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, 1996

                                       OR

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

            From the transition period from __________ to __________

                         Commission File Number 0-19899

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

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

                        655 Montgomery Street, Suite 830
                         San Francisco, California 94111
                    (Address of Principal Executive Offices)

                                 (415) 616-8111
              (Registrant's Telephone Number, Including Area Code)

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

                          Yes  _X_            No___

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

As of February  11, 1997 there were  14,007,841  shares of the  issuer's  common
stock, par value $.001 per share, outstanding.


<PAGE>


Part l. - Financial Information

Item 1. Consolidated Financial Statements

Consolidated balance sheet as of  December 31, 1996
and June 30, 1996 (unaudited)                                               1-3

Consolidated statements of operations for the three months
and six months ended December 31, 1996 and 1995 (unaudited)                 4-5

Consolidated statements of cash flows for the six months
ended December 31, 1996 and 1995 (unaudited)                                6-7

Notes to consolidated financial statements                                  8-9

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.                                       10-17

Part II. - Other Information

Item 2. Changes in Securities                                                 18

Item 6. Exhibits and Reports on Form 8-K                                      18

Signatures                                                                    19


<PAGE>

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

                                                                                     Consolidated Balance Sheet

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

                                                                               December 31,              June 30,  
                                                                                       1996                  1996
-------------------------------------------------------------------------------------------------------------------
                                                                                (Unaudited)
<S>                                                                            <C>                     <C>        
Assets
Current
  Cash and cash equivalents                                                    $   256,054             $   679,850
  Accounts receivable, less allowance for doubtful
    accounts and sales returns of $310,000 and
    $155,000                                                                     6,332,883               7,109,392
  Inventories                                                                    9,661,344               3,391,553
  Prepaid expenses and other current assets                                        354,010                 462,246
  Income tax receivable                                                            764,547                      --
  Deferred tax asset                                                             1,333,000               1,333,000
-------------------------------------------------------------------------------------------------------------------
Total current assets                                                            18,701,838              12,976,041

Furniture, fixtures and equipment, net                                           2,090,766               1,215,660

Intangible assets
  Excess of cost over net assets acquired of Weatherly
    Consumer Products Group, Inc., net of accumulated
    amortization of $280,037                                                    20,550,598                      --
  Excess of cost over net assets acquired of Easy
    Gardener, Inc., net of accumulated amortization
    of $1,065,215 and $828,289                                                  13,106,992              13,343,918
  Excess of cost over net assets acquired of Golden
    West Chemical Distributors, Inc., net of accumu-
    lated amortization of $459,489 and $406,903                                  1,638,114               1,690,700
  Excess of cost over net assets acquired of Emerald
    Products, LLC, net of accumulated amortization of
    $49,944 and $29,356                                                            746,143                 749,375
  Deferred financing costs, net of accumulated amor-
    tization of $97,181 and $467,193                                             1,652,226               1,004,614
  Product rights, patents and trademarks, net of
    accumulated amortization of $107,879 and $56,500                             1,933,666                 198,500
</TABLE>
                                                                               1


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

                                                                                     Consolidated Balance Sheet

====================================================================================================================
                                                                               December 31,              June 30,
                                                                                       1996                  1996
--------------------------------------------------------------------------------------------------------------------
                                                                                 (Unaudited)
<S>                                                                             <C>                      <C>        
Assets (continued)

Intangible assets (continued)
  Non-compete agreement, net of accumulated amortiza-
    tion of $9,812                                                              $   490,188              $        --
  Package design, net of accumulated amortization of
    $90,790 and $56,016                                                             192,291                  180,293
Deferred tax asset                                                                2,171,918                       --

Trade credits                                                                     1,289,120                1,294,560

Officer receivables                                                                 753,266                  617,204

Other assets                                                                        226,188                  313,117
--------------------------------------------------------------------------------------------------------------------


                                                                                $65,543,314              $33,583,982
====================================================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                                                               2


