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

                        SECURITIES & EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE
    ACT OF 1934

    For the quarterly period ended December 31, 1999

                                       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: 0-30002

                             RAVENSWOOD WINERY, INC.
        (Exact Name of Small Business Issuer as Specified in its Charter)

               California                               94-3026706
   (State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
   Incorporation or Organization)

            18701 Gehricke Road
            Sonoma, California                          95476
  (Address of Principal Executive Offices)            (Zip Code)

                     Issuer's Telephone Number: 707-938-1960

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

                                 Yes [X] No [ ]

The number of shares  outstanding  of the  Issuer's  Common Stock on February 8,
2000 was 4,855,053.

Transitional Small Business Disclosure Format: Yes [ ] No [X]


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


<PAGE>

                             RAVENSWOOD WINERY, INC.

                          PART I. FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS                                         Page
                                                                           ----
    Balance Sheets as of December 31, 1999 and June 30, 1999.                2

    Statements of Income for the three months and six months ended
    December 31 , 1999 and 1998.                                             3

    Statements of Cash Flows for the three months and six months ended
    December 31, 1999 and 1998.                                              4

    Notes to Financial Statements.                                           5

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS                               8

                           PART II. OTHER INFORMATION

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS                        23

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              23

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K                                 24


                                       1

<PAGE>
                                                RAVENSWOOD WINERY, INC.
                                             PART I. FINANCIAL INFORMATION
<TABLE>
Item 1.    Financial Statements

                                                RAVENSWOOD WINERY, INC.
                                                     BALANCE SHEET

<CAPTION>
                                                                               December 31,       June 30,
                                                                                  1999              1999
                                                                               -----------       -----------
                                ASSETS                                         (unaudited)
<S>                                                                            <C>               <C>
Current assets:
 Cash and cash equivalents                                                     $ 7,585,695       $11,390,903
 Accounts receivable, less allowance of $10,000                                  5,144,037         2,763,418
 Inventories                                                                    19,960,310        14,581,973
 Prepaid expenses                                                                  322,875           116,676
 Deferred tax assets                                                               155,000           162,800
                                                                               -----------       -----------
     Total current assets                                                       33,167,917        29,015,770

 Property, plant and equipment, net                                             14,213,111         9,001,147
 Notes receivable from shareholder                                                 314,475           314,475
 Other assets                                                                      129,103           186,921
                                                                               -----------       -----------
          Total Assets                                                         $47,824,606       $38,518,313
                                                                               ===========       ===========
                      LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
 Current portion of long-term debt                                             $    90,857       $   109,722
 Current portion of capital lease obligations                                      372,837           368,203
 Short-term borrowings                                                           1,000,000         1,700,000
 Accounts payable                                                                6,355,311         3,382,118
 Accrued commissions                                                               677,954           396,358
 Accrued liabilities                                                               640,253           433,011
                                                                               -----------       -----------
     Total current liabilities                                                   9,137,212         6,389,412

Long-term liabilities:
 Long-term debt, net                                                             6,749,564         4,525,231
 Capital lease obligations, net                                                  2,551,992         1,551,762
 Convertible debentures                                                          1,687,500         2,502,500
                                                                               -----------       -----------
     Total liabilities                                                          20,126,268        14,968,905
                                                                               -----------       -----------

Shareholders' equity:
 Preferred stock, no par value; 1 million shares authorized, none issued              --                --
 Common stock, no par value; 20 million shares authorized,
  4,855,053 and 4,568,352 issued and outstanding                                15,038,965        14,211,018
 Retained earnings                                                              12,616,157         9,338,390
 Unrealized gain on available-for-sale securities                                   43,216              --
                                                                               -----------       -----------
     Total shareholders' equity                                                 27,698,338        23,549,408
                                                                               -----------       -----------
                                                                               $47,824,606       $38,518,313
                                                                               ===========       ===========
<FN>
                 See accompanying notes to financial statements.
</FN>
</TABLE>


                                                             2
<PAGE>
<TABLE>
                                              RAVENSWOOD WINERY, INC.
                                                STATEMENT OF INCOME
                                                    (UNAUDITED)

<CAPTION>
                                    Three months ended December 31,         Six months ended December 31,
                                   --------------------------------        --------------------------------
                                       1999                1998                1999                1998
                                   ------------        ------------        ------------        ------------
<S>                                <C>                 <C>                 <C>                 <C>
Gross Sales                        $ 10,437,413        $  5,853,049        $ 18,726,389        $ 12,194,996
  Less excise taxes                    (199,045)            (50,736)           (533,690)           (275,795)
  Less discounts, allowances
   and returns                         (314,777)           (181,574)           (576,925)           (336,684)
                                   ------------        ------------        ------------        ------------
Net sales                             9,923,591           5,620,739          17,615,774          11,582,517
Cost of goods sold                    4,813,758           2,538,146           8,277,176           5,066,471
                                   ------------        ------------        ------------        ------------
Gross profit                          5,109,833           3,082,593           9,338,598           6,516,046
Operating expenses                    2,001,483           1,125,183           3,741,333           2,340,009
                                   ------------        ------------        ------------        ------------
Operating income                      3,108,350           1,957,410           5,597,265           4,176,037
Interest expense                       (232,678)           (127,901)           (356,444)           (225,669)
Other income                             72,282              54,146             158,076              78,713
                                   ------------        ------------        ------------        ------------
                                       (160,396)            (73,755)           (198,368)           (146,956)
Income before income taxes            2,947,954           1,883,655           5,398,897           4,029,081
Provision for income taxes            1,168,000             815,349           2,121,130           1,743,849
                                   ------------        ------------        ------------        ------------
Net income                         $  1,779,954        $  1,068,306        $  3,277,767        $  2,285,232
                                   ============        ============        ============        ============


Earnings per share:
  Basic                            $       0.39        $       0.31        $       0.72        $       0.65
                                   ============        ============        ============        ============
  Diluted                          $       0.36        $       0.28        $       0.67        $       0.60
                                   ============        ============        ============        ============


Weighted average number of
  common shares outstanding:
    Basic                             4,571,435           3,498,942           4,569,893           3,498,942
                                   ============        ============        ============        ============
    Diluted                           5,006,546           3,932,964           5,006,562           3,867,329
                                   ============        ============        ============        ============
<FN>
          See accompanying notes to financial statements.
</FN>
</TABLE>


