**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**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 March 31, 2007 and                             |   |
|                                         | June                30, 2006(unaudited)                                         |  3  |
|                                         |                                                                            |   |
|                                         | Condensed                Statements of Operations - Nine and three months ended |   |
|                                         | March                31, 2007 and 2006 (unaudited)                              |  4 |
|                                         |                                                                            |   |
|                                         | Statement                of Changes in Shareholders’ Equity -             |   |
|                                         | Nine                months ended March 31, 2007 (unaudited)                     |  5 |
|                                         |                                                                            |   |
|                                         | Statements                of Cash Flows - Nine months ended                     |   |
|                                         | March                31, 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    | 15                                                                              |
|                                         |                                                                            |   |
| Item                1.                       | Legal                Proceedings                                                | 15 |
|                                         |                                                                            |   |
| Item                2.                       | Unregistered                Sales of Equity Securities and Use of Proceeds      | 15 |
|                                         |                                                                            |   |
| Item                3.                       | Defaults                Upon Senior Securities                                  | 15 |
|                                         |                                                                            |   |
| Item                4.                       | Submission                of Matters to a Vote of Security Holders              | 15 |
|                                         |                                                                            |   |
| Item                5.                       | Other                Information                                                | 15 |
|                                         |                                                                            |   |
| Item                6.                       | Exhibits                                                                        | 16 |
|                                         |                                                                            |   |
|                                         | Signature                                                                       | 17 |
|                                         |                                                                            |   |
|                                         | EXHIBIT                INDEX                                                    | 18 |
|                                         |                                                                            |   |
|                                         | EXHIBITS                                                                        |   |

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**PART      I. FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**SONOMAWEST      HOLDINGS, INC.**

**BALANCE      SHEETS**

**MARCH      31, 2007 AND JUNE 30, 2006**

**(AMOUNTS      IN THOUSANDS)**

**(UNAUDITED)**

| **ASSETS**                                                                                                                                                                                                                            |   | March                31, 2007 |   | June                30, 2006 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|------------------------------|--------|
| CURRENT                ASSETS:                                                                                                                                                                                                        |   |                          |        |                         |   |  |   |
| Cash                                                                                                                                                                                                                                  |   | $                             | 3,248  |                         | $      | 3,851 |   |
| Accounts                receivable                                                                                                                                                                                                    |   |                          | 160    |                         |   | 160 |   |
| Other                receivables                                                                                                                                                                                                      |   |                          | 11     |                         |   | 16 |   |
| Prepaid                income taxes                                                                                                                                                                                                   |   |                          | 56     |                         |   | 73 |   |
| Prepaid                expenses and other assets                                                                                                                                                                                      |   |                          | 39     |                         |   | 134 |   |
| Deferred                income taxes, net                                                                                                                                                                                             |   |                          | 25     |                         |   | 55 |   |
| Total                current assets                                                                                                                                                                                                   |   |                          | 3,539  |                         |   | 4,289 |   |
| RENTAL                PROPERTY, net                                                                                                                                                                                                   |   |                          | 1,262  |                         |   | 1,412 |   |
| INVESTMENT,                at cost                                                                                                                                                                                                    |   |                          | 2,401  |                         |   | 2,401 |   |
| DEFERRED                INCOME TAXES, net                                                                                                                                                                                             |   |                          | 214    |                         |   | 190 |   |
| PREPAID                COMMISSIONS AND OTHER ASSETS                                                                                                                                                                                   |   |                          | 184    |                         |   | 181 |   |
| Total                assets                                                                                                                                                                                                           |   | $                             | 7,600  |                         | $      | 8,473 |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                                                                                                                         |   |                          |        |                         |   |  |   |
| CURRENT                LIABILITIES:                                                                                                                                                                                                   |   |                          |        |                         |   |  |   |
| Current                maturities of long-term debt                                                                                                                                                                                   |   | $                             | -      |                         | $      | 80 |   |
| Accounts                payable                                                                                                                                                                                                       |   |                          | 99     |                         |   | 248 |   |
| Accrued                payroll and related liabilities                                                                                                                                                                                |   |                          | 17     |                         |   | 77 |   |
| Accrued                expenses                                                                                                                                                                                                       |   |                          | 66     |                         |   | 176 |   |
| Unearned                rents                                                                                                                                                                                                         |   |                          | 208    |                         |   | 193 |   |
| Tenant                deposits                                                                                                                                                                                                        |   |                          | 367    |                         |   | 310 |   |
| Total                current liabilities                                                                                                                                                                                              |   |                          | 757    |                         |   | 1,084 |   |
| LONG-TERM                DEBT, net of current maturities                                                                                                                                                                              |   |                          | -      |                         |   | 1,472 |   |
| Total                liabilities                                                                                                                                                                                                      |   |                          | 757    |                         |   | 2,556 |   |
| SHAREHOLDERS’                EQUITY:                                                                                                                                                                                            |   |                          |        |                         |   |  |   |
| Preferred                stock: 2,500 shares authorized; no shares issued and                outstanding                                                                                                                              |   |                          | -      |                         |   | - |   |
| Common                stock: 5,000 shares authorized, no par value; 1,180 and                1,124  shares issued and                outstanding at March 31, 2007 and June 30, 2006,                respectively |   |                          | 3,500  |                         |   | 2,912 |   |
| Retained                earnings                                                                                                                                                                                                      |   |                          | 3,343  |                         |   | 3,005 |   |
| Total                shareholders’ equity                                                                                                                                                                                       |   |                          | 6,865  |                         |   | 5,917 |   |
| Total                liabilities and shareholders’ equity                                                                                                                                                                       |   | $                             | 7,600  |                         | $      | 8,473 |   |