<PAGE>


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

                                                                           Consolidated Balance Sheet

===================================================================================================================
                                                                               December 31,              June 30,
                                                                                       1996                  1996
-------------------------------------------------------------------------------------------------------------------
                                                                                 (Unaudited)
Liabilities and Shareholders' Equity
<S>                                                                          <C>                       <C>         
Current
  Line of credit                                                             $  7,197,371              $  1,288,146
  Current maturities of notes payable                                           3,840,000                 2,361,798
  Accounts payable                                                              2,625,864                 1,285,585
  Accrued expenses                                                              2,816,422                 1,085,797
  Accrued commissions                                                             153,255                   545,670
  Accrued interest                                                                276,168                   592,271
  Accrued purchase consideration                                                1,116,054                   488,888
-------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                      18,025,134                 7,648,155

Deferred tax liability                                                            328,000                   328,000

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

Total liabilities                                                              39,193,134                14,214,355
-------------------------------------------------------------------------------------------------------------------

Commitments, contingency and subsequent event

Shareholders' equity
  Preferred stock, $.001 par value - shares authorized,
    1,000,000; no shares outstanding                                                   --                        --
  Common stock, $.001 par value - shares authorized,
    30,000,000; 10,507,381 and 13,917,266 shares issued
    and outstanding at June 30, 1996 and December 31,
     1996                                                                          13,917                    10,507
  Additional paid-in capital                                                   30,452,992                21,413,422
  Accumulated deficit                                                          (4,116,729)               (2,054,302)
-------------------------------------------------------------------------------------------------------------------

Total shareholders' equity                                                     26,350,180                19,369,627
-------------------------------------------------------------------------------------------------------------------

                                                                             $ 65,543,314              $ 33,583,982
===================================================================================================================
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                                                               3
<PAGE>


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

                                                                          Consolidated  Statement of Operations

====================================================================================================================
                                                     Three Months Ended                     Six Months Ended
                                                         December 31,                         December 31,
                                                 ----------------------------         ---------------------------
                                                      1996              1995               1996              1995
--------------------------------------------------------------------------------------------------------------------
                                                            Unaudited                            Unaudited
                                                 ----------------------------         ---------------------------
<S>                                              <C>                <C>               <C>               <C>         
Net sales                                        $  7,415,940       $  2,714,702      $ 12,938,733      $  5,979,338

Cost of sales                                       3,217,234          1,289,524         5,824,401         2,844,710
--------------------------------------------------------------------------------------------------------------------

Gross profit                                        4,198,706          1,425,178         7,114,332         3,134,628
--------------------------------------------------------------------------------------------------------------------

Operating expenses
  Selling and shipping                              2,230,228          1,120,081         3,989,708         2,317,506
  General and administrative                        1,817,837          1,274,306         3,322,368         2,287,811
--------------------------------------------------------------------------------------------------------------------

                                                    4,048,065          2,394,387         7,312,076         4,605,317
--------------------------------------------------------------------------------------------------------------------

Income (loss) from operations                         150,641           (969,209)         (197,744)       (1,470,689)

Other income (expense)
  Investment income                                    16,531             10,053            42,458            33,924
  Interest expense                                   (812,479)          (472,844)       (1,375,247)         (930,102)
--------------------------------------------------------------------------------------------------------------------

Loss before income taxes
  and extraordinary expense                          (645,307)        (1,432,000)       (1,530,533)       (2,366,867)

Income tax benefit                                    195,000             80,000           475,000           180,000
--------------------------------------------------------------------------------------------------------------------

Loss before extraordinary
  expense                                            (450,307)        (1,352,000)       (1,055,533)       (2,186,867)

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

Net loss                                         $   (450,307)      $ (1,352,000)     $ (2,062,427)     $ (2,186,867)
====================================================================================================================
</TABLE>
                                                                               4