                                       3
<PAGE>
<TABLE>

                                           RAVENSWOOD WINERY, INC.
                                           STATEMENT OF CASH FLOWS
                                                 (UNAUDITED)
<CAPTION>
                                               Three months ended December 31,        Six months ended December 31,
                                             --------------------------------        ---------------------------------
                                                  1999                1998               1999                1998
                                             ------------        ------------        ------------        -------------
<S>                                          <C>                 <C>                 <C>                 <C>
Operations:
Net income                                   $  1,779,954        $  1,068,306        $  3,277,767        $  2,285,232
Items not requiring the current
 use of cash:
  Depreciation and amortization                   315,441             121,458             458,831             170,668
  Unrealized capital appreciation                   5,649                --                43,216                --
  Deferred income taxes                              --                  --                 7,800                --
Changes in other operating items:
  Accounts receivable                          (1,176,461)            (44,496)         (2,380,620)           (747,982)
  Inventories                                  (3,521,358)         (3,237,568)         (5,378,337)         (2,503,980)
  Prepaid expenses                               (169,092)            (19,191)           (206,200)             26,902
  Other assets                                        500                --                (3,672)               --
  Accounts payable                              2,326,683           2,664,490           2,973,194           1,429,719
  Accrued liabilities                             121,329            (105,662)            207,243            (133,555)
  Income taxes payable                           (929,480)           (850,000)               --                  --
  Accrued commissions                             185,285              24,657             281,595             128,769
                                             ------------        ------------        ------------        -------------
Cash provided by (used for) operations         (1,061,550)           (378,006)           (719,183)            655,773
                                             ------------        ------------        ------------        -------------
Investing:
 Shareholder receivables                           (4,107)            (58,968)             (8,215)            (59,435)
 Additions to plant & equipment                (2,382,011)           (288,520)         (4,484,459)           (548,390)
                                             ------------        ------------        ------------        -------------
Cash used for investing activities             (2,386,118)           (347,488)         (4,492,674)           (607,825)
                                             ------------        ------------        ------------        -------------
Financing:
 Short-term borrowings, net                       250,000             300,000            (700,000)           (400,000)
 Proceeds from long-term debt                   1,933,509             550,000           2,252,036             550,000
 Proceeds from convertible debentures                --             1,443,750                --             1,443,750
 Proceeds from sale of securities                  12,948           1,647,739              12,948           1,647,739
 Repayments of long-term debt                     (73,955)           (177,934)           (158,335)           (220,335)
                                             ------------        ------------        ------------        -------------
Cash provided by financing activities           2,122,502           3,763,555           1,406,649           3,021,154
                                             ------------        ------------        ------------        -------------
Change in cash & cash equivalents              (1,325,166)          3,038,061          (3,805,208)          3,069,102
Balance at beginning of period                  8,910,861             133,314          11,390,903             102,272
                                             ------------        ------------        ------------        -------------
Balance at end of period                     $  7,585,695        $  3,171,375        $  7,585,695        $  3,171,374
                                             ============        ============        ============        =============
Cash paid during the period for:
 Interest                                    $    253,835        $    113,882        $    377,824        $    209,497
                                             ============        ============        ============        =============
 Taxes                                       $  2,353,850        $  1,670,000        $  2,353,850        $  1,670,000
                                             ============        ============        ============        =============
Noncash investing and financing:
 Plant and equipment purchased with
 long-term liabilities                       $    411,576        $    515,718        $  1,116,631        $    515,718
                                             ============        ============        ============        =============
 Conversion of convertible debentures
  to common stock                            $    815,000        $       --          $    815,000        $       --
                                             ============        ============        ============        =============
<FN>
    See accompanying notes to financial statements.
</FN>
</TABLE>


                                       4

<PAGE>
--------------------------------------------------------------------------------

                             RAVENSWOOD WINERY, INC.

                          NOTES TO FINANCIAL STATEMENTS

         NOTE 1 - Basis of presentation:

         The financial  statements  included herein for Ravenswood Winery,  Inc.
         (the  "Company")  have been  prepared  by the  Company,  without  audit
         pursuant to the rules and  regulations  of the  Securities and Exchange
         Commission.   In  management's  opinion,  the  interim  financial  data
         presented includes all adjustments (which include only normal recurring
         adjustments) necessary for a fair presentation. Certain information and
         footnote disclosures normally included in financial statements prepared
         in accordance with generally accepted  accounting  principles have been
         condensed or omitted pursuant to such rules and regulations.

         The results of operations  for the three and six months ended  December
         31,  1999  are not  necessarily  indicative  of the  operating  results
         expected for the entire fiscal year. The financial  statements included
         herein should be read in conjunction  with other  documents the Company
         files from time to time with the  Securities  and Exchange  Commission,
         including the Company's  Form 10-KSB for the fiscal year ended June 30,
         1999 dated  September 29, 1999 and its Quarterly  Report on Form 10-QSB
         dated November 12, 1999.

         NOTE 2 - Reclassifications:

         Certain prior period amounts have been reclassified in order to conform
         to the current period presentation.

         NOTE 3 - Earnings per Share

         Basic EPS  represents  the  income  available  to  common  shareholders
         divided by the weighted average number of common shares outstanding for
         the  period.  Diluted EPS  represents  the income  available  to common
         shareholders   divided  by  the  weighted   average  of  common  shares
         outstanding  while also giving  effect to the  potential  dilution that
         could occur if  securities  or other  contracts  to issue  common stock
         (e.g.  stock options and  convertible  debentures)  were  exercised and
         converted into stock. For all periods presented, the difference between
         basic and diluted EPS for the Company is due to the dilutive  effect of
         stock  options and  convertible  debentures.  This effect is calculated
         using the treasury stock method.

         On December 31,  1999,  debentures  with a face value of $815,000  were
         converted into 285,250 shares of the Company's common stock. During the
         three month  period ended  December  31,  1999,  1,451 shares of common
         stock were issued under Ravenswood's Employee Stock Purchase Plan.

         NOTE 4 - Recent accounting pronouncements:

         In June 1999, the FASB issued SFAS No. 137,  "Accounting for Derivative
         Instruments,"  SFAS 137  extends  the  effective  date of SFAS No. 133,
         "Accounting for Derivative  Instruments and Hedging  Activities,"  SFAS
         133  establishes  accounting  and reporting  standards  for  derivative
         instruments, including certain derivative instruments embedded in other
         contracts,  and for hedging activities.  The statement requires that an
         entity recognize all derivatives as either assets or liabilities in the
         statement of financial  position and measure those  instruments at fair
         value.  As amended by SFAS 137, SFAS 133 is effective for the Company's
         fiscal year ending June 30, 2001. The Company does not anticipate  that
         SFAS No. 137 will have a material impact on its financial statements


                                       5


<PAGE>



         NOTE 5 - Inventories:

         Inventories are summarized as follows:

                                       December 31,         June 30,
                                          1999               1999
                                       -----------        -----------
                                       (Unaudited)

Bulk wine                              $16,107,838        $10,355,759
Bottled wine                             3,473,618          3,870,548
Crop costs                                  36,337             88,725
Supplies                                   193,400            124,298
Tasting room merchandise                   149,117            142,643
                                       -----------        -----------
                                       $19,960,310        $14,581,973
                                       ===========        ===========


         NOTE 6 - Property, plant and equipment:

         Property, plant and equipment is summarized as follows:

                                       December 31,         June 30,
                                          1999               1999
                                       -----------        -----------
                                       (Unaudited)

Land                                   $   245,135        $   245,135
Vineyards                                  134,033            134,033
Vineyards under development                211,440            211,440
Buildings and improvements               1,647,634          1,647,637
Leasehold improvements                     174,331            174,331
Machinery and equipment                    835,850            835,850
Barrels and equipment held under
capital leases                           3,740,608          2,623,977
Tanks                                      172,172            145,688
Office equipment                           134,578            131,127
Transportation equipment                    40,999             38,469
Construction in progress                 8,918,530          4,466,534
                                       -----------        -----------
                                        16,255,310         10,654,221
Less accumulated depreciation            2,042,199          1,653,074
                                       -----------        -----------
                                       $14,213,111        $ 9,001,147
                                       ===========        ===========

         NOTE 7 - Comprehensive income:

         In June 1997, the Financial Accounting Standards Board issued Statement
         of Financial  Accounting  Standards  No. 130 - Reporting  Comprehensive
         Income ("SFAS 130").  SFAS 130 requires the  additional  reporting of a
         new  measure  of income  which  takes  into  account  certain  elements
         otherwise recorded as part of equity.  For all periods  presented,  the
         difference between net income and comprehensive  income consists of the
         changes  in  the  unrealized  gain  in  securities   available-for-sale
         included as part of the Company's equity.


