<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   -----------

                                    FORM 10-Q


(Mark One)

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

          For the quarterly period ended June 30, 2000
                                         -------------

                                       or

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

         For the transition period from                  to
                                        ---------------      ----------------

                Commission file number        000-23121
                                         ------------------

                          U.S.A. Floral Products, Inc.
                          ----------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                            52-2030697
--------------------------------------------------------------------------------
(State or other jurisdiction                                (I.R.S. employer
of incorporation or organization)                          identification no.)

1025 Thomas Jefferson Street, N.W., Suite 300 East       Washington, DC 20007
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip code)

Registrant's telephone number, including area code           (202) 333-0800
                                                    ----------------------------

--------------------------------------------------------------------------------

               Former name, former address and former fiscal year,
                          if changed since last report.

    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
                                       -----     -----

    The number of shares outstanding of the registrant's Common stock, par value
$.001 per share (which is the only outstanding class of the registrant's common
stock) was 16,112,404 shares at August 14, 2000.
<PAGE>

                          U.S.A. FLORAL PRODUCTS, INC.
                          ----------------------------

                                      INDEX
                                      -----


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Consolidated Balance Sheets at June 30, 2000 and December 31, 1999

         Consolidated Statements of Operations for the Six Months Ended June 30,
         2000 and 1999 and for the Three Months Ended June 30, 2000 and 1999

         Consolidated Statement of Stockholders' Equity for the Six Months
         Ended June 30, 2000

         Consolidated Statements of Cash Flows for the Six Months Ended June 30,
         2000 and 1999

         Notes to Consolidated Financial Statements

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risks

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

Item 2.   Changes in Securities and Use of Proceeds

Item 3.   Defaults Upon Senior Securities

Item 4.   Submission of Matters to a Vote of Security Holders

Item 5.   Other Information

Item 6.   Exhibits and Reports on Form 8-K


Signatures
<PAGE>

Forward Looking Statements

     In this Form 10-Q ("Form 10-Q"), "USA Floral," "we," "us," and "our" refer
to U.S.A. Floral Products, Inc. and its subsidiaries, unless the context
otherwise requires. This Form 10-Q contains (or incorporates by reference)
certain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements generally can be
identified by the use of forward-looking terminology such as "may," "will,"
"intend," "estimate," "anticipate," "believe," "expect," or "continue" or
variations thereon or similar terminology. We have based these forward-looking
statements on our current expectations and projections about future events.
These forward-looking statements are subject to risks, uncertainties and
assumptions about USA Floral, including among other things:

 .    general economic and business conditions;

 .    changes in political, social and economic conditions and local regulations,
     particularly in Central America and South America;

 .    changes in, or failure to comply with, government regulations;

 .    demographic changes;

 .    change in our sales mix;

 .    seasonal and holiday demand fluctuations;

 .    our ability to obtain floral products during periods of peak demand;

 .    changes in, or failure to maintain, current pricing levels;

 .    currency fluctuations;

 .    any reduction in sales to or loss of any significant customers;

 .    competition;

 .    changes in our business strategy or development;

 .    availability of sufficient capital to meet our needs or on terms or at
     times acceptable to us; and

 .    availability of qualified personnel.

     We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Because of these risks, uncertainties and assumptions, the forward-looking
events discussed in this Form 10-Q might not occur.

                                                                               3
<PAGE>

PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1. Financial Statements

                                                                               4
<PAGE>

                          U.S.A. FLORAL PRODUCTS, INC.

                           CONSOLIDATED BALANCE SHEET
                        (in thousands, except par value)

<TABLE>
<CAPTION>

                                                            June 30, 2000     December 31, 1999
                                                            -------------     -----------------
<S>                                                         <C>                 <C>
ASSETS
Current assets:
  Cash and cash equivalents                                   $  13,878           $  10,048
  Accounts receivable, net of allowance of
    $9,051 and $7,774, respectively                              97,250             102,524
  Inventory                                                      21,383              24,569
  Prepaid expenses and other assets                              10,999              14,444
  Recoverable income taxes                                        3,108                   -
  Deferred income tax assets                                      2,224               2,931
                                                              ---------           ---------
    Total current assets                                        148,842             154,516
Property and equipment, net                                      48,426              53,357
Goodwill, net                                                   262,074             267,590
Restricted cash                                                   3,865               3,834
Deferred financing costs                                          5,150               2,971
Other assets                                                      2,622               4,542
                                                              ---------           ---------
    Total assets                                              $ 470,979           $ 486,810
                                                              =========           =========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt                                             $ 200,521           $   4,919
  Accounts payable                                               47,438              60,574
  Accrued expenses                                               18,207              15,501
  Restructuring reserve                                           5,728                 269
  Due to stockholders                                             2,278               2,278
  Income taxes payable                                            2,248               2,328
                                                              ---------           ---------
    Total current liabilities                                   276,420              85,869
Long-term debt                                                    1,172             195,914
Deferred income tax liabilities                                   5,140               3,469
Other liabilities                                                   538                 618
                                                              ---------           ---------
    Total liabilities                                           283,270             285,870
                                                              ---------           ---------
Minority interests in subsidiaries                                  314                 363
                                                              ---------           ---------
Commitments and contingencies

Stockholders' equity:
  Common stock, $0.001 par value: 100,000 shares authorized;
    15,950 and 16,266 shares issued, respectively                    16                  16
  Treasury stock (14 shares)                                       (287)               (287)
  Additional paid-in capital                                    190,693             193,477
  Retained earnings (accumulated deficit)                        (4,748)              5,093
  Accumulated other comprehensive income                          1,721               2,278
                                                              ---------           ---------
    Total stockholders' equity                                  187,395             200,577
                                                              ---------           ---------
    Total liabilities and stockholders' equity                $ 470,979           $ 486,810
                                                              =========           =========
</TABLE>


      The accompanying notes are an integral part of these consolidated
                             financial statements.

                                                                               5
<PAGE>

                          U.S.A. FLORAL PRODUCTS, INC.

                     CONSOLIDATED STATEMENT OF OPERATIONS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                 Six Months Ended   Six Months Ended   Three Months Ended     Three Months Ended
                                                   June 30, 2000      June 30, 1999       June 30, 2000          June 30, 1999
                                                 ----------------   ----------------   -------------------    ------------------
<S>                                                  <C>                 <C>                 <C>                   <C>
Net revenues                                         $ 491,946          $ 510,384           $ 240,301              $ 239,041
Cost of sales                                          371,357            380,616             181,406                175,847
                                                     ---------          ---------           ---------              ---------
  Gross margin                                         120,589            129,768              58,895                 63,194

Selling, general and administrative expenses           104,628            107,064              52,150                 53,085
Goodwill amortization                                    3,524              3,507               1,766                  1,780
Integration charge                                      10,155                 40                   -                      3
                                                     ---------          ---------           ---------              ---------
  Income from operations                                 2,282             19,157               4,979                  8,326

Other income (expense):
  Interest expense                                      (9,505)            (7,911)             (4,874)                (4,048)
  Interest income                                          612                994                 297                    612
  Other                                                     24                322                  68                    140
  Loss on sale of business assets                       (3,673)                 -              (3,673)                     -
                                                     ---------          ---------           ---------              ---------
Income (loss) before income taxes and minority
  interest                                             (10,260)            12,562              (3,203)                 5,030
Provision for (benefit from) income taxes                 (442)             6,819              (1,263)                 3,307
                                                     ---------          ---------           ---------              ---------
Income (loss) before minority interest                  (9,818)             5,743              (1,940)                 1,723
Minority interest                                          (23)                 3                  (7)                    11
                                                     ---------          ---------           ---------              ---------
Net income (loss)                                    $  (9,841)         $   5,746           $  (1,947)             $   1,734
                                                     =========          =========           =========              =========
Net income (loss) per share:
  Basic                                              $   (0.60)         $    0.35           $   (0.12)             $    0.11
  Diluted                                            $   (0.60)         $    0.35           $   (0.12)             $    0.11
Weighted average shares outstanding:
  Basic                                                 16,450             16,315              16,472                 16,315
  Diluted                                               16,450             16,496              16,472                 16,429
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.
                                                                               6
<PAGE>

