<PAGE> 1
                      U.S. Securities and 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, 1998
          [ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934 
                  For the transition period from ________ to________ 

                         Commission File No.: 0-26276


                             R.H. PHILLIPS, INC.
                         ---------------------------
             (Exact name of small business issuer in its charter)


         California                                     68-0313739
 --------------------------------------------------------------------- 
State or other jurisdiction of       (IRS Employer Identification No.)
 incorporation or organization)
               
             26836 County Road 12A, Esparto, California  95627
--------------------------------------------------------------------------     
                   (Address of principal executive offices)

                                (530) 662-3215
---------------------------------------------------------------------------
                          (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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    
       ----        ----
Number of shares outstanding of each of the issuer's classes of common
equity as of April 30, 1998: 6,483,760 

Transitional Small Business Disclosure Format:    Yes        No   X  
 
This document consists of 15 pages, excluding exhibits.  The Exhibit
Index is on page 15.

<PAGE> 2
                                     R.H. PHILLIPS, INC.
                     
                                               INDEX


   Part I.   Financial Information (unaudited)

          Item 1.   Condensed Financial Statements ......................3

                 Balance Sheet ..........................................4

                 Statements of Operations ...............................5

                 Statements of Cash Flows ...............................6

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

           Item 2.   Management's Discussion and Analysis of 

                 Financial Condition and Results of Operations..........8

        Part II.  Other Information

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


Signatures ............................................................14
<PAGE> 3
                              PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
<PAGE> 4
<TABLE>
                                R.H. PHILLIPS, INC.
                                   BALANCE SHEET 
                                  MARCH 31, 1998
         (IN THOUSANDS, EXCEPT SHARE INFORMATION AND REDEMPTION PROVISION)
                                     (UNAUDITED) 

                                             ASSETS
<S>                                                                         <C>
CURRENT ASSETS:
   Cash                                                                     $    137 
   Accounts receivable                                                         2,448 
   Inventories                                                                10,688 
   Deferred income taxes and prepaid expenses                                    743 
                                                                           ---------
        Total current assets                                                  14,016 

PROPERTY, PLANT, AND EQUIPMENT - net                                          29,428 

OTHER ASSETS:
   Note receivable from shareholders and other affiliates                        228 
   Deferred loan fees and other, net                                             482 
                                                                           ---------
        Total other assets                                                       710 
                                                                           --------- 
TOTAL ASSETS                                                                 $44,154 
                                                                           =========
                          LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current maturities of long-term debt                                    $   1,332 
   Accounts payable                                                              595 
   Accrued liabilities                                                         1,083 
                                                                           ---------
      Total current liabilities                                                3,010 
                                                                                          
LONG-TERM DEBT                                                                17,832 
DEFERRED INCOME TAXES                                                          1,410 
DEFERRED GAIN AND VINEYARD 
    DEVELOPMENT COSTS                                                            795
COMMITMENTS AND CONTINGENCIES                                                     --                

REDEEMABLE PREFERRED STOCK, 
    redeemable at $5,000,000                                                   4,521 

SHAREHOLDERS' EQUITY:
   Non-redeemable preferred stock, no par value, 
      4,500,000 shares authorized, none issued and outstanding                    --
   Common stock, no par value, 12,500,000 shares 
      authorized, 6,483,760 shares issued and outstanding                     14,191 
   Additional paid-in capital                                                    337 
   Retained earnings                                                           2,058 
                                                                           --------- 
      Total shareholders' equity                                              16,586 
                                                                           --------- 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                   $44,154 
                                                                           =========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE> 5
<TABLE>               
                                        R.H. PHILLIPS, INC.
                                     STATEMENTS OF OPERATIONS 
                          THREE MONTHS ENDED MARCH 31, 1997 AND 1998
                           (IN THOUSANDS, EXCEPT SHARE INFORMATION)
                                            (UNAUDITED)
<CAPTION>
                                                   1997               1998
<S>                                             <C>                <C>
NET SALES                                       $   3,486          $   3,988 
 
COST OF SALES                                       2,112              2,000 
                                                 --------           -------- 
GROSS PROFIT                                        1,374              1,988 

SELLING EXPENSES                                      728              1,018 

GENERAL AND ADMINISTRATIVE EXPENSES                   223                262
                                                 --------           --------
OPERATING INCOME                                      423                708 

INTEREST EXPENSE                                     (223)              (278)

OTHER INCOME (EXPENSE) - NET                           40                 48 
                                                 --------           --------
INCOME BEFORE INCOME TAXES                            240                478 