                                       6
<PAGE>


<TABLE>
         The  following  is a  reconciliation  of net income  and  comprehensive
income:
<CAPTION>
                                             Three months ended                Six months ended
                                                December 31,                       December 31,
                                       ----------------------------        ----------------------------
                                          1999              1998              1999              1998
                                       ----------        ----------        ----------        ----------
                                                                (Unaudited)
<S>                                    <C>               <C>               <C>               <C>
Net income                             $1,779,954        $1,068,306        $3,277,767        $2,285,232
Change in unrealized gain on
  available-for-sale securities             5,649              --              43,216              --
                                       ----------        ----------        ----------        ----------
Comprehensive income                   $1,785,603        $1,068,306        $3,320,983        $2,285,232
                                       ==========        ==========        ==========        ==========
</TABLE>


                                                          7

<PAGE>

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

Forward-Looking Statements

From time to time,  statements  made by  Ravenswood's  employees or  information
included in  Ravenswood's  filings with the Securities  and Exchange  Commission
(including  this Form  10-QSB) may contain  statements  that are not  historical
facts, so called  "forward-looking  statements,"  which are subject to risks and
uncertainties   that  could   cause   actual   results  to  differ   materially.
Forward-looking  statements  are made pursuant to the safe harbor  provisions of
the Private  Securities  Litigation  Reform Act of 1995.  When used in this Form
10-QSB, the terms "anticipates,"  "expects," "estimates,"  "believes," and other
similar  terms as they relate to Ravenswood  or its  management  are intended to
identify such forward-looking  statements.  For example,  statements made herein
relating to operating  expenses,  gross sales  attributable to specific  product
series, and future capital expenditures, are forward-looking statements. Factors
that may cause  actual  results to vary  include,  but are not  limited  to: (i)
future and past  weather and general  farming  conditions  affecting  the annual
grape  harvest;  (ii)  variations in consumer  taste and  preference;  and (iii)
changes in the wine industry regulatory environment.  Each of these factors, and
others,  are  discussed  beginning on  page 17 of this report and in the section
entitled  "Factors that May Affect Future Results" of  Ravenswood's  Form 10-KSB
for the fiscal year ended June 30, 1999,  filed with the Securities and Exchange
Commission.  Readers  are  cautioned  not  to  place  undue  reliance  on  these
forward-looking  statements,  which speak only as of the date hereof. Ravenswood
undertakes no obligation to update or revise these statements.

Overview

Ravenswood  produces,  markets and sells premium  California  wines  exclusively
under the Ravenswood brand name. The vast majority of wines produced and sold by
Ravenswood   are  red  wines,   including   Merlot,   Cabernet   Sauvignon  and,
particularly,  Zinfandel.  To a lesser extent,  Ravenswood produces white wines,
including  Chardonnay,  French  Colombard and  Gewurztraminer.  Ravenswood's red
wines  accounted for  approximately  93% of gross sales in the 1999 fiscal year,
with sales of Zinfandel accounting for approximately 67% of gross sales for that
period. Ravenswood believes that sales of its red wines, particularly Zinfandel,
will continue to account for a significant portion of its sales in the future.

Since its inception in 1976,  Ravenswood  has grown by increasing its production
volume and its  portfolio of wine  products.  For the fiscal year ended June 30,
1999,  Ravenswood  realized  total gross sales of $23.7 million from the sale of
270,760 cases of wine and Ravenswood branded merchandise.


The mix of products sold in any given period affects  Ravenswood's  gross profit
as a percentage of net sales,  or gross margin.  In particular,  as sales of the
value-priced  Vintners  Blend Series have  increased  as a  percentage  of gross
sales,  Ravenswood's  gross  margin  has  decreased.  The gross  margin  for the
Vintners  Blend  Series  traditionally  is  also  more  variable  than  that  of
Ravenswood's  higher-priced product series, because a significant portion of the
wine used in the Vintners  Blend  series is purchased in the bulk market  rather
than produced by Ravenswood  from grapes  acquired  from its  traditional  grape
suppliers.  Ravenswood has no bulk wine purchase contracts.  The price,  quality
and available  quantity of bulk wine have  fluctuated in the past and Ravenswood
expects that they will continue to fluctuate in the future.


The timing for release of Ravenswood's products,  particularly its County Series
and Vineyard Designate Series, also significantly  affects Ravenswood's sales in
specific periods. Ravenswood traditionally releases


                                       8
<PAGE>

new vintages of its Vineyard  Designate  Series in the fourth fiscal  quarter or
the first fiscal quarter of the subsequent fiscal year. In addition, the release
dates of some of Ravenswood's  County Series wines  fluctuate  between the third
and fourth  fiscal  quarters of each fiscal  year.  The timing of these  release
dates is based  upon the  winemakers'  determination  as to the  optimal  flavor
characteristics of these wines and available  inventory.  Fluctuation of release
dates  may  make  comparison  of  results  on  a  period-to-period   basis  less
meaningful. The nature of the winemaking process, including the need for wine to
be aged before it is released, requires Ravenswood to incur significant expenses
in  producing  products  which may not generate  revenues  until up to two years
later.  Any factors that may prevent or delay the sale of Ravenswood's  wines at
the prices  anticipated at the time of their  production  could adversely affect
its liquidity and reduce its profits.

Pricing for grapes  purchased by Ravenswood is determined  annually by reference
to benchmark price quotations or through  negotiation.  As a result, the cost of
grapes used in  Ravenswood's  wine  production has fluctuated and is expected to
continue to fluctuate.  Ravenswood has  traditionally  attempted to moderate and
stabilize  price  increases  from  year to  year.  Consequently,  gross  margins
realized by Ravenswood  have fluctuated in the past and are expected to continue
to fluctuate with the price of grapes used in production.

Within the United States, Ravenswood utilizes distributors in every state except
California.  Brokers are used to assist the sales  effort in  California  and 29
other states.  Brokers act as an independent sales force and receive commissions
as  compensation  for their  sales.  Brokers do not take title to the wines they
sell.  Distributors purchase wine from Ravenswood and sell the wine to their own
retail accounts such as restaurants,  grocery stores and wines shops. Ravenswood
uses both  brokers and  distributors  in most of the foreign  countries in which
Ravenswood's wines are sold.

Ravenswood primarily uses smaller,  well-positioned brokers and distributors for
whom  Ravenswood  is a key brand.  Although  Ravenswood  has very few  long-term
agreements  for  distribution  of its  products,  Ravenswood  believes  that its
relationships with existing brokers and distributors are excellent. Ravenswood's
executive  management  also  takes  an  active  role in  assisting  brokers  and
distributors  with sales within  California and within major geographic  markets
outside California.

Ravenswood sells its products directly in California,  utilizing five warehouses
throughout  the  state  and a  network  of seven  brokers.  Ravenswood  realizes
significantly  greater  gross  margins in areas,  such as  California,  where it
relies  on  direct  sales  facilitated   through  brokers  without  the  use  of
distributors.  Sales  within  California  accounted  for  approximately  48%  of
Ravenswood's gross sales in the 1999 fiscal year. Of this amount,  approximately
9% of gross  sales  were  retail  purchases  by  California  and  non-California
consumers through Ravenswood's tasting room and approximately 39% of gross sales
were sales to retail  accounts.  Ravenswood  expects  similar results for fiscal
2000.  Ravenswood believes that sales within California will continue to account
for a substantial portion of its sales in the future.


