<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    September 30, 1998
                                      ------------------------

                                       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 14,850,398 shares at November 16, 1998.
<PAGE>
 
                          U.S.A. FLORAL PRODUCTS, INC.
                          ----------------------------

                                      INDEX
                                      -----


PART I - FINANCIAL INFORMATION                                              PAGE

Item 1.  Financial Statements:

         Balance Sheets at September 30, 1998 and December 31, 1997.

         Statements of Operations for the Nine Months Ended September 30, 1998
         and 1997 and for the Three Months Ended September 30, 1998 and 1997.

         Statement of Stockholders' Equity

         Statements of Cash Flows for the Nine Months Ended September 30, 1998
         and 1997.

         Notes to Financial Statements

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



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

ITEM 1. Financial Statements
<PAGE>
 
                         U.S.A. FLORAL PRODUCTS, INC.

                          CONSOLIDATED BALANCE SHEETS
                       (In thousands, except par value)


                                         September 30, 1998    December 31, 1997
                                           --------------        -------------
                                             (Unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                  $   12,667           $   15,582
  Accounts receivable, net of reserve
   of $2,263 and $599, respectively              54,301               18,505
  Inventory                                      16,848                4,937
  Due from related parties                        1,731                1,153
  Prepaid income taxes                              -                     52
  Prepaid expenses and other assets               5,788                  959
                                            ------------         ------------
     Total current assets                        91,335               41,188
Property and equipment, net                      21,112                8,726
Due from related parties                            -                    994
Deferred income taxes                               698                  394
Goodwill, net                                   197,014               52,569
Restricted cash                                   3,631                  -
Deferred financing costs                          1,602                1,696
Other assets                                      5,181                1,681
                                            ------------         ------------
     Total assets                            $  320,573           $  107,248
                                            ============         ============

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt                            $   86,705           $      290
  Accounts payable                               26,653                9,824
  Accrued expenses                               12,724                2,910
  Due to stockholders                             1,619                6,060
  Income taxes payable                            2,146                1,008
  Due to related parties                            -                     36
                                            ------------         ------------
     Total current liabilities                  129,847               20,128
Long-term debt                                    1,148                  309
Deferred income taxes                                17                   97
Other                                             2,365                  549
                                            ------------         ------------
     Total liabilities                          133,377               21,083
                                            ------------         ------------

Commitments and contingencies

Stockholders' equity
  Common stock, $0.001 par value; 
    100,000 shares authorized; 14,850 
    and 9,594 shares issued and 
    outstanding, respectively                        15                    9
  Additional paid-in capital                    178,206               85,740
  Accumulated other comprehensive income           (437)                 -
  Retained earnings                               9,412                  416
                                            ------------         ------------
   Total stockholders' equity                   187,196               86,165
                                            ------------         ------------
   Total liabilities and
    stockholders' equity                     $  320,573           $  107,248
                                            ============         ============

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

<PAGE>
 
                         U.S.A. FLORAL PRODUCTS, INC.

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

<TABLE> 
<CAPTION> 
                                         Nine Months Ended    Nine Months Ended        Three Months Ended   Three Months Ended
                                         September 30, 1998   September 30, 1997 (1)   September 30, 1998   September 30, 1997 (1)
                                         ------------------   ------------------       ------------------   ------------------
<S>                                      <C>                  <C>                      <C>                  <C> 
Net revenues                                $   345,093          $      -                 $   110,799         $      -
Cost of sales                                   250,002                 -                      79,281                -
                                            -----------          ----------               -----------         ----------
 Gross margin                                    95,091                 -                      31,518                -
                                       
Selling, general and administrative              73,609                 110                    29,053                 80
Goodwill amortization                             3,135                 -                       1,250                -
                                            -----------          ----------               -----------         ----------
                                       
 Income from operations                          18,347                (110)                    1,215                (80)
                                       
Other income (expense):                
 Interest expense                                (3,857)                -                      (1,764)               -
 Interest income                                  1,353                 -                         610                -
 Other                                              468                 -                          91                -
                                            -----------          ----------               -----------         ----------
Income before for income taxes                   16,311                (110)                      152                (80)
Provision for income taxes                        7,315                 -                          71                -
                                            -----------          ----------               -----------         ----------
Net income                                  $     8,996          $     (110)              $        81         $      (80)
                                            ===========          ==========               ===========         ==========
                                       
Net income per share                   
 Basic                                      $      0.65          $    (0.05)              $      0.01         $    (0.03)
                                       
 Diluted                                    $      0.63          $    (0.05)              $      0.01         $    (0.03)
                                       
Weighted average shares outstanding:   
 Basic                                           13,846               2,400                    14,825              2,400
                                       
 Diluted                                         14,198               2,400                    14,883              2,400
</TABLE> 

(1) Represents Statement of Operations from the date of inception (April 22, 
    1997) through September 30, 1997 (See Note 1)


The accompanying notes are an integral part of these consolidated financial 
statements.
<PAGE>
 
                         U.S.A. FLORAL PRODUCTS, INC.

            UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                (in thousands)
<TABLE>
<CAPTION>

                                                                          Accumulated
                                             Common Stock     Additional     Other                    Total
                                           ----------------    Paid-in   Comprehensive  Retained   Stockholders'
                                           Shares    Amount    Capital       Income      Earnings     Equity
                                           ------    ------    -------       ------      --------     ------
<S>                                        <C>       <C>     <C>        <C>            <C>         <C>
Balance at December 31, 1997                9,594    $    9  $   85,740   $       -     $     416   $    86,165   

Issuance of 5,256 shares of common
  stock for business acquisitions           5,256         6      92,466                                  92,472

Net Income                                                                                  8,996

Foreign currency translation adjustment                                        (437) 

Total comprehensive income                                                                                8,559
                                           --------------------------------------------------------------------- 
Balance at September 30, 1998              14,850    $   15  $  178,206   $    (437)    $   9,412   $   187,196 
                                           ===================================================================== 
</TABLE>


The accompanying notes are an integral part of these consolidated financial 
statements.
<PAGE>
 
                         U.S.A. FLORAL PRODUCTS, INC.

                UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

<TABLE> 
<CAPTION> 

                                                                       Nine Months Ended                 Nine Months Ended
                                                                      September 30, 1998              September 30, 1997(1)
                                                                         -------------                    ------------- 
<S>                                                                      <C>                              <C> 
Cash flows from operating activities:                                    
  Net income (loss)                                                       $     8,996                      $     (110)    
  Adjustments to reconcile net income to cash                                   
    provided by operating activities:                                           
    Depreciation and amortization                                               2,522
    Amortization of goodwill                                                    3,135
    Amortization of deferred financing costs                                      286
    Gain on disposal of property and equipment                                     52 
    Changes in operating assets and liabilities, 
     exclusive of acquired companies:
      Accounts receivable                                                         671 
      Inventory                                                                (1,184)
      Due from related parties                                                  4,018 
      Prepaid expenses and other current assets                                (2,507)
      Other assets                                                                336 
      Income taxes payable                                                        512 
      Other liabilities                                                            (2)
      Accounts payable                                                         (3,860)
      Accrued expenses                                                         (3,995)                          2,000
                                                                         -------------                    -------------
        Net cash provided by operating activities:                              8,978                           1,890
                                                                         -------------                    ------------- 
Cash flows from investing activities:                                                 
  Purchases of property and equipment                                          (2,619) 
  Payment for Founding Company earnout consideration                             (625)
  Payment for purchase of January 1998 Class, net of cash acquired            (47,332)
  Payment for purchase of April 1998 Class, net of cash acquired              (18,315)
  Payment for purchase of July 1998 Class, net of cash acquired               (10,771)
  Increase in restricted cash                                                  (3,558)
                                                                         -------------                    ------------- 
        Net cash used in investing activities                                 (83,220)                             --
                                                                         -------------                    ------------- 
Cash flows from financing activities                                                  
  Proceeds from credit facility, net                                           85,845 
  Repayments of long-term debt                                                (13,544)
  Increase in deferred financing costs                                           (192)
  Stock issuance costs                                                           (707)                         (2,214) 
  Proceeds from issuance of common stock                                           --                             402 
                                                                         -------------                    ------------- 
        Net cash provided by (used in) financing activities                    71,402                          (1,812)
                                                                         -------------                    ------------- 
Net increase (decrease) in cash and cash equivalents                           (2,840)                             78
Cash and cash equivalents - beginning of the period                            15,582                              --
                                                                         -------------                    ------------- 
Cash and cash equivalents - end of the period                             $    12,742                      $       78  
                                                                         =============                    =============

</TABLE> 

See Note 6 for supplemental cash flow information.

(1) Represents Statement of Cash Flows from the date of inception (April 22, 
    1997) through September 30, 1997 (See Note 1).


 The accompanying notes are an integral part of these consolidated financial 
 statements.
<PAGE>
 
                          U.S.A. FLORAL PRODUCTS, INC.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                             (dollars in thousands)


NOTE 1--GENERAL

     U.S.A. Floral Products, Inc., a Delaware corporation ("USA Floral" or the
"Company"), was founded in April 1997 and since then has grown to become a
worldwide distributor of floral products. USA Floral acquired eight U.S.
businesses in the floral industry (the "Founding Companies") simultaneously with
the initial public offering ("IPO") of its Common Stock in October 1997,
acquired six U.S. businesses in the floral industry in January 1998 (the
"January 1998 Class"), acquired eight businesses in the floral industry in April
1998(the "April 1998 Class") and acquired nine businesses in the floral industry
in July 1998 (the "July 1998 Class") (together, the "Acquisitions"). These
financial statements include the results of operations of USA Floral, the
Founding Companies, the January 1998 Class, the April 1998 Class and the July
1998 Class subsequent to their acquisitions. Subsequent to the close of business
on September 30, 1998, the Company acquired the business of Florimex Worldwide
GmbH and related entities ("Florimex"), an international distributor of floral
products headquartered in Nuremberg, Germany (See Note 7). These financial
statements do not include the results of operations or the balance sheet of
Florimex as at the date of acquisitions. The results of operations of Florimex
will be included with USA Floral effective October 1, 1998. The Company intends
to continue to acquire, through merger or purchase, similar companies to expand
its domestic and international operations.

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 period 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 1997 Annual
Report on Form 10-K.


NOTE 2--ACQUISITIONS

  As discussed in Note 3 to the consolidated financial statements included in
the Company's 1997 Annual Report on Form 10-K, USA Floral acquired all the
outstanding stock of the Founding Companies effective October 16, 1997.

  Additionally, in January 1998, USA Floral consummated the acquisition of the
following six companies of the January 1998 Class:

  Continental Farms Limited ("Continental Farms") and Atlantic Bouquet Company
Limited ("Atlantic Bouquet"), each a Florida limited partnership headquartered
in Miami, Florida. Prior to their acquisition, Continental Farms and Atlantic
Bouquet were under common ownership. Continental Farms is an importer and broker
of floral products from South America and Central America
<PAGE>
 
and Atlantic Bouquet is a bouquet manufacturer. Both companies distribute their
products throughout the United States and Canada.

  XL Group, Inc. ("XL Group") imports fresh cut floral products from farms
located primarily in Costa Rica, Ecuador and Columbia and distributes these
products to wholesale florists and supermarkets throughout the United States. XL
Group is located in Miami, Florida.