                          U.S.A. FLORAL PRODUCTS, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                        Retained      Accumulated
                                            Common Stock                Additional      Earnings         Other          Total
                                          ---------------    Treasury     Paid-In     (Accumulated    Comprehensive   Stockholders'
                                          Shares   Amount     Stock       Capital        Deficit)        Income          Equity
                                          ------   ------    --------    ----------   ------------    -------------   -------------
<S>                                         <C>        <C>     <C>       <C>          <C>          <C>          <C>
Balances at December 31, 1999             16,252     $16      $ (287)    $193,477        $ 5,093          $2,278        $200,577
Issuance of common stock and warrants         87       -                    1,520                                          1,520
Receipt and retirement of common stock      (403)                          (4,304)                                        (4,304)
Net loss                                                                                  (9,841)                         (9,841)
Foreign currency adjustment                                                                                 (557)           (557)
                                          --------------------------------------------------------------------------------------
Balances at June 30, 2000                 15,936     $16      $ (287)    $190,693        $(4,748)         $1,721        $187,395
                                          ======================================================================================
</TABLE>

       The accompanying notes are an integral part of these consolidated
                              financial statements
                                                                               7
<PAGE>

                           U.S.A. FLORAL PRODUCTS, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                        Six Months Ended     Six Months Ended
                                                          June 30, 2000        June 30, 1999
                                                        ----------------     ----------------
<S>                                                        <C>                 <C>
Cash flows from operating activities:
   Net income (loss)                                        $ (9,841)            $  5,746
   Adjustments to reconcile net income (loss) to cash
   provided by operating activities:
      Depreciation and amortization                            4,409                4,846
      Amortization of goodwill                                 3,524                3,507
      Amortization of deferred financing costs                   903                  252
      Loss (gain) on disposal of property and equipment         (123)                  46
      Loss on disposal of business assets                      3,673                    -
      Loss (gain) applicable to minority interests                23                   (3)
      Changes in operating assets and liabilities,
      exclusive of acquired/divested companies:
        Accounts receivable                                    4,595               (1,674)
        Inventory                                              2,879               (2,175)
        Prepaid expenses and other current assets               (912)              (3,393)
        Other assets                                           1,885                  790
        Income taxes payable                                    (817)               1,980
        Accounts payable                                     (11,336)              (4,040)
        Accrued expenses                                       1,397                2,758
        Other liabilities                                     (1,430)                   -
        Integration reserve                                    7,062                    -
                                                            --------             --------
          Net cash provided by operating activities            5,891                8,640
                                                            --------             --------

   Cash flows from investing activities:
      Purchases of property and equipment                     (3,278)              (6,675)
      Proceeds from sale of property and equipment               845                  900
      Proceeds from sale of business assets                    1,000                    -
      Payments to stockholders                                  (800)              (4,658)
      Payment for business acquisitions                         (376)                   -
      Increase in restricted cash                                (31)                 (97)
                                                            --------             --------
          Net cash used in investing activities               (2,640)             (10,530)
                                                            --------             --------

   Cash flows from financing activities:
      Proceeds from and repayments of debt                     3,038               (2,037)
      Increase in deferred financing costs                    (1,820)                (154)
      Proceeds from issuance of common stock                      57                  164
      Proceeds from exercise of stock options                      -                   87
      Stock issuance costs                                         -                  (92)
                                                            --------             --------
          Net cash provided by (used in) financing
            activities                                         1,275               (2,032)
                                                            --------             --------
    Effect of exchange rates on cash                            (696)                 777
                                                            --------             --------
   Net increase (decrease) in cash and cash equivalents        3,830               (3,145)
   Cash and cash equivalents - beginning of the period        10,048               20,196
                                                            --------             --------
   Cash and cash equivalents - end of the period            $ 13,878             $ 17,051
                                                            ========             ========
</TABLE>

See Note 12 for supplemental cash flow information


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                                                               8
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


NOTE 1 - GENERAL

USA Floral is the largest integrated distributor of floral products in the
world. We are organized into two divisions, an International Division and a
North American Division. Within each of these divisions, we have three
reportable operating segments: Import/Export, Wholesale Distribution and Bouquet
Making and Distribution.

     Through these divisions, we:

 .    import, export and distribute floral products and floral-related hardgoods;

 .    engage in brokerage and shipping services for wholesale distributors of
     both international and domestic cut flowers;

 .    provide traditional and Internet floral fulfillment services to non-store
     retailers; and

 .    provide in-store merchandising services to certain supermarkets and
     mass-market retailers.

     The unaudited condensed consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. All such adjustments
are of a normal, recurring nature.

     The unaudited interim financial information should be read in conjunction
with the consolidated financial statements contained in the Company's 1999
Annual Report on Form 10-K.

NOTE 2 - ACQUISITIONS

     Pursuant to the terms of the purchase agreements, contingent consideration
in the amount of $4,304, originally paid to the former shareholders of Maxima
was returned to the Company in April 2000 as a result of their 1999 adjusted
earnings before interest and taxes being lower than the 1998 adjusted earnings
before interest and taxes. The common shares associated with the contingent
consideration were retired during the three-month period ended June 30, 2000.
Additional contingent purchase consideration related to earn-out arrangements
included in the definitive agreements for Allan Stanley were finalized during
the three months ended March 31, 2000. Subsequent to March 31, 2000, the total
additional purchase consideration paid to the former owners of Allan Stanley was
$350 ($150 in cash and $200 in shares of common stock) .

NOTE 3 - LOSS ON SALE OF BUSINESS ASSETS

     On June 30, 2000, the Company executed a definite sales agreement to sell
the assets and liabilities of its Alpine Gem subsidiary. It was determined by
management that the Alpine Gem subsidiary no longer fit with the strategic
direction of USA Floral. As a result of the sale, the Company incurred a loss on
sale of approximately $3.7 million, primarily related to the unamortized
goodwill balance.

                                                                               9
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


NOTE 4 - EARNINGS PER SHARE


     The shares used in computing net income (loss) per share are as follows:

                                   Six months ended         Three months ended
                                       June 30,                  June 30,
                                  2000         1999         2000         1999
                                ---------    ---------    ---------    ---------
Weighted average shares
 outstanding -- basic             16,450       16,315       16,472       16,315
Dilution attributable to
 options                               -          149            -           51
Dilution attributable to
 potentially issuable shares
 under earnout arrangements            -           32            -           63
                                ---------    ---------    ---------    ---------
Weighted average shares
 outstanding -- diluted           16,450       16,496       16,472       16,429
                                ---------    ---------    ---------    ---------

     Included in the weighted average shares outstanding -- basic are 44 shares
of common stock issued under the employee stock purchase plan at June 30, 2000.
As the Company reported a loss for the period ended June 30, 2000, 20 options
and 347 warrants were excluded from the weighted average shares outstanding --
diluted calculation for the six months ended June 30, 2000 and 640 warrants
were excluded from the weighted average shares outstanding -- diluted
calculation for the three months ended June 30, 2000 because to do so would have
been anti-dilutive.


NOTE 5 - INVENTORY

     Inventory consists of the following finished goods:

                                      June 30,            December 31,
                                        2000                 1999
                                  ----------------      ----------------
Hardgoods                                $ 16,593             $ 20,430
Hardgoods inventory allowance                (517)                (642)
                                  ----------------      ----------------
Hardgoods, net of allowance                16,076             $ 19,788
Perishables                                 5,307                4,781
                                  ----------------      ----------------
                                         $ 21,383             $ 24,569
                                  ----------------      ----------------

NOTE 6 - COMMITMENTS AND CONTINGENCIES

     The Company is involved in various legal proceedings that have arisen in
the ordinary course of business. The Company does not believe that any of these
proceedings will have a material adverse effect on the financial position,
results of operations or cash flows of the Company.

