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 December 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 #)


  2064 Highway 116 North, Sebastopol, CA                         95472-2662
 (Address of principal executive offices)                        (Zip Code)


      Registrant's telephone number, including area code:     707-824-2001
      --------------------------------------------------



      (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 February 1, 2002,  there were  1,104,393  shares of common  stock,  no par
value, outstanding.





<PAGE>





                            SONOMAWEST HOLDINGS, INC.

                                TABLE OF CONTENTS



PART  I.   FINANCIAL INFORMATION                                            Page

    Item 1.   Condensed Financial Statements

              Condensed Balance Sheets at December 31, 2001 and
              June 30, 2001....................................................3

              Condensed Statements of Earnings - Three and Six months
              ended December 31, 2001 and 2000.................................4

              Condensed Statement of Changes in Shareholders' Equity -
              Six months ended December 31, 2001...............................5

              Condensed Statements of Cash Flows - Six months ended
              December 31, 2001 and 2000.......................................6

              Notes to Condensed 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...............................................14

    Item 6.   Exhibits and Reports on Form 8-K................................14

    Signature................................................................ 15




<PAGE>


PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements


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

ASSETS                                                                                12/31/01          6/30/01
                                                                                  ----------------- ----------------
CURRENT ASSETS:
<S>                                                                                     <C>             <C>
   Cash                                                                                 $2,939          $ 3,336
   Restricted cash  (see note 3)                                                           600              600
   Accounts receivable, less allowance for uncollectible accounts of $9
   and $10 respectively                                                                    117               97
   Other receivables                                                                        37              124
   Prepaid income taxes                                                                    250              287
   Prepaid expenses and other assets                                                        49              129
   Current deferred income taxes, net                                                      361              263
                                                                                  ----------------- ----------------
         Total current assets                                                            4,353            4,836
                                                                                  ----------------- ----------------

RENTAL PROPERTY, net                                                                     2,152            2,252
INVESTMENT, at cost                                                                      1,045              599
LT DEFERRED TAXES                                                                           18                -
PREPAID COMMISSIONS                                                                         69                -
                                                                                  ----------------- ----------------

         Total assets                                                                   $7,637           $7,687
                                                                                  ================= ================

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
                                                                                                           $
   Current maturities of long-term debt                                             $       59               57
   Accounts payable                                                                        170               70
   Accrued expenses                                                                        262              241
   Accrued payroll and related liabilities                                                 323               52
   Unearned rents and deposits                                                             216              176
   Net liabilities of discontinued operations                                              223              281
                                                                                  ----------------- ----------------
         Total current liabilities                                                       1,253              877
                                                                                  ----------------- ----------------
   LONG TERM DEBT, net of current maturities                                             1,887            1,917
                                                                                  ----------------- ----------------
   DEFERRED INCOME TAXES, net                                                                -               45
                                                                                  ----------------- ----------------
         Total liabilities                                                               3,140            2,839
                                                                                  ----------------- ----------------
SHAREHOLDERS' EQUITY:
   Preferred stock: 2,500 shares authorized; no shares outstanding                           -                -
   Common stock: 5,000 shares authorized, no par value; 1,024 and 1,024
     shares outstanding, respectively                                                    2,210            2,187
   Retained earnings                                                                     2,287            2,661
                                                                                  ----------------- ----------------
         Total shareholders' equity                                                      4,497            4,848
                                                                                  ----------------- ----------------

         Total liabilities and shareholders' equity                                     $7,637          $ 7,687
                                                                                  ================= ================
</TABLE>

        The accompanying notes are an integral part of these statements.

                                        3
<PAGE>



                            SONOMAWEST HOLDINGS, INC.
                        CONDENSED STATEMENTS OF EARNINGS
          FOR THE SIX AND THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000
                                   (UNAUDITED)
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                            Six Months              Three Months
                                                                        Ended December 31         Ended December 31
                                                                        -----------------         -----------------
                                                                        2001          2000           2001        2000
                                                                        ----          ----           ----        ----
<S>                                                                    <C>           <C>          <C>           <C>
RENTAL REVENUE                                                        $   733       $  554        $  382        $ 311
OPERATING COSTS                                                         1,245        1,030           434          513
                                                                    ------------ ------------ ------------- ------------
OPERATING LOSS                                                           (512)        (476)          (52)        (202)

