             Inventories                                         (2,416,000)      (250,000)
             Prepaid expenses and other current assets              (37,000)      (315,000)
             Accounts payable and accrued expenses                 (318,000)       618,000
             Other assets                                                --        278,000
------------------------------------------------------------------------------------------

Net Cash Provided By Operating Activities                         4,861,000      6,632,000
------------------------------------------------------------------------------------------

Cash Flows from Investing Activities:
     Payments related to purchase of business                       (17,000)            --
     Increase in officer receivables                                     --        (20,000)
     Purchase of property and equipment                            (565,000)      (577,000)
     Purchase of intangibles                                       (208,000)      (219,000)
------------------------------------------------------------------------------------------

Net Cash Used in Investing Activities                              (790,000)      (816,000)
==========================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.


                                                                               4
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                           Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
Six months ended December 31,                                   2002            2001
------------------------------------------------------------------------------------
                                                                  Unaudited
                                                        ----------------------------
<S>                                                     <C>             <C>
Cash Flows from Financing Activities:
     Deferred finance costs                             $ (1,863,000)   $   (951,000)
     Net payments on lines-of-credit                      (4,426,000)    (15,810,000)
     Proceeds from long-term debt                         12,020,000       8,263,000
     Principal payments on long-term debt                 (8,616,000)        (33,000)
------------------------------------------------------------------------------------
Net Cash Used In Financing Activities                     (2,885,000)     (8,531,000)
------------------------------------------------------------------------------------

Net increase in cash and cash equivalents from
     continuing operations                                 1,186,000      (2,715,000)
Cash used in discontinued operations                        (286,000)         (9,000)
------------------------------------------------------------------------------------
Net increase (decrease)  in cash and cash equivalents        900,000      (2,724,000)

Cash and Cash Equivalents, beginning of period               219,000       2,724,000
------------------------------------------------------------------------------------

Cash and Cash Equivalents, end of period                $  1,119,000    $         --
====================================================================================

Supplemental Disclosure of Cash Flow
Information
     Cash paid for interest                             $  3,599,000    $  3,511,000
     Cash paid (refund received) for taxes - net        $   (180,000)   $    219,000
====================================================================================

Non-Cash Investing and Financing Activities
     Issuance of 16% subordinated notes at
        90% of face amount                              $         --    $    600,000
     Issuance of warrants and options in
        conjunction with debt refinancing               $         --    $    402,000
====================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               5
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

1.   The accompanying consolidated financial statements at December 31, 2002 and
     for the three months and six months ended December 31, 2002 and 2001 are
     unaudited, but, in the opinion of management, include all adjustments
     necessary for a fair presentation of consolidated financial position and
     results of operations for the periods presented. The results for the six
     months ended December 31, 2002 are not necessarily indicative of the
     results of operations for a full year.

2.   Refer to the audited consolidated financial statements for the year ended
     June 30, 2002, for details of accounting policies and detailed notes to the
     consolidated financial statements.

3.   Inventories consist of:

                               December 31, 2002             June 30, 2002
     ---------------------------------------------------------------------

     Raw materials                  $  4,952,000              $  4,025,000
     Finished goods                    5,487,000                 3,998,000
     ---------------------------------------------------------------------

                                    $ 10,439,000              $  8,023,000
     =====================================================================

4.   All shipping and handling expenses are included in the selling and shipping
     caption and totaled approximately $1,061,000 and $1,099,000 for the three
     months ended December 31, 2002 and 2001 respectively and $2,433,000 and
     $2,011,000 for the six months ended December 31, 2002 and 2001
     respectively.

5.   The Company entered into a senior credit facility dated as of October 30,
     2002 for the Company and its material subsidiaries. Foothill Capital
     Corporation, which is the administrative agent for the facility, is also
     the revolving credit lender, and Ableco Finance LLC is providing a term
     loan. The total amount of the new credit facility is $35 million, of which
     $23 million is a revolving credit facility and $12 million is a term loan.
     Of the $10,610,000 outstanding on the credit facility, $6,000,000 has been
     classified as long-term debt. The new credit facility matures in three
     years. Interest on the revolving credit facility is at variable annual
     interest rates based on the prime rate or LIBOR plus applicable marginal
     rates. Interest on the term loan is at variable annual interest rates based
     on the prime rate with a minimum rate of 9.75% plus 2% of accrued interest
     payable upon maturity (payment in kind interest). The interest rate on the
     term loan increases 2% each year the balance is outstanding. Borrowings on
     the revolving credit facility are limited based on eligible borrowing
     bases, effectively $13,872,000 at December 31, 2002.

     The Company and its material subsidiaries' obligations under the new credit
     facility are secured by a security interest in favor of the lenders in
     substantially all of the assets of the Company and its material
     subsidiaries. The Company and its material subsidiaries are subject to
     certain financial and other covenants under the new credit facility. At
     December 31, 2002, the Company was in compliance with the covenants.

     The Company had a financing agreement to provide $25,000,000 in senior
     secured financing. The agreement provided for a $23,000,000 revolving
     credit facility and a $2,000,000 term loan due in monthly installments of
     $33,000 plus interest. The term loan balance outstanding at June 30, 2002
     was $1,767,000. Interest on borrowings was calculated at variable annual
     rates based on either the bank's prime rate plus an applicable marginal
     rate or the federal funds rate plus an applicable marginal rate. At


                                                                               6
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

     June 30, 2002 the Company had $15,036,000 of borrowings outstanding under
     the revolving credit facility. These borrowings were paid in full on
     November 1, 2002 with proceeds from the new financing agreements discussed
     above.