Antidumping

     Beginning in 1986, the U.S. Department of Commerce (the "DOC") imposed an
antidumping duty deposit ("ADD") on the importation of certain flowers (the
"Antidumping Order") from Colombia. Such antidumping duty is subject to change
based upon annual reviews of the flower growers' margins. On May 20, 1999, a
settlement was reached whereby all open review periods through

                                                                              10
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)

February 28, 1997 (periods 5, 6, 7, 9 and 10) were finalized at the cash deposit
rate. That is, the Company does not owe any additional antidumping duties for
those periods. On July 20, 1999, the DOC revoked the Antidumping Order on fresh
cut flowers from Colombia retroactive to March 1, 1997, the beginning of period
11. Further, the DOC stated that, as a result of the retroactive revocation, the
DOC has terminated its reviews of periods 11 and 12 and that the DOC intends to
refund any ADD collected on or after March 1, 1997. Therefore, as a result of
the final determinations by the DOC regarding open review periods and the DOC's
retroactive revocation of the Antidumping Order, the Company released
antidumping reserves aggregating $2.2 million as a reduction to cost of sales
during the second quarter of 1999. Further, ADD refunds aggregating $1.9 million
related to periods subsequent to March 1, 1997, were received during the first
quarter of 2000 and were recorded as a reduction to cost of sales. Management
believes that the majority of refunds related to periods subsequent to March 1,
1997, have been received at June 30, 2000.

NOTE 7 - INTEGRATION AND RESTRUCTURING PLANS

March 2000 Restructuring Plan

     In the first quarter of 2000, the Company recorded a restructuring charge
of approximately $10.2 million before income taxes. The Company will discontinue
several strategic initiatives, close certain under-performing and unprofitable
business locations and re-focus on the core business operations. The charge
principally relates to severance payments, lease termination costs, write-down
of information technology assets and the write-down of property and equipment
associated with the discontinuance of strategic initiatives and the write-down
of assets, including property and equipment and goodwill related to the closure
of one company and two branch locations of two wholesale companies. The closure
of the unprofitable locations was substantially completed as of June 30, 2000.
The balance of the restructuring plan is expected to be completed by year-end.
The Company will reduce the number of employees by 85 or approximately 3% of the
North American workforce.

The major components of the restructuring charge as originally estimated are as
follows:

Severance and related costs                                        $1,869
Write-down of property and equipment                                1,932
Write-down of goodwill                                                710
Write-down of information technology assets                         4,215
Lease termination costs                                               228
Contract termination costs                                            980
Other costs                                                           221
                                                              ------------
                                                                 $10, 155
                                                              ------------

                                                                              11
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)

     At June 30, 2000, $5.7 million of the restructuring charge remained in
accrued liabilities and 68 employees had been terminated. Management believes
the remaining accrual will be sufficient to cover the remaining costs associated
with the restructuring plan. A summary of the restructuring activity is
presented below:

Initial Balance                                               $ 10,155
Restructuring activity:
     Severance and related costs                                (1,711)
     Non cash write-down of property and equipment              (1,327)
     Non cash write-down of goodwill                              (153)
     Non cash write-down of information
        technology assets                                         (115)
     Lease termination costs                                      (118)
     Contract termination costs                                   (730)
     Other cash outflows                                          (273)
                                                           -------------
Balance at June 30, 2000                                      $  5,728
                                                           =============



NOTE 8 - GEOGRAPHIC REGION AND BUSINESS SEGMENT INFORMATION

     Segment information has been provided for each of the periods presented in
the Company's statement of operations. The Company is organized primarily on a
geographic basis with an International Division and a North America Division and
secondarily based on the products and services that it offers. Each division has
three segments: import/export, wholesale distribution and bouquet making and
distribution. The import/export segment purchases flowers from farms located
primarily in South America, Africa and Europe and sells them to wholesaler and
bouquet making and distribution companies. The wholesale distribution segment
purchases perishable flowers and floral related hardgoods from growers,
importer/exporters and brokers and sells them to retail florists and mass
marketers. The bouquet making and distribution segment procures and produces
fresh cut floral bouquets for distribution primarily to mass marketers, broadly
defined as supermarkets and discount retailers. The Company's reportable
divisions and segments are strategic business units that offer different floral
related products and services. They are managed separately because each business
division and segment requires different marketing and management strategies. The
Company evaluates segment performance and allocates resources to them based
primarily on gross margins and income from operations.

     The accounting policies of the segments are the same as those described in
the Company's 1999 Annual Report on Form 10K. Segment data includes intersegment
sales and transfers which the Company accounts for as if the sales or transfers
were to third parties, that is, at current market prices.

                                                                              12
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


The following tables present information about reported segments:


                                     For the Six Months   For the Three Months
Revenues - external customers          Ended June 30,        Ended June 30,
                                      2000       1999       2000        1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                      $102,919   $122,873   $ 50,075   $ 56,927
  Wholesale Distribution               99,356    103,669     50,824     51,898
  Bouquet Making and Distribution      95,316     97,623     48,585     46,321
--------------------------------------------------------------------------------
  Total North America Division        297,591    324,165    149,484    155,146
--------------------------------------------------------------------------------
International Division
  Import/Export                       103,462    117,475     49,694     52,675
  Wholesale Distribution               55,851     36,177     25,612     17,234
  Bouquet Making and Distribution      35,042     32,567     15,511     13,986
--------------------------------------------------------------------------------
  Total International Division        194,355    186,219     90,817     83,895
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                       206,381    240,348     99,769    109,602
  Wholesale Distribution              155,207    139,846     76,436     69,132
  Bouquet Making and Distribution     130,358    130,190     64,096     60,307
--------------------------------------------------------------------------------
  Total of Reportable Segments       $491,946   $510,384   $240,301   $239,041
--------------------------------------------------------------------------------


                                     For the Six Months   For the Three Months
Revenues - intercompany                Ended June 30,        Ended June 30,
                                      2000       1999       2000        1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                      $ 23,178   $ 25,005   $ 10,955   $ 11,203
  Wholesale Distribution                1,889        920        735        695
  Bouquet Making and Distribution       7,903      2,790      3,535      1,376
--------------------------------------------------------------------------------
  Total North America Division         32,970     28,715     15,225     13,274
--------------------------------------------------------------------------------
International Division
  Import/Export                        22,100     36,627      9,498     15,339
  Wholesale Distribution                3,519         68      1,670         33
  Bouquet Making and Distribution         370        238        156         59
--------------------------------------------------------------------------------
  Total International Division         25,989     36,933     11,324     15,431
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                        45,278     61,632     20,453     26,542
  Wholesale Distribution                5,408        988      2,405        728
  Bouquet Making and Distribution       8,273      3,028      3,691      1,435
--------------------------------------------------------------------------------
  Total of Reportable Segments       $ 58,959   $ 65,648   $ 26,549   $ 28,705
--------------------------------------------------------------------------------

                                                                              13
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


                                     For the Six Months   For the Three Months
Gross Margin                           Ended June 30,        Ended June 30,
                                      2000       1999       2000        1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                      $ 31,415   $ 38,138   $ 14,943   $ 18,904
  Wholesale Distribution               30,751     32,478     15,601     16,354
  Bouquet Making and Distribution      19,194     19,314      9,566      9,528
--------------------------------------------------------------------------------
  Total North America Division         81,360     89,930     40,110     44,786
--------------------------------------------------------------------------------
International Division
  Import/Export                        22,026     24,600     10,532     11,111
  Wholesale Distribution               11,863      9,302      5,648      4,600
  Bouquet Making and Distribution       5,340      5,936      2,605      2,697
--------------------------------------------------------------------------------
  Total International Division         39,229     39,838     18,785     18,408
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                        53,441     62,738     25,475     30,015
  Wholesale Distribution               42,614     41,780     21,249     20,954
  Bouquet Making and Distribution      24,534     25,250     12,171     12,225
--------------------------------------------------------------------------------
  Total of Reportable Segments       $120,589   $129,768   $ 58,895   $ 63,194
--------------------------------------------------------------------------------


                                     For the Six Months   For the Three Months
Depreciation and Amortization          Ended June 30,        Ended June 30,
                                      2000       1999       2000        1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                      $  2,064   $  2,335   $  1,009   $  1,262
  Wholesale Distribution                1,593      1,491        776        780
  Bouquet Making and Distribution       1,009      1,116        470        587
--------------------------------------------------------------------------------
  Total North America Division          4,666      4,942      2,255      2,629
--------------------------------------------------------------------------------
International Division
  Import/Export                           644      1,109        308        556
  Wholesale Distribution                1,034        907        509        430
  Bouquet Making and Distribution         399        504        180        246
--------------------------------------------------------------------------------
  Total International Division          2,077      2,520        997      1,232
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                         2,708      3,444      1,317      1,818
  Wholesale Distribution                2,627      2,398      1,285      1,210
  Bouquet Making and Distribution       1,408      1,620        650        833
--------------------------------------------------------------------------------
  Total of Reportable Segments       $  6,743   $  7,462   $  3,252   $  3,861
--------------------------------------------------------------------------------

