U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

   
                                  FORM 10-QSB/A
                                 AMENDMENT NO. 1
    

/  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 No. 1-13048

                          HEALTHY PLANET PRODUCTS, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                                   92-2601764
--------------------------------         ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
  incorporation or organization)

1700 Corporate Circle, Petaluma, California                        94954
-------------------------------------------                      ----------
(Address of principal executive offices)                         (Zip Code)


Registrant's telephone number, including area code:           (707) 778-2280
--------------------------------------------------------------------------------

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

Check  whether the Issuer (1) 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
                      -----                 -----

As of November 2, 1998,  there were issued and outstanding  2,282,368  shares of
common stock of the  registrant  (exclusive  of 31,335 shares of voting Series D
Preferred Stock convertible into 31,335 shares of common stock).


    Transitional Small Business Disclosure Format    Yes          No   X
                                                         -----       -----

   
                                  Page 1 of 16
    

<PAGE>

   
Prefatory Note to Amendment No. 1 on Form 10-QSB/A.

Healthy Planet Products, Inc. (the "Company") has filed this Amendement No. 1 on
Form  10-QSB/A  to  revise  and  restate  certain  portions  of Part  I,  Item 2
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

                                  Page 2 of 16
    


<PAGE>

<TABLE>
                          HEALTHY PLANET PRODUCTS, INC.
                          -----------------------------

                                      INDEX
                                      -----
<CAPTION>



                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
Form 10-QSB Cover Page                                                                          1


   
Index                                                                                           3

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

         Item 1.         Financial Statements

                         Balance Sheet at September 30, 1998                                    4

                         Statements of Operations for the three-months ended                    6
                             and nine months ended September 30, 1998 and 1997

                         Statements of Cash Flows for the three-months ended                    7
                             and nine months ended September 30, 1998 and 1997

                         Notes to the Financial Statements                                      8

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


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

         Item 6.         Exhibits and Reports on Form 8-K                                      16

         Signature                                                                             16


</TABLE>



                                  Page 3 of 16
    
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements

                          HEALTHY PLANET PRODUCTS, INC.
                          -----------------------------

                                  BALANCE SHEET
                                  -------------

                                     ASSETS
                                     ------

                                                                   September 30,
                                                                        1998   
                                                                    (Unaudited)
                                                                   ------------
CURRENT ASSETS
     Cash and cash equivalents                                     $  2,258,382
     Marketable securities                                                  333
     Accounts receivable - net of allowances for doubtful
         accounts and returns of $226,594                               729,004
     Inventories                                                        774,185
     Advance on royalties                                               120,523
     Prepaid expenses                                                   110,246
     Deferred income taxes                                              264,900
                                                                   ------------

                  Total current assets                                4,257,573
                                                                   ------------
PROPERTY AND EQUIPMENT, at cost, net of accumulated
     depreciation and amortization                                      772,760
                                                                   ------------
OTHER ASSETS
     Deferred income taxes                                              185,800
     Security deposits                                                   34,277
     Publishing rights - net of accumulated
         amortization of $463,788                                       100,442
     Other                                                              103,660
                                                                   ------------

                  Total other assets                                    424,179
                                                                   ------------
TOTAL ASSETS                                                       $  5,454,512
                                                                   ============


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


   
                                  Page 4 of 16
    


<PAGE>

<TABLE>
                          HEALTHY PLANET PRODUCTS, INC.
                          -----------------------------

                            BALANCE SHEET (continued)
                            -------------            

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
<CAPTION>
                                                                                September 30,
                                                                                    1998 
                                                                                ------------
                                                                                 (Unaudited)
<S>                                                                             <C>
CURRENT LIABILITIES
     Accounts payable                                                           $    330,560
     Royalties payable                                                                22,924
     Commissions payable                                                              78,138
     Series B preferred stock redemption and dividends payable                       161,500
     Accrued wages, bonuses and payroll taxes                                         65,625
     Accrued liabilities                                                               4,662
     Current portion of long-term debt                                               108,899
                                                                                ------------

                  Total current liabilities                                          772,308

OTHER LIABILITIES
     Long-term debt, net of current portion                                           17,148
     Accrued rent payable                                                            115,448
                                                                                ------------

                                                                                     904,904
                                                                                ------------

