<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, 1999
[ ]     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, 1999: 6,582,559 

Transitional Small Business Disclosure Format:    Yes        No   X  
                                                       ---       ---

This document consists of 17 pages, excluding exhibits.  The Exhibit
Index is on page 17.
<PAGE> 2
                      R.H. PHILLIPS, INC.
                        
                            INDEX


Part I.   Financial Information

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

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

Part II.  Other Information

   Item 6.   Exhibits and Reports on Form 8-K......................15

Signatures ........................................................16
<PAGE> 3
               PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements
<PAGE> 4
<TABLE>
                      R.H. Phillips, Inc.
                                
                         Balance Sheet 

            (In thousands, except share information)

                                                March   
                                              31, 1999
                                              --------
                                             (Unaudited)
<S>                                           <C>
Assets                                                 
Current assets:
   Cash                                        $   226      
   Accounts receivable                           2,808      
   Inventories                                  13,329      
   Prepaid expenses and other current assets     1,304
                                               -------
Total current assets                            17,667      

Property, plant and equipment, net              33,821      

Other assets                                       703      
                                               -------               
                                               $52,191      
                                               =======
Liabilities and shareholders' equity
Current liabilities:
   Current maturities of long-term debt        $ 1,808      
   Accounts payable                              1,081      
   Accrued payroll and related                     236      
   Accrued selling expenses                        549      
   Accrued income taxes                            318      
   Other accrued liabilities                       424      
                                               -------
Total current liabilities                        4,416      

Long-term debt                                  22,513      
Subordinated debt                                2,282      
Deferred income taxes                            2,082      
Deferred gain and vineyard development costs       103      

Commitments and contingencies                               
                                                            

Redeemable preferred stock,
redeemable at $2,500,000                         2,282      

Shareholders' equity:
   Non-redeemable preferred stock, no par value,
   4,750,000 shares authorized, none issued
   and outstanding                                  --
                                                            
   Common stock, no par value, 12,500,000 shares
   authorized, 6,582,559 shares issued and
   outstanding                                  14,491      
   Additional paid-in capital                      337      
   Retained earnings                             3,685      
                                               -------
Total shareholders' equity                      18,513
                                               -------             
                                               $52,191      
                                               =======
</TABLE>
[FN]
See accompanying notes.
<PAGE> 5
<TABLE>
                      R.H. Phillips, Inc.
                                
                     Statements of Income 
                                
          (In thousands, except share information)

<CAPTION>
                                                       Three months ended
                                                            March 31,                          
                                                            ---------
                                                         1999      1998
                                                         ----      ----
                                                           (Unaudited)

<S>                                                       <C>      <C>
Net sales                                                 $5,001   $3,988 

Cost of sales                                              2,338    2,000 
                                                          ------   ------
Gross profit                                               2,663    1,988 

Selling expenses                                           1,311    1,018 

General and administrative expenses                          260      262 
                                                          ------   ------
Operating income                                           1,092      708 

Interest expense                                            (378)    (278)

Other income, net                                             63       48 
                                                          ------   ------
Income before provision for income taxes                     777      478 

Provision for income taxes                                  (313)    (192)
                                                          ------   ------
Net income                                                $  464   $  286 
                                                          ======   ======

Net income                                                $  464   $  286 

Dividends and accretion on Redeemable Preferred Stock        (85)     (85)
                                                          ------   ------
Net income applicable to Common Shareholders              $  379   $  201 
                                                          ======   ======

Net income per share - basic and diluted                  $  .06   $  .03 
                                                          ======   ======
Shares used in per share calculations:
 - Basic                                               6,582,559 6,582,559
 - Diluted                                             6,582,559 6,582,656
</TABLE>
[FN]
See accompanying notes.
<PAGE> 6
<TABLE>
                          R.H. Phillips, Inc.
                                    