     The Company also had a financing agreement to provide $6,250,000 of
     subordinated debt. At June 30, 2002, the Company had borrowings outstanding
     of $5,945,000, net of discounts of $905,000, pursuant to the subordinated
     secured notes. Interest was charged on the face of the notes at 16% and 14%
     per annum, payable monthly. The issue price of the 16% notes was 90% of the
     face amount of the notes resulting in a discount of $600,000. In connection
     with this financing, the Company issued to the purchasers of the notes
     warrants to purchase up to 3.75% of the fully diluted common stock of the
     Company and an option to purchase from the Company certain Trust Preferred
     Securities of the Company's subsidiary, U.S. Home and Garden Trust I, that
     are owned by the Company, which resulted in an additional discount of
     $402,000. These borrowings were paid in full on November 1, 2002 with
     proceeds from the new financing agreements discussed above.

     Upon repayment of the $6,250,000 subordinated debt, the Company continues
     to have certain ongoing obligations under the subordinated debt financing
     agreement to the holders of the warrants to purchase common stock of the
     Company and option to purchase Trust Preferred Securities described above
     by virtue of these agreements.

6.   In December 2002, the Company announced an agreement to sell substantially
     all of its assets to a management group led by Richard Grandy, Chief
     Operating Officer of the Company.

     Under the terms of the agreement, Easy Gardener Products Ltd. a new entity
     owned by the management group will acquire substantially all of the assets
     and assume substantially all of the liabilities of Easy Gardener, Inc. and
     its subsidiaries, Easy Gardener, UK, Ltd, Weatherly Consumer Products
     Group, Inc. and Weatherly Consumer Products, Inc. and Ampro Industries,
     Inc. The new company will also assume the obligations of the parent
     company, US Home & Garden, Inc., (USHG) to make monthly payments to U.S.
     Home & Garden Trust I which will allow the Trust to make distributions to
     holders of its Trust Preferred Securities. The transaction is subject to
     the approval of the holders of the Trust Preferred Securities and a proxy
     statement seeking such approval has been filed with the SEC as part of a
     registration statement of Easy Gardener Products Ltd and U.S. Home & Garden
     Trust I that is subject to SEC review and effectiveness. The proposed sale
     is also subject to a number of additional conditions including the buyer
     obtaining the required financing.

     Management of the Company anticipates that the proposed sale transaction
     will be completed by the early part of the quarter ended June 30, 2003. The
     Asset Purchase Agreement provides that the proposed transaction must be
     completed on or before June 30, 2003.

     After subtracting costs of the transaction, the Company expects to receive
     net cash of $18,700,000 upon the following terms: net cash of between
     $17,900,000 and $18,200,000 at the closing and an additional cash payment
     of between $500,000 and $800,000 on or before December 31, 2003.

7.   Refinancing and transaction costs included in the Consolidated Statements
     of Operations for the three and six month periods ended December 31, 2002
     relate to the refinancing described in note 5 to the


                                                                               7
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

     financial statements and the proposed asset sale described in note 6 to the
     financial statements. As a result of the refinancing, the Company wrote-off
     $1,928,000 of previously deferred financing costs and discounts related to
     the replaced financing agreements and also recorded fees and expenses of
     $1,668,000 in the quarter ended December 31, 2002. Also included in this
     caption is $273,000 of costs incurred in the quarter ended December 31,
     2002 related to the proposed asset sale transaction and $467,000 of costs
     incurred in the six months ended December 31, 2002. The Company capitalized
     $1,863,000 of deferred financing costs related to the new financing during
     the quarter ended December 31, 2002.

8.   In June 2002, the Company announced that is was discontinuing the
     operations conducted through its subsidiary Weed Wizard Acquisition Corp.
     ("Weed Wizard") effective September 30, 2002. Despite the Company's efforts
     to increase sales and return to profitability, Weed Wizard experienced
     continued erosion of its business. The Company plans to dispose of the
     assets and liabilities of Weed Wizard through a sale of the assets and
     liquidation of the liabilities during fiscal 2003.

     Revenues for Weed Wizard for the three months and six months ended December
     31, 2002 and 2001 were not material. The Company had a net loss from the
     discontinued operations of Weed Wizard of $215,000 and $488,000 for the
     three months ended December 31, 2002 and 2001, respectively, and $1,193,000
     and $758,000 for the six months ended December 31, 2002 and 2001,
     respectively.

     In June 2001, the Company announced that it was discontinuing its
     e-commerce initiative, which it was conducting though its subsidiary,
     Egarden, Inc. (Egarden), effective June 30, 2001. All severance payments
     were made by June 30, 2002. No adjustments were required to the liability
     recorded for severance payments since June 30, 2001.


                                                                               8
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

The assets and liabilities of discontinued Weed Wizard and Egarden operations
reported in the consolidated balance sheets consist of the following:

                                                December 31, 2002
     -----------------------------------------------------------------------
                                     Weed Wizard       Egarden         Total
     -----------------------------------------------------------------------

     Current Assets:
     Cash and cash equivalents       $        --    $   62,000    $   62,000
     Accounts receivable: -
          Trade                          117,000            --       117,000
     Other current assets                  1,000            --         1,000
     -----------------------------------------------------------------------

     Total Current Assets            $   118,000    $   62,000    $  180,000
     =======================================================================

     Current Liabilities:
     Accounts payable                $    98,000    $       --    $   98,000
     Accrued expenses                     98,000        16,000       114,000
     -----------------------------------------------------------------------

     Total Current Liabilities       $   196,000    $   16,000    $  212,000
     =======================================================================

                                                  June 30, 2002
                                     ---------------------------------------
                                     Weed Wizard       Egarden         Total
     -----------------------------------------------------------------------