SHAREHOLDERS' EQUITY
     Common stock, $.01 par value, 12,000,000 shares
         authorized, 2,282,368 shares issued and outstanding                          22,823
     Preferred stock, Series D, $.10 par value, with
         aggregate liquidation preferences of $160,122,
         371,009 shares authorized, 31,335 issued and outstanding                      3,134

     Additional paid-in capital                                                   13,320,278

     Accumulated deficit                                                          (8,796,627)
                                                                                ------------

                  Total shareholders' equity                                       4,549,608 
                                                                                ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      $  5,454,512
                                                                                ============


<FN>
                     The accompanying notes are an integral
                       part of these financial statements.
</FN>
</TABLE>


   
                                  Page 5 of 16
    

<PAGE>

<TABLE>
                                       HEALTHY PLANET PRODUCTS, INC.
                                       -----------------------------

                                          STATEMENTS OF OPERATIONS
                                          ------------------------

                                                (Unaudited)
<CAPTION>





                                            Three Months Ended Sept. 30,      Nine Months Ended Sept. 30,
                                            ------------------------------    ----------------------------

                                                1998              1997            1998             1997
                                            ------------      ------------    ------------     -----------
<S>                                         <C>               <C>             <C>              <C>
NET SALES                                   $  1,034,654      $  1,425,463    $  2,751,652     $ 3,138,656

COST OF GOODS SOLD                             1,119,734           792,356       2,482,727       1,572,129
                                            ------------      ------------    ------------     -----------

GROSS PROFIT (LOSS)                              (85,080)          633,107         268,925       1,566,527
                                            ------------      ------------    ------------     -----------

OPERATING EXPENSES
     Selling, shipping and marketing             366,824           344,615         949,751         802,660
     General and administrative                  524,098           437,361       1,451,431       1,227,645
                                            ------------      ------------    ------------     -----------
                                                 890,922           781,976       2,401,182       2,030,305
                                            ------------      ------------    ------------     -----------

OPERATING LOSS                                  (976,002)         (148,869)     (2,132,257)       (463,778)

OTHER INCOME/EXPENSE
     Interest expense                             (4,306)             --           (14,452)           --
     Interest income                              31,780            43,211          95,843         116,616
     Other income                                 32,779               467          98,764           5,138
                                            ------------      ------------    ------------     -----------
                                                  60,253            43,678         180,155         121,754
                                            ------------      ------------    ------------     -----------

LOSS BEFORE TAXES                               (915,749)         (105,191)     (1,952,102)       (342,024)

PROVISION FOR INCOME TAXES                       200,000              --           500,000         222,000
                                            ------------      ------------    ------------     -----------

NET LOSS                                   ($  1,115,749)    ($    105,191)  ($  2,452,102)   ($   564,024)
                                            ============      ============    ============     ===========

BASIC AND DILUTED LOSS PER SHARE                  ($0.49)           ($0.06)         ($1.08)         ($0.31)

WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING                        2,282,368         1,827,362       2,265,701       1,827,362
                                            ============      ============    ============     ===========


<FN>
                                    The accompanying notes are an integral
                                      part of these financial statements.
</FN>
</TABLE>

   
                                                 Page 6 of 16
    

<PAGE>

<TABLE>
                                               HEALTHY PLANET PRODUCTS, INC.
                                               -----------------------------

                                                 STATEMENTS OF CASH FLOWS
                                                 ------------------------

                                                        (Unaudited)
<CAPTION>


                                                           Three Months Ended Sept. 30,       Nine Months Ended Sept. 30,
                                                           -----------------------------      ---------------------------
                                                           
                                                               1998             1997              1998            1997
                                                           ------------      -----------      ------------    -----------
<S>                                                        <C>               <C>              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                      
     Net Loss                                              ($1,115,749)      ($  105,191)     ($2,452,102)    ($  564,024)
     Non-cash items included in net loss
         Depreciation and amortization                          77,834            52,797          225,488         152,226
         Increase/(Decrease) in allowances for             
              doubtful accounts and returns                     86,284            62,518          (96,486)       (233,869)
         Change in inventory reserves                          319,000             --             665,000          81,000
         Decrease in deferred income taxes                     200,000             --             500,000         217,920
                                                           
