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

                        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 March 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 ___ No _X_


The number of shares  outstanding  of the Issuer's  Common Stock on May __, 1999
was [complete with number].

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 March 31, 1999 and June 30, 1998.

     Statements  of Income for the three  months and nine  months
     ended March 31, 1999 and 1998.

     Statements of Cash Flows for the nine months ended March 31,
     1999 and 1998.

     Notes to Financial Statements.


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


Item 3. Risk Factors


                           PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds


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


Item 6. Exhibits and Reports on Form 8-K




<PAGE>


<TABLE>
                                                       RAVENSWOOD WINERY, INC.

                                                    PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                                       RAVENSWOOD WINERY, INC.
                                                            BALANCE SHEET

<CAPTION>
                                                                                                      March 31,           June 30,
                                                                                                        1999                1998
                                                                                                     -----------         -----------
                                                                                                     (unaudited)
                                                               ASSETS
<S>                                                                                                  <C>                 <C>
Current assets:
     Cash and cash equivalents                                                                       $ 3,124,083         $   102,272
     Accounts receivable, less allowance for doubtful accounts of $10,000                              2,809,527           1,906,498
     Prepaid income taxes                                                                                 14,850              73,849
     Inventories                                                                                      13,725,160          10,427,359
     Prepaid expenses                                                                                     69,005              38,569
     Deferred stock offering costs                                                                       371,272                --
     Deferred tax assets                                                                                  28,500             270,822
                                                                                                     -----------         -----------
         Total current assets                                                                         20,142,397          12,819,369
                                                                                                     -----------         -----------

     Property, plant and equipment, less accumulated depreciation, net                                 4,069,828           2,973,814
     Notes receivable from shareholder                                                                    59,275              28,312
     Other assets                                                                                        151,743             155,615
                                                                                                     -----------         -----------
                                                                                                       4,280,846           3,157,741
                                                                                                     -----------         -----------
                                                                                                     $24,423,243         $15,977,110
                                                                                                     ===========         ===========

                                                LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Current portion of long-term debt                                                               $    17,805         $   194,464
     Current portion of capital lease obligations                                                         55,764             189,975
     Short-term borrowings                                                                             1,100,000           1,350,000
     Accounts payable                                                                                  3,818,025           2,330,967
     Accrued commissions                                                                                 366,491             246,483
     Accrued liabilities                                                                                 560,085             381,013
                                                                                                     -----------         -----------
         Total current liabilities                                                                     5,918,170           4,692,902

Long-term liabilities:
     Long-term debt, net                                                                               2,445,666           1,795,665
     Notes payable to shareholders, net                                                                     --                50,000
     Capital lease obligations, net                                                                      375,226             199,719
     Convertible debentures                                                                            2,552,500             865,000
     Other long-term liabilities                                                                          22,080                --
                                                                                                     -----------         -----------
         Total liabilities                                                                            11,313,642           7,603,286
                                                                                                     -----------         -----------

Shareholders' equity:
     Preferred stock, no par value; 1 million shares authorized, none issued
                                                                                                            --                  --
     Common stock, no par value; 20 million shares authorized                                          4,626,400           2,938,900
     Retained earnings                                                                                 8,476,384           5,434,924
     Unrealized gain on available-for-sale securities                                                      6,817                --
                                                                                                     -----------         -----------
         Total shareholders' equity                                                                   13,109,601           8,373,824
                                                                                                     -----------         -----------

                                                                                                     $24,423,243         $15,977,110
                                                                                                     ===========         ===========
<FN>
                                           See accompanying notes to financial statements.
</FN>
</TABLE>


<PAGE>


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

<CAPTION>
                                                           Nine months ended March 31,               Three months ended March 31,
                                                        ---------------------------------         ---------------------------------
                                                          1 9 9 9              1 9 9 8              1 9 9 9              1 9 9 8
                                                        ------------         ------------         ------------         ------------
<S>                                                     <C>                  <C>                  <C>                  <C>
Gross sales                                             $ 17,610,314         $ 12,650,085         $  5,415,318         $  3,794,901

     Less excise taxes                                      (547,830)            (280,873)            (272,035)             (83,875)
     Less discounts, returns and
         allowances                                         (518,910)            (408,556)            (182,226)            (135,153)
                                                        ------------         ------------         ------------         ------------

Net sales                                                 16,543,574           11,960,656            4,961,057            3,575,873

Cost of goods sold                                         7,471,357            5,438,891            2,404,886            1,786,534
                                                        ------------         ------------         ------------         ------------