<PAGE>


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

                                                                                           Consolidated Statement of Operations

====================================================================================================================================
                                                          Three Months Ended                              Six Months Ended
                                                              December 31,                                   December 31,
                                                ---------------------------------------       --------------------------------------
                                                        1996                   1995                   1996                   1995
------------------------------------------------------------------------------------------------------------------------------------
                                                              Unaudited                                       Unaudited
                                                ---------------------------------------       --------------------------------------
<S>                                             <C>                    <C>                    <C>                    <C>            
Loss per common share
  before extraordinary
  expense                                       $         (.03)        $         (.13)        $         (.08)        $         (.22)

Extraordinary expense                                       --                     --                   (.07)                    --

Net loss per share                              $         (.03)        $         (.13)        $         (.15)        $         (.22)
------------------------------------------------------------------------------------------------------------------------------------

Weighted average common
  and common equivalent
  shares outstanding                                13,917,000             10,200,000             13,437,000             10,073,000
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                    See accompanying notes to consolidated financial statements.

                                                                               5

<PAGE>

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

                                                                          Consolidated statements of Cash Flows

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

Increase (Decrease) in Cash

Six months ended December 31,                                                        1996                 1995
--------------------------------------------------------------------------------------------------------------------
                                                                                             (Unaudited)
<S>                                                                             <C>                   <C>          
Cash flows from operating activities
  Net loss                                                                      $ (2,062,427)         $ (2,186,867)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Extraordinary expense                                                        1,006,894                    --
      Depreciation and amortization                                                  958,324               416,657
      Amortization of deferred financing costs                                       119,274               125,214
      Changes in operating  assets and  liabilities,  net of
        assets acquired and liabilities assumed:
         Accounts receivable                                                       2,118,948             2,117,805
         Inventories                                                              (4,463,763)           (2,631,032)
         Prepaid expenses and other current assets                                   540,579              (137,408)
         Accounts payable and accrued expenses                                     1,084,013             1,261,356
         Other assets                                                                 92,369              (263,785)
         Deferred tax asset                                                         (934,015)                   --
--------------------------------------------------------------------------------------------------------------------

Net cash used in operating activities                                             (1,539,804)           (1,298,060)
--------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities
  Payment for purchase of business, net of cash acquired                         (23,801,258)           (1,007,016)
  Payment for non-compete                                                           (500,000)                   --
  Increase in officer receivables                                                   (136,062)              (43,176)
  Purchase of furniture, fixtures and equipment                                     (229,472)             (136,863)
  Purchase of package design                                                              --               (93,234)
--------------------------------------------------------------------------------------------------------------------

Net cash used in investing activities                                            (24,666,792)           (1,280,289)
--------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities
  Proceeds from warrants exercised                                                 5,192,980             1,265,998
  Proceeds from bank line of credit                                               17,883,851             4,044,065
  Payment on bank line of credit                                                 (11,974,626)           (2,312,698)
  Proceeds from notes payable                                                     16,783,335                    --
  Payments of notes payable                                                         (703,333)             (800,000)
  Acquisition finance costs                                                       (1,399,407)                   --
--------------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                                         25,782,800             2,197,365
--------------------------------------------------------------------------------------------------------------------
</TABLE>
                                                                               6


<PAGE>


                               U.S. Home & Garden Inc. and Subsidiaries

                                  Consolidated Statements of Cash Flows

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

Six months ended December 31,                      1996           1995
------------------------------------------------------------------------
                                                       (Unaudited)

Net decrease in cash                             $(423,796)   $(380,984)

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


Cash and cash equivalents, end of period         $ 256,054    $ 589,326
========================================================================
             See accompanying notes to consolidated financial statements.

Six months ended December 31,                      1996           1995
------------------------------------------------------------------------


Supplemental disclosure of cash flow information
  Cash paid for interest,
  including deferred financing costs             $3,251,331   $  646,358
  Cash paid for taxes                            $    6,644   $       --
========================================================================

                                                                               7

<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

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

1.   The accompanying  consolidated  financial  statements at December 31, 1996,
     and for the three  and six  months  ended  December  31,  1996 and 1995 are
     unaudited,  but, in the  opinion of  management,  include  all  adjustments
     necessary for a fair  presentation of consolidated  financial  position and
     results of operations for the periods presented.