INTEREST AND OTHER INCOME (EXPENSE), NET                                  (67)         179            (6)          91
                                                                    ------------ ------------ ------------- ------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                      (579)        (297)          (58)        (111)
                                                                                       120
BENEFIT FOR INCOME TAXES                                                  162                         24           45
                                                                    ------------ ------------ ------------- ------------
NET LOSS FROM CONTINUING OPERATIONS                                      (417)        (177)          (34)         (66)
                                                                                       147
GAIN ON SALE OF DISCONTINUED OPERATIONS, net of income taxes               43                          5           57
                                                                    ------------ ------------ ------------- ------------
NET LOSS                                                              $  (374)      $  (30)       $  (29)        $ (9)
                                                                    ============ ============ ============= ============

WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS:
   Basic                                                                1,024        1,522         1,024        1,522
   Diluted                                                              1,059        1,545         1,058        1,548

EARNINGS (LOSS) PER COMMON SHARE
Continuing operations
   Basic                                                              $ (0.41)      $(0.12)      $ (0.03)     $ (0.05)
   Diluted                                                            $ (0.41)      $(0.12)      $ (0.03)     $ (0.05)

Discontinued operations:
   Basic                                                              $  0.04       $ 0.10       $  0.01      $  0.04
   Diluted                                                            $  0.04       $ 0.10       $  0.01      $  0.04

Net loss:
   Basic                                                              $ (0.37)     $ (0.02)      $ (0.03)     $ (0.01)
   Diluted                                                            $ (0.37)     $ (0.02)      $ (0.03)     $ (0.01)


</TABLE>

                                       4
        The accompanying notes are an integral part of these statements.







<PAGE>

<TABLE>
<CAPTION>



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



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


<S>                                               <C>          <C>                <C>             <C>
BALANCE, JUNE 30, 2001                              1,024      $  2,187       $  2,661        $   4,848

   Net loss                                             -            -            (345)            (345)
   Non-cash stock compensation charge                   -            18             -                18
   Issuance of common stock                             -             2             -                 2
                                              ------------- -------------- -------------- ---------------

BALANCE, SETPEMBER 30, 2001                         1,024      $  2,207       $  2,316        $   4,523
                                              ------------- -------------- -------------- ---------------

   Net loss                                             -             -            (29)             (29)
   Issuance of common stock                             -             3             -                 3
                                              ------------- -------------- -------------- ---------------

BALANCE, DECEMBER 31, 2001                          1,024      $  2,210       $  2,287        $   4,497

                                              ============= ============== ============== ===============

</TABLE>

                                       5
        The accompanying notes are an integral part of these statements.



<PAGE>


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

<TABLE>
<CAPTION>

                                                                                    2001                 2000
                                                                             -------------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                            <C>                   <C>
Net loss                                                                       $  (374)              $  (30)
Adjustments to reconcile net loss
   to net cash provided by (used in) operating activities:
   Gain on sale of discontinued operations, net                                    (43)                (147)
   Non-cash stock compensation charge                                               18                    -
   Depreciation expense                                                            194                  242

Changes in assets & liabilities:
    Prepaid income taxes                                                            37                  500
    Accounts receivable, net                                                       (20)                   0
    Other receivables                                                               87                    -
    Prepaid expenses and other assets                                               80                   25
    Prepaid Commissions                                                            (69)                   -
    Accounts payable and accrued expenses                                          121                  (77)
    Deferred income taxes, net                                                    (161)                 (22)
    Accrued payroll and related liabilities                                        271                    0
    Unearned rents and deposits                                                     40                   19
                                                                             -------------------- ----------------
         Net cash provided by continuing operating activities                      181                  510
                                                                             -------------------- ----------------
         Net cash used in discontinued operations                                  (15)                (230)
                                                                             -------------------- ----------------
         Net cash provided by operating activities                                 166                  280
                                                                             -------------------- ----------------

CASH FLOWS USED IN INVESTING ACTIVITIES:
    Capital expenditures, net                                                      (94)                 (11)

    Investments                                                                   (446)                (329)
                                                                             -------------------- ----------------

