SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

   X              Quarterly Report Pursuant to Section 13 or 15 (d) of the
-------           Securities Exchange Act of 1934.  For the quarterly period
                  ended March 31, 2001 or

                  Transition Report Pursuant to Section 13 or 15(d) of the
-------           Securities Exchange Act of 1934.  For the transition period
                  from _________ to _________.


                          Commission File Number 01912

                            SONOMAWEST HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)


        California                                         94-1069729
 (State of incorporation)                        (IRS Employer Identification #)


 1448 Industrial Avenue, Sebastopol, CA                        95472-4848
 --------------------------------------                        ----------
 (Address of principal executive offices)                      (Zip Code)


        Registrant's telephone number, including area code: 707/824-2548
        --------------------------------------------------



            (Former Name, Former Address and Former Fiscal Year, if
                           Changed Since Last Report)

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

         YES:     X                 NO:
               -------                   ----------



As of March 31, 2001, there were 1,523,231 shares of common stock, no par value,
outstanding.





<PAGE>



                            SONOMAWEST HOLDINGS, INC.

                                TABLE OF CONTENTS



PART  I.   FINANCIAL INFORMATION                                         Page

    Item 1.   Condensed Consolidated Financial Statements

              Condensed Consolidated Balance Sheets at March 31, 2001 and
              June 30, 2000...................................................3

              Condensed Consolidated Statements of Earnings - Three and Nine
              months Ended March 31, 2001 and 2000............................4

              Condensed Consolidated Statement of Changes in Shareholders'
              Equity - Nine months Ended March 31, 2001.......................5

              Condensed Consolidated Statements of Cash Flows - Nine months
              Ended March 31, 2001 and 2000...................................6

              Notes to Condensed Consolidated Financial Statements............7

    Item 2.   Management's Discussion and Analysis of Financial Condition
              and Results of Operations.......................................9



PART II.   OTHER INFORMATION

    Item 1.   Legal Proceedings..............................................13

    Item 6.   Exhibits and Reports on Form 8-K...............................13

    Signature ...............................................................13




<PAGE>


PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements


                            SONOMAWEST HOLDINGS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                              AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>

CURRENT ASSETS:                                                                          3/31/01                 6/30/00
---------------                                                                          -------                 -------
<S>                                                                                      <C>                      <C>
Cash and cash equivalents                                                                $ 6,882                  $8,359
Restricted cash  (see note 6)                                                                600                      -
Accounts Receivable, less allowance for uncollectible accounts of $10
and $47, respectively                                                                        123                     110
Prepaid income taxes                                                                         394                     816
Prepaid expenses                                                                              76                      87
Current deferred income taxes, net                                                           683                     621
                                                                                          --------               --------
Total current assets                                                                       8,758                   9,993

Real property, net                                                                         2,502                   2,854
Net assets of discontinued operations                                                        122                     122
Investment, at cost                                                                          466                      -
                                                                                         --------                --------
Total Assets                                                                             $11,848                 $12,969
                                                                                         ========                ========

CURRENT LIABILITIES:
--------------------
Accounts payable and accrued expenses                                                    $   171                  $  225
Unearned rents and deposits                                                                  170                     143
Current maturities of long term debt                                                          56                     617
Net liabilities of discounted operations                                                     254                     628
                                                                                        --------                 --------
Total current liabilities                                                                    651                   1,613
Long term debt-net of current maturities                                                   1,932                   1,974
Deferred income taxes, net                                                                   227                     147
                                                                                        --------                 --------
Total Liabilities                                                                          2,810                   3,734
                                                                                        --------                 --------
SHAREHOLDERS' EQUITY:
---------------------
Preferred stock: 2,500 shares authorized; no shares outstanding                               -                       -
Common stock: 5,000 shares authorized, no par value; 1,523 and 1,522
  Shares outstanding, respectively                                                         3,254                   2,905
Warrants for common stock                                                                     -                      456
Retained earnings                                                                          5,784                   5,874
                                                                                        --------                 --------
Total shareholders' equity                                                                 9,038                   9,235
                                                                                        --------                 --------

