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 June 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 August 7, 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 17
    


<PAGE>

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

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


                                  Page 2 of 17
    

<PAGE>



                          HEALTHY PLANET PRODUCTS, INC.

                                      INDEX





                                                                            Page
                                                                            ----

Form 10-QSB Cover Page                                                         1

   
Index                                                                          3
    

PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements

   
                 Balance Sheet at June 30, 1998                                4

                 Statements of Operations for the three-months ended           6
                     and six months ended June 30, 1998 and 1997

                 Statements of Cash Flows for the three-months ended           7
                     and six months ended June 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 4. Submission of Matters to a Vote of Securityholders           14

         Item 6. Exhibits and Reports on Form 8-K                        16 & 17

         Signature                                                            17



                                  Page 3 of 17
    

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1. Financial Statements

                          HEALTHY PLANET PRODUCTS, INC.

                                  BALANCE SHEET

                                     ASSETS


                                                                       June 30,
                                                                         1998
                                                                     -----------
                                                                     (Unaudited)

CURRENT ASSETS
     Cash and cash equivalents                                        $2,499,568
     Marketable securities                                                   333
     Accounts receivable - net of allowances for doubtful
         accounts and returns of $140,310                                486,180
     Inventories                                                       1,311,974
     Advance on royalties                                                239,413
     Prepaid expenses                                                    210,016
     Deferred income taxes                                               264,900
                                                                     -----------

                  Total current assets                                 5,012,384
                                                                     -----------

PROPERTY AND EQUIPMENT, at cost, net of accumulated
     depreciation and amortization                                       809,930
                                                                     -----------

OTHER ASSETS
     Deferred income taxes                                               385,800
     Security deposits                                                    34,277
     Publishing rights - net of accumulated
         amortization of $443,562                                        114,827
     Other                                                               107,198
                                                                     -----------

                  Total other assets                                     642,102
                                                                     -----------

TOTAL ASSETS                                                          $6,464,416
                                                                     ===========

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

   
                                  Page 4 of 17
    

<PAGE>

                          HEALTHY PLANET PRODUCTS, INC.

                            BALANCE SHEET (continued)

                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                                      June 30,
                                                                        1998
                                                                   ------------
                                                                    (Unaudited)

CURRENT LIABILITIES
     Accounts payable                                              $    260,542
     Royalties payable                                                   14,858
     Commissions payable                                                 36,577
     Series B preferred stock redemption and dividends payable          161,500
     Accrued wages, bonuses and payroll taxes                            42,860
     Accrued liabilities                                                 25,466
     Current portion of long-term debt                                  104,001
                                                                   ------------

                  Total current liabilities                             645,804

OTHER LIABILITIES
     Long-term debt, net of current portion                              47,740
     Accrued rent payable                                               105,515
                                                                   ------------

                                                                        799,059
                                                                   ------------

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                                             (7,680,878)
                                                                   ------------

                  Total shareholders' equity                          5,665,357
                                                                   ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $  6,464,416
                                                                   ============

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

   
                                  Page 5 of 17
    

<PAGE>

<TABLE>
                                                    HEALTHY PLANET PRODUCTS, INC.

                                                      STATEMENTS OF OPERATIONS

                                                             (Unaudited)

<CAPTION>
                                                              Three Months Ended June 30,              Six Months Ended June 30,
                                                            -------------------------------         -------------------------------

                                                               1998                1997                1998                1997
                                                            -----------         -----------         -----------         -----------
<S>                                                         <C>                 <C>                 <C>                 <C>        
NET SALES                                                   $   739,740         $   884,912         $ 1,716,998         $ 1,713,193

COST OF GOODS SOLD                                              934,940             416,775           1,362,993             779,773
                                                            -----------         -----------         -----------         -----------

GROSS PROFIT (LOSS)                                            (195,200)            468,137             354,005             933,420
                                                            -----------         -----------         -----------         -----------

OPERATING EXPENSES
     Selling, shipping and marketing                            280,399             230,628             582,927             458,045
     General and administrative                                 478,892             373,156             927,333             790,284
                                                            -----------         -----------         -----------         -----------
                                                                759,291             603,784           1,510,260           1,248,329
                                                            -----------         -----------         -----------         -----------

