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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period September 30, 2002

or

|o | 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: 1-14305

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GOLDEN STATE VINTNERS, INC.(Exact name of registrant as specified in its charter)

|DELAWARE                                                       |  | 77-0412761                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|607 AIRPARK ROAD, NAPA, CALIFORNIA                             |  | 94558                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(707) 254-4900(Registrant's telephone number,
including area code)

NONE(Former name, former address and former fiscal year,
if changed since last report)

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

ý Yes            o No

The
number of shares of the Registrant's Class A and Class B Common Stock outstanding as of November 13, 2002 was 4,342,528 and 5,170,459 shares, respectively.

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GOLDEN STATE VINTNERS, INC.  TABLE OF CONTENTS

|Item No.                                                                                     |                                                                                                        | Page
|-------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ----
|PART IFINANCIAL INFORMATION                                                                
|Item 1Financial Statements                                                                  |                                                                                                        |     
|                                                                                             | Condensed Consolidated Balance Sheets as of September 30, 2002 and June 30, 2002                       |     
|                                                                                             | Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2002 and 2001 |     
|                                                                                             | Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2002 and 2001 |     
|                                                                                             | Notes to Condensed Consolidated Financial Statements                                                   |     
|Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                        | 10  
|Item 3Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                        | 15  
|Item 4Controls and Procedures                                                               |                                                                                                        | 22  
|PART IIOTHER INFORMATION                                                                   
|Item 6Exhibits and Reports on Form 8-K                                                      |                                                                                                        | 23  

2

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PART IFINANCIAL INFORMATION

Item 1. Financial Statements

GOLDEN STATE VINTNERS, INC.        CONDENSED CONSOLIDATED BALANCE SHEETS        (UNAUDITED, IN THOUSANDS)

|                                           |                                                                                      | September 30,
2002                                                                                                                                                  |                           | June 30,
2002 |       
|------------------------------------------ | ------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ------------- | ------
|ASSETS                                     |                                                                                      |                                                                                                                                                                     |                           |               |       
|CURRENT ASSETS:                            |                                                                                      |                                                                                                                                                                     |                           |               |       
|                                           | Cash and equivalents                                                                 |                                                                                                                                                                     | $                         | 65            |       
|                                           | Trade and other receivablesnet                                                      |                                                                                                                                                                     |                           | 12,471        |       
|                                           | Inventories                                                                          |                                                                                                                                                                     |                           | 40,789        |       
|                                           | Refundable income taxes                                                              |                                                                                                                                                                     |                           | 188           |       
|                                           | Deferred income taxes                                                                |                                                                                                                                                                     |                           | 778           |       
|                                           | Prepaid expenses and other current assets                                            |                                                                                                                                                                     |                           | 577           |       
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       
|                                           |                                                                                      |                                                                                                                                                                     | Total current assets      |               |       
|PROPERTY, PLANT AND EQUIPMENTNet          |                                                                                      |                                                                                                                                                                     | 68,656                    |               |       
|ASSETS HELD FOR SALE                       |                                                                                      |                                                                                                                                                                     | 15,849                    |               |       
|OTHER ASSETS                               |                                                                                      |                                                                                                                                                                     | 1,423                     |               |       
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       
|TOTAL ASSETS                               |                                                                                      | $                                                                                                                                                                   | 140,796                   |               | $     
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       
|LIABILITIES AND STOCKHOLDERS' EQUITY       |                                                                                      |                                                                                                                                                                     |                           |               |       
|CURRENT LIABILITIES:                       |                                                                                      |                                                                                                                                                                     |                           |               |       
|                                           | Bank line of credit                                                                  |                                                                                                                                                                     | $                         | 16,900        |       
|                                           | Cash overdraft                                                                       |                                                                                                                                                                     |                           | 1,088         |       
|                                           | Accounts payable                                                                     |                                                                                                                                                                     |                           | 4,597         |       
|                                           | Payable to growers                                                                   |                                                                                                                                                                     |                           | 5,091         |       
|                                           | Payroll and related liabilities                                                      |                                                                                                                                                                     |                           | 730           |       
|                                           | Accrued interest                                                                     |                                                                                                                                                                     |                           | 257           |       
|                                           | Other accrued liabilities                                                            |                                                                                                                                                                     |                           | 471           |       
|                                           | Deferred income taxes                                                                |                                                                                                                                                                     |                           |              |       
|                                           | Current portion of long-term debt                                                    |                                                                                                                                                                     |                           | 6,864         |       
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       
|                                           |                                                                                      |                                                                                                                                                                     | Total current liabilities |               |       
|LONG-TERM DEBT                             |                                                                                      |                                                                                                                                                                     | 31,055                    |               |       
|DEFERRED COMPENSATION                      |                                                                                      |                                                                                                                                                                     | 719                       |               |       
|DEFERRED INCOME TAXES                      |                                                                                      |                                                                                                                                                                     | 11,781                    |               |       
|STOCKHOLDERS' EQUITY:                      |                                                                                      |                                                                                                                                                                     |                           |               |       
|                                           | Common Stock:                                                                        |                                                                                                                                                                     |                           |               |       
|                                           |                                                                                      | Class A common stock, par value $.01; 6,000,000 shares authorized; 4,342,528 shares issued and outstanding at September 30, 2002 and at June 30, 2002, respectively |                           |               | 43    
|                                           |                                                                                      | Class B common stock, par value $.01; 54,000,000 shares authorized; 5,192,323 shares issued at September 30, 2002 and at June 30, 2002                              |                           |               | 52    
|                                           | Additional paid-in capital                                                           |                                                                                                                                                                     |                           | 45,058        |       
|                                           | Retained earnings                                                                    |                                                                                                                                                                     |                           | 16,236        |       
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       
|                                           |                                                                                      | Total common stock, paid-in capital and retained earnings                                                                                                           |                           |               | 61,389
|                                           | Treasury stock (21,884 shares at September 30, 2002 and June 30, 2002, respectively) |                                                                                                                                                                     |                           | (146          | )     
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       
|                                           |                                                                                      | Total stockholders' equity                                                                                                                                          |                           |               | 61,243
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |                                                                                      | $                                                                                                                                                                   | 140,796                   |               | $     
|                                           |                                                                                      |                                                                                                                                                                     |                           |               |       

See accompanying notes to condensed consolidated financial statements.

3

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GOLDEN STATE VINTNERS, INC.        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)

|                                             |                    | Three Months Ended
September 30, |               
|-------------------------------------------- | ------------------ | -------------------------------- | --------------
|
|REVENUES:                                    |                    |                                  |               
|                                             | Bulk wine          |                                  | $             
|                                             | Wine grapes        |                                  |               
|                                             | Case goods         |                                  |               
|                                             | Brandy and spirits |                                  |               
|                                             |                    |                                  |               
|                                             |                    |                                  | Total revenues
|COST OF SALES                                |                    |                                  | 13,120        
|                                             |                    |                                  |               
|GROSS PROFIT                                 |                    |                                  | 4,696         
|SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES |                    |                                  | 2,454         
|                                             |                    |                                  |               
|INCOME FROM OPERATIONS                       |                    |                                  | 2,242         
|INTEREST EXPENSE                             |                    |                                  | 1,012         
|                                             |                    |                                  |               
|INCOME (LOSS) BEFORE INCOME TAXES            |                    |                                  | 1,230         
|INCOME TAXES (BENEFIT)                       |                    |                                  | 420           
|                                             |                    |                                  |               
|NET INCOME (LOSS)                            |                    | $                                | 810           
|                                             |                    |                                  |               
|EARNINGS (LOSS) PER COMMON SHARE:            |                    |                                  |               
|                                             | BASIC              |                                  | $             
|                                             |                    |                                  |               
|                                             | DILUTED            |                                  | $             
|                                             |                    |                                  |               
|WEIGHTED AVERAGE SHARES OUTSTANDING:         |                    |                                  |               
|                                             | BASIC              |                                  |               
|                                             |                    |                                  |               
|                                             | DILUTED            |                                  |               
|                                             |                    |                                  |               

See
accompanying notes to condensed consolidated financial statements.