Total Liabilities and Shareholders' Equity                                               $11,848                 $12,969
                                                                                        ========                =========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements


<PAGE>


                            SONOMAWEST HOLDINGS, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)
                 AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
<TABLE>
<CAPTION>

                                                                                  Nine months                Three Months
                                                                                 Ended March 31             Ended March 31
                                                                                 --------------             --------------
                                                                                 2001         2000         2001            2000
                                                                                 ----         ----         ----            ----
<S>                                                                             <C>          <C>          <C>               <C>
Rental revenue                                                                  $ 886        $ 954        $ 332             289
Operating costs                                                                 1,573        1,543          543             709
Interest and Other income, net                                                    250          132           71              77
                                                                                 -----        -----        ------          -----
Loss from continuing operations before income taxes                              (437)        (457)        (140)           (343)
Benefit for income taxes                                                         (175)        (183)         (55)           (137)
                                                                                 -----        -----        ------          -----
Net loss from continuing operations                                              (262)        (274)         (85)           (206)
DISCONTINUED OPERATIONS:
   Earnings (loss) from discontinued operations, net of income taxes              172           32           25            (133)
   Gain (loss) on sale of discontinued business, net of income taxes                -        2,566            -            (334)
                                                                                 -----       ------        ------         -----
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS                                  172        2,598           25            (467)
                                                                                 -----       ------        ------         ------
NET EARNINGS (LOSS)                                                             $ (90)      $2,324         $(60)          $(673)
                                                                                ======      =======        ======         ======
WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS:
   Basic                                                                        1,523        1,520        1,523           1,521
   Diluted                                                                      1,550        1,546        1,557           1,521

EARNINGS (LOSS) PER COMMON SHARE
Continuing operations
   Basic                                                                       $(0.17)     $ (0.18)       $(0.06)        $(0.14)
   Diluted                                                                     $(0.17)     $ (0.18)       $(0.06)        $(0.14)

Discontinued operations:
   Basic                                                                       $ 0.11      $  1.71        $ 0.02         $(0.31)
   Diluted                                                                     $ 0.11      $  1.68        $ 0.02         $(0.31)

Net earnings (loss):
   Basic                                                                       $(0.06)     $  1.53        $(0.04)        $(0.44)
   Diluted                                                                     $(0.06)     $  1.50        $(0.04)        $(0.44)

</TABLE>

            See Notes to Condensed Consolidated Financial Statements




<PAGE>




                            SONOMAWEST HOLDINGS, INC.
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
                              AMOUNTS IN THOUSANDS
                    FOR THE NINE MONTHS ENDED MARCH 31, 2001

<TABLE>
<CAPTION>

                                                     Common Stock
                                              ----------------------------   Warrants for                     Total
                                                 Number                        Common        Retained      Shareholders'
                                               of Shares       Amount          Stock         Earnings         Equity
                                              ------------- -------------- --------------- -------------- ----------------


<S>                                               <C>            <C>              <C>           <C>             <C>
BALANCE, JUNE 30, 2000                              1,522          2,905            456           5,874           9,235

   Net loss                                             -              -              -             (90)            (90)
   Issuance of common stock                             1              5                                              5
   Repurchase of warrants                               -            344           (456)                           (112)
                                              ------------- -------------- --------------- -------------- ----------------
BALANCE, MARCH 31, 2001                             1,523       $  3,254          $  -           $5,784         $ 9,038
                                              ============= ============== =============== ============== ================
</TABLE>


            See Notes to Condensed Consolidated Financial Statements


<PAGE>


                            SONOMAWEST HOLDINGS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                              AMOUNTS IN THOUSANDS
                FOR THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000

<TABLE>
<CAPTION>

CASH FLOWS FROM OPERATING ACTIVITIES                                      2001                      2000
                                                                          ----                      ----
<S>                                                                        <C>                       <C>
Net earnings (loss)                                                        $(90)                    $2,324
Adjustments to reconcile net earnings (loss)
to net cash used for operating activities:
            Earnings from discontinued operations, net                     (172)                       (32)
            Gain on sale of discontinued business, net                        -                     (2,566)
            Depreciation and amortization expense                           362                        265

