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, 2000

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

From the transition period from __________________ to ___________________

Commission File Number 0-19899

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

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


655 Montgomery Street
San Francisco, California                              94111
(Address of Principal Executive Offices)             (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 the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.

As of November 1, 2000 there were 18,290,309 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 June 30, 2000
and September 30, 2000 (Unaudited)                                          1-2

Consolidated statements of income for the three months
ended September 30, 1999 and 2000 (Unaudited)                                 3

Consolidated statements of cash flows for the three months
ended September 30, 1999 and 2000 (Unaudited)                               4-5

Notes to consolidated financial statements                                  6-8

Item 2. - Management's Discussion and Analysis of Financial
          Condition and Results of Operations.                             9-14

Item 3. - Quantitative and Qualitative Disclosures About Market Risk      14-15


Part II. - Other Information

Item 1. - Legal Proceedings                                                  15

Item 2. - Changes in Securities                                              15

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

Signatures                                                                   16

<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries


                                                     Consolidated Balance Sheets


================================================================================
<TABLE>
<CAPTION>
                                                                            June 30, 2000            September 30, 2000
                                                                          -------------------       -------------------
                                                                                                          (Unaudited)
<S>                                                                       <C>                        <C>
Assets

Current
     Cash and cash equivalents                                            $  7,338,000               $  6,344,000
     Restricted cash                                                         1,582,000                  1,582,000
     Accounts receivable, less allowance for doubtful accounts
       and sales returns of $1,199,000 and $597,000                         19,972,000                 10,855,000
     Inventories                                                            12,843,000                 14,185,000
     Prepaid expenses and other current assets                                 606,000                    623,000
     Deferred tax asset                                                        210,000                    210,000
-----------------------------------------------------------------------------------------------------------------
Total Current Assets                                                        42,551,000                 33,799,000

Deferred Tax Asset                                                                  --                    955,000

Property and Equipment, net                                                 13,622,000                 13,964,000

Intangible Assets
     Excess of cost over net assets acquired, net                           73,395,000                 72,629,000
     Deferred financing costs, net of accumulated
       amortization of $372,000 and $422,000                                 3,093,000                  3,041,000
     Product rights, patents and trademarks, net of
       accumulated amortization of $47,000 and $55,000                         555,000                    571,000
     Non-compete agreement, net of accumulated
       amortization of $106,000 and $114,000                                 1,404,000                  1,396,000
     Package tooling costs, net of
       accumulated amortization  of $929,000 and $1,040,000                  1,359,000                  1,298,000
     Exclusivity agreements, net of accumulated
       amortization of $62,000 and $163,000                                  1,398,000                  1,455,000

Officer Receivables                                                            655,000                    645,000

Other Assets                                                                   513,000                    465,000
-----------------------------------------------------------------------------------------------------------------

Total Assets                                                              $138,545,000               $130,218,000
-----------------------------------------------------------------------------------------------------------------
</TABLE>
                    See accompanying notes to consolidated financial statements.


                                                                               1

<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries


                                                     Consolidated Balance Sheets


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

<TABLE>
<CAPTION>
                                                                            June 30, 2000        September 30, 2000
                                                                          ------------------     ------------------
                                                                                                    (Unaudited)
<S>                                                                       <C>                    <C>
Liabilities and Stockholders' Equity
Current
     Current portion of acquisition line-of-credit                        $   3,125,000          $   2,250,000
     Accounts payable                                                         6,187,000              5,503,000
     Income taxes payable                                                     2,413,000              1,658,000
     Accrued expenses                                                         2,260,000              1,288,000
     Accrued commissions                                                      1,296,000                753,000
     Accrued co-op advertising                                                1,143,000                946,000
     Accrued rebates                                                          1,075,000              1,158,000
--------------------------------------------------------------------------------------------------------------

Total Current Liabilities                                                    17,499,000             13,556,000