     Current Assets:
     Cash and cash equivalents       $        --    $   62,000    $   62,000
     Accounts receivable:
          Trade                          385,000            --       385,000
          Settlement                     195,000            --       195,000
     Inventories                         274,000            --       274,000
     Other current assets                136,000            --       136,000
     -----------------------------------------------------------------------

     Total Current Assets            $   990,000    $   62,000    $1,052,000
     =======================================================================

     Long-Term Assets-
     Property and equipment, net     $   100,000    $       --    $  100,000
     =======================================================================

     Current Liabilities:
     Accounts payable                $    98,000    $       --    $   98,000
     Accrued expenses                    163,000        16,000       179,000
     -----------------------------------------------------------------------

     Total Current Liabilities       $   261,000    $   16,000    $  277,000
     =======================================================================


                                                                               9
<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements


     Pursuant to Statement of Financial Accounting Standards (SFAS) No. 144,
     Accounting for the Impairment or Disposal of Long-Lived Assets, the
     Company's consolidated financial statements and notes have been restated
     for all periods presented to reflect the discontinued components. The
     current assets and current liabilities of the discontinued components have
     been separately stated and the property and equipment of discontinued
     operations has been classified as "Held for Sale" on the balance sheet. The
     net losses and net cash flows have been reported as "Discontinued
     Operations" in the accompanying consolidated financial statements. The
     notes have been restated to exclude amounts related to these discontinued
     components.

9.   Effective July 1, 2001, the Company adopted SFAS No. 141 and SFAS No. 142
     and completed a reassessment of the useful lives of all intangible assets
     other than goodwill which total $6,701,000 and $6,398,000 (net of
     accumulated amortization of $3,686,000 and $3,008,000) at December 31, 2002
     and June 30, 2002, respectively. No adjustments to previously determined
     amortization periods were considered necessary. The Company has no
     intangible assets with indefinite useful lives other than goodwill at
     December 31, 2002.

     In conjunction with the adoption of SFAS No. 141 and SFAS No. 142, the
     Company completed its transitional goodwill impairment test. Ampro
     Industries, Inc. ("Ampro") and Golden West Agri-Products, Inc. ("Golden
     West") were the only reporting units where the carrying value exceeded the
     fair value of their net assets including goodwill. As of July 1, 2001, the
     net goodwill related to Ampro was $17,078,000. The Company hired an
     independent valuation professional to assist the Company in measuring the
     amount of the impairment. Based on the valuation, the Company recorded an
     impairment loss at the end of the prior fiscal year of $9,390,000. The net
     goodwill related to Golden West at July 1, 2001 was approximately
     $1,165,000. Based on a valuation prepared by management, an impairment loss
     was recorded at the end of the prior fiscal year of $492,000. In accordance
     with the applicable accounting literature, for interim reporting purposes
     these impairment losses were reflected as of July 1, 2001 and were reported
     as a cumulative effect of a change in accounting principle in the
     Consolidated Statements of Operations.

     The Company's previous business combinations were accounted for using the
     purchase method. As a result of such combinations, the Company has
     recognized a significant amount of goodwill, which, in the aggregate, was
     $49,878,000 and $49,861,000, net of accumulated amortization, at December
     31, 2002 and June 30, 2002, respectively. Amortization expense for all
     intangible assets during the three months ended December 31, 2002 and 2001
     was $421,000 and $313,000, respectively, and for the six months ended
     December 31, 2002 and 2001 was $772,000 and $508,000, respectively.
     Estimated amortization expense for continuing operations for each of the
     five succeeding fiscal years is as follows:

              Year Ended June 30,                           Amount
              ----------------------------------------------------

              2003                                     $ 1,400,000
              2004                                     $ 1,400,000
              2005                                     $   877,000
              2006                                     $   667,000
              2007                                     $   667,000


                                                                              10
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

10.  In the normal course of business, the Company is subject to proceedings,
     lawsuits, and other claims, including proceedings under laws and government
     regulations related to product safety and other matters. Such matters are
     subject to many uncertainties, and outcomes are not predictable with
     assurance.


                                                                              11
<PAGE>

Item 2.

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

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this Report
contains statements that are forward-looking, such as statements relating to
plans for the Company's future activities. Such forward-looking information
involves important known and unknown risks and uncertainties that could
significantly affect actual results, performance or achievements in the future
and, accordingly, such actual results, performance or achievements may
materially differ from those expressed or implied in any forward-looking
statements made by or on behalf of the Company.

These risks and uncertainties include, but are not limited to, those relating to
the Company's growth strategy, customer concentration, outstanding indebtedness,
dependence on weather conditions, seasonality, expansion and other activities of
competitors, ability to successfully integrate acquired companies and product
lines, changes in federal or state environmental laws and the administration of
such laws, protection of trademarks and other proprietary rights, uncertainty of
continued listing of the Company's common stock on NASDAQ due to its possible
inability to meet NASDAQ continuing listing criteria, and the general condition
of the economy and its effect on the securities markets and other risks detailed
in the Company's other filings with the Securities and Exchange Commission. The
words "believe," "expect," "anticipate," "intend" and "plan" and similar
expressions identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date the statement was made.

General

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, Ampro, Easy Gardener, Inc. ("Easy Gardener"), and Golden West and
Easy Gardener's wholly owned subsidiaries, Weatherly Consumer Products Group,
Inc. and Weed Wizard. In June 2002, the Company announced the discontinuation of
the Weed Wizard operations effective September 30, 2002. Since 1992, the Company
consummated eleven acquisitions of complementary lawn and garden companies and
product lines for an aggregate consideration of approximately $111,000,000 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
$49,878,000 and $49,861,000, net of accumulated amortization, at December 31,
2002 and June 30, 2002, respectively.