  Koehler & Dramm, Inc. ("Koehler & Dramm") is a regional wholesale florist
company serving retailers throughout the upper midwestern United States. Koehler
& Dramm is headquartered in Minneapolis, Minnesota and has a branch operation in
Kansas City, Missouri.

  Everflora, Inc. ("Everflora") and Everflora Miami, Inc. ("Everflora Miami")
are importers/brokers of perishable floral products. Everflora, headquartered in
Creskill, New Jersey, sells various types of flowers to wholesalers across the
United States. Everflora Miami, headquartered in Miami, Florida, sells various
types of flowers and bouquets, primarily imported from Central America and South
America.

  H&H Flowers, Inc. d/b/a/ La Fleurette ("La Fleurette"), which does business
under the name of "La Fleurette" assembles and sells floral bouquets and other
arrangements to the supermarket industry primarily throughout the eastern United
States. H&H Flowers is headquartered in Miami, Florida. A member of the Board of
Directors of USA Floral was a stockholder in H&H Flowers.

  UltraFlora Corporation ("UltraFlora") imports and sells floral bouquets and
other arrangements to mass markets throughout the United States and Canada.
UltraFlora is headquartered in Miami, Florida. A member of the Board of
Directors of USA Floral was a stockholder in UltraFlora.

  The following table sets forth the consideration paid (the "Purchase
Consideration") (a) in cash and (b) in shares of Common Stock to the common
stockholders of each of the January 1998 Class, the estimated fair value of the
net assets acquired and resulting goodwill. For purposes of computing the
purchase price for accounting purposes, the value of shares is based upon an
average share price calculated using the purchase contract formula, which
incorporates the share price at the date of the letter of intent, the date of
the definitive agreement and the average daily share price between the two
aforementioned events. The total Purchase Consideration also reflects the
contingent consideration related to earn-out arrangements included in the
definitive agreement for UltraFlora provided for the Company to pay additional
consideration, based on 1997 earnings before interest and taxes, of $5,892 in
shares of Common Stock. The resultant 359,487 shares were issued during the
quarter ended September 30, 1998.

  The contingent consideration related to earn-out arrangements included in the
definitive agreement for XL Group has not been included in the Purchase
Consideration. This arrangement provides for the Company to pay additional
consideration, based on 1998 earnings before interest and taxes, of up to $4,000
in shares of Common Stock, calculated by reference to the average closing price
of the Common Stock for each trading day during the thirty calendar day period
ending December 31, 1998. The contingent consideration related to earn-out
arrangements included in the definitive agreement for La Fleurette also has not
been included in the Purchase Consideration. This arrangement provided for the
Company to pay additional consideration, without limit, based on earnings before
interest and taxes for the twelve-month period ended June 30, 1998, in shares of
Common Stock. La Fleurette did not achieve 
<PAGE>
 
sufficient earnings before interest and taxes to warrant additional earn-out
consideration.

     The purchase price has been allocated to each company's assets and
liabilities based on their respective carrying values, with the exception of
acquired properties at one of the entities, as these carrying values are deemed
to represent fair market value of these assets and liabilities. The fair market
value of acquired properties has been determined via an independent valuation by
a third party. The allocation of the purchase price is preliminary, but the
Company does not anticipate that the final allocation of purchase price will
differ significantly from that as described above.

<TABLE> 
<CAPTION> 
                                                              Shares of                                  Net  
                                                              ---------                                  ---
                                                               Common    Value of         Total         Assets             
                                                               ------    --------         -----         ------
                                                    Cash       Stock      Shares      Consideration    Acquired    Goodwill    
                                                   -------   ---------   --------     -------------   ---------    --------
<S>                                                <C>       <C>         <C>          <C>             <C>          <C> 
Continental Farms and Atlantic                                                                                                 
    Bouquet                                        $27,500   1,642,672    $27,500      $   55,000     $ 5,359      $49,641     
XL Group                                            11,250     660,938     11,000          22,250       5,525       16,725     
Koehler & Dramm                                      5,000     298,596      5,000          10,000       3,544        6,456     
Everflora and Everflora, Miami                       4,000     246,654      4,000           8,000       2,889        5,111     
La Fleurette                                         1,600          --         --           1,600        (710)       2,310     
UltraFlora                                           2,750     522,768      8,642          11,392       1,559        9,833     
                                                   -------   ---------    -------      ----------     --------     -------      
Total                                              $52,100   3,371,628    $56,142      $  108,242     $18,166      $90,076     
                                                   =======   =========    =======      ==========     ========     =======      
</TABLE> 

     In April 1998, USA Floral consummated the acquisition of the following
eight companies of the April 1998 Class:

David L. Jones Wholesale Ltd. ("D.L.Jones"), a wholesale florist and importer in
Canada with offices in Vancouver, Edmonton, Calgary and Winnipeg.

Edfrancar, Inc., d/b/a Florafresh International ("Florafresh"), is a Miami-based
bouquet manufacturer, distributor and importer servicing primarily retail
supermarket chains;

AFB Marketing Inc. d/b/a Allan Stanley Greenhouses ("Allan Stanley"),
headquartered in Carlsbad, California, is a bouquet manufacturer and distributor
serving California, Nevada, Arizona, New Mexico and Colorado;

Pacific Floral Wholesale, Inc. and Rose City Floral Inc. ("Rose City") are
regional floral distributors serving the Portland, Oregon area;

Master Flowers Inc., d/b/a Sabana Farms ("Sabana"), is a Miami-based regional
importer of fresh cut floral products serving over 300 national wholesale
accounts;

Maxima Farms Inc. ("Maxima") is an importer and broker of fresh cut flowers to
over 450 customers in the United States, Europe and Canada with offices in
Florida and California;

