----

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**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

|    X    | Quarterly                Report Pursuant to Section 13 or 15 (d) of the Securities Exchange                Act of                1934. For the quarterly period ended September 30, 2007                or |
|---------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Transition                Report Pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934. For the transition period from _________ to                _________. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**SONOMAWEST      HOLDINGS, INC.**

|  **Delaware**                                              |  **94-1069729**                           |
|-----------------------------------------------------------------|------------------------------------------------|
| (State                of incorporation)                         | (IRS                Employer Identification #) |
|  **2064                Highway 116 North, Sebastopol, CA** |  **95472-2662**                           |
| (Address                of principal executive offices)         | (Zip                Code)                      |

**707-824-2534**

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**SONOMAWEST      HOLDINGS, INC.**

**TABLE      OF CONTENTS**

| PART I.                FINANCIAL INFORMATION                                                                                                                                                                                         | Page                                                                                                                                                                                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                1.                                                                                                                                                                                                                    | Condensed                Financial Statements                                                                                                                                                                                                                    |   |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                      | Balance                Sheets at September 30, 2007 (unaudited) and                                                                                                                                                                                              |   |
|                                                                                                                                                                                                                                      | June                30, 2007 . . . . . . . . .                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                . . . . . . . . . . . . . . . . . . . .                                                                  |   3  |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                      | Condensed                Statements of Income - Three months ended                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                      | September                30, 2007 and 2006                (unaudited)  .   . . . . . . . . . . . . . . . . . . . . .                . . . . . . . . . . . . . . . .                                                                               |  4 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                      | Statement                of Changes in Shareholders’ Equity -                                                                                                                                                                                              |   |
|                                                                                                                                                                                                                                      | Three                months ended September                30, 2007 (unaudited)   . . . . . . . . . . . . . . . . . . . . .                . . . . . . .                                                                                               |  5 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                      | Statements                of Cash Flows - Three months ended                                                                                                                                                                                                     |   |
|                                                                                                                                                                                                                                      | September                30, 2007 and 2006                (unaudited)   . . . . . . . . . . . . . . . . . . . . . . . . .                . . . . . . . . . . . . .                                                                                     |  6 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                      | Notes                to Condensed Financial Statements (unaudited) . . . . . . . . . .                . . . .                . . . . . . . . . . . . . . . .                                                                                                     |  7 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                2.                                                                                                                                                                                                                    | Management's                Discussion and Analysis of Financial Condition                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                                      | and                Results of Operations . .                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                . . . .                . . . . . . . . . . . . .                                                                    | 11 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                3.                                                                                                                                                                                                                    | Quantitative                and Qualitative Disclosures About Market Risk  . . . . . . . . . . .                . . . . . . . . . . . . .                                                                                                                   | 15 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                4.                                                                                                                                                                                                                    | Controls                and Procedures . . . . . . . . . . . . . . . . . . . . . . . . .                . . . . .                . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                             | 15 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |
| PART                II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . .                . . . .                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                . . . .                . . . | 16                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                1.                                                                                                                                                                                                                    | Legal                Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . .                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                .                                                                   | 16 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                2.                                                                                                                                                                                                                    | Unregistered                Sales of Equity Securities and Use of Proceeds  . . . . . . . . . . .                . . . . . . . . . . . . .                                                                                                                  | 16 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                3.                                                                                                                                                                                                                    | Defaults                Upon Senior Securities  . . . . . . . . . . . . . . . . . . . . . . .                . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                                            | 16 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                4.                                                                                                                                                                                                                    | Submission                of Matters to a Vote of Security Holders .  . . . . . . . . . . . . .                . . . . . . . . . . . . . . . . .                                                                                                            | 16 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                5.                                                                                                                                                                                                                    | Other                Information . . . . . . . . . . . . . . . . . . . . . . . . . . .                . . . .                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                .                                                        | 16 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
| Item                6.                                                                                                                                                                                                                    | Exhibits                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                . . . .                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                .                                               | 16 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                      | Signatures                 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                .                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                .                                             | 17 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |
|                                                                                                                                                                                                                                      |                      Exhibit Index  . . . . . . . . . . . . . . . . . . . . . .              . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              . . .              . . . . . . . |  18 |
|                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                             |   |