                                       9
<PAGE>

Results of Operations
<TABLE>
The  following  table sets forth items from  Ravenswood's  statement  of income,
expressed as a percentage of net sales, for the periods indicated:
<CAPTION>
                                             Three Months Ended    Six Months Ended
                                                December 31,         December 31,
                                                ------------         ------------
Statement of Income Data:                      1998      1999       1998      1999
<S>                                            <C>       <C>        <C>       <C>
Net Sales                                     100.0%    100.0%     100.0%    100.0%
Cost of Goods Sold                             45.2      48.5       43.7      47.0
                                             ------    ------     ------    ------
Gross Profit                                   54.8      51.5       56.3      53.0
Operating Expenses                             20.0      20.2       20.2      21.2
                                             ------    ------     ------    ------
Operating Income                               34.8      31.3       36.1      31.8
Other Expense, net                              1.3       1.6        1.3       1.1
                                             ------    ------     ------    ------
Income Before Income Taxes                     33.5      29.7       34.8      30.7
Provision for Income Taxes                     14.5      11.8       15.1      12.1
                                             ------    ------     ------    ------
Net Income                                     19.0%     17.9%      19.7%     18.6%
                                             ======    ======     ======    ======
</TABLE>
Three Months Ended December 31, 1999 and 1998

Sales

Net sales of Ravenswood's products increased to $9.9 million in the three months
ended  December 31, 1999,  from $5.6 million in the three months ended  December
31, 1998.  This increase is primarily  attributable to an increase in the volume
of wines produced and sold by Ravenswood. In the three months ended December 31,
1999,  case sales  increased  to 119,966  cases from  67,030  cases in the three
months  ended  December  31, 1998,  while the average  price per case  increased
slightly to $86.13 from $86.07 in these respective periods. Gross sales for each
product series grew in the three months ending December 31, 1999, with increases
for  Vintners  Blend  Series,  County  Series and Vineyard  Designate  Series of
100.1%, 30.9% and 86.9%, respectively,  over the three months ended December 31,
1998.

The percentages of gross sales attributable to the Vintners Blend Series, County
Series and Vineyard Designate Series were 62.5%, 19.8% and 16.8%,  respectively,
for the three months ended  December 31, 1999,  as compared to 55.6%,  26.9% and
16.0%,  respectively,  in the three  months ended  December  31, 1998.  Sales of
Ravenswood  branded  merchandise  accounted for approximately .9% of gross sales
for the three months ended December 31, 1999, as compared to 1.5% of gross sales
for the three months ended December 31, 1998.


                                       10
<PAGE>

Cost of Goods Sold

Cost of goods sold  increased to $4.8  million,  or 48.5% of net sales,  for the
three months ended December 31, 1999, from $2.5 million,  or 45.2% of net sales,
for the three months ended December 31, 1998. The increase in cost of goods sold
as a percentage of net sales is primarily  attributable to the increase in sales
of Ravenswood's Vintners Blend Series as a percentage of gross sales.

Gross Profit

Ravenswood's  gross profit  increased to $5.1 million for the three months ended
December  31, 1999,  from $3.1  million for the three months ended  December 31,
1998,  and  decreased as a percentage  of net sales to 51.5% from 54.8% in these
respective  periods.  The  increase  in  aggregate  gross  profit  is  primarily
attributable  to increases in sales volumes across all of  Ravenswood's  product
series.  The decrease in gross profit as a percentage  of net sales is primarily
attributable  to an  increase  in  sales  of  the  Vintners  Blend  Series  as a
percentage  of gross sales.  Traditionally,  Vintners  Blend Series wines have a
lower percentage gross margin than those of Vineyard Designate and County Series
wines. As a result,  as gross sales of Vintners Blend Series wines increase as a
percentage  of  Ravenswood's  product  mix,  gross  margin  will  decrease  as a
percentage of net sales.

Operating Expenses

Operating expenses increased to $2.0 million for the three months ended December
31, 1999,  from $1.1 million for the three months ended  December 31, 1998,  and
increased  slightly  as a  percentage  of net sales to 20.2% from 20.0% in these
respective  periods.  The  increase  in the  amount  of  operating  expenses  is
attributable to several different  factors.  Increased sales volumes resulted in
increased brokerage commissions.  A portion of estimated annual employee bonuses
is being  accrued in each  quarter of fiscal  2000,  while in fiscal  1999 these
expenses were accrued in the third and fourth quarters only. Ravenswood has also
incurred  additional  expenses  since  becoming  a public  company in the fourth
quarter of fiscal 1999, such as increased legal and accounting fees.

Other Expense, Net

Other expense  amounted to $160,396 and $73,755,  or 1.6% and 1.3% of net sales,
in the three  months  ended  December  31,  1999,  and 1998,  respectively.  The
increase in other expense is primarily attributable to interest incurred on both
Ravenswood's  December 1998  offering of  $1,687,500  of  securities  and on the
construction  loan for its new  production  facility,  referred to as the Quarry
Facility,  offset  by an  increase  in  interest  income  on the  proceeds  from
Ravenswood's initial public offering.

Provision for Income Taxes

The provision for income taxes  reflects an estimated  annualized  effective tax
rate of 39.6% for the three months ended December 31, 1999, as compared to 43.3%
for the three  months  ended  December  31,  1998.  The  decrease  is due to the
effective tax rate for the three months ended  December 31, 1998 not  reflecting
adjustments  for deferred taxes and  recognition of  manufacturer's  tax credits
until the third


                                       11
<PAGE>

and fourth quarters of fiscal 1999.

Six Months Ended December 31, 1999 and 1998

Sales

Net sales of Ravenswood's  products increased to $17.6 million in the six months
ended December 31, 1999, from $11.6 million in the six months ended December 31,
1998.  This increase is primarily  attributable  to an increase in the volume of
wines  produced and sold by  Ravenswood.  In the six months  ended  December 31,
1999,  case sales  increased to 206,654  cases,  from  130,493  cases in the six
months ended  December 31, 1998,  while the average price per case  decreased to
$89.59  from $92.03 in these  respective  periods.  The  decrease in the average
price  per  case  is  primarily   attributable  to  the  increase  in  sales  of
Ravenswood's  Vintners Blend Series as a percentage of gross sales.  Gross sales
for each  product  series grew in the six months ended  December 31, 1999,  with
increases for Vintners Blend Series, County Series and Vineyard Designate Series
of 82.2%, 20.9% and 34.1%, respectively, over the six months ending December 31,
1998.

The percentages of gross sales attributable to the Vintners Blend Series, County
Series and Vineyard Designate Series were 57.2%, 20.5% and 21.2%,  respectively,
for the six months  ended  December 31,  1999,  as compared to 48.2%,  25.9% and
24.3%,  respectively,  for the six months  ended  December  31,  1998.  Sales of
Ravenswood branded  merchandise  accounted for approximately 1.1% of gross sales
for the six months ended  December 31, 1999, and 1.6% of gross sales for the six
months ended December 31, 1998.

Cost of Goods Sold

Cost of goods sold increased to $8.3 million, or 47.0% of net sales, for the six
months ended December 31, 1999,  from $5.1 million,  or 43.7% of net sales,  for
the six months ended  December 31, 1998. The increase in cost of goods sold as a
percentage  of net sales is primarily  attributable  to the increase in sales of
Ravenswood's Vintners Blend Series as a percentage of gross sales.

Gross Profit

Ravenswood's  gross  profit  increased  to $9.3 million for the six months ended
December 31, 1999, from $6.5 million for the six months ended December 31, 1998,
and  decreased  as a  percentage  of net  sales  to  53.0%  from  56.3% in these
respective  periods.  The  increase  in  aggregate  gross  profit  is  primarily
attributable  to increases in sales volumes across all of  Ravenswood's  product
series.  The decrease in gross profit as a percentage  of net sales is primarily
attributable  to an  increase  in  sales  of  the  Vintners  Blend  Series  as a
percentage of gross sales.

Operating Expenses

Operating  expenses  increased to $3.7 million for the six months ended December
31,  1999,  from $2.3 million for the six months  ended  December 31, 1998,  and
increased as a percentage  of net sales to 21.2% from 20.2% in these  respective
periods.  The increase in the amount of operating  expenses is  attributable  to
several  different  factors.  Increased  sales  volumes  resulted  in  increased
brokerage  commissions.  A portion of estimated annual employee bonuses is being
accrued in each quarter of fiscal 2000,  while in fiscal  1999,  these  expenses
were accrued in the third and fourth quarters only. Ravenswood has also


                                       12
<PAGE>

incurred  additional  expenses  since  becoming  a public  company in the fourth
quarter of fiscal 1999, such as increased legal and accounting fees.