Selecta Farms, Inc. ("Selecta") is a Miami-based importer of fresh cut flowers
from international growers serving over 450 customers nationwide;

Elite Farms, Talent, Inc. and Anvacu, Inc. ("Elite") are importers of fresh cut
flowers located in Miami serving over 200 customers on a nationwide basis.
<PAGE>
 
     The following table sets forth Purchase Consideration (a) in cash and (b)
in shares of Common Stock to the common stockholders of each of the April 1998
Class, the estimated fair value of the net assets acquired and resulting
goodwill. For purposes of computing the purchase price for accounting purposes,
the value of shares is based upon an average share price calculated using the
purchase contract formula, which incorporates the share price at the date of the
letter of intent, the date of the definitive agreement and the average daily
share price between the two aforementioned events. The total Purchase
Consideration also reflects the contingent consideration related to earn-out
arrangements included in the definitive agreement for Sabana, which provides for
the Company to pay additional consideration, based on earnings before interest
and taxes for the twelve-month period ended May 31, 1998, of approximately
$1,465 in shares of Common Stock, calculated by reference to the average closing
price of the Common Stock for each trading day during the thirty calendar day
period ended May 31, 1998. The estimated resultant 76,920 shares will be issued
when all amounts have been finalized.

     The contingent consideration related to earn-out arrangements included in
the definitive agreement for D. L. Jones has not been included in the Purchase
Consideration. Additional consideration, based on earnings before interest and
taxes for the twelve month period ending February 28, 1999, may not exceed
$3,800 in shares of Common Stock, calculated by reference to the average closing
price of the Common Stock for each trading day during the thirty calendar day
period ending February 28, 1999. The contingent consideration related to
earn-out arrangements included in the definitive agreement for Maxima has not
been included in the Purchase Consideration. Additional consideration, based on
earnings before interest and taxes for the twelve month period ending December
31, 1998, may not exceed $6,000 in shares of Common Stock, calculated by
reference to the average closing price of the Common Stock for each trading day
during the thirty calendar day period ending December 31, 1998. The contingent
consideration related to earn-out arrangements included in the definitive
agreement for Allan Stanley has not been included in the Purchase Consideration.
Additional consideration, based on earnings before interest and taxes for the
twelve month period ending March 31, 1999, may not exceed $3,000 in cash and
$3,000 in shares of Common Stock, calculated by reference to the average closing
price of the Common Stock for each trading day during the thirty calendar day
period ending March 31, 1999. The contingent consideration related to earn-out
arrangements included in the definitive agreement for Rose City has not been
included in the Purchase Consideration. Additional consideration, based on
earnings before interest and taxes for the twelve month period ending December
31, 1998, may not exceed $850 in shares of Common Stock, calculated by reference
to the average closing price of the Common Stock for each trading day during the
thirty calendar day period ending December 31, 1998.

     The purchase price has been allocated to each company's assets and
liabilities based on their respective carrying values, as these carrying values
are deemed to represent fair market value of these assets and liabilities. The
allocation of the purchase price is preliminary, but the Company does not
anticipate that the final allocation of purchase price will differ significantly
from that as described above.
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                              Shares of    Value of                     Net
                                                              ---------    --------                     ---
                                                               Common       Shares        Total        Assets
                                                               ------       ------        -----        ------
                                                  Cash          Stock                  Consideration  Acquired     Goodwill
                                                  ----          -----                  -------------  --------     --------
<S>                                              <C>          <C>          <C>         <C>            <C>          <C> 
D.L. Jones                                       $2,183        179,020      $3,976         $6,159      $1,275       $4,884
Florafresh                                        3,945        172,928       3,945          7,890     (1,025)        8,915
Maxima                                            5,300        233,418       5,300         10,600       2,668        7,932
Selecta                                           2,500        112,007       2,500          5,000         238        4,762
Elite                                             3,700        184,907       3,700          7,400         796        6,604
Allan Stanley                                     1,925         84,638       1,925          3,850       (148)        3,998
Sabana                                              659        164,784       3,453          4,112         776        3,336
Rose City                                           133         10,634         240            373       (176)          549
                                                                                     
                                        -----------------------------------------------------------------------------------
                                                                                     
Total                                           $20,345      1,142,336     $25,039        $45,384      $4,404      $40,980
                                        ===================================================================================
</TABLE> 

     In addition, in July 1998, USA Floral consummated the acquisition of the
following nine companies, including Southern Rainbow Corporation, which signed a
definite agreement in July 1998 and closed in September 1998 (referred to
collectively as the "July 1998 Class"):

Channel Islands Floral("Channel Islands"), located in Carpinteria, California,
is a bouquet manufacturer servicing regional supermarket chains in the western
United States;

Petals Distributing Company, Inc.("Petals"), a Georgia-based bouquet
manufacturer servicing mass-market and supermarket accounts throughout the
southern United States;

AlphaFlora Imports, Inc.("Alpha Flora"), an Illinois-based fresh cut floral
importer and bouquet manufacturer, which serves mass-market accounts and
supermarket chains in the midwestern United States;

Sandlake Farms, Inc. and affiliated companies, Sabal International, Inc., and
Continental Artistry, Inc. ("Sandlake"), which serves mass-market accounts,
specializes in contract growing operations and manages a commercial floral
business in Orlando, Florida;

Floramark, Inc.("Floramark"), a Denver-based bouquet manufacturer, servicing
mass-market accounts in the western United States;

Evergreen Wholesale Florist, Inc.("Evergreen"), a wholesaler based in Seattle,
Washington, servicing retail and mass-market accounts throughout the
northwestern United States with fresh cut and non-perishable floral products;

Tommy's Wholesale Florist, Inc.("Tommy's"), a South Carolina-based floral
wholesaler serving the Southeastern U.S.;

First Distributors, Inc.("First Distributors"), a northern California based-
wholesaler of non-perishable and fresh cut floral products; and

Southern Rainbow Corporation ("Southern Rainbow")a Miami-based speciality
importer of fresh cut flowers.
<PAGE>
 
     The following table sets forth Purchase Consideration (a) in cash and (b)
in shares of Common Stock to the common stockholders of each of the July 1998
Class, the estimated fair value of the net assets acquired and resulting
goodwill. For purposes of computing the purchase price for accounting purposes,
the value of shares is based upon an average share price calculated using the
purchase contract formula, which incorporates the share price at the date of the
letter of intent, the date of the definitive agreement and the average daily
share price between the two aforementioned events.

