U.S. SECURITIES AND EXCHANGE COMMISION
                             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, 1998

                                       OR

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

     From the transition period from ____________ to __________________

                         Commission File Number 0-19899

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


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


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

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

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

                             Yes _X_          No ___

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

As of November  10, 1998 there were  19,711,427  shares of the  issuer's  common
stock, par value $.001 per share, outstanding.


<PAGE>


Part 1. - Financial Information

Item 1. - Consolidated Financial Statements

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

Consolidated statements of income for the three  months  
ended  September  30, 1997 and 1998  (Unaudited)                               3

Consolidated statements of cash flows for the three months 
ended  September 30, 1997 and 1998 (Unaudited)                               4-5

Notes to consolidated financial statements                                   6-7

Item 2. - Management's Discussion and Analysis of Financial
          Condition and Results of Operations.                              8-13

Part II.- Other Information

Item 2. - Changes in Securities                                               14

Item 6. - Exhibits and Reports on Form 8-K                                    14

Signatures                                                                    15


<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                                     Consolidated Balance Sheets

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

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

Current
   Cash and cash equivalents                                                     $ 27,130,000   $ 26,277,000
   Accounts receivable, less allowance for doubtful accounts and
     sales returns of $399,000 and $399,000                                        17,350,000      6,937,000
   Inventories                                                                     11,763,000     13,193,000
   Prepaid expenses and other current assets                                        1,130,000      1,132,000
   Deferred tax asset                                                                 522,000        522,000
------------------------------------------------------------------------------------------------------------
Total Current Assets                                                               57,895,000     48,061,000

Furniture, Fixtures and Equipment, net                                              3,590,000      3,791,000

Intangible Assets
   Excess of cost over net assets acquired, net                                    58,864,000     58,494,000
   Deferred financing costs, net of accumulated amortization of
     $21,000 and $46,000                                                            3,186,000      3,168,000
   Product rights, patents and trademarks, net of accumulated
     amortization of $93,000 and $98,000                                              165,000        160,000
   Non-compete agreement, net of accumulated amortization of
     $48,000 and $55,000                                                              462,000        455,000
   Package design, net of accumulated amortization of $247,000\
     and $303,000
                                                                                      718,000        890,000

Trade Credits                                                                         944,000        944,000

Officer Receivables                                                                   850,000        832,000

Other Assets                                                                          139,000        142,000
------------------------------------------------------------------------------------------------------------
                                                                                 $126,813,000   $116,937,000
============================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               1
<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                                     Consolidated Balance Sheets
<TABLE>
<CAPTION>
============================================================================================================

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

Current
     Line of credit                                                              $       --     $       --
     Accounts payable                                                               4,501,000      2,615,000
     Accrued expenses                                                               3,922,000      1,580,000
     Accrued co-op advertising                                                        645,000        637,000
     Accrued commissions                                                            1,106,000        361,000
     Accrued purchase consideration                                                   978,000           --
------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                          11,152,000      5,193,000

Deferred Tax Liability                                                                812,000        875,000

Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
   Trust Holding Solely Junior Subordinated Debentures
                                                                                   63,250,000     63,250,000
------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                  75,214,000     69,318,000
------------------------------------------------------------------------------------------------------------
Commitments, Contingency and Subsequent Events                                           --             --

Stockholders' Equity
     Convertible preferred stock, $.001 par value-shares authorized,
       1,000,000; no shares outstanding                                                  --             --
     Common stock, $.001 par value-shares authorized, 75,000,000; 20,133,000
       and 20,843,000 shares issued at June 30, 1998 and September 30, 1998
                                                                                       20,000         21,000
     Additional paid-in capital                                                    50,153,000     50,178,000
     Retained earnings                                                              2,733,000      1,431,000
------------------------------------------------------------------------------------------------------------
                                                                                   52,906,000     51,630,000
Less: Treasury Stock, 236,000 and 824,000 shares at cost                           (1,307,000)    (4,011,000)
------------------------------------------------------------------------------------------------------------

Total Stockholders' Equity                                                         51,599,000     47,619,000
------------------------------------------------------------------------------------------------------------
                                                                                 $126,813,000   $116,937,000
============================================================================================================
</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,                                                    1997            1998
------------------------------------------------------------------------------------------------------------
                                                                                         (Unaudited)
                                                                                ----------------------------
<S>                                                                              <C>            <C>         
Net Sales                                                                        $  7,025,000   $ 10,768,000

