SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

___________________________________________________________

FORM 10-QSB
___________________________________________________________

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2006

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______ to _______

Commission file number
Commission File Number 0-21522

WILLAMETTE VALLEY VINEYARDS, INC.

 (Exact name of registrant as specified in charter)

              Oregon                       93-0981021
  (State or other jurisdiction of      (I.R.S. Employer
  incorporation or organization)     Identification Number)


___________________________________________________________


8800 Enchanted Way, S.E., Turner, Oregon 97392
 (503)-588-9463

 (Address, including Zip code, and telephone number,
including area code, of registrant's principal executive offices)

___________________________________________________________

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
                                            [X] YES        [ ] NO

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).

                                            [ ] YES        [X] NO


Number of shares of common stock outstanding as of September 30, 2006
4,784,702 shares, no par value

Transitional Small Business Disclosure
                                            [ ] YES        [X] NO



                  WILLAMETTE VALLEY VINEYARDS, INC.
                       INDEX TO FORM 10-QSB


Part I - Financial Information

Item 1--Financial Statements

Balance Sheet

Statement of Operations

Statement of Cash Flows

Notes to Interim Unaudited Financial Statements

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

Item 3--Controls and Procedures

Part II - Other Information

Item 1 - Legal proceedings

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

Item 3 - Default Upon Senior Securities

Item 4 - Submission of Matters to a Vote of Security Holders

Item 5 - Other Information

Item 6 - Exhibits

Signatures
PART 1                 FINANCIAL INFORMATION
ITEM 1                    Financial Statements

                  WILLAMETTE VALLEY VINEYARDS, INC.
                            Balance Sheet
                                       September 30,       December 31,
                                            2006                2005
                                        (unaudited)
ASSETS.                                 __________          __________
Current Assets:
  Cash and cash equivalents            $ 2,414,142         $   415,591
  Accounts receivable trade, net           799,071           1,568,255
  Inventories                            6,062,563           6,950,993
  Prepaid expenses and other
  current assets                           244,450              22,561
  Deferred income taxes                     91,000              91,000
                                        __________          __________
Total current assets                     9,611,226           9,048,400

Vineyard development cost, net           1,481,555           1,526,073
Property and equipment, net              3,969,677           4,037,160
Debt issuance costs, net                    30,046              35,410
Other assets                                79,126              80,071
                                        __________          __________
Total assets                           $15,171,630         $14,727,114
                                        ==========          ==========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Current portion of long term debt    $   283,334         $   283,334
  Accounts payable                         825,095             811,141
  Accrued expenses                         345,592             348,169
  Income taxes payable                      62,527             344,987
  Grapes payable                           281,331             471,873
                                        __________          __________
Total current liabilities                1,797,879           2,259,504

Long-term debt                           1,774,182           1,986,531
Deferred rent liability                    182,704             164,771
Deferred gain                              418,143             442,214
Deferred income taxes                      148,000             148,000
                                        __________          __________
Total liabilities                        4,320,908           5,001,020
                                        __________          __________
Shareholders' equity
  Common stock, no par value - 10,000,000
  shares authorized, 4,784,702 and 4,660,202
  shares issued and outstanding at September 30,
  2006 and December 31, 2005             7,893,287           7,613,222
Retained earnings                        2,957,435           2,112,872
                                        __________          __________
Total shareholders' equity              10,850,722           9,726,094
                                        __________          __________
Total liabilities and shareholders'
equity                                 $15,171,630         $14,727,114
                                        ==========          ==========

The accompanying notes are an integral part of this financial statement.
                  WILLAMETTE VALLEY VINEYARDS, INC.
                       Statement of Operations
                             (unaudited)
                      Three months ended         Nine months ended
                         September 30,              September 30,
                      2006          2005         2006          2005
                   __________    __________   __________    __________
Net revenues
  Case revenue    $ 3,293,144   $ 3,609,228  $10,414,158   $ 9,394,542
  Custom crush-facility lease-
    bulk revenue       14,899         8,828       32,485       111,090
                   __________    __________   __________    __________
Total net revenues  3,308,043     3,618,056   10,446,643     9,505,632