Gross profit                                               9,072,217            6,521,765            2,556,171            1,789,339

Operating expenses                                         3,735,849            2,766,085            1,395,840              914,226
                                                        ------------         ------------         ------------         ------------

Operating income                                           5,336,368            3,755,680            1,160,331              875,113
                                                        ------------         ------------         ------------         ------------

Other (expense):
     Interest expense                                       (357,685)            (257,950)            (133,378)             (93,562)
     Other, net                                              119,077               44,671               41,726               (6,129)
                                                        ------------         ------------         ------------         ------------
                                                            (238,608)            (213,279)             (91,652)             (99,691)
                                                        ------------         ------------         ------------         ------------

Income before income taxes                                 5,097,760            3,542,401            1,068,679              775,422

Provision for income taxes                                 2,056,300            1,448,000              312,451              315,000
                                                        ------------         ------------         ------------         ------------

Net income                                              $  3,041,460         $  2,094,401         $    756,228         $    460,422
                                                        ============         ============         ============         ============



Basic earnings per share                                $       0.87         $       0.60         $       0.22         $       0.13
                                                        ============         ============         ============         ============

Weighted average number of common
     shares outstanding
                                                           3,498,945            3,516,445            3,498,945            3,498,945
                                                        ============         ============         ============         ============

Diluted earnings per share                              $       0.80         $       0.56         $       0.21         $       0.12
                                                        ============         ============         ============         ============

Weighted average number of common
     shares and equivalents
     outstanding                                           3,896,083            3,819,195            3,953,588            3,801,694
                                                        ============         ============         ============         ============

<FN>
                                           See accompanying notes to financial statements.
</FN>
</TABLE>


<PAGE>


<TABLE>
                                                       RAVENSWOOD WINERY, INC.
                                                       STATEMENT OF CASH FLOWS
                                                             (UNAUDITED)

<CAPTION>
                                                                                                    Nine months ended March 31,
                                                                                                  1 9 9 9                1 9 9 8
                                                                                                 -----------            -----------
<S>                                                                                              <C>                    <C>
Operations:
     Net income                                                                                  $ 3,041,460            $ 2,094,401
     Items not requiring the current use of cash:
         Depreciation and amortization                                                               292,240                136,312
         Unrealized capital appreciation                                                               6,817                   --
         Changes in other operating items:
              Accounts receivable                                                                   (903,029)              (221,648)
              Prepaid income taxes                                                                    73,849                 33,886
              Inventories                                                                         (3,297,802)            (3,189,132)
              Deferred tax asset                                                                     242,322                (21,432)
              Prepaid expenses and deferred cost                                                     (45,286)              (125,886)
              Accounts payable                                                                     1,373,769              1,253,426
              Accrued liabilities and accrued commissions                                            410,873                 52,646
                                                                                                 -----------            -----------
         Cash provided by operations                                                               1,195,213                 12,573
                                                                                                 -----------            -----------

Investments:
     Shareholder receivables                                                                         (30,963)                (1,403)
     Additions to plant and equipment                                                             (1,208,873)              (280,844)
                                                                                                 -----------            -----------
         Cash used for investing activities                                                       (1,239,836)              (282,247)
                                                                                                 -----------            -----------

Financing:
     Short-term borrowings, net                                                                     (250,000)               276,801
     Proceeds from long-term debt                                                                    672,080                278,255
     Repayments of long-term debt                                                                   (194,231)               (61,756)
     Proceeds from convertible debenture and common shares issued                                  3,375,000                   --
     Repayments of related parties' notes                                                           (165,143)                (9,995)
     Deferred stock offering costs                                                                  (371,272)                  --
     Repurchase of common shares from former owner                                                      --                 (278,255)
                                                                                                 -----------            -----------
         Cash provided by financing activities                                                     3,066,434                205,050
                                                                                                 -----------            -----------

Increase (decrease) in cash and cash equivalents                                                   3,021,811                (64,624)

Cash and cash equivalents at beginning of period                                                     102,272                211,961
                                                                                                 -----------            -----------

Cash and cash equivalents at end of period                                                       $ 3,124,083            $   147,337
                                                                                                 ===========            ===========

Cash paid during the period for:
     Interest                                                                                    $   437,243            $   225,598
                                                                                                 ===========            ===========
     Income taxes                                                                                $ 1,755,000            $ 1,540,000
                                                                                                 ===========            ===========

Noncash investing and financing information:
     Equipment purchased with capital leases                                                     $   175,507            $      --
                                                                                                 ===========            ===========

<FN>
                                           See accompanying notes to financial statements.
</FN>
</TABLE>


<PAGE>


                             RAVENSWOOD WINERY, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - Financial statements:

         The balance  sheet as of March 31, 1999,  the  statements of income for
the  three  months  and nine  months  ended  March 31,  1999 and  1998,  and the
statements  of cash flows for the nine months ended March 31, 1999 and 1998 have
been prepared by the Company,  without audit. In the opinion of management,  all
adjustments  (which  include  only normal  recurring  adjustments)  necessary to
present fairly the Company's financial position,  results of operations and cash
flow at March 31, 1999, and for all periods presented above have been made.