         Net cash used in investing activities                                    (540)                (340)
                                                                             -------------------- ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments of long term debt                                           (28)                (589)
    Warrant repurchase                                                               -                 (112)
    Issuance of common stock                                                         5                    5
                                                                             -------------------- ----------------
         Net cash used for financing activities                                    (23)                (696)
                                                                             -------------------- ----------------

NET DECREASE IN CASH                                                              (397)                (756

CASH AT BEGINNING OF THE PERIOD                                                  3,936                8,359
                                                                             -------------------- ----------------

CASH AT THE END OF THE PERIOD                                                 $  3,539             $  7,603
                                                                             ==================== ================

</TABLE>

                                       6
        The accompanying notes are an integral part of these statements.




                            SONOMAWEST HOLDINGS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                       SIX MONTHS ENDED DECEMBER 31, 2001



Note 1-

The  accompanying  fiscal 2002 and 2001 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,  2001.  The results of
operations for the six month period ended December 31, 2001 are not  necessarily
indicative  of the results that will be achieved for the entire year ending June
30, 2002.

Reclassifications  - Certain  previously  reported amounts were  reclassified to
conform to the current presentation.



Note 2-

The Company has  committed  itself to a $3 million  investment  in the preferred
stock of a privately  held  telecommunications  company,  Metro PCS,  Inc. As of
December  31,  2001,  the  Company  has  invested  $1,045,000  of its $3 million
commitment.  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 year ending June 30, 2002.



Note 3-

As of August 15, 2001, the Company and the bank agreed to a Restated and Amended
Addendum to its December 2000 loan agreement.  This addendum amends and restates
the provisions of this agreement. The new addendum requires that the Company, at
the end of each Fiscal Year,  maintain a debt service coverage ratio of at least
1.05 to 1. It also  requires  that until such time as this ratio reaches 1.25 to
1,  the  Company  must  maintain  restricted,  unencumbered  cash or  marketable
securities of at least $600,000.  As of December 31, 2001 the $600,000 continues
to be presented on the balance sheet as Restricted  Cash, as the bank  agreement
states that the test of the Debt Service coverage ratio be calculated as of each
fiscal year end. As of the last fiscal year end,  the Company did not exceed the
required  ratio to release  this  restriction.  As a condition  to decrease  the
required  debt  service  coverage  ratio  from  1.15 to  1.05,  per the  Amended
Addendum,  the bank was granted a security interest in a money market account in
the amount of $90,000.  This account balance is part of, not an addition to, the
restricted  unencumbered cash balance of $600,000.  As of December 31, 2001, the
Company's Debt Service  coverage  ratio was slightly under the minimum  required
ratio of 1.05 as of the end of the fiscal year.

The Company's  long-term  debt is a five-year  note,  secured by real  property,
payable in monthly  installments  of principal  and interest  with a maturity of
December 2003. The interest rate is tied to LIBOR and is synthetically  fixed at
7.35 percent.  To reduce its exposure to changes in the LIBOR rate,  the Company
has entered into an interest rate swap  contract.  Under the interest rate swap,
the  Company  exchanges  monthly,  the  difference  between  fixed and  floating
interest  amounts  calculated  on an  initial  agreed-upon  notional  amount  of
$2,100,000.  The notional  amount is amortized  monthly  based on the  Company's
principal payments and was $1,946,000 as of December 31, 2001. The interest rate
contract  has a five year term that  coincides  with the term of the  borrowing,
both of which began on  December  1, 1998 and end on December 1, 2003.  The swap
contract  requires  the  Company's  counter  party to pay it a floating  rate of
interest based on USD-LIBOR due monthly. In return, the Company pays its counter
party a fixed rate of 5.10%  interest  due  monthly.  The  Company  reports  all
changes in fair value of its swap  contract in  earnings.  During the six months
ended  December 31, 2001,  the Company  recorded a decrease in the value of this
swap of $56,800, which is included in interest expense. The cumulative effect of
adopting this standard effective July 1, 2000 was not significant.