OPERATING LOSS                                                 (954,491)           (135,647)         (1,156,255)           (314,909)

OTHER INCOME/EXPENSE
     Interest expense                                            (6,441)               --               (10,146)               --
     Interest income                                             27,993              28,439              64,063              73,405
     Other income                                                37,307                  28              65,985               4,671
                                                            -----------         -----------         -----------         -----------
                                                                 58,859              28,467             119,902              78,076
                                                            -----------         -----------         -----------         -----------

LOSS BEFORE TAXES                                              (895,632)           (107,180)         (1,036,353)           (236,833)

PROVISION FOR INCOME TAXES                                      300,000             222,000             300,000             222,000
                                                            -----------         -----------         -----------         -----------

NET LOSS                                                    $(1,195,632)        $  (329,180)        $(1,336,353)        $  (458,833)
                                                            ===========         ===========         ===========         ===========

BASIC AND DILUTED LOSS PER SHARE                            $     (0.52)        $     (0.18)        $     (0.59)        $     (0.25)

WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING                                       2,282,368           1,827,362           2,257,367           1,827,362
                                                            ===========         ===========         ===========         ===========


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

   
                                                            Page 6 of 17
    

<PAGE>

<TABLE>
                                                    HEALTHY PLANET PRODUCTS, INC.

                                                      STATEMENTS OF CASH FLOWS

                                                             (Unaudited)

<CAPTION>
                                                                        Three Months Ended June 30,       Six Months Ended June 30,
                                                                        ---------------------------     ---------------------------

                                                                            1998            1997           1998              1997
                                                                        -----------     -----------     -----------     -----------
<S>                                                                     <C>             <C>             <C>             <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Loss                                                           $(1,195,632)    $  (329,180)    $(1,336,353)    $  (458,833)
     Non-cash items included in net loss
         Depreciation and amortization                                       74,094          48,761         147,654          99,429
         Decrease in allowances for
              doubtful accounts and returns                                 (28,352)        (21,961)       (182,770)       (296,387)
         Change in inventory reserves                                       346,000          81,000         346,000          81,000
         Decrease in deferred income taxes                                  300,000         217,920         300,000         217,920

     Changes in:
         Accounts receivables                                               458,851          (6,644)        450,853         543,386
         Inventories                                                         94,474        (141,223)       (116,949)       (524,766)
         Advances on royalties                                               79,189          85,594        (239,413)       (225,850)
         Prepaid expenses                                                    32,692          45,099         (94,290)         (6,554)
         Accounts payable                                                   (19,636)       (163,860)       (115,447)       (150,181)
         Royalties payable                                                   (5,434)          1,400          10,285           2,604
         Commissions payable                                                 (5,462)          5,719         (57,604)        (72,455)
         Accrued wages, bonus and payroll taxes                             (14,721)        (16,988)         (3,910)        (44,257)
         Income taxes payable                                                  --              --              (800)        (16,300)
         Accrued liabilities                                                 19,997         (14,327)          5,163         (41,158)
         Accrued rent payable                                                 9,933          10,660          19,866          25,270
                                                                        -----------     -----------     -----------     -----------
         Net cash (used) provided by operating activities                   145,993        (198,030)       (867,715)       (867,132)
                                                                        -----------     -----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
         Sales/Purchases of marketable securities                              --            18,798         249,667          (6,816)
         Purchases of equipment and color separations                       (53,539)        (32,758)        (66,591)        (62,882)
         Security deposits                                                     --             2,075            --             2,075
         Other                                                              (12,348)        (15,510)         (9,201)        (58,436)
         Net cash (used) provided by investing activity                     (65,887)        (27,395)        173,875        (126,059)
                                                                        -----------     -----------     -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
         Principal repayments on note payable                               (66,559)           --           (92,654)           --
                                                                        -----------     -----------     -----------     -----------
         Net cash used by financing activities                              (66,559)           --           (92,654)           --
                                                                        -----------     -----------     -----------     -----------

