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 September 30,
            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 September 30, 2001,  there were 1,023,797  shares of common stock,  no par
value, outstanding.





<PAGE>



                            SONOMAWEST HOLDINGS, INC.

                                TABLE OF CONTENTS



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

              Condensed Consolidated Balance Sheets at September 30, 2001 and
              June 30, 2001..........................  ....................... 3

              Condensed Consolidated Statements of Earnings - Three months
              ended September 30, 2001 and 2000................................4

              Condensed Consolidated Statement of Changes in Shareholders'
              Equity - Three months ended September 30, 2001...................5

              Condensed Consolidated Statements of Cash Flows - Three months
              ended September 30, 2001 and 2000................................6

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

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



PART II.   OTHER INFORMATION

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

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

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





                                       2
<PAGE>



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

<TABLE>
<CAPTION>

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



ASSETS                                                                                9/30/01           6/30/01
                                                                                  ----------------- ----------------
CURRENT ASSETS:
<S>                                                                                     <C>             <C>
   Cash                                                                                 $2,979          $ 3,336
   Restricted cash  (see note 3)                                                           600              600
   Accounts receivable, less allowance for uncollectible accounts of $9
   and $10 respectively                                                                    153               97
   Other receivables                                                                        83              124
   Prepaid income taxes                                                                    283              287
   Prepaid expenses and other assets                                                       111              129
   Current deferred income taxes, net                                                      368              263
                                                                                  ----------------- ----------------
         Total current assets                                                            4,577            4,836
                                                                                  ----------------- ----------------

RENTAL PROPERTY, net                                                                     2,172            2,252
                                                                                  ----------------- ----------------
INVESTMENT, at cost                                                                      1,045              599
                                                                                  ----------------- ----------------
         Total assets                                                                   $7,794           $7,687
                                                                                  ================= ================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
                                                                                                           $
   Current maturities of long-term debt                                                 $   58               57
   Accounts payable                                                                        111               70
   Unearned rents and deposits                                                             229              176
   Accrued payroll and related liabilities                                                 382               52
   Accrued expenses                                                                        286              241
   Net liabilities of discounted operations                                                264              281
                                                                                  ----------------- ----------------
         Total current liabilities                                                       1,330              877
                                                                                  ----------------- ----------------
   LONG TERM DEBT, net of current maturities                                             1,902            1,917
                                                                                  ----------------- ----------------
   DEFERRED INCOME TAXES, net                                                               39               45
                                                                                  ----------------- ----------------
         Total liabilities                                                               3,271            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                                                    2,207            2,187
   Retained earnings                                                                     2,316            2,661
                                                                                  ----------------- ----------------
         Total shareholders' equity                                                      4,523            4,848
                                                                                  ----------------- ----------------

         Total liabilities and shareholders' equity                                    $ 7,794          $ 7,687
                                                                                  ================= ================
</TABLE>

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



                                       3
<PAGE>


<TABLE>
<CAPTION>


                    SONOMAWEST HOLDINGS, INC. AND SUBSIDIARY
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (UNAUDITED)
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                                                           2001          2000
                                                                                       ------------- -------------

<S>                                                                                    <C>           <C>
     RENTAL REVENUE                                                                    $     351    $      243

     OPERATING COSTS                                                                         811           517
                                                                                       ------------- -------------

     OPERATING LOSS                                                                         (460)         (274)

     INTEREST AND OTHER INCOME (EXPENSE), NET                                                (61)           88
                                                                                       ------------- -------------
     LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX                                      (521)         (186)

     BENEFIT FOR INCOME TAXES                                                                138            75
                                                                                       ------------- -------------
     NET LOSS FROM CONTINUING OPERATIONS                                                    (383)         (111)

     GAIN ON SALE OF DISCONTINUED OPERATIONS, net of income taxes                             38            90
                                                                                       ------------- -------------
     NET LOSS                                                                          $   (345)     $     (21)
                                                                                       ============= =============
     WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS:
        Basic                                                                              1,024         1,522
        Diluted                                                                            1,059         1,542

     EARNINGS (LOSS) PER COMMON SHARE:
        Continuing operations:
           Basic                                                                       $   (0.37)    $   (0.07)
           Diluted                                                                         (0.37)        (0.07)
        Discontinued operations:
           Basic                                                                            0.04          0.06
           Diluted                                                                          0.04          0.06
        Net earnings (loss):
           Basic                                                                           (0.34)        (0.01)
           Diluted                                                                         (0.34)        (0.01)

</TABLE>

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








                                       4
<PAGE>



<TABLE>
<CAPTION>


                            SONOMAWEST HOLDINGS, INC.
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
                  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 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, SEPTEMBER 30, 2001                       1,024      $    2,207       $ 2,316         $  4,523

                                              ============= ==============  ============== ================
</TABLE>


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




                                       5
<PAGE>

<TABLE>
<CAPTION>


                            SONOMAWEST HOLDINGS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                             (AMOUNTS IN THOUSANDS)