                       Statements of Cash Flows 
                                    
                             (In thousands)
<CAPTION>
                                                      Three months ended
                                                           March 31, 
                                                           ---------
                                                          1999    1998
                                                          ----    ----
                                                           (Unaudited)
<S>                                                      <C>     <C>
Cash flows from operating activities:                            
Net income                                               $   464  $   286 
Adjustments to reconcile net income to net cash 
   provided by operating activities:
   Depreciation and amortization                             669      484 
   Gain on disposal of property, plant and equipment                   (5)
   Net changes in assets and liabilities:
      Accounts receivable                                    174       65 
      Inventories                                           (655)    (759)
      Prepaid expenses and other current assets             (187)     102 
      Other assets                                           (21)     (36)
      Accounts payable                                        23     (223)
      Accrued payroll and related                            (97)      (1)
      Accrued selling expenses                                67      142 
      Accrued income taxes                                   318      123 
      Other accrued liabilities                               27      (31)
                                                         -------  -------
Net cash provided by operating activities                    782      147
                                                                          
Cash flows from investing activities:
Purchase of property, plant and equipment                 (1,247)  (1,011)
Proceeds from sale of property, plant and equipment           --        5 
                                                         -------  -------
Net cash used in investing activities                     (1,247)  (1,006)

Cash flows from financing activities:
Cash dividends paid                                         (150)    (150)
Proceeds from long-term debt and notes payable             3,243    3,434 
Principal payments on long-term debt and notes payable    (2,444)  (2,297)
Payment for development of leased vineyards
and related fees                                            (109)     (96)
Other financing activities, net                               --       (4)
                                                         -------  -------
Net cash provided by financing activities                    540      887

Increase in cash                                              75       28 
Cash at beginning of period                                  151      109 
                                                         -------  -------
Cash at end of period                                    $   226  $   137
                                                         =======  =======
Other cash flow information: 
Interest paid (including capitalized interest of 
$85 and $121 in 1999 and 1998, respectively)             $   432  $   300
Income taxes paid                                        $    --  $    69 
Noncash transactions:
Issuance of notes payable to finance inventory, 
  property, plant and equipment purchased                $    --  $     4 
Issuance of stock dividend                               $   150  $   150 
Accretion of redeemable preferred stock                  $    10  $    10 
Conversion of preferred stock to subordinated debt       $ 2,281  $    --
</TABLE>
[FN]
See accompanying notes.
<PAGE> 7
            R.H. Phillips, Inc.
                      
       Notes to Financial Statements
                      
               March 31, 1999

1.  Summary of Significant Accounting Policies

The interim financial statements as of March 31, 1999 and for each
of the three month periods ended  March 31, 1999 and 1998 have
been prepared by R.H. Phillips, Inc. ("R.H. Phillips"), and are
unaudited.  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, 1999 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
annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to generally accepted accounting principles applicable for
interim periods. These statements should be read in conjunction with
the financial statements and notes included in R.H. Phillips' Annual
Report on Form 10-KSB for the fiscal year ended December 31,
1998.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statemetns and accompanying notes.  Actual results could
differ from those estimates.

2.  Computation of Net Income per Share

Basic net income per share for the three month periods ended March
31, 1999 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.  There were no dilutive potential
common shares outstanding for the three month period ended March
31, 1999.  Potential common shares outstanding which could have a
dilutive effect in the future, but were anti-dilutive for the three month
period ended March 31, 1999, totaled  2,333,598.  Basic and diluted
net income per share and the weighted average number of common
shares outstanding for the three month period ended March 31, 1998
have been restated to reflect stock dividends of 48,071 shares issued
in September 1998 and 50,728 shares issued in March 1999. 

3.  Long-term Debt

R.H. Phillips obtained two long-term loans from General Electric
Capital Corporation during the three month period ended March 31,
1999.  The first loan bears interest at annual rate of 7.41%, and
principal and interest are due in 84 monthly installments.  The second
loan bears interest at annual rate of 7.23%, and principal and interest
are due in 60 monthly installments.  Both loans are collateralized by
equipment.