The consumer lawn and garden market continues to become more consolidated with
fewer retailers accounting for an increasing percentage of all lawn and garden
products sold. This increasing concentration provides the largest retailers with
greater leverage over their suppliers, such as the Company. This leverage could
result in decreased margins for suppliers, including the Company, who may be
required to make greater price concessions to their large retail accounts
without being able to reduce the costs of the products sold by them to the
retailers. This leverage by the large retailers could also increase sales
volatility for the Company as well as other suppliers of lawn and garden
products.


                                                                              12
<PAGE>

Results of Operations

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

<TABLE>
<CAPTION>
                                                          Three Months Ended       Six Months Ended
                                                             December 31,            December 31,
                                                           2002        2001        2002        2001
                                                        =====================   ======================
<S>                                                       <C>         <C>         <C>         <C>
Net sales                                                 100.0%      100.0%      100.0%      100.0%
Cost of sales                                              58.0        59.6        60.2        59.2
                                                        ---------------------   ----------------------
Gross profit                                               42.0        40.4        39.8        40.8
Selling and shipping expenses                              27.5        28.3        29.6        28.6
General and administrative expenses                        15.0        16.1        16.0        16.0
Depreciation and amortization                               3.3         3.2         3.3         2.6
                                                        ---------------------   ----------------------
Loss from operations                                       (3.8)       (7.2)       (9.1)       (6.4)
Refinance and transaction costs                           (31.3)       (2.1)      (15.9)       (1.0)
Interest expense, net                                     (14.8)      (14.8)      (14.4)      (13.9)
                                                        ---------------------   ----------------------
Loss from continuing operations before cumulative
    effect of a change in accounting principle            (49.9)      (24.1)      (39.4)      (21.3)
Income taxes                                               (0.9)         --        (0.4)         --
                                                        ---------------------   ----------------------
Loss from continuing operations before cumulative
    effect of a change in accounting principle            (50.8)      (24.1)      (39.8)      (21.3)
Loss from discontinued operations                          (1.7)       (4.2)       (4.7)       (3.0)
                                                        =====================   ======================
Loss before cumulative effect of a change
    in accounting principle                               (52.5)      (28.3)      (44.5)      (24.3)
Cumulative effect of a change in accounting principle        --          --          --       (39.2)
                                                        =====================   ======================
Net loss                                                  (52.5%)     (28.3%)     (44.5%)     (63.5%)
                                                        =====================   ======================
</TABLE>


                                                                              13
<PAGE>

Three Months Ended December 31, 2002 Compared to Three Months Ended December 31,
2001

Net sales. Net sales increased by $589,000, or 5.0%, to $12,351,000 during the
three months ended December 31, 2002, from $11,762,000 during the comparable
period in 2001. The increase in net sales was the result of an increase in
volume of products sold to new and existing customers.

Cost of sales. Cost of sales increased by $156,000, or 2.2% to $7,167,000 for
the three months ended December 31, 2002 from $7,011,000 during the comparable
period in 2001. The increase was a result of the increase in sales. Cost of
sales as a percentage of net sales decreased to 58.0% during the three months
ended December 31, 2002 from 59.6% during the comparable period in 2001. The
percentage decrease is primarily a result of slightly reduced material costs.

Gross profit. Gross profit increased by $433,000, or 9.1%, to $5,184,000 for the
three months ended December 31, 2002 from $4,751,000 during the comparable
period in 2001. Gross profit as a percentage of net sales increased to 42.0%
during the three months ended December 31, 2002, from 40.4% during the
comparable period in 2001. This increase in gross profit dollars and as a
percentage of net sales results from the increased volume and decreased cost of
sales as a percentage of sales as noted above.

Selling and shipping expenses. Selling and shipping expenses increased by
$74,000, or 2.2% to $3,400,000 during the three months ended December 31, 2002
from $3,326,000 during the comparable period in 2001. This increase in expense
was attributable to increased shipments. As a percentage of net sales, selling
and shipping expenses decreased to 27.5% during the three months ended December
31, 2002 from 28.3% during the comparable period in 2001.

General and administrative expenses. General and administrative expenses
decreased by $43,000 or 2.3%, to $1,848,000 during the three months ended
December 31, 2002 from $1,891,000 during the comparable period in 2001 due
primarily to cost reduction measures. As a percentage of net sales, general and
administrative expenses decreased to 15.0% during the three months ended
December 31, 2002 from 16.1% during the comparable period in 2001.

Depreciation and amortization. Depreciation and amortization expenses increased
by $32,000 or 8.5% to $409,000 during the three months ended December 31, 2002
from $377,000 during the comparable period in 2001. This increase is primarily
due to additional amortization related to a non-compete agreement that the
Company began amortizing in October 2001 as well as increased amortization of
deferred financing costs. As a percentage of net sales, depreciation and
amortization expenses increased to 3.3% during the three months ended December
31, 2002 from 3.2% during the comparable period in 2001.

Loss from continuing operations. Loss from continuing operations decreased by
$370,000 or 43.9% to $473,000 during the three months ended December 31, 2002,
from $843,000 during the comparable period in 2001. The decrease in loss from
continuing operations was primarily due to increased sales volume and decreased
operating expenses as noted above. As a percentage of net sales, loss from
operations decreased to 3.8% for the three months ended December 31, 2002 from
7.2% during the comparable period in 2001.

Refinancing and transaction costs. The Company incurred $3,869,000 in
refinancing and transaction costs during the three months ended December 31,
2002. Included in the above is a write-off of $1,928,000 for deferred financing
costs and discounts, $1,668,000 of fees and expenses related to the replaced
financing agreements, and $273,000 of transaction costs. In the comparable
quarter in the prior year, the Company incurred a $254,000 write-off of deferred
financing costs. See Note 7 to the Consolidated Financial Statements.