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**SONOMAWEST      HOLDINGS, INC. **

**CONDENSED      STATEMENTS OF OPERATIONS**

**FOR      THE NINE AND THREE MONTHS ENDED MARCH 31, 2007 AND 2006**

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

**(UNAUDITED)**

|                                                                     |   | Nine                          Months    |   | Three                          Months   |   |
|--------------------------------------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|--------|
|                                                                     |   | Ended                          March 31 |   | Ended                          March 31 |   |
|                                                                     |   | 2007                                    |   | 2006                                    |   | 2007 |   | 2006 |   |
| RENTAL                          REVENUE -NET                        |   | $                                       | 1,876  |                                    | $      | 1,540 |   | $ | 629 |   | $ | 544 |   |
| TENANT                          REIMBURSEMENTS                           |   |                                    | 518    |                                    |   | 386 |   |   | 157 |   |   | 112 |   |
| TOTAL                          REVENUE                                   |   |                                    | 2,394  |                                    |   | 1,926 |   |   | 786 |   |   | 656 |   |
|                                                                     |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
| OPERATING                          COSTS                                 |   |                                    | 1,919  |                                    |   | 1,771 |   |   | 576 |   |   | 583 |   |
| OPERATING                          COSTS - RELATED PARTY EXPENSES        |   |                                    | 10     |                                    |   | 52 |   |   | 2 |   |   | 13 |   |
| TOTAL                          OPERATING COSTS                           |   |                                    | 1,929  |                                    |   | 1,823 |   |   | 578 |   |   | 596 |   |
| OPERATING                          INCOME                                |   |                                    | 465    |                                    |   | 103 |   |   | 208 |   |   | 60 |   |
|                                                                     |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
| INTEREST                          EXPENSE                                |   |                                    | (7     | )                                       |   | (87 | ) |   | 0 |   |   | (30 | ) |
| INTEREST                          INCOME                                 |   |                                    | 108    |                                    |   | 89 |   |   | 39 |   |   | 42 |   |
| DIVIDEND                          INCOME                                 |   |                                    | 0      |                                    |   | 122 |   |   | 0 |   |   | 0 |   |
| GAIN                          ON SALE OF INVESTMENTS                     |   |                                    | 0      |                                    |   | 1,090 |   |   | 0 |   |   | 0 |   |
| OTHER                          INCOME (EXPENSE)                          |   |                                    | 2      |                                    |   | 7 |   |   | (1 | ) |   | 1 |   |
| INCOME                          BEFORE TAXES                             |   |                                    | 568    |                                    |   | 1,324 |   |   | 246 |   |   | 73 |   |
| INCOME                          TAX PROVISION                            |   |                                    | 230    |                                    |   | 510 |   |   | 98  |   |   | 29 |   |
| NET                          INCOME                                      |   | $                                       | 338    |                                    | $      | 814 |   | $ | 148 |   | $ | 44 |   |
|                                                                     |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
| WEIGHTED                          AVERAGE COMMON SHARES AND EQUIVALENTS: |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
| Basic                                                                    |   |                                    | 1,148  |                                    |   | 1,123 |   |   | 1,157 |   |   | 1,124 |   |
| Diluted                                                                  |   |                                    | 1,165  |                                    |   | 1,155 |   |   | 1,184 |   |   | 1,164 |   |
|                                                                     |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
| INCOME                          PER COMMON SHARE:                        |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
| Basic                                                                    |   | $                                       | 0.29   |                                    | $      | 0.73 |   | $ | 0.13 |   | $ | 0.04 |   |
| Diluted                                                                  |   | $                                       | 0.29   |                                    | $      | 0.70 |   | $ | 0.13 |   | $ | 0.04 |   |