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**PART I.      FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**SONOMAWEST      HOLDINGS, INC.**

**BALANCE      SHEETS**

**SEPTEMBER      30, 2007 AND JUNE 30, 2007**

**(AMOUNTS      IN THOUSANDS EXCEPT PAR VALUE AMOUNTS)**

|                                                                                                                                                                                                                                              |   | September                30, 2007 (unaudited) |    |   | June                30, 2007 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|--------|------------------------------|--------|
|  **ASSETS**                                                                                                                                                                                                                                  |   |                                          |    |   |                         |   |
|                  CURRENT ASSETS:                                                                                                                                                                                                   |   |                                          |    |   |                         |   |
| Cash                and cash equivalents                                                                                                                                                                                                          |   | $                                             | 2,363   |   |                         | $      | 3,587 |   |
|                            Marketable securities, fair                value                                                                                                           |   |                                          | 27,097  |   |                         |   | 32,819 |   |
| Accounts                receivable                                                                                                                                                                                                                |   |                                          | 29      |   |                         |   | 39 |   |
| Other                receivables                                                                                                                                                                                                                  |   |                                          | 14      |   |                         |   | 21 |   |
| Prepaid                income taxes                                                                                                                                                                                                               |   |                                          | 1,487   |   |                         |   | 85 |   |
| Prepaid                expenses and other assets                                                                                                                                                                                                  |   |                                          | 103     |   |                         |   | 154 |   |
| Total                current assets                                                                                                                                                                                                               |   |                                          | 31,093  |   |                         |   | 36,705 |   |
|                    RENTAL PROPERTY, net                                                                                                                                                                                            |   |                                          | 1,157   |   |                         |   | 1,210 |   |
|                    DEFERRED INCOME TAXES, net                                                                                                                                                                                      |   |                                          | 230     |   |                         |   | 222 |   |
|                    PREPAID COMMISSIONS AND OTHER ASSETS                                                                                                                                                                            |   |                                          | 207     |   |                         |   | 167 |   |
| Total                assets                                                                                                                                                                                                                       |   | $                                             | 32,687  |   |                         | $      | 38,304 |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                                                                                                                                     |   |                                          |    |   |                         |   |   |   |
|                  CURRENT LIABILITIES:                                                                                                                                                                                              |   |                                          |    |   |                         |   |   |   |
| Accounts                payable                                                                                                                                                                                                                   |   |                                          | 135     |   |                         |   | 111 |   |
| Accrued                payroll and related liabilities                                                                                                                                                                                            |   |                                          | 16      |   |                         |   | 204 |   |
| Accrued                expenses                                                                                                                                                                                                                   |   |                                          | 155     |   |                         |   | 108 |   |
| Unearned                rents                                                                                                                                                                                                                     |   |                                          | 111     |   |                         |   | 102 |   |
| Tenant                deposits                                                                                                                                                                                                                    |   |                                          | 493     |   |                         |   | 376 |   |
| Deferred                income taxes, net                                                                                                                                                                                                         |   |                                          | 9,742   |   |                         |   | 12,023 |   |
| Total                current liabilities                                                                                                                                                                                                          |   |                                          | 10,652  |   |                         |   | 12,924 |   |
|                  SHAREHOLDERS' EQUITY:                                                                                                                                                                                             |   |                                          |    |   |                         |   |   |   |
|                          Preferred stock: 2,500 shares              authorized; no shares issued and outstanding                                                                                     |   |                                          | -  |   |                         |   | -  |   |
|                    Common stock: 5,000 shares authorized, par value $0.0001;                1,188 and 1,188 shares issued and outstanding at September 30, 2007                and                June 30, 2007, respectively |   |                                          | 3,635   |   |                         |   | 3,625 |   |
| Accumulated                other comprehensive income                                                                                                                                                                                             |   |                                          | 14,859  |   |                         |   | 18,301 |   |
| Retained                earnings                                                                                                                                                                                                                  |   |                                          | 3,541   |   |                         |   | 3,454 |   |
| Total                shareholders’ equity                                                                                                                                                                                                   |   |                                          | 22,035  |   |                         |   | 25,380 |   |
| Total                liabilities and shareholders’ equity                                                                                                                                                                                   |   | $                                             | 32,687  |   |                         | $      | 38,304 |   |