4.  Subordinated Debt and Preferred Stock

In March 1999, R.H. Phillips exchanged, at par, 500,000 shares of
Senior Redeemable Preferred Stock for unsecured subordinated debt
with a principal amount of $2,500,000 and 250,000 shares of
Redeemable Exchangeable Preferred Stock ("Exchangeable
Preferred").  The subordinated debt carries an annual interest rate of
14%, payable semi-annually.  The Exchangeable Preferred bears a
cumulative annual dividend of $1.20 per share payable semiannually
in shares of Common Stock at a price equal to the lower of the
average daily market price over a period of twenty consecutive
trading days before the dividend payment date or $4.00 per share. 
After March 15, 2000, R.H. Phillips has the option to convert the
Exchangeable Preferred to unsecured subordinated debt at an interest
rate to be determined at the time of conversion.  If the Exchangeable
Preferred is not converted at March 15, 2000, the $1.20 per share
dividend will become payable in cash.  The
<PAGE> 8
subordinated debt,
including any amount converted from Exchangeable Preferred, can
be paid, at R.H. Phillips' option, after March 15, 2001.  R.H. Phillips
is required to make principal payments (including redemption
payments if the Exchangeable Preferred is not converted to
subordinated debt) of $1,666,666 in 2004, $1,666,667 in 2005 and
$1,666,667 in 2006.
<PAGE> 9
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
   
   R.H. Phillips provides in this report and elsewhere from time
to time forward-looking statements regarding R.H. Phillips, 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 R.H.
Phillips may vary due to a variety of factors, including the following:
   
   Availability of Future Financing.  R.H. Phillips 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 R.H. Phillips. 
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, R.H. Phillips 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 R.H.
Phillips' estimates will prove to be correct.  If costs are higher than
anticipated, R.H. Phillips may be required to raise an even greater
amount of financing or reduce the rate of expansion.

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

Seasonality
   
   R.H. Phillips 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.  R.H.
Phillips' expenditures fluctuate throughout the year based on
vineyard and winery activities.  Expenditures typically peak during
the summer and early autumn.
<PAGE> 10
Costs of Production
   
   R.H. Phillips' vineyards produced 7,700 tons of grapes in
1998, compared to 5,100 tons in 1997.  The increase was primarily
due to production from new vineyards.  R.H. Phillips has expanded
the size of its vineyards to lessen its dependence on outside sources
of bulk wines and grapes and reduce its cost of goods.  Management
anticipates that the full benefit of the vineyard expansion should
continue to be realized over the next several years as the vines
mature.

   The Dunnigan Hills region experienced an unusual period of
below freezing weather during early April 1999.  The cold weather
damaged some of the fruit producing buds in R.H. Phillips'
Chardonnay vineyards.  Management believes that the 1999
Chardonnay yield per acre may be as much as 35% below average,
which will negatively affect Chardonnay product margins in 2000. 
Management believes that production from recently planted
Chardonnay vineyards will partially offset the crop damage, and that
overall Chardonnay yields will be approximately 11% less than 1998. 
Management believes that other varietals were not significantly
affected.  Despite the anticipated lower Chardonnay yields, the total
1999 crop for all varietals combined should be larger than the 1998
crop due to production from recently planted vineyards.

Results of Operations

   Net Sales

   Net sales for the three month period ended March 31, 1999
were $5,001,000, a 25% increase over net sales of $3,988,000 for the
corresponding period of the prior year.  Net sales included sales of
bulk wines and other items totaling $246,000 for the three month
period ended March 31, 1999, compared to $46,000 for the
corresponding period in 1998.  The increase in net sales was
primarily due to a greater proportion of higher priced, super premium
wines.  Sales of super premium wines increased from 7,000 cases for
the three month period ended March 31, 1998 to 15,000 cases for the
same period in 1999.  This resulted in an average price per case of
$54.24 for the three month period ended March 31, 1999, compared
to $49.03 for the same period in 1998.  Higher sales volumes also
contributed to the increase in net sales.  R.H. Phillips sold 88,000
cases during the three month period ended March 31, 1999,
compared to 80,000 in the corresponding period of the prior year.  

   
   Gross profit

   Gross profit was $2,663,000 for the three month period
ended March 31, 1999, a 34% increase over $1,988,000 for the same
period in 1998.  Excluding sales of bulk wines and other items, gross
profit was $2,635,000 in 1999, compared to $1,948,000 in 1998. 
Gross margins were 53% for the three month period ended March
31, 1999, compared to 50% for the same period in 1998.  The
increase in 1999 gross margins is primarily attributable to the higher
average selling prices discussed above and, to a lesser degree, to a
decrease in the average cost per case.  The average cost per case for
the three month period ended March 31, 1999 was $24.18, compared
to $24.80 for the same period in 1998.
   