                                                                                    2001                 2000
                                                                             -------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                  <C>                 <C>
Net loss                                                                             $   (345)               (21)
Adjustments to reconcile net loss
   to net cash provided by (used in) operating activities:
   Loss on sale of fixed assets                                                             1                  -
   Gain on sale of discontinued operations, net                                           (38)               (90)
   Non-cash stock compensation charge                                                      18                  -
   Depreciation expense                                                                    97                121

Changes in assets & liabilities:
    Accounts receivable, net                                                              (56)                 3
    Other receivables                                                                      41                  -
    Prepaid expenses and other assets                                                      22                (39)
    Accounts payable and accrued expenses                                                  86                 17
    Deferred income taxes, net                                                           (111)               (16)
    Accrued payroll and related liabilities                                               330                (34)
    Unearned rents and deposits                                                            53                  9
                                                                             -------------------- --------------------
         Net cash provided by continuing operating activities                              98                 50
                                                                             -------------------- --------------------
         Net cash provided by (used in) discontinued operations                            21               (281)
                                                                             -------------------- --------------------
         Net cash provided by (used in) operating activities                              119               (331)
                                                                             -------------------- --------------------

CASH FLOWS USED IN INVESTING ACTIVITIES:
    Capital expenditures, net                                                             (18)                (5)
    Investments                                                                          (446)                 -
                                                                             -------------------- --------------------

         Net cash (used in) investing activities                                         (464)                (5)
                                                                             -------------------- --------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments of long term debt                                                  (14)              (577)
    Issuance of common stock                                                                2                  -
                                                                             -------------------- --------------------
         Net cash (used for) financing activities                                         (12)              (577)
                                                                             -------------------- --------------------

NET DECREASE IN CASH                                                                     (357)              (913)

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

CASH AT THE END OF THE PERIOD                                                        $  3,579           $  7,446
                                                                             ==================== ====================
</TABLE>

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




                                       6
<PAGE>


                            SONOMAWEST HOLDINGS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                      THREE MONTHS ENDED SEPTEMBER 30, 2001



Note 1-

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

During December 2000, the Company entered into an agreement with its sole lender
in order to  modify  the  terms  of the  lending  agreement.  As a  result,  the
financial  based debt  covenant  was  amended.  The new  covenant  required  the
Company,  at the end of each Fiscal Year,  to maintain a debt  service  coverage
ratio at least 1:15 to 1. Until such time as this ratio  reaches  1.25 to 1, the
Company was required to maintain  restricted,  unencumbered  cash or  marketable
securities of at least $600,000. Furthermore, the terms of the loan restrict the
Company from incurring any additional  indebtedness during the term of the loan.
As  of  June  30,  2001,  the  Company's  debt  service  ratio  was  .97  to  1.
Consequently,  $600,000 is  classified as  restricted  cash on the  accompanying
balance   sheet.   The  Company   received  a  waiver  from  the  Bank  of  this
non-compliance with the debt service coverage ratio as of June 30, 2001.

As of August 15, 2001, the Company and the Bank agreed to a Restated and Amended
Addendum to this Agreement.  This addendum amends and restates the provisions of
the agreement  described above. 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 still  requires that until such time as this ratio reaches 1.25 to
1,  the  Company  is  required  to  maintain  restricted,  unencumbered  cash or
marketable  securities  of at  least  $600,000.  As of  September  30,  2001 the
$600,000  continues to be presented on the Balance Sheet as Restricted  Cash, as

                                       7
<PAGE>

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.  The
Money  Market  account  was  opened  and the  cash  transferred  to the  account
subsequent to September 30, 2001.  Management is confident that in the future it
can remain in compliance with this new debt service coverage ratio.

The Company has a variable rate  borrowing tied to the LIBOR rate. To reduce its
exposure  to changes in the LIBOR rate,  the  Company  has  entered  into a swap
contract.  The  Company  is a party to an  interest  rate  swap  under  which it
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
$1,960,000 as of September 30, 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 three months ended  September  30, 2001,  the
Company  recorded  a  decrease  in the value of this swap of  $60,000,  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 an 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 will continue 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 will pay separation payments to Mr.
Hess in the  amount of $12,500  monthly  for 29 months,  replacing  all  payment
obligations  under  his  prior  employment  agreement.  Mr.  Hess has also  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.  Mr. Hess also has the option of extending  the period within which he
is eligible to exercise options previously granted to him. The options currently
expire on January 29, 2002.  To the extent that Mr. Hess elects to exercise some
or all of his options on or before  January 29, 2002,  the Company has committed
to loan him up to $447,000.

On September 4, 2001 the Company authorized the waiver of the provision of a
resigning board members' 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

                                       8
<PAGE>

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
September  30,  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 September 30, 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 three months ended  September 30, 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 $264,000 and $281,000,  as of September 30, 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                              $ 37             $ 45
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.