Cost of Sales                                                                       3,522,000      5,312,000
------------------------------------------------------------------------------------------------------------
Gross Profit                                                                        3,503,000      5,456,000
------------------------------------------------------------------------------------------------------------
Operating Expenses
   Selling and shipping                                                             2,304,000      3,221,000
   General and administrative                                                       1,659,000      3,218,000
------------------------------------------------------------------------------------------------------------
                                                                                    3,963,000      6,439,000
------------------------------------------------------------------------------------------------------------
Loss from Operations                                                                 (460,000)      (983,000)

Other Income (Expense)
   Investment income                                                                   47,000        381,000
   Interest expense                                                                  (853,000)    (1,541,000)
------------------------------------------------------------------------------------------------------------
Loss before Income Taxes                                                           (1,266,000)    (2,143,000)

Income Tax Benefit                                                                    550,000        920,000
------------------------------------------------------------------------------------------------------------
Net Loss                                                                         $   (716,000)  $ (1,223,000)
------------------------------------------------------------------------------------------------------------
Basic and Diluted Loss per Common Share                                          $       (.05)  $       (.06)
------------------------------------------------------------------------------------------------------------
Weighted Average Common and Common Equivalent Shares Outstanding
                                                                                   14,702,000     20,143,000
------------------------------------------------------------------------------------------------------------
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               3

<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                           Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
============================================================================================================
Increase (Decrease) in Cash and Cash Equivalents

Three months ended September 30,                                                      1997           1998
------------------------------------------------------------------------------------------------------------
                                                                                          (Unaudited)
                                                                                ----------------------------
<S>                                                                              <C>            <C>
Cash Flows from Operating Activities
     Net loss                                                                    $   (716,000)  $ (1,223,000)
     Adjustments to reconcile net loss to net cash provided by operating
       activities:
         Depreciation and other amortization                                          588,000        838,000
         Amortization of deferred financing costs                                     132,000         25,000
         Changes in operating assets and liabilities, net of assets acquired and
           liabilities assumed:
              Accounts receivable                                                   6,558,000     10,413,000
              Inventories                                                          (1,070,000)    (1,429,000)
              Prepaid expenses and other current assets                               (96,000)        (2,000)
              Accounts payable and accrued expenses                                (2,138,000)    (4,981,000)
              Other assets                                                             35,000         (3,000)
              Deferred taxes                                                         (229,000)        63,000
------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                           3,064,000      3,701,000
------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
   Payment for purchase of business, net of cash acquired                            (539,000)    (1,167,000)
   Decrease (increase) in officer receivables                                         (98,000)        18,000
   Purchase of furniture, fixtures and equipment                                     (103,000)      (413,000)
   Purchase of package design                                                        (108,000)      (228,000)
------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                                                (848,000)    (1,790,000)
------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
   Proceeds from issuances of stock                                                 2,453,000         25,000
   Repurchase of common stock for treasury                                               --       (2,703,000)
   Repurchase of unit purchase options                                                   --          (79,000)
   Payments of notes payable                                                       (1,920,000)          --
   Acquisition finance cost                                                              --           (7,000)
------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities                                   533,000     (2,764,000)
------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                               4

<PAGE>


                                        U.S. Home & Garden Inc. and Subsidiaries

                                           Consolidated Statements of Cash Flows

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

Three months ended September 30,                                                    1997            1998
------------------------------------------------------------------------------------------------------------
                                                                                         (Unaudited)
                                                                                ----------------------------
<S>                                                                              <C>            <C>
Net increase (decrease) in cash and cash equivalents                             $  2,749,000   $   (853,000)

Cash and Cash Equivalents, beginning of period                                      2,083,000     27,130,000
------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, end of period                                         $  4,832,000   $ 26,277,000
------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
   Cash paid for interest, including deferred financing costs and extraordinary
     expense                                                                     $    711,000   $  1,491,000
   Cash paid for taxes                                                           $     29,000   $       --
============================================================================================================
</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, 1998,
     and for the three months ended  September 30, 1997 and 1998 are  unaudited,
     but, in the opinion of management,  include all adjustments necessary for a
     fair  presentation  of  consolidated  financial  position  and  results  of
     operations for the periods presented.