     Changes in:                                           
         Accounts receivables                                 (329,108)         (489,607)         121,745          53,779
         Inventories                                           218,789           121,002          101,840        (403,764)
         Advances on royalties                                 118,890            97,179         (120,523)       (128,671)
         Prepaid expenses                                       99,770            (7,641)           5,480         (14,195)
         Accounts payable                                       69,316           147,262          (46,131)         (2,919)
         Royalties payable                                       8,066             5,770           18,351           8,374
         Commissions payable                                    41,561            59,136          (16,043)        (13,319)
         Accrued wages, bonus and payroll taxes                 22,765            44,692           18,855             435
         Income taxes payable                                    --                --                (800)        (16,300)
         Accrued liabilities                                   (20,804)           (4,630)         (15,641)        (45,788)
         Accrued rent payable                                    9,933             9,933           29,799          35,203
                                                           ------------      -----------      ------------    -----------
         Net cash used by operating activities                (193,453)           (6,780)      (1,061,168)       (873,912)
                                                           ------------      -----------      ------------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
         Sales of marketable securities                          --              979,919          249,667         973,103
         Purchases of equipment and color separations          (20,338)          (29,343)         (86,929)        (92,225)
         Security deposits                                       --                --               --              2,075
         Other                                                  (1,701)          (10,902)         (10,902)        (75,908)
                                                           ------------      -----------      ------------    -----------
         Net cash (used)/provided by investing activities      (22,039)         (933,104)         151,836        (807,045)
                                                           ------------      -----------      ------------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
         Principal repayments on note payable                  (25,694)            --            (118,348)          --
                                                           ------------      -----------      ------------    -----------
         Net cash used by financing activities                 (25,694)            --            (118,348)          --
                                                           ------------      -----------      ------------    -----------


INCREASE/(DECREASE)  IN CASH
     AND CASH EQUIVALENTS                                     (241,186)          926,324       (1,027,680)        (66,867)
CASH AND CASH EQUIVALENTS,
     BEGINNING OF PERIOD                                     2,499,568           657,520        3,286,062       1,650,711
                                                           ------------      -----------      ------------    -----------
CASH AND CASH EQUIVALENTS,
     END OF PERIOD                                          $2,258,382        $1,583,844       $2,258,382      $1,583,844
                                                           ============      ===========      ============    ===========


SUPPLEMENTARY CASH FLOW INFORMATION INCLUDES THE FOLLOWING:

         Cash paid during the period for:
              Interest                                      $    4,306        $        0       $   14,452      $        0
              Income taxes                                  $        0        $        0       $    1,600      $   20,380


<FN>
                        The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>


   
                                                       Page 7 of 16
    

<PAGE>


                          HEALTHY PLANET PRODUCTS, INC.
                          -----------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The  financial  statements  included  herein have been  prepared by the Company,
without  audit,  pursuant to the rules and  regulations  of the  Securities  and
Exchange  Commission.  Certain  information  and footnote  disclosures  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been omitted pursuant to such rules and regulations.
It is  believed,  however,  that  the  disclosures  are  adequate  to  make  the
information presented not misleading.

The financial statements, in the opinion of management,  reflect all adjustments
necessary, which are of a normal recurring nature, to fairly state the financial
position and the results of operations.  These results are not necessarily to be
considered indicative of the results for the entire year.

NOTE 2 - INVENTORIES

Inventories consist of the following:
                                                                  September 30,
                                                                       1998    
                                                                  -------------

         Raw materials                                            $     62,162
         Work-in-process                                               393,988
         Finished goods                                                318,035
                                                                  -------------
                                                                  $    774,185
                                                                  =============
NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
                                                                  September 30,
                                                                       1998   
                                                                  -------------
         Machinery, equipment and leasehold improvements          $    727,397
         Molds                                                         436,422
         Color separations                                             302,632
         Furniture and fixtures                                         72,664
         Computer software                                              38,171
                                                                  -------------
                                                                     1,577,286

         Less accumulated depreciation and amortization               (804,526)
                                                                  -------------
                                                                  $    772,760
                                                                  =============


   
                                  Page 8 of 16
    


<PAGE>

                          HEALTHY PLANET PRODUCTS, INC.
                          -----------------------------

                    NOTES TO FINANCIAL STATEMENTS (continued)
                    -----------------------------

                                   (Unaudited)

NOTE 4 - INCOME TAXES

Deferred  income tax assets and  liabilities  are  recognized  using enacted tax
rates and reflect the expected future tax consequences of temporary  differences
between  recorded  amounts of assets and  liabilities  for  financial  reporting
purposes and tax basis of such assets and liabilities.  A valuation allowance is
recognized to offset a deferred tax asset if the eventual  realization of all or
a portion of the asset is uncertain.