Changes in assets & liabilities:
    Accounts receivable, net                                                (13)                       (99)
    Prepaid income taxes                                                    422                        566
    Prepaid and other assets                                                 11                         98
    Accounts payable and accrued expenses                                   (54)                      (325)
    Income taxes payable                                                      -                         63
    Deferred income taxes, net                                               18                        748
    Other accrued expenses                                                    -                        126
    Unearned rents and deposits                                              27                         91
                                                                       ---------                  ---------
Net cash provided by continuing operating
      Activities                                                            511                      1,259
                                                                       ---------                  ---------
    Net cash provided by (used in) discontinued operations                 (202)                    12,275
                                                                       ---------                  ---------
    Net cash provided by operating activities                               309                     13,534
                                                                       ---------                  ---------

CASH FLOWS USED IN INVESTING ACTIVITIES,
    Capital expenditures                                                    (10)                       (63)
    Investments                                                            (466)                         -
    Investing activities of discontinued operations                           -                      1,349
                                                                       ---------                  ----------
Net cash provided by (used in) investing Activities                        (476)                     1,286
                                                                       ---------                  ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings under the line of credit                                       -                      3,727
    Payments on the line of credit                                            -                     (9,472)
    Principal payments of long term debt                                   (603)                    (1,672)
    Issuance of common stock                                                  5                         11
    Warrant repurchase                                                     (112)                         -
                                                                        --------                   ---------
    Net cash used in financing activities                                  (710)                    (7,406)
                                                                        --------                   ---------
NET INCREASE (DECREASE) IN CASH                                            (877)                     7,414

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR                           8,359                       548
                                                                        --------                    --------

TOTAL CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD                  $7,482                    $7,962
                                                                        ========                    ========

</TABLE>

            See Notes to Condensed Consolidated Financial Statements


                            SONOMAWEST HOLDINGS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        NINE MONTHS ENDED MARCH 31, 2001

Note 1-

The  accompanying  fiscal 2001 and 2000 unaudited  interim  statements have been
prepared  pursuant  to the  rules of the  Securities  and  Exchange  Commission.
Certain  information  and  disclosures  normally  included  in annual  financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to such rules and regulations,  although
the Company believes these  disclosures are adequate to make the information not
misleading.  In the opinion of management,  all adjustments necessary for a fair
presentation  for the periods  presented have been reflected and are of a normal
recurring nature except as discussed below.  These interim financial  statements
should be read in  conjunction  with the financial  statements and notes thereto
for each of the three years in the period  ended June 30,  2000.  The results of
operations  for the three and nine month  periods  ended  March 31, 2001 are not
necessarily  indicative of the results that will be achieved for the entire year
ending June 30, 2001.

Reclassifications  - Certain  previously  reported amounts were  reclassified to
conform to the current presentation with respect to discontinued operations.

Note 2-

Cash and cash equivalents consist of demand deposits and short term money market
accounts.

Note 3-

The Company has  committed  itself to a $3 million  investment  in the preferred
stock of a privately held  telecommunications  company,  which is expected to be
funded in fiscal 2001 and 2002.  The Company has  invested  $466,000 as of March
31, 2001. The Company has accounted for the investment using the cost method. It
is  expected  that the Company  will make the  remaining  investment  in several
installments throughout the fiscal years ending June 30, 2001 and 2002.

Note 4-

During the quarter ended  December 31, 2000,  the  Corporation  repurchased  and
retired  112,000  warrants for  $112,000.  The warrants  represented  a right to
purchase  112,000  shares of common  stock and had an  exercise  price of $8 per
share. The warrants were originally assigned a valued of $456,000.  Common stock
was increased by the difference  between the repurchase price and the originally
assigned value.

Note 5-

The Company's  Board of Directors  has  authorized a program to repurchase up to
500,000  shares of the  Company's  stock at $8.00  per share in a tender  offer.
Subsequent to March 31, 2001,  776,000 shares were tendered resulting in the pro
ration and acceptance of 64% of the tendered shares (500,000 shares).