Note 4-

On July 17, 2001 the Company  entered into a separation  agreement in principle,
which was thereafter  executed,  with its President and Chief Executive  Officer
replacing  the  executive's  existing  employment  agreement.  Pursuant  to  the
separation  agreement,  the executive continued as President and Chief Executive
Officer,  first on a  full-time  basis and then on a  part-time  basis,  through
October 31, 2001.  Effective September 2001, the Company began paying separation
payments to Mr. Hess in the amount of $12,500  monthly for 29 months,  replacing
all payment  obligations  under his prior  employment  agreement.  The Company's
obligation  under this agreement of $362,500 was recorded in operating  expenses
in the first  quarter  of  fiscal  2001.  Mr.  Hess has been  designated  as the
Company's  exclusive  sales  representative  in its  efforts to sell any and all
remaining  Perma-Pak  finished  good  inventory  and  other  Perma-Pak  property
(inventory  and property  related to  discontinued  operations).  As part of the
separation  agreement,  Mr.  Hess was given  until  January  29,  2002 to decide
whether to extend the period  within which he was eligible to exercise the stock
options  previously  granted to him. On January 29,  2002,  Mr. Hess  elected to
exercise his option to purchase 80,000 shares of his total  outstanding  options
of 89,474 shares.  Mr. Hess elected to extend the termination date on his option
to purchase the remaining  9,474 shares,  through the last date of the severance
period or January 31, 2004.  The Company has committed to loan Mr. Hess $400,000
(80,000 at $5.00 per share) to allow Mr.  Hess to  exercise  the  aforementioned
options.  The note  dated  January  29,  2002 in the amount of  $400,000,  bears
interest at the  Applicable  Federal Rate (AFR) for loans of three years or less
on the date of the note  (the  AFR at  January  28,  2002  was  2.73%),  payable
quarterly. The Note is payable on August 1, 2004. The Note is recourse,  secured
by the  stock  certificates  and  evidenced  in the form of a loan and  security
agreement.  As a result of the  extension  of the option to  purchase  the 9,474
shares,  the Company will incur a non-cash  stock  compensation  charge  against
earnings in the third quarter ended March 31, 2002 of $ 22,501.

On September  4, 2001 the Company  authorized  the waiver of the  provision of a
resigning board member's options providing for the termination 90 days following
service. Consequently, a non-cash compensation charge of $18,000 was recorded in
September, 2001.



Note 5-

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
increase 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 condensed  consolidated balance sheets at
December 31, 2001 and 2000, the operating results of the discontinued operations
in  the   consolidated   statements  of  operations  and  the  cash  flows  from
discontinued  operations in the consolidated statements of cash flows for period
ending December 31, 2001 and 2000.

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   and  its   investment   in  the   preferred   stock  of  a  private
telecommunications company, Metro PCS, Inc.

The gain on the sale of discontinued  operations  presented in the  accompanying
statements  of earnings  for the six months  ended  December  31, 2001 and 2000,
respectively represent the sales of remaining discontinued inventories and fixed
assets net of related selling costs and income taxes.  Remaining  liabilities of
discontinued  operations of $223,000 and  $281,000,  as of December 31, 2001 and
June 30, 2001,  respectively  relate to reserves for rental repairs necessary to
ready  warehouses  previously  used in the  discontinued  operations  for future
rentals and  estimated  lease  obligations  at the  Company's  former  corporate
headquarters in excess of projected sublease income.  All remaining  inventories
and fixed assets of discontinued operations are fully reserved.



Note 6 -

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                           $ 74             $ 83
Income taxes paid                       $ -               $ -


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

SonomaWest  Holdings,  Inc.  (the  "Company" or  "Registrant")  is including the
following cautionary statement in this Annual Report 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
manage-ment 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, although actual results may differ materially from those described in any
such forward looking statements. Risks inherent in the Registrant's business and
factors that could cause or  contribute  to such  differences  include,  without
limitation,  the  considerations  set forth under  "Management's  Discussion and
Analysis of  Financial  Condition  and Results of  Operations".  There can be no
assurance  that  management's  expectations,  beliefs  or  projections  will  be
achieved or accomplished,  and the Company expressly disclaims any obligation to
update any forward looking statements.

The  financial  statements  herein  presented for the three and six months ended
December  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

As of December  31, 2001,  the  Company's  business  consists of its real estate
management and rental  operations and its investment in the preferred stock of a
private  telecommunications  company,  Metro PCS, Inc.  Prior to the sale of its
other  business  segments,  SonomaWest  operated  in  three  business  segments:
industrial dried fruit ingredients,  organic packaged goods and real estate. The
Company  commenced  a  strategic  reorientation  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.  In January
2000,  the Company  decided to sell or discontinue  it's organic  packaged goods
business.  As a result of these decisions,  both of these business  segments are
considered discontinued operations and their operating results,  results of cash
flows  and  net  assets  are  reflected  outside  of  the  Company's  continuing
operations.