     The contingent consideration related to earn-out arrangements included in
the definitive agreement for Channel Islands has not been included in the
Purchase Consideration. Additional consideration, based on earnings before
interest and taxes for the eighteen month period ending December 31, 1999, may
not exceed $3,000 in shares of Common Stock, calculated by reference to the
average closing price of the Common Stock for each trading day during the thirty
calendar day period ending December 31, 1999. The contingent consideration
related to earn-out arrangements included in the definitive agreement for
AlphaFlora has not been included in the Purchase Consideration. Additional
consideration, based on earnings before interest and taxes for the twelve month
period ending December 31, 1998, may not exceed $1,000 in shares of Common
Stock, calculated by reference to the average closing price of the Common Stock
for each trading day during the thirty calendar day period ending December 31,
1998. The contingent consideration related to earn-out arrangements included in
the definitive agreement for Sandlake has not been included in the Purchase
Consideration. Additional consideration, based on earnings before interest and
taxes for the twelve month period ending December 31, 1998 may not exceed $800
in shares of Common Stock, calculated by reference to the average closing price
of the Common Stock for each trading day during the thirty calendar day period
ending December 31, 1998. The contingent consideration related to earn-out
arrangements included in the definitive agreement for Tommy's has not been
included in the Purchase Consideration. Additional consideration, based on
earnings before interest and taxes for the twelve month period ending December
31, 1998, may not exceed $1,550 in shares of Common Stock, calculated by
reference to the average closing price of the Common Stock for each trading day
during the thirty calendar day period ending December 31, 1998. The contingent
consideration related to earn-out arrangements included in the definitive
agreement for Southern Rainbow has not been included in the Purchase
Consideration. This arrangement provides for the Company to pay additional
consideration, without limit, based on earnings before interest and taxes for
the twelve-month period ending December 31, 1998, 50% in cash and 50% in shares
of Common Stock.

     The purchase price has been allocated to each company's assets and
liabilities based on their respective carrying values, as these carrying values
are deemed to represent fair market value of these assets and liabilities. The
allocation of the purchase price is preliminary, but the Company does not
anticipate that the final allocation of purchase price will differ significantly
from that as described above.
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                            Shares of     Value of                         Net
                                                            ---------     --------                         ---
                                                              Common       Shares          Total         Assets
                                                              ------       ------          -----         ------
                                               Cash           Stock                    Consideration    Acquired     Goodwill
                                               ----           -----                    -------------    --------     --------
<S>                                            <C>            <C>          <C>         <C>              <C>          <C> 
Channel Islands                                  $1,550         95,484      $1,550            $3,100        $467       $2,633
Petals                                               50          6,204         100               150       (471)          621
AlphaFlora                                            0         31,650         571               571       (175)          746
Sandlake                                          1,104         72,315       1,375             2,479       (169)        2,648
Floramark                                             0         56,211       1,000             1,000       (226)        1,226
Evergreen                                         5,899         30,739         500             6,399         179        6,220
Tommy's                                             789         77,530       1,275             2,064         700        1,364
First Distributors                                  400         24,323         400               800         213          587
Southern Rainbow                                  1,543        105,910       1,401             2,944       2,465          479
                                        --------------------------------------------------------------------------------------

Total                                           $11,335        500,366      $8,172           $19,507      $2,983      $16,524
                                        ======================================================================================
</TABLE> 

     The following unaudited pro forma data present the combined results of
operations of the Company, the July 1998 Class, the April 1998 Class, the
January 1998 Class and the Founding Companies, as if the acquisitions and USA
Floral's IPO had occurred at January 1, 1997. The pro forma amounts give effect
to certain adjustments including amortization of intangibles, interest expense
on incremental financing, reduction in salary, bonuses and benefits in
connection with the transactions, anticipated compensation of USA Floral's
management, associated costs of being a public company and income taxes. The pro
forma summary does not purport to represent what USA Floral's results of
operations would actually have been if such transactions in fact had occurred on
January 1, 1997 and are not necessarily representative of USA Floral's results
of operations for any future period. Since the July 1998 Class, April 1998
Class, the January 1998 Class and the Founding Companies were not under common
control or management, historical combined results may not be comparable to, or
indicative of, future performance.