<PAGE>



Note 6-

During December 2000, the Company entered into an agreement with its sole lender
in order to  modify  the  terms  of the  lending  agreement.  As a  result,  the
financial based debt covenant was amended.  As of the end of the fiscal year the
new covenant  requires the Company to maintain a debt service  coverage ratio of
at least 1.15 to 1. Until such time this ratio reaches 1.25 to 1, the Company is
required to maintain unrestricted, unencumbered cash or marketable securities of
at least  $600,000.  As of March 31, 2001,  the Company's debt service ratio was
less than 1.25.  Consequently,  $600,000 is classified as restricted cash on the
accompanying  balance  sheet.  Furthermore,  the terms of the loan  restrict the
Company from incurring any additional indebtedness during the term of the loan.

Note 7-

In July 1999, the Company  consummated an asset purchase agreement (the Purchase
Agreement) with Tree Top, Inc. The Purchase  Agreement  governed the sale of all
intangible  assets  (primarily  trademarks,  know-how,  and customer  lists) and
certain of the equipment  relating to the  Company's  processed  apple  products
line.  Although the Purchase  Agreement  excluded other product lines within the
Company's  ingredient  segment,  the Company decided to actively seek buyers for
the remaining  product  lines of the  ingredients  segment and has  discontinued
production of all ingredients  segment products.  Consequently,  the ingredients
segment has been  presented  as a  discontinued  operation  in the  accompanying
consolidated financial statements for all periods presented.

The purchase  price for the sale of the  processed  apple  products  line of $12
million was paid in cash at the closing  date of the sale on July 30,  1999.  In
addition,  equipment  with a net book value of $1,478,000  was sold for $500,000
and apple  product  inventories  with a cost of $1.7 million were  purchased for
$1.9 million. Tree Top, Inc. did not assume any of the Company's liabilities. In
connection with the Purchase  Agreement,  the Company and certain  shareholders,
directors,  and  management  have agreed not to compete  with Tree Top,  Inc. in
processed  apple product lines for a period of three to ten years.  In addition,
as part of the transaction,  the Company sold the Vacu-dry trademark.  Thus, the
Company changed its name to SonomaWest Holdings, Inc. in December 1999.

In the third  quarter  of fiscal  2000,  the  Company  decided to dispose of its
organic  packaged  foods  operations.  Accordingly,  the organic  packaged foods
segment is included in discontinued operations in the accompanying  consolidated
financial  statements  for all  periods  presented.  The Company  received  $1.1
million for all  intellectual  property,  consisting of the Made In Nature brand
name and all related  trademarks,  and  certain  dried  fruit  inventory  of the
organic  packaged  goods segment from Premier  Valley  Foods,  Inc. in May 2000.
Remaining assets of this segment have been disposed of as of March 31, 2001.

Upon the  disposal  of the  Company's  remaining  ingredients  assets,  the sole
remaining  line of  business  will be its  real  estate  management  and  rental
operations.

During fiscal 2000,  the Company  recorded a net after-tax  gain of $3.2 million
from the sale of the  processed  apple  product  line  and the  disposal  of the
remaining  product  lines of the  ingredients  segment and the organic  packaged
foods  segment.  The net after-tax  gain included $16.1 million of proceeds from
the sales offset by: a) the  write-down  of assets  related to the  discontinued
segments to their estimated net realizable  value (assets which were impaired as
a direct result of the decision to discontinue the segments);  b) costs incurred
in closing the discontinued  segments (consisting  primarily of severance costs,
professional fees, relocation costs and lease buy-outs);  c) estimated operating
losses to be  incurred  during the  wind-down  period;  and d) losses on sale of
equipment.



