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, 2002 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 April 30, 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 March 31, 2002 and
              June 30, 2001....................................................3

              Condensed Statements of Earnings - Three and Nine months
              ended March 31, 2002 and 2001....................................4

              Condensed Statement of Changes in Shareholders' Equity -
              Nine months ended March 31, 2002.................................5

              Condensed Statements of Cash Flows - Nine months ended
              March 31, 2002 and 2001..........................................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





                                       2
<PAGE>



PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements

<TABLE>
<CAPTION>

                            SONOMAWEST HOLDINGS, INC.
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)
                             (AMOUNTS IN THOUSANDS)

ASSETS                                                                                3/31/02           6/30/01
                                                                                  ----------------- ----------------
CURRENT ASSETS:
<S>                                                                                     <C>                <C>
   Cash                                                                                 $  3,143           $3,336
   Restricted cash  (see note 3)                                                             600              600
   Accounts receivable, less allowance for uncollectible accounts of $4
   and $10 respectively                                                                       90               97
   Other receivables                                                                          38              124
   Prepaid income taxes                                                                        -              287
   Prepaid expenses and other assets                                                          45              129
   Current deferred income taxes, net                                                        334              263
                                                                                  ----------------- ----------------
         Total current assets                                                              4,250            4,836
                                                                                  ----------------- ----------------
RENTAL PROPERTY, net                                                                       2,067            2,252
INVESTMENT, at cost                                                                        1,045              599
DEFERRED TAXES                                                                                38                -
PREPAID COMMISSIONS                                                                           52                -
                                                                                  ----------------- ----------------
         Total assets                                                                   $  7,452           $7,687
                                                                                  ================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Current maturities of long-term debt                                                  $    60            $  57
   Accounts payable                                                                           99               70
   Accrued expenses                                                                          212              241
   Accrued payroll and related liabilities                                                   286               52
   Unearned rents and deposits                                                               210              176
   Net liabilities of discontinued operations                                                210              281
                                                                                  ----------------- ----------------
         Total current liabilities                                                         1,077              877
                                                                                  ----------------- ----------------
 LONG TERM DEBT, net of current maturities                                                 1,872            1,917
 DEFERRED INCOME TAXES, net                                                                    -               45
                                                                                  ----------------- ----------------
         Total liabilities                                                                 2,949            2,839
                                                                                  ----------------- ----------------
SHAREHOLDERS' EQUITY:
   Preferred stock: 2,500 shares authorized; no shares outstanding                             -                -
   Common stock: 5,000 shares authorized, no par value; 1,104 and 1,024
      shares outstanding, respectively                                                     2,632            2,187
   Stock subscriptions receivable                                                          (400)                -
   Retained earnings                                                                       2,271            2,661
                                                                                  ----------------- ----------------
         Total shareholders' equity                                                        4,503            4,848
                                                                                  ----------------- ----------------
         Total liabilities and shareholders' equity                                     $  7,452          $ 7,687
                                                                                  ================= ================
</TABLE>

        The accompanying notes are an integral part of these statements.



                                       3
<PAGE>


<TABLE>
<CAPTION>


                            SONOMAWEST HOLDINGS, INC.
                        CONDENSED STATEMENTS OF EARNINGS
           FOR THE NINE AND THREE MONTHS ENDED MARCH 31, 2002 AND 2001
                                   (UNAUDITED)
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                                            Nine Months               Three Months
                                                                           Ended March 31            Ended March 31
                                                                           --------------            --------------
                                                                         2002         2001          2002         2001
                                                                         ----         ----          ----         ----
<S>                                                                       <C>           <C>           <C>          <C>
RENTAL REVENUE                                                            $1,095       $  886        $  362       $  332
OPERATING COSTS                                                            1,639        1,573           394          543
                                                                      ------------ ------------ ------------- ------------
OPERATING LOSS                                                              (544)        (687)          (32)        (211)
INTEREST AND OTHER INCOME (EXPENSE), NET                                     (60)         250             7           71
                                                                      ------------ ------------ ------------- ------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                         (604)        (437)          (25)        (140)
BENEFIT (PROVISION) FOR INCOME TAXES                                         161          175            (1)          55
                                                                      ------------ ------------ ------------- ------------
NET LOSS FROM CONTINUING OPERATIONS                                         (443)        (262)          (26)         (85)
GAIN ON SALE OF DISCONTINUED OPERATIONS, net of income taxes                  53          172            10           25
                                                                      ------------ ------------ ------------- ------------
NET LOSS                                                                  $ (390)      $  (90)       $  (16)      $  (60)
                                                                      ============ ============ ============= ============
WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS:
   Basic                                                                   1,042        1,523         1,043        1,523
   Diluted                                                                 1,051        1,550         1,052        1,557