4

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GOLDEN STATE VINTNERS, INC.        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        (UNAUDITED, IN THOUSANDS)

|                                            |                                                                                             | Three Months Ended
September 30,                          |                                          
|------------------------------------------- | ------------------------------------------------------------------------------------------- | --------------------------------------------------------- | -----------------------------------------
|
|OPERATING ACTIVITIES:                       |                                                                                             |                                                           |                                          
|                                            | Net income (loss)                                                                           |                                                           | $                                        
|                                            | Adjustments to reconcile net income to net cash provided by (used in) operating activities: |                                                           |                                          
|                                            |                                                                                             | Depreciation and amortization                             |                                          
|                                            |                                                                                             | Loss on disposal of assets                                |                                          
|                                            |                                                                                             | Provision for doubtful accounts                           |                                          
|                                            |                                                                                             | Change in cash surrender value of life insurance policies |                                          
|                                            |                                                                                             | Change in market value of deferred compensation           |                                          
|                                            |                                                                                             | Deferred income taxes                                     |                                          
|                                            |                                                                                             | Changes in operating assets and liabilities:              |                                          
|                                            |                                                                                             |                                                           | Trade and other receivables              
|                                            |                                                                                             |                                                           | Inventories                              
|                                            |                                                                                             |                                                           | Prepaid expenses and other current assets
|                                            |                                                                                             |                                                           | Accounts payable                         
|                                            |                                                                                             |                                                           | Payable to growers                       
|                                            |                                                                                             |                                                           | Payroll and related liabilities          
|                                            |                                                                                             |                                                           | Other accrued liabilities                
|                                            |                                                                                             |                                                           | Accrued interest                         
|                                            |                                                                                             |                                                           | Deferred compensation                    
|                                            |                                                                                             |                                                           | Income taxes refundable/payable          
|                                            |                                                                                             |                                                           |                                          
|                                            |                                                                                             |                                                           |                                          
|INVESTING ACTIVITIES:                       |                                                                                             |                                                           |                                          
|                                            | Purchases of property, plant and equipment                                                  |                                                           |                                          
|                                            | Refund (payment) of deposits                                                                |                                                           |                                          
|                                            |                                                                                             |                                                           |                                          
|                                            |                                                                                             |                                                           |                                          
|FINANCING ACTIVITIES:                       |                                                                                             |                                                           |                                          
|                                            | Borrowings on line of credit                                                                |                                                           |                                          
|                                            | Payments on line of credit                                                                  |                                                           |                                          
|                                            | Cash overdraft increase (decrease)                                                          |                                                           |                                          
|                                            | Proceeds from lease financing                                                               |                                                           |                                          
|                                            | Payments on long-term debt                                                                  |                                                           |                                          
|                                            | Purchases of treasury stock                                                                 |                                                           |                                          
|                                            |                                                                                             |                                                           |                                          
|                                            |                                                                                             |                                                           |                                          
|                                            |                                                                                             |                                                           |                                          
|INCREASE (DECREASE) IN CASH AND EQUIVALENTS |                                                                                             |                                                           | 6                                        
|CASH AND EQUIVALENTS, BEGINNING OF PERIOD   |                                                                                             |                                                           | 59                                       
|                                            |                                                                                             |                                                           |                                          
|CASH AND EQUIVALENTS, END OF PERIOD         |                                                                                             | $                                                         | 65                                       
|                                            |                                                                                             |                                                           |                                          
|OTHER CASH FLOW INFORMATION:                |                                                                                             |                                                           |                                          
|                                            | Interest paid                                                                               |                                                           | $                                        
|                                            |                                                                                             |                                                           |                                          
|                                            | Income taxes paid (refunded), net                                                           |                                                           | $                                        
|                                            |                                                                                             |                                                           |                                          

See accompanying notes to condensed consolidated financial statements.

5

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GOLDEN STATE VINTNERS, INC.        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1Basis of Presentation:

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include all normal and recurring
adjustments) necessary to present fairly the Company's financial position at September 30, 2002 and its results of operations for the three-month periods ended September 30, 2002 and
2001 and its cash flows for the three-month periods ended September 30, 2002 and 2001. Certain information and disclosures normally included in the notes to financial statements prepared in
accordance with generally accepted accounting principles have been condensed or omitted from the accompanying financial statements. The unaudited financial statements set forth in this quarterly
report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K (the "10-K") for the fiscal year
ended June 30, 2002, on file at the Securities and Exchange Commission ("SEC"). The Company's results for the three months ended September 30, 2002 are not necessarily indicative of the
results that may be expected for the fiscal year ending June 30, 2003.

Certain
reclassifications have been made to the fiscal 2002 amounts in order for them to conform to the fiscal 2003 presentation.

Note 2Inventories:

Inventories consist of the following (in thousands):

September 30,
2002

June 30,
2002(Unaudited)Bulk wine

$
25,367

$
18,187Cased and bottled wine


8,092


7,341Brandy


4,287


1,713Supplies and other


1,050


834Unharvested crop costs


1,993


5,901Total

$
40,789

$
33,976


Note 3Assets Held for Sale

In June 2002 the Company's Board of Directors approved a plan to sell certain excess assets. Such assets include a bulk wine and bottling facility, a warehouse, a
tasting room and certain vineyards. After operations started at the new American Canyon facility in December 2001, the bulk wine and bottling facility and the other warehouse facility were no longer
necessary for custom crushing, bottling or storage.

In
addition, in August 2002 (escrow closed in October 2002), the Company entered into an agreement to sell the entire Lost Hills Vineyard. An asset impairment charge was recognized of
$1.9 million included in wine grape cost of sales in fiscal 2002 to reflect the anticipated loss in this sale. This loss was partially offset by a reversal of a contingent note payable to a
related party of $0.9 million. Such note was a part of the original purchase price of the Lost Hills Vineyard.

Assets
held for sale, at the lower of carrying value or fair value, were $15.8 million and $16.2 million at September 30, 2002 and June 30, 2002 respectively.

6

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Note 4Long-Term Debt

In September 2002, the Company entered into a $2.7 million, 7-year capital lease agreement to finance expenditures incurred on construction of the bottling line
and warehouse improvements for its American Canyon facility.

Effective
October 22, 2002, escrow closed on the sale of the entire Lost Hills Vineyard. This vineyard served as collateral for a note payable to an insurance company with a current
principal balance outstanding of $1.5 million. The buyer has agreed to assume this note as specified in the agreement.