Acquisition Line-of-Credit, less current portion                             13,875,000             12,750,000
Deferred Tax Liability                                                          185,000                     --
Other Long Term Liabilities                                                     792,000              1,040,000
Company Obligated Mandatorily Redeemable
  Preferred Securities of Subsidiary Trust Holding
  Solely Junior Subordinated Debentures                                      56,980,000             56,950,000
--------------------------------------------------------------------------------------------------------------
Total Liabilities                                                            89,331,000             84,296,000
--------------------------------------------------------------------------------------------------------------
Minority Interest in Equity of Affiliate                                      4,111,000              3,857,000
--------------------------------------------------------------------------------------------------------------

Stockholders' Equity
     Preferred stock, $.001 par value - shares authorized,
       1,000,000; no shares outstanding                                              --                     --
     Common stock, $0.001 par value-shares authorized,
       75,000,000; 21,751,000 and 21,433,000 shares
       issued at June 30, 2000 and September 30, 2000                            22,000                 21,000
     Additional paid-in capital                                              51,409,000             51,615,000
     Retained earnings                                                        4,359,000              1,608,000
--------------------------------------------------------------------------------------------------------------
                                                                             55,790,000             53,244,000
Less: Treasury Stock, 2,554,000 and 2,760,000 shares
     at cost at June 30, 2000 and September 30, 2000                        (10,687,000)           (11,179,000)
--------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                   45,103,000             42,065,000
--------------------------------------------------------------------------------------------------------------
                                                                          $ 138,545,000          $ 130,218,000
--------------------------------------------------------------------------------------------------------------
</TABLE>


                   See accompanying notes to consolidated financial statements.


                                                                               2
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries


                                               Consolidated Statements of Income

<TABLE>
<CAPTION>
============================================================================================
        Three Months Ended September 30,                        1999                 2000
--------------------------------------------------------------------------------------------
                                                                       (Unaudited)
                                                           ---------------------------------
<S>                                                        <C>                  <C>
Net Sales                                                  $ 12,985,000         $ 13,111,000

Cost of Sales                                                 7,176,000            7,424,000
--------------------------------------------------------------------------------------------

Gross Profit                                                  5,809,000            5,687,000
--------------------------------------------------------------------------------------------
Operating Expenses
       Selling & shipping                                     3,468,000            4,331,000
       General and administrative                             2,969,000            4,043,000
       Depreciation                                             383,000              662,000
       Goodwill amortization                                    721,000              783,000
       Other amortization                                       104,000              278,000
--------------------------------------------------------------------------------------------
Total Operating Expenses                                      7,645,000           10,097,000
--------------------------------------------------------------------------------------------

Loss from Operations                                         (1,836,000)          (4,410,000)

Other Income (Expense)
       Investment income                                         73,000              135,000
       Interest expense                                      (1,818,000)          (1,663,000)
--------------------------------------------------------------------------------------------
Loss before Income Taxes, Minority Interest
  and Extraordinary Gain                                     (3,581,000)          (5,938,000)

Income Tax Benefit                                            1,600,000            2,966,000

Minority Interest in Loss of Affiliate                               --              217,000
--------------------------------------------------------------------------------------------

Loss Before Extraordinary Gain                               (1,981,000)          (2,755,000)
Extraordinary gain on purchase of Trust
  Preferred Securities, net of income taxes                          --                4,000
--------------------------------------------------------------------------------------------

Net Loss                                                   $ (1,981,000)        $ (2,751,000)
--------------------------------------------------------------------------------------------
Basic and Diluted Loss per Common Share                    $      (0.10)        $      (0.15)
--------------------------------------------------------------------------------------------
Weighted Average Common and Common
       Equivalent Shares Outstanding                         19,335,000           18,807,000
--------------------------------------------------------------------------------------------
</TABLE>


                    See accompanying notes to consolidated financial statements.