                                       9
<PAGE>

The financial statements herein presented for the quarters ending September 30,
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 September  30, 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,  MetroPCS,  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  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
a telecommunications company. As of September 30, 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
September 30, 2001 and June 30, 2001, the operating  results of the discontinued
operations in the  consolidated  statements  of  operations  for the three ended
September 30, 2001 and 2000 and the cash flows from  discontinued  operations in
the  consolidated  statements of cash flows for the three months ended September
30, 2001 and 2000.

For the three months ended September 30, 2001, the Company recorded an after-tax
gain from discontinued operations of $38,000. This compares to an after-tax gain
of $90,000 for the three months ended  September 30, 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.


                                       10
<PAGE>

                        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
September  30, 2001,  the Company has  invested  $1,045,000  of its  commitment.
Currently,  there are no other 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
September  30,  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  September  30, 2001,  the  Company's  tenants  occupy
approximately 325,000 square feet or 69% of the properties' available space.

Rental  Revenue.  For the three months ended  September 30, 2001 rental  revenue
increased  $108,000 from the three months ended September 30, 2000. The increase
in rental revenue is attributable to increased  occupancy in the current year as
the Company continues in its efforts to lease vacant space.

Operating  Costs.  Operating costs consist of direct costs related to continuing
operations and all general  corporate  costs.  Only direct selling,  general and
administrative costs related to the discontinued  packaged goods businesses were
charged to discontinued operations in the consolidated statements of operations.
For the three months ended September 30, 2001 operating costs increased $294,000
or 57% compared to the three months ended  September 30, 2000,  primarily due to
separation  costs of $350,000  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.  Excluding the impact
of separation costs and the non-cash  compensation  charge,  the Company's total
operating  costs exceeded the tenant 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.

Interest and Other Income  (Expense),  Net.  Interest and other income (expense)
consists  primarily  of  interest  income on the  Company's  cash  balances  and
interest  expense on  mortgage  debt and the  decrease  in the value of the Swap
contract.  Proceeds from the sale of the ingredients  business  received in July
1999  were used to pay off the  Company's  revolving  bank  line of  credit  and
substantially  reduce  long-term debt. As a result,  for the three months ending
September  30,  2001,  the  Company  generated  $36,000 of  interest  income and
incurred  $37,000 of interest  expense,  compared to $128,000 of interest income
and $45,000 of interest expense for the corresponding  period in the prior year.
The decrease in interest  income is due to a reduced cash balance in fiscal 2001
as a result of the  Company's  investment  in Metro PCS  coupled  with  drops in
interest rates.

Income Taxes.  The  effective tax rate for the three months ended  September 30,
2001  decreased to 26% from 40% as of September 30, 2000. The decrease is due to
a valuation  allowance  placed on state net  operating  losses  generated  as of
September 30, 2001,  due to the  uncertainty  of future  taxable  income against
which the state net operating losses could be offset,  in addition to a non-cash
compensation  charge that will not be deductible  for income tax  purposes.  The
Company has continued to benefit from federal losses due to the ability to carry
such losses back and offset against prior taxable income.


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

The Company had  unrestricted  cash of $3.0 million at September  30, 2001,  and
current  maturities of long-term  debt of $58,000.  The  Company's  cash balance
decreased  $357,000 during the quarter ended September 30, 2001,  primarily as a
result of the investment of $446,000 in Metro PCS, Inc.

As of August 15, 2001,  the Company and its Bank agreed to restate and amend its
loan agreement.  This agreement required the Company to maintain,  at the end of
each fiscal  year, a debt  service  coverage  ratio of at least 1.05 to 1. Until
such time as this ratio  reaches  1.25 to 1, the Company is required to maintain
restricted unencumbered cash or marketable securities of at least $600,000. As a
condition of the decrease in 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.  The Money Market account was
opened and the cash transferred to the account subsequent to September 30, 2001.

The Company has  committed  itself to a $3 million  investment  in the preferred
stock of a  privately  held  telecommunications  company,  MetroPCS,  Inc. As of
September  30,  2001,  the Company  had  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 an 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 will continue 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 will pay separation payments to Mr.
Hess in the  amount of $12,500  monthly  for 29 months,  replacing  all  payment
obligations  under  his  prior  employment  agreement.  Mr.  Hess has also  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.  Mr. Hess also has the option of extending  the period within which he
is eligible to exercise options previously granted to him. The options currently
expire on January 29, 2002.  To the extent that Mr. Hess elects to exercise some
or all of his options on or before  January 29, 2002,  the Company has committed
to loan him up to $447,000.

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.




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PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

None.

Item 6.  Exhibits and Reports on Form 8-K

         a.   Exhibits

              27.   Financial Data Schedule (EDGAR Filing Only)

          b.  Reports on Form 8-K

              None

SIGNATURES

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



Date:  October  30, 2001


SONOMAWEST HOLDINGS, INC.

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





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