Other Expense, Net

Other expense amounted to $198,368 and $146,956,  or 1.1% and 1.3% of net sales,
in the six months ended December 31, 1999 and 1998,  respectively.  The increase
in  other  expense  is  primarily  attributable  to  interest  incurred  on both
Ravenswood's  December 1998  offering of  $1,687,500  of  securities  and on its
construction  loan for the Quarry  Facility,  offset by an  increase in interest
income on the proceeds from Ravenswood's s initial public offering.

Provision for Income Taxes

The provision for income taxes  reflects an estimated  annualized  effective tax
rate of 39.3% for the six months ended  December 31, 1999, and 43.3% for the six
months ended  December 31, 1998.  The decrease is due to the  effective tax rate
for the six months  ended  December  31,  1998 not  reflecting  adjustments  for
deferred taxes and recognition of manufacturer's tax credits until the third and
fourth quarters of fiscal 1999.

Selected Quarterly Results of Operations
<TABLE>

The following table presents  Ravenswood's results of operations for each of the
six quarters  prior to and including the quarter  ended  December 31, 1999.  The
quarterly information is unaudited, but management believes that the information
regarding  these  quarters  has been  prepared  on the same basis as the audited
financial  statements  appearing in Ravenswood's Form 10-KSB for the fiscal year
ended June 30, 1999. In the opinion of  management,  all necessary  adjustments,
which include only normal recurring  adjustments,  have been included to present
fairly  the  unaudited  quarterly  results  when  read in  conjunction  with the
financial statements and related notes appearing elsewhere in this Form 10-QSB.
<CAPTION>
                                                                         Quarter Ended
                                                                         (In Thousands)
                                          -----------------------------------------------------------------------------------
                                          September 30,  December 31,    March 31,     June 30,    September 30,  December 31
                                               1998          1998          1999          1999          1999          1999
                                             -------       -------       -------       -------        -------       -------
<S>                                          <C>           <C>           <C>           <C>            <C>           <C>
Statement of Income Data:

Gross Sales                                  $ 6,342       $ 5,853       $ 5,415       $ 6,119        $ 8,289       $10,437
 Less Excise Taxes                               225            51           272           361            335           199
 Less Discounts, Allowance and Returns           155           182           182           234            262           315
                                             -------       -------       -------       -------        -------       -------

Net Sales                                      5,962         5,620         4,961         5,525          7,692         9,924
Cost of Goods Sold                             2,528         2,538         2,405         2,788          3,463         4,814
                                             -------       -------       -------       -------        -------       -------
Gross Profit                                   3,434         3,082         2,556         2,737          4,229         5,110
Operating Expenses                             1,215         1,125         1,396         1,503          1,740         2,001
                                             -------       -------       -------       -------        -------       -------
Operating Income                               2,219         1,957         1,160         1,234          2,489         3,108
Other (Income) Expense                            73            74            92           (12)            38           160
                                             -------       -------       -------       -------        -------       -------
Income  Before Income Taxes                    2,146         1,884         1,068         1,247          2,451         2,947
Provision for Income Taxes                       929           815           312           385            953         1,168
                                             -------       -------       -------       -------        -------       -------
Net Income                                   $ 1,217       $ 1,068       $   756       $   862        $ 1,498       $ 1,780
                                             =======       =======       =======       =======        =======       =======
</TABLE>


                                       13
<PAGE>


Ravenswood  experiences seasonal and quarterly  fluctuations in sales, operating
expenses  and net income.  Because  Ravenswood  manages its  business to achieve
long-term  strategic  objectives,  it may make  decisions  that it believes will
enhance  its  long-term  growth  and  profitability,  even  if  these  decisions
adversely  affect  quarterly  earnings.  These  decisions  include:  (a) when to
release its wines for sale; (b) how to position its wines competitively; and (c)
which  grape and bulk wine  sources to use to produce  its wines.  In  addition,
variations in the release dates of Ravenswood's  Vineyard  Designate  Series and
County  Series  have  resulted  in  fluctuations  in  Ravenswood's  results on a
quarter-to-quarter  basis.  Ravenswood's  sales volume may also change depending
upon its  distributors'  inventory  levels.  The results of  operations  for any
quarter are not necessarily  indicative of the results of any future period. The
market  price of  Ravenswood's  common  stock  may  fluctuate  significantly  in
response to these quarter-to-quarter variations.



FINANCIAL CONDITION

Assets

Ravenswood's  total assets  increased by 24.2% to $47.8  million at December 31,
1999, from $38.5 million at June 30, 1999.  Ravenswood's  inventory increased by
36.9% to $19.9  million on December  31,  1999,  from $14.5  million at June 30,
1999.  Property,  plant and equipment,  net of depreciation,  increased 57.9% to
$14.2  million  at  December  31,  1999,  from $9.0  million  at June 30,  1999.
Ravenswood  expects total assets to continue to increase as  Ravenswood  expands
its inventory and completes construction of the Quarry Facility.

Liabilities

Ravenswood's total liabilities  increased 34.5% to $20.1 million at December 31,
1999,  from $15.0 million at June 30, 1999.  At December 31, 1999,  Ravenswood's
outstanding  long-term  liabilities  were  $10.9  million,  and a total  of $1.0
million was available under the terms of Ravenswood's lines of credit.


                                       14
<PAGE>

Liquidity and Capital Resources

Ravenswood  has funded its capital  requirements  primarily with cash flows from
operations,  a mix of short-term and long-term  borrowings,  and the sale of its
securities,  most recently with its initial public  offering in April 1999. Cash
and cash  equivalents  totaled $7.6 million at December 31, 1999, as compared to
$11.4  million at June 30, 1999.  The decrease in cash and cash  equivalents  is
primarily due to cash required to expand inventory,  to continue construction of
the Quarry Facility and to retire indebtedness.

Net cash used by operations was $1.1 million for the three months ended December
31, 1999, as compared to $378,006 for the three months ended  December 31, 1998.
The principal  uses of cash from  operations for the three months ended December
31, 1999 was the acquisition of inventory,  especially  grapes received  through
the harvest.  Net cash used by operations  was $719,183 for the six months ended
December 31, 1999, as compared to $655,773  provided by  operations  for the six
months ended  December 31, 1998.  The principal use of cash from  operations for
the six    months  ended  December 31, 1999 was the  acquisition  of  additional
inventory, especially grapes received through the harvest.

Net cash used for investing activities totaled $2.4 million for the three months
ended  December  31,  1999,  as compared to $347,488  for the three months ended
December 31, 1998.  The principal use of cash for  investing  activities  during
this period was primarily the costs  associated with  construction of the Quarry
Facility.  Net cash used for investing  activities  totaled $4.5 million for the
six months ended  December 31, 1999,  as compared to $607,825 for the six months
ended  December 31,  1998.  The increase  was  primarily  attributable  to costs
associated with construction of the Quarry Facility. Ravenswood expects that net
cash used for  investing  activities  will  increase in the future as additional
investments for plant and equipment are made to complete the Quarry Facility.

Net cash provided by financing  activities was $2.1 million for the three months
ended  December 31, 1999, as compared to $3.7 million for the three months ended
December  31,  1998.  The  principal  source of cash for the three  months ended
December  31,  1999  was  financing   provided  by  Pacific  Coast  Farm  Credit
Association to construct the Quarry Facility, while the principal source of cash
for  the  three  months  ended  December  31,  1998  was  Ravenswood's  sale  of
securities, which was completed in December 1998. Net cash provided by financing
activities  was $1.4  million for the six months ended  December  31,  1999,  as
compared  to $3.0  million  for the six months  ended  December  31,  1998.  The
principal  source  of cash  for the six  months  ended  December  31,  1999  was
financing  provided by Pacific  Coast Farm Credit  Association  to construct the
Quarry Facility.  The principal source of cash for the six months ended December
31, 1998 was  Ravenswood's  sale of securities,  which was completed in December
1998.