                                                                               3
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries


                                           Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
=======================================================================================================

Three months ended September 30,                                       1999                  2000
-------------------------------------------------------------------------------------------------------
                                                                              (Unaudited)
                                                                  -------------------------------------

<S>                                                               <C>                     <C>
Cash Flows from Operating Activities:
    Net loss                                                      $ (1,981,000)           $ (2,751,000)
    Adjustments to reconcile net loss to net cash
       provided by operating activities:
          Minority interest in loss of affiliate                            --                (217,000)
          Extraordinary gain                                                --                  (4,000)
          Depreciation and other amortization                        1,274,000               1,723,000
          Deferred income taxes                                     (1,400,000)             (1,140,000)
          Compensation related to stock options                             --                  30,000
          Changes in operating assets and liabilities, net of
            assets acquired and liabilities assumed in business
            acquisitions:
               Accounts receivable                                  11,682,000               9,117,000
               Inventories                                             617,000              (1,342,000)
               Prepaid expenses and other current assets                66,000                 (17,000)
               Accounts payable and accrued expenses                (3,818,000)             (3,096,000)
               Other assets                                           (104,000)                 48,000
------------------------------------------------------------------------------------------------------

Net Cash Provided by Operating Activities                            6,336,000               2,351,000
------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities:
    Payment for purchase of businesses, net of cash
      acquired                                                        (153,000)                (16,000)
    Increase in officer receivables                                    (13,000)                (10,000)
    Purchase of property and equipment                                (896,000)             (1,003,000)
    Purchase of intangibles                                           (175,000)                (74,000)
------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                               (1,237,000)             (1,103,000)
------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities:
    Proceeds from issuances of stock                                    33,000                      --
    Purchases of mandatorily redeemable preferred
      securities                                                            --                 (22,000)
    Repurchase of common stock for treasury                           (990,000)               (492,000)
    Net proceeds from notes payable                                         --                 272,000
</TABLE>


                                                                               4
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries


                                           Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
===================================================================================================
Three Months Ended September 30,                                        1999               2000
---------------------------------------------------------------------------------------------------
                                                                               (Unaudited)
                                                                  ---------------------------------

<S>                                                                  <C>                <C>
    Payment on bank line-of-credit                                   (500,000)          (2,000,000)
---------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities                              (1,457,000)          (2,242,000)
---------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                3,642,000             (994,000)

Cash and Cash Equivalents, beginning of period                      2,936,000            7,338,000
---------------------------------------------------------------------------------------------------

Cash and Cash Equivalents, end of period                          $ 6,578,000          $ 6,344,000
===================================================================================================

Supplemental disclosure of Cash Flow Information
    Cash paid for interest                                        $ 1,774,000          $ 1,635,000
    Cash paid for taxes                                           $    22,000          $        --
---------------------------------------------------------------------------------------------------
</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 September 30, 2000
     and for the three months ended  September 30, 1999 and 2000 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 three  months
     ended September 30, 2000 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, 2000, for details of accounting policies and detailed notes to the
     consolidated financial statements.

3.   Inventories consist of:

                                     June 30, 2000           September 30, 2000
     --------------------------------------------------------------------------
                                             (000)                         (000)

         Raw materials               $      8,390                 $       6,358

         Finished goods                     4,453                         7,827
         ----------------------------------------------------------------------
                                     $     12,843                 $      14,185
         ----------------------------------------------------------------------

4.   The  Company  completed  a financing  agreement  with Bank of America  (the
     "Bank") on October  13,  1998.  The  agreement  provides  for a $25 million
     revolving  acquisition  line of  credit  ("the  Acquisition  Facility")  to
     finance  acquisitions  and a $20 million working capital  revolving line of
     credit  ("the  Working  Capital  Facility").  Borrowings  under such credit
     facilities  bear  interest at variable  annual  rates chosen by the Company
     based on either (i) the London  Interbank  Offered Rate  ("LIBOR")  plus an
     applicable marginal rate, or (ii) the higher of 0.5% above the then current
     Federal Funds Rate or the Prime Rate of Bank of America, in each case, plus
     an applicable  marginal rate. The Acquisition  Facility terminates June 30,
     2001 and the outstanding  balance is payable in quarterly payments starting
     on June 30, 2001 and ending on March 31, 2004. The Working Capital Facility
     terminates  with the  balance due on  September  30,  2001.  The Company is
     required to maintain a zero balance,  under the Working  Capital  Facility,
     for at least 30 consecutive  days during the period from July 1 to December
     1 of each year. Moreover,  if the Company elects to terminate the financing
     agreement  prior to the expiration  date, the  outstanding  balance must be
     prepaid together with a premium of 0.5% of the total facility.