Interest expense. Net interest expense increased $86,000, or 4.9% to $1,826,000
during the three months ended December 31, 2002, from $1,740,000 during the
comparable period in 2001. The increase in interest expense is related to an
increase in borrowing levels.


                                                                              14
<PAGE>

Income taxes. State income taxes increased to $108,000 during the three months
ended December 31, 2002 from zero during the comparable quarter.

Discontinued Operations. Loss from discontinued operations decreased to $215,000
from $488,000 during the three months ended December 31, 2002, from the
comparable period in 2001. The $273,000, or 55.9% decrease in loss from
discontinued operations is primarily due to management's decision to discontinue
selling Weed Wizard product as of September 30, 2002.

Net loss. Net loss increased by $3,166,000 to $6,491,000 during the three months
ended December 31, 2002 from a net loss of $3,325,000 during the comparable
period in 2001. Net loss per common share increased to $0.36 per share for the
three months ended December 31, 2002 from net loss of $0.19 per share during the
comparable period in 2001. The increase in net loss and net loss per common
share is due to the refinancing and transaction costs recorded in the three
months ended December 31, 2002 of $3,869,000 as noted above, offset in part by
decreased loss from continuing and discontinued operations as noted above.

Six Months Ended December 31, 2002 Compared to Six Months Ended December 31,
2001

Net sales. Net sales increased by $257,000, or 1.0%, to $25,502,000 during the
six months ended December 31, 2002, from $25,245,000 during the comparable
period in 2001. The increase in net sales was the result of an increase in
volume to new and existing customers, offset in part by increased rebates and
discounts given to a significant customer.

Cost of sales. Cost of sales increased by $400,000, or 2.7% to $15,353,000 for
the six months ended December 31, 2002 from $14,953,000 during the comparable
period in 2001 due to increased sales volume. Cost of sales as a percentage of
net sales increased to 60.2% during the six months ended December 31, 2002 from
59.2% during the comparable period in 2001 due to increased rebates and
discounts noted above. Cost of sales as a percent of sales before rebates and
discounts decreased slightly.

Gross profit. Gross profit decreased by $143,000, or 1.4%, to $10,149,000 for
the six months ended December 31, 2002 from $10,292,000 during the comparable
period in 2001. Gross profit as a percentage of net sales decreased to 39.8%
during the six months ended December 31, 2002, from 40.8% during the comparable
period in 2001. This decrease in gross profit dollars and as a percentage of net
sales resulted from the increased rebates and discounts noted above.

Selling and shipping expenses. Selling and shipping expenses increased by
$339,000, or 4.7% to $7,556,000 during the six months ended December 31, 2002
from $7,217,000 during the comparable period in 2001. As a percentage of net
sales, selling and shipping expenses increased to 29.6% during the six months
ended December 31, 2002 from 28.6% during the comparable period in 2001. The
increase in expense was attributable to increased shipments and to increased
outbound freight costs.

General and administrative expenses. General and administrative expenses
increased by $40,000 or 1.0%, to $4,080,000 during the six months ended December
31, 2002 from $4,040,000 during the comparable period in 2001. As a percentage
of net sales, general and administrative expenses during the six months ended
December 31, 2002 were consistent with the comparable period in 2001 at 16.0%.

Depreciation and amortization. Depreciation and amortization expenses increased
by $174,000 or 26.3% to $836,000 during the six months ended December 31, 2002
from $662,000 during the comparable period in 2001. This increase is primarily
due to additional amortization related to a non-compete agreement that the
Company began amortizing in October 2001 as well as increased amortization of
deferred financing costs. As a percentage of net sales, depreciation and
amortization expenses increased to 3.3% during the six months ended December 31,
2002 from 2.6% during the comparable period in 2001.


                                                                              15
<PAGE>

Loss from continuing operations. Loss from continuing operations increased by
$696,000 or 42.8% to $2,323,000 during the six months ended December 31, 2002,
from $1,627,000 during the comparable period in 2001. The increase in loss from
continuing operations was primarily due to increased sales rebates and
discounts, outbound freight costs and amortization expenses as noted above. As a
percentage of net sales, loss from operations increased to 9.1% for the six
months ended December 31, 2002 from 6.4% during the comparable period in 2001.

Refinancing and transaction costs. The Company incurred $4,063,000 in
refinancing and transaction costs during the six months ended December 31, 2002.
Included in the above is a write-off of $1,928,000 for deferred financing costs
and discounts, $1,668,000 of fees and expenses related to the replaced financing
arrangements, and $467,000 of transaction costs. In the comparable quarter in
the prior year, the Company incurred a $254,000 write-off of deferred financing
costs. See Note 7 to the Consolidated Financial Statements.

Interest expense. Net interest expense increased $153,000, or 4.4% to $3,660,000
during the six months ended December 31, 2002, from $3,507,000 during the
comparable period in 2001. The increase in interest expense is related to an
increase in borrowing levels.

Income taxes. State income taxes increased to $108,000 during the six months
ended December 31, 2002 from zero during the comparable quarter.

Discontinued Operations. Loss from discontinued operations increased to
$1,193,000 from $758,000, or 57.4% during the six months ended December 31,
2002, from the comparable period in 2001. The $435,000 increase in loss from
discontinued operations is primarily due to legal costs associated with settling
the U.S. Consumer Products Safety Commission ("CPSC") and A.A.B.B., Inc.
litigation and a write-down of assets, offset in part by management's decision
to discontinue selling Weed Wizard products as of September 30, 2002.

Cumulative Effect of a Change in Accounting Principle. The cumulative effect of
a change in accounting principle during the six months ended December 31, 2001
resulted from the transitional goodwill impairment test required in conjunction
with the adoption of SFAS No. 142. The recording of an impairment loss of
$9,882,000, which is primarily related to the Ampro operations, is reflected as
a cumulative effect of a change in accounting principle. See Note 9 to the
Consolidated Financial Statements.