<TABLE> 
<CAPTION> 

                                                                           Nine Months Ended
                                          Year Ended                       -----------------
                                       December 31,1997        September 30, 1998      September 30, 1997
                                       ----------------        ------------------      ------------------
<S>                                     <C>                    <C>                     <C> 
   Net sales...................                 $561,790                 $451,621               $425,786
   Operating income............                   25,988                   23,512                 21,864
   Net income..................                   10,823                   10,927                  9,590
   Net income per share
     Basic                                         $0.72                    $0.73                  $0.64
     Diluted                                       $0.72                    $0.73                  $0.64
</TABLE> 

NOTE 3 -   INVENTORY

     Inventory consists of the following finished goods:

<TABLE> 
<CAPTION> 
                                            September 30,1998          December 31, 1997
                                            -----------------          -----------------
                  <S>                       <C>                        <C> 
                  Perishables                    $ 2,022                    $  523
                  Hardgoods                       14,826                     4,414
                                                  ------                     -----
                                                 $16,848                    $4,937
                                                 -------                    ------
</TABLE> 
<PAGE>
 
NOTE 4--EARNINGS PER SHARE

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

<TABLE> 
<CAPTION> 
                                                                                                
                                             Nine months          Nine months           Three months          Three months
                                                ended                ended                 ended                 ended
                                          September30, 1998    September 30, 1997    September 30, 1998    September 30, 1997
                                          -----------------    ------------------    ------------------    ------------------
<S>                                       <C>                  <C>                   <C>                   <C> 
Weighted average shares                              13,846                 2,400                14,825                 2,400
   Outstanding - Basic
Dilution attributable to options                        352                     -                    58                     -
                                        --------------------------------------------------------------------------------------
Weighted average shares
   Outstanding - Diluted                             14,198                 2,400                14,883                 2,400
                                        --------------------------------------------------------------------------------------
</TABLE> 

The above calculations do not include shares which may be issued under
earn-out arrangements for XL Group, D. L. Jones, Maxima, Allan Stanley, Rose
City, Channel Islands, AlphaFlora, Sandlake, Tommy's and Southern Rainbow as
discussed in Note 2.

NOTE 5--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.


NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosure of cash flow information:

<TABLE> 
<CAPTION> 
                                                                    Nine months ended
                                                                    September 30, 1998 
                                                                  ----------------------
<S>                                                               <C> 
   Cash paid during the period for interest                                    $   3,277
                                                                               =========
   Cash paid during the period for income taxes                                $   6,738
                                                                               =========

Supplemental disclosure of non-cash transactions:
  Business acquisitions:
    Cash paid for business acquisitions                                          $83,782
    Less:  cash acquired                                                           7,364
                                                                                   -----
    Cash paid for business acquisitions, net                                      76,418
    Issuance of common stock for business acquisitions                            81,816
                                                                                  ------
                                                                                 158,234
    Fair value of net assets acquired, net of cash                                18,189
                                                                                  ------
                                                                                $140,045
                                                                                ========
</TABLE> 
<PAGE>
 
NOTE 7 - SUBSEQUENT EVENTS

Florimex Transaction

     Subsequent to the close of business on September 30, 1998 and pursuant to a
Stock and Asset Purchase Agreement ("Purchase Agreement") by and between DIMON
Incorporated ("DIMON"), Florimex Worldwide GmbH ("Florimex Germany"), and the
Company, USA Floral acquired: (i) the stock of 23 subsidiaries of Florimex
Germany, (ii) certain assets and liabilities of Florimex Germany; and (iii) the
stock of Florimex USA, Inc. ("Florimex USA") and Florimex Canada, Inc.
("Florimex Canada"), each of which were previously wholly-owned subsidiaries of
DIMON. 

Florimex Germany, Florimex USA and Florimex Canada are collectively referred to
as "Florimex." Florimex is the largest international importer and distributor of
fresh-cut flowers in the world with operations in over 15 countries.

Pursuant to all terms of the Purchase Agreement: (i) USA Floral acquired from
DIMON all of the shares of the issued and outstanding capital stock of Florimex
USA and Florimex Canada; (ii) U.S.A. Floral Products Germany GmbH & Co. KG, a
German limited partnership and an indirect wholly-owned subsidiary of USA
Floral, acquired from Florimex Germany all of the shares of the issued and
outstanding capital stock of three German operating subsidiaries of Florimex
Germany; (iii) U.S.A. Floral Products Holding GmbH, the limited partner of the
German limited partnership described above and a wholly-owned subsidiary of USA
Floral, acquired from Florimex Germany all of the shares of the issued and
outstanding capital stock of 20 additional subsidiaries directly or indirectly
owned, of record and beneficially, by Florimex Germany; and (iv) U.S.A. Floral
Products Holding GmbH acquired from Florimex Germany certain assets and
liabilities. In consideration for the exchange of their shares of issued and
outstanding capital stock and/or assets and liabilities, DIMON and Florimex
Germany received consideration in the aggregate of approximately $66.1 million
in cash and USA Floral or its subsidiaries extinguished approximately $23.6
million of the net debt of the acquired businesses. The approximately $66.1
million in cash for the acquisitions was obtained from borrowings under USA
Floral's amended credit facility with a syndicate of lenders for which Bankers
Trust Company serves as agent.

Revenues for Florimex for its fiscal year ended June 30, 1998 aggregated
approximately $390 million. Goodwill arising from acquisition, which will be
accounted for under the purchase method of accounting, is expected to
approximate $52 million.

These financial statements do not include the results of operations or the
balance sheet of Florimex. The results of operations of Florimex will be
included with those of USA Floral effective October 1, 1998.
<PAGE>
 
Integration Plan

  In November 1998, in connection with management's plan to reduce costs and
improve operating efficiencies, the Company announced an integration plan which
is expected to result in a charge of approximately $3.8 million before income
taxes ($2.3 million after income taxes).

  In connection with the integration plan, the Company will integrate certain
warehouse and distribution facilities to be principally those associated with
the Company's import and bouquet manufacturing operations in Miami, Florida.
Approximately $3.2 million, or $1.9 million after-tax, of the charge will be
recorded in the fourth quarter of 1998, with the balance of the charge to be
recorded in the first three quarters of 1999. The charge principally relates to
the write-down to fair value of equipment made obsolete or redundant, severance,
and lease termination costs due to the decision to merge certain facilities. The
integration of the warehouses and distribution facilities will begin immediately
and is expected to be completed by September 30, 1999. As part of the
integration plan, the Company expects to reduce the number of its employees by
approximately 180 or approximately 7% of the North American workforce.