                                                                              14
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


                                     For the Six Months   For the Three Months
Restructuring Charge                   Ended June 30,        Ended June 30,
                                      2000       1999       2000        1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                       $    30    $     -    $     -    $     -
  Wholesale Distribution                3,135         40          -          3
  Bouquet Making and Distribution          50          -          -          -
--------------------------------------------------------------------------------
  Total North America Division          3,215         40          -          3
--------------------------------------------------------------------------------
International Division
  Import/Export                             -          -          -          -
  Wholesale Distribution                    -          -          -          -
  Bouquet Making and Distribution           -          -          -          -
--------------------------------------------------------------------------------
  Total International Division              -          -          -          -
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                            30          -          -          -
  Wholesale Distribution                3,135         40          -          3
  Bouquet Making and Distribution          50          -          -          -
--------------------------------------------------------------------------------
  Total of Reportable Segments        $ 3,215    $    40    $     -    $     3
--------------------------------------------------------------------------------


                                     For the Six Months   For the Three Months
Income from Operations                 Ended June 30,        Ended June 30,
                                      2000       1999       2000        1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                       $ 8,084    $15,073    $ 4,317    $ 7,383
  Wholesale Distribution                   68      3,228      1,915      1,452
  Bouquet Making and Distribution       5,213      2,532      2,770        422
--------------------------------------------------------------------------------
  Total North America Division         13,365     20,883      9,002      9,257
--------------------------------------------------------------------------------
International Division
  Import/Export                         4,371      1,816      1,647        237
  Wholesale Distribution                1,260        498        580        446
  Bouquet Making and Distribution       1,000      1,181        460        466
--------------------------------------------------------------------------------
  Total International Division          6,631      3,495      2,687      1,149
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                        12,455     16,889      5,964      7,620
  Wholesale Distribution                1,328      3,726      2,495      1,898
  Bouquet Making and Distribution       6,213      3,713      3,230        888
--------------------------------------------------------------------------------
  Total of Reportable Segments        $19,996    $24,328    $11,689    $10,406
--------------------------------------------------------------------------------

                                                                              15
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)

Total Assets                                   June 30, 2000   December 31, 1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                                     $148,380            $158,870
  Wholesale Distribution                              98,163             102,306
  Bouquet Making and Distribution                     68,996              71,896
--------------------------------------------------------------------------------
  Total North America Division                       315,539             333,072
--------------------------------------------------------------------------------
International Division
  Import/Export                                       47,141              61,634
  Wholesale Distribution                              42,958              17,431
  Bouquet Making and Distribution                     11,933              12,225
--------------------------------------------------------------------------------
  Total International Division                       102,032              91,290
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                                      195,521             220,504
  Wholesale Distribution                             141,121             119,737
  Bouquet Making and Distribution                     80,929              84,121
--------------------------------------------------------------------------------
  Total of Reportable Segments                      $417,571            $424,362
--------------------------------------------------------------------------------

                                    For the Six Months   For the Three Months
Capital Expenditures                  Ended June 30,         Ended June 30,
                                     2000       1999        2000       1999
--------------------------------------------------------------------------------
North America Division
  Import/Export                      $  1,244   $  1,909    $    436   $  1,109
  Wholesale Distribution                  101      2,069          56        867
  Bouquet Making and Distribution         229        854          98        286
--------------------------------------------------------------------------------
  Total North America Division          1,574      4,833         590      2,262
--------------------------------------------------------------------------------
International Division
  Import/Export                           413        936         256        779
  Wholesale Distribution                  472         18         110          -
  Bouquet Making and Distribution         232          -         127          -
--------------------------------------------------------------------------------
  Total International Division          1,117        955         493        779
--------------------------------------------------------------------------------
Total of Reportable Segments
  Import/Export                         1,657      2,846         692      1,888
  Wholesale Distribution                  573      2,088         166        867
  Bouquet Making and Distribution         461        854         225        286
--------------------------------------------------------------------------------
  Total of Reportable Segments       $  2,691   $  5,787    $  1,083   $  3,041
--------------------------------------------------------------------------------

                                                                              16
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


A reconciliation of total segment income from operations to total consolidated
income before income taxes is as follows;

<TABLE>
<CAPTION>

                                        For the Six Months      For the Three Months
                                          Ended June 30,            Ended June 30,
Income from Operations                  2000         1999         2000         1999
-----------------------------------------------------------------------------------------
<S>                                     <C>          <C>          <C>          <C>
Total segment income from operations    $ 19,996     $ 24,328     $ 11,689     $ 10,406
Interest income                              612          994          297          612
Interest expense                          (9,505)      (7,911)      (4,874)      (4,048)
Other income                                  24          322           68          140
Loss on sale of business assets           (3,673)           -       (3,673)           -
Unallocated information technology
     expenses                             (4,582)           -       (2,445)           -
Unallocated corporate S,G&A expenses      (5,590)      (4,431)      (3,950)      (1,806)
Unallocated goodwill amortization           (603)        (740)        (315)        (274)
Unallocated restructuring charge          (6,939)           -            -            -
-----------------------------------------------------------------------------------------
Total consolidated income (loss)
     Before Income taxes                $(l0,260)    $ 12,562     $ (3,203)    $  5,030
-----------------------------------------------------------------------------------------

</TABLE>

As part of the Company's increased focus to control costs a technology
department was established. Prior to January 1, 2000 the expenses associated
with information technology were recorded by each subsidiary and reported as a
component of total segment income from operations. Prior period information
technology expenses were not restated because to do so would be impracticable.

A reconciliation of total segment assets to consolidated total assets is as
follows:

                                            June 30,            December 31,
Total Assets                                  2000                  1999
--------------------------------------------------------------------------------
Total segment assets                          $ 417,571             $ 424,362
Elimination of intercompany receivable           (5,354)                 (592)
Goodwill not allocated to segments               45,114                54,200
Other assets                                     13,648                 8,840
--------------------------------------------------------------------------------
Total consolidated assets                     $ 470,979             $ 486,810
--------------------------------------------------------------------------------


The following table presents revenues and long-lived assets information by
geographic area. Sales are based on the country in which the sale originates
(i.e., where the legal subsidiary is domiciled) and does not include
intercompany sales.


                               For the Six Months         For the Three Months
Revenues                         Ended June 30,              Ended June 30,
                               2000          1999          2000          1999
                           -----------------------------------------------------
United States                $279,752      $306,961      $140,345      $146,678
Germany                        53,476        60,185        24,396        27,246
Netherlands                    86,967        74,837        41,612        34,576
Other foreign countries        71,751        68,401        33,948        30,541
                           -----------------------------------------------------
     Total                   $491,946      $510,384      $240,301      $239,041
                           -----------------------------------------------------

                                                                              17
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


Long-lived Assets                 June 30, 2000        December 31, 1999
                               --------------------------------------------
United States                          $231,041                 $230,503
Germany                                  70,934                   72,734
Netherlands                               7,204                    7,681
Other foreign countries                  12,958                   21,376
                               --------------------------------------------
     Total                             $322,137                 $332,294
                               --------------------------------------------


NOTE 9 - INCOME TAXES

     The effective income tax rate is different than the statutory rate
primarily due to the non-deductibility of certain goodwill amortization. The
effect of the non-deductibility of certain goodwill amortization is much more
pronounced with the lower base of income (loss) before provision for taxes.
During the six month period ended June 30, 2000, the Company recorded an income
tax benefit of $2.0 million in the North American division and an income tax
provision of $1.6 million in the International division. The income tax benefit
in North America relates to certain net operating loss carrybacks which will be
utilized in future taxation periods. No valuation allowance has been made
against these income tax benefits.