Note 5New Accounting Pronouncements

In 2001, the FASB issued four statements: No. 141,Business Combinations, No. 142, Goodwill and Other
Intangible Assets, and No. 143,Accounting for Assets Retirement Obligationsand No. 144,Accounting for Impairment or Disposal of Long-Lived Assets. SFAS No. 141 requires the purchase method of accounting
for business combinations initiated after June 30, 2001. SFAS No. 142 provides that goodwill and certain identifiable intangible assets will not be amortized and requires
impairment tests for goodwill and certain identifiable intangible assets. SFAS No. 143 provides that asset retirement obligations be measured at fair value and be discounted.
Dismantlement and restoration costs should be recognized as a liability when incurred. SFAS No. 144 provides that impairment losses be recognized only if the carrying amount of the
long-lived assets is not recoverable from undiscounted cash flows. Any impairment loss recognized would be the difference between the carrying value of the asset and its fair value. In 2002, the FASB
issued SFAS No. 145Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Correctionsand SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities.
SFAS No. 145 provides that debt extinguishments that are part of a Company's risk management strategy should not be reported as extraordinary items because they do not meet the criteria
as unusual and infrequently occurring events. This statement also requires sale-leaseback accounting for certain lease modifications whose economic effects are similar to sale-leaseback transactions.
SFAS No. 146 may affect the timing of recognizing future restructuring costs as well as the amounts recognized. This statement requires that the liability for costs associated with an
exit or disposal activity be recognized when the liability is incurred, rather than at the date of the Company's commitment to an exit plan. SFAS No. 146 also establishes that the
liability should initially be measured and recorded at fair value. SFAS Nos. 144 and 145 were effective for the Company July 1, 2002 and the provisions of
SFAS No. 146 are effective for future exit activities initiated after December 31, 2002. The Company adopted SFAS Nos. 141, 142 and 143 effective July 1,
2001. Adoption of these statements did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. Management expects that the adoption of
SFAS Nos. 144, 145 and 146 will not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

7

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Note 6Business Segment Information

The Company's chief decision makers evaluate performance based on the gross profit of the following four segments: bulk wine, wine grapes, case goods, and brandy.
The bulk wine segment includes production and sale of bulk wine, custom crushing services, storage of bulk wine in tanks and barrels and delivery of bulk wine barreling services, such as racking and
topping. The Company's wine grapes segment consists of the farming and harvesting of Company owned vineyards and subsequent sales or internal use of produced grapes as well as grapes purchased by the
Company for resale. The case goods segment includes production of proprietary and private label bottled wine, alcoholic beverages and custom bottling and storage services and providing custom bottling
services for malt-based alcoholic beverages to two major customers. The Company's brandy segment includes production of brandy and spirits and brandy barrel storage and related barreling services. The
Company also analyzes information on capital expenditures, depreciation and amortization and assets utilized by each of the four segments.

8

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Segment
information as of September 30, 2002 and June 30, 2002 and for the three-month periods ended September 30, 2002 and 2001 is as follows (unaudited, in thousands):

|                               |             | Three Months Ended
September 30
|------------------------------ | ----------- | -------------------------------
|
|Revenues, net:                 |             |                                
|                               | Bulk wine   |                                
|                               | Wine grapes |                                
|                               | Case goods  |                                
|                               | Brandy      |                                
|                               |             |                                
|                               |             | Total revenues, net            
|Cost of Sales:                 |             |                                
|                               | Bulk wine   |                                
|                               | Wine grapes |                                
|                               | Case goods  |                                
|                               | Brandy      |                                
|                               |             |                                
|                               |             | Total cost of sales            
|Gross Profit:                  |             |                                
|                               | Bulk wine   |                                
|                               | Wine grapes |                                
|                               | Case goods  |                                
|                               | Brandy      |                                
|                               |             |                                
|                               |             | Total gross profit             
|                               |             |                                
|Capital Expenditures:          |             |                                
|                               | Bulk wine   |                                
|                               | Wine grapes |                                
|                               | Case goods  |                                
|                               | Brandy      |                                
|                               | Corporate   |                                
|                               |             |                                
|                               |             | Total                          
|                               |             |                                
|Depreciation and amortization: |             |                                
|                               | Bulk wine   |                                
|                               | Wine grapes |                                
|                               | Case goods  |                                
|                               | Brandy      |                                
|                               | Corporate   |                                
|                               |             |                                
|                               |             | Total                          
|                               |             |                                
|Total Assets:                  |             |                                
|                               | Bulk wine   |                                
|                               | Wine grapes |                                
|                               | Case goods  |                                
|                               | Brandy      |                                
|                               | Corporate   |                                
|                               |             |                                
|                               |             | Total                          
|                               |             |                                

9

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

The following discussion and analysis of the financial condition and results of operations of Golden State Vintners, Inc. ("we" or "us" or the "Company") contains
"Forward-Looking Statements," as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-Looking Statements
are statements other than historical information or statements of current condition and relate to future events or the future financial performance of the Company. Some Forward-Looking Statements may
be identified by use of such terms as "believes," "anticipates," "intends" or "expects." Such Forward-Looking Statements involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such Forward-Looking Statements. Our results may
differ materially from those anticipated in such Forward-Looking Statements as a result of a number of factors, including without limitation, (i) difficulties in the bulk wine market;
(ii) loss of key customers or contracts and ability of customers to pay; (iii) competition from various domestic and foreign wine producers; (iv) interest rates and other business
and economic conditions which could increase significantly the costs and risks of projected capital spending; and (v) the effect of weather and other natural forces on growing conditions and,
in turn, the quality and quantity of grapes we produce. Each of these factors, and other risks pertaining to our business, the premium wine industry and general business and economic conditions, are
more fully discussed herein and from time to time in other filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, for the year ended June 30,
2002. We undertake no obligation to publicly update or revise any Forward-Looking Statements, whether as a result of new information, future events or otherwise.

Significant Accounting Policies

Critical Accounting Policies

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements included in our Annual Report on Form 10-K. Our
discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those
related to its revenue recognition policy, the collectibility of accounts receivable, the valuation of inventories, and the valuation of its long-lived assets and deferred tax assets. We base our
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. In the past, actual results have not been materially different from our
estimates.

Some
of our significant accounting policies involve a higher degree of judgment or complexity than our other accounting policies. The policies described below have been identified as
critical to our business operations and the understanding of our results of operations. The impact and associated risks related to these policies on our business operations are discussed throughout
Management's Discussion and Analysis of Financial Condition and Results of Operations.

Revenue Recognition

Sales of bulk wine, juice and brandy are recognized at the time the product specifications of the purchase contract are met and the product has been accepted by
the buyer, title has passed to the buyer, and there is no right of return in the contract. In certain cases the contract requirements specify that we store such product after it has been sold and
require the buyer to pay a storage fee. Sales of wine grapes and cased goods are recognized at the time of delivery to the customer. Wine processing and storage fees are recognized as those services
are provided.

10

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Trade Receivables

A substantial portion of our accounts receivable are due from wine distributors and major wineries located in California. We perform periodic credit evaluations
of our customers' financial condition and generally do not require collateral for our sales. We maintain an allowance for doubtful accounts to reflect expected credit losses resulting from the
inability of customers to make required payments on such accounts. A considerable amount of judgment is required to assess the ultimate realization of the customer accounts receivable and the
credit-worthiness of each customer. Furthermore, these judgments are continually updated and evaluated. Estimates of potential losses are based on historical as well as current data, including the
aging of the receivables, specific customer analysis, recent bankruptcy trends, delinquency rates, historical charge-off patterns, recovery rates and other data. Other factors, including the general
economic environment in the wine industry, are also considered. However, if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payment,
adjustment to those estimates may be required.