During fiscal 2001, the Company committed to a $3 million minority investment in
a telecommunications  company. As of December 31, 2001, the Company had invested
$1,045,000 of its $3.0 million commitment.


                             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,  was 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
liabilities of the discontinued operations in the consolidated balance sheets at
December 31, 2001 and June 30, 2001, the operating  results of the  discontinued
operations in the  consolidated  statements of operations  for the three and six
months  ended  December  31, 2001 and 2000 and the cash flows from  discontinued
operations in the consolidated statements of cash flows for the six months ended
December 31, 2001 and 2000.

For the six months ended  December 31, 2001,  the Company  recorded an after-tax
gain from discontinued operations of $43,000. This compares to an after-tax gain
of $147,000 for the six months ended December 31, 2000. The gains on the sale of
discontinued  operations  relate to the Company's  continued efforts to sell the
remaining discontinued inventories and fixed assets.

The  Company   continues  to  actively  market  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 and all amounts
have been fully reserved.


                        RESULTS OF CONTINUING OPERATIONS

The  Company's  continuing  line of business is its real estate  management  and
rental  operations.  Additionally,  the  Company has  committed  to a $3 million
minority  investment  in a  telecommunications  company,  Metro PCS,  Inc. As of
December  31,  2001,  the Company has  invested  $1,045,000  of its  commitment.
Currently,  there  are no  plans  to make any  additional  commitments  to other
investments.


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

The Company leases  warehouse,  production,  and office space as well as outside
storage  space at both of its  properties.  The two  properties  have a combined
leaseable area of approximately 472,000 square feet on 81.5 acres of land. As of
December  31,  2001,  the Company has  twenty-eight  tenants  that have  varying
original lease terms ranging from  month-to-month to eight years with options to
extend the  leases.  As of December  31,  2001,  the  Company's  tenants  occupy
approximately 301,000 square feet or 64% of the properties' available space.

Rental  Revenue.  For the six months  ended  December  31, 2001  rental  revenue
increased  $179,000 or 32% as compared to the corresponding  period in the prior
year.  For the three months ended  December  31, 2001 rental  revenue  increased
$71,000 or 23% as compared to the  corresponding  period in the prior year. Both
of these  increases  were  attributable  to  increased  occupancy in the current
fiscal year.  The Company has  increased the number of tenants by 17% from 24 as
of December 31, 2000 to 28 as of December 31, 2001.

Operating  Costs.  Operating costs consist of direct costs related to continuing
operations and all general corporate costs. Only direct selling expenses related
to the  discontinued  packaged  goods  businesses  were charged to  discontinued
operations in the  statements of  operations.  For the six months ended December
31, 2001 operating  costs  increased  $215,000 or 21% compared to the six months
ended December 31, 2000, this increase was primarily due to separation  costs of
$362,500  expensed during the three months ended September 30, 2001,  related to
the  termination  of the  Company's  CEO  offset by  efficiencies  gained as the
Company  continues to minimize  costs.  Operating  costs also include a non-cash
compensation  charge of  $18,000  related  to the  extension  of a former  Board
Member's  stock  options  during the three  months  ended  September  30,  2001.
Excluding the impact of separation costs and the non-cash  compensation  charge,
the Company's  total  operating  costs exceeded the gross rental  revenue.  Cost
reduction  efforts to minimize any avoidable  spending  have been  undertaken to
minimize these negative  operating  results while the Company actively  searches
for additional  tenant  revenue.  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 or at rates  comparable
with  existing  leases.  As a result,  the Company's  operating  results will be
negatively  impacted as long as the tenant rental  revenue stream fails to cover
existing operating costs.

For the three months ended December 31, 2001 operating costs  decreased  $79,000
or 15% compared to the three months ended  December 31, 2000.  This is primarily
due to a decrease in staff and consulting expenses.