Cost of sales
  Case              1,745,683     1,944,787    5,476,376     5,106,703
  Bulk                      -             -        4,631        55,926
                   __________    __________   __________    __________
Total cost of sales 1,745,683     1,944,787    5,481,007     5,162,629

Gross profit        1,562,360     1,673,269    4,965,636     4,343,003

Selling, general and administrative
  expenses          1,160,318     1,085,852    3,490,063     3,047,836
                   __________    __________   __________    __________
Net operating
  income              402,042       587,417    1,475,573     1,295,167

Other income (expense)
  Interest income      19,729           349       42,885           775
  Interest expense    (41,667)      (57,355)    (127,750)     (175,735)
  Other income
    (expense)               -             -       16,895        17,336
                   __________    __________   __________    __________
Net income before
  income taxes        380,104       530,411    1,407,603     1,137,543

Income tax            152,041       212,165      563,040       455,018
                   __________    __________   __________    __________
Net income            228,063       318,246      844,563       682,525

Retained earnings beginning of
  period            2,729,372     1,320,212    2,112,872       955,933
                   __________    __________   __________    __________
Retained earnings
  end of period   $ 2,957,435   $ 1,638,458  $ 2,957,435   $ 1,638,458
                   ==========    ==========   ==========    ==========
Basic earnings per
  common share    $       .05   $       .07  $       .18   $       .15

Diluted earnings per
  common share    $       .05   $       .07  $       .17   $       .15

Weighted average number of
basic common shares
outstanding         4,781,055     4,514,635    4,722,636     4,498,019

Weighted average number of
diluted common shares
outstanding         4,978,955     4,621,115    4,920,536     4,604,499


The accompanying notes are an integral part of this financial statement.
                  WILLAMETTE VALLEY VINEYARDS, INC.
                       Statement of Cash Flows
                             (unaudited)

                                        Nine months ended September 30,
                                            2006                2005
                                        __________          __________
Cash flows from operating activities:
  Net income                           $   844,563        $    682,525
Reconciliation of net income to
 net cash provided by (used in)
 operating activities:
  Depreciation and amortization            404,748             422,355
  Loss on disposal of fixed assets               -                   -
  Stock based compensation expense          25,170               9,610

Changes in assets and liabilities:
  Accounts receivable trade                769,184            (145,726)
  Inventories                              888,430           1,169,566
  Prepaid expenses and other
    current assets                        (221,889)            (12,336)
  Note receivable                                -               5,000
  Other assets                                 945               1,806
  Accounts payable                          13,954             280,751
  Accrued expenses                          (2,577)           (251,352)
  Income taxes payable                    (282,460)            (23,800)
  Grape payables                          (190,542)           (240,566)
  Deferred rent liability                   17,933              24,739
  Deferred gain                            (24,071)            (24,071)
                                        __________          __________
Net cash provided by
  operating activities                   2,243,388           1,898,491
                                        __________          __________

Cash flows from investing activities;
  Additions to property and equipment     (270,456)           (193,101)
  Vineyard development expenditures        (16,927)           (171,095)
                                        __________          __________
Net cash used in investing activities     (287,383)           (364,196)
                                        __________          __________

Cash flows from financing activities:
  Debt issuance costs                            -              (4,622)
  Net (decrease) increase in line of
    credit balance                               -          (1,232,251)
  Proceeds from stock options exercised    254,895             100,249
  Repayments of distributor obligation           -          (1,500,000)
  Issuance of long-term debt                     -           1,500,000
  Repayments of long-term debt            (212,349)           (748,351)
                                        __________          __________
Net cash used in
  financing activities                      42,546          (1,884,975)
                                        __________          __________
Net increase (decrease) in cash and
  cash equivalents                       1,998,551            (350,680)

Cash and cash equivalents:
  Beginning of period                      415,591             851,492
                                        __________          __________
  End of period                        $ 2,414,142         $   500,812
                                        ==========          ==========

The accompanying notes are an integral part of this financial statement.
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1) BASIS OF PRESENTATION