Inventories

Bulk wine, case goods and brandy are stated at the lower of average cost or net realizable value. Inventories of supplies are stated at the lower of the first-in,
first-out method or market. Costs associated with the current year's unharvested grape crop are deferred and recognized in the subsequent year when the grapes are harvested. Wine inventories are
classified as current assets in accordance with recognized trade practice although some products will not be sold in the following year. We write down our inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about historical usage, future demand and market conditions. If
actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

The
Company's bulk wine inventory at September 30, 2002 is approximately $25.0 million and substantially in excess of committed sales contracts. Although management believes that
this excess inventory can be sold on the spot market at prices at or above the carrying value, no assurance can be given that the Company will not experience losses on the sale or disposition of a
portion of the inventory, and such losses could be material.

Impairment of Long-Lived Assets

Our long-lived assets consist primarily of property and equipment, assets held for sale and other assets. Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. With respect to vineyards, we perform an evaluation of whether an impairment charge should be
made whenever particular vineyards experience unfavorable operating results. A vineyard's assets are evaluated for impairment by comparing its estimated undiscounted cash flows over its estimated life
to its carrying value. If the cash flows are not sufficient to recover the carrying value, a loss equal to the difference between the carrying value and the discounted future cash flows of the
vineyard is recognized. Estimates of future cash flows are based on a variety of factors, including historical experience with yields and expected grape sales prices. Various uncertainties, including
but not limited to bad weather, pests and diseases, and excess inventory levels in the industry could adversely impact the expected cash flows to be generated by a vineyard. If actual performances of
the remaining vineyards are less favorable than our projections, future asset impairment charges may be necessary. Similar procedures are used when analyzing other corporate assets for impairment.

In
fiscal 2002, we recognized an impairment reserve of approximately $1.9 million to reflect the anticipated loss on the sale of Lost Hills Vineyard currently in escrow. This loss
was partially offset by a reversal of a contingent note payable to a related party of $0.9 million. The escrow closed in October 2002.

11

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In
June 2002 the Company's Board of Directors approved a plan to sell certain excess assets. These assets, which include a bulk wine and bottling facility, a warehouse, a tasting room
and certain vineyards, are included in the accompanying financial statements as assets held for sale. We expect that proceeds from the sale of the excess assets will be used for debt reduction and/or
operating purposes.

Recent Developments

Our bulk wine and case goods business units continue to experience downward pressure on sales volumes and margins. This is a result of continued softness in the
wine industry due to surplus domestic and international bulk wine and case goods inventories and a reduction in the number of long-term bulk wine sales contracts relative to previous years. As a
result, our bulk wine inventory at September 30, 2002 is approximately $25.0 million and substantially in excess of committed sales contracts. In addition, our case goods inventories
have increased by approximately 100,000 cases at September 30, 2002 relative to a year ago at this time. Although we believe that this excess inventory can be sold on the spot market at sales
prices at or above the carrying value, no assurance can be given that we will not experience losses on the sale or disposition of a portion of the inventory, and such losses could be material. We have
reduced the bulk wine and case goods inventory by approximately $0.2 million and $0.1 million respectively, during the quarter ended September 30, 2002 to write down such items to
market based on our current assessment of market conditions.

Our
ready-to-drink ("RTD") bottling unit has not met our originally anticipated profit levels due to lower than expected customer demand, higher than expected start-up costs, unplanned
capital expenditures and expenditures to improve bottling line throughput. Furthermore, the largest of our RTD customers exercised a contract provision providing for termination of the contract. A
termination agreement to buy out the remaining contract production requirement was entered into in August 2002. The agreement required this customer to pay approximately $1.4 million
(received in October 2002) to us in lieu of providing further production services. Revenues for the year ended June 30, 2002 related to this contract were approximately $3.9 million or
14% of case goods segment revenues. We are actively pursuing alternate customer relationships to increase revenues for the RTD line. No assurances can be given as to what extent such efforts will be
successful. If such efforts are not successful, we will ultimately be required to review this asset for potential impairment.

In
August 2002, we entered into an agreement to sell the entire Lost Hills Vineyard. An asset impairment reserve was recognized of approximately $1.9 million included in
wine grape cost of sales in fiscal 2002 to reflect the anticipated loss on this sale. This loss was partially offset by a reversal of a contingent note payable to a related party of approximately
$0.9 million. Escrow closed on this sale in October 2002.

We
anticipate closing on a sale of approximately 800 acres of vineyards in Fresno County in late November 2002 at a gain of approximately $1.4 million. The property collateralizes
long-term debt and the lender will require the proceeds of approximately $3.4 million to be applied to loan principal and to a prepayment penalty.

In
September 2002, Greg J. Forrest and Peter W. Mullin resigned as directors of the Company. The Board has appointed David Gale as a new director of the Company, effective
September 18, 2002.

In
October 1996, as amended in May 1997, we agreed to pay an annual fee of $125,000 to Forrest Binkley & Brown L.P., an affiliate of Messrs. Forrest, Brown and Binkley and
of SBIC Partners, a 5% Stockholder, as compensation for management services to be provided with respect to our operations. In exchange for the annual fee, FBB advises us regarding our indebtedness and
plans for expansion, and provides assistance to us in our fund raising activities and presentations to financial analysts. The agreement was terminated in October 2002 effective retroactively to May
2002.



We have experienced and expect to continue to experience seasonal and quarterly fluctuations in our revenues. Because of the inherent seasonality of our
operations, we have historically reported our

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highest revenues and net income in our second fiscal quarter as we sell most of our bulk wine in the second quarter, immediately after crush, and perform many of our wine processing services in the
first and second quarters. As a result, we typically report lower revenues and net income (loss) in the third and fourth fiscal quarters. In the current fiscal year, we continue to anticipate
decreased bulk wine revenues as a result of a reduced number of long-term bulk wine sales contracts relative to previous years. We believe such decrease in long-term bulk sales contracts is
attributable to 1) plantings of new vineyards 2) current and anticipated lower bulk wine market prices 3) higher levels of wine inventory held by our customers and
4) increased international competition. We anticipate that these market pressures will continue.



Approximately 11% and 14% of our revenues in the first three months of fiscal 2003 and 2002 respectively were derived from the sale of wine and wine products
internationally. We export bulk wine and case goods to Europe, Canada and Asia.

Three Months Ended September 30, 2002 and 2001



Total revenues for the first quarter of fiscal 2003 were $17.8 million, an increase of $0.4 million or 2.3%, as compared to revenues of
$17.4 million for the first quarter of 2002. The overall increase in revenues is due to increases in bulk wine and case goods revenues as partially offset by decreased wine grape and brandy
revenues. Revenues for the quarter ended September 30, 2002 were favorably impacted by a $1.4 million termination settlement and a $0.5 million small brewers credit as further
discussed below under "Case Goods and Related Services."

Bulk Wine and Related Services.For fiscal 2003, revenues from bulk wine and related services were $9.7 million, an
increase of $2.0 million or 26.0%, as compared to revenues of $7.7 million in the first quarter of 2002. The period to period increase was a result of an increase of bulk wine contract
and spot sales of approximately 1.1 million gallons or approximately $2.7 million at lower average sales prices per gallon totalling approximately $0.6 million.