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**SONOMAWEST      HOLDINGS, INC. **

**STATEMENT      OF CHANGES IN SHAREHOLDERS’EQUITY**

**FOR      THE NINE MONTHS ENDED MARCH 31, 2007**

**(AMOUNTS      IN THOUSANDS)**

**(UNAUDITED)**

|                                                |   | Common                  Stock |   |   |   | Total    |   |
|-----------------------------------------------------|--------|-------------------------------|--------|--------|--------|----------|--------|
|                                                |   | Number                        |   |   |   | Retained |   | Shareholders’ |   |
|                                                |   | Of                  Shares    |   |   |   | Earnings |   | Equity |   |
| BALANCE,                  JUNE 30, 2006             |   |                          | 1,124  |   | $      | 2,912    |   | $ | 3,005 |   | $ | 5,917 |   |
| Net                  income                         |   |                          |        |   |   |          |   |   | 338 |   |   | 338 |   |
| Issuance                  of common stock           |   |                          | 56     |   |   | 337      |   |   |  |   |   | 337 |   |
| Stock                  compensation expense         |   |                          |        |   |   | 106      |   |   |  |   |   | 106 |   |
| Tax                  benefit on exercise of options |   |                          |   |   |   | 145      |   |   |   |   |   | 145 |   |
| BALANCE,                  MARCH 31, 2007            |   |                          | 1,180  |   | $      | 3,500    |   | $ | 3,343 |   | $ | 6,843 |   |

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**SONOMAWEST      HOLDINGS, INC.**

**STATEMENTS      OF CASH FLOWS**

**FOR      THE NINE MONTHS ENDED MARCH 31, 2007 AND 2006**

**(AMOUNTS      IN THOUSANDS)**

**(UNAUDITED)**

|                                                                                                              |   | 2007   |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                              |   |   |   |   |   |
| Net                income                                                                                         |   | $      | 338    |   | $      | 814 |   |
| Adjustments                to reconcile net earnings to net cash provided by operating                activities: |   |   |   |
| Gain                on sale of investments                                                                        |   |   | -      |   |   | (1,090 | ) |
| Dividends                received from investments                                                                |   |   | -      |   |   | (122 | ) |
| Stock                compensation expense                                                                         |   |   | 106    |   |   | 81 |   |
| Depreciation                and amortization expense                                                              |   |   | 160    |   |   | 162 |   |
| Deferred                income tax provision                                                                      |   |   | 6      |   |   | 283 |   |
| Changes                in assets and liabilities:                                                                 |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                |   |   | -      |   |   | (46 | ) |
| Other                receivables                                                                                  |   |   | 5      |   |   | 9 |   |
| Prepaid                income taxes                                                                               |   |   | 17     |   |   | (70 | ) |
| Prepaid                expenses and other assets                                                                  |   |   | 95     |   |   | 110 |   |
| Prepaid                commissions and other assets                                                               |   |   | (3     | )      |   | (61 | ) |
| Accounts                payable                                                                                   |   |   | (149   | )      |   | (31 | ) |
| Accrued                expenses                                                                              |   |   | (110   | )      |   | 110 |   |
| Accrued                payroll and related liabilities                                                            |   |   | (60    | )      |   | (14 | ) |
| Unearned                rents                                                                                     |   |   | 15     |   |   | 44 |   |
| Tenant                deposits                                                                                    |   |   | 57     |   |   | 51 |   |
| Other                long-term liabilities                                                                        |   |   | -      |   |   | (131 | ) |
|                                                                                                              |   |   | 139    |   |   | (715 | ) |
| Net                cash provided by operating activities                                                          |   |   | 477    |   |   | 99 |   |
|                                                                                                              |   |   |   |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                              |   |   |   |   |   |   |   |
| Capital                expenditures                                                                               |   |   | (10    | )      |   | (76 | ) |
| Proceeds                from sale of investments                                                                  |   |   | -      |   |   | 1,691 |   |
| Dividends                received from investments                                                                |   |   | -      |   |   | 122 |   |
| Net                cash provided by (used in) investing activities                                                |   |   | (10    | )      |   | 1,737 |   |
|                                                                                                              |   |   |   |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                              |   |   |   |   |   |   |   |
| Proceeds                from debt refinancing                                                                     |   |   | -      |   |   | 1,606 |   |
| Principal                payments on debt                                                                         |   |   | (1,552 | )      |   | (1,653 | ) |
| Tax                benefit from exercise of stock options                                                         |   |   | 145    |   |   | - |   |
| Exercise                of stock options                                                                          |   |   | 337    |   |   | 62 |   |
| Net                cash provided by (used in) financing activities                                                |   |   | (1,070 | )      |   | 15 |   |
| NET                INCREASE (DECREASE) IN CASH                                                                    |   |   | (603   | )      |   | 1,851 |   |
|                                                                                                              |   |   |   |   |   |   |   |
| CASH                AT BEGINNING OF PERIOD                                                                        |   |   | 3,851  |   |   | 1,879 |   |
| CASH                AT END OF PERIOD                                                                              |   | $      | 3,248  |   | $      | 3,730 |   |