PROVISION FOR INCOME TAXES                            (86)              (192)
                                                 --------           --------
NET INCOME                                       $    154           $    286 
                                                 ========           ========

NET INCOME                                       $    154           $    286 

DIVIDENDS AND ACCRETION ON 
 REDEEMABLE PREFERRED STOCK                           (84)               (85)
                                                                                                    ---------           --------- 
NET INCOME APPLICABLE TO COMMON STOCK            $     70           $    201 
                                                                                                    ======           ====== 
NET INCOME  PER SHARE - BASIC AND DILUTED        $    .01           $    .03 

COMMON AND COMMON EQUIVALENT 
   SHARES OUTSTANDING                           6,090,935          6,483,760 
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE> 6
<TABLE>
                                 R.H. PHILLIPS, INC.
                               STATEMENTS OF CASH FLOWS 
                      THREE MONTHS ENDED MARCH 31, 1997 AND 1998
                                   (IN THOUSANDS)
                                     (UNAUDITED)
<CAPTION>
                                                             1997       1998
<S>        
CASH FLOWS FROM OPERATING ACTIVITIES:                       <C>        <C>                
   Net income                                               $    154   $   286 
   Adjustments to reconcile net income to net cash 
      provided by operating activities:
      Depreciation and amortization                              501       484
      Gain on disposal of property, plant and equipment           (8)       (5)
      Net changes in assets and liabilities:
         Accounts receivable                                   1,173        65 
         Inventories                                              11      (759)
         Prepaid expenses                                        (22)      102 
         Other assets                                            (11)      (36)
         Accounts payable and accrued liabilities             (1,132)       10 
                                                            --------   -------
            Net cash provided by operating activities            666       147 
                                                                                    
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property, plant and equipment                 (1,569)   (1,011)
    Proceeds from property, plant and equipment sold               8         5 
                                                            --------   -------
           Net cash used in investing activities              (1,561)   (1,006)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Issuance of common stock                                       8        --             
    Payment of cash dividend                                    (150)     (150)
    Proceeds from long-term debt and notes payable             4,446     3,434 
    Principal payments on long-term debt and notes payable    (3,494)   (2,297)
    Payment for development of leased vineyards                   --       (96)
    Other financing activities                                    (5)       (4)
                                                            --------   -------
           Net cash provided by financing activities             805       887 
                                                            --------   -------
INCREASE (DECREASE) IN CASH                                      (90)       28 
CASH AT BEGINNING OF PERIOD                                      309       109
                                                             -------   -------
CASH AT END OF PERIOD                                        $   219   $   137 
                                                             =======   =======
OTHER CASH FLOW INFORMATION: 
    Interest paid (including capitalized interest of 
    $179 and $121 in 1997 and 1998, respectively)            $   330   $   300 
    Income tax paid                                          $   248   $    69 
NONCASH TRANSACTIONS:
    Issuance of notes payable to finance inventory, 
      property, plant and equipment purchased                $    50   $     4 
    Issuance of stock dividend                               $    --   $   150 
    Accretion of redeemable preferred stock                  $     8   $    10 
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE> 7
R.H. PHILLIPS, INC.
NOTES TO CONDENSED FINANCIAL
STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

       The interim financial statements as of March
31, 1998 and for the three month periods ended March
31, 1997 and 1998 have been prepared by R.H.
Phillips, Inc. (the "Company") without audit.  In the
opinion of management, the financial statements
include all adjustments (which include only normal
recurring entries) necessary for a fair presentation. 
The operating results for the three month periods
ended March 31, 1997 and 1998 are not necessarily
indicative of the results which might be realized for the
full year.

       Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting
principles have been condensed or omitted. These
statements should be read in conjunction with the
financial statements and notes included in the
Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1997.

2.  COMPUTATION OF NET INCOME PER
SHARE

       The Company has adopted Statement of
Financial Accounting Standards No. 128, which
requires the presentation of basic and diluted net
income per share.  Basic net income per share for the
three month periods ended March 31, 1997 and 1998 
was computed using the weighted average number of
common shares outstanding during each period. 
Diluted net income per share was computed using the
weighted average number of common shares and
dilutive potential common shares outstanding during
each period.  Because all of the potential common
shares outstanding during each period were anti-
dilutive, basic and diluted net income per share are the
same.  Potential common shares outstanding which
could have a dilutive effect in the future total
2,469,667.  
       
       Basic and diluted net income per share and
the weighted average number of common shares
outstanding for the three month period ended March
31, 1997 have been restated to reflect stock dividends
of 39,117 shares issued in September 1997 and 50,578
shares issued in March 1998. 