Wine Grapes.In the first quarter of fiscal 2003, revenues from grape sales were $0.5 million, a decrease of
$1.4 million or 73.7%, as compared to revenues of $1.9 million in the first quarter of fiscal 2002. Wine grape revenues include sales of grapes grown on the Company's vineyards and
grapes purchased from outside growers and resold to various third parties or "resold grapes". The decline in this segment's revenues is due to reduced volume of wine grapes sold of approximately
$0.6 million, partially offset by price increases totalling approximately $0.1 million. The reduction in sales of Company grown grapes is consistent with our plan to use more Company
grown grapes in our operations. Resold grape volume decreases totalled approximately $0.9 million in addition to decreased pricing totalling approximately $0.2 million.

Case Goods and Related Services.For the first quarter of fiscal 2002, revenues from case goods and related services were
$6.6 million, an increase of $0.6 million or 10.0%, as compared to revenues of $6.0 million in the first quarter of fiscal 2001. The increase is a result of proceeds of
approximately $1.4 million on a termination settlement with the largest of our RTD customers to buy out the remaining contract production requirement. In addition, we recognized approximately
$0.5 million of income from a small brewers excise tax credit for calendar 2001. Such increases were partially offset by the period to period decrease in RTD production revenues of
$1.3 million.

Brandy.For the first quarter of fiscal 2003, revenues from the sale of brandy and grape spirits were $1.0 million, a
decrease of $0.8 million or 44.4%, as compared to revenues of $1.8 million for the first quarter of fiscal 2002. The period to period decrease in brandy revenue was due to decreased
proof gallons sold or approximately $0.8 million at reduced contracted prices with an effect of approximately $0.1 million.

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For the first quarter of fiscal 2003, total cost of sales was $13.1 million, a decrease of $1.3 or 9.0%, from $14.4 million for the first
quarter of fiscal 2002. As a percentage of revenues, cost of sales for the first quarter of fiscal 2003 was 73.6%, a decrease from 83.0% for the first quarter of fiscal 2002. The decrease in cost of
sales on a percentage of revenue basis was a result of: (1) the gross margin impact of revenue recognized on the $1.4 million termination settlement and $0.5 million excise tax
credit discussed above without associated cost of sales (2) reduced ready-to-drink service revenues relative to associated ready-to-drink division fixed operating costs relative to the first
quarter of fiscal 2002 and (3) higher margin bulk wine custom services and storage partially offset by lower margin bulk wine and brandy sales.



In the first quarter of fiscal 2003, we realized gross profit of $4.9 million, an increase of $1.9 million or 63.3%, as compared to
$3.0 million in the first quarter of fiscal 2002. As a percentage of revenues, gross profit for the first quarter of fiscal 2003 was 26.4%, an increase from 17.0% in the first quarter of fiscal
2002, for reasons discussed above under "Cost of Sales."



For the first quarter of fiscal 2003, selling, general and administrative expenses were $2.5 million, a decrease of $0.2 million or 7.4%, from
$2.7 million in the first quarter of fiscal 2002. The period to period decrease was due principally to decreased general and administrative payroll and related expenses partially offset by
increased sales and marketing costs.



For the first quarter of fiscal 2003, interest expense was $1.0 million, an increase of $0.2 million or 25.0%, as compared to interest expense of
$0.8 million in the first quarter of fiscal 2002. The period to period increase resulted from increased average borrowings on our line of credit partially offset by decreased long-term debt and
lower overall interest rates. We did not capitalize any interest in the first quarter of fiscal 2003. Interest capitalized in the first quarter of fiscal 2002 was approximately $0.1 million.



The effective tax rate of our income tax benefit was 34.1% and 34.6% for the first quarters of fiscal 2003 and fiscal 2002 respectively.



For the first quarter of fiscal 2003, net income was $0.8 million, an increase of $1.1 million, as compared to net loss of $0.3 million in
the first quarter of fiscal 2002. Net income for the first quarter of fiscal 2003 was impacted by factors covered above.



For the first quarter of fiscal 2003, diluted earnings per share was $0.09 compared to diluted loss per share of $0.04 for the first quarter of fiscal 2002.



Our working capital position at September 30, 2002 was $17.6 million, compared to $14.1 million at June 30, 2002. The increase in working
capital is due to increased accounts receivable and inventory and lower accounts payable. Historically, our investments in receivables and inventories are at their highest in the second quarter and
are reduced in the third and fourth quarters, however, investments in inventories remain high due to current difficult market conditions. We maintain a revolving line of

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credit for working capital purposes which is secured by inventory, accounts receivable, the current year's wine grape crop and other collateral. Borrowings under the line typically peak in November,
during our second fiscal quarter. The revolving line of credit balance was $16.9 million at September 30, 2002, an increase from $14.5 million at June 30, 2002. Unused
availability under the line of credit was $5.1 million at September 30, 2002. On July 19, 2002, we renewed the revolving bank line of credit to provide $22.0 million
through February 5, 2003 and $18.0 million thereafter. The line expires July 5, 2003 and we intend to renew or obtain similar financing from other sources, however, no assurances
can be given that such financing can be achieved on similar terms.

Net
cash used in operating activities in the three months ended September 30, 2002 was $3.5 million, compared to net cash used in operating activities of
$9.3 million in the three months ended September 30, 2001. The decrease in cash used in operations resulted from reduced increases in accounts receivable and inventories relative to the
prior year.

We
have classified a bulk wine facility, a warehouse, a tasting room and certain vineyards with a net book value of $15.8 million as assets held for sale at September 30,
2002. Proceeds from the sale of these assets will be used for operating purposes and/or debt reduction. Escrow closed on an agreement to sell the Lost Hills Vineyard in October 2002. This
vineyard served as collateral for a note payable to an insurance company with a current principal balance outstanding of $1.5 million. The buyer has assumed this note as specified in the
agreement.

Capital
expenditures in the three months ended September 30, 2002 were $0.4 million, compared to $4.3 million in the three months ended September 30, 2001. We
have funded these expenditures in 2003 from our working capital line. We refinanced certain expenditures under a $2.7 million capital lease in September 2002 and intend to finance future major
capital expenditures through long-term financing arrangements. We believe that cash flows from operations and the line of credit are sufficient to cover operating needs for the year, however, as
discussed above, the line of credit expires July 5, 2003. We expect to renew the line of credit or obtain alternate financing.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We can choose from several variable rate options on certain of our debt. All of our balance sheet items and sales are in U.S. dollars, therefore we have no
foreign currency exchange rate risk related to these financial data. We do not use financial instruments for trading purposes.

Certain
of our debt is subject to variable interest rate options. The following chart indicates our fixed and variable rate long and short-term debt at September 30, 2002, and
estimates the balances of such debt in future periods assuming no additional debt will be obtained or required. This analysis does not, therefore, constitute in any way our forward plan and should not
be used by investors as such. ($ millions):

|                                        |                | September 30,                    |  | June 30, |     
|--------------------------------------- | -------------- | -------------------------------- |  | -------- | ----
|
|Bank line of credit and long-term debt: |                |                                  |  |          |     
|                                        | Variable Rate: |                                  |  |          |     
|                                        |                | Average Outstanding*             |  | $        | 16.8
|                                        |                | Weighted average rate per period |  |          | 3.6 
|Long-term Debt:                         |                |                                  |  |          |     
|                                        | Fixed Rate:    |                                  |  |          |     
|                                        |                | Average Outstanding              |  | $        | 35.9
|                                        |                | Weighted average rate per period |  |          | 8.4 

---

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During
our annual business cycle, we utilize a variable interest rate working capital line at various borrowing levels. Our existing working capital loan agreement offers interest rate
options at spreads over LIBOR and/or lender cost of funds, at maturities we selected. For the three months ended September 30, 2002, the average outstanding balance under this line was
approximately $16.8 million, with a weighted average interest rate of approximately 3.6%.