2.   Refer to the audited financial statements for the year ended June 30, 1996,
     for details of accounting policies and accounts.

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

     In connection with the above acquisition,  the Company's  outstanding notes
     payable  were  refinanced  and  a  new  line  of  credit   arrangement  was
     established.  Under the  terms of the new loan  agreement,  two  promissory
     notes were issued in the principal  amount of $23,000,000  and  $2,250,000,
     respectively.  The $23,000,000 note requires  quarterly  principal payments
     ranging from  $570,000 to $1,350,000  beginning  September 30, 1996 through
     June 30, 2002 and bears  interest at the lower of prime or LIBOR rates,  as
     defined. The $2,250,000 note requires quarterly principal payments totaling
     $140,625 beginning September 30, 1998, through December 30, 1999, and bears
     interest at prime plus 6%. The line of credit  agreement  calls for maximum
     borrowings  totaling  $13,000,000  with  interest  at the lower of prime or
     LIBOR  rates.  As a result  of this  refinancing,  the  entire  balance  of
     deferred  finance costs at June 30, 1996, net of accumulated  amortization,
     plus  certain  prepayment  penalties,  was written off as an  extraordinary
     expense  during the six  months  ended  December  31,  1996.  Extraordinary
     expense, net of $452,000 tax benefit,  totaled approximately  $1,007,000 in
     the six months ended December 31, 1996.

     In conjunction  with the debt  refinancing,  a warrant to purchase  400,000
     shares  of stock  at $2.50  per  share  was  issued  to  certain  financial
     institutions  which provided the financing.  The warrant has been valued at
     $350,000 and is being  amortized  over the six-year  term of the  financing
     agreement.


                                                                               8
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements

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

     Subsequent  to June  30,  1996,  warrants  and a unit  purchase  option  to
     purchase  common  stock were  exercised  resulting  in net  proceeds to the
     Company of  approximately  $5,200,000.  These  proceeds were used to fund a
     portion of the Weatherly acquisition.

     Subsequent  to June 30, 1996,  the Company  granted  stock options (with an
     exercise  price equal to the current  market  price) to purchase  2,115,000
     shares of common stock to various  employees and  consultants  primarily as
     bonus  compensation  for fiscal 1996  operating  results and the  Weatherly
     acquisition.  In  addition,  the Company also granted an option to purchase
     200,000  shares of common  stock to a  financial  consultant  for  services
     relating to the Weatherly  acquisition.  The option has a nominal  exercise
     price and will be recorded  as a cost of the  acquisition  (estimated  fair
     value approximately $500,000),  thus increasing the excess of cost over net
     assets acquired of Weatherly.

     The  acquisition  was  accounted for as a purchase  and,  accordingly,  the
     results of operations have been included in the  consolidated  statement of
     the operations since August 9, 1996. The value of intangibles purchased and
     the excess of the  purchase  price  over the fair value of assets  acquired
     totalled  approximately  $20.8  million and will be amortized on a straight
     line basis over the estimated useful life of thirty years.

     The following unaudited pro forma summary combines the consolidated results
     of  operations  of the  Company and  Weatherly  as if the  acquisition  had
     occurred at the  beginning of fiscal 1995,  after giving  effect to certain
     adjustments,  including  the  amortization  of  excess  costs  over  assets
     acquired  and the  elimination  of certain  expenses  incurred by Weatherly
     related to the  acquisition.  This pro forma  summary does not  necessarily
     reflect  the results of  operations  as they would have been if the Company
     and Weatherly had constituted a single entity during such period and is not
     necessarily indicative of results which may be obtained in the future.