The majority of Ravenswood's grape purchases occur in the second fiscal quarter,
when the fruit is harvested. Most grape purchase contracts specify the timing of
payment for these  purchases.  The actual  payment dates vary depending upon the
terms of the individual  contract.  Based upon its grape purchase  contracts for
the 1999 harvest,  these payments will be made in the following manner: 42%, 29%
and 17% in the second,  third and fourth quarters of fiscal 2000,  respectively,
and the  remaining  12% in the  first  quarter  of fiscal  2001.  As a result of
harvest  costs  and the  timing  of  grape  and  bulk  wine  purchase  payments,
Ravenswood's  inventory and related cash requirements  generally peak during the
second or third fiscal quarters. Cash requirements also fluctuate depending upon
the level and timing of capital spending and tax payments.


                                       15
<PAGE>

Ravenswood  leases  barrels and other  equipment  used in the  production of its
wines.  Ravenswood estimates that aggregate lease payments for barrels and other
equipment will be approximately $545,000 for fiscal 2000. Ravenswood anticipates
that it will enter into additional  leasing  arrangements  for barrels and other
equipment as it increases its production.

In December 1994, Ravenswood completed a private sale of $865,000 of convertible
debentures due December 31, 2004. Each $10,000  debenture was  convertible  into
3,500  shares of common  stock at any time  prior to  December  31,  1999,  upon
request of the holder.  $50,000 of  convertible  debentures  were converted into
17,500  shares  of  common  stock in  April  1999.  The  remaining  $815,000  in
convertible  debentures  were  converted  into 285,250 shares of common stock in
December 1999.

In  December  1998,  Ravenswood  completed  a private  sale of $1.7  million  of
convertible  debentures  due December 31, 2008 and $1.7 million of common stock.
Each  $10,000  debenture is  convertible  into 900 shares of common stock at any
time prior to December 31, 2003,  upon request of the holder.  If the debentures
are not  converted,  Ravenswood may redeem them at face value at any time during
the period  from  January  1, 2004  until the  maturity  date.  Ravenswood  pays
interest  quarterly on the  debentures in an amount equal to the prime  interest
rate  quoted by Bank of America  NT&SA plus 1%. The  interest  rate is  adjusted
every 18 months,  except  that in no period  may the  interest  rate  adjustment
exceed 2%, or the maximum interest rate exceed 11%.

Ravenswood  has a line of credit with  Pacific  Coast Farm  Credit  Association,
under which  Ravenswood  may borrow up to $2 million.  As of December  31, 1999,
Ravenswood had $1,000,000 outstanding under this line of credit. In addition, on
April 26, 1999 Ravenswood obtained a $4.6 million construction loan from Pacific
Coast for the purpose of financing the construction of the Quarry Facility.  The
loan is being used as funds for construction are needed.  The loan is secured by
the Quarry  Facility and its lease.  The estimated $5 million in remaining costs
to  complete  the  facility  are being  funded  from its  December  1998 sale of
securities and proceeds from Ravenswood's initial public offering in April 1999.
Equipment is being acquired through a $3 million commitment for leases.

In April 1999,  Ravenswood  completed an initial public  offering of one million
shares of its  common  stock at a price of $10.50 per share.  W.R.  Hambrecht  &
Company,  LLC acted as underwriter  for the offering.  The net proceeds from the
offering of approximately $9,528,000 have been and will continue to be used for:
investment  in wine  inventory,  expansion  of  production  facilities,  general
corporate  purposes,  and retirement of  indebtedness.  Ravenswood's  shares are
listed on the Nasdaq National Market under the trading symbol RVWD.


The full extent of Ravenswood's future capital  requirements and the adequacy of
its  available  funds  will  depend  on many  factors,  not all of which  can be
accurately  predicted.  Although no assurance can be given,  Ravenswood believes
that anticipated cash flow from operations, borrowings under its existing credit
agreements, proceeds from its initial public offering and the private placements
in 1994  and 1998  described  above,  will be  sufficient  to fund  its  capital
requirements,  including its planned expansion, for at least the next 12 months.
In the event that additional  capital is required,  Ravenswood may seek to raise
that capital through public or private equity or debt financings. Future capital
funding transactions may result in dilution to shareholders.

There can be no assurance that additional capital will be available on favorable
terms,  if at all.  Ravenswood's  inability  to  obtain  additional  capital  on
acceptable  terms would limit its growth and could have a negative impact on its
business. Ravenswood uses substantial amounts of its working capital to purchase
grapes  and bulk wine  supplies  from  third  parties  and to pay for the use of
third-party  production facilities in its wine production.  Ravenswood also uses
capital to fund its own  grape-growing  and


                                       16
<PAGE>

winemaking activities.  Ravenswood expects that it will need an increased amount
of  working  capital  over  the next  several  years  to fund  increases  in its
production level and inventory.

Risks associated with potential Year 2000 problems

Even  though  the date is now  past  January  1,  2000  and  Ravenswood  has not
experienced  any immediate  adverse impact from the transition to the Year 2000,
Ravenswood  cannot  provide  assurance that its suppliers and customers have not
been  affected  in a  manner  that is not yet  apparent.  In  addition,  certain
computer  programs that were date sensitive to the Year 2000 may not process the
Year 2000 as a leap year and any negative  consequential effects remain unknown.
As a result,  Ravenswood  will continue to monitor its Year 2000  compliance and
the Year 2000 compliance of its suppliers and customers.

FACTORS THAT MAY AFFECT RESULTS

A reduction in consumer demand for premium red wines could harm our business

Because a large  percentage  of the wines we  produce  are  premium  red  wines,
including Merlot, Cabernet Sauvignon and, in particular, Zinfandel, our business
would be harmed if consumer  demand for red wines in general,  or  Zinfandel  in
particular,  failed to grow or declined. An overall reduction in consumer demand
for premium wine would also harm our business.

A  reduction  in the  supply of grapes  and bulk wine  available  to us from the
independent  grape growers and bulk wine  suppliers on whom we rely could reduce
our annual production of wine

We rely on  annual  contracts,  many of which are not in  writing,  with over 60
independent growers to purchase substantially all of the grapes used in our wine
production.  We  cannot  assure  you  that we will be able to  contract  for the
purchase of grapes at  acceptable  prices from these or other  suppliers  in the
future. The terms of many of our purchase  agreements also constrain our ability
to discontinue  purchasing grapes in circumstances where we might want to do so.
Those  agreements  typically  provide that, while either party may terminate the
agreement  at any time,  both  parties  must  continue to abide by its terms for
three years following termination.

We are  dependent on bulk wine  suppliers  for the  production of several of our
wines,  particularly  our Vintners  Blend Series.  We do not have contracts with
bulk wine suppliers or agreements that would protect us from fluctuations in the
price or  availability  of bulk wine.  The  availability  and price of bulk wine
significantly  affect the quality and  production  levels of our  products  that
contain bulk wine. The price,  quality and available  quantity of bulk wine have
fluctuated in the past. It is possible that we will not be able


                                       17
<PAGE>

to purchase bulk wine of acceptable  quality at acceptable prices and quantities
in the  future,  which could  increase  the cost or reduce the amount of wine we
produce for sale. This could cause reductions in our sales and profits.