We
financed capital expenditures for our American Canyon facility under a seven-year, variable rate $2.7 million capital lease in September 2002. The lease bears interest at 2.13%
over LIBOR. At September 30, 2002, the balance on our variable rate long-term debt was $2.7 million and carried a weighted average interest rate of 4.0%.

At
September 30, 2002, the balance on our fixed rate long-term debt was $35.2 million and carried a weighted average interest rate of approximately 8.4%. The weighted
average interest rate for the three months ended September 30, 2002 for all our debt was approximately 6.6%.

For
strategic reasons, we enter into forward product sales and material supply contracts, most of which have staggered maturity dates. Under SFAS 133 and the corresponding
amendments under SFAS 138, these contracts qualify as normal sales and purchases contracts, under which we expect to take physical delivery. Of our four primary lines of business, bulk wine,
grape sales and brandy production are subject to multi-year contracts, while case goods sales occur on a short-term basis. The primary raw material component for most of our products is wine grapes.
We enter into long and short-term grape purchase contracts to ensure an adequate and cost effective source of raw material for production. We currently have several contracts to purchase grapes at
costs anticipated to exceed market for the 2002 crush. We are in the process of renegotiating such contracts but no assurance can be given that such efforts will be successful. Product sales contracts
are substantially fixed over the term of the contract as to quantity and price. Wine grape contract terms are similarly fixed at inception for the term of the contract, although a portion of these
contracts contains annual harvest market price adjustment clauses, including individual harvest year minimum pricing. For fiscal 2002, or the 2001 harvest year, none of our total wine grape purchases
on a dollar basis were adjusted upward against contract minimum prices following the harvest.

A
certain portion of our annual wine and brandy production is committed under sales contracts. We maintain a certain amount of uncommitted product inventory to meet customer demand. Bulk
wine sold under long-term contracts decreased from 11.7 million gallons in fiscal 2001 to 10.0 million gallons in fiscal 2002. At June 30, 2002, our reported inventory
value of bulk wine and brandy was approximately $19.9 million, of which approximately $3.7 million, or 18%, is committed to sales contracts. Uncommitted inventory of approximately
$16.2 million, or 82% is reserved for future case goods sales and for spot market bulk wine sales. We generally match preproduction contractual sales with contracted material supply agreements
and will continue to maintain certain uncommitted inventory.

Item 4. Controls and Procedures

Within the 90-day period prior to the filing of this report, an evaluation was carried out under the supervision and with the participation of the Company's
management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the CEO and CFO
have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and include
controls and procedures to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. Subsequent to the date of their evaluation, there were no significant changes in the Company's
internal controls or in other factors that could significantly affect the disclosure controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

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RISK FACTORS

In evaluating the Company, its business, operations and financial position, the following risk factors should be carefully considered, in
addition to the other information contained in this Form 10-K. The following factors, among others, could affect the Company's actual future operating results and could cause such results to
differ from the results discussed elsewhere in this Form 10-K.

Much of Our Revenues Are Derived From Only a Few Customers, the Loss of Any One of Which Would Harm Our Business

During fiscal 2002, five of our customers accounted for approximately 49% of our revenues, with Constellation and Diageo accounting for approximately 17% and 13%,
respectively. While some of our largest customers have entered into some form of long-term contract with us, there can be no assurance that each of these relationships will continue following the
expiration of these contracts or that the volume of business we are currently conducting with such customers will continue at such levels. The loss of any one of our major customers or a significant
reduction in the sales prices or volume of their business with us could have a material adverse effect on our business, financial condition and results of operations.

Loss of a Major Bulk Wine Customer Could Adversely Affect Our Operations

Bulk wine and related services accounted for approximately 52% of our revenues in fiscal 2002. We continue to provide resources for expanding this portion of our
business. Any loss of a major bulk wine customer could reduce our bulk wine revenues, which could have a material adverse effect on our business, financial condition and results of operations.

Our Customers Inability to Pay Would Adversely Affect Our Revenues and Operating Results

From time to time we have provided extended payment terms to certain of our customers subject to the credit risk of such customers. If one of these customers
fails to pay amounts owed us, or does not pay such amounts on time, our revenue, operating results and/or liquidity would suffer.

Inability to Sell Our Inventory Would Harm Our Business

Due to continued surplus domestic and international bulk wine and case goods inventories and a reduction in the number of our long-term bulk wine sales contracts
compared to previous years, our bulk wine inventory is substantially in excess of committed sales contracts. In addition, our case goods inventories have significantly increased over the past year.
There can be no assurance that we will be able to sell this excess inventory on the spot market at prices at or above our carrying value. As a result, we may experience losses on the disposition of
this inventory which would have an adverse affect on the results of our operations.

Decreasing Amounts of Our Bulk Wine Revenues Are Derived From Long-Term Contracts

During fiscal 2001, approximately 11.7 million gallons were sold under long-term contracts. In fiscal 2002, approximately 10.0 million gallons were sold under
long-term contracts. As a result of our decreasing reliance on long-term contracts, our ability to accurately predict our future revenues, required inventory levels and the volume of our business has
declined. Furthermore, our operating expenses are relatively fixed and cannot be reduced on short notice to compensate for unanticipated variation in the demand of bulk wine and related services. As a
result, any termination, significant reduction or modification of our business relationships with any of our significant customers, or with a number of smaller customers, could have a material adverse
effect on our business, financial condition or results of operations.

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Decreased Customer Demand for Our RTD Bottling Unit Could Adversely Affect Our Business

Our ready-to-drink ("RTD") bottling unit has not met originally anticipated profit levels. due, in part, to lower than expected customer demand. In addition, the
largest of our three RTD customers exercised a termination provision in its contract and paid us $1.4 million in October 2002 in lieu of further RTD production services. We are actively
pursuing alternative customer arrangements to replace the revenues lost as a result of this customer's termination. If we are unable to locate new RTD customers, or if we fail to retain our existing
RTD customers, the resulting loss or decrease in RTD
revenues could have a material adverse effect on our business, financial condition and results of operation. In addition, assets utilized in our RTD operations could be subject to impairment reserves
should minimum profitability requirements not be achieved. See "Recent Developments" in Management's Discussion and Analysis.

Decreased Demand for Our Case Goods Could Harm Our Business

Sales of case goods and related services accounted for approximately 33% of revenues in fiscal 2002. A significant portion of our case goods revenues consists of
short-term private label case goods sales. Additionally, our higher margin proprietary case goods revenues resulted from sales of our relatively unknown proprietary brands of premium wines. Any
significant increase in the supply of premium wine in the California wine market that is not met by a corresponding demand could adversely affect our case goods sales. See "Recent Developments" in
Management's Discussion and Analysis where we discuss the effect of reduced demand in our case goods business.

Wine Grape and Bulk Wine Price Declines Would Harm Our Business

Recent developments resulted in oversupply and declining prices for certain wine grapes and bulk wine categories, which could have a material adverse effect on
our business, financial condition and results of operations. Such developments include (1) plantings of new vineyards, (2) yield enhancements through technological advances and (3) denser
plantings of vines. Anticipated high levels of grape production will continue to exert pressure on our bulk wine sales volume and margins. As a result, we may experience lower than expected revenues
and increased inventories which would materially adversely affect our business and future results. See "Recent Developments" in Management's Discussion and Analysis where we discuss the effect of
current difficulties in the bulk wine market on our business.