INCREASE/(DECREASE) IN CASH AND CASH
     EQUIVALENTS                                                             13,547        (225,425)       (786,494)       (993,191)
CASH AND CASH EQUIVALENTS,
     BEGINNING OF PERIOD                                                  2,486,021         882,945       3,286,062       1,650,711
                                                                        -----------     -----------     -----------     -----------
CASH AND CASH EQUIVALENTS,
     END OF  PERIOD                                                     $ 2,499,568     $   657,520     $ 2,499,568     $   657,520
                                                                        ===========     ===========     ===========     ===========

SUPPLEMENTARY CASH FLOW INFORMATION INCLUDES THE FOLLOWING:

         Cash paid during the period for:
              Interest                                                  $     6,441     $         0     $    10,146     $         0
              Income taxes                                              $         0     $     4,080     $     1,600     $    20,380


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

</FN>
</TABLE>

   
                                                            Page 7 of 17
    

<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:
                                                                     June 30,
                                                                       1998
                                                                   -----------
         Raw materials                                             $    40,670
         Work-in-process                                               870,843
         Finished goods                                                400,461
                                                                   -----------
                                                                   $ 1,311,974
                                                                   ===========

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
                                                                     June 30,
                                                                       1998
                                                                   -----------
         Machinery, equipment and leasehold improvements           $   727,397
         Molds                                                         418,553
         Color separations                                             300,162
         Furniture and fixtures                                         72,664
         Computer software                                              38,171
                                                                   ------------
                                                                     1,556,947

         Less accumulated depreciation and amortization               (747,017)
                                                                   ------------
                                                                   $   809,930
                                                                   ============


   
                                  Page 8 of 17
    

<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 June 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 17
    
<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.
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                            (1,800,000)

         Deferred income taxes expected to be
              utilized currently                              (264,900)
                                                           -----------
         Deferred income taxes                             $   385,800
                                                           ===========



   
                                  Page 10 of 17
    


<PAGE>

                         HEALTHY PLANET PRODUCTS, INC.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                                   (Unaudited)

NOTE 5. - EARNINGS PER SHARE

                                                Three Months Ended June 30, 1998
                                               ---------------------------------

                                                                       Per-Share
                                                 Loss        Shares      Amount
                                             ------------   ---------   --------
Net loss                                     $(1,195,632)
                                             ============
Basic loss per share:
    Loss available to common shareholders    $(1,195,632)   2,282,368   $  (.52)

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

Diluted loss per share:
    Loss available to common shareholders
         plus assumed conversions            $(1,195,632)   2,282,368   $  (.52)
                                             ============   =========   ========


                                                Six Months Ended June 30, 1998
                                               ---------------------------------
                                                                       Per-Share
                                                 Loss        Shares      Amount
                                             ------------   ---------   --------
Net loss                                     $(1,336,353)  
                                             ============
Basic loss per share:                                      
    Loss available to common shareholders    $(1,336,353)   2,257,367   $  (.59)
                                                           
Effect of dilutive securities                     --             --        --
                                             ------------   ---------   --------
                                                           
Diluted loss per share:                                    
    Loss available to common shareholders                  
         plus assumed conversions            $(1,336,353)   2,257,367   $  (.59)
                                             ============   =========   ========
                                                         

Warrants to purchase  368,117 shares of common stock at a weighted average price
per share of $4.45 and options to purchase  325,000  shares of common stock at a
weighted average price per share of $6.19 were outstanding at June 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 June 30, 1998, but were not included in the  computation of diluted  earnings
per share as the effect would be anti-dilutive.

   
                                  Page 11 of 17
    

<PAGE>

                          HEALTHY PLANET PRODUCTS, INC.

                    NOTES TO FINANCIAL STATEMENTS (continued)

                                   (Unaudited)
NOTE 5.