The provision  for income taxes is based on pre-tax  earnings as reported in the
financial  statements  and  adjusted  for  requirements  of current tax law, and
changes in deferred taxes.

The  provision  for income taxes at September  30, 1998  consists of a valuation
allowance on deferred taxes.

As of January 1, 1998 the Company had available net operating loss carryovers of
approximately  $6,230,500 to be applied  against future federal  taxable income.
Due to a change in  ownership  during  1988,  $2,638,000  of these  amounts  are
subject to a Section 382  limitation  of a maximum of $476,950 per year.  If the
Company  does not  generate  sufficient  income to use the  maximum  limitation,
remaining amounts  accumulate for use in future periods until the operating loss
expires.  The remaining net operating loss  carryovers  generated after 1988 are
available to be used without yearly  limitation.  For federal tax purposes,  net
operating losses expire as follows:


                  Year Ending December 31,

                           2002                              $2,638,600
                           2003                               1,222,000
                           2004                               1,299,100
                           2005                                 383,300
                           2006                                  31,700
                           2012                                 655,800
                                                            -----------
                                                             $6,230,500
                                                            ===========

The Company has available  approximately  $25,500 of federal Alternative Minimum
Tax credits which can be carried forward  indefinitely and offset against future
income taxes.

The Company has available  approximately  $326,000 of  California  net operating
losses which can be carried  forward and offset against  future taxable  income.
These loss carryforwards expire in 2002.



   
                                  Page 9 of 16
    


<PAGE>

                          HEALTHY PLANET PRODUCTS, INC.
                          -----------------------------

                    NOTES TO FINANCIAL STATEMENTS (continued)
                    -----------------------------

                                   (Unaudited)



NOTE 4.  INCOME TAXES   (continued)

The  Company  has  substantial  net  operating  loss  carryforwards  and credits
available to offset  future income tax  liabilities.  The expected tax effect of
these  losses  and  credits  are   reflected  as  deferred  tax  assets  on  the
accompanying balance sheet. A valuation allowance has been established since the
realization of tax benefits of net operating loss  carryforwards is not assured.
However, management believes, at this time, that it is more likely than not that
the  Company's  future  taxable  income  will be  sufficient  to utilize the NOL
deferred tax asset prior to its  expiration  date.  The amount of the  valuation
allowance will be reviewed on a quarterly basis.  Deferred tax assets consist of
the following:

         Net operating loss carryforwards                            $2,147,200
         AMT carryforwards                                               25,500
         Other                                                          278,000
                                                                     ----------
                                                                      2,450,700

         Valuation allowance on net operating
              loss carryforwards                                     (2,000,000)

         Deferred income taxes expected to be
              utilized currently                                       (264,900)
                                                                     -----------
         Deferred income taxes                                       $  185,800
                                                                     ===========




   
                                  Page 10 of 16
    

<PAGE>

<TABLE>
                                       HEALTHY PLANET PRODUCTS, INC.
                                       -----------------------------

                                 NOTES TO FINANCIAL STATEMENTS (continued)
                                 -----------------------------

                                                (Unaudited)
<CAPTION>

NOTE 5. - EARNINGS PER SHARE
                                                                 Three Months Ended September 30, 1998
                                                                 -------------------------------------

                                                                                                  Per-Share
                                                                Loss              Shares           Amount
                                                            ------------        ---------          -------
<S>                                                         <C>                 <C>                <C>
     Net loss                                               ($1,115,749)
                                                            ============
     Basic loss per share: 
         Loss available to common shareholders              ($1,115,749)        2,282,368          ($.49)

     Effect of dilutive securities                               --                --                 --
                                                            ------------        ---------          -------

     Diluted loss per share:
         Loss available to common shareholders
              plus assumed conversions                      ($1,115,749)        2,282,368          ($.49)
                                                            ============        =========          =======

                                                                 Nine Months Ended September 30, 1998
                                                                 ------------------------------------

                                                                                                  Per-Share
                                                               Loss               Shares           Amount
                                                            ------------        ---------          -------
     Net loss                                               ($2,452,102)
                                                            ============
     Basic loss per share:
         Loss available to common shareholders              ($2,452,102)        2,265,701          ($1.08)