   Selling Expenses

   Selling expenses were $1,311,000, or 26% of net sales, for
the three month period ended  March 31, 1999, an increase from
$1,018,000, or 26% of net sales, for the same period in 1998.  The
$293,000 increase is primarily due to increased sales promotion
costs. 
<PAGE> 11
   General and Administrative Expenses  

   General and administrative expenses were $260,000, or 5%
of net sales, for the three month period ended March 31, 1999. 
General and administrative expenses were $262,000, or 7% of sales,
for the three month period ended March 31, 1998.

   Interest Expense

   Interest expense for the three month period ended March 31,
1999 was $378,000, compared to $278,000 for the same period in
1998.  R.H. Phillips capitalized $85,000 of additional interest
pertaining to vineyard and winery development during the three
month period ended March 31, 1999, and $121,000 during the same
period in 1998.  R.H. Phillips had fewer vineyards under development
during the first three months of 1999 than during the same period in
1998, causing capitalized interest to decrease.  The increase in total
interest cost is primarily due to borrowings to fund capital
improvements during 1998.  The interest is attributable to R.H.
Phillips' debt obligations and bank line of credit.

   Other Income, net
   
   Other income, net for the three month period ended March
31, 1999 was $63,000, compared to  $48,000 for the same period in
1998.  The income was primarily from crop subsidies and vineyard
management fees.

   Provision for income taxes

   Provision for income taxes for the three month period ended
March 31, 1999 was $313,000, compared to $192,000 for the same
period in 1998.  The $121,000 increase is due to higher income.

   Net Income

   R.H. Phillips generated net income of $464,000 for the three
month period ended March 31, 1999, compared to $286,000 for the
same period in 1998.  The $178,000 increase was primarily due to
higher gross profit, which was partially offset by increased selling
expenses.

Liquidity and Capital Resources

   R.H. Phillips 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.  R.H. Phillips has made substantial capital expenditures to
expand its vineyards and winery facilities, obtain production
efficiencies, and raise wine quality.  R.H. Phillips' 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.  

   R.H. Phillips had cash totaling $226,000 on March 31, 1999,
an increase from $151,000 on December 31, 1998.  Sources of cash
during the three month period ended March 31, 1999 included cash
from operations of $782,000 and proceeds from long-term debt of
$3,243,000.  Cash used during that period included $1,247,000
invested in property, plant and equipment and $2,444,000 to repay
debt.

   Current assets increased by $743,000 during the three month
period ended March 31, 1999, primarily due to an increase in
inventories from $12,674,000 on December 31, 1998 to $13,329,000
on March 31, 1999.  The increase is primarily due to inventoried
work in progress pertaining to the 1999 grape crop.  Current
liabilities increased by $277,000 during the three month period ended
March 31, 1999, primarily due to accrued income taxes.  These
factors caused net working capital to increase $466,000, from
$12,785,000 on December 31, 1998 to $13,251,000 on March 31,
1999. 
<PAGE> 12   
   R.H. Phillips has several long-term loans, the largest of which
was obtained from Metropolitan Life Insurance Company
("Metropolitan").  R.H. Phillips has borrowed $11,000,000 from
Metropolitan, of which $10,160,000 was outstanding at March 31,
1999.  The unpaid principal under the loan accrues interest at an
annual rate of 8.04%.  The interest rate is subject to adjustment by
Metropolitan every three years, beginning on January 1, 2001.  R.H.
Phillips is required to make monthly principal payments of $60,000
plus accrued interest.  The loan matures in January 2013, at which
time R.H. Phillips will be required to make a balloon payment of
$200,000.

   R.H. Phillips has a line of credit of $10,000,000 with U.S.
Bank National Association ("U.S. Bank") to finance its working
capital requirements.  The line of credit is secured by accounts
receivable, inventory, the grape crop, and unencumbered farm
equipment.  The annual interest rate on the line is either U.S. Bank's
prime rate or IBOR plus 150 basis points, at R.H. Phillips' option. 
The balance on the line at March 31, 1999 was $8,738,000.  R.H.
Phillips is in the process of renegotiating the line to increase the limit
to $15,000,000 and extend the maturity date from April 2000 to
April 2001.  Management believes that the new line of credit will be
finalized by late May 1999. 
   In addition to loans with Metropolitan and U.S. Bank, R.H.
Phillips has several smaller loans, which are generally secured by
equipment, and capital leases.  The maturity dates range from May
1999 to April 2006 and, excluding capital leases, the interest rates
range from 7.0% to 10.9%.  The balances due on these items totaled
$5,423,000 at March 31, 1999.