Six months ended December 31,                        1996               1995
--------------------------------------------------------------------------------

Net sales                                        $ 13,680,000      $ 12,003,000
Net (loss) before extraordinary expense            (1,429,000)       (3,308,000)
Net loss                                           (2,955,000)       (4,834,000)
Net (loss) per common share before
      extraordinary expense                              (.10)             (.25)
Net (loss) per common share                              (.21)             (.36)
================================================================================

                                                                               9


<PAGE>


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



General

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

THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995

     The Company's  consolidated  net sales  increased to $7,415,940  during the
three  months  ended  December 31, 1996 from  $2,714,702  during the  comparable
period  in 1995.  The  increase  in net sales  resulted  from the  inclusion  of
Weatherly's  sales of  approximately  $3,776,000  during the three  months ended
December 31, 1996 compared to $0 in the comparable  period in 1995. In addition,
approximately  $925,000 of the  increase in sales  resulted  from an increase in
shipments of EGAC's  products from the  comparable  period in 1995.  The Company
believes that its sales were positively affected by the continued penetration in
existing markets,  expansion into new markets and a higher recognition of EGAC's
brand name and products.

     The Company's  consolidated  cost of goods sold and gross profit  generated
during the quarter ended  December 31, 1996 were also higher than the comparable
period in 1995  primarily  due to the increase in net sales and the inclusion of
Weatherly's  costs of goods sold and gross profit.  Gross profit as a percentage
of net sales,  for the three months ended December 31, 1996 and 1995 was 57% and
53%, respectively.  This increase is due to the addition of Weatherly's products
which have a higher gross profit percentage.

     The  Company's  consolidated  selling and  shipping  expenses  increased to
$2,230,228  during the three  months  ended  December  31, 1996 from  $1,120,081
during the  comparable  period in 1995  primarily as a result of the increase in
net sales and the  accompanying  increase in selling and shipping  expenses as a
result of the  acquisition  of  Weatherly.  Selling and  shipping  expenses as a
percentage of net sales for the three months ended  December 31, 1996  decreased
from 41% to 30% compared to the comparable  period in 1995 primarily as a result
of  economies  of  scale  gained  from  the  sale of new  products  to  existing
customers.  The decrease in percentage is also  attributable to the commencement
of the consolidation of EGAC and Weatherly.

                                       10

<PAGE>




     The Company's consolidated general and administrative expenses increased to
$1,817,837  during the three  months  ended  December  31, 1996 from  $1,274,306
during the  comparable  period in 1995 primarily as a result of the inclusion of
Weatherly  expenses of  approximately  $355,000.  In  addition,  the increase in
general and administrative  expenses was due to the overhead expenses associated
with the overall increase in the size of the Company. General and administrative
expenses,  as a percentage of net sales, for the three months ended December 31,
1996 decreased  from 47% to 25% compared to the  comparable  period in 1995. The
decrease is  attributed to the  commencement  of the  consolidation  of EGAC and
Weatherly.

     The Company's  consolidated  interest expense  increased to $812,479 during
the three months ended  December 31, 1996 from  $472,844  during the  comparable
period in 1995 primarily due to the increase in outstanding  indebtedness  which
was incurred in connection with the purchase of Weatherly.

     The Company's consolidated income tax benefit increased to $195,000, during
the three months ended  December  31, 1996 from  $80,000  during the  comparable
period in 1995  primarily  due to the  Company's  reduction  of the deferred tax
asset  valuation  allocation  associated  with the available net operating  loss
carryforwards.

     As a result of the foregoing,  the Company incurred a consolidated net loss
of  $450,307  in  the  three  months  ended  December  31,  1996  compared  to a
consolidated net loss of $1,352,000 in the comparable 1995 period.


SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995

     The Company's  consolidated  net sales increased to $12,938,733  during the
six months ended December 31, 1996 from $5,979,338  during the comparable period
in 1995.  The increase in net sales  resulted  primarily  from the  inclusion of
Weatherly's  sales of  approximately  $4,564,000  during  the six  months  ended
December 31, 1996 compared to $0 in the comparable  period in 1995. In addition,
approximately  $2,562,000 of the increase in sales  resulted from an increase in
shipments of EGAC's  products from the comparable  period in 1995.  Furthermore,
the Company  believes that its sales were  positively  affected by the continued
penetration  in  existing  markets,  expansion  into  new  markets  and a higher
recognition of EGAC's brand name and products.