EARNINGS (LOSS) PER COMMON SHARE
Continuing operations
   Basic                                                                 $ (0.43)     $ (0.17)      $ (0.02)       $ 0.39
   Diluted                                                               $ (0.43)     $ (0.17)      $ (0.02)       $ 0.38

Discontinued operations:
   Basic                                                                  $ 0.05       $ 0.11        $ 0.01       $  0.02
   Diluted                                                                $ 0.05       $ 0.11        $ 0.01       $  0.02

Net loss:
   Basic                                                                 $ (0.37)     $ (0.06)      $ (0.02)       $ 0.41
   Diluted                                                               $ (0.37)     $ (0.06)      $ (0.02)       $ 0.40


</TABLE>

        The accompanying notes are an integral part of these statements.








                                       4
<PAGE>


<TABLE>
<CAPTION>



                            SONOMAWEST HOLDINGS, INC.
             CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
                    FOR THE NINE MONTHS ENDED MARCH 31, 2002
                             (AMOUNTS IN THOUSANDS)


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



<S>                                              <C>         <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, SEPTEMBER 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
                                              ------------- -------------- ---------------- -------------- ----------------
   Net loss                                            -            -                -              (16)          (16)
   Non-cash stock compensation charge                  -           22                -                -            22
   Exercise of stock options                          80          400             (400)               -             -
                                              ------------- -------------- ---------------- -------------- ----------------
BALANCE, MARCH 31, 2002                            1,104     $  2,632           $ (400)        $  2,271       $ 4,503
                                              ============= ============== ================ ============== ================


</TABLE>



        The accompanying notes are an integral part of these statements.




                                       5
<PAGE>
<TABLE>
<CAPTION>



                            SONOMAWEST HOLDINGS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                FOR THE NINE MONTHS ENDED MARCH 31, 2002 AND 2001
                             (AMOUNTS IN THOUSANDS)


                                                                                    2002                 2001
                                                                             -------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                  <C>                <C>
Net loss                                                                             $ (390)             $  (90)
Adjustments to reconcile net loss
   to net cash provided by (used in) operating activities:
   Gain on sale of discontinued operations, net                                         (53)               (172)
   Non-cash stock compensation charge                                                    40                   -
   Depreciation expense                                                                 297                 362

Changes in assets & liabilities:
    Accounts receivable, net                                                              7                 (13)
    Other receivables                                                                    86                   -
    Prepaid income taxes                                                                287                 422
    Prepaid expenses and other assets                                                    84                  11
    Deferred income taxes, net                                                         (154)                 18
    Prepaid Commissions                                                                 (52)                  -
    Accounts payable and accrued expenses                                                 -                 (54)
    Accrued payroll and related liabilities                                             234                   -
    Unearned rents and deposits                                                          34                  27
                                                                             -------------------- -------------------
         Net cash provided by continuing operating activities                           420                 511
                                                                             -------------------- -------------------
         Net cash used in discontinued operations                                       (17)               (202)
                                                                             -------------------- -------------------
         Net cash provided by operating activities                                      403                 309
                                                                             -------------------- -------------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
    Capital expenditures, net                                                          (113)                (10)
    Investments                                                                        (446)               (466)
                                                                             -------------------- -------------------
         Net cash used in investing activities                                         (559)               (476)
                                                                             -------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments of long term debt                                                (42)               (603)
    Warrant repurchase                                                                    -                (112)
    Issuance of common stock                                                              5                   5
                                                                             -------------------- -------------------
         Net cash used for financing activities                                         (37)               (710)
                                                                             -------------------- -------------------
NET DECREASE IN CASH                                                                   (193)               (877)

CASH AT BEGINNING OF THE PERIOD                                                       3,936               8,359
                                                                             -------------------- --------------------
CASH AT THE END OF THE PERIOD                                                       $ 3,743             $ 7,482
                                                                             ==================== ====================

</TABLE>

        The accompanying notes are an integral part of these statements.