     Effect of dilutive securities                               --                --                 --
                                                            ------------        ---------          -------

     Diluted loss per share:
         Loss available to common shareholders
              plus assumed conversions                      ($2,452,102)        2,265,701          ($1.08)
                                                            ============        =========          =======
</TABLE>

Warrants to purchase  368,117 shares of common stock at a weighted average price
per share of $4.45 and options to purchase  350,000  shares of common stock at a
weighted  average  price per share of $5.88 were  outstanding  at September  30,
1998, but were not included in the computation of diluted  earnings per share as
the exercise  prices were  greater  than the average  market price of the common
shares.

Preferred stock  convertible into 31,335 shares of common stock were outstanding
at September  30,  1998,  but were not  included in the  computation  of diluted
earnings per share as the effect would be anti-dilutive.

   
                                  Page 11 of 16
    

<PAGE>

<TABLE>
                                    HEALTHY PLANET PRODUCTS, INC.
                                    -----------------------------

                              NOTES TO FINANCIAL STATEMENTS (continued)
                              -----------------------------

                                             (Unaudited)
<CAPTION>


NOTE 5.
                                                             Three Months Ended September 30, 1997
                                                             -------------------------------------

                                                                                            Per-Share
                                                               Loss            Shares        Amount
                                                            ----------       ---------       -------
<S>                                                         <C>              <C>             <C>
     Net loss                                               ($105,191)
                                                            ==========
     Basic loss per share:
         Loss available to common shareholders              ($105,191)       1,827,362       ($.06)

     Effect of dilutive securities                              --              --              -- 
                                                            ----------       ---------       -------

     Diluted loss per share:
         Loss available to common shareholders              ($105,191)       1,827,362       ($.06)
                                                            ==========       =========       =======

                                                              Nine Months Ended September 30, 1997
                                                              ------------------------------------

                                                                                            Per-Share
                                                               Loss            Shares        Amount
                                                            ----------       ---------       -------

     Net loss                                               ($564,024)
                                                            ==========
     Basic loss per share:
         Loss available to common shareholders              ($564,024)       1,827,362       ($.31)

     Effect of dilutive securities                              --              --              -- 
                                                            ----------       ---------       -------

     Diluted loss per share:
         Loss available to common shareholders
              plus assumed conversions                      ($564,024)       1,827,362       ($.31)
                                                            ==========       =========       =======
</TABLE>

Warrants to purchase  68,117 shares of common stock at a weighted  average price
per share of $5.31 and options to purchase  325,000  shares of common stock at a
weighted  average  price per share of $6.19 were  outstanding  at September  30,
1997, but were not included in the computation of diluted  earnings per share as
the exercise  prices were  greater  than the average  market price of the common
shares.

Preferred stock convertible into 186,341 shares of common stock were outstanding
at September  30,  1997,  but were not  included in the  computation  of diluted
earnings per share as the effect would be anti-dilutive.


   
                                  Page 12 of 16
    

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     ---------------------------------------

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Special Note Regarding Forward-Looking Statements

Certain  statements in this Form 10-QSB,  including  information set forth under
this Item 2  "Management's  Discussion  and Analysis of Financial  Condition and
Results  of  Operations"  constitute  "forward-looking  statements"  within  the
meaning of the Private  Securities  Litigation  Reform Act of 1995 (the  "Act").
Healthy Planet Products, Inc. (the "Company") desires to avail itself of certain
"safe harbor" provisions of the Act and is therefore including this special note
to enable the Company to do so. Forward-looking statements included in this From
10-QSB or hereafter  included in other publicly  available  documents filed with
the Securities and Exchange Commission, report to the Company's stockholders and
other publicly  available  statements  issued or released by the Company involve
known and unknown risks, uncertainties,  and other factors which could cause the
Company's actual results,  performance  (financial or operating) or achievements
to  differ  from  the  future  results,  performance  (financial  or  operating)
achievements  expressed  or implied by such  forward  looking  statements.  Such
future results are based upon  management's  best  estimates  based upon current
conditions and the most recent results of operations. These include management's
forecasts  for sales,  the decrease in net sales for the nine month period ended
September 30, 1998,  purchasing plans and programs of certain large chain buyers
relating to holiday product recently experienced decline in gross margin as well
as marginal increases in general and administrative expenses, the recent adverse
trend  in  the  general  retail   environment,   general  economic   conditions,
competition  generally  and  specifically  relating  to  greeting  cards  having
environmental,  nature or  wildlife  themes and the  ability  of the  Company to
sustain  consumer demand for the Company's  principal  Sierra Club card line. In
addition,  the  ability of the Company to enhance and expand its product mix and
to successfully  introduce new products which will meet with consumer acceptance
may also affect future results.