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**SONOMAWEST      HOLDINGS, INC.**

**CONDENSED      STATEMENTS OF INCOME**

**FOR      THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006**

**(AMOUNTS      IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)**

**(UNAUDITED)**

|                                                           |   | 2007   |   |   | 2006   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| RENTAL                REVENUE – NET                 |   | $      | 674    |   |   | $      | 621 |   |
| TENANT                REIMBURSEMENTS                           |   |   | 169    |   |   |   | 207 |   |
| TOTAL                REVENUE                                   |   |   | 843    |   |   |   | 828 |   |
|                                                           |   |   |   |   |   |   |   |   |
| OPERATING                COSTS                                 |   |   | 708    |   |   |   | 569 |   |
| OPERATING                COSTS - RELATED PARTY EXPENSES        |   |   | 2      |   |   |   | 4 |   |
| TOTAL                OPERATING COSTS                           |   |   | 710    |   |   |   | 573 |   |
| OPERATING                PROFIT                                |   |   | 133    |   |   |   | 255 |   |
|                                                           |   |   |   |   |   |   |   |   |
| INTEREST                EXPENSE                                |   |   | -      |   |   |   | (7 | ) |
| INTEREST                INCOME                                 |   |   | 44     |   |   |   | 34 |   |
| LOSS                ON RETIREMENT OF RENTAL PROPERTY           |   |   | (2     | )      |   |   | - |   |
| OTHER                INCOME                                    |   |   | 3      |   |   |   | 2 |   |
| INCOME                BEFORE TAXES                             |   |   | 178    |   |   |   | 284 |   |
| PROVISION                FOR INCOME TAXES                      |   |   | 91     |   |   |   | 113 |   |
| NET                INCOME                                      |   | $      | 87     |   |   | $      | 171 |   |
|                                                           |   |   |   |   |   |   |   |   |
| WEIGHTED                AVERAGE COMMON SHARES AND EQUIVALENTS: |   |   |   |   |   |   |   |   |
| Basic                                                          |   |   | 1,188  |   |   |   | 1,124 |   |
| Diluted                                                        |   |   | 1,209  |   |   |   | 1,166 |   |
|                                                           |   |   |   |   |   |   |   |   |
|  INCOME              PER COMMON SHARE:                    |   |   |   |   |   |   |   |   |
| Basic                                                          |   | $      | 0.07   |   |   | $      | 0.15 |   |
| Diluted                                                        |   | $      | 0.07   |   |   | $      | 0.15 |   |

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**SONOMAWEST      HOLDINGS, INC.**