   In May 1997, R.H. Phillips sold 371 acres of land partially
developed into vineyard to John Hancock Mutual Life Insurance
Company ("Hancock").  In connection with the transaction, R.H.
Phillips 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.  R.H. Phillips received
proceeds of $5,384,000 from the sale.  R.H. Phillips began paying
rent of $161,000 per calendar quarter in January 1999.  The lease is
accounted for as an operating lease.

   In March 1996, R.H. Phillips 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 R.H. Phillips 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 bore a
cumulative annual dividend of $1.20 per share, payable semiannually. 
During the first four years after issuance, 50% of the dividend was
payable in cash and 50% of the dividend was payable in shares of
Common Stock at a price equal to the lower of the average daily
market price over a period of twenty consecutive trading days before
the dividend payment date or $4.00 per share. 

   In March 1999, R.H. Phillips exchanged, at par, all shares of
the Senior Preferred Stock for unsecured subordinated debt with a
principal amount of $2,500,000 and 250,000 shares of Redeemable
Exchangeable Preferred Stock ("Exchangeable Preferred").  The
subordinated debt carries an annual interest rate of 14%, payable
semi-annually.  The Exchangeable Preferred bears a cumulative
annual dividend of $1.20 per share payable semiannually in shares of
Common Stock at a price equal to the lower of the average daily
market price over a period of twenty consecutive trading days before
the dividend payment date or $4.00 per share.  After March 15,
2000, R.H. Phillips has the option to convert the Exchangeable
Preferred to unsecured subordinated debt at an interest rate to be
determined at the time of conversion.  If the Exchangeable Preferred
is not converted at March 15, 2000, the $1.20 per share dividend will
become payable in cash.  The subordinated debt, including any
amount converted from Exchangeable Preferred, can be paid, at R.H.
Phillips' option, after March 15, 2001.  R.H. Phillips is required to
make principal payments (including redemption payments if the
Exchangeable Preferred is not converted to subordinated debt) of
$1,666,666 in 2004, $1,666,667 in 2005 and $1,666,667 in 2006.
<PAGE> 13
   R.H. Phillips has invested in substantial improvements to its
winery facility and vineyards over the past several years, and plans to
continue the expansion.  R.H. Phillips plans to invest approximately
$5,000,000 in tanks, barrels and other equipment during 1999. 
Additional winery expansion projects are planned for the future to
handle the increased production from R.H. Phillips' recently planted
vineyards.  R.H. Phillips plans to invest approximately $800,000 in
farm equipment and the continued development of recently planted
vineyards during 1999.  R.H. Phillips plans to fund 1999 capital
projects with internally generated funds, proceeds from the U.S.
Bank line of credit increase, and long-term lease financing.

   Phylloxera infestation may have a negative impact on R.H.
Phillips' future grape production.  Phylloxera is a root louse which
feeds on grape roots, causing reduced production and eventual vine
death.  Of R.H. Phillips' 1,555 acres of vineyard, 187 acres have root
stock which is susceptible 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.  R.H. Phillips has replaced the majority of
Phylloxera-infested or susceptible vines with rootstock believed to be
resistant to Phylloxera. 

   R.H. Phillips expects that cash flows generated from
operations, together with borrowing availability, will be adequate to
fund R.H. Phillips' operations, capital expansion efforts and debt
service requirements over the next twelve months.  However, a
significant decline in R.H. Phillips' expected operating performance
could have a material adverse effect on R.H. Phillips' liquidity.  In
such case, R.H. Phillips would adjust its level of capital expenditures
as necessary, obtain additional debt financing or issue equity
securities.  However, there can be no assurance that such financing
will be available and, if available, that it could be obtained in terms
favorable to R.H. Phillips.

Year 2000 

   R.H. Phillips is reviewing its potential exposure to the "Year
2000 Problem", which results from computer programs being written
using two digits rather than four to define the applicable year.  As a
result of this problem, computer programs that are not "Year 2000
compliant" may recognize a date using "00" as the year 1900 rather
than 2000.  The impact of the Year 2000 Problem on R.H. Phillips is
difficult to assess at this time, but the Year 2000 Problem could
result in a system failure or miscalculation causing disruptions of
operations, including a temporary inability to process sales, send
invoices, retain accurate data or engage in normal business activities. 
The Year 2000 Problem may also affect the operations of suppliers,
distributors, vendors and others with whom R.H. Phillips does
business, thereby adversely affecting R.H. Phillips as well.