Net loss. Net loss decreased by $4,681,000 to $11,347,000 during the six months
ended December 31, 2002 from a net loss of $16,028,000 during the comparable
period in 2001. Net loss per common share decreased to $0.64 per share for the
six months ended December 31, 2002 from a net loss of $0.91 per share during the
comparable period in 2001. The decrease in net loss and net loss per common
share is due primarily to the cumulative effect of a change in accounting
principle recorded in the three months ended September 30, 2001 of $9,882,000
noted above, offset in part by the refinancing and transaction costs recorded in
the six months ended December 31, 2002 of $4,063,000 as noted above.

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 March 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. The buying pattern of
retailers, including our retail customers, is changing and stores are
replenishing their inventory when sales are made by them rather than buying
large quantities of inventory in advance of the selling season. Sales typically
decline in mid-summer.


                                                                              16
<PAGE>

Sales of the Company's agricultural products, which were not material during the
three and six months ended December 31, 2002, are also seasonal. Most shipments
occur during the agricultural 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 placements and
public sales of securities and borrowings from lending institutions.

At December 31, 2002, the Company had consolidated cash and short-term
investments totaling $1,119,000, and working capital of $9,542,000. At June 30,
2002, the Company had consolidated cash and short-term investments totaling
$219,000, and working capital of $2,728,000. The increase in working capital was
primarily attributable to the terms of the new financing obtained during the
quarter ended December 31, 2002, which resulted in $6,000,000 of the outstanding
borrowing under the new revolving credit facility and $12,020,000 of the term
loan being classified as long-term liabilities.

Net cash provided by operating activities for the six months ended December 31,
2002 of $4.9 million consisted primarily of a decrease in accounts receivable of
$14.2 million. This was partially offset by the net loss from continuing
operations of $10.2 million, adjusted for non-cash expenses of $3.6 million and
an increase in inventories and prepaid expenses of $2.7 million. The decrease in
accounts receivable is consistent with the seasonal nature of our business,
offset in part due to extended payment terms from 30 to 60 days with a key
customer.

Net cash used in investing activities for the six months ended December 31, 2002
of $0.8 million is primarily due to capital purchases of equipment and
intangible assets.

Net cash used in financing activities for the six months ended December 31, 2002
of $2.9 million is primarily due to payments made on the credit facilities with
cash provided by operating activities and amounts paid for deferred finance
costs in conjunction with the new financing.

The Company entered into a senior credit facility dated as of October 30, 2002
for the Company and its material subsidiaries. Foothill Capital Corporation,
which is the administrative agent for the facility, is also the revolving credit
lender, and Ableco Finance LLC is providing a term loan. The total amount of the
new credit facility is $35 million, of which $23 million is a revolving credit
facility and $12 million is a term loan. Of the $10,610,000 outstanding on the
credit facility, $6,000,000 has been classified as long-term debt. The new
credit facility matures in three years. Interest on the revolving credit
facility is at variable annual interest rates based on the prime rate or LIBOR
plus applicable marginal rates. Interest on the term loan is at variable annual
interest rates based on the prime rate with a minimum rate of 9.75% plus 2% of
accrued interest payable upon maturity (payment in kind interest). The interest
rate on the term loan increases 2% each year the balance is outstanding.
Borrowings on the revolving credit facility are limited based on eligible
borrowing bases, effectively $13,872,000 at December 31, 2002.

The Company and its material subsidiaries' obligations under the new credit
facility are secured by a security interest in favor of the lenders in
substantially all of the assets of the Company and its material subsidiaries.
The Company and its material subsidiaries are subject to certain financial and
other covenants under the new credit facility. At December 31, 2002, the Company
was in compliance with the covenants.

The Company had a financing agreement to provide $25,000,000 in senior secured
financing. The agreement provided for a $23,000,000 revolving credit facility
and a $2,000,000 term loan due in monthly


                                                                              17
<PAGE>

installments of $33,000 plus interest. The term loan balance outstanding at June
30, 2002 was $1,767,000. Interest on borrowings was calculated at variable
annual rates based on either the bank's prime rate plus an applicable marginal
rate or the federal funds rate plus an applicable marginal rate. At June 30,
2002 the Company had $15,036,000 of borrowings outstanding under the revolving
credit facility. These borrowings were paid in full on November 1, 2002 with
proceeds from the new financing agreements discussed above.

The Company also had a financing agreement to provide $6,250,000 of subordinated
debt. At June 30, 2002, the Company had borrowings outstanding of $5,945,000,
net of discounts of $905,000, pursuant to the subordinated secured notes.
Interest was charged on the face of the notes at 16% and 14% per annum, payable
monthly. The issue price of the 16% notes was 90% of the face amount of the
notes resulting in a discount of $600,000. In connection with this financing,
the Company issued to the purchasers of the notes warrants to purchase up to
3.75% of the fully diluted common stock of the Company and an option to purchase
from the Company certain Trust Preferred Securities of the Company's subsidiary,
U.S. Home and Garden Trust I, that are owned by the Company, which resulted in
an additional discount of $402,000.

Upon repayment of the $6,250,000 subordinated debt, the Company continues to
have certain ongoing obligations under the subordinated debt financing agreement
to the holders of the warrants to purchase common stock of the Company and
option to purchase Trust Preferred Securities described above by virtue of these
agreements.