                                       6
<PAGE>

                            SONOMAWEST HOLDINGS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                        NINE MONTHS ENDED MARCH 31, 2002



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 the information  and disclosures  included 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 nine month period ended
March  31,  2002 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  minority  investment  in the
Series  D  preferred  stock  of a  privately  held  telecommunications  company,
MetroPCS,  Inc. As of March 31, 2002, the Company has invested $1,045,000 of its
$3 million  commitment.  The Company has accounted for the investment  using the
cost method. At this time the Company  anticipates an additional capital call by
MetroPCS, Inc. in May or June of 2002. SonomaWest's portion of this capital call
is approximately  $350,000. The Company anticipates that there may be additional
capital calls by the end of the 2002 calendar year.


Note 3-

As of August 15, 2001, the Company and the bank agreed to a Restated and Amended
Addendum  (the  "Addendum")  to its December 2000 loan  agreement.  The Addendum
amends and restates the provisions of this agreement. The 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 (formerly  1.15 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 the last
fiscal year end,  the Company did not meet the  required  ratio to release  this
restriction.  As a result, $600,000 continues to be presented as Restricted Cash
on the  accompanying  balance  sheet as of March 31,  2002.  As a  condition  to
decrease the required debt service  coverage  ratio from 1.15 to 1.05,  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 March 31, 2002, the Company's Debt
Service coverage ratio was 1.15 to 1.

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 set at LIBOR plus  2.25%.  To reduce its
exposure to changes in the LIBOR rate,  the Company has entered into an interest
rate swap  contract to  effectively  fix the interest  rate at 7.35%.  Under the
interest rate swap, the Company exchanges monthly,  the difference between fixed
and floating interest amounts calculated on an initial agreed-upon notional



                                       7
<PAGE>


amount of  $2,100,000.  The notional  amount is amortized  monthly  based on the
Company's  principal  payments  and was  $1,932,000  as of March 31,  2002.  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.  In  accordance  with
Statement of Financial  Standards  ("SFAS") No. 133,  "Accounting for Derivative
Instruments  and Hedging  Activities",  the Company  reports all changes in fair
value of its swap  contract in earnings.  During the nine months ended March 31,
2002,  the  Company  recorded a decrease  in the value of this swap of  $38,000,
which is included in interest  expense.  The cumulative  effect of adopting SFAS
No. 133 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
(the  "Executive")  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 the Executive 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  2002.  The
Executive 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)  and will receive a commission  if such sales occur.  As part of the
separation  agreement,  the Executive 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 28, 2002, the Executive elected to
exercise his option to purchase 80,000 shares of his total  outstanding  options
of 89,474  shares and to extend the  termination  date on his option to purchase
the  remaining  9,474  shares,  through  the last date of the  severance  period
(January 31, 2004).  As part of the  separation  agreement the Company agreed to
loan the  Executive  up to  $447,370  to allow the  Executive  to  exercise  the
aforementioned  options.  The Executive  elected to borrow the money to purchase
the 80,000  shares  from the  company.  The note dated  January  28, 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 full 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  incurred a non-cash  stock
compensation  charge in the third quarter  ended March 31, 2002 of $22,501.  The
Executive remains a board member of the Company.

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 one-time 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 sale was
recorded in the first quarter of fiscal 2000. 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


                                       8
<PAGE>


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 balance sheets,  the operating results of the discontinued  operations
in the statements of operations and the cash flows from discontinued  operations
in the statements of cash flows for each of the periods presented.

Upon the  disposal  of the  Company's  remaining  ingredients  assets,  the sole
remaining  lines of  business  will be its real  estate  management  and  rental
operations   and  its   investment   in  the   preferred   stock  of  a  private
telecommunications company, MetroPCS, Inc.