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

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

     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  the  acquisition  date.  The  value of  intangibles
     purchased  and the  excess of the  purchase  price  over the fair  value of
     assets acquired totaled  approximately  $11.5 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 Weed Wizard,  Inc., as if the  acquisition
     had  occurred at the  beginning  of fiscal  1997,  after  giving  effect to
     certain adjustments, including the amortization of excess costs over assets
     acquired,  increased  interest  expense  and  the  elimination  of  certain
     expenses incurred by Weed Wizard, Inc. 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 Weed Wizard, Inc. had constituted a
     single  entity  during such  period and is not  necessarily  indicative  of
     results, which may be obtained in the future.

     Three months ended September 30,                                     1997
     ---------------------------------------------------------------------------
                                                                          (000)

     Net sales                                                            7836
     Net loss                                                            (1302)
     Diluted net loss per common share                                    (.09)
     ===========================================================================

     On October  15,  1998,  the  Company  completed  the  acquisition  of Ampro
     Industries,  Inc., a lawn and garden company for  approximately $22 million
     with additional  purchase price payments over the next two years based upon
     Ampro Industries,  Inc. achieving certain earnings before interest,  taxes,
     depreciation  and  amortization.  An  additional  $1 million was paid for a
     non-compete agreement.

                                                                               6

<PAGE>

                                        U.S. Home & Garden Inc. and Subsidiaries

                                      Notes to Consolidated Financial Statements
================================================================================

     Subsequent to September 30, 1998, the Company repurchased 370,000 shares of
     its common stock for approximately $1.5 million.

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



                                                                               7

<PAGE>


Item 2.

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


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

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

General

     U.S. Home & Garden Inc., ("the Company"),  manufactures and markets a broad
range of brand-name  consumer lawn and garden products  through its wholly-owned
subsidiaries   Easy  Gardener,   Inc.,  ("Easy   Gardener"),   and  Golden  West
Agri-Products,  Inc., ("Golden West"), and through Easy Gardener's  wholly-owned
subsidiaries,  Weatherly Consumer Products Group,  Inc.,  ("Weatherly") and Weed
Wizard Acquisition,  Corp. ("Weed Wizard"). Between 1992 and September 30, 1998,
the Company  consummated  eight  acquisitions of  complementary  lawn and garden
companies and product lines for an aggregate  consideration  of over $80 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  $58.5 million at September 30, 1998. The Company is currently
amortizing  such  goodwill  using the  straight-line  method over  various  time
periods ranging from 20 to 30 years.


                                       8


<PAGE>



Results of Operations

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

                                           Percentage of Net Sales
                                           -----------------------
                                             Three Months Ended
                                            ------------------
                                               September 30,
                                               -------------
                                              1997       1998

Net sales                                    100.0%      100.0%
Cost of sales                                 50.1        49.3
                                             -----       -----
Gross profit                                  49.9        50.7
Selling and shipping expenses                 32.8        29.9
General and administrative expenses           23.6        29.9
                                             -----       -----
Income from operations                        (6.5)       (9.1)
Interest expense, net                        (11.5)      (10.8)
Income tax benefit                             7.8         8.5
                                           ======================
Net Income                                   (10.2)%     (11.4)%
                                           ======================


Three Months Ended  September 30, 1998 Compared to Three Months Ended  September
30, 1997

     Net sales. Net sales increased by $3.7 million,  or 53.3%, to $10.8 million
during the three months ended  September  30, 1998 from $7.0 million  during the
comparable  period in 1997.  The increase in net sales was primarily a result of
the internal  growth of the Company's  pre-existing  product lines combined with
the  Company's  acquisition  of  substantially  all of the  assets  used  in the
businesses of Weed Wizard, Inc. in February 1998 and Landmaster  Products,  Inc.
in March 1998 and the acquisition in May 1998 of the Tensar(R) consumer products
line from the Tensar Corporation.