A Decrease in Customer Spending Would Harm Our Business

The growth of the wine industry and the success of our business depend to a significant extent on a number of factors relating to discretionary consumer spending,
including the general condition of the economy, general levels of consumer confidence, federal, state and local taxation, and the deductibility of business entertainment expenses under federal and
state tax laws. The current economic downturn both in the U.S. and abroad could adversely affect discretionary consumer spending generally, or purchases of wine specifically, which could have a
material adverse effect on our business. Current market pressures could negatively impact our lower of cost or market reserves for inventories. In addition, reduced sales could result in increased
inventories on hand and possible deterioration of inventory quality.

Decreased Cash Flow Could Limit Our Ability to Service Our Debt

As a result of incurring debt, we are subject to the risks normally associated with debt financing, including the risk that cash flow from operations will be
insufficient to meet required payments of principal and interest. Our ability to satisfy our obligations to pay interest and to repay debt is dependent on our future performance. Our performance
depends, in part, on prevailing economic conditions and financial, business and other factors, including factors beyond our control. To the extent we use a substantial portion of our cash flow from
operations to pay the principal and interest on our

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indebtedness, that cash flow will not be available to fund future operations and capital expenditures. Our debt level may also limit our ability to obtain additional financing to fund future capital
expenditures, debt service, working capital and other general corporate requirements. It could also make us more vulnerable to general economic downturns and competitive pressures. We can give no
assurances that our operating cash flow will be sufficient to fund our future capital expenditure and debt service requirements or to fund future operations. In addition, our debt is secured by
substantially all of our assets. If we are unable to meet our debt service obligations due to adverse economic conditions, we risk the loss of some or all of our assets to foreclosure. See "Liquidity
and Capital Resources" in Management's Discussion and Analysis where we discuss our existing line of credit.

Our Debt Financing Agreements Contain Restrictive Covenants with Which We May Not Be Able to Comply

Our existing line of credit and long-term debt financing agreements contain restrictive financial covenants. These covenants require us, among other things, to
maintain specified levels of net income, working capital, tangible net worth and financial ratios. We were out of compliance as of June 30, 2002 with certain financial covenants. We received
waivers of such covenants in addition to amendment of covenant requirements for fiscal 2003.

Our
ability to comply with restrictive financial covenants depends upon our future operating performance. Our future operating performance depends, in part, on general industry
conditions and other factors beyond our control. We can give no assurance that we will be able to comply with these covenants. If we fail to comply with these covenants in the future, we may not
succeed in renegotiating our debt financing agreements or otherwise obtaining relief from the covenants. If we default under some or all of our debt financial agreements, our lenders may require that
we immediately repay the full outstanding amount we owe them. In such event, we may have to pursue alternative financing arrangements. If we are not in compliance with financial covenants at the end
of any compliance period, our future results of operations and liquidity could be materially adversely affected.

Bad Weather, Pests and Diseases Could Adversely Affect Our Business

Grape production is subject to a variety of agricultural risks. Extreme weather conditions can materially and adversely affect the quality and quantity of grapes
produced. There can be no assurance that inclement weather in the future will not affect a substantial portion of our vineyards in any year and have a material adverse effect on our business,
financial condition and results of operations.

Vineyards
are also susceptible to certain diseases, insects and pests, which can increase operating expenses, reduce yields and damage or kill vines. In recent years phylloxera, a louse
that feeds on and may ultimately destroy the roots of grape vines, has infested many vineyards in the wine grape producing regions of California, causing grape yields to decrease. Phylloxera
infestation has been widespread in California, particularly in Napa, Sonoma, Mendocino and Monterey Counties, where the soil and climate provide an ideal environment for the pest. As a result of this
widespread infestation, thousands of vineyard acres throughout the State of California have been replanted with phylloxera-resistant rootstock or, in some cases, taken out of production completely.
The cost of controlling this pest was significant to affected vineyard owners.

Substantially
all of our vineyards are planted on their own rootstock that is not phylloxera-resistant. In the fall of 1997, phylloxera was discovered in certain acres of our vineyards
located in Fresno County. We believe that the scope of this phylloxera infestation is modest, though there can be no assurance in that regard. Additionally, we believe the climate, soil and water
conditions in California's San Joaquin Valley slow the development of phylloxera in vineyard roots. Further, recent harvest yields from our phylloxera-infested acres were not notably lower than
yields from surrounding, non-infested acreage. There can, however, be no assurance that phylloxera will not spread throughout adjoining vineyard acres, or infest any of our other vineyards which could
reduce yields and require a

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significant investment in replanting with disease-resistant root stock, all of which would have a material adverse effect on the Company.

In
recent years the Glassy-Winged Sharpshooter ("GWSS") has emerged as an efficient vector of Pierce's disease. Pierce's disease is a serious threat to wine grapes and combined with
large GWSS populations can destroy vineyards over a several year period. The GWSS has been discovered in low populations throughout many of California's grape regions. A number of vineyards in a small
grape growing region in Southern California have been destroyed by Pierce's disease. We have engaged a consultant to monitor the pest and advise regarding the latest research developments. To date,
the GWSS has not been found on our vineyards and we believe there is no immediate Pierce's threat. While the grape industry is hopeful the spread of Pierce's disease can be controlled, an infestation
of our vineyards would have a materially adverse effect on our operations and profitability.

Other
pests that may infest vineyards include leafhoppers, thrips, nematodes, mites, insects, orange tortrix and various grapevine diseases. Pesticides and the selection of resistant
rootstocks reduce losses from these pests, but do not eliminate the risk of such loss. Gophers, rabbits, deer and birds can also
pose a problem for vineyards, and wine grapevines are also susceptible to certain viral infections which may cause reduction of yields. In addition, the presence of potentially harmful nematodes in
relatively high numbers has been detected in certain acres of our vineyards. While we believe that none of these infestations or infections currently poses a major threat to our vineyards, they could
do so in the future and could subject our vineyards to severe damage, which could have a material adverse effect on our business, financial position and results of operations.

Intense Competition in the Wine Industry Could Adversely Affect Our Business

The wine industry is extremely competitive. We compete with several well-capitalized companies in the production of bulk wine. Further, many of our current and
prospective competitors have substantially greater financial, production, personnel and other resources than us. In order to meet near-term shortfalls in supply, a number of wineries have commenced
purchases of wine from foreign sources. Because of higher production costs in the United States some wineries can achieve significant cost savings, even after taking into account shipping costs, by
importing bulk wine from abroad. Some countries, such as France and Australia, have launched marketing campaigns to increase their sales in the United States. Foreign competition can be expected to
continue and increase. In addition, our principal winery customers compete with each other and with other wineries located in the United States, Europe, South America, South Africa and Australia. Wine
also competes with other alcoholic, and to a lesser degree, nonalcoholic beverages, and to the extent wine consumers reduce consumption of wine in favor of such other beverages, demand for wine and
the Company's products and services could decline.

Difficulties in Production of Bulk Wine Could Affect Our Financial Condition

While we have substantial experience in producing and processing bulk wine, we may still experience production difficulties and delays with respect to the
delivery of finished wine. We generally guarantee the quality of the wine produced, which could result in our bearing financial responsibility for wine that fails to meet agreed upon quality
standards. From time to time, we have received claims from customers based on alleged defects in wine we produce. Such production difficulties could have a material adverse effect on our business,
results of operations and financial condition.