         Certain  information  and  footnote  disclosures  normally  included in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  For further  information,  reference
should be made to the  registration  statement for the Company's  initial public
offering, filed with the Securities and Exchange Commission on February 4, 1999,
as amended.


NOTE 2 - Reclassifications:

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


NOTE 3 - Inventories:

         Inventories are summarized as follows:


                                             March 31,        June 30,
                                               1999            1998
                                            -----------     -----------
                                           (unaudited)
         Bulk wine                          $11,458,469     $ 7,898,937
         Bottled wine                         1,918,080       2,285,862
         Crop costs                              48,274          37,691
         Supplies                               132,827          72,902
         Tasting room merchandise               167,510         131,967
                                            -----------     -----------
                                            $13,725,160     $10,427,359
                                            ===========     ===========


NOTE 4 - 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 the Company's equity.



<PAGE>


<TABLE>
         The  following  is a  reconciliation  of net income  and  comprehensive
income:

<CAPTION>
                                                                     Nine months ended                    Three months ended
                                                                         March 31,                               March 31,
                                                              ------------------------------          ------------------------------
                                                               1 9 9 9             1 9 9 8             1 9 9 9              1 9 9 8
                                                              ----------          ----------          ----------          ----------
<S>                                                           <C>                 <C>                 <C>                 <C>
Net income                                                    $3,041,460          $2,094,401          $  756,228          $  460,422
Change in unrealized gain on
     available-for-sale securities                                 6,817                --                 6,817                --
                                                              ----------          ----------          ----------          ----------

Comprehensive income                                          $3,048,277          $2,094,401          $  763,045          $  460,422
                                                              ==========          ==========          ==========          ==========
</TABLE>


<PAGE>



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


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

From time to time,  information provided us, statements made by our employees or
information  included in our filings with the Securities and Exchange Commission
(including this Form 10-Q) may contain statements that are not historical facts,
so called  "forward-looking  statements," which involve risks and uncertainties.
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-Q, the terms  "anticipates,"  "expects,"  "estimates,"  "believes," and other
similar  terms as they relate to us or our  management  are intended to identify
such forward-looking statements. For example, statements made herein relating to
other operating expenses, gross sales attributable to specific tiers, 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;  (iii) changes in the wine industry
regulatory environment;  and (iv) changes in the fair market value of our common
stock. Each of these factors,  and others, are discussed beginning on page 12 of
this report and in the risk factor section of the Registration Statement for our
initial public  offering  filed with the  Securities and Exchange  Commission on
February 4, 1999,  as amended.  They will also be  addressed  in the future from
time to time in our filings with the Securities and Exchange Commission.


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  91% of its gross  sales in the 1998 fiscal
year,  with sales of Zinfandel  accounting  for  approximately  63% of its gross
sales for that period.  We expect  similar  results for fiscal 1999.  Ravenswood
believes that sales of its red wines,  particularly Zinfandel,  will continue to
account for a significant portion of its sales in the future.

Ravenswood was founded as a partnership in 1976 by W. Reed Foster,  Ravenswood's
chairman  and  chief  executive  officer,  and  Joel E.  Peterson,  Ravenswood's
president and winemaker. In its initial year of operation,  Ravenswood harvested
and  crushed  Zinfandel  grapes  from  two  Sonoma  County  vineyards.  In 1979,
Ravenswood  converted  to a limited  partnership  and  released its first wines,
consisting of 327 cases of the 1976 vintage Zinfandel.  Ravenswood  incorporated
in California in 1986.

Since its inception,  Ravenswood  has grown by increasing its production  volume
and its  portfolio  of wine  products.  For the fiscal year ended June 30, 1998,
Ravenswood  realized gross sales of $17.0 million from the sale of 191,655 cases
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  is  traditionally   more  variable  than   Ravenswood's
higher-priced  product series because a significant  portion of the wine used in
these  products  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,  and 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 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. Release dates have fluctuated in the past and can be expected to continue
to  fluctuate  from year to year,  which may make  comparison  of  results  on a
period-to-period basis less meaningful.