Bad weather, plant diseases and other factors could reduce the amount or quality
of the grapes we need to produce our wines

A shortage in the supply of quality grapes may result from the occurrence of any
number of the factors which  determine the quality and quantity of grape supply,
such as weather  conditions,  pruning  methods,  the  existence  of diseases and
pests,  and the  number  of  vines  producing  grapes,  as well as the  level of
consumer  demand for wine.  Any shortage could cause an increase in the price of
some or all of the grape  varieties  required for our wine  production  and/or a
reduction  in the amount of wine we are able to  produce,  which  could harm our
business and reduce our sales and profits.

For example, due to the effects of El Nino, the grape supply available to us for
the 1998  harvest was lower than for the 1997  harvest,  which we believe was an
unusually  large  harvest.  Therefore,  the inventory of our 1998 vintage may be
less than that of our 1997 vintage.  As a result, the growth of our sales may be
limited in fiscal  years 2000 and 2001,  when most of our 1998  vintage  will be
released for sale.

Factors which reduce the quantity of grapes may also reduce their quality, which
in turn could reduce the quality or amount of wine we produce.  A  deterioration
in the  quality of our wines  could harm our brand  name,  and a decrease in our
production could reduce our sales and profits.

Although  we grow only a small  portion of the grapes we use,  our  business  is
still subject to numerous  agricultural risks. Most of the vineyards that supply
our grapes are  primarily  planted to  rootstocks  believed to be  resistant  to
Phylloxera,  a pest that feeds on  susceptible  grape  rootstocks.  However,  we
cannot be certain that these vineyards, or vineyards from which we obtain grapes
in the  future,  will not  become  susceptible  to  current  or new  strains  of
Phylloxera,  plant insects or diseases.  Any resulting reduction in grape supply
could reduce our sales and profits.

An oversupply of grapes may also harm  our business by increasing  the supply of
wine sold by our competitors

The recent  increase in demand for premium  wine has resulted in the planting of
additional vineyards, both domestically and internationally,  and the replanting
of existing vineyards to greater densities,  which could result in a significant
increase  in the supply of premium  wine  grapes.  An  oversupply  of grapes may
significantly  increase the amount of premium wine produced.  An increase in the
supply of premium wine may reduce the price of premium wines. This oversupply of
premium  wines could harm our business  because we only produce  premium  wines.
Oversupply  may also  increase  the  amount of  premium  wine  available  to our
distributors  and  retail  outlets,  which  would  increase  competition  in our
distribution channels.

The loss of Mr. Foster,  Mr. Peterson  or other key employees  would damage  our
reputation and business

We believe that our success  largely  depends on the  continued  employment of a
number of our key  employees,  including W. Reed Foster,  our chairman and chief
executive  officer,  and Joel E.  Peterson,  our  president and  winemaker.  Any
inability or unwillingness  of Mr. Foster,  Mr. Peterson or other key management
team members to continue in their present capacities could harm our business and
our reputation.  For instance,  if Mr.  Peterson's  relationship with Ravenswood
were to terminate for any reason,  we would need to find a successor  winemaker.
We cannot be  certain  that we could  find or hire a  successor  winemaker  with
skills equivalent to those of Mr. Peterson.


                                       18
<PAGE>

Because a significant  amount of our sales is made through brokers,  a change in
our relationship with any of them could harm our business

In the 1999 fiscal year,  approximately 75% of our gross sales were made through
brokers.  A change in our  relationship  with any of our brokers  could harm our
business and reduce our sales.  Our most  successful  broker was responsible for
22% of our gross  sales in the 1999  fiscal  year,  and our ten most  successful
brokers were responsible for 70% of our gross sales in the 1999 fiscal year.

Our sales outside of California  largely depend on the use of distributors.  Our
ten largest distributors  accounted for approximately 23% of our gross sales for
the 1999 fiscal year,  and we expect that sales to our ten largest  distributors
will continue to represent a substantial portion of our sales in the future. The
laws and regulations of several states prohibit distributor changes except under
limited  circumstances.  As a  result,  it may be  difficult  for us to  replace
distributors  that do not  perform  adequately,  which may  reduce our sales and
profits.

Our  business  may be harmed if our  distributors  fail to market  our  products
effectively

We depend largely on our distributors in areas outside  California to market our
products to the restaurants and retail outlets they service.  Other premium wine
producers,  as well as the producers of alternative  beverages,  compete for our
distributors'  marketing resources.  A failure by our distributors to market our
products as effectively as they, or other distributors,  market our competitors'
products could harm our business.

The market price of our stock may fluctuate due to seasonal  fluctuations in our
wine sales, operating expenses and net income

We experience seasonal and quarterly  fluctuations in sales,  operating expenses
and net income. Generally, the second and third quarters of our fiscal year have
lower sales volumes than the first and fourth  quarters.  We have  managed,  and
will continue to manage, our business to achieve long-term objectives.  In doing
so,  we  may  make   decisions  that  we  believe  will  enhance  our  long-term
profitability,  even if these  decisions may reduce  quarterly  earnings.  These
decisions  include:  (a) when to release our wines for sale; (b) how to position
our wines  competitively;  and (c) which  grape and bulk wine  sources to use to
produce our wines.  In addition,  fluctuations  in our  distributors'  inventory
levels  may  affect  our  sales  volume.  These and other  factors  relating  to
seasonality and business decisions may cause fluctuations in the market price of
our common stock.

We also compete with popular low-priced  "generic" wines and with beer and other
alcoholic  and  non-alcoholic  beverages  both  for  demand  and for  access  to
distribution  channels.  Many of the  producers  of these  beverages  also  have
significantly  greater  financial,  technical,  marketing  and public  relations
resources  than we do.  Our sales may be harmed to the  extent  any  alternative
beverages are  introduced  that compete with wine. We may not be able to compete
successfully against these wine or alternative beverage producers.

A reduction  in our access to, or an  increase  in the cost of, the  third-party
services we use to produce our wine could harm our business

We utilize several third-party  facilities,  of which there is a limited supply,
for the production  activities  associated with our wines.  Our inability in the
future to use these or alternative  facilities,  at reasonable prices or at all,
could  increase  the cost or reduce the amount of our  production,  which  could
reduce our sales and our profits.  We do not have long-term  agreements with any
of these facilities. The activities conducted at


                                       19
<PAGE>

outside facilities include:  (a) crushing;  (b) fermentation;  (c) storage;  (d)
blending; and (e) bottling. Our reliance on these third parties varies according
to  the  type  of  production  activity.  As  production   increases,   we  must
increasingly  rely upon these  third-party  production  facilities.  Reliance on
third parties will also vary with annual harvest volumes.

A failure to complete the expansion of our facilities as planned could limit our
production of wine and harm our business

We are  currently  building  a new  facility,  which we are  calling  the Quarry
Facility,  in order to  increase  our  production  capacity.  While  the  Quarry
Facility is still under construction,  we crushed and fermented a portion of the
1999 harvest at the facility.  Our failure to complete the Quarry  Facility,  or
otherwise  expand  our  production  capabilities,  would  limit  our  production
capacity,  would require greater use of third-party production  facilities,  and
could reduce our sales and/or  profits.  Upon its  completion,  we expect to use
both the Quarry  Facility and our current  Gehricke Road Facility for a majority
of our operations.

We expect to utilize the Quarry Facility fully upon its completion. As a result,
any  further  expansion  of  our  production  capacity  may  require  us to  use
third-party  production  facilities or to continue to expand our own  production
capacity.  Our failure to expand our production capacity,  or to secure capacity
from third  parties,  either at  acceptable  prices or at all,  could  limit our
production and reduce our sales and/or profits.

Adverse public opinion about alcohol may harm our business

While a number of research studies suggest that moderate alcohol consumption may
provide various health benefits,  other studies conclude or suggest that alcohol
consumption has no health  benefits and may increase the risk of stroke,  cancer
and other  illnesses.  An  unfavorable  report on the health  effects of alcohol
consumption could significantly reduce the demand for wine, which could harm our
business and reduce our sales and profits.