Commitments

The Company leases office and warehouse space, certain office equipment and
automobiles under operating leases expiring through 2006. The future minimum
annual lease payments under these non-cancelable operating leases are as
follows:


              Year Ended June 30,                           Amount
              ----------------------------------------------------

              2003                                     $   843,000
              2004                                         731,000
              2005                                         484,000
              2006                                         252,000
              2007                                          55,000
              ----------------------------------------------------
                                                       $ 2,365,000
              ----------------------------------------------------

Critical Accounting Policies

The preparation of financial statements requires the adoption and implementation
of accounting policies and the use of assumptions and estimates in their
presentation. The accounting policies and uncertainties, judgments and estimates
make it likely that materially different amounts would be reported under
different conditions and different assumptions.

The Company has included below a discussion of the more critical accounting
policies that are affected by the significant judgments and estimates used in
the preparation of the financial statements, how such policies are applied, and
how results differing from the estimates and assumptions would affect the
amounts presented in the financial statements. Other accounting policies also
have a significant effect on the financial statements, and some of these
policies also require the use of estimates and assumptions as discussed in the
Summary of Accounting Policies in the Company's Consolidated Financial
Statements at June 30, 2002.


                                                                              18
<PAGE>

Allowance for Doubtful Accounts Receivable and Sales Returns. The Company
maintains an allowance for doubtful accounts receivable, which represents the
potential estimated losses resulting from the inability of customers to make
required payments for amounts owed. The allowance is estimated based on
historical experience of write-offs, the level of past due amounts and
information known about specific customers with respect to their ability to make
payments at the balance sheet date. If the financial condition of the Company's
customers were to change, resulting in an impairment or improvement in their
ability to make payments, additional allowances may be required or allowances
may be reduced.

The Company also maintains an allowance for sales returns. The allowance is
estimated based on historical experience of sales returns from customers with
agreements that allow the return of product. If actual market conditions for the
sale of the products by the customers are less favorable than those anticipated,
additional allowances may be required.

Inventories. The Company records inventory reserves for estimated obsolescence
of inventory equal to the difference between the cost of inventory owned and the
estimated market value. Market value is based upon the age of specific inventory
on hand and assumptions about future demand and market conditions. If actual
market conditions for the sale of the inventory are less favorable than those
anticipated by management, additional reserves may be required.

Goodwill. The Company has consummated eleven acquisitions accounted for using
the purchase method. The excess of cost over net assets acquired which relates
to these acquisitions has been recorded as goodwill. Goodwill is tested for
impairment by comparing the carrying value of the assets of our individual
reporting units to their fair value. The fair value of the assets could vary
significantly over time and different assumptions and estimates will result in
different valuations.

Deferred Income Taxes. The Company records deferred income taxes based on
enacted income tax rates in effect on the dates temporary differences between
the financial reporting and tax bases of assets and liabilities reverse. To the
extent that available evidence about the future raises doubt about the
realization of a deferred tax asset, a valuation allowance is established. the
Company has recorded a valuation allowance due to the uncertainty of our ability
to generate sufficient future taxable income to realize the gross deferred tax
assets. If the Company is able to generate future taxable income, the valuation
allowance may be adjusted.

New Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections". SFAS No. 4 required all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an extraordinary item, net of related income tax effect. SFAS No. 145
requires any gain or loss from the extinguishment of debt to meet the
requirements of APB No. 30, "Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions", to be classified as an
extraordinary item, otherwise the item would be classified in the results of
continuing operations. Any gain or loss on extinguishment of debt that was
classified as an extraordinary item in prior periods that does not meet the
criteria of APB No. 30 for classification as an extraordinary item shall be
reclassified. The provisions of the statement related to the rescission of SFAS
No. 4 are applicable for the Company for the fiscal year ended June 30, 2003.
The adoption of SFAS No. 145 did not have an effect on the Company's financial
statements for the periods presented.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". SFAS No. 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity." The provisions of
this statement are effective for exit or disposal activities that are initiated
after December 31, 2002, with early application encouraged. Currently, the
Company is assessing but has not adopted SFAS No. 146. However, because there
were no


                                                                              19
<PAGE>

restructuring activities during the six months ended December 31, 2002, the
Company believes there would have been no effect on current operations had the
statement been applied early.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure". SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation" to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this statement amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The provisions of the statement are effective for the Company for the
quarter ended March 31, 2003. The Company is currently assessing, but has not
adopted SFAS No. 148.

Inflation

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a result of its variable rate revolving credit line, the Company is exposed
to the risk of rising interest rates. The following table provides information
on the Company's fixed maturity debt as of December 31, 2002 that are sensitive
to changes in interest rates.

The Revolving Credit Facility had an interest
rate of 5.25% for the period ended
December 31, 2002                                      $10.6 million

The Term Loan had an interest rate of 11.75%
for the period ended December 31, 2002                 $12.0 million

Item 4. Controls and Procedures

Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of the Company's
management, including the Chief Executive Officer ("CEO") and the Chief
Financial Officer ("CFO"), of the effectiveness of the Company's disclosure
controls and procedures. Based on that evaluation, the CEO and CFO have
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. Subsequent to the date of
their evaluation, there were no significant changes in the Company's internal
controls or in other factors that could significantly affect the internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

PART II - OTHER INFORMATION

Item 2. Changes of Securities and Use of Proceeds.

     During the quarter ended December 31, 2002 the Company issued 198,823
     shares of common stock to a consultant pursuant to the exercise in full of
     an option for a greater number of shares previously issued to the
     consultant. No commissions or other remuneration was paid in solicitation
     of the exchange of the options for the shares of common stock. The shares
     were issued pursuant to the exemption from registration under Section
     3(a)(9) of the Securities Act of 1933.


                                                                              20
<PAGE>

Item 5. Other Information

     In December 2002 the Company entered into an agreement to sell
     substantially all of the assets of certain of its subsidiaries to a
     management group led by Richard Grandy, the Chief Operating Officer of the
     Company.