<PAGE>



Summarized historical information of the discontinued operations is as follows:

<TABLE>
<CAPTION>

(in thousands)                                                                 Nine months Ended March 31,
                                                                               ---------------------------
                                                                               2001                   2000
                                                                               ----                   ----
Income statement data:
<S>                                                                             <C>                  <C>
    Revenues                                                                    $384                 $9,264
    Costs and expenses                                                           (97)                (9,211)
                                                                                ----                -------
    Operating income                                                             287                     53
    Income tax expense                                                          (115)                   (21)
                                                                                -----               -------
    Income from discontinued operations, net of income taxes                    $172                   $ 32
                                                                                =====               =======

                                                                          March 31, 2001          June 30, 2000
                                                                          --------------          -------------
Balance sheet data:
Property, plant and equipment, net                                               122                    122
                                                                                 ---                    ---
    Total assets of discontinued operations                                      122                    122
                                                                                 ===                    ===

Accounts payable                                                                   -                    234
Provision for severance, transaction costs, wind-down costs and
other liabilities related to the decision to discontinue the segments            254                    394
                                                                                 ---                    ---
    Total liabilities of discontinued operations                                 254                    628
                                                                                 ---                    ---
    Net liabilities of discontinued operations                                 $(132)                 $(506)
                                                                               ======                 ======
</TABLE>

Note 8 -

Statement of Cash Flows - Interest and income tax payments reflected in the
Consolidated Statement of Cash Flows were as follows:

(in thousands)                            2001              2000
                                          ----              ----
Interest paid                            $ 119             $ 285
Income taxes paid                        $ -               $ 420


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

     SonomaWest  Holdings,  Inc.  (the  "Company")  is including  the  following
cautionary  statement in this Form 10-Q to make applicable and take advantage of
the safe harbor  provisions of the Private  Securities  Litigation Reform Act of
1995 for any forward  looking  statements made by, or on behalf of, the Company.
Forward looking  statements  include  statements  concerning plans,  objectives,
goals, strategies,  future events or performance and underlying assumptions, and
other  statements which are other than statements of historical  facts.  Certain
statements  contained  herein are forward looking  statements and,  accordingly,
involve risks and uncertainties  which could cause actual results or outcomes to
differ  materially from those expressed in the forward  looking  statements.  In
addition to other factors and matters discussed  elsewhere  herein,  these risks
and uncertainties  include, but are not limited to, uncertainties  affecting the
real estate market,  performance of the Company's investment,  and management of
growth.  The Company's  expectations,  beliefs and  projections are expressed in
good faith and are believed by the Company to have a reasonable basis, including
without  limitation,  management's  examination of historical  operating trends,
data  contained in the  Company's  records and other data  available  from third
parties, but there can be no assurance that management's  expectations,  beliefs
or projections will result or be achieved or accomplished. The Company disclaims
any  obligation to update any  forward-looking  statements to reflect  events or
circumstances after the date hereof.

     The financial  statements herein presented for the quarters and nine months
ended March 31, 2001 and 2000 reflect all the adjustments that in the opinion of
management are necessary for the fair presentation of the financial position and
results of operations  for the periods then ended.  All  adjustments  during the
periods presented are of a normal recurring nature unless otherwise stated.


                                    OVERVIEW

     Since the Company acquired certain of the assets and liabilities of Made in
Nature,  Inc. in June 1998, the Company had operated in three business segments:
industrial dried fruit ingredients,  organic packaged foods and real estate. The
Company  commenced  a  strategic  reorganization  upon the  announcement  of the
proposed sale of its  apple-based  industrial  ingredients  product line in June
1999.  In August 1999 the decision was made to sell or  discontinue  all product
lines in the Company's  industrial dried fruit ingredients  business segment. In
January 2000, the Company  decided to sell or discontinue  its organic  packaged
foods  business.  As a result of these  decisions,  both  business  segments are
considered discontinued operations and their operating results,  results of cash
flows,  net assets  and  liabilities  are  reflected  outside  of the  Company's
continuing operations. The Company's sole remaining line of business is its real
estate management and rental operations.  Additionally, the Company is committed
to a $3 million minority investment in a telecommunications company to be funded
over the next two fiscal years.