In recent  years,  activist  groups have used  advertising  and other methods to
inform the public about the societal harms  associated  with the  consumption of
alcoholic  beverages.  These  groups  have also  sought,  and  continue to seek,
legislation to reduce the availability of alcoholic  beverages,  to increase the
penalties associated with the misuse of alcoholic beverages,  or to increase the
costs  associated with the production of alcoholic  beverages.  Over time, these
efforts  could cause a  reduction  in the  consumption  of  alcoholic  beverages
generally, which could harm our business and reduce our sales and profits.

Contamination of our wines would harm our business

Because our products are designed for human consumption, our business is subject
to hazards and liabilities  related to food products,  such as contamination.  A
discovery of contamination in any of our wines,  through tampering or otherwise,
could result in a recall of our products.  Any recall would significantly damage
our  reputation  for product  quality,  which we believe is one of our principal
competitive assets, and could seriously harm our business and sales. Although we
maintain  insurance  to  protect  against  these  risks,  we may  not be able to
maintain insurance on acceptable terms and this insurance may not be adequate to
cover any resulting liability.

Increased regulatory costs or taxes would harm our financial performance

The wine  industry is regulated  extensively  by the Federal  Bureau of Alcohol,
Tobacco and  Firearms,  various  foreign  agencies,  and state and local  liquor


                                       20
<PAGE>

authorities. These regulations and laws dictate various matters, including:

     o        Excise taxes
     o        Licensing requirements
     o        Trade and pricing practices
     o        Permitted distribution channels
     o        Permitted and required labeling
     o        Advertising
     o        Relationships with distributors and retailers

Recent and future zoning ordinances,  environmental restrictions and other legal
requirements may limit our plans to expand our production  capacity,  as well as
any future  development  of new  vineyards and  wineries.  In addition,  federal
legislation has been proposed that could significantly  increase excise taxes on
wine.  Other federal  legislation  has been proposed which would prevent us from
selling  wine  directly  through  the  mail  or  the  Internet.   This  proposed
legislation,  or other new  regulations,  requirements  or taxes  could harm our
business and operating  results.  Future legal or  regulatory  challenges to the
wine industry could also harm our business and impact our operating results.


Because our  directors and officers have  significant  control over  Ravenswood,
other  investors do not have as much  influence  on corporate  decisions as they
would if  control  were  less  concentrated

Assuming  conversion  of all  debentures  held by our  directors  and  executive
officers and their respective  affiliates,  our directors and executive officers
and their  respective  affiliates  would  beneficially  own 2,178,541  shares of
common stock, or approximately  42.9% of our outstanding common stock and common
stock equivalents.  Of these shares, 2,077,051 shares, plus an additional 19,530
shares  not held of record by  Ravenswood's  affiliates,  have been  placed in a
voting trust.  The trustees of this voting trust are Messrs.  Foster,  Peterson,
and Faggioli, and Ms. Konno, all of whom serve as directors of Ravenswood.  As a
result,  Messrs.  Foster,  Peterson, and Faggioli and Ms. Konno have significant
influence  in the election of  directors  and the approval of corporate  actions
that must be submitted for a vote of shareholders.


The  interests  of these  affiliates  may conflict  with the  interests of other
shareholders,  and the  actions  they take or approve  may be  contrary to those
desired by the other shareholders. This concentration of ownership may also have
the effect of delaying,  preventing or deterring an acquisition of Ravenswood by
a third party.

Natural disasters, including earthquakes or fires, could  destroy our facilities
or our inventory

The Gehricke  Road  Facility,  the Quarry  Facility  and all of the  third-party
facilities  we use to produce  and store our wine are  located in areas that are
subject to earthquake activity. If we lost all or a portion of our wine prior to
its sale or distribution as a result of earthquake  activity,  we would lose our
investment in, and  anticipated  profits and cash flows from,  that wine. Such a
loss would seriously harm our business and reduce our sales and profits.

In  addition,  we must  store our wine in a limited  number of  locations  for a
period of time prior to its sale or distribution. Any intervening catastrophies,
such as a fire,  that result in the  destruction of all or a portion of our wine
would result in a loss of our  investment in, and  anticipated  profits and cash
flows from,  that wine. Such a loss would seriously harm our business and reduce
our sales and profits.


                                       21
<PAGE>

Our small size and  relatively  low trading  volume may limit the market  price,
liquidity or trading volume of our stock

Our small  size and  relatively  low  trading  volume  may  reduce the amount of
research coverage from market analysts. This reduced level of coverage may limit
the market price, liquidity or trading volume of our common stock.



                                       22

<PAGE>

                             RAVENSWOOD WINERY, INC.

                           PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds
<TABLE>
The following  table  describes the use of proceeds  from  Ravenswood's  initial
public offering in April 1999.
<CAPTION>
(IN THOUSANDS)
<S>                                                                    <C>
Effective Date of the Company's Registration Statement:                April 8, 1999
Commission File Number                                                 333-71729
Date Offering Commenced:                                               April 9, 1999
Date Offering Completed:                                               Upon the sale of all the shares
                                                                         registered
Names of Managing Underwriters:                                        W. R. Hambrecht & Co., LLP
Class of Securities Registered:                                        Common Stock
Shares Registered and Sold:                                             1,000*
Sold by Company:                                                        1,000*
Sold by Shareholders:                                                   0
Aggregate Price of Offering Amount Registered and Sold:                $10,500
Gross Proceeds to Company:                                             $10,500
Gross Proceeds to Selling Shareholders                                  0
Underwriter's Discounts and Commission Charged to the Company:         $420
Other issuance costs:                                                  $552
Net offering proceeds to the Company:                                  $9,528
Approximate use of net offering proceeds through December 31,
   1999:
         Working capital                                               $525
         Retirement of debt                                            $1,000
         Expansion of production facilities                            $2,300
<FN>
-----------
*In  connection  with  the  initial  public  offering,  Ravenswood  granted  the
underwriters an over-allotment  option to purchase 150,000  additional shares of
Ravenswood's  common stock at the original  initial public offering  price.  The
option was not exercised.
</FN>
</TABLE>

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

The following matters were submitted to the shareholders at Ravenswood's  Annual
Meeting of  Shareholders  held on  November 4, 1999.  Each of these  matters was
approved by a majority of the shares present at the meeting.

(1) The uncontested reelection of each member of the Board of Directors:

Name                      Shares Voted For         Shares Withheld

W. Reed Foster               4,012,584                   400
Joel E. Peterson             4,012,584                   400
Callie S. Konno              4,012,584                   400
Justin M. Faggioli           4,012,584                   400
James F. Wisner              4,012,584                   400
Robert E. McGill III         4,012,584                   400


                                       23
<PAGE>

(2)  Ratification of the appointment of Ravenswood's Independent Auditors:

Shares voted for:  4,011,890
Shares voted against:  704
Abstentions:  390
Broker Non-votes:  none


Item 6. Exhibits and Reports on Form 8-K

(a)      Exhibits.

         Exhibit Number

                  27.1                      Financial Data Schedule

(b)      Reports on Form 8-K.

         None.



                                       24
<PAGE>


                             RAVENSWOOD WINERY, INC.

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.

Dated: February 11, 2000                     Ravenswood Winery, Inc.

                                             /s/ Callie S. Konno
                                             -----------------------------------
                                             Callie S. Konno
                                             Chief Financial Officer

Dated: February 11, 2000
                                             /s/ W. Reed Foster
                                             -----------------------------------
                                             W. Reed Foster
                                             Chairman of the Board and Chief
                                             Executive Officer



                                       25