NOTE 10 - CREDIT FACILITY

     Effective October 2, 1998, the Company amended and restated its existing
credit agreement with a syndicate of lenders for which Bankers Trust Company
serves as agent (the "Amended Credit Agreement"). Pursuant to the terms of the
Amended Credit Agreement, the amount of the Company's revolving credit
facilities was increased to $200 million, of which the sub-limit for permitted
acquisitions is $180 million and the sub-limit for working capital purposes and
letters of credit is $20 million. In addition, of the $200 million in revolving
credit facilities, up to $15 million has been designated to be a revolving loan,
which is available to certain foreign subsidiaries of USA Floral in either
Deutsche Marks or Guilders. Further, a new $50 million, Deutsche Mark
denominated term loan was created as an additional source of borrowings in
excess of the $200 million revolving credit facilities. Borrowings under the
revolving credit facilities bear interest, at the Company's option, at (a)
Bankers Trust Company's base rate plus an applicable margin of up to 1.25% or
(b) a Eurodollar rate plus an applicable margin of up to 2.50%. Borrowings under
the term loan bear interest at the interbank rate for Deutsche Marks plus an
applicable margin of up to 2.50%. The Company paid aggregate financing fees of
approximately $3.9 million, which has been deferred and will be amortized over
the term of the Amended Credit Agreement. In addition, a commitment fee of 0.50%
will be charged on the unused portion of the revolving credit facilities on a
quarterly basis. Both the revolving credit facilities and the term loan mature
five years from the closing date. The installments of the term loan in the next
four years are: 2000 - $2.5 million, 2001 - $12.5 million, 2002 - $20 million
and 2003 - $15 million. At June 30, 2000, the aggregate outstanding indebtedness
under both the revolving credit facilities and the term loan including issued
Letters of Credit was approximately $201.7 million and the effective interest
rate was approximately 9.4% on the revolving credit facility and approximately
6.9% on the term loan.

                                                                              18
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


     Borrowings under the Amended Credit Agreement are collateralized by
receivables, inventories, equipment and certain real property. Under the terms
of the Amended Credit Agreement, the Company is required to maintain certain
financial ratios and other financial and non-financial conditions. The Amended
Credit Agreement prohibits the Company from incurring additional indebtedness,
limits certain investments, advances or loans and restricts substantial asset
sales, capital expenditures and cash dividends.

     On March 24, 2000, the financial covenants, including the leverage ratio
and consolidated interest coverage ratio were amended under the Fourth Amendment
and Waiver to the Credit Agreement ("Fourth Amendment"). Pursuant to the terms
of the Fourth Amendment, the Company is required to achieve minimum EBITDA
levels. The minimum EBITDA levels established in the Fourth Amendment are based
upon the objectives set forth in the Company's 2000 Operating Plan.
Additionally, the Fourth Amendment limits the level of the Company's total
outstanding borrowings to $224.0 million. As a result of the Fourth Amendment,
the level of available total outstanding borrowings to the Company was reduced
and the Company recorded a charge of $0.3 million in the first quarter 2000,
representing a write-off of a prorata portion of the unamortized deferred
financing fees related to the October 1998 credit facility amendment, which has
been recorded as interest expense in the accompanying Statement of Operations.

     In consideration for the Fourth Amendment, the Company agreed to pay a
financing fee of $1.75 million on March 31, 2001 and issue approximately 865
warrants to purchase common stock of the Company at an exercise price of $0.25
per share. The warrants issued are exercisable anytime after March 31, 2001 and
expire March 31, 2010. Both the financing fee and the fair value of the warrants
issued have been deferred and will be amortized over the remaining term of the
Amended Credit Agreement.

     As of June 30, 2000, the Company was not in compliance with the applicable
financial covenants, including the leverage ratio. Pursuant to the terms of the
Credit Agreement, non-compliance with one or more financial covenants permits
the lenders to exercise certain remedies, which include termination of the
commitment and declare that the principal balance and any accrued interest on
all loans and obligations immediately due and payable. The Lenders have not
exercised these remedies. The Company obtained a waiver letter through August
16, 2000, from the Bank with respect to the noncompliance as of June 30, 2000
under the Amended Credit Agreement. Based on current projections, the Company
anticipates it will not be in compliance with the financial covenants in the
third quarter. Hence, the outstanding balance has been classified as a current
liability at June 30, 2000. In order to be in compliance with certain covenants
in the Credit Agreement during the remainder of 2000, the Company will likely
require additional amendments. The Company is currently discussing amending the
financial covenants and restructuring the debt with the bank. There can be no
assurance that any such amendment will be available on terms favorable to the
Company. Inability of the Company to reach an agreement with the Lender on
amendments or to arrange alternative financing could have a material adverse
affect on the Company. If the current credit agreement is refinanced or the
borrowed amount is declared by the lenders to be payable on demand, the
remaining unamortized deferred financing costs of $5.2 million will be adjusted
in the period of refinancing or when the debt is declared payable.

                                                                              19
<PAGE>

                           U.S.A FLORAL PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)


NOTE 11 - COMPREHENSIVE INCOME (LOSS)

The table below presents the components of the Company's comprehensive income
(loss) for the three and six month periods ended June 30, 2000 and 1999:

                                  For the Six Months       For the Three Months
                                    Ended June 30,            Ended June 30,
                                  2000         1999         2000          1999
                              --------------------------------------------------
Net income (loss)               $ (9,841)    $  5,746      $(l,947)     $  1,734
Foreign currency translation
  adjustment                        (557)         843          (391)         798
                              --------------------------------------------------
Comprehensive income (loss)     $(10,398)    $  6,589      $ (2,338)    $  2,532
                              --------------------------------------------------


NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION

     Supplemental disclosure of cash flow information:

                                               Six months ended June 30,
                                                2000             1999
                                                -----------------------------
Cash paid during the period for interest           $8,594           $4,501
                                                   ------           ------
Cash paid during the period for income taxes       $2,172           $3,005
                                                   ------           ------

During the six months ended June 30, 2000 the Company issued warrants valued at
$1,262 in consideration for the Fourth Amendment and Waiver to the Credit
Aggreement.
                                                                              20
<PAGE>

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

Three Months Ended June 30, 2000

Statement of Operations:           For the Three           For the Three
(in thousands except per            Months ended            Months ended
    share data)                    June 30, 2000           June 30, 1999
                                ------------------------------------------------
Net revenue                        $240,301   100.0%       $239,041   100.0%
Cost of sales                       181,406    75.5%        175,847    73.6%
                                ------------------------------------------------
Gross margin                         58,895    24.5%         63,194    26.4%
Selling, general and
   administrative expenses           52,150    21.7%         53,085    22.2%
Goodwill amortization                 1,766     0.7%          1,780     0.7%
Integration charges                       -     0.0%              3     0.0%
                                ------------------------------------------------
Income from operations                4,979     2.1%          8,326     3.5%
Interest expense                     (4,874)   (2.0)%        (4,048)   (l.7)%
Interest income                         297     0.1%            612     0.3%
Other                                    68     0.0%            140     0.0%
Loss on sale of business assets      (3,673)   (1.5)%             -     0.0%
                                ------------------------------------------------
Income (loss) before income
  taxes and minority interest        (3,203)   (1.3)%         5,030     2.1%
Provision for (benefit from)
  income taxes                       (1,263)   (0.5)%         3,307     1.4%
                                ------------------------------------------------
Income (loss) before minority
   interest                          (1,940)   (0.8)%         1,723     0.7%
Minority interest                        (7)   (0.0)%            11     0.0%
                                ------------------------------------------------

Net income (loss)                   $(l,947)   (0.8)%        $1,734     0.7%
                                ------------------------------------------------

Net income (loss) per share:
Basic                                $(0.12)                  $0.11
Diluted                              $(0.12)                  $0.11

Shares used in computing
   net income (loss) per share:
Basic                                16,472                  16,315
Diluted                              16,472                  16,429


USA Floral is the largest integrated distributor of floral products in the
world. We:

 . import, export and distribute floral products and floral-related hardgoods;

 . engage in brokerage and shipping services for wholesale distributors of both
international and domestic cut flowers;

 . provide traditional floral and Internet fulfillment services to non-store
retailers; and

 . provide in-store merchandising services to certain supermarkets and
mass-market retailers.

                                                                              21
<PAGE>

     Increasingly, we provide higher value-added services including bouquet and
arrangement making and marketing support to retailers. Our customers are retail
florists, supermarkets, other mass-market retailers and Internet fulfillment and
catalog retailers, as well as wholesale distributors and bouquet and arrangement
makers. We do not own or operate growing operations or retail florists. We
operate from 102 facilities in 18 countries located on five continents.