                             DISCONTINUED OPERATIONS

     In July  1999,  the  Company  sold the bulk of its  apple-based  industrial
ingredients product line to Tree Top, Inc., of Selah,  Washington.  This product
line represented 55% and 81% of the Company's sales for the years ended June 30,
1999 and 1998, respectively.  This sale, which was recorded in the first quarter
of fiscal  2000,  is an important  element of the  Company's  strategic  plan to
improve the return on its investments and increase  shareholder value by exiting
businesses  with low  returns and high  capital  requirements.  The  transaction
provided  financial  resources  to support the  Company's  real estate and other
business opportunities. Following completion of the sale, the Company determined
in  August  1999  that  the  remaining  product  lines in the  Company's  vacuum
ingredients  segment of its business  would be  discontinued  and held for sale.
These  product  lines  included  the  Company's  dried  ingredients,   Perma-Pak
long-term food storage,  and drink mix businesses.  In January 2000, the Company
decided to sell or discontinue its organic packaged goods business.  As a result
of these  decisions,  the  Company has  classified  these  business  segments as
discontinued operations.  Accordingly, the Company has segregated the net assets
of the discontinued  operations in the consolidated  balance sheets at March 31,
2001 and June 30, 2000, the operating results of the discontinued  operations in
the  consolidated  statements of operations  for the three and nine months ended
March 31, 2001 and 2000 and the cash flows from  discontinued  operations in the
consolidated  statements  of cash flows for the nine months ended March 31, 2001
and 2000.

     For the nine months ended March 31, 2001,  the Company  recorded  after-tax
earnings from discontinued  operations of $172,000 on revenue of $384,000.  This
compares to an after-tax  earnings of $32,000 on revenue of  $9,264,000  for the
nine  months  ended March 31 2000.  The  decline in revenue in the  discontinued
operations  is due to the sale of the apple  ingredients  and  organic  packaged
goods  businesses in fiscal 2000.  After the allocation of selling,  general and
administrative  expenses  between  continuing and discontinued  operations,  the
discontinued  businesses  generated  $287,000 of  operating  income for the nine
months ended March 31, 2001 versus an  operating  income of $53,000 for the nine
months ended March 31, 2000.

     The Company is actively  marketing all remaining assets of its discontinued
businesses (primarily inventory), but there can be no assurances that there will
be a sale of all or any of the remaining assets.


                        RESULTS OF CONTINUING OPERATIONS

     The  Company's  continuing  line of  business  consists  of the leasing and
development  of  the  Company's  real  estate.  Additionally,  the  Company  has
committed to a $3 million minority  investment in a  telecommunications  company
(of which  $466,000 has been invested to date).  The Company  intends to develop
its real estate largely for agricultural and industrial  rental. The current use
permit for the Company's  former  production  site requires that the facility be
used  exclusively  for  diversified   agricultural   purposes.  The  Company  is
attempting  to broaden the use permit to allow other  types of  activities,  but
there can be no assurance  that such efforts will be  successful.  The Company's
other piece of real estate is already zoned for industrial use.

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

     The Company's continuing line of business is its real estate management and
rental  operations  consisting  of several  buildings  and yards on two property
locations.  The two properties have a combined  leaseable area of  approximately
470,000 square feet on 81 acres of land.  Twenty-four  tenants that have varying
original lease terms ranging from  month-to-month to eight years with options to
extend the leases by approximately 287,000 square feet or 66% of the properties'
available  lease space.  Additionally,  the Company has  committed to $3 million
minority investment in a  telecommunications  company.  Currently,  there are no
other plans to make any additional investments.

     Rental Revenue. The Company leases warehouse, cold storage, production, and
office space as well as outside storage space at both of its properties. For the
nine months  ending March 31, 2001,  rental  revenue  decreased 7% or $68,000 to
$886,000 compared to the  corresponding  period in the prior year. This decrease
was  primarily a result of losing a significant  tenant at the Company's  former
production facility.  This facility is approximately 57% occupied. The Company's
other property is approximately 76% occupied. While the Company and its retained
broker are actively marketing the properties to prospective  tenants,  there can
be no assurance that tenants will be found in the near term.

     Operating  Costs.  Operating  costs  consist  of direct  costs  related  to
continuing  operations and all general  corporate  costs.  Only direct  selling,
general and administrative costs related to the ingredients and organic packaged
goods  businesses were allocated to discontinued  operations in the consolidated
statements of  operations.  The Company's  operating  results will be negatively
impacted as long as the tenant  rental  revenue  stream fails to cover  existing
operating costs. Cost reduction efforts to minimize any avoidable  spending have
been undertaken to minimize  negative  operating results while the tenant search
continues.  For the nine months ending March 31, 2001, operating costs increased
2% or $30,000 to $1,573,000  compared to the  corresponding  period in the prior
year, as costs have begun to normalize for the continuing operation.