                                                Three Months Ended June 30, 1997
                                                -------------------------------
                                                                       Per-Share
                                                  Loss         Shares    Amount
                                                ---------    ---------  -------
Net loss                                        $(329,180)
                                                =========
Basic loss per share:
    Loss available to common shareholders       $(329,180)   1,827,362  $  (.18)

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

Diluted loss per share:
    Loss available to common shareholders       $(329,180)   1,827,362  $  (.18)
                                                =========    =========  =======


                                                 Six Months Ended June 30, 1997
                                                -------------------------------
                                                                      Per-Share
                                                  Loss        Shares    Amount
                                                ---------    ---------  -------
Net loss                                        $(458,833)
                                                =========
Basic loss per share:
    Loss available to common shareholders       $(458,833)   1,827,362  $  (.25)

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

Diluted loss per share:
    Loss available to common shareholders
         plus assumed conversions               $(458,833)   1,827,362  $  (.25)
                                                =========    =========  =======


Warrants to purchase  68,117 shares of common stock at a weighted  average price
per share of $5.31 and options to purchase  310,000  shares of common stock at a
weighted average price per share of $6.31 were outstanding at June 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 190,010 shares of common stock were outstanding
at June 30, 1997, but were not included in the  computation of diluted  earnings
per share as the effect would be anti-dilutive.


   
                                  Page 12 of 17
    

<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  increase in net sales for the six month period ended
June 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 six months  ended June 30, 1998,  the  Company's  net sales  amounted to
$1,716,998  which  reflected  a marginal  increase  versus last year's six month
results of $1,713,193 or 0.2%. Revenues from the Company's new Collectibles line
of $181,000  accounted  for 10.5% of revenues for the period while sales for the
Sierra Club and Nature  Baby lines  decreased  by 23.1% and 33.0%,  respectively
compared to the 1997  period.  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 June 30, 1998,  the Company's  net sales  amounted to
$739,740  representing  a shortfall  of $145,712  versus last year's three month
results of $884,912 or 16.4%.  Collectible  product sales of $85,000 were offset
principally  by a  decrease,  compared to the 1997  quarter,  in Sierra Club and
Nature Baby sales of $181,000 and $13,000 respectively.

Gross Profit

For the six months  ended June 30, 1998,  gross  profit  amounted to $354,005 or
20.6% of sales. For the comparable  prior year period,  gross profit amounted to
$933,420 or 54.4% of sales. The period to period decline resulted primarily from
a close-out  sale of obsolete  holiday  inventory at a cost of $230,000,  and an
increase in  inventory  reserves  of $346,000  for  slow-moving  inventory.  The
Company in  previous  years  during  revenue  growth  periods  pursued  quantity
discounts on its card businesses to improve  margins.  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 June 30, 1998, a loss at gross margin was incurred in
the amount of $195,200.  This reflects the above  referenced  close-out sale and
inventory reserve which were recorded during the second quarter.


                                  Page 13 of 17
    

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   
Operating Expenses

For the six months ended June 30, 1998, selling, shipping and marketing expenses
amounted to $582,987  reflecting an increase of $124,882 versus the prior year's
level of $458,045 or 27.2%.  Costs associated with the new Collectibles line for
advertising commissions and travel accounted for the year to year increase.

For the three  months  ended June 30,  1998,  selling,  shipping  and  marketing
expenses  amounted to $280,399  reflecting  an increase of $49,771 or 21.5% over
the  previous  year's  level  of  $230,628.   Costs   associated  with  the  new
Collectibles  line for  advertising,  commissions,  and travel accounted for the
year to year increase.

General and  administrative  expenses  amounted  to $927,333  for the six months
ended June 30,  1998,  reflecting  an increase  of $137,049 or 17.3%  versus the
prior year period of $790,284.  Increased professional fees accounted for 38% of
the  increase  with the  addition of  personnel  for the new  Collectibles  line
accounting for 42% of this year to year increase.

General and  administrative  expenses  amounted to $478,892 for the three months
ended June 30,  1998,  reflecting  an increase  of $105,736 or 28.3%  versus the
prior  year  quarter  of  $373,156.  The  addition  of  personnel  for  the  new
Collectibles line primarily accounted for the year to year increase.