     The Company's  obligations under the Credit Agreement are guaranteed by its
     subsidiaries  and  secured by a security  interest  in favor of the Bank in
     substantially all of the assets of the Company and its  subsidiaries.  Upon


                                                                               6
<PAGE>



                                        U.S. Home & Garden Inc. and Subsidiaries


                                      Notes to Consolidated Financial Statements


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

     the occurrence of an the assets of the Company and its  subsidiaries.  Upon
     the  occurrence of an event of default  specified in the Credit  Agreement,
     the  maturity  of loans  outstanding  under  the  Credit  Agreement  may be
     accelerated by the Bank, which may also foreclose its security  interest on
     the assets of the Company and its subsidiaries.

     Under the Credit Agreement,  the Company and its subsidiaries are required,
     among other  things,  to comply with (a) certain  limitations  on incurring
     additional indebtedness,  liens and guaranties,  on dispositions of assets,
     payment  of  cash  dividends  and  cash   redemption  and   repurchases  of
     securities, and (b) certain limitations on merger, liquidations, changes in
     business,  investments,  loans and  advances,  affiliate  transactions  and
     certain  acquisitions.  In  addition,  the Company must comply with certain
     financial  tests  and  ratios.  A  violation  of  any  of  these  covenants
     constitutes  an event of default under the Credit  Agreement.  At September
     30,  2000,  the Company was in violation  of certain  financial  covenants;
     however, a waiver was obtained from the Bank.

5.   Subsequent to September 30, 2000, the Company repurchased 382,000 shares of
     its common stock for approximately $748,000.

6.   Segment  Reporting.  The  Company  operates in two  distinctive  reportable
     segments:    (1)   the   lawn   and   garden    industry   and,   (2)   the
     business-to-business   electronic  commerce  (E-Commerce)   industry.   The
     Company's  reportable  segments  are  business  units that offer  different
     products and services and are managed  separately due to different types of
     customers, technology, methods of distribution and marketing strategies.

     The accounting  policies of the segments are the same as those described in
     the summary of accounting policies. The Company evaluates performance based
     on  operating  income  or  loss  of  each  segment.   Transactions  between
     reportable segments are eliminated.


                                                                               7
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries


                                      Notes to Consolidated Financial Statements


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

     The revenues,  operating income and  identifiable  assets of the reportable
     segments  are as  follows  for the  period  ended  September  30,  2000 (in
     thousands).

     Revenues:
              Lawn and Garden                         $  13,111
              E-Commerce                                     --
                                                      ---------

                       Total Revenue                  $  13,111
                                                      =========

     Operating (Loss):
              Lawn and Garden                         $  (2,055)
              E-Commerce                                 (2,355)
                                                      ---------
                       Total Operating (Loss)         $  (4,410)
                                                      =========


     Identifiable Assets:
              Lawn and Garden                         $ 128,631
              E-Commerce                                 12,365
              Intercompany Eliminations                 (10,778)
                                                      ---------
                       Total Assets                   $ 130,218
                                                      =========


     The Company  does not have  material  revenue,  operating  income or assets
     outside the United States