     Interest  and Other  Income  (Expense),  Net.  Interest  and  other  income
(expense)  net  consists  primarily  of interest  income on the  Company's  cash
balances, and interest expense on mortgage debt and shareholder loans. In Fiscal
2000,  proceeds from the sale of the  ingredients  business were used to pay off
the Company's  revolving bank line of credit and substantially  reduce long-term
debt. As a result,  for the nine months ending March 31, 2001, the Company was a
net  investor of cash,  generating  $369,000 of  interest  income and  incurring
$119,000 of interest expense, while in the corresponding period in prior year it
was a net investor generating interest income of $284,000 and incurring interest
expense of $176,000.

     Income  Taxes.  The  effective tax rate for the nine months ended March 31,
2001 was 40%, or approximately  the statutory rate after the federal benefit for
state income taxes.

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

     The  Company  had cash of $7.5  million  at March  31,  2001,  and  current
maturities  of long-term  debt of $56,000.  In fiscal  2000,  the Company used a
portion of the $16.1  million net proceeds from its  discontinued  businesses to
pay off  borrowings  under  its bank  line of credit  and  retire a  significant
portion of its long-term  debt. In August 2000, the Company elected to prepay in
full a remaining  shareholder note payable (scheduled to mature in 2003), in the
amount of  $564,000  plus  accrued  interest.  Although  the  Company  generated
$511,000  from  operating  activities,  the cash  balances  decreased  from $8.4
million at June 30, 2000  primarily  as a result of an  investment  in Metro PCS
(see  below),  the  repurchase  of  warrants,  the  shareholder  note payoff and
payments of liabilities related to discontinued operations.

     During  December 2000, the Company  entered into an agreement with its sole
lender in order to modify the terms of the lending  agreement.  As a result, the
financial  based debt  covenant  was  amended.  The new  covenant  requires  the
Company,  at the end of each Fiscal Year,  to maintain a debt  service  coverage
ratio at least  1:15 to 1. Until  such time this  ratio  reaches  1.25 to 1, the
Company is required to maintain  unrestricted,  unencumbered  cash or marketable
securities  of at least  $600,000.  As of March 31,  2001,  the  Company's  debt
service  ratio was less than  1.25.  Consequently,  $600,000  is  classified  as
restricted cash on the accompanying balance sheet. Furthermore, the terms of the
loan restrict the Company from incurring any additional  indebtedness during the
term of the loan.

     The  Company  has  committed  itself  to a $3  million  investment  in  the
preferred stock of a privately held telecommunications  company, MetroPCS, Inc.,
which is expected to be funded in fiscal  2001 and 2002.  As of March 31,  2001,
the Company had invested $466,000 on its $3 million commitment.  The Company has
accounted  for the  investment  using the cost method.  It is expected  that the
remaining  $2,534,000  is to be funded in several  installments  throughout  the
fiscal years ending June 30, 2001 and 2002.

     In December 2000, The Corporation  repurchased and retired 112,000 warrants
for $112,000.  The warrants  represented a right to purchase  112,000  shares of
common  stock and had an  exercise  price of $8 per  share.  The  warrants  were
originally  assigned a valued of  $456,000.  Common  stock was  increased by the
difference between the repurchase price and the originally assigned value.

     The Company's  Board of Directors has authorized a program to repurchase up
to 500,000  shares of the Company's  stock at $8.00 per share in a tender offer.
Subsequent to March 31, 2001,  776,000 shares were tendered resulting in the pro
ration and acceptance of 64% of the tendered shares (500,000 shares).


<PAGE>


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

     None.

Item 6.  Exhibits and Reports on Form 8-K

        a.   Exhibits

             None

        b.   Reports on Form 8-K

              None


SIGNATURES

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



Date:    May 9, 2001



/s/ Gary L. Hess
------------------
Gary L. Hess,
Chief Executive Officer, President and Chief Financial Officer



<PAGE>