Interest and Other Income  (Expense),  Net.  Interest and other income (expense)
consists  primarily of interest  income on the Company's cash balances offset by
interest  expense on mortgage debt and the decrease in the value of its interest
rate swap  contract.  For the six months ending  December 31, 2001,  the Company
generated  $64,000 of interest income and incurred $130,000 of interest expense,
compared to $260,000 of interest income and $83,000 of interest  expense for the
corresponding  period in the prior year. The decrease in interest  income is due
to a reduced  comparative  cash balance in fiscal 2001 versus fiscal 2000.  This
decrease was a result of a stock repurchase of $4.0 million in October 2000, the
Company's investment in Metro PCS and lower interest rates.

For the three months ending December 31, 2001, the Company generated $28,000 of
interest income and incurred $33,000 of interest expense, compared to $131,000
of interest income and $35,000 of interest expense for the corresponding period
in the prior year. This was primarily due to the stock repurchase of $4.0
million in October 2000 and the investment in Metro PCS

Income Taxes.  The effective tax rate for the six months ended December 31, 2001
decreased to 27% from 40% as of December 31, 2000.  This  decrease is due to the
fact that the  Company  established  a  valuation  allowance  on the state NOL's
generated  prior to September 30, 2001.  For the three months ended December 31,
2001,  the  effective tax rate is 42% compared to 40% for the three months ended
December 31, 2000.  The 42% effective tax rate is due to the impact of permanent
items on a small amount of taxable income offset by the fact that the Company is
benefiting  deferred  taxes  at 50% for  state  purposes,  due to the  Company's
continuing operating losses.


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

The Company had  unrestricted  cash of $2.9 million at December  31,  2001,  and
current  maturities of long-term  debt of $59,000.  The  Company's  cash balance
decreased  $397,000 during the six months ended December 31, 2001. This decrease
was  primarily a result of the  investment of $446,000 in Metro PCS,  Inc.,  and
capital  expenditures  of $94,000.  These  expenditures  of cash were  partially
offset by cash provided from operations of $166,000.

As of August 15, 2001, the Company and the bank agreed to a Restated and Amended
Addendum to it's December 2000 loan agreement. This addendum amends and restates
the provisions of this agreement. The new addendum requires that the Company, at
the end of each Fiscal Year,  maintain a debt service coverage ratio of at least
1.05 to 1. It also  requires  that until such time as this ratio reaches 1.25 to
1,  the  Company  must  maintain  restricted,  unencumbered  cash or  marketable
securities of at least $600,000.  As of December 31, 2001 the $600,000 continues
to be presented on the balance sheet as Restricted  Cash, as the bank  agreement
states that the test of the Debt Service coverage ratio be calculated as of each
fiscal year end. As of the last fiscal year end,  the Company did not exceed the
required  ratio to release  this  restriction.  As a condition  to decrease  the
required  debt  service  coverage  ratio  from  1.15 to  1.05,  per the  Amended
Addendum,  the bank was granted a security interest in a money market account in
the amount of $90,000.  This account balance is part of, not an addition to, the
restricted  unencumbered cash balance of $600,000.  As of December 31, 2001, the
Company's Debt Service  coverage  ratio was slightly under the minimum  required
ratio of 1.05 as of the end of the fiscal year.

The Company has a capital  expenditure budget for fiscal 2002 of $ 159,000.  The
Company intends to fund these capital additions from internally generated funds.
As of the six months ended  December 31, 2001, the Company  incurred  $94,000 of
the $159,000 fiscal 2002 budget.

The Company has  committed  itself to a $3 million  investment  in the preferred
stock of a privately  held  telecommunications  company,  Metro PCS,  Inc. As of
December  31,  2001,  the  Company  has  invested  $1,045,000  of its $3 million
commitment.  The Company has accounted for the investment using the cost method.
It is  expected  that  the  remaining  $1,955,000  will  be  funded  in  several
installments throughout the fiscal year ending June 30, 2002.