The accompanying unaudited financial statements as of and for the three and
nine months ended September 30, 2006 and 2005, have been prepared in
conformity with accounting principles generally accepted in the United States
("GAAP"). The financial information as of December 31, 2005 is derived from
the audited financial statements presented in the Willamette Valley Vineyards,
Inc. (the "Company") Annual Report on Form 10-KSB for the year ended
December 31, 2005. Certain information or footnote disclosures normally
included in financial statements prepared in accordance with GAAP have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, the accompanying
financial statements include all adjustments necessary (which are of a normal
recurring nature) for the fair statement of the results of the interim periods
presented. The accompanying financial statements should be read in conjunction
with the Company's audited financial statements for the year ended
December 31, 2005, as presented in the Company's Annual Report on Form 10-KSB.

Operating results for the three and nine months ended September 30, 2006, are
not necessarily indicative of the results that may be expected for the entire
year ending December 31, 2006, or any portion thereof.

The Company has a single operating segment consisting of the retail, instate
self-distribution and out-of-state sales departments.  These departments have
similar economic characteristics, offer comparable products to customers, and
utilize similar processes for production and distribution.

Basic earnings per share are computed based on the weighted-average number of
common shares outstanding each period. Diluted earnings per share are computed
using the weighted average number of shares of common stock and potentially
dilutive common shares outstanding during the year.  Potentially dilutive
shares from stock options and other potentially dilutive shares are excluded
from the computation when their effect is anti-dilutive.  Potentially dilutive
shares of 197,900 shares are included in the computation of dilutive earnings
per share for the three and nine months ended September 30, 2006. Total
potentially dilutive shares of 106,480 shares are included in the computation
of dilutive earnings per share for the three and nine months ended
September 30, 2005.


2) STOCK BASED COMPENSATION

The Company has two stock option plans, the 1992 Stock Incentive Plan
("1992 Plan") and 2001 Stock Option Plan ("2001 Plan").  No additional grants
may be made under the 1992 Plan.  The 2001 Plan, which is shareholder
approved, permits the grant of stock options and restricted stock awards for
up to 900,000 shares.  All stock options have an exercise price that is equal
to the fair market value of the Company's stock on the date the options were
granted.  Administration of the plan, including determination of the number,
term, and type of options to be granted, lies with the Board of Directors or a
duly authorized committee of the Board of Directors.  Options are generally
granted based on employee performance with vesting periods ranging from date
of grant to seven years.  The maximum term before expiration for all grants
is ten years.




The following table presents information on stock options outstanding for the
periods shown:
                         Three months ended      Nine months ended
                         September 30, 2006      September 30, 2006
                           _______________         _______________
                                  Weighted                Weighted
                                   Average                 average
                                  Exercise                exercise
                           Shares   price          Shares   price
Outstanding at
    beginning of period   530,500  $ 3.82         609,500  $ 3.57
  Granted                       -       -               -       -
  Exercised               (30,500) $ 1.71        (109,500) $ 1.85
  Forfeited                     -       -               -       -
                          --------                --------
Outstanding at
    end of period         500,000  $ 3.95         500,000  $ 3.95
                          ________                ________


The following table presents information on stock options outstanding for the
periods shown:
                           Three months ended     Nine months ended
                           September 30, 2006     September 30, 2005
                           __________________     __________________
Intrinsic value of options
    exercised in the period        $  179,550             $   90,807
Stock options fully vested and
    expected to vest
  Number                     500,000                491,500
  Weighted average exercise
    Price                          $     3.95             $     2.71
  Aggregate intrinsic value        $  881,756             $1,140,536
  Weighted average contractual
    term of options                7.17 years             7.89 years

Stock options vested and
    Currently exercisable
  Number                     451,100
  Weighted average exercise
    Price                          $     3.99
  Aggregate intrinsic value        $  775,560
  Weighted average contractual
    term of options                7.04 years


At January 1, 2006, the Company began recognizing compensation expense for
stock options with the adoption of Statement of Financial Accounting Standards
("SFAS") No. 123 (Revised), "Share-Based Payment," ("SFAS 123R"). The fair
value of each stock option granted is estimated on the date of grant using the
Black-Scholes based stock option valuation model. This model uses the
assumptions listed in the table below. Expected volatilities are based on
implied volatilities from the Company's stock, historical volatility of the
Company's stock, and other factors.  Expected dividends are based on the
Company's plan not to pay dividends for the foreseeable future.  The Company
uses historical data to estimate option exercises and employee terminations
within the valuation model. The risk-free rate for periods within the
contractual life of the option is based on the U.S. Treasury yield curve in
effect at the time of grant.