                                                                               8
<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  recently  acquired  companies  and products
lines,   the   Company's   ability  to   successfully   commercialize   its  new
business-to-business   e-commerce   website,   changes   in   federal  or  state
environmental laws and the administration of such laws, protection of trademarks
and other proprietary  rights,  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,   Egarden.com,   Inc.,  Ampro  Industries,  Inc.  ("Ampro"),  Easy
Gardener, Inc. ("Easy Gardener"), and Golden West Agri-Products,  Inc., and Easy
Gardener's wholly owned  subsidiaries,  Weatherly  Consumer Products Group, Inc.
and Weed Wizard  Acquisition  Corp. Since 1992, the Company  consummated  eleven
acquisitions of complementary lawn and garden companies and product lines for an
aggregate  consideration of approximately $111 million in cash, notes and equity
securities.  As  a  result  of  such  acquisitions,  the  Company  recognized  a
significant amount of goodwill, which, in the aggregate, was approximately $72.6
million, net of accumulated amortization,  at September 30, 2000. The Company is
currently  amortizing such goodwill using the straight-line  method over various
time periods ranging from 5 to 30 years.


                                                                               9
<PAGE>


Results of Operations

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

                                           Percentage of Net Sales
                                              Three Months Ended
                                               September 30,
                                               -------------

                                             1999       2000

Net sales                                   100.0%     100.0%
Cost of sales                                55.3       56.6
                                          -----------------------
Gross profit                                 44.7       43.4
Selling and shipping expenses                26.7       33.0
General and administrative expenses          22.9       30.8
Depreciation and amortization                 9.3       13.1
                                              ---       ----
Loss from operations                        (14.2)     (33.5)
Interest expense, net                       (13.4)     (11.7)
Income tax benefit                           12.3       22.6
Minority interest in loss of affiliate       --          1.6
                                          -----------------------
Loss before extraordinary items             (15.3)     (21.0)
Extraordinary items                          --         --
                                          -----------------------
Net Loss                                    (15.3)%    (21.0)%
                                          -----------------------


Three Months Ended  September 30, 2000 Compared to Three Months Ended  September
30, 1999

Net sales. Net sales increased by $126,000, or 1.0%, to $13.1 million during the
three months ended  September 30, 2000 from $13.0 million  during the comparable
period in 1999.  The  increase  in net sales was  primarily a result of internal
growth of the Company's pre-existing product lines.

Gross profit.  Gross profit decreased by $122,000,  or 2.1%, to $5.7 million for
the  three  months  ended  September  30,  2000  from $5.8  million  during  the
comparable  period in 1999.  Gross profit as a percentage of net sales decreased
to 43.4% during the three months ended  September 30, 2000 from 44.7% during the
comparable   period  in  1999.  The  decrease  in  gross  profit  was  primarily
attributable to reduced pricing on certain products sold to major retailers when
compared to the September 30, 1999 period.

Selling and shipping expenses. Selling and shipping expenses increased $863,000,
or 24.9% to $4.3 million  during the three months ended  September 30, 2000 from
$3.5 million during the comparable period in 1999. Selling and shipping expenses
as a  percentage  of net sales  increased to 33.0% during the three months ended
September  30,  2000 from  26.7%  during  the  comparable  period in 1999.  This
increase was primarily as a result of start-up selling and development costs for
the Company's business-to-business  e-commerce initiative Egarden.com,  included
in the three months ended September 30, 2000.


                                                                              10
<PAGE>


General  and  administrative  expenses.   General  and  administrative  expenses
increased  $1.1 million or 36.2%,  to $4.0 million during the three months ended
September 30, 2000 from $3.0 million during the comparable  period in 1999. This
increase is primarily due to start-up and administrative  costs for Egarden.com.
As a percentage of net sales,  general and administrative  expenses increased to
30.8%  during the three months  ended  September  30, 2000 from 22.9% during the
comparable period in 1999.

Depreciation and amortization.  Depreciation and amortization expenses increased
by $515,000 or 42.6% to $1.7 million during the three months ended September 30,
2000 from $1.2 million  during the comparable  period in 1999.  This increase is
primarily as a result of the  acquisition of Egarden.com,  Inc and  amortization
related to certain  exclusivity  contracts for  Egarden.com in conjunction  with
depreciation related to the implementation of the Company's new fully integrated
enterprise  resource planning system, QAD MFG/PRO. As a percentage of net sales,
depreciation  and  amortization  expenses  increased  to 13.1%  during the three
months ended September 30, 2000 from 9.3% during the comparable period in 1999.