**STATEMENT      OF CHANGES IN SHAREHOLDERS’ EQUITY**

**FOR      THE THREE MONTHS ENDED SEPTEMBER 30, 2007**

**(AMOUNTS      IN THOUSANDS)**

**(UNAUDITED)**

|                                                                                                                                                                    |   | *Common                Stock* |   |   | *Accumulated* |   |   |                                 |   |   | *Total*    |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|--------|---------------|--------|--------|--------------------------------------|--------|--------|------------|---------|
|                                                                                                                                                                    |   |                          |   |   |          |   |   | *Other                Comprehensive* |   |   | *Retained* |    |   | *Shareholders’* |   |
|                                                                                                                                                                    |   | *Shares*                      |   |   | *Amount*      |   |   | *Income*                             |   |   | *Earnings* |    |   | *Equity* |   |
| BALANCE,                JUNE 30, 2007                                                                                                                                   |   |                          | 1,188  |   |          | $      | 3,625  |                                 |   | $      | 18,301     |    |   | $ | 3,454 |   |   | $ | 25,380 |   |
| Comprehensive                income (loss)                                                                                                                              |   |                          |   |   |          |   |   |                                 |   |   |       |    |   |   |   |   |   |   |   |   |
|                       Net income                                                                                                |   |                          |   |   |          |   |   |                                 |   |   |       |    |   |   | 87  |   |   |   | 87  |   |
| Other                comprehensive loss - Unrealized loss on available-for-sale securities,                net                of tax benefit ($5,722) thousand pre-tax) |   |                          |   |   |          |   |   |                                 |   |   | (3,442     |  ) |   |   |   |   |   |   | (3,442 | ) |
|                        Total comprehensive loss                                                                                      |   |                          |   |   |          |   |   |                                 |   |   |       |    |   |   |   |   |   |   | (3,355 | ) |
| Stock                compensation expense                                                                                                                               |   |                          |   |   |          |   | 10     |                                 |   |   |       |    |   |   |   |   |   |   | 10 |   |
| BALANCE,                SEPTEMBER 30, 2007                                                                                                                              |   |                          | 1,188  |   |          | $      | 3,635  |                                 |   | $      | 14,859     |    |   | $ | 3,541 |   |   | $ | 22,035 |   |

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**SONOMAWEST      HOLDINGS, INC.**

**STATEMENTS      OF CASH FLOWS**

**FOR      THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006**

**(AMOUNTS      IN THOUSANDS)**

**(UNAUDITED)**

|                                                                                                                                                                                                                                   |   | 2007   |    |   | 2006   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                                                                                                                                                   |   |   |    |   |   |   |
| Net                income                                                                                                                                                                                                              |   | $      | 87      |   |   | $      | 171 |   |
|                   Adjustments to reconcile net income to net cash provided by operating                activities:                                                                                                           |   |   |    |   |   |   |   |   |
| Loss                on retirement of rental property                                                                                                                                                                                   |   |   | 2       |   |   |   | - |   |
| Stock                compensation expense                                                                                                                                                                                              |   |   | 10      |   |   |   | - |   |
| Depreciation                and amortization expense                                                                                                                                                                                   |   |   | 51      |   |   |   | 54 |   |
| Deferred                income tax benefit                                                                                                                                                                                             |   |   | (9      | )      |   |   | - |   |
| Changes                in assets and liabilities:                                                                                                                                                                                      |   |   |    |   |   |   |   |   |
| Accounts                receivable                                                                                                                                                                                                     |   |   | 10      |   |   |   | (19 | ) |
| Other                receivables                                                                                                                                                                                                       |   |   | 7       |   |   |   | 5 |   |
| Prepaid                income taxes                                                                                                                                                                                                    |   |   | (1,402  | )      |   |   | 114 |   |
| Prepaid                expenses and other assets                                                                                                                                                                                       |   |   | 51      |   |   |   | 6 |   |
| Prepaid                commissions and other assets                                                                                                                                                                                    |   |   | (40     | )      |   |   | 33 |   |
| Accounts                payable                                                                                                                                                                                                        |   |   | 24      |   |   |   | (133 | ) |
| Accrued                payroll and related liabilities                                                                                                                                                                                 |   |   | (188    | )      |   |   | (63 | ) |
| Accrued                expenses                                                                                                                                                                                                   |   |   | 47      |   |   |   | (51 | ) |
| Unearned                rents                                                                                                                                                                                                          |   |   | 9       |   |   |   | 4 |   |
| Tenant                deposits                                                                                                                                                                                                         |   |   | 117     |   |   |   | (1 | ) |
| Net                cash provided by (used for) operating activities                                                                                                                                                                    |   |   | (1,224  | )      |   |   | 120 |   |
|                                                                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
| Capital                expenditures                                                                                                                                                                                                    |   |   | -       |   |   |   | (2 | ) |
|                           Net cash used for investing activities                                                                                                                     |   |   | -       |   |   |   | (2 | ) |
|                                                                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
| Principal                payments on debt                                                                                                                                                                                              |   |   | -       |   |   |   | (1,552 | ) |
|                                      Net cash used for financing activies        |   |   | -  |   |   |   | (1,552 | )  |
| NET                DECREASE IN CASH                                                                                                                                                                                                    |   |   | (1,224  | )      |   |   | (1,434 | ) |
|                                                                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                                                                                                                                        |   |   | 3,587   |   |   |   | 3,851 |   |
| CASH                AND CASH EQUIVALENTS AT END OF PERIOD                                                                                                                                                                              |   | $      | 2,363   |   |   | $      | 2,417 |   |
|                                                                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
| Supplemental                Cash Flow Information                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                   |   | 2007   |    |   | 2006   |   |
|                             Interest paid                                                                                                                                  |   | $      | -       |   |   | $      | 18 |   |
|                             Taxes paid                                                                                                                                     |   | $      | 1,503   |   |   | $      | - |   |