The gain on the sale of discontinued  operations  presented in the  accompanying
statements  of earnings  for the three and nine months  ended March 31, 2002 and
2001, 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 $210,000 and $281,000, as of March 31,
2002 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)
                                    2002             2001
                              ----------------- ----------------
Interest paid                     $ 109             $ 119
Income taxes paid                 $   2             $  -


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 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,  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 nine months ended
March 31,  2002 and 2001  reflect  all the  adjustments  that in the  opinion of
management are necessary for the fair presentation of the financial position and




                                       9
<PAGE>


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 March  31,  2002,  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,  MetroPCS,  Inc.  Prior to the sale of its
other  business  segments,  the  Company  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  its 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
the Series D preferred stock of a privately held telecommunications  company. As
of March 31,  2002,  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 sale was
recorded in the first quarter of fiscal 2000. 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 March 31, 2002 and June 30, 2001, the operating
results  of the  discontinued  operations  in  the  consolidated  statements  of
operations  for the three and nine months  ended March 31, 2002 and 2001 and the
cash flows from discontinued  operations in the consolidated  statements of cash
flows for the nine months ended March 31, 2002 and 2001.

For the nine months ended March 31, 2002, the Company recorded an after-tax gain
from discontinued  operations of $53,000.  This compares to an after-tax gain of
$172,000  for the nine  months  ended March 31,  2001.  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 privately held  telecommunications  company,  MetroPCS,
Inc.  As of  March  31,  2002,  the  Company  has  invested  $1,045,000  of  its
commitment.  Currently, there are no plans to make any additional commitments to
other investments.




                                       10
<PAGE>

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 390,000 square feet on 81.5 acres of land. As of
March 31, 2002, the Company has twenty-seven  tenants that have varying original
lease terms  ranging from  month-to-month  to eight years with options to extend
the leases.  As of March 31, 2002, the Company's  tenants  occupy  approximately
209,000 square feet or 54% of the properties' available space.

Rental  Revenue.  For the nine  months  ended  March 31,  2002,  rental  revenue
increased  $209,000 or 24% as compared to the corresponding  period in the prior
year. For the three months ended March 31, 2002 rental revenue increased $30,000
or 9% 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 13% from 24 as of March 31,
2001 to 27 as of March 31, 2002.

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 nine months ended March 31,
2002 operating costs  increased  $66,000 or 4% compared to the nine months ended
March 31,  2001.  Some of the  increase in  operating  costs was the result of 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
and $22,500  related to the extension of a current Board  Member's stock options
during  the three  months  ended  March  31,  2002 and the  separation  costs of
$362,500  expensed  during the three months ended  September 30, 2001 related to
the  termination  of the Company's  CEO. These  increased  operating  costs were
substantially offset by efficiencies gained as the Company continues to minimize
costs; such as reductions in payroll and related expenses of $156,000, telephone
and  utilities  of  $70,000,  professional  fees of  $70,000  and other  overall
reductions in overhead.

For the three months ended March 31, 2002 operating costs decreased  $149,000 or
27%  compared  to the three  months  ended  March 31,  2001.  This  decrease  is
partially the result of the  elimination  of the $76,000 of expenses  associated
with the stock  repurchase  and a  decrease  of $59,000  of  accounting  fees in
addition  to other  efficiencies  gained as the  Company  continues  to minimize
costs.  Operating  costs for the three  months  ended March 31,  2002  include a
non-cash  compensation  charge of $22,500  related to the extension of a current
Board Member's stock options.

Even  excluding  the impact of  separation  costs and the non-cash  compensation
charges,  the Company's  total operating costs exceeded gross rental revenue for
the three and nine  months  ended  March 31,  2002.  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.

Interest and Other Income  (Expense),  Net.  Interest and other income (expense)
consist  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 nine months  ending  March 31,  2002,  the Company
generated  $84,000 of interest income and incurred $147,000 of interest expense,
compared to $369,000 of interest income and $119,000 of interest expense for the
corresponding  period in the prior year. The decrease in interest  income is due
primarily  to reduced  cash  balances  in fiscal 2002 versus  fiscal  2001.  The





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<PAGE>

decrease in cash was primarily a result of a stock repurchase of $4.0 million in
October 2000 and the Company's investment in MetroPCS, Inc.