     Gross profit.  Gross profit  increased by $2.0 million,  or 55.8%,  to $5.5
million for the three months ended  September 30, 1998 from $3.5 million  during
the comparable  period in 1997.  This increase was due primarily to the increase
in net sales.  Gross  profit as a  percentage  of net sales  increased  to 50.7%
during  the three  months  ended  September  30,  1998  from  49.9 % during  the
comparable  period in 1997.  The increase in gross profit as a percentage of net
sales  was  primarily  attributable  to an  increase  in sales of  higher-margin
products.

     Selling and  shipping  expenses.  Selling and shipping  expenses  increased
$917,000,  or 39.8%, to $3.2 million during the three months ended September 30,
1998 from $2.3 million during the comparable  period in 1997.  This increase was
primarily the result of an increase in the amount of products shipped, which was
a consequence of the internal growth of the Company's pre-existing product lines
combined  with the  acquisition  of the  Tensar(R)  consumer  products  line and
substantially all of the assets used in the businesses of Weed Wizard,  Inc. and
Landmaster  Products,  Inc. Selling and shipping expenses as a percentage of net
sales  decreased to 29.9% during the three months ended  September 30, 1998 from
32.8% during the  comparable  period in 1997.  This  decrease was primarily as a
result of  economies  of scale  gained from the sale of new products to existing
customers.

                                       9

<PAGE>


     General and administrative  expenses.  General and administrative  expenses
increased  $1.6  million or 94%, to $3.2  million  during the three months ended
September 30, 1998 from $1.7 million during the comparable  period in 1997. This
increase  was   primarily  due  to  increased   amortization   of  goodwill  and
depreciation  as a result of the asset  acquisitions  of Weed  Wizard,  Inc. and
Landmaster Products,  Inc. and the acquisition of the Tensar(R) consumer product
line. Furthermore, the increase is due to the addition of certain administrative
personnel related to the Company's internal growth and recent acquisitions. As a
percentage of net sales, general and administrative  expenses increased to 29.9%
during  the three  months  ended  September  30,  1998  from  23.6%  during  the
comparable period in 1997.

     Loss from  operations.  Loss from  operations  increased  by  $523,000,  or
113.7%,  to  $983,000  during the three  months  ended  September  30, 1998 from
$460,000  during the  comparable  period in 1997.  The loss from  operations  in
actual  dollars  was  primarily  due to the  seasonal  nature  of the  Company's
business.   The  increase  in  the  loss  for  the  1998  period  was  primarily
attributable to the increased  general and  administrative  costs resulting from
increased  amortization  of goodwill.  As a percentage  of net sales,  loss from
operations  increased to 9.1% for the three months ended September 30, 1998 from
6.5% during the comparable period in 1997.

     Interest expense. Interest expense increased by $688,000, or 80.7%, to $1.5
million during the three months ended  September 30, 1998,  from $853,000 during
the  comparable  period in 1997.  The increase in interest  expense is primarily
related to the  interest  associated  with the increase in Company debt in April
1998,  associated  with the issuance by U.S. Home & Garden Trust I, a subsidiary
of the Company, of certain trust preferred securities.

     Income  taxes.  Income tax benefit  increased to $920,000  during the three
months ended  September 30, 1998 from $550,000  during the comparable  period in
1997,  primarily  due to the increase in net loss before  taxes.  The income tax
benefit or expense for each interim period is based upon the Company's estimated
effective income tax rate for the year.

     Net loss. Net loss increased by $507,000,  or 70.8%, to $1.2 million during
the three months ended  September 30, 1998 from $716,000  during the  comparable
period in 1997.  Diluted net loss per common  share  increased  $.01 to $.06 per
share for the three months ended  September  30, 1998 from $.05 per share during
the  comparable  period  in 1997.  The  increase  in  diluted  loss per share is
primarily  attributable  to the increase in net loss,  partially  offset by more
weighted average common and common  equivalent  shares  outstanding in the three
months ended  September 30, 1998 compared to the comparable  period in the prior
year due to the Company selling 4.3 million shares of common stock in a December
1997 public offering.

Seasonality

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

     Sales of the Company's agriculture products, which were not material during
the three months ended  September 30, 1998,  are also  seasonal.  Most shipments
occur during the agriculture cultivation period from March through October.