----

**SONOMAWEST      HOLDINGS, INC.**

**NOTES      TO CONDENSED FINANCIAL STATEMENTS**

**THREE      MONTHS ENDED SEPTEMBER 30, 2007**

**(UNAUDITED)**

**Note      1 - Basis of Presentation**

**Revenue      Recognition**

**Note      2 - New Accounting Pronouncements**

*Accounting for        Uncertainty in Income Taxes*
*Accounting for Income Taxes*

----

*Fair Value Measurements*

*The Fair Value Option for      Financial Assets and Financial Liabilities*
*Fair Value Measurements*

**Note      3 - Investments**

**Note      4 - Long-term Debt**

**Note      5 - Earnings Per Share**

----

**Note      6 - Stock-Based Compensation**

*Share-Based Payment*
*Stock-Based Compensation*

|                                           |   | Options |   |   | Weighted                Average Exercise Price |   |   | Weighted                Average Remaining Contractual Years |   |   | Aggregate                Intrinsic Value (in thousands) |   |
|------------------------------------------------|--------|---------|--------|--------|------------------------------------------------|--------|--------|-------------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|
| Balance,                June 30, 2007          |   |    | 57,000 |   |                                           | $      | 10.42  |                                                        |   |   |                                                    |   |   |   |
| Granted                                        |   |    | -      |   |                                           |   |   |                                                        |   |   |                                                    |   |   |   |
| Exercised                                      |   |    | -      |   |                                           |   |   |                                                        |   |   |                                                    |   |   |   |
| Cancelled                                      |   |    | -      |   |                                           |   |   |                                                        |   |   |                                                    |   |   |   |
| Balance,                September 30, 2007     |   |    | 57,000 |   |                                           | $      | 10.42  |                                                        |   |   | 6.45                                                    |   |   | $ | 599 |   |
|                                           |   |    |   |   |                                           |   |   |                                                        |   |   |                                                    |   |   |   |   |   |
| Exercisable,                September 30, 2007 |   |    | 55,000 |   |                                           | $      | 10.32  |                                                        |   |   | 6.45                                                    |   |   | $ | 572 |   |