     Under the terms of the agreement, Easy Gardener Products Ltd., a new entity
     owned by the management group, will acquire substantially all of the assets
     and assume substantially all of the liabilities (including liabilities
     under the Company's and its subsidiaries' senior credit facility) of Easy
     Gardener, Inc. and its subsidiaries, Easy Gardener UK, Ltd, Weatherly
     Consumer Products Group, Inc and Weatherly Consumer Products, Inc. and
     Ampro Industries, Inc. The new company will also assume the obligations of
     the parent company, US Home & Garden, Inc., to make monthly payments to
     U.S. Home & Garden Trust I which will allow the Trust to make distributions
     to holders of its Trust Preferred Securities. The transaction is subject to
     the approval of the holders of the Trust Preferred Securities and a proxy
     statement seeking such approval has been filed with the SEC as part of a
     registration statement of Easy Gardener Products, Ltd and U.S. Home &
     Garden Trust I that is subject to SEC review and effectiveness. The
     proposed sale is also subject to a number of additional conditions
     including the buyer obtaining the required financing.

     At the time in November 2002 that the Company repaid all amounts
     outstanding under its subordinated debt facility the Company also entered
     into a settlement agreement with the holders of the repaid subordinated
     debt, in which they irrevocably agreed and consented to the Company's
     execution of the asset purchase agreement and the consummation of the
     transactions contemplated by that agreement, provided certain conditions
     are met prior to the closing. Agreement of these former debt holders to the
     proposed asset sale was required under the terms of the then existing
     agreements they had with the Company.

     The conditions to the consent included the following:

          o    that Easy Gardener Products Ltd. become the obligor under the
               Trust documents;

          o    that Easy Gardener Products Ltd. acquire the 251,981 Trust
               Preferred Securities currently owned by the Company;

          o    that Easy Gardener Products Ltd. grant to these former
               subordinated lenders options to purchase 189,750 of the foregoing
               Trust Preferred Securities, in replacement of the currently
               existing options granted to them by the Company which are
               exercisable for the purchase of only 94,875 of these Trust
               Preferred Securities;

          o    that the former subordinated debtholders and related parties
               receive the monies due to them under the settlement agreement (an
               estimated $1,145,000) at the closing of the asset sale; and

          o    that the Company receive no less than approximately $16.5 million
               of immediately available cash proceeds at the closing.

     The settlement agreement also provides for certain amendments to the Trust
     Preferred option held by these former debt holders and provides that, upon
     the closing of the proposed asset sale and the satisfaction of the
     foregoing conditions, the warrants to purchase common stock of the Company
     held by these former debt holders will be amended and certain obligations
     of the Company and Easy Gardener, Inc. to these holders and related parties
     that survived the November 2002 repayment of the subordinated loan
     facility, will expire.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

     2.1  Asset Purchase Agreement, dated December 11, 2002, by and between Easy
          Gardener Products, Ltd., EYAS International, Inc., U.S. Home & Garden
          Inc., Easy Gardener, Inc., Ampro Industries,


                                                                              21
<PAGE>

          Inc., and Weed Wizard Acquisition Corp (incorporated by reference to
          Exhibit 2.1 and Annex A to the Registration Statement on Form S-4 of
          Easy Gardener Products, Ltd. and U.S. Home & Garden Trust I (SEC File
          no. 333-102296).

     10.1 Settlement Agreement, dated as of November 1, 2002 by and between U.S.
          Home & Garden Inc., Easy Gardener, Inc., LEG Partners Debenture SBIC,
          L.P., a Delaware limited partnership, LEG Partners III SBIC, L.P., a
          Delaware limited partnership, LEG Co-Investors, LLC, a Delaware
          limited liability company, 555 Madison Investors II LLC, f/k/a LEG
          Co-Investors II, LLC, a Delaware limited liability company, 555
          Madison Investors, LLC, a Delaware limited liability company, Golub
          Associates LLC, a New York limited liability company and Golub
          Associates Incorporated, a New York corporation.

     99.1 Certification of the Chief Executive Officer pursuant to section 906
          of the Sarbanes-Oxley Act of 2002

     99.2 Certification of the Chief Financial Officer pursuant to section 906
          of the Sarbanes-Oxley Act of 2002

(b) No reports on Form 8-K were filed during the quarter ended December 31,
2002.

                                   SIGNATURES

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

February 14, 2003

                                            U.S. Home & Garden Inc.
                                                       (Registrant)


                                        By: /s/ Robert Kassel
                                            ----------------------------------
                                            President, Chief Executive Officer


                                            By: /s/ Richard Kurz
                                            ----------------------------------
                                            Chief Financial Officer


                                                                              22
<PAGE>

                             U.S. Home & Garden Inc.

                  Certification of Principal Executive Officer

I, Robert Kassel, President and Chief Executive Officer of U.S. Home & Garden
Inc., certify that:

1.   I have reviewed this quarterly report on Form 10-Q of U.S. Home & Garden
     Inc.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report.

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

     b.   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     a.   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b.   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: February 14, 2003

                                /s/ Robert Kassel
                                -----------------
                                Robert Kassel
                                Chief Executive Officer
                                (Principal Executive Officer)


                                                                              23
<PAGE>

                             U.S. Home & Garden Inc.

                  Certification of Principal Financial Officer

I, Richard Kurz, Chief Financial Officer of U.S. Home & Garden Inc., certify
that:

1.   I have reviewed this quarterly report on Form 10-Q of U.S. Home & Garden
     Inc.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report.

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

     b.   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     a.   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b.   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: February 14, 2003

                                /s/ Richard Kurz
                                ----------------
                                Richard Kurz
                                Chief Financial Officer
                                (Principal Financial Officer)


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