|                                        |   | 2007 |   | 2006   |   |
|---------------------------------------------|--------|------|--------|--------|--------|
| Interest                paid                |   | $    | 18     |   | $      | 85 |   |
| Taxes                paid                   |   | $    | 63     |   | $      | 1 |   |
| Cashless                exercise of options |   | $    | 36     |   | $      | - |   |

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**SONOMAWEST      HOLDINGS, INC. **

**NOTES      TO CONDENSED FINANCIAL      STATEMENTS**

**NINE      MONTHS ENDED MARCH 31, 2007**

**(UNAUDITED)**

**Note      1 - Basis of Presentation**

**Revenue      Recognition**

**Note      2 - New Accounting Pronouncement**

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**Note      3 - Investment**

***MetroPCS***

**Note      4 - Long-term Debt**

**Note      5 - Earnings Per Share**

**Note      6 - Stock-Based Compensation **

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|                                    |   | **Options** |    | **Weighted                  Average Exercise Price** |   | **Weighted                  Average Remaining contractual Term (years)** |   | **Aggregate                  Intrinsic value (in thousands)** |   |
|-----------------------------------------|--------|-------------|---------|------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
| Balance,                  June 30, 2006 |   |        | 96,000  |                                                 | $      | 8                                                                        |   |                                                          |   |   |   |   |   |
| Granted                                 |   |        | 27,000  |                                                 | $      | 13                                                                       |   |                                                          |   |   |   |   |   |
| Cancelled                               |   |        | (1,000  | )                                                    | $      | 10                                                                       |   |                                                          |   |   |   |   |   |
| Exercised                               |   |        | (59,000 | )                                                    | $      | 6                                                                        |   |                                                          |   |   |   |   |   |
| Balance                                 |   |        | 63,000  |                                                 | $      | 10                                                                       |   |                                                          | 5.20   |   | $ | 1,032 |   |
| Exercisable                             |   |        | 57,000  |                                                 | $      | 10                                                                       |   |                                                          | 5.20   |   | $ | 562 |   |

|                                              |   | **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                      |   |                                     | 6,000  |                                     |   | 3.10 |   | $ | 5.5 |   |   | 6,000 |   | $ | 5.50 |   |
| $                  7.00-10.00                     |   |                                     | 18,000 |                                     |   | 3.90 |   | $ | 7.32 |   |   | 18,000 |   | $ | 7.23 |   |
| $                  over 10.00                     |   |                                     | 39,000 |                                     |   | 8.59 |   | $ | 12.56 |   |   | 33,000 |   | $ | 12.03 |   |
| Total                                             |   |                                     | 63,000 |                                     |   | 5.20 |   | $ | 10.24 |   |   | 57,000 |   | $ | 9.89 |   |

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|                                                |   | **Nine                  Months Ended** |    |
|----------------------------------------------------------|--------|----------------------------------------|---------|
|                                                     |   | **March                  31, 2007**    |    |
|                                                |   | **Number of**                     |    | **Weighted                  Average** |   |
|                                                     |   | **Shares**                             |    | **Grant                  Date Fair Value** |   |
| Unvested                  balance at beginning of period |   |                                   | -       |   | $ | - |   |
| Granted                                                  |   |                                   | 27,000  |   | $ | 13.05 |   |
| Forfeited                                                |   |                                   | -       |   | $ | - |   |
| Vested                                                   |   |                                   | (20,000 | ) | $ | 13.05 |   |
| Unvested                  balance at end of period       |   |                                   | 7,000   |   | $ | 13.05 |   |

**Note      7 - Related Parties **

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**Note      8 - Minimum Lease Income**

| Year                EndingJune                30 |   | Amounts                in Thousands |   |
|--------------------------------------------------|--------|-------------------------------------|--------|
| Balance                of 2007                   |   | $                                   | 163    |   |
| 2008                                             |   |                                | 1,747  |   |
| 2009                                             |   |                                | 775    |   |
| 2010                                             |   |                                | 657    |   |
| 2011                                             |   |                                | 600    |   |
| Thereafter                through 2013           |   |                                | 508    |   |
| Total                                            |   | $                                   | 4,450  |   |

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

**FORWARD      LOOKING STATEMENTS**

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

**Item      4. Controls and Procedures**

**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**

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**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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SIGNATURES

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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 |