     The Company's  consolidated  cost of goods sold and gross profit  generated
during  the six  months  ended  December  31,  1996  were also  higher  than the
comparable  period in 1995  primarily  due to the  increase in net sales and the
inclusion of Weatherly's costs of goods sold and gross profit. Gross profit as a
percentage of net


                                       11
<PAGE>


sales,  for the six months  ended  December  31,  1996 and 1995 was 55% and 52%,
respectively. This increase is due to the addition of Weatherly's products which
have a higher gross profit percentage.

     The  Company's  consolidated  selling and  shipping  expenses  increased to
$3,989,708  during the six months ended December 31, 1996 from $2,317,506 during
the comparable period in 1995 primarily as a result of the increase in net sales
and the  accompanying  increase in selling and shipping  expenses as a result of
the acquisition of Weatherly.  Selling and shipping  expenses as a percentage of
net sales for the six months ended  December 31, 1996  decreased from 39% to 31%
compared to the comparable  period in 1995 primarily as a result of economies of
scale gained from the sale of new products to existing  customers.  In addition,
the decrease is attributable to the  commencement of the  consolidation  of EGAC
and Weatherly.

     The Company's consolidated general and administrative expenses increased to
$3,322,368  during the six months ended December 31, 1996 from $2,287,811 during
the  comparable  period  in 1995  primarily  as a  result  of the  inclusion  of
Weatherly  expenses of  approximately  $571,000.  In  addition,  the increase in
general and administrative  expenses was due to the overhead expenses associated
with the overall increase in the size of the Company. General and administrative
expenses,  as a percentage of net sales,  for the six months ended  December 31,
1996 decreased  from 38% to 26% compared to the  comparable  period in 1995. The
decrease is attributed to the commencement of the consolidation of Easy Gardener
and Weatherly.

     The Company's  consolidated interest expense increased to $1,375,247 during
the six months  ended  December  31, 1996 from  $930,102  during the  comparable
period in 1995 primarily due to the increase in outstanding  indebtedness  which
was incurred in connection with the purchase of Weatherly.

     The Company's consolidated income tax benefit increased to $475,000, during
the six months  ended  December  31, 1996 from  $180,000  during the  comparable
period in 1995  primarily  due to the  Company's  reduction  of the deferred tax
asset valuation allocation associated with net operating loss carryforwards.

     In connection with the Weatherly  acquisition,  during the six months ended
December  31,  1996,  the  Company  incurred  an  extraordinary  expense  on the
refinancing,  at a more  favorable  rate,  of  outstanding  notes payable and an
outstanding  revolving  credit  facility.  As a result of the  refinancing,  the
Company  incurred an  extraordinary  expense of  $1,006,894  ($1,459,266  net of
$452,372 of tax benefit),  or $.07 per share. There was no comparable expense in
the corresponding 1995 period. The extraordinary expense consists of the balance
of  deferred  finance  costs,  net of  accumulated  amortization,  plus  certain
prepayment penalties. See " Liquidity and Capital Resources".


                                       12
<PAGE>


     As a result of the foregoing,  the Company incurred a consolidated net loss
of  $2,062,427  in  the  six  months  ended  December  31,  1996  compared  to a
consolidated net loss of $2,186,867 in the comparable 1995 period.

Liquidity and Capital Resources

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

     At December  31, 1996,  the Company had  consolidated  cash and  short-term
investments  totalling  $256,054 and working  capital of  $676,704.  At June 30,
1996, the Company had  consolidated  cash and short-term  investments  totalling
$679,850 and working capital of $5,327,886. The decrease in working capital from
June 30, 1996 is due primarily to the additional  notes payable,  line of credit
and  additional  accrued  purchase  consideration  for  the  acquisition  of the
outstanding stock of Weatherly.  Additionally,  the seasonal fluctuations in the
Company's operations has resulted in a decrease in working capital from June 30,
1996.