----

|                                        |                                        |   | **Options                    outstanding**      | **Options                    exercisable**  |
|---------------------------------------------|---------------------------------------------|--------|--------------------------------------------------------------------------|--------------------------------------------------|
|                                        |                                        |   |                                                                     |                                             |   | **Weighted-** |   |   |   |   |   |   |   |   |   |   |
|                                        |                                        |   |                                                                     |                                             |   | **average** |   |   | **Weighted-** |   |   |   |   |   | **Weighted-** |   |
|                                        |                                        |   |                                                                     |                                             |   | **remaining** |   |   | **average** |   |   |   |   |   | **average** |   |
|                                        |                                        |   | **Number of**                                                       |                                             |   | **contractual** |   |   | **exercise** |   |   | **Number of** |   |   | **exercise** |   |
| **Range of exercise prices** |                                        |   | **shares**                                                               |                                             |   | **life                    (years)** |   |   | **price** |   |   | **shares** |   |   | **price** |   |
|                                        | $                       5.00-7.00 |   |                                                                     |                                             | 5,000 |   |   |   | 5.83 |   |   | $ | 5.05 |   |   |   | 5,000 |   |   | $ | 5.05 |   |
|                                        | $                     7.00-10.00       |   |                                                                     |                                             | 15,000 |   |   |   | 4.31 |   |   | $ | 7.39 |   |   |   | 15,000 |   |   | $ | 7.39 |   |
| $ over                    10.00        |                                        |   |                                                                     | 37,000                                           |   |   |   | 8.72 |   |   | $ | 12.52 |   |   |   | 35,000 |   |   | $ | 12.46 |   |
| Total                                       |                                        |   |                                                                     | 57,000                                           |   |   |   | 6.45 |   |   | $ | 10.42 |   |   |   | 55,000 |   |   | $ | 10.32 |   |

|                                              |   | Three Months                Ended |   |
|--------------------------------------------------------|--------|----------------------------------------|--------|
|                                                   |   | September                30, 2007      |   |
|                                              |   | Number of                         |   |   | Weighted                Average |   |
|                                                   |   | Shares                                 |   |   | Grant                Date Fair Value |   |
| Unvested                balance at beginning of period |   |                                   | 6,000  |   |   | $ | 13.05 |   |
| Granted                                                |   |                                   | -      |   |   | $ | - |   |
| Forfeited                                              |   |                                   | -      |   |   | $ | - |   |
| Vested                                                 |   |                                   | (3,000 | ) |   | $ | 13.05 |   |
| Unvested                balance at end of period       |   |                                   | 3,000  |   |   | $ | 13.05 |   |

**Note      7 - Related Parties **

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**Note      8 - Minimum Lease Income**

| Year                EndingJune                30 |   | Amount |      |
|--------------------------------------------------|--------|--------|-----------|
| Balance                of 2008                   |   | $      | 1,922,000 |   |
| 2009                                             |   |   | 1,922,000 |   |
| 2010                                             |   |   | 1,793,000 |   |
| 2011                                             |   |   | 1,721,000 |   |
| 2012                                             |   |   | 1,105,000 |   |
| Thereafter                through 2017           |   |   | 527,000   |   |
| Total                                            |   | $      | 8,990,000 |   |

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

**FORWARD      LOOKING STATEMENTS**

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**OVERVIEW**

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**RESULTS      OF OPERATIONS**

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**CRITICAL      ACCOUNTING POLICIES**

*Valuation      of Investments Securities*

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**Item      3. Quantitative and Qualitative Disclosures About Market      Risk**

**Item      4. Controls and Procedures**

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**PART      II. OTHER INFORMATION**

**Item      1. Legal Proceedings**

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds**

**Item      3. Defaults Upon Senior Securities**

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

**Item      5. Other Information**

**Item      6.                 Exhibits**

|   | 31.1 | Chief                Executive Officer and Chief Financial Officer Certification of Periodic                Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act                of                2002* |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.1 | Chief                Executive Officer and Chief Financial Officer Certification Pursuant                to 18                U.S.C. Section 1350, as adopted pursuant to section 906 of the                Sarbanes-Oxley Act of 2002 + |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  EXHIBIT                INDEX                                                                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit                No.                                                                                                                           | Document                Description |
| 31.1                                                                                                                                            | Chief                Executive Officer and Chief Financial Officer Certification of Periodic                Financial Report Pursuant to Section 302 of the Sarbanes-Oxley Act                of                2002* |
| 32.1                                                                                                                                                 | Chief                Executive Officer and Chief Financial Officer Certification Pursuant                to 18                U.S.C. Section 1350, as adopted pursuant to section 906 of the                Sarbanes-Oxley Act of 2002 + |
|  *      Filed                herewith +      Furnished                herewith |

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