3.  RECENT PRONOUNCEMENTS

     The Company has adopted Statement of Financial
Accounting Standards No. 130 (FASB 130), which 
establishes standards for the reporting and display of
comprehensive income and its components.  
Comprehensive income includes revenues, expenses,
gains and losses that are excluded from net income
under current accounting standards.  Comprehensive income
and net income are the same for each of the three month periods
ending March 31, 1997 and 1998.
<PAGE> 8
Item 2.  Management's Discussion and Analysis of
Financial Condition and Results of Operations

       In reviewing the following management's
discussion and analysis, the reader should refer to the
historical financial statements of R.H. Phillips, Inc.  The
discussion of the results and trends does not necessarily
imply that these results and trends will continue.  For the
following discussion,  a "case" means a 9-liter case of
wine.  All numbers are approximate.

Forward-Looking Statements
       
       The Company provides in this report and
elsewhere from time to time forward-looking
statements regarding the Company, its products, the
wine business, and general business and economic
conditions.  Examples of forward-looking statements
include projections regarding future expansion, trends
in the wine industry, sources of supply, costs of
production, profit margins, and availability and sources
of financing.  The actual results of the Company may
vary due to a variety of factors, including the
following:
       
       Availability of Future Financing.  The
Company may continue to heavily depend upon its
ability to raise additional debt or equity financing for
its working capital and capital expansion needs.  The
ability to raise financing is in turn dependent upon a
variety of factors, some of which are outside the
control of the Company.  These factors include, but are
not limited to, interest rates, the availability of
financing sources, and general economic conditions. 
If interest rates increase or other financing becomes
unavailable or more costly to obtain, the Company may
not be able to raise sufficient capital to supply its
needs.

       Costs of Expansion.  Management has based
its assumptions concerning the costs of expansion on
assumptions which it believes are reasonable. 
However, there can be no assurance that the
Company's estimates will prove to be correct.  If costs
are higher than anticipated, the Company may be
required to raise an even greater amount of financing
or reduce the rate of facility expansion.

       Costs of Production.  Statements with
respect to the general decline in the Company's cost of
production are based on management's assumptions
concerning the likely levels of future sales by the
Company, projected yields from the Company's
vineyards and the cost and availability of bulk wine and
grapes from the spot market.  For example, if the
Company's sales increase at a faster rate than
anticipated or the Company's grape production is
lower than projected, the Company could be forced to
make additional purchases of grapes and wine on the
spot market.  Management believes that such events
could increase the Company's costs of production.

       Market Conditions.  Assumptions as to the
desirability of expansion are based to a great extent on
management's beliefs concerning the current status of
and trends within the wine industry.  Market conditions
in the wine industry have changed substantially from
time to time.  To the extent market conditions change
substantially in the future, the rate at which the
Company deems it advisable to expand its vineyard and
winery facilities may be adjusted.

       Other Factors.  A variety of other factors could
affect the actual results of the Company.  These include
changes in economic conditions, unexpected adverse
weather or growing conditions, reduction or increases in
consumer demand, changes in governmental regulation
concerning the production and sale of wine, and increased
competition from foreign or domestic wine producers.
<PAGE> 9
Seasonality
       
       The Company usually experiences substantial
seasonal fluctuations in revenue and expenditures.  Sales
volumes generally increase during the holiday season,
which causes a large percentage of sales to occur during
the last three months of each year.  The Company's
expenditures fluctuate throughout the year based on
vineyard and winery activities.  Expenditures typically
peak during the summer and early autumn, due to harvest
and crush activities and expenditures to fund vineyard and
winery expansions.

Costs of Production
       
        The Company realized above average yields
from its 1997 crop, primarily due to favorable growing
conditions and yields from new vineyards.  The
increased 1997 grape tonnage reduced the cost per
gallon of wine produced from Company vineyards.  
Consequently, management believes that the
Company's cost of goods will likely decline as the
1997 vintage is sold during 1998, and that the
Company will have more wine available for sale.  The
Company has expanded the size of its vineyards to
lessen its dependence on outside sources of bulk wines
and grapes and further reduce its cost of goods.  The
Company anticipates that the full benefit of the
vineyard expansion should continue to be realized over
the next several years as the vines mature. 