     We derive our revenues from the sale of perishable floral products and
floral-related hardgoods. Sales of perishable products, which include cut
flowers, bouquets and potted plants, accounted for approximately 95% of our
actual revenues. Sales of floral-related hardgoods, which include vases and
glassware, foam for flower arranging, tools and other supplies, account for
approximately 5% of our revenues.

     We recognize net revenues upon the shipment of products to our customers.
Cost of sales generally includes the cost of perishable products and
floral-related hardgoods plus the cost of in-bound freight. In addition, the
cost of sales for bouquet companies also includes production costs. Although we
generally do not enter into long-term contracts with our suppliers, we do
conduct business on a fixed-price "standing order" basis with certain importers
in order to ensure an adequate supply of flowers during periods of peak demand.
In general, our operating subsidiaries have been able to pass on most of their
direct price increases to customers, however, this may not be the case in the
future. Our selling, general and administrative expenses include warehouse and
customer delivery expenses, employee salaries and benefits, telephone expenses,
advertising and promotional expenses, depreciation and occupancy costs.


Results of Operations
---------------------

Three months ended June 30, 2000 compared to three months ended June 30, 1999

     Net Revenues. Net revenues for the quarter ended June 30, 2000 were $240.3
million. Revenues increased from $239.0 million in the same quarter last year.
Revenues for the North America Division were $149.5 million, or 62.2% of the
consolidated revenues and revenues for the International Division were $90.8
million, or 37.8%. In 1999, 64.9% revenues were generated by the North American
Division and 35.1% were generated by the International Division. Revenues for
the International Division consisted primarily of revenues from Germany, the
Netherlands, Italy and Japan. The Company experienced an increase in revenues
for the three months ended June 30, 2000 when compared to the same period in the
prior year primarily due to the International Division. The International
Division revenues increased to $90.8 million for the quarter ended June 30, 2000
from $83.9 million as a result of firmer flower pricing at the Dutch auction and
increased bouquet sales to the mass markets. The Company derives nearly 40% of
its revenue internationally primarily from Europe, and management estimates that
the stronger U.S. dollar versus the Euro negatively impacts reported revenues by
approximately 12%. The North American division experienced a decline in revenues
of approximately $5.6 million or 3.6% to $149.5 million. Revenues for the import
division in North America decreased $6.9 million or 12.0% to $50.1 million for
the three months ended June 30, 2000. The decline in revenues

                                                                              22
<PAGE>

can be attributable to the following: increased competition, growers selling
directly to wholesalers and increased level of sales personnel turnover.
Offsetting the decline in revenues in the import division was an increase in
revenues in the bouquet division. Revenues for the three months ended June 30,
2000 for the bouquet division were $48.6 million an increase of $2.3 million or
4.9% over the same period in the prior year. The Company is in the process of
establishing a national accounts program with designated account managers to
enhance revenues in future periods.

     Gross margin. Gross margins for the three months ended June 30, 2000 and
1999 were $58.9 and $63.2 million, respectively. Gross margin as a percentage of
net revenue was 24.5% and 26.4% (including the effect of the final determination
of antidumping duties) for the three months ended June 30, 2000 and June 30,
1999. Included in the gross margin for June 30, 1999 was approximately $2.2
million from the final determination of antidumping duties. Beginning in 1986,
the U.S. Department of Commerce (the "DOC") has imposed an antidumping duty
deposit ("ADD") on the importation of certain flowers (the "Antidumping Order")
from Colombia. As a result of the final determinations by the DOC regarding open
review periods and the DOC's retroactive revocation of the Antidumping Order,
the Company has released approximately $2.2 million in antidumping reserves at
June 30, 1999. The release of the reserves was recorded as a reduction of cost
of sales in the three month period ended June 30, 1999. The decrease in gross
margin as a percentage of revenues for the quarter is partially attributable to
the inclusion of the final determination of antidumping duties in the
comparative prior year numbers. Without the release of the $2.2 million
antidumping accrual in the period ended June 30, 1999, consolidated gross margin
was 25.5%. The North America Division gross margin was 26.8% for the three
months ended June 30, 2000 and 28.9% (including the effect of the final
determination of antidumping duties), for the three months ended June 30, 1999.
The International Division's gross margin was 20.7% for the three months ended
June 30, 2000 and 21.9% for the three months ended June 30, 1999. The decline in
gross margin as a percentage of revenues in the International Division is due
primarily to firmer flower pricing at the Dutch auctions and higher labor costs
associated with bouquet manufacturing during the three months ended June 30,
2000.

     Selling, General and Administrative. Selling, general and administrative
expenses were $52.2 million in the three months ended June 30, 2000, or 21.7% of
net revenues, and $53.1 million, or 22.2% of net revenues, in the three months
ended June 30, 1999. The decrease in selling, general and administrative
expenses for the three months ended June 30, 2000 is the primary result of
integration and consolidation of operations and a reduction in sales volume. The
Company continues to integrate all its Miami-based import companies into one
facility to improve efficiencies and eliminate redundancies .

     Income from operatiOns. Income from operations was $5.0 million, or 2.1% of
net revenues, for the three months ended June 30, 2000, and $8.3 million, or
3.5% of net revenues, for the three months ended June 30, 1999 for the reasons
discussed above.

                                                                              23
<PAGE>

     Interest expense. For the three months ended June 30, 2000, interest
expense was approximately $4.9 million as compared to $4.0 million for the three
months ended June 30, 1999, an increase of $0.9 million. The Company's average
borrowing rate for the three month period ended June 30, 2000 and 1999 was 8.7%
and 8.0%, respectively, based on the Company's weighted average outstanding debt
balance.

     Loss on sale of business assets. On June 30, 2000, the Company executed a
definite sales agreement to sell the assets and liabilities of its Alpine Gem
subsidiary. It was determined by management that the Alpine Gem subsidiary no
longer fit with the strategic direction of USA Floral. As a result of the sale,
the Company incurred a loss on sale of approximately $3.7 million, primarily
related to the goodwill balance.

     Provision for income taxes. The provision for income taxes was a $1.3
million tax benefit for the three months ended June 30, 2000 on a pre-tax loss
of $3.2 million compared to $3.3 million in income tax expense for the quarter
ended June 30, 1999 on a pre-tax income of $5.0 million for the period. During
the three month period ended June 30, 2000, the Company recorded an income tax
benefit of $1.5 million in the North America division and an income tax
provision of $0.2 million in the International divison. The income tax benefit
in North America relates to certain net operating loss carrybacks which will be
utilized in future taxation periods. No valuation allowance has been made
against these income tax benefits. The 2000 and 1999 effective income tax rates
of (39.4)% and 65.7%, is different than the statutory rate primarily due to the
non-deductibility of certain goodwill amortization. The effect of the non-
deductibility of certain goodwill amortization is much more pronounced with the
lower base of income (loss) before provision for taxes.

     Net income (loss). As a result of the factors discussed above, the Company
had a net loss of $1.9 million for the three months ended June 30, 2000, or
$0.12 per basic and diluted share. The Company had net income of $1.7 million
for the three months ended June 30, 1999, or $0.11 per basic and diluted share.