                                       10
<PAGE>

Liquidity and Capital Resources

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

     At September 30, 1998,  the Company had  consolidated  cash and  short-term
investments totaling $26.3 million and working capital of $42.9 million. At June
30, 1998, the Company had consolidated cash and short-term  investments totaling
$27.1  million and working  capital of $46.7  million.  This decrease in working
capital  is in line with the  seasonal  nature  of the  Company's  business.  In
addition,  $2.7 million was used for the repurchase of common stock for treasury
during the three months ended September 30, 1998.

     Net cash  provided by  operating  activities  during the three months ended
September  30,  1998 was $3.7  million  consisting  primarily  of a decrease  in
accounts  receivable and  depreciation  and  amortization,  offset in part by an
increase in inventory,  a decrease in accounts  payable and the net loss for the
three months.

     Net cash  used in  investing  activities  during  the  three  months  ended
September  30, 1998 was $1.8 million  consisting  primarily of cash used for the
final payment to the selling shareholders of Easy Gardener and cash used for the
purchase of furniture, fixtures and equipment and package design.

     Net cash  used in  financing  activities  during  the  three  months  ended
September 30, 1998 was $2.8 million  consisting  primarily of the  repurchase of
approximately 588,000 shares of common stock for treasury.

     On October  15,  1998,  the  Company  completed  the  acquisition  of Ampro
Industries,  Inc., a lawn and garden company for  approximately $22 million with
additional  purchase price payments by the Company over the next two years based
upon Ampro Industries,  Inc. achieving certain earnings before interest,  taxes,
depreciation  and  amortization.  An  additional  $1  million  was  paid  for  a
non-compete agreement.

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

     The Company's  obligations under the Credit Agreement are guaranteed by its
subsidiaries  and are  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

                                       11

<PAGE>


and cash redemption and repurchases of securities,  and (b) certain  limitations
on merger, liquidations,  changes in business,  investments, loans and advances,
affiliate  transactions and certain acquisitions.  In addition, the Company must
comply with  certain  financial  tests and ratios.  A violation  of any of these
covenants constitutes an event of default under the Credit Agreement.

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

     As of September  30, 1998,  the Company has a net deferred tax liability of
$875,000  primarily  relating to depreciation  and amortization in excess of the
book amount.  The deferred tax asset of $522,000  relates to the  allowance  for
accounts receivable, vacation accrual and certain other balance sheet reserves.

New Accounting Pronouncements

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

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

Inflation

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

Year 2000

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

     In addition,  the Company has been in contact with its  suppliers and other
third  parties to  determine  the extent which they may be  vulnerable  to "Year
2000" issues. As this assessment  progresses,  matters may come to the Company's
attention which could give rise to the need for remedial measures which have not
yet been identified.  The Company cannot currently  predict the potential effect
of third  parties  "Year  2000"  issues on its  business.  It is  expected  that
assessment,  remediation  and contingency  planning  activities will be on-going
throughout 1998 and 1999 with the goal of  appropriately  resolving all material
internal  systems and third party  issues.  The Company  intends to utilize both
internal and external  resources to reprogram,  replace and test the systems for
the year 2000 modifications.


                                       12

<PAGE>


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



                                       13

<PAGE>



         Part II - OTHER INFORMATION

Item 2.  Changes in Securities

          In September  1998,  the Company  issued five year options to purchase
          150,000 shares of common stock at $4.625 per share to Easy  Gardener's
          Director of New Business  Development  pursuant to the Company's  1997
          stock option plan. The options were issued by the Company in a private
          transaction  pursuant to the exemption provided by Section 4(2) of the
          Securities Act of 1933.

Item 6. Exhibits and Reports on Form 8-K

          (a)  Exhibits:

               10.1 Credit  Agreement dated October 13, 1998 between the Company
                    and Bank of America National Trust and Savings Association.

               27.1 Financial Data Schedule for the Quarter ended  September 30,
                    1998*

               27.2 Restated  Financial  Data Schedule for the fiscal year ended
                    June 30, 1997.*

               27.3 Restated  Financial  Data Schedule for the fiscal year ended
                    June 30, 1996*

          (b)  No  reports  on Form 8-K were  filed  during  the  quarter  ended
               September 30, 1998.

               ----------
               *    (For SEC use only)

<PAGE>

                                   SIGNATURES


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


Dated November 12, 1998

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

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


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