   R.H. Phillips has completed its internal assessment of its own 
information technology systems and non-information technology
systems to ascertain whether they are Year 2000 compliant.  R.H.
Phillips is also in the process of assessing the potential effect upon its
operations of Year 2000 Problems encountered by its suppliers,
customers, bank and others with whom it does business.  Although
R.H. Phillips is implementing measures to reduce its potential
exposure to the Year 2000 Problem, due to the general uncertainty
over the Year 2000 readiness of third parties, R.H. Phillips is unable
to determine at this time whether the consequences of Year 2000
failures will have a material impact. 

   R.H. Phillips uses several information technology systems,
some of which may be affected by the Year 2000 Problem. 
Management has reviewed its critical computer systems in order to
determine whether any software requires updating or replacement,
and has determined that its primary financial and operating software
is not Year 2000 compliant.  The software supplier is in the process
of making the software Year 2000 compliant, and has advised R.H.
Phillips that it will bear the costs of the modification.  Although the
supplier has informed R.H. Phillips that the software will be Year
2000 compliant by mid 1999, R.H. Phillips cannot be certain that the
supplier will be able to meet this deadline.  R.H. Phillips has also
agreed to provide personnel to assist in software testing scheduled
for the first half of 1999.  The costs incurred by R.H. Phillips
<PAGE> 14
in connection with this testing will be expensed as incurred. 
Management does not believe that these costs will have a material
impact on R.H. Phillips' financial condition.  If the supplier does not
make the software Year 2000 compliant within a reasonable time, it
may be necessary for R.H. Phillips to purchase alternate financial and
operating software.  Management believes that the cost of purchasing
and installing new financial and operating software will not have a
material impact on R.H. Phillips' financial condition, results of
operations or cash flows.  

   R.H. Phillips is also reviewing its non-information technology
systems for potential exposure to the Year 2000 Problem.  Although
the review is not complete, management expects to complete its
review and any necessary corrections or replacements to its non-
information technology  systems by mid 1999.  The costs to correct
or modify these systems will be expensed as incurred, while any
replacement costs will be capitalized.  Management does not believe
that the total cost of making these systems Year 2000 compliant will
be material.

   Outside parties whose exposure to Year 2000 Problems may
have a material impact on R.H. Phillips' operations include its bank,
major customers, and major suppliers.  Management has reviewed the
issue with bank representatives, and believes that the Year 2000
Problem will not materially affect R.H. Phillips' banking operations. 
Management believes that one or more of R.H. Phillips' customers
could have their operations interrupted or terminated by Year 2000
problems.  Such an event could result in the delay of payments to
R.H. Phillips.  Management believes that it would be impractical to
attempt to measure the potential risk of such an occurrence, and that
correction of Year 2000 Problems R.H. Phillips' customers
experience is outside of R.H. Phillips' control.  Similarly, R.H.
Phillips' major suppliers may experience Year 2000 Problems,
potentially delaying the shipment of necessary materials. 
Management believes that it would be able to find alternate suppliers
should this occur.  

   The costs of the project and the date on which R.H. Phillips
believes it will complete the Year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of
certain resources and other factors.  However, there can be no
guarantee that these estimates will be achieved and actual results
could differ materially from those anticipated.  Specific factors that
might cause such material differences include, but are not limited to,
the availability and cost of personnel trained in this area, the ability
to locate and correct all relevant computer codes, and similar
uncertainties.    
<PAGE> 15                  
                 PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

   (a) Exhibits   

   Exhibit No.      Description
   -----------      -----------

   3.1              Articles of Incorporation

   27.1             Financial Data Schedule


   (b) Reports on Form 8-K

   None
<PAGE> 16
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 13, 1999


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

                       By//s//Michael J. Motroni
                       ___________________________
                       Michael J. Motroni, Chief Financial Officer
                       Principal Financial Officer
<PAGE> 17
                     EXHIBIT INDEX


Exhibit No.           Description                               
                            
   3.1         Articles of Incorporation 

   27.1        Financial Data Schedules