                                        3

<PAGE>


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.

The  pricing for grapes  obtained  from  Ravenswood's  suppliers  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.

Ravenswood  does not have an in-house sales staff. It markets and sells its wine
both to "on-premise"  restaurants and  "off-premise"  retailers,  such as liquor
stores,  specialty wine stores,  supermarkets and discounters.  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  50% of Ravenswood's  gross sales in the
1998  fiscal  year.  Of this  amount,  approximately  11% of  gross  sales  were
purchases  by  California  and  non-California  consumers  through  Ravenswood's
tasting room and approximately 39% of gross sales were sales to retail accounts.
We expect similar results for fiscal 1999. Ravenswood believes that sales within
California  will continue to account for a  substantial  portion of its sales in
the future.

                                        4

<PAGE>


Results of Operations

The  following  table sets forth items from  Ravenswood's  statement  of income,
expressed as a percentage of net sales, for the periods indicated:


                                             Three Months      Nine Months Ended
                                            Ended March 31,        March 31,
                                            ---------------     ---------------
Statement of Income Data:                   1998      1999       1998      1999
-------------------------                   -----     -----     ------    -----
Net Sales ..............................    100.0%    100.0%    100.0%    100.0%
Cost of Goods Sold .....................     50.0      48.5      45.5      45.2
                                            -----     -----     -----     -----
Gross Profit ...........................     50.0      51.5      54.5      54.8
Operating Expenses:
 Deferred Compensation Expense .........       --        --        --        --
 Other Operating Expenses ..............     25.6      28.1      23.1      22.6
                                            -----     -----     -----     -----
Operating Income .......................     24.4      23.4      31.4      32.2
Other Expense, net .....................      2.8       1.9       1.8       1.4
                                            -----     -----     -----     -----
Income Before Income Taxes .............     21.7      21.5      29.6      30.8
Provision for Income Taxes .............      8.8       6.3      12.1      12.4
                                            -----     -----     -----     -----
Net Income .............................     12.9%     15.2%     17.5%     18.4%
                                            =====     =====     =====     =====

Nine Months Ended March 31, 1999 and 1998

Sales

Net sales consist of gross sales of  Ravenswood's  wines and  merchandise,  less
excise  taxes,  discounts,  returns and  allowances.  Net sales of  Ravenswood's
products  increased  to $16.5  million in the nine months  ended March 31, 1999,
from $12  million in the nine  months  ended March 31,  1998.  This  increase is
primarily  attributable  to an increase in the volume of wines produced and sold
by  Ravenswood.  In the  nine  months  ended  March  31,  1999,  case  sales  of
Ravenswood's products increased to 195,600 cases, from 138,988 cases in the nine
months  ended March 31,  1998,  while the average  price per case  decreased  by
approximately  .7%.  This  decrease  in  average  price  per  case is  primarily
attributable  to the  increase in sales of  Ravenswood's  value-priced  Vintners
Blend  Series as a  percentage  of gross sales and, to a lesser  extent,  to the
respective release dates of Vineyard Designate Series Zinfandel products in each
of these periods.

The percentages of gross sales attributable to the Vintners Blend Series, County
Series and  Vineyard  Designate  Series  were  approximately  53%,  27% and 18%,
respectively,  in the nine months ended March 31, 1999,  as compared to 53%, 26%
and 19%,  respectively,  in the  corresponding  period for fiscal 1998. Sales of
Ravenswood branded  merchandise  accounted for approximately 1.5% of gross sales
for the nine months  ended March 31, 1999  compared to 2% for the  corresponding
period in fiscal 1998.  Ravenswood  expects that the  percentage  of gross sales
attributable to sales of its Vintners Blend Series and, to a lesser extent,  its
County  Series,  will  increase  relative  to  sales  of  Ravenswood's  Vineyard
Designate  Series as Ravenswood  continues to expand its  production and product
offerings within these segments.

                                        5

<PAGE>


Cost of Goods Sold

Cost of goods sold includes the costs of:

     o   Grapes
     o   Bulk wine
     o   Packaging materials
     o   Labor used in wine production
     o   Bottling expenses
     o   Overhead  allocated  to  production  costs from winery  facilities  and
         equipment

These costs are capitalized as inventory and depleted as costs of goods sold are
recognized. Cost of goods sold increased to $7.5 million, or 45.2% of net sales,
in the nine months  ended March 31,  1999,  from $5.4  million,  or 45.5% of net
sales, in the corresponding period in fiscal 1998. The increase in the amount of
cost of goods sold is  primarily  due to an increase in the total volume of wine
sold.