Loss from operations.  Loss from operations  increased by $2.6 million or 140.2%
to $4.4  million  during the three months ended  September  30, 2000,  from $1.8
million  during the  comparable  period in 1999.  The loss from  operations  was
primarily due to the seasonal nature of the Company's  business and the start-up
costs for  Egarden.com  of  approximately  $2.4 million.  As a percentage of net
sales,  loss from  operations  increased  to 33.5% for the  three  months  ended
September 30, 2000 from 14.2% during the comparable period in 1999.

Interest  expense.  Net interest expense  decreased  $217,000,  or 12.4% to $1.5
million  during the three months  ended  September  30, 2000,  from $1.7 million
during the  comparable  period in 1999.  The  decrease  in  interest  expense is
primarily related to the Company's repurchase of $6.3 million of the mandatorily
redeemable  trust  preferred  securities of its  subsidiary,  U.S. Home & Garden
Trust I, during the prior ten months.

Income  taxes.  Income tax benefit  increased to $3.0  million  during the three
months ended  September 30, 2000 from $1.6 million during the comparable  period
in 1999,  primarily due to the increase in the net loss before taxes. The income
tax  benefit  or expense  for each  interim  period is based upon the  Company's
estimated effective income tax rate for the year.

Minority  interest in loss of affiliate.  Minority interest in loss of affiliate
increased $217,000, net of tax expense of $217,000 during the three months ended
September 30, 2000 from the comparable period in 1999. Minority interest relates
to the Company's partial ownership of EGarden.com Inc. EGarden.com's results are
fully consolidated in the Company's financial statements.

Net loss. Net loss increased by $770,000,  or 38.9%,  to $2.8 million during the
three months ended  September 30, 2000 from $2.0 million  during the  comparable
period in 1999.  Diluted net loss per common share  increased $0.05 to $0.15 per
share for the three months ended  September 30, 2000 from $0.10 per share during
the comparable  period in 1999. The increase in diluted loss per common share is
primarily  attributable to the $930,000 of Egarden.com's net loss in conjunction
with fewer weighted average common and common equivalent  shares  outstanding in
the three months ended  September 30, 2000 compared to the comparable  period in
the prior year due to the Company's repurchase of shares of its common stock.


                                                                              11
<PAGE>


Seasonality

The  Company's  sales are  seasonal  due to the  nature  of the lawn and  garden
business,  in parallel with the annual growing  season.  The Company's sales and
shipping  are most  active  from late  December  through  May when home lawn and
garden  customers are purchasing  supplies for spring planting and retail stores
are increasing their inventory of lawn and garden products.  Additionally, since
the Company has better adjusted its operations to respond to the  (just-in-time)
inventory management programs increasingly  utilized by its major customers,  it
expects to ship an  increasingly  larger  proportion  of its total  orders on an
annual basis in the  seasonally  strong  second half of the year.  This shift of
early  seasonal  product orders from December into January is expected to result
in higher  revenues in both the third and fourth  quarters  compared to the same
period last year and slightly lower  revenues in the second quarter  compared to
the same period last year. Sales typically decline by early to mid-summer.

Sales of the Company's agricultural products, which were not material during the
three months ended  September 30, 2000, 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  September  30,  2000,  the  Company  had  consolidated  cash and  short-term
investments  totaling $7.9  million,  of which $1.6 million is  restricted,  and
working capital of $20.2 million. At June 30, 2000, the Company had consolidated
cash and short-term investments totaling $8.9 million, of which $1.6 million was
restricted,  and  working  capital of $25.1  million.  The  decrease  in working
capital is in line with the seasonal  nature of the  Company's  business and the
net loss for the period.  During the first  quarter,  $492,000  was used for the
repurchase  of common stock for treasury and $2.0 million for  repayments on the
Company's acquisition line of credit.

Net cash  provided  by  operating  activities  during  the  three  months  ended
September  30,  2000 was $2.4  million  consisting  primarily  of a decrease  in
accounts receivable in conjunction with amortization and depreciation, offset in
part by a decrease in accounts  payable,  an increase in deferred tax assets and
the net loss for the three months.