                                    Black-Scholes assumptions

                                       September 30, 2006
                                            __________

Risk Free interest rates                         4.26%
Expected dividend                                   0%
Expected lives, in years                         5-10
Expected volatility                                46%

The Company expenses stock options on a straight line basis over the options'
related vesting term.  For the three and nine months ended September 30, 2006,
the Company recognized pretax compensation expense related to stock options of
$8,390 and $25,170, respectively.  The following table, presented to aid the
reader's ability to compare the relevant periods from 2005 if the Company had
applied FASB123R to such periods in the same manner as the Company applied
FASB123R in the current periods, illustrates the effect on net income and
earnings per share if the fair value method established in SFAS 123R had been
applied to all outstanding and unvested awards in the prior period.

                                  Three Months Ended  Nine Months Ended
                                           September 30, 2005
                                        (unaudited)      (unaudited)
                                        __________       __________

Net income, as reported                $   318,246      $   682,525

Add Stock-based employee
compensation expense included in
reported net income, net of
  related tax effects                            -                -

Deduct total stock based employee
  compensation expense determined
  under fair value based method for
  all awards, net of related tax
  effects                                  (64,199)        (192,597)
                                        __________       __________

Pro forma net income                   $   254,047      $   489,928

Earnings per share:
  Basic - as reported                  $      0.07      $      0.15
  Basic - pro forma                    $      0.06      $      0.11

  Diluted - as reported                $      0.07      $      0.15
  Diluted - pro forma                  $      0.05      $      0.11




During the three months ended September 30, 2006, the following transactions
related to stock option and warrant exercise occurred:
                                          Exercise
                               Shares       price

  Stock Options Exercised      25,000     $ 1.75
                                4,000       1.5625
                                1,500       1.50



3) INVENTORIES BY MAJOR CLASSIFICATION ARE SUMMARIZED AS FOLLOW:

                                       September 30,       December 31,
                                            2006                2005
                                        (unaudited)
                                        __________          __________

Winemaking and packaging materials     $    34,542         $   223,389
Work-in-progress (costs relating
  to unprocessed and/or bulk
  wine products)                         1,715,590           1,790,472
Finished goods (bottled wines            4,312,431           4,937,132
  and related products)                 __________          __________

Current inventories                    $ 6,062,563         $ 6,950,993
                                        ==========          ==========


4) PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING:

                                       September 30,       December 31,
                                            2006                2005
                                        (unaudited)
                                        __________          __________

Land and improvements                  $   787,454         $   769,644
Winery building and hospitality center   4,751,930           4,707,802
Equipment                                4,184,170           3,975,652
                                        __________          __________
                                         9,723,554           9,453,098

Less accumulated depreciation           (5,753,877)         (5,415,938)
                                        __________          __________
                                       $ 3,969,677         $ 4,037,160
                                        ==========          ==========



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

Forward Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results
of Operation and other sections of this Form 10-QSB contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995.  These forward-looking statements involve risks and uncertainties
that are based on current expectations, estimates and projections about the
Company's business, and beliefs and assumptions made by management.  Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" and variations of such words and similar expressions are intended
to identify such forward-looking statements.  Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking statements due to numerous factors, including, but not limited
to:  availability of financing for growth, availability of adequate supply of
high quality grapes, successful performance of internal operations, impact of
competition, changes in wine broker or distributor relations or performance,
impact of possible adverse weather conditions, impact of reduction in grape
quality or supply due to disease, impact of governmental regulatory decisions,
and other risks detailed below as well as those discussed elsewhere in this
Form 10-QSB and from time to time in the Company's Securities and Exchange
Commission filings and reports.  In addition, such statements could be
affected by general industry and market conditions and growth rates, and
general domestic economic conditions.