Gross Profit

Ravenswood's  gross  profit  increased  to $9.1 million in the nine months ended
March 31, 1999, from $6.5 million in the  corresponding  period for fiscal 1998,
and  increased  as a  percentage  of net  sales  to  54.8%  from  54.5% in these
respective  periods.  The  increase in the amount of gross  profit is  primarily
attributable to increases in sales volumes across all product lines.

Operating Expenses

Deferred   Compensation   Expense:   No   deferred  compensation  expenses  were
recognized in the nine months ended March 31, 1998 and March 31, 1999.

Other  Operating  Expenses:  Other  operating  expenses  consist  of  sales  and
marketing  overhead,  commissions paid to independent  brokers,  advertising and
merchandising  expenses,  salaries  and  facilities  expenses  unrelated to wine
production,  insurance  and  professional  services  expenses.  Other  operating
expenses increased to $3.7 million in the nine months ended March 31, 1999, from
$2.8 million in the corresponding period for fiscal 1998. As a percentage of net
sales,  other  operating  expenses  decreased  to 22.6% of net sales in the nine
months  ended March 31,  1999,  from 23.1% of net sales in the nine months ended
March 31,  1998.  This  increase  is  primarily  attributable  to  increases  in
brokerage   commissions   related  to  Ravenswood's   increased  sales  volumes,
particularly  in  California.  Additionally,  during this  period,  a portion of
employee  bonuses were accrued which had been recognized only in the 4th quarter
in previous financial statements.  The decrease in other operating expenses as a
percentage  of net sales is primarily  attributable  to increased  sales volumes
without  corresponding  increases  in  administrative  staff or  other  overhead
expenses.  Ravenswood  expects  other  operating  expenses  to  increase  as  it
continues to increase production and now that it is a public company.

Other Expense, Net

Other  expense  consists  of  non-operating  income  and  expense  items,  which
primarily  consist of interest  on  outstanding  indebtedness.  These items have
tended to fluctuate  from year to year.  Other expense  amounted to $213,279 and
$238,608  in the nine  months  ended  March  31,  1998 and  1999,  respectively.
Ravenswood  expects that these  expenses  will increase as it is required to pay
interest on  $1,687,500  worth of  convertible  debentures  issued in the second
quarter of the 1999 fiscal  year.  Ravenswood  expects  that this expense may be
offset in part by interest  earned on that  portion of the  proceeds of our 1999
initial public  offering that is retained as working capital as well as interest
earned from proceeds from the sale of common stock in 1998 that was not used for
the quarry  project.  Interest  payments on the debentures  commenced in January
1999 and will continue to be paid on a quarterly  basis until the debentures are
converted or redeemed, or until they mature.

                                        6

<PAGE>


Provision for Income Taxes

The provision for income taxes  reflects an estimated  annualized  effective tax
rate of 40.3% at March 31, 1999,  and 40.9% at March 31, 1998.  Ravenswood  does
not expect a material change in its effective tax rate in the near future.

Net Income and Earnings Per Share

Net income for the nine months ended March 31, 1999 increased to $3.0 million as
compared  to $2.1  million  for the  corresponding  period in fiscal  1998.  The
increase was due primarily to the increased  volume in sales.  Diluted  earnings
per share for the nine months  ended March 31, 1999  increased to $.80 per share
from $.56 for the nine months ended March 31, 1998.

Three Months Ended March 31, 1999 and 1998

Sales

Net sales of Ravenswood's products increased to $5.0 million in the three months
ended March 31,  1999,  from $3.6  million in the three  months  ended March 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 March 31, 1999,
case sales increased to 65,108 cases from 47,306 cases in the three months ended
March 31, 1998, while the average price per case increased to $82.36 from $79.32
in these respective periods. The increase in average price per case is primarily
attributable  to the increase in sales of the County  Series as a percentage  of
gross sales.

The percentages of gross sales attributable to the Vintners Blend Series, County
Series and Vineyard Designate Series were 65%, 29% and 5%, respectively, for the
three months ended March 31, 1999, as compared to 75%, 16% and 8%, respectively,
in the  corresponding  period  for  fiscal  1998.  Sales of  Ravenswood  branded
merchandise  accounted for  approximately 1% of gross sales for the three months
ended March 31, 1999 compared to 2% for the three months ended March 31, 1998.