     Net cash used in operating activities for the six months ended December 31,
1996 was $1,539,804  consisting primarily of a net loss, a decrease in inventory
offset by the extraordinary expense, an increase in accounts payable and accrued
expenses  and an  increase in accounts  receivable.  Net cash used in  investing
activities for the six months ended December 31, 1996 was $24,666,792 consisting
primarily of cash used for the  acquisition  of Weatherly.  Net cash provided by
financing  activities for the six months ended December 31, 1996 was $25,782,800
consisting  primarily of the additional  proceeds from the notes payable used in
connection  with the purchase of  Weatherly  and the  exercising  of warrants to
purchase  common  stock  which  was  substantially  used  for  the  purchase  of
Weatherly.

     At December 31, 1996 the Company had consolidated  term debt of $24,680,000
which  was  incurred  in  connection  with the  purchase  of  Weatherly  and the
refinancing of the outstanding notes payable. In connection with the acquisition
of Weatherly, EGAC entered into a new credit agreement ("Credit Agreement") with
certain  institutional  lenders  under  which  its  outstanding  term  loan  and
revolving credit indebtedness were refinanced. Pursuant to the Credit Agreement,
the lenders have  provided the Company with the following  revolving  credit and
term loan facilities:

     (a) Revolving Credit  Facility:  The maximum amount available for borrowing
under this  facility from time to time is equal to the lesser of $13 million and
a borrowing  base  determined  by reference to specified  percentages  of EGAC's
consolidated  accounts  receivable and inventory  deemed to be "eligible" by the
lenders. For the


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<PAGE>


period of December 1, 1996 through  February 28, 1997 the Company has received a
temporary  overadvance on the borrowing base for $3,100,000.  As of December 31,
1996,   based  on  this  formula  and  including  the  additional   overadvance,
approximately   $2,600,000  was  available  for  borrowing  and  $7,197,371  was
outstanding.

     Revolving credit loans bear interest at an annual rate chosen by EGAC based
on the prime rate of one of the lenders or LIBOR (the London inter-bank  offered
rate) plus an  applicable  marginal  rate.  At December  31, 1996 the  effective
annual rate for the outstanding  revolving  credit loans was 9.5%. The revolving
credit  facility  expires  on June 30,  2002  (the  "Expiration  Date")  and all
outstanding  revolving credit loans are then due, unless such loans are required
to be repaid earlier by the terms of the Credit Agreement. In addition, for a 10
day period in each year, all outstanding revolving credit loans must be paid and
no  revolving  credit  loans  may be  borrowed.  Revolving  credit  loans may be
voluntarily  prepaid at any time.  Subject to the  availability  formula and the
Expiration  Date,  amounts  repaid  may be  reborrowed  and,  subject to certain
restrictions, outstanding prime rate loans may be converted to LIBOR rate loans.
EGAC is also  required  to pay  certain  commitment,  service  and other fees in
connection  with this  facility.  If EGAC  determines to terminate the revolving
credit facility prior to the Expiration  Date, the outstanding  revolving credit
loan  must be  prepaid  together  with a premium  from 1% to 3% of the  "Average
Yearly Loan  Balance"  (as  defined in the Credit  Agreement)  of the  revolving
credit loans.

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


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<PAGE>


of the Term Loan I on account  of "excess  cash  flow",  if any,  will be due in
October 1997.

     EGAC's obligation to pay the principal of, the interest on, and/or premium,
if any, and all other amounts  payable on account of the revolving  credit loans
and the Term Loans is secured by substantially all of the assets of EGAC and its
subsidiaries   and  the  irrevocable   guarantees  of  the  Company  and  EGAC's
subsidiaries  of such  obligations.  Upon the  occurrence  of events of  default
specified in the Credit  Agreement,  the maturity of the  outstanding  principal
amounts of the revolving  credit loans and the Term Loans may be  accelerated by
the  lenders  who may  also  foreclose  on the  secured  assets  of EGAC and its
subsidiaries.