For the three months  ending March 31, 2002,  the Company  generated  $20,000 of
interest income and incurred $16,000 of interest  expense,  compared to $110,000
of interest income and $37,000 of interest expense for the corresponding  period
in the prior year. This decrease was primarily due to a reduced cash balance due
to the stock  repurchase  of $4.0  million  in  October  2000 and the  Company's
investment in MetroPCS, Inc. in addition to lower interest rates in fiscal 2002.

Income  Taxes.  The  effective tax rate for the nine months ended March 31, 2002
decreased to 27% from 40% as of March 31, 2001. This decrease is due to the fact
that the Company  established  a valuation  allowance on the state net operating
losses  generated  prior to September 30, 2001. For the three months ended March
31,  2002,  the  effective  tax rate is 4% compared to 39% for the three  months
ended March 31, 2001.  The 4% effective  tax rate is primarily due to the impact
of permanent items on a small amount of taxable income.

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

The Company had unrestricted cash of $3.1 million at March 31, 2002, and current
maturities of long-term debt of $60,000.  The Company's  cash balance  decreased
$193,000  during  the nine  months  ended  March 31,  2002.  This  decrease  was
primarily a result of the investment of $446,000 in MetroPCS,  Inc., and capital
expenditures of $113,000.  These expenditures of cash were substantially  offset
by cash provided from operations of $418,000.

As of August 15, 2001, the Company and the bank agreed to a Restated and Amended
Addendum  (the  "Addendum")  to its December 2000 loan  agreement.  The Addendum
amends and restates the provisions of this agreement. The 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 (formerly  1.15 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 the last
fiscal year end,  the Company did not meet the  required  ratio to release  this
restriction.  As a result,  the $600,000 continues to be presented as Restricted
Cash on the  accompanying  balance sheet as of March 31, 2002. As a condition to
decrease the required debt service  coverage  ratio from 1.15 to 1.05,  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 March 31, 2002, the Company's Debt
Service coverage ratio was 1.15 to 1.

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 nine months ended March 31, 2002, the Company incurred $113,000 of the
$159,000 fiscal 2002 budget.

The Company has  committed  itself to a $3 million  minority  investment  in the
Series  D  preferred  stock  of a  privately  held  telecommunications  company,
MetroPCS,  Inc. As of March 31, 2002, the Company has invested $1,045,000 of its
$3 million  commitment.  The Company has accounted for the investment  using the
cost method. At this time the Company  anticipates an additional capital call by
MetroPCS, Inc. in May or June of 2002. SonomaWest's portion of this capital call
is approximately  $350,000. The Company anticipates that there may be additional
capital calls by the end of the 2002 calendar year.

On July 17, 2001 the Company entered into a separation agreement in principle,
which was thereafter executed, with its President and Chief Executive Officer
(the "Executive") 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






                                       12
<PAGE>

paying separation payments to the Executive 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 2002. The
Executive 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) and will receive a commission if such sales occur. As part of the
separation agreement, the Executive 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 28, 2002, the Executive elected to
exercise his option to purchase 80,000 shares of his total outstanding options
of 89,474 shares. The Executive elected to extend the termination date on his
option to purchase the remaining 9,474 shares, through the last date of the
severance period (January 31, 2004). As part of the separation agreement the
Company has agreed to loan the Executive up to $447,370 to allow the Executive
to exercise the aforementioned options. The Executive elected to borrow the
money to purchase the 80,000 shares from the Company. The note dated January 28,
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 full 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 incurred a non-cash stock
compensation charge in the third quarter ended March 31, 2002 of $22,501.

As long as the demand for real estate does not decline, the Company expects
available resources will be sufficient to cover the MetroPCS, Inc. commitment
and fund operations for the foreseeable future.




                                       13
<PAGE>




PART II.  OTHER INFORMATION


Item 1. Legal Proceedings

         None

Item 2. Changes in Securities and Use of Proceeds

         None

Item 3. Defaults Upon Senior Securities.

         None

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

         None

Item 5. Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

     a.  Exhibits

         None

     b.  Reports on Form 8-K

         No reports where filed on Form 8-K during the quarter ended March
         31, 2002.



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, 2002

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

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