Cost of Goods Sold

Cost of goods sold  increased to $2.4  million,  or 48.5% of net sales,  for the
three months ended March 31, 1999, from $1.8 million, or 50.0% of net sales, for
the  corresponding  period in fiscal 1998. The increase in the amount of cost of
goods sold is primarily due to an increase in the total volume of wine sold. The
decrease  in cost of  goods  sold as a  percentage  of net  sales  is  primarily
attributable  to the  increase  in  sales of  Ravenswood's  County  Series  as a
percentage of gross sales.

Gross Profit

Ravenswood's  gross  profit  increased to $2.6 million in the three months ended
March 31, 1999,  from $1.8 million in the three months ended March 31 1998,  and
increased as a percentage of net sales to 51.52% from 50.04% in these respective
periods.  The increase in aggregate  gross profit is primarily  attributable  to
increases  in sales  volumes  across  all of  Ravenswood's  product  lines.  The
increase in gross profit as a percentage of net sales is primarily  attributable
to an increase in sales of the County Series as a percentage of gross sales.

                                       7

<PAGE>

Operating Expenses

No deferred  compensation  expenses  were  recognized  in the three months ended
March 31, 1999 and March 31, 1998.

Other Operating Expenses:  Other operating expenses increased to $1.4 million in
the three months ended March 31, 1999, from $914,226 in the corresponding period
for fiscal 1998, and increased as a percentage of net sales to 28.0% from 25.6%.
The increase in the amount of other operating expenses is primarily attributable
to increases in brokerage  commissions  related to Ravenswood's  increased sales
volumes and to the  accrual in the 1999  period of a portion of annual  employee
bonuses  that were  recognized  only in the 4th  quarter in  previous  financial
statements.

Other Expense, Net

Other expense amounted to $91,652 and $99,691,  or 1.85% and 2.79% of net sales,
in the three months ended March 31, 1999 and 1998, respectively. The decrease as
a percentage  of sales was due to an offset of interest  income  generated  from
investment of proceeds from the 1998 private equity offering.

Provision for Income Taxes

The provision for income taxes  reflects an estimated  annualized  effective tax
rate of 29.2%  for the  three  months  ended  March  31,  1999 and 40.6% for the
corresponding  period in fiscal 1998. The decrease in the effective tax rate for
the three months ended March 31, 1999 was a result of  application of a deferred
tax asset to the quarterly tax calculation.


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 March 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 the registration  statement for the Company's
initial public  offering,  filed with the Securities and Exchange  Commission on
February  4, 1999,  as  amended.  In the opinion of  management,  all  necessary
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-Q filing.

<CAPTION>
                                                                                 Quarter Ended
                                                -------------------------------------------------------------------
                                                December 31, March 31, June 30, September 30, December 31, March 31,
                                                    1997       1998      1998       1998         1998        1999
                                                  -------     -------   -------    -------      -------     -------
<S>                                               <C>         <C>       <C>        <C>          <C>         <C>    
Statement of Income Data:
(In thousands)
Gross Sales ..................................    $ 4,277     $ 3,795   $ 4,367    $ 6,342      $ 5,853     $ 5,415
  Less Excise Taxes ..........................         68          84       272        225           51         272
  Less Discounts, Allowances and
   Returns ...................................        150         135       165        155          182         182
                                                  -------     -------   -------    -------      -------     -------
Net Sales ....................................      4,059       3,576     3,930      5,962        5,620       4,961
Cost of Goods Sold ...........................      1,848       1,787     1,958      2,528        2,538       2,405
                                                  -------     -------   -------    -------      -------     -------
Gross Profit .................................      2,211       1,789     1,972      3,434        3,082       2,556
                                                  -------     -------   -------    -------      -------     -------
Operating Expenses:
 Deferred Compensation Expense ...............       --          --       2,206       --           --          --
 Other Operating Expenses ....................        972         914     1,269      1,215        1,125       1,396
                                                  -------     -------   -------    -------      -------     -------
Operating Income (Loss) ......................      1,239         875    (1,503)     2,219        1,957       1,160
Other (Income) Expense .......................         79         100       260         73           74          92
                                                  -------     -------   -------    -------      -------     -------
Income (Loss) Before Income Taxes ............      1,160         775    (1,763)     2,146        1,884       1,068
Provision for Income Taxes ...................        475         315       144        929          815         312
                                                  -------     -------   -------    -------      -------     -------
Net Income (Loss) ............................    $   685     $   460   $(1,907)   $ 1,217      $ 1,068     $   756
                                                  =======     =======   =======    =======      =======     =======
</TABLE>

                                                 8

<PAGE>


Ravenswood  has  experienced  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,  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.