                                                                              24
<PAGE>

Six months ended June 30, 2000

Statement of Operations:              For the Six              For the Six
(in thousands except per             Months ended             Months ended
   share data)                      June 30, 2000            June 30, 1999
                                ------------------------------------------------

Net revenue                         $491,946    100.0%       $510,384    100.0%
Cost of sales                        371,357     75.5%        380,616     74.6%
                                ------------------------------------------------
Gross margin                         120,589     24.5%        129,768     25.4%
Selling, general and
  administrative expenses            104,628     21.3%        107,064     20.9%
Goodwill amortization                  3,524      0.7%          3,507      0.7%
Integration charges                   10,155      2.1%             40      0.0%
                                ------------------------------------------------
Income from operations                 2,282      0.4%         19,157      3.8%
Interest expense                      (9,505)    (1.9)%        (7,911)    (1.6)%
Interest income                          612      0.1%            994      0.2%
Other                                     24      0.0%            322      0.1%
Loss on sale of business assets       (3,673)    (0.7)%             -      0.0%
                                ------------------------------------------------
Income (loss) before income
  taxes and minority interest        (10,260)    (2.1)%        12,562      2.5%
Provision for (benefit from)
  income taxes                          (442)    (0.1)%         6,819      1.4%
                                ------------------------------------------------
Income (loss) before minority
  interest                            (9,818)    (2.0)%         5,743      1.1%
Minority interest                        (23)    (0.0)%             3      0.0%
                                ------------------------------------------------

Net income (loss)                    $(9,841)    (2.0)%        $5,746      1.1%
                                ------------------------------------------------

Net income (loss) per share:
Basic                                 $(0.60)                   $0.35
Diluted                               $(0.60)                   $0.35

Shares used in computing
   net income (loss) per share:
Basic                                 16,450                   16,315
Diluted                               16,450                   16,496


Results of Operations
---------------------

Six months ended June 30, 2000 compared to six months ended June 30, 1999

     Net Revenues. Net revenues for the six months ended June 30, 2000 were
$491.9 million. Revenues decreased from $510.4 million in the same period last
year. Revenues for the North America Division were $297.6 million, or 60.5% of
the consolidated revenues and revenues for the International Division were
$194.4 million, or 39.5%. Revenues for the International Division consisted
primarily of revenues from Germany, the Netherlands, Italy and Japan. In 1999,
63.5% of revenues were generated by the North American Division and 36.5% were
generated by the International Division. The International Division revenues
increased to $194.4 million for the six months ended June 30, 2000 from $186.2
million as a result of firmer flower pricing at the Dutch auction. The Company
derives nearly 40% of its revenue

                                                                              25
<PAGE>

internationally primarily from Europe, and management estimates that the
stronger U.S. dollar versus the Euro negatively impacts reported revenues by
approximately 13%. The North American division experienced a decline in revenues
of approximately $26.6 million or 8.2% to $297.6 million. Revenues for the
import division in North America decreased $20.0 million or 16.2% to $102.9
million for the six months ended June 30, 2000. The decline in revenues can be
attributable to the following: increased competition, growers selling directly
to wholesalers and increased level of sales personnel turnover. Revenues for the
six months ended June 30, 2000 for the bouquet division were $95.3 million, a
decrease of $2.3 million or 2.4% over the same period in the prior year. The
Company is in the process of establishing a national accounts program with
designated account managers to enhance revenues in future periods.


     Gross margin. Gross margins for the six months ended June 30, 2000 and 1999
were $120.6 million and $129.8 million. Gross margin as a percentage of net
revenue was 24.5% (including the effect of the anti-dumping deposit refunds) and
25.4% (including the effect of the final determination of antidumping duties)
for the six months ended June 30, 2000 and June 30, 1999. Included in the gross
margin for June 30, 1999 was approximately $2.2 million from the final
determination of antidumping duties. Beginning in 1986, the U.S. Department of
Commerce (the "DOC") has imposed an antidumping duty deposit ("ADD") on the
importation of certain flowers (the "Antidumping Order") from Colombia. As a
result of the final determinations by the DOC regarding open review periods and
the DOC's retroactive revocation of the Antidumping Order, the Company has
released approximately $2.2 million in antidumping reserves at June 30, 1999.
The release of the reserves was recorded as a reduction of cost of sales in the
three month period ended June 30, 1999. ADD refunds aggregating $1.9 million
related to periods subsequent to March 1, 1997, were received during the first
quarter of 2000 and were recorded as a reduction to cost of sales. The North
America Division gross margin was 27.3% for the six months ended June 30, 2000
and 27.7% for the six months ended June 30, 1999. The International Division's
gross margin was 20.2% for the six months ended June 30, 2000 and 21.4% for the
six months ended June 30, 1999. The decline in gross margin as a percentage of
revenues in the International Division is due primarily to firmer flower pricing
at the Dutch auctions and increase cost of labor in bouquet manufacturing during
the six months ended June 30, 2000.

     Selling, General and Administrative. Selling, general and administrative
expenses were $104.6 million in the six months ended June 30, 2000, or 21.3% of
net revenues and $107.1 million in the six months ended June 30, 1999, or 20.9%
of net revenues. The decrease in selling, general and administrative expenses
for the six months ended June 30, 2000 is the primary result of integration and
consolidation of operations and a reduction in sales volume. The Company
continues to integrate all its Miami-based import companies into one facility to
improve efficiencies and eliminate redundancies.


     Restructuring charge. As part of our increased focus on operational
matters, we have pursued cost reduction measures, including the elimination of
duplicative facilities, the consolidation of certain operating functions and the
deployment of common information systems. In implementing these cost reduction
measures, we have incurred, and may incur in the future, certain integration
charges associated with such cost reduction measures.

                                                                              26
<PAGE>

     In the first quarter of 2000, the Company recorded a restructuring charge
of approximately $10.2 million before income taxes ($6.4 million after income
taxes). The Company will discontinue several strategic initiatives, close
certain under-performing and unprofitable business locations and re-focus on the
core business operations. The charge principally relates to severance payments,
lease termination costs, the write-down of information technology assets and the
write-down of property and equipment associated with the discontinuance of
strategic initiatives and the write-down of assets, including property and
equipment and goodwill related to the closure of one company and two branch
locations of two wholesale companies. The closure of the unprofitable locations
were substantially completed as of June 30, 2000. The balance of the
restructuring plan is expected to be completed by year-end. The Company will
reduce the number of employees by 85 or approximately 3% of the North American
workforce.

     Income from operations. Income from operations was $2.3 million, or 0.4% of
net revenues, for the six months ended June 30, 2000 and $19.2 million, or 3.8%
of net revenues, for the six months ended June 30, 1999 for the reasons
discussed above.

     Interest expense. For the six months ended June 30, 2000, interest expense
was approximately $9.5 million as compared to $7.9 million for the six months
ended June 30, 1999, an increase of $1.6 million. Interest expense for the six
months ended June 30, 2000 includes a charge of approximately $0.3 million
related to the write-off of deferred financing fees related to the amendment
limits on the level of the Company's total outstanding borrowings. The Company's
average borrowing rate for the six month period ended June 30, 2000 and 1999 was
8.2% and 8.1%, respectively, based on the Company's weighted average outstanding
debt balance.

     Loss on sale of business assets. On June 30, 2000, the Company executed a
definite sales agreement to sell the assets and liabilities of its Alpine Gem
subsidiary. It was determined by management that the Alpine Gem subsidiary no
longer fit with the strategic direction of USA Floral. As a result of the sale,
the Company incurred a loss on sale of approximately $3.7 million, primarily
related to the goodwill balance.

     Provision for income taxes. The provision for income taxes was a $0.4
million tax benefit for the six months ended June 30, 2000 on a pre-tax loss of
$10.3 million compared to $6.8 million in income tax expense for the six months
ended June 30, 1999 on a pre-tax income of $12.6 million for the period. During
the six month period ended June 30, 2000, the Company recorded an income tax
benefit of $2.0 million in the North America division and an income tax
provision of $1.6 million in the International division. The Income tax benefit
in North America relates to certain net operating loss carrybacks which will be
utilized in future taxation periods. The 2000 and 1999 effective income tax
rates of (4.3)% and 54.3% is different than the statutory rate primarily due to
the non-deductibility of certain goodwill amortization. The effect of the non-
deductibility of certain goodwill amortization is much more pronounced with the
lower base of income (loss) before provision for taxes.

     Net income (loss). As a result of the factors discussed above, the Company
had a net loss of $9.8 million for the six months ended June 30, 2000, or
$(0.60) per basic and diluted share. The Company had net income of $5.7 million
for the six months ended June 30, 1999, or $0.35 per basic and diluted share.

                                                                              27
<PAGE>

Liquidity and Capital Resources
-------------------------------

     Historical. Historically, the Company's primary sources of liquidity have
been cash from operations and borrowings under our credit facility. The
Company's principal uses of liquidity have been to provide working capital, to
meet debt service requirements and finance the Company's strategic plans. For
fiscal 1999, quarterly net revenues as a percentage of total revenues were
approximately 29%, 26%, 21%, and 24%, respectively, for the first through fourth
quarters of the fiscal year. The Company's need for cash has historically been
greater in its first and second quarters when cash generated from operating
activities coupled with draw-downs from bank lines have been invested in
receivables and to a lesser extent inventories. The Company experiences higher
levels of sales in the first two quarters of the year due to the traditional
flower giving holidays, such as Valentine's Day in February and Mother's Day in
May. For the six months ended June 30, 2000 the Company used $1.3 million in
proceeds from financing activities and $1.8 million in proceeds from the sale of
property and equipment and business assets to invest $3.3 million in capital
expenditures and fund working capital for operating activities.