The major components of the integration charge are as follows:

Description
-----------
Severance and related costs                                    $800
Write-down of property, plant and equipment                   2,100
Lease-termination costs                                         400
Professional fees and other costs                               500
                                                             ------
                                                             $3,800
Credit Facility

  Effective October 2, 1998, USA Floral amended and restated its existing credit
agreement with a syndicate of leaders 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. Finally, 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.O% or (b) a Eurodollar
rate plus an applicable margin of up to 2.25%. Borrowings under the term loan
bear interest at the interbank rate for Deutsche Marks plus an applicable margin
of up to 2.25%. The Company paid on closing a financing fee of approximately
$3.6 million, which has been deferred and will be amortized over the term of the
Amended Credit Agreement. In addition, a commitment fee of up to 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 entire $50 million proceeds of the new term loan and $54.1 million of the
borrowings available under the revolving credit facilities were used to finance
the aggregate purchase price of approximately $90 million (including the
<PAGE>
 
assumption of indebtedness) and related transactional expenses for the purchase
of the business of Florimex. In addition, on October 2, 1998, the Company rolled
over approximately $86.5 million in outstanding borrowings, accrued interest and
related fees under its existing revolving credit facility, so that the aggregate
both the revolving credit facilities and the term loan were approximately $190
million.

  The proceeds of the outstanding borrowings under the revolving credit facility
prior to its amendment on October 2, were used to finance acquisitions and fund
related working capital requirements.

  As a result of the amendment and restatement of the credit facility and
termination of the original credit agreement, the Company will record a charge
before income taxes of $1,602 in the fourth quarter of 1998, to the write off
unamortized portion of the deferred financing fee related to the original credit
agreement.

  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. As of September 30, 1998, the
Company was in compliance with all applicable covenants.
<PAGE>
 
Item 2.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

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

Nine and Three Months Ended September 30, 1998

  Net Sales.  Net sales for the nine and three months ended
September 30, 1998 were $345.1 million and $110.8 million, respectively.

  Cost of Sales.  Cost of sales for the nine and three months
ended September 30, 1998 was $250.0 million and $79.3 million, respectively.
Cost of sales as a percentage of net sales was 72.4%, resulting in a gross
profit margin of 27.6%, for the nine months ended September 30, 1998. For the
three months ended September 30, 1998, cost of sales as a percentage of sales
were 71.6%, resulting in a gross profit margin of 28.4%.

  Selling, General and Administrative.  Selling general and administrative
expenses were $73.6 million and $29.1 million in the nine and three months ended
September 30, 1998, respectively. Selling, general and administrative expenses
for the nine and three month periods ended September 30, 1998 were 21.3% and
26.2% as a percentage of net sales, respectively.

Pro Forma Combined Results of Operations
--------------------

  USA Floral was incorporated in April 1997 and conducted no operations prior to
the October 1997 consummation of its IPO and the acquisition of the Founding
Companies. Since then, it has consummated the acquisitions of the January 1998
Class, the April 1998 Class and the July 1998 Class. Pro forma combined results
of operations for the three and nine months ended September 30, 1998 may not be
comparable with pro forma combined results of operations for the corresponding
periods in 1997, because the Company had no operations during any relevant point
in 1997 and did not, throughout the 1997 periods and for portions of the 1998
periods, actually own or operate any of the businesses whose operations have
been combined on a pro forma basis.

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

  The following unaudited pro forma information presents the combined results of
operations of the Company, the July 1998 Class, the April 1998 Class, the
January 1998 Class and the Founding Companies, as if all such acquisitions and
the IPO occurred on January 1, 1997. The information does not include financial
results of the Florimex Transaction, which was consummated after the close of
business on September 30, 1998. The pro forma amounts give effect to certain
adjustments, including amortization of intangible assets, interest expense on
incremental financing, reduction in salary, bonuses and benefits in connection
with the transactions, anticipated compensation of the Company's management and
associated costs of being a public company, and income taxes.
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                     Nine Months Ended
                                                   Year Ended                        -----------------
                                                December 31,1997       September 30, 1998       September 30, 1997
                                                ----------------       ------------------       ------------------
<S>                                             <C>                    <C>                      <C> 
Net sales                                               $561,790                 $451,621                 $425,786
Cost of Sales                                            410,836                  328,955                  312,338
Selling, General and
 Administrative Expenses                                 119,961                   95,397                   87,826
Goodwill amortization                                      5,011                    3,757                    3,757
                                                           -----                    -----                    -----
Operating income                                         $25,988                  $23,512                  $21,864
                                                         =======                  =======                  =======
</TABLE> 

  The pro forma information does not purport to represent what the Company's
results of operations actually would have been if such transactions had occurred
on January 1, 1997 and is not necessarily representative of the Company's
results of operations for any future period. Since the July 1998 Class, the
April 1998 Class, the January 1998 Class and the Founding Companies were not
under common control or management at any time prior to the actual consummation
of each respective acquisition, historical combined results may not be
comparable to, or indicative of, future, performance.

  Net Sales. Pro forma net sales increased to $451.6 million in the nine months
ended. September 30, 1998 from $425.8 million for the nine months ended
September 30, 1997, an increase of $25.8 million or 6.1%. The increase in Pro
forma sales was attributable to an increase in the volume of flowers sold during
the second and third quarter of 1998, primarily at the companies involved in
importing and bouquet manufacturing and distribution.