Results  of  operations  for the  quarter  ended June 30,  1998 were  materially
affected by a $2.2 million  expense  recognized  in  connection  with a deferred
compensation  arrangement with W. Reed Foster,  Ravenswood's  chairman and chief
executive  officer.  This  arrangement  was  terminated  as of July 1, 1998.  No
additional deferred compensation expenses relating to this arrangement have been
or will be incurred in subsequent periods.

FINANCIAL CONDITION

Assets

Our total assets increased to $24 million at March 31, 1999 from $16 million, or
50.2%,  at June 30, 1998. Our inventory  increased by $3.3 million from June 30,
1998 to $13.7  million on March 31, 1999.  We expect total assets to continue to
increase as we expand inventory and build our new production facility.

Liabilities

Our total  liabilities  increased  to $11.3  million at March 31, 1999 from $7.6
million,  or 48.8%,  at June 30, 1998.  At March 31, 1999,  our  long-term  debt
outstanding  was $5.4 million and $1.1 million was available  under the terms of
our lines of credit.

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. Cash and cash equivalents totaled $3.1 million at March 31, 1999, as
compared to $102,272 at June 30, 1998. The increase in cash and cash equivalents
is primarily  due to the receipt of the net proceeds from  Ravenswood's  sale of
securities completed in December 1998.

Net cash provided by operations was $1.2 million for the nine months ended March
31,  1999.  The  principal  use of cash from  operations  in this period was the
acquisition of additional  inventory  through  increased  production,  while the
principal source of cash was net income.  Inventory acquisitions were relatively
lower for the nine months ended March 31, 1999,  but are expected to increase in
the fourth quarter.

Net cash used for investing  activities totaled $1.2 million for the nine months
ended March 31,  1999,  as compared to $282,247  for the nine months ended March
31,  1998.  The  increase  was  primarily  a  result  of costs  associated  with
Ravenswood's new production facility under construction. Ravenswood expects that
net cash used for investing activities will increase in the future as additional
investments  in plant and equipment are made in  completing  the new  production
facility.

Net cash provided by financing  activities  was $3.1 million for the nine months
ended March 31,  1999,  as compared to $205,050  for the nine months ended March
31, 1998. The principal source of cash provided by financing  activities in this
period  was  short-  and  long-term  borrowings  under two lines of credit  with
Pacific  Coast  Farm  Credit  Services  and  long-term   borrowings,   including
additional  obligations to Pacific Coast. In addition,  in the nine months ended
March 31, 1999, a principal source of cash was  Ravenswood's  sale of securities
completed in December 1998. The principal use of cash from financing  activities
in

                                        9

<PAGE>


this period was for repayment of obligations under  Ravenswood's  various short-
and long-term borrowing arrangements.  Ravenswood also used funds to repay notes
payable to related parties. In the 1998 fiscal year, Ravenswood used $278,255 in
cash for the  repurchase of  outstanding  shares of common stock from one of its
former officers and later obtained a loan for that amount from Pacific Coast.


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 1998 harvest,  these payments will be made in the following manner: 42%, 19%
and 21% in the second,  third and fourth quarters of fiscal 1999,  respectively,
and 18% in the first  quarter of fiscal 2000.  As a result of harvest  costs and
the  timing of grape and bulk  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.

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 $222,844 for the 1999 fiscal year. Ravenswood anticipates that
it  will  enter  into  additional  leasing  arrangements  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 is  convertible  into
3,500 shares of common stock at any time prior to December 31, 1999 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, 2000 until the
maturity date.  Ravenswood pays interest  quarterly on the debentures based on a
floating  index tied to prime bank rates for a five-year  period.  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%.

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 two lines of credit with Pacific Coast Farm Credit  Association,
under which Ravenswood may borrow up to a total of $2.8 million. As of March 31,
1999,  Ravenswood had $1.8 million  outstanding  under these lines of credit. In
addition,  on April 26, 1999 Ravenswood closed a $4.6 million  construction loan
from Pacific  Coast for the purpose of  financing  the  construction  of its new
production facility. The loan will be used as funds for construction are needed.
The loan is secured by the new production  facility and its lease. The estimated
$2.5 million in  remaining  costs to complete the facility are to be funded from
the 1998  private  equity  offering.  Equipment  will be  acquired  through a $2
million commitment for leases.

Since 1989,  Ravenswood has periodically  borrowed funds for short-term  working
capital  from its  executive  officers.  Notes to W. Reed  Foster,  Ravenswood's
chairman and chief executive  officer,  and Joel E. Peterson,  its winemaker and
president, were retired during the quarter ended March 31, 1999.