      In the six months ended June 30, 2000, operating activities provided $5.9
million of net cash compared to $8.6 million of cash provided by operations in
the same period last year. The decrease in cash provided by operations is
principally attributable to $15.5 million lower net income offset by $7.0
million increase in the integration reserve, $3.7 million loss on disposal of
business assets, and $2.0 million decrease in the use of cash for working
capital and other assets and liabilities. During the six month period ended June
30, 2000 the Company experienced a decline in its days payable outstanding to 23
days from 29 days at June 30, 1999 as a result of increased pressure from
suppliers. Cash used in operating activities to support the decrease in accounts
payable were approximately $7.3 million. The Company's days sales outstanding
was relatively consistent with the prior period at June 30, 2000, at 36 days.

     Our capital expenditures for the three months ended June 30, 2000 were
approximately $3.3 million. These capital expenditures were primarily for
vehicles, machinery, office equipment and computer equipment and software,
building additions, and facility upgrades. Although we currently do not have any
commitments to make significant capital expenditures, we expect to expend
approximately $6.0 million for capital expenditures in the next twelve months in
the normal course of business.

     Financing. Our existing credit agreement is with a syndicate of lenders for
which Bankers Trust Company serves as agent (the "Credit Agreement"). Pursuant
to the terms of the Credit Agreement as of October 2, 1998, the amount of our
revolving credit facility was increased to $200 million, of which the sub-limit
for permitted acquisitions is $180 million and the sub-limit for working capital
purposes and letters of credit is $20 million. In addition, of the $200 million
in revolving credit facilities, up to $15 million has been designated to be a
revolving loan which is available to certain of our foreign subsidiaries in
either Deutsche Marks or Guilders. Further, a new $50 million, Deutsche Mark
denominated term loan was created as an additional source of borrowings in
excess of the $200 million revolving credit facility. Borrowings under the
revolving credit facility bear interest, at our option, at (a) Bankers Trust
Company's base rate plus an applicable margin of up to 1.25% or (b) a Eurodollar
rate plus an applicable

                                                                              28
<PAGE>

margin of up to 2.50%. Borrowings under the term loan bear interest at the
inter-bank rate for Deutsche Marks plus an applicable margin of up to 2.50%. For
the execution of the Amended Credit Agreement the Company paid aggregate
financing fees of approximately $3.9 million, which has been deferred and is
being amortized over the term of the Credit Agreement. In addition, a commitment
fee of up to 0.50% is being charged on the unused portion of the revolving
credit facility on a quarterly basis. Both the revolving credit facilities and
the term loan mature five years from the closing date. At March 31, 2000
outstanding borrowings under our Credit Agreement aggregated $205.5 million. The
Company does not have any required repayments of term loans until December 31,
2000.

     On March 24, 2000, the financial covenants, including the leverage ratio
and consolidated interest coverage ratio, were amended under the Fourth
Amendment and waiver to the Credit Agreement ("Fourth Amendment"). Pursuant to
the terms of the Fourth Amendment, the Company is required to achieve minimum
EBITDA levels. The minimum EBITDA levels established in the Fourth Amendment are
based upon the objectives set forth in the Company's 2000 Operating Plan and
require that the Company's achieve the following EBITDA levels in fiscal year
2000; Q1 - $11.5 million, Q2 - $12.75 million, Q3 -$1.25 million, and Q4 - $8.0
million. Additionally, the Fourth Amendment limits the level of the Company's
total outstanding borrowings to $224.0 million and at June 30, 2000, the
aggregate outstanding borrowings were approximately $203 million. As a result of
the Fourth Amendment limits on the level of the Company's total outstanding
borrowings, approximately $0.3 million of the financing fees deferred and
amortized in October 1998 were written off and recorded as interest expense
during the first quarter of 2000. In consideration for the Fourth Amendment, the
Company agreed to pay a financing fee of $1.75 million on March 31, 2001 and
issue approximately 865 warrants to purchase common stock of the Company at an
exercise price of $0.25 per share. The warrants issued are exercisable anytime
after March 31, 2001 and expire March 31, 2010. Both the financing fee and the
fair value of the warrants issued have been deferred and will be amortized over
the remaining term of the Amended Credit Agreement.

     As of June 30, 2000, the Company was not in compliance with the applicable
financial covenants, including the leverage ratio. Pursuant to the terms of the
Credit Agreement, non-compliance with one or more financial covenants permits
the lenders to exercise certain remedies, which include termination of the
commitment and declare that the principal balance and any accrued interest on
all loans and obligations immediately due and payable. The Lenders have not
exercised these remedies. The Company obtained a waiver letter through August
16, 2000, from the Bank with respect to the noncompliance as of June 30, 2000
under the Amended Credit Agreement. Based on current projections, the Company
anticipates it will not be in compliance with the financial covenants in the
third quarter. Hence, the outstanding balance has been classified as a current
liability at June 30, 2000. In order to be in compliance with certain covenants
in the Credit Agreement during the remainder of 2000, the Company will likely
require additional amendments. The Company is currently discussing amending the
financial covenants and restructuring the debt with the bank. There can be no
assurance that any such amendment will be available on terms favorable to the
Company. Inability of the Company to reach an agreement with the Lender on
amendments or to arrange alternative financing could have a material adverse
effect on the Company.

                                                                              29
<PAGE>

     In the event the bank group amends the financial covenants under the
Amended Credit Agreement, the Company believes that funds generated from
operations, together with borrowings under the Credit Agreement, should be
sufficient to finance our current operations and planned capital expenditure
requirements for at least the next twelve months; thereafter, the Company does
not believe that a need for cash would exceed anticipated sources of cash from
operations and from the credit facility currently in place.

     To the extent that we are successful in consummating future acquisitions,
if any, it may be necessary to finance such acquisitions through the issuance of
additional equity securities, incurrence of indebtedness, or a combination of
both. Such additional equity issuances or incurrences of indebtedness may not be
possible, or if possible may not be available on terms acceptable to us.

      Other. On July 18, 2000, the Company received notification from the Nasdaq
Stock Market that its common stock has failed to maintain the minimum bid price
of $1.00 as required for continued listing on the Nasdaq SmallCap Market. If the
bid price of USA Floral common stock does not equal or exceed $1.00 for a
minimum of 10 consecutive trading days prior to October 16, 2000, USA Floral
common stock will be delisted from the Nasdaq SmallCap Market. There is no
assurance that the Company's common stock will be eligible for listing on the
Nasdaq SmallCap Market as of October 16, 2000 and failure to maintain listing on
an organized market may have a material adverse effect on the liquidity of the
Company's common stock.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     There has been no material change in the information set forth in our
December 31, 1999 Form 10-K filed with the Securities and Exchange Commission on
March 31, 2000.

                                                                              30
<PAGE>

PART II - OTHER INFORMATION
-----------------------------

Item 1.   Legal Proceedings

               U.S.A. Floral and its subsidiaries are from time to time parties
          to lawsuits arising out of our respective operations. We believe that
          any pending litigation to which we or our subsidiaries are parties
          will not have a material adverse effect upon our consolidated
          financial position or results of operations.

Item 2.   Changes in Securities and Use of Proceeds

               (a)  Not applicable.
               (b)  Pursuant to the Credit Agreement, the Company is not
                    permitted to pay dividends upon its common stock without the
                    consent of the lenders thereunder.
               (c)  Not applicable.
               (d)  Not applicable.

Item 3.   Defaults upon Senior Securities

               None

Item 4.   Submission of Matters to a Vote of Security Holders

               None

Item 5. Other Information

               None

Item 6. Exhibits and Reports on Form 8-K

               Exhibit 27 -- Financial data schedule

                                                                              31
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities and 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.A. FLORAL PRODUCTS, INC.

Date: August 14, 2000                    By: /s/ Michael W. Broomfield
                                          --------------------------------------
                                              Michael W. Broomfield
                                              Chief Executive Officer

                                          By: /s/ G. Andrew Cooke
                                          --------------------------------------
                                              G. Andrew Cooke
                                              Chief Financial Officer