   
Sales


         For the nine months ended  September 30, 1998,  the Company's net sales
amounted to $2,751,652 which reflected a decrease of $387,004 versus last year's
nine month  results of  $3,138,656  by 12.3%.  An increase  due to  Collectibles
revenues  of  $343,000  was  principally  offset by  declines in Sierra Club and
Nature  Baby sales of  $527,000  and  $119,000,  respectively.  The Sierra  Club
decrease was due in part by the loss of Barnes & Noble as a customer in the fall
of 1997.

         For the three months ended  September  30, 1998,  the  Company's  sales
amounted to $1,034,654 representing a decrease of $390,809 compared to the prior
years  three  month  results  of  $1,425,463  by  27.4%.   Increased   sales  of
Collectibles of $162,000 were offset by declines of Sierra Club,  Humane Society
and Nature Baby of $263,000,  $132,000 and $172,000,  respectively  to result in
the quarter to quarter decline.

Gross Profit

         For the nine months ended September 30, 1998,  gross profit amounted to
$268,925 or 9.8% of sales. For the comparable  period,  gross profit amounted to
$1,566,527  or 49.9% of sales.  The decline at gross  margin  resulted  from the
revenue  shortfall,  the cost of a  close-out  of  obsolete  holiday  product of
$230,000 and a
    

                                  Page 13 of 16

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     ---------------------------------------

            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
            ---------------------------------------------

Gross Profit (continued)

provision for obsolete and slow-moving  inventory of $665,000.  The Company,  in
previous  years  during  periods of revenue  increases,  sought to increase  its
margins through  quantity  discounts on higher card production runs. the current
downtrend in revenues has now classified  these  inventories as slow-moving  and
has  resulted  in the current  quarter's  increase in  inventory  reserves.  The
inventory  reserve will be  evaluated  quarterly  based on actual and  projected
sales.

         For the three  months ended  September  30, 1998 a gross margin loss of
$85,080 was  incurred  compared  to a gross  margin  profit of $633,107  for the
comparable   prior  year  three  month  period.   In  addition  to  the  decline
attributable  to the  revenue  decline,  an increase  in  inventory  reserves of
$319,000 was established for slow-moving inventory.

Operating Expenses

         For the nine months ended  September  30, 1998,  selling,  shipping and
marketing  expenses  amounted  to  $949,751  reflecting  an increase of $147,091
versus the prior year's level of $802,660 or 18.3%.  Costs  associated  with the
new Collectibles line for advertising, commissions, and travel accounted for the
year to year increase.

         For the three months ended  September 30, 1998,  selling,  shipping and
marketing  expenses amounted to $366,824  reflecting an increase of $22,209 over
the previous year's level of $344,615 or 6.4%. Decreased commissions were offset
by increases in  advertising  and travel costs  associated  with the new product
launch.

         General and administrative expenses amounted to $1,451,431 for the nine
months ended  September  30, 1998,  reflecting  an increase of $223,786 or 18.2%
versus the prior year period $1,227,645.  Increased  professional fees accounted
for 35% of the increase with the addition of personnel for the new  Collectibles
line accounting for 40% of the year to year increase.

         General and administrative  expenses amounted to $524,098 for the three
months  ended  September  30, 1998,  reflecting  an increase of $86,737 or 19.8%
versus the prior year quarter of $437,361.  Increased  professional fees and the
addition of people for the new Collectibles  line accounted for the year to year
increase.