Net cash used in investing  activities  during the three months ended  September
30, 2000 was $1.1 million, consisting primarily of cash used for the purchase of
property and equipment and package design.

Net cash used in financing  activities  during the three months ended  September
30,  2000  was  $2.2  million,   consisting   primarily  of  the  repurchase  of
approximately  206,000  shares of common stock for treasury and the $2.0 million
repayment on the Company's acquisition line of credit.


                                                                              12
<PAGE>


On October 13, 1998,  the Company  entered into a credit  agreement (the "Credit
Agreement") with Bank of America (the "Bank"). The Credit Agreement provides for
a  revolving  credit  facility  of up to $25  million  to  finance  the  cost of
acquisitions by the Company (the "Acquisition  Facility") and a revolving credit
facility  of  up to  $20  million  to  finance  the  Company's  working  capital
requirements  (the "Working  Capital  Facility").  Borrowings  under such credit
facilities bear interest at variable annual rates chosen by the Company based on
either  (i) the London  Interbank  Offered  Rate  ("LIBOR")  plus an  applicable
marginal  rate, or (ii) the higher of 0.5% above the then current  Federal Funds
Rate or the Prime  Rate of Bank of  America,  in each case,  plus an  applicable
marginal  rate.  The  Acquisition  Facility  terminates at June 30, 2001 and the
outstanding balance is payable in quarterly payments starting with June 30, 2001
and ending with March 31, 2004. The Working Capital Facility terminates with the
balance due on September  30,  2001.  The Company is required to maintain a zero
balance,  under the Working Capital  Facility,  for at least 30 consecutive days
during the period  from July 1 to  December  1 of each  year.  Moreover,  if the
Company  elects to terminate the  financing  agreement  prior to the  expiration
date, the outstanding balance must be prepaid together with a premium of 0.5% of
the total facility.

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

Under the Credit Agreement, the Company and its subsidiaries are required, among
other things,  to comply with (a) certain  limitations  on incurring  additional
indebtedness,  liens and guaranties,  on dispositions of assets, payment of cash
dividends and cash  redemption and  repurchases  of securities,  and (b) certain
limitations on merger, liquidations, changes in business, investments, loans and
advances,  affiliate  transactions and certain  acquisitions.  In addition,  the
Company must comply with certain  financial tests and ratios. A violation of any
of these covenants  constitutes an event of default under the Credit  Agreement.
At  September  30,  2000,  the Company  was in  violation  of certain  financial
covenants; however, a waiver was obtained from the Bank.

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

As of  September  30,  2000,  the Company had a net  deferred  tax asset of $1.2
million  primarily  relating to start-up costs for  Egarden.com  which are being
expensed for book  purposes,  but are  capitalized  for tax purposes as start-up
costs until Company starts generating revenue, at which time these costs will be
amortized over a five-year period.  The start-up costs are largely offset by tax
accumulated  depreciation  and  amortization  in  excess  of  the  book  amount.
Realization of the $1.2 million deferred tax asset depends on U.S. Home & Garden
Inc. maintaining its 80% ownership in Egarden.com.


                                                                              13
<PAGE>


During the three months ended  September 30, 2000, the Company  purchased  1,000
shares of the outstanding 9.4% Cumulative Trust Preferred  Securities  issued by
its subsidiary,  U.S. Home & Garden Trust I, at an average price of $17.67.  The
shares  were  originally  issued  at  $25  per  share,  resulting  in  a  $4,000
extraordinary gain (after provision for income taxes) for the three months ended
September  30,  2000.  As of  November  9,  2000,  there were  2,278,019  shares
outstanding at a market price of $12.94 per share.