Income

An  operating  loss of  $1,156,255  or $.51 per share was  incurred  for the six
months  ended June 30, 1998.  Net interest and other income of $119,902  reduced
the operating loss to result in a net loss of $1,036,353 or $.46 per share.  For
the prior year period, the operating loss amounted to $314,909 or $.17 per share
and loss before taxes amounted to $236,833. Increased operating costs associated
with the new  Collectibles  line, and the write-down of obsolete and slow-moving
inventory resulted in the six month loss. New loss for the six months ended June
30, 1998 amounted to $1,336,353 or $.59 per share,  compared to the prior year's
net loss of  $458,833 or $.25 per share.  During the current  quarter a $300,000
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 six months ended June 30, 1998,  the  realization  of tax benefits  from net
operating  loss  carryforwards  expected to be used in 1998 is not assured.  The
amount of the  valuation  allowance  will be  reviewed  and may be adjusted on a
quarterly basis.


                                  Page 14 of 17
    
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   

Balance Sheet

Total assets at June 30, 1998 amounted to $6,464,416  which reflected a decrease
versus the prior year level of $8,036,000  by $1,571,584 or 19.6%.  A decline in
cash, fixed assets,  deferred taxes,  receivables and inventories were offset in
part by increases in fixed assets,  prepaid  expenses and royalties to result in
the period to period decline.  Total current liabilities amounted to $645,804 as
of June 30, 1998 versus the December  31, 1997 level of  $806,000.  The decrease
was a result of the paydown of accrued  seasonal  commissions and trade payables
during the six month period.

Liquidity and Capital Resources

At June 30, 1998,  the Company's  working  capital was  $4,366,580  reflecting a
decrease  of  $1,039,420  versus the  working  capital at  December  31, 1997 of
$5,406,000.  Cash of $142,546 was provided for during the period from  operating
activities  primarily  due to a  reduction  in  receivables  offset  in  part by
increases in inventory, advances on royalties, and payables. Cash of 173,875 was
generated by  investment  activities  due  primarily  to the sale of  marketable
securities.  Cash of  $92,654  was  used to pay a note  related  to the  Corlett
Collectibles  acquisition.  The Company  remains  liquid with a current ratio of
7.8:1.

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 6/30/98.  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 June 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 17
    

<PAGE>

                           PART II. OTHER INFORMATION


Item 4.       Submission of Matters to a Vote of Securityholders

              On  August  5,  1998  the  Company  held  its  Annual  Meeting  of
Shareholders.  At the Meeting, the sole item of business was the election of two
(2) Class 1 Directors  to the Board of  Directors  of the  Company.  The two (2)
Directors  elected as Class 1 Directors and the percentage of the votes (both in
person and by proxy) was as follows:

                  Name of Director                        For           Withheld
                  ----------------                        ---           --------

                  Bruce A. Wilson                         95.1%             4.9%

                  William J. Nance                        95.1%             4.9%

At the meeting,  68.1% of all Common  Stock and Series D Preferred  Stock issued
and outstanding and entitled to vote were present in person or by proxy.

              The Board of Directors elected Mr. Robert D. Sweitzer,  Ph.D. as a
Class 3 Director to fill the vacancy on the Board that  existed by reason of the
resignation of Joseph F. Furlong III.

              The following  individuals  comprise the entire Board of Directors
and occupy the class indicated opposite his name:

                  Name of Director                        Class
                  ----------------                        -----
                  Bruce A. Wilson                           1
                  William J. Nance                          1
                  Daniel R. Coleman                         2
                  Michael G. Zybala                         2
                  John V. Winfield                          3
                  Robert D. Sweitzer                        3

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

              a)  Exhibits

                  None

              b)  Reports on Form 8-K


              During the quarter ended June 30, 1998,  the following  reports on
Form 8-K were filed by the Registrant.


   
                                  Page 16 of 17
    

<PAGE>

<TABLE>
                     PART II. OTHER INFORMATION (continued)
                     --------------------------------------
<CAPTION>
              b)  Reports on Form 8-K   (continued)

Date of Report              Item Reported             Description
--------------                                        -----------
<S>               <C>                                 <C>
April 6, 1998     Item 6.   Resignation of            Resignation of Robert Fagenson
                            Registrant's Directors    as Director

June 16, 1998     Item 6.   Resignation of            Resignation of Joseph F. Furlong III
                            Registrant's Directors    as Director

June 23, 1998     Item 5.   Other Events              Election of Michael G. Zybala as Director
</TABLE>

                                   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:  August _____, 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 17 of 17