                                       10

<PAGE>

On April 14,  1999,  Ravenswood  completed  an initial  public  offering  of one
million shares of common stock at a price of $10.50 per share. W.R.  Hambrecht &
Company, LLC acted as underwriter for the offering. The proceeds of the offering
will be used for: wine inventory,  expansion of production  facilities,  general
corporate  purposes and retirement of indebtedness,  and to pay for expenses and
underwriting  discounts  associated with the offering.  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, its proposed additional line of credit, and proceeds from its recent
public offering and other recent financing activities 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  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

Many currently  installed  computer  systems and software  products are coded to
accept  only  two-digit  entries  in the date  code  field and  cannot  reliably
distinguish  dates  beginning  on January  1, 2000 from dates  prior to the year
2000. Many companies'  software and computer  systems may need to be upgraded or
replaced in order to process  correctly  dates  beginning  in 2000 and to comply
with the Year 2000 requirements. Ravenswood is reviewing its information systems
for any  potential  Year 2000  problems  that  might  arise as a result of these
requirements,  and does not believe its systems will be affected by the upcoming
change in  century.  However,  Ravenswood  utilizes  third-party  equipment  and
software that may not be Year 2000 compliant.  If this third-party  equipment or
software  fails to  process  dates  for the  year  2000 and  dates  that  follow
properly,  Ravenswood could incur unanticipated expenses to remedy any problems,
which could harm its business.

In addition,  Ravenswood relies on various service  providers,  including banks,
and on grape and bulk wine  suppliers,  third-party  production  facilities  and
distributors.  The software and computer  systems of any of these entities could
have Year 2000  problems.  A  disruption  in the supply of  services or products
Ravenswood  receives from any of these  entities due to Year 2000 problems could
harm its business.

                                       11

<PAGE>

                         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 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 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 occurence 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

                                       12

<PAGE>


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.

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 1998 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
21% of our gross  sales in the 1998  fiscal  year,  and our ten most  successful
brokers were responsible for 69% of our gross sales in the 1998 fiscal year.

                                       13

<PAGE>


Because some states have laws that prohibit  distributor  changes, our sales may
be reduced if we cannot replace an under-performing distributor

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 1998 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 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.

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<PAGE>


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.  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.

                                       15

<PAGE>


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
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. 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

Following our initial public  offering and assuming that all debentures  held by
our directors and executive  officers and their respective  affiliates have been
converted,  our directors and executive officers and their respective affiliates
will  beneficially own 2,225,641 shares of common stock, or approximately  48.5%
of our outstanding  common stock.  Of these shares,  2,131,151  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,  Faggioli,  and  Wisner,  all of whom serve as  directors  of
Ravenswood.  As a result,  Messrs.  Foster,  Peterson,  Faggioli and Wisner 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

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<PAGE>


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.

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.


                                       17

<PAGE>


                             RAVENSWOOD WINERY, INC.

                           PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

Proceeds  from the  public  offering  have been  deposited  into a money  market
account approved by the Board of Directors at their meeting of April 6, 1999.


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

As of  February  1,  1999,  we  circulated  a written  consent  of  shareholders
representing 2,199,891 shares out of a total of 3,550,852 issued and outstanding
shares of our common stock.  Pursuant to the written  consent,  our shareholders
approved the proposals more fully described below.

1.  Election  of each of the  following  directors:  Joel E.  Peterson,  W. Reed
Foster,  Justin M.  Faggioli,  James F.  Wisner,  Callie S.  Konno and Robert E.
McGill  III,  each to serve until our next Annual  Meeting of  Shareholders  and
until his or her  successor  is duly  elected and  qualified or until his or her
earlier resignation or removal.

2.  Amendment and restatement of our Articles of Incorporation.

3.  Amendment and restatement of our Bylaws.

4.  Approval of our 1999 Equity Incentive Plan.

5.  Approval of our Employee Stock Purchase Plan.

6.  Approval of an officer loan from us to W. Reed  Foster,  our Chairman of the
Board  and  Chief  Executive  Officer,  for  $335,000,  in  connection  with the
termination, effective July 1, 1998, of a deferred compensation arrangement.


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.

                                       18

<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: May __, 1999                     Ravenswood Winery, Inc.
-------------------                     ----------------------------------------
                                             (Registrant)


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




Dated: May __, 1999                     /s/ W. Reed Foster
-------------------                     ----------------------------------------
                                        W. Reed Foster
                                        Chairman of the Board and Chief
                                        Executive Officer

                                       19