On July 17, 2001 the Company  entered into a separation  agreement in principle,
which was thereafter  executed,  with its President and Chief Executive  Officer
replacing  the  executive's  existing  employment  agreement.  Pursuant  to  the
separation  agreement,  the executive continued as President and Chief Executive
Officer,  first on a  full-time  basis and then on a  part-time  basis,  through
October 31, 2001.  Effective September 2001, the Company began paying separation
payments to Mr. Hess in the amount of $12,500  monthly for 29 months,  replacing
all payment  obligations  under his prior  employment  agreement.  The Company's
obligation  under this agreement of $362,500 was recorded in operating  expenses
in the first  quarter  of  fiscal  2001.  Mr.  Hess has been  designated  as the
Company's  exclusive  sales  representative  in its  efforts to sell any and all
remaining  Perma-Pak  finished  good  inventory  and  other  Perma-Pak  property
(inventory  and property  related to  discontinued  operations).  As part of the
separation  agreement,  Mr.  Hess was given  until  January  29,  2002 to decide
whether to extend the period  within which he was eligible to exercise the stock
options  previously  granted to him. On January 29,  2002,  Mr. Hess  elected to
exercise his option to purchase 80,000 shares of his total  outstanding  options
of 89,474 shares.  Mr. Hess elected to extend the termination date on his option
to purchase the remaining  9,474 shares,  through the last date of the severance
period or January 31, 2004.  The Company has committed to loan Mr. Hess $400,000
(80,000 at $5.00 per share) to allow Mr.  Hess to  exercise  the  aforementioned
options.  The note  dated  January  29,  2002 in the amount of  $400,000,  bears
interest at the  Applicable  Federal Rate (AFR) for loans of three years or less
on the date of the note  (the  AFR at  January  28,  2002  was  2.73%),  payable
quarterly. The Note is payable on August 1, 2004. The Note is recourse,  secured
by the  stock  certificates  and  evidenced  in the form of a loan and  security
agreement.  As a result of the  extension  of the option to  purchase  the 9,474
shares,  the Company will incur a non-cash  stock  compensation  charge  against
earnings in the third quarter ended March 31, 2002 of $ 22,501.

On September  4, 2001 the Company  authorized  the waiver of the  provision of a
resigning Board Member's options providing for the termination 90 days following
service, consequently, a non-cash compensation charge of $18,000 was recorded in
September, 2001.

As long as the demand for real estate does not decline, the Company expects that
cash flow from operations  will continue to be positive and available  resources
will be sufficient to cover the Metro PCS, Inc.  commitment and fund  operations
for the foreseeable future.



<PAGE>



PART II.  OTHER INFORMATION

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

     At the Registrant's Annual Meeting of Stockholders held on October 31, 2001
the following proposals were adopted by the margins indicated:

<TABLE>
<CAPTION>

                                                                                      Number of Shares
                                                                        ----------------------------------------------

                                                                            Voted For                     Withheld
                                                                        ------------------              --------------
1.   To  elect  a four  Directors  to hold  office  until  the  Annual
     Meeting  of  Stockholders  to be  held in  2002  or  until  their
     respective successors have been elected or appointed

<S>                                                                          <C>                            <C>
     David J. Bugatto                                                        934,490                        2,890
     Gary L. Hess                                                            934,490                        2,890
     Roger S. Mertz                                                          934,490                        2,890
     Fredric Selinger                                                        934,490                        2,890

                                                                                    Number of Shares
                                                              --------------- ---------------- ------------- --------------

                                                                                                             Broker
                                                                Voted For      Voted Against   Withheld      Non-Vote
                                                              --------------- ---------------- ------------- --------------

2.   To ratify the  appointment  of the  accounting  firm of
     Arthur  Andersen  LLP as  independent  auditors for the
     fiscal year ending June 30, 2002                            935,730            600           1,050            0

</TABLE>


Item 6.  Exhibits and Reports on Form 8-K

a.       Exhibits

         None

b.       Reports on Form 8-K

               1. On November 7, 2001, the Registrant filed a report on Form 8-K
          announcing that David J. Bugatto,  Fredric Selinger,  Gary L. Hess and
          Roger S. Mertz were elected as directors of the Company to serve until
          the 2002 annual  meeting  and that the  Company's  Board of  Directors
          named  Roger S. Mertz as  Chairman of the Board and Thomas R. Eakin as
          Chief Financial Officer.

               2. On December 20, 2001,  the  Registrant  filed a report on Form
          8-K  announcing  that  effective  December 21, 2001,  its common stock
          would be listed on The Nasdaq Small Cap Market.

               No other  reports on Form 8-K were filed  during the three months
          ended December 31, 2001.


All  other  items  specified  by Part II of this  report  are  inapplicable  and
accordingly have been omitted.



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:    February 11, 2002


/s/ Thomas R. Eakin
-------------------
Thomas R. Eakin,
Chief Financial Officer