Results of Operations

       Net Sales

       Net sales for the three month period ended
March 31, 1998 were $3,988,000, an increase of 14%
over net sales of $3,486,000 for the corresponding
period of the prior year.  Excluding sales of bulk wines
and other items, net sales were $3,942,000 for the
quarter ended March 31, 1998, an increase of 19%
over net sales of $3,305,000 for the corresponding
period in 1997.  The increase in net sales was primarily
due to higher prices.  The average selling price per
case increased from $41.29 for the three month period
ended March 31, 1997 to $49.03 for the same period
in 1998.  The Company sold 80,400 cases during the
three month period ended March 31, 1998,
substantially the same as the corresponding period of
the prior year.   

       Gross profit

       Gross profit was $1,988,000 for the three
month period ended March 31, 1998, a 45% increase
over $1,374,000 for the same period in 1997. 
Excluding the sales of bulk wines and other items,
gross profit was $1,948,000 in 1998, compared to
$1,306,000 in 1997.  Gross margins were 50% for the
three month period ended March 31, 1998, compared
to 39% for the same period in 1997.  The average cost
per case for the three month period ended March 31,
1998 was $24.80, substantially the same as 1997.  The
increase in gross margins is attributable to the higher
average selling price discussed above.

       Selling Expenses

       Selling expenses were $1,018,000, or 26% of
net sales, for the three month period ended March 31,
1998, an increase from $728,000, or 21% of net sales,
for the same period in 1997.  The $290,000 increase is
primarily due to increased sales promotion and labor
costs.  
<PAGE> 10
       General and Administrative Expenses  

       General and administrative expenses were
$262,000, or 7% of net sales, for the three month
period ended March 31, 1998, an increase from
$223,000, or 6% of net sales, for the same period in
1997.  The $39,000 increase is primarily due to
increased labor costs.

       Interest Expense

       Interest expense for the three month period
ended March 31, 1998 was $278,000, compared to
$223,000 for the same period in 1997.  The Company
capitalized $121,000 of additional interest pertaining to
vineyard and winery development during the three
month period ended March 31, 1998, and $179,000
during the same period in 1997.  Total interest was
substantially the same during the two periods.  The
Company had fewer vineyards under development
during the first three months of 1998 than during the
same period in 1997, causing capitalized interest to
decrease.  The interest is attributable to the Company's
bank lines of credit and other debt obligations.

       Other Income (Expense)
       
       Other income was $48,000 for the three
month period ended March 31, 1998, compared to
$40,000 for the same period in 1997.  The income was
primarily from vineyard management fees.

       Net Income

       The Company generated net income of
$286,000 for the three month period ended March 31,
1998, compared to $154,000 for the same period in
1997.  The $132,000 increase was primarily due to
higher gross profit, which was partially offset by
increases in selling, general, and administrative
expenses.

Liquidity and Capital Resources

       The Company has financed its working
capital and capital expansion needs through internally
generated funds, outside credit facilities, equity
financing, and the sale and leaseback of certain assets. 
The Company has made substantial capital
expenditures to expand its vineyards and winery
facilities to obtain production efficiencies through
vertical integration and increased product sales.  The
Company's cash flows from operations have not been
sufficient to satisfy all of the working capital and
capital expenditure requirements needed to keep pace
with its growth.  Consequently, the Company has
depended upon debt, equity, and lease financing for its
working capital and capital expansion needs. 

       The Company had cash totaling $137,000 on
March 31, 1998, an increase from $109,000 on
December 31, 1997.  Sources of cash during the three
month period ended March 31, 1998  included cash
from operations of $147,000 and proceeds from long-
term debt of $3,434,000.  Cash used during that period
included $1,011,000 invested in plant and equipment,
$396,000 used to repay a note payable, and
$1,901,000 used to repay long-term debt.

       Current assets increased by $620,000 during
the three month period ended March 31, 1998,
primarily due to an increase in inventories from
$9,928,000 on December 31, 1997 to $10,688,000 on
March 31, 1998.  The increase is primarily due to
inventoried crop costs pertaining to the 1998 harvest. 
Current liabilities decreased by $387,000 during the
three month period ended March 31, 1998, 
<PAGE> 11
primarily due to the payment of a note payable.  These factors
caused net working capital to increase $1,007,000,
from $9,999,000 on December 31, 1997 to
$11,006,000 on March 31, 1998. 
       
       The Company has several long-term loans,
the largest of which was obtained from Metropolitan
Life Insurance Company ("Metropolitan").  The
Company has borrowed $11,000,000 from
Metropolitan, of which $10,880,000 was outstanding
at March 31, 1998.  The unpaid principal under the
loan accrues interest at an annual rate of 7.79%.  The
Company is required to make monthly principal
payments of $60,000 plus accrued interest.  The loan
matures in January 2013, at which time the Company
will be required to make a balloon payment of
$200,000.