Adverse Public Opinion About Alcohol May Harm Our Business

In
recent years there has been substantial publicity regarding the possible health benefits of moderate wine consumption. The results of a number of studies suggest that moderate
consumption of wine (or other alcoholic beverages) could result in decreased mortality and other health benefits. Alternatively, anti-alcohol groups have, in the past, successfully advocated more
stringent labeling

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requirements and other regulations designed to discourage consumption of alcoholic beverages, including wine. More restrictive regulations, negative publicity regarding alcohol consumption,
publication of studies that indicate a significant health risk from moderate consumption of alcohol or changes in consumer perceptions of the relative healthfulness or safety of wine generally could
adversely affect the sale and consumption of wine and the demand for wine and wine grapes and could have a material adverse effect on our business, financial condition and results of operations.

We Use Pesticides and Other Hazardous Substances in Our Business

Our current operations emit ethanol and require the periodic use of various chemical herbicides, fungicides and pesticides, some of which contain hazardous or
toxic substances. The emission and usage of these chemicals are, to varying degrees, subject to federal and state regulation. We believe that our properties and operations have been and continue to be
in material compliance with relevant environmental regulations. At the same time, if hazardous substances are discovered to have emanated from our properties, we could be subject to material liability
arising from the remediation of such potential harm. Additionally our processing operations generally require the disposal of water-based effluents. As environmental regulations tighten we cannot be
assured our current waste water management practices will meet such standards.

The Seasonality of Our Business Could Cause Our Stock Price to Fluctuate

The wine grape business is extremely seasonal and we recognize the vast majority of our revenues in the first six months of our fiscal year. We are not positioned
to maximize quarter-to-quarter results, and our quarterly results should not be considered indicative of those to be expected for a full year. We recorded 64% of our revenues during the first six
months of our 2002 fiscal year. We have historically operated at a loss in the last two fiscal quarters due to limited sales during such quarters. Seasonality of revenues also affects our cash flow
requirements. In the past, we have borrowed funds under lines of credit from late summer through the fall to finance inventory build-up during the fall crush season. We also historically borrow funds
through the spring and summer to finance crop production costs through harvest. Such seasonality in revenues and borrowings may lead to significant fluctuations in our reported quarterly results. See
"Management's Discussion and Analysis of Financial Condition and Results of Operations."

Because We Have Fixed Farming Costs, a Weak Harvest Would Reduce Our Profit

We incur relatively fixed annual farming costs per vineyard acre. Revenues from grape sales and wine processing and production are not realized until harvest and
vary depending upon numerous factors. Vineyard productivity varies from year to year depending upon weather and other factors, and significant variations in annual yields should be expected from time
to time. Because production costs
are not significantly variable in light of productivity or revenue levels, weak harvests or lower grape prices cannot be fully mitigated by cost reductions and could have an adverse effect upon our
profitability.

Loss of Key Personnel Could Harm Our Operations

We believe our continued success depends on the active involvement of Jeffrey B. O'Neill, the Company's Chief Executive Officer and President, and our key
personnel, including John G. Kelleher, the Company's Chief Financial Officer. There can be no assurance that these persons will remain in their management positions, and the loss of the
services of any of these persons could have an adverse effect on our business, financial condition and results of operations.

New or Changed Regulations Could Significantly Impact Our Business

We are subject to a broad range of federal and state regulatory requirements regarding our operations and practices. These regulations are subject to change and
conceivably could have a

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significant impact on operating practices, chemical usage and other aspects of our business. There can be no assurance that new or revised regulations pertaining to the wine grape production industry
will not have a material adverse effect on our business, financial condition and results of operations.

Wine
production and sales are subject to extensive regulation by the Federal Bureau of Alcohol, Tobacco and Firearms, the California Department of Alcohol Beverage Control and other
state, local and federal governmental authorities that regulate licensing, trade and pricing practices, labeling, advertising and other activities. In recent years, federal and state authorities have
required warning labels on beverages containing alcohol. Restrictions imposed by government authorities on the sale of wine could increase the retail price of wine, which could have an adverse effect
on demand for wine in general. In addition, imposition of excise or other taxes on wine could also negatively impact the wine industry by increasing wine prices for consumers. There can be no
assurance that there will not be new or revised laws or regulations pertaining to the wine industry which could have a negative impact on our business.

Our Stock Price May Be Volatile

The market price of the shares of our Class B Common Stock has declined sharply since our initial public offering in late July 1998. The market price for
such shares could continue to be volatile and may be significantly affected by factors such as actual or anticipated fluctuations in our operating results, industry consolidation, conditions and
trends in the wine industry, changes in recommendations
and estimates by security analysts, general market conditions and other factors. There can be no assurance that an active trading market of our Class B Common Stock will be sustained. In
addition, stock markets from time to time have experienced price and volume fluctuations that have affected the market price for many companies and that frequently have been unrelated to the operating
performance of those companies. Such market fluctuations may adversely affect the market price of our Class B Common Stock.

Furthermore,
due to the volatility of our stock price, we could be subject to delisting from The Nasdaq National Market. To maintain the listing of our Class B Common Stock on The
Nasdaq National Market, we are required to meet certain listing requirements, including a minimum bid price of $1.00 per share. The market price of our Class B Common Stock has never fallen
below $1.00 per share, however, if our stock price fell below that level for an extended period, we could be subject to delisting from The Nasdaq National Market. On October 14, 2002, our stock
price traded at an intraday low of $1.00 and closed at $1.08. Delisting could materially affect the market price and market liquidity of our capital stock and our ability to raise necessary capital.

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PART IIOTHER INFORMATION

Item 6. Exhibits and Reports On Form 8-K.

|Exhibit Number |  |                                                                                                  
|-------------- |  | -------------------------------------------------------------------------------------------------
|11             |  | Statement Regarding Computation of Per Share Earnings (Loss)                                     
|99.1           |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350.)
|99.2           |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350.)

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SIGNATURES

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

|                      |  |  |  | Golden State Vintners, Inc.
(Registrant)                                                
|--------------------- |  |  |  | ----------------------------------------------------------------------------------------
|November 14, 2002Date |  |  |  | /S/ JOHN G. KELLEHERJohn G. Kelleher Duly Authorized Officer and
Chief Financial Officer

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CERTIFICATION

I, Jeffrey B. O'Neill, certify that:

1.    I
have reviewed this quarterly report on Form 10-Q of Golden State Vintners, Inc.;

2.    Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.

3.    Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly represent in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

4.    The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.    The
registrant's other certifying officer and I have disclosed, based on our recent evaluation, to the registrant's auditors and the audit committee of registrant's board
of directors (or persons performing the equivalent function):



6.    The
registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|Date: November 14, 2002                                         |  | 
|--------------------------------------------------------------- |  | 
|                                                                |  | 
|/s/JEFFREY B. O'NEILLJeffrey B. O'Neill
Chief Executive Officer |  | 
|                                                                |  | 

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CERTIFICATION

I, John Kelleher, certify that:

1.    I
have reviewed this quarterly report on Form 10-Q of Golden State Vintners, Inc.;

2.    Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report.

3.    Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly represent in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

4.    The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.    The
registrant's other certifying officer and I have disclosed, based on our recent evaluation, to the registrant's auditors and the audit committee of registrant's board
of directors (or persons performing the equivalent function):



6.    The
registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|Date: November 14, 2002                               |  | 
|----------------------------------------------------- |  | 
|                                                      |  | 
|/s/JOHN KELLEHERJohn Kelleher
Chief Financial Officer |  | 
|                                                      |  | 

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