New Accounting Pronouncement

In June  1998,  the  Financial  Accounting  Standards  Board  issued  SFAS  133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities".  SFAS  133
requires  companies to recognize all  derivatives  contracts as either assets or
liabilities  in the balance sheet and to measure them at fair value.  If certain
conditions are met, a derivative may be specifically  designated as a hedge, the
objective  of which is to match the  timing of gain or loss  recognition  on the
hedging  derivative with the recognition of (i) the changes in the fair value of
the hedged asset or liability that are  attributable  to the hedged risk or (ii)
the earnings' effect of the hedged forecasted transaction.  For a derivative not
designated as a hedging instrument,  the gain or loss is recognized in income in
the period of change.  SFAS 133 is  effective  for the  Company  for the quarter
ending September 30, 2000.

The Company holds a derivative instrument at September 30, 2000, as described in
Item 3. The effects of adoption of SFAS 133 were not considered  material to the
Company's financial statements.

In June 2000,  the FASB issued  Interpretation  No. 44,  Accounting  for Certain
Transactions  Involving Stock Compensation.  Interpretation No. 44 clarifies the
application  of APB No. 25 for certain  issues  including (i) the  definition of
employee for purposes of applying APB No. 25, (ii) the criteria for  determining
whether a plan  qualifies  as a  non-compensatory  plan,  (iii)  the  accounting
consequences of various  modifications  to the terms of a previously fixed stock
option or award,  and (iv) the accounting for an exchange of stock  compensation
awards in a business combination. This Interpretation is effective July 1, 2000,
but certain conclusions in this Interpretation  cover specific events that occur
after  either  December  15,  1998 or January  12,  2000.  The  Company  did not
experience a material  impact on the financial  statements  upon the adoption of
Interpretation No. 44.

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. To minimize this risk, the Company holds a
derivative instrument in the form of an interest rate swap, which is viewed as a
risk  management tool and is not used for trading or speculative  purposes.  The
intent of the interest rate swap is to effectively fix the interest rate on part
of the borrowing on the Company's variable rate revolving credit agreement.


                                                                              14
<PAGE>


The following table provides information on the Company's fixed maturity debt as
of September 30, 2000 that are sensitive to changes in interest rates. The table
also  presents  the  corresponding  interest  rate swap on this debt.  Since the
interest rate swap effectively fixes the interest rate on the notional amount of
debt,  changes in interest rates have no current effect on the interest  expense
recorded by the Company on the portion of the debt covered by the interest  rate
swap.

The Acquisition Line of Credit had an              $25 million
interest rate ranging from 7.78% to 8.28%
for the three months ended September 30, 2000

Interests Rate Swaps
Notional amount                                    $15 million
Pay fixed/Receive variable -6.78%
Pay fixed interest rate    -6.15%

This swap agreement expires November 1, 2000 and reverts to a variable agreement
rate loan.  The Company does not intend to renew the interest rate swap upon its
expiration.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

     Reference  is made to Part  I-Item  3 of the  Company's  Form  10-K for the
     fiscal year ended June 30, 2000 for a description of certain  litigation in
     which the Company is involved.

Item 2.  Changes in Securities and Use of Proceeds

(c)  During  the  quarter  ended  September  30,  2000 the  Company  issued to a
     director  under its Non  Employee  Director  Stock  Option  Plan  five-year
     options to purchase 5,000 shares of the Company's common stock at $3.25 per
     share.  The  Company  also  issued to a financial  advisor:  (i)  five-year
     warrants to purchase an aggregate of 100,000 shares of the Company's common
     stock at an exercise price of $3.00 per share and (ii)  five-year  warrants
     to purchase an aggregate of 100,000 shares of the Company's common stock at
     an exercise price of $7.00 per share. The options and warrants  referred to
     above  were  issued in private  transactions  which  were  exempt  from the
     registration requirements of the Securities Act of 1933 pursuant to Section
     4(2) of the Securities Act.


Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits:

          27.1 Financial Data Schedule (For SEC use only)


     (b)  No reports on Form 8-K were filed during the quarter  ended  September
          30, 2000.


                                                                              15
<PAGE>


                                   SIGNATURES

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

November 14, 2000

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


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


                                          /s/ Donald Rutishauser
                                          ----------------------------
                                          Chief Financial Officer


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