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

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

     The Company believes that the consolidated operations of EGAC will generate
sufficient  cash  flow to  service  the debt  incurred  in  connection  with the
acquisition of the assets of Easy Gardener,


                                       15
<PAGE>


Inc. ("EGI"),  and the acquisition of Weatherly.  However,  if such cash flow is
not  sufficient  to service  the debt,  the  Company  will be  required  to seek
additional financing which may not be available on commercially acceptable terms
or at all.  In  addition,  the Company has  commenced  amortizing  over 30 years
approximately  $14,170,000 of goodwill  related to the purchase of the assets of
EGI  (being  the  value of the  cost  over the  value of the  assets  acquired).
Furthermore,  the company has commenced  amortizing over 20 years  approximately
$792,000  of goodwill  related to the  purchase of Emerald  Products,  LLC.  The
Company  is  already  amortizing  approximately  $105,000  per year of  goodwill
relating to the  acquisition of Golden West. As of August 9, 1996, in connection
with  the  purchase  of  Weatherly,   the  Company  has   commenced   amortizing
approximately $20,083,000 of goodwill over 30 years.

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

     As of December 31, 1996, the Company has a deferred tax asset of $3,504,918
(of which  $1,333,000  is a current  asset)  the  majority  relating  to the tax
benefit  associated with the accumulated net operating  losses of  approximately
$5,560,000   for  Federal   income  tax  purposes   which  expire  in  2009  and
approximately   $1.2  million  of  tax  benefits   acquired  in  the   Weatherly
acquisition. The Company believes that with the successful implementation of the
September 1994  acquisition  of the assets of EGI and the most recent  Weatherly
acquisition  in August 1996,  realization of this asset is more likely than not.
For California  income tax purposes,  the Company has  accumulated net operating
losses of  approximately  $2,903,000  which expire through 2000.  Based upon the
estimated  taxable  income to be  apportioned  to  California  over the next few
fiscal years and  considering  the  expiration  date of the net  operating  loss
carryovers, the Company has established a valuation reserve of $223,000 relating
to the estimated  $275,000 benefit  associated with the California net operating
loss carryovers.

     In January 1997, the Company borrowed $550,000,  in the aggregate,  from an
individual  and an  institutional  lender.  The loans are being  used to satisfy
short term working capital requirements.


                                       16
<PAGE>


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


                                       17
<PAGE>


                           PART II - OTHER INFORMATION

Item 2  Changes in Securities

     In  December  1996 the  Company  issued  five year  options to  purchase an
aggregate  of  400,000  shares of its  Common  Stock,  consisting  of options to
purchase  200,000 and 100,000 shares  repectively,  at $2.0625 per share, to two
officers of the Company  and options to purchase  100,000  shares at $2.0625 per
share to a consultant to the Company.  The options were granted to the optionees
for  services  they  rendered  to the  Company.  The  issuances  of the  options
described above were deemed to be exempt from registration  under the Securities
Act of 1933 in reliance upon Section 4(2) thereof as transactions  not involving
a public offering.

Item 6. Exhibits and Reports on Form 8-K

a.       Exhibits

         Exhibit 27-Financial Data Schedule (For SEC use only)

b.  During the quarter  ended  December  31,  1996 the Company  filed an amended
Current  Report on Form 8-K/A,  for the event dated  August 9, 1996,  to include
pursuant to Item 7, the  audited  financial  statements  of  Weatherly  Consumer
Products Group, Inc. and related pro forma financial information.


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<PAGE>


                                   SIGNATURES


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


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


Date:  February 10, 1997                           By: /s/  Robert Kassel
                                                       -------------------------

                                                       Robert Kassel, President,
                                                     Chief Executive Officer and
                                                      Treasurer (Duly Authorized
                                                           Officer and Principal
                                                        Financial and Accounting
                                                                        Officer)



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