Income

         An operating  loss of $2,132,257 or $.94 per share was incurred for the
nine months  ended  September  30,  1998.  Interest and other income of $180,155
reduced  the  operating  loss to result  in a net loss  before  income  taxes of
$1,952,107  or $.86 per share.  For the prior year  period,  the net loss before
income  taxes  amounted to $342,024 or $.19 per share.  Lower  sales,  increased
operating  costs  associated  with the new  Collectibles  line, the close-out of
slow-moving inventory and the write-down of obsolete inventory resulted in the


                                  Page 14 of 16

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     ---------------------------------------

            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
            ---------------------------------------------

Income   (continued)

nine month loss. Net loss for the nine months ended  September 30, 1998 amounted
to  $2,452,102  or $1.08 per  share,  compared  to the prior  year's net loss of
$564,024 or $.31 per share.  During the nine month  period a $500,000  valuation
allowance  was placed on  deferred  tax assets.  Under  Statement  of  Financial
Accounting  Standard  No.  109,  "Accounting  for  Income  Taxes",  a  valuation
allowance  is  recognized  to  offset  a  deferred  tax  asset  if the  eventual
realization  of all or a portion of the asset is uncertain.  Due to the loss for
the nine months ended  September 30, 1998, the  realization of tax benefits from
net operating  loss  carryforwards  is not assured.  The amount of the valuation
allowance will be reviewed and may be adjusted on a quarterly basis.

Balance Sheet
   
Total assets at September  30, 1998  amounted to  $5,454,512  which  reflected a
decrease  versus the  December 31, 1997 level of  $8,036,000  by  $2,581,488  or
32.1%. A decline in cash,  inventories,  prepaid assets,  and  receivables  were
offset in part by increases in fixed  assets,  prepaid  assets and  royalties to
result in the period to period decline.

As of  September  30, 1998 the  Company had  deferred  tax assets  amounting  to
$450,000.  Of this amount,  $147,200 represented NOL carryforwards (which expire
in 2013) with the balance  relating  principally  to reserves for  inventory and
receivables.  Management believes, at this time, that it is more likely than not
that the Company's  future  taxable income will be sufficient to utilize the NOL
deferred tax asset prior to its expiration date.

Total current  liabilities  amounted to $772,308 as of September 30, 1998 versus
the  December  31,  1997 level of  $806,000.  The  decrease  was a result of the
paydown of commissions and trade payables offset by increases in royalties due.

Liquidity and Capital Resources

At September 30, 1998, the Company's working capital was $3,485,265 reflecting a
decrease  of  $1,920,735   versus  working  capital  at  December  31,  1997  of
$5,406,000.  Cash of $96,932  was  generated  during the period  from  operating
activities primarily due to a reduction of accounts receivable. Cash of $151,836
was  generated by investment  activities  during the period due primarily to the
sale of marketable  securities.  Cash of $118,348 was used to pay a note related
to the  Corlett  Collectibles  acquisition.  The Company  remains  liquid with a
current ratio of 5.5:1.

The present primary sources of the Company's  liquidity has been cash internally
generated from operations,  proceeds obtained by the Company through the private
sale of its securities,  and the  availability of a secured line of credit.  The
Company  has a  $500,000  secured  line of  credit  from  Westamerica  Bank with
interest at the bank's  Index Rate plus .75% or 8.5% as of  September  30, 1998.
The Company draws on this line from time to time on a short term basis; however,
the  Company  did not utilize  the line of credit  during  this  quarter.  As of
September 30, 1998, there were no borrowings under this line of credit.
    

Effects of Inflation

The Company does not view the effects of  inflation as having a material  effect
upon its  business.  Increases  in paper and  labor  costs  have been  offset by
increases  in the price of the  Company's  cards and through  higher print runs,
which  have  reduced  the unit cost of the  Company's  card  product.  While the
Company has in the past increased its prices to its customers, it has maintained
its relative  competitive  price  position  within the general range of greeting
cards.



   
                                  Page 15 of 16
    

<PAGE>

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


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

                  a)  Exhibits

                      None

                  b)  Reports on Form 8-K


   
                  During the quarter  ended  September  30, 1998,  there were no
reports on Form 8-K filed by the Registrant.

                                   SIGNATURES
    

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




                                     HEALTHY PLANET PRODUCTS, INC.
                                            (Registrant)

   
DATED:  November __, 1998           by:       /s/   Bruce A. Wilson           
       (February 4, 1999                --------------------------------------
        as to  Amendment No. 1)                Bruce A. Wilson
                                     President, Chief Executive, Chief Operating
                                     and Chief Financial Officer.
                                     (Principal Executive, Financial
                                      and Accounting Officer)



                                  Page 16 of 16