  Cost of Sales. Pro forma cost of sales increased to $329.0 million in the nine
months ended September 30, 1998 from $312.3 million in the nine months ended
September 30, 1997, an increase of $16.6 million or 5.3%, primarily as a result
of increased pro forma are sales. As a percentage of sales, Pro forma cost of
sales was 72.8% for the nine months ended September 30, 1998 and 73.4% for the
nine months ended September 30, 1997. The decrease as a percentage of sales is a
result of favorable pricing received from certain suppliers of flowers and an
increase in intercompany sales.

  Selling General and Administrative. Selling general and administrative
expenses increased to $95.4 million in the nine months ended September 30, 1998
from $87.8 million for the nine months ended September 30, 1997, an increase of
$7.6 million or 8.6%. The increase is primarily due to an increase in expenses
at certain of the April 1998 Class companies in the three months prior to their
acquisition and increased selling, commissions and other costs associated with
the increased sales at the companies involved in importing and bouquet
manufacturing, as well as increased costs at the Company.

     Operating Income. As a result of the factors discussed above, operating
income increased to $23.5 million in the nine months ended September 30, 1998
from $21.9 million in the nine months ended September 30, 1997, a increase of
$1.6 million, or 7.5%. As a percentage of net sales, operating income increased
to 5.2% in the nine months ended September 30, 1998 from 5.1% in the nine months
ended September 30, 1997.
<PAGE>
 
Special Note Regarding Forward Looking Statements
-------------------------------------------------

Except for historical information contained herein, the statements made in this
Form 10-Q, including those with respect to results for the three and nine month
periods ended September 30, 1998 as they apply to possible results for the full
fiscal year, and those with respect to the effects of purchasing synergies,
expense reductions, acquisition explorations and marketing and research and
development efforts, as they apply to such possible future synergies,
reductions, exploration efforts or the Company's results therefore constitute
forward-looking statements that involve certain risks and uncertainties. Certain
factors may cause actual results to differ materially from those contained in
the forward looking statements, including those risks detailed in the Company's
Prospectus dated May 8, 1998 relating to, among other things: the absence of a
combined operating history; the Company's acquisition strategy; the
concentration of flower sales in traditional holiday periods; the financing of
acquisitions; the Company's internal growth and operating strategies;
seasonality, cyclicality, fluctuations in quarterly operating results, and
weather; competition; the amortization of intangible assets; dependence upon key
personnel; and imported products matters. In addition, results may vary as a
result of factors set forth from time to time in the Company's reports on file
at the Securities and Exchange Commission.

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

The Company's principal sources of liquidity have historically been cash flows
from operating activities and borrowings. To date, approximately $127.5 million
has been used to fund the cash portion of the consideration paid in connection
with the acquisitions.

Effective October 2, 1998, USA Floral amended and restated its existing credit
agreement with a syndicate of leaders 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. Finally, 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.O% or (b) a Eurodollar
rate plus an applicable margin of up to 2.25%. Borrowings under the term loan
bear interest at the interbank rate for Deutsche Marks plus an applicable margin
of up to 2.25%. The Company paid on closing a financing fee of approximately
$3.6 million, which has been deferred and will be amortized over the term of the
Amended Credit Agreement. In addition, a commitment fee of up to 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 entire $50 million proceeds of the new term loan and $54.1 million of the
borrowings available under the revolving credit facilities were used to finance
the aggregate purchase price of approximately $90 million (including the
assumption of indebtedness) and related transactional expenses for the purchase
of the business of Florimex. 
<PAGE>
 
In addition, on October 2, 1998, the Company rolled over approximately $86.5
million in outstanding borrowings, accrued interest and related fees under its
existing revolving credit facility, so that the aggregate both the revolving
credit facilities and the term loan were approximately $190 million.

  The proceeds of the outstanding borrowings under the revolving credit facility
prior to its amendment on October 2, were used to finance acquisitions and fund
related working capital requirements.

  As a result of the amendment and restatement of the credit facility and
termination of the original credit agreement, the Company will record a charge
before income taxes of $1,602 in the fourth quarter of 1998, to the write off
unamortized portion of the deferred financing fee related to the original credit
agreement.

    The capital expenditures of the Company for the nine months ended September
30, 1998 were approximately $2.6 million. These capital expenditures were
primarily for vehicles, machinery, office equipment and computer equipment and
software, building additions and facility upgrades. Although the Company
currently does not have any commitments to make significant capital
expenditures, the Company does expect to expend approximately $10 million for
capital expenditures in the next twelve months in the normal course of business.

Excluding capital requirements for future acquisitions, if any, which the
Company cannot currently predict, the Company believes that funds generated from
operations, together with borrowings under the Amended Credit Agreement, will be
sufficient to finance its current operations and planned capital expenditure
requirements at least through 1999. To the extent that the Company is 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
incurrances of indebtedness may not be possible, or if possible may not be
available on terms acceptable to the company.
<PAGE>
 
PART II - OTHER INFORMATION
---------------------------

Item 1.  Legal Proceedings

             The Company is not a party to any material legal proceedings.

Item 2.  Changes in Securities and Use of Proceeds

             (a) Not applicable.
             (b) Pursuant to the Amended 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) No longer 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

      (a) Exhibits. The following exhibit is filed with this report:

        Exhibit No.                Description
        -----------                -----------
           27.1                    Financial Data Schedule
                                   (pursuant to Item 601 (c)(1)(iv) of
                                   Regulation S-K, this exhibit shall
                                   not be deemed to be filed for
                                   purposes of Section 18 of the
                                   Securities Exchange Act of 1934, as
                                   amended)

      (b) Reports on Form 8-K during the period covered by this report, the
Company filed the following reports on Form 8-K.

             None
<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:  November 16, 1998                By:    /s/ W. Michael Kipphut
                                        ------------------------------------
                                        W. Michael Kipphut,
                                        Chief Financial Officer