       The Company has a line of credit of
$10,000,000 with U.S. Bank of California ("U.S.
Bank") to finance its working capital requirements. 
The line of credit is secured by accounts receivable,
inventory, unencumbered farm equipment, and crop, 
and matures in April 2000.  The annual interest 
rate on the line is either U.S. Bank's prime rate 
or IBOR plus 150 basis points, at the Company's 
option.  The balance on the line at March 31, 1998 
was $5,003,000.

       In addition to loans with Metropolitan and
U.S. Bank, the Company has several smaller loans,
which are generally secured by equipment, and capital
leases.  The maturity dates range from April 1998 to
December 2003, and, excluding capital leases, the
interest rates range from 7.0% to 10.9%.  The
balances due on these items totaled $3,281,000 at
March 31, 1998.

       In May 1997, the Company sold 371 acres of
land being developed into vineyard to John Hancock
Mutual Life Insurance Company ("Hancock").  In
connection with that transaction, the Company now
manages, operates and leases the land and vineyards
from a subtenant of Hancock, Farmland Management
Services, for a term that expires on December 31,
2012.  The Company received proceeds of $5,384,000
from the sale.  The lease, which is accounted for as an
operating lease, provides that the Company will pay
rent of $161,000 per calendar quarter beginning in
1999.
       
       In March 1996, the Company sold 500,000
shares of Senior Redeemable Preferred Stock (the
"Senior Preferred Stock") and warrants to purchase up
to 1,346,788 shares of Common Stock to Hancock. 
The net proceeds the Company derived from the sale
of the Senior Preferred Stock and the warrants, after
payment of offering expenses, were $4,785,000. The
Senior Preferred Stock bears a cumulative annual
dividend of $1.20 per share, payable semiannually. 
During the first four years after issuance, 50% of the
dividend is payable in cash and 50% of the dividend is
payable in shares of Common Stock at a price equal to
the lower of the average daily market price over a
period of 20 consecutive trading days before the
dividend payment date or $4.00 per share.  The
Company is required to redeem one-third of the Senior
Preferred Stock eight years after issuance, and one-
third in each of the succeeding years at a price of
$10.00 per share.

       The Company has invested in substantial
improvements to its winery facility and vineyards over
the past several years, and plans to continue the
expansion.  During 1998, the Company plans to add a
tasting room at an estimated cost of $600,000, and to
invest an estimated $3,200,000 in tanks, barrels,
presses and other equipment.  Additional winery
expansion projects are anticipated for the future to
handle the increased production from the Company's
recently planted vineyards.  The Company plans to
invest an estimated $1,800,000 to continue the
development of recently planted vineyards during
1998.  The Company plans to fund 1998 capital
projects with internally generated funds and additional
debt.
<PAGE> 12
       Phylloxera infestation may have a negative
impact on the Company's future grape production. 
Phylloxera is a root louse which feeds on grape roots,
causing reduced production and eventual vine death. 
Of the Company's 1,561 acres of vineyard, 187 acres
have root stock which is not resistant to Phylloxera. 
Management estimates these vineyards will be
commercially productive for ten years (until 2004), as
compared with twenty-five years generally estimated
for vineyards without Phylloxera.  The reduction in
vineyard useful life causes an increase in depreciation
and maintenance expense.  The increased expenses are
added to the cost of grapes harvested, thus increasing
cost of sales.  The Company is in the process of
replacing the majority of Phylloxera-infested and non-
resistant vines with rootstock believed to be resistant
to Phylloxera. 
<PAGE> 13
               PART II.  OTHER INFORMATION
     
Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits                                                
<TABLE>
<CAPTION>        
     Exhibit No.                       Description
     <S>                  <C>
     10.1                  Loan Agreements between the Company and U.S. Bank, 
                           dated May 1, 1998
     27.1                  Financial Data Schedule
</TABLE>
     (b) Reports on Form 8-K

           None
<PAGE> 14
SIGNATURES

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

                    R.H. PHILLIPS, INC.
                    (Registrant)

                    Date: May 11, 1998


By //s// John E. Giguiere
     ----------------------------------------------
John E. Giguiere, Co-President
Co-Chief Executive Officer


By //s// Michael J. Motroni
     ----------------------------------------------
Michael J. Motroni, Chief Financial Officer
Principal Financial Officer
<PAGE> 15
                             EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.               Description                           Page No.
<S>            <C>
10.1            Loan Agreements between the Company 
                   and U.S. Bank, dated May 1, 1998.                                     
27.1            Financial Data Schedule
</TABLE>