Critical Accounting Policies:

The foregoing discussion and analysis of our financial condition and results
of operations are based upon our financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP").  The preparation of these financial
statements requires management to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities.  On an on-going
basis, we evaluate our estimates, including those related to revenue
recognition, collection of accounts receivable, valuation of inventories, and
amortization of vineyard development costs. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances.  Actual results may differ from these estimates under
different assumptions or conditions.  A description of our critical accounting
policies and related judgments and estimates that affect the preparation of
our financial statements is set forth in our Annual Report on Form 10-KSB for
the year ended December 31, 2005.  Except with respect to accounting for stock-
based compensation expenses (see Note 2 of Notes to Financial Statements,
above), such policies were unchanged during the three and nine months ended
September 30, 2006.

Overview

Demand for Willamette Valley Vineyards Pinot Noir and Pinot Gris continues to
exceed available inventories.  The Company has and continues to receive orders
from its distributors it cannot completely fill, rather all available
inventory has been fairly allocated to each distributor based upon their
historical sales.

The lack of available inventory is a result of high demand experienced in the
recent past and of previous sales made to distributors which has drawn down
available supplies.

Management continues to develop both short and long term wine grape and wine
supplies to address this demand.  This year's harvest aided our effort by
producing higher quality and volumes, approximately 20% more than expected in
tonnage.

Continued awareness of the Company and its wines was enhanced by national and
regional media coverage.

The Winery's founder and CEO, Jim Bernau presented Oregon Pinot Noirs to the
Smithsonian Institution's wine program in Washington DC this October.  Scott
Greenberg of the DC Examiner recommended the '04 Willamette Valley Estate
Pinot Noir in his November 9th column.  Food columnist Dick Rosano of the
Washington Post recommended our '05 Whole Cluster Pinot Noir in a food pairing
and northwest wine critic and publisher of the Wine Iconoclast, Robert
Mayfield recommended the '02 Willamette Valley Vineyards '02 Signature Cuvee
Pinot Noir in his November 9th column for the Statesman Journal.

The Wine Spectator magazine, in its October 31st issue, named the Willamette
Valley Vineyards '05 Pinot Gris as one of the Top 100 Wine Values in the
World.  Wine and Spirits magazine published a 91 score for this wine in its
August issue.  Washington Times wine writer Paul Lukas called it "the best
white" of the Seattle Enological Society Wine Competition.  The winery's '05
Whole Cluster Pinot Noir was recommended by national wine author Leslie
Sbrocco for Thanksgiving in her new book, "Simple and Savvy Wine Guide".

The Winery continues to receive national and regional attention for its
sustainable practices.  In the September/October issue of Sierra Magazine, the
winery's employee biofuel policy was highlighted in the article "Grape Vine."
The Winery was featured for its biofuel program on the front page of the
September 27th edition of The Oregonian newspaper Business section in the
article "Perks take Greener Shade." On October 10th, the Portland Tribune
published a feature on Willamette Valley Vineyards, highlighting the Winery's
use of biofuel and our sustainable farming practices, as did the Capital
Press in their November 3rd issue.

The Company was included as one of Oregon's top 50 public companies on the
front page of the Business Section in the July 2nd issue of The Oregonian
newspaper and featured as the state's highest performing public common stock
for the first 6 months of 2006.  Forbes Magazine, in its November issue named
the Company as one of the 200 Best Small Companies in America.  Salem Monthly
readers voted the Winery as "Best Winery" in their July issue.

The Winery received much attention from local TV news stations during harvest,
appearing on KOIN, KATU, and KGW.  The Company's annual Oregon Grape Stomp
Championship was a feature on both KATU AM Northwest and KGW, as well as being
featured in the September/October Home & Lifestyle magazine, a publication of
the Statesman Journal.


RESULTS OF OPERATIONS

Revenue

Winery Operations
The Company's revenues from winery operations are summarized as follows:

                      Three months ended         Nine months ended
                         September 30,              September 30,
                      2006          2005         2006          2005
                   __________    __________   __________    __________

Tasting Room Sales and
 Rental Income    $   559,669   $   514,424  $ 1,367,837   $ 1,308,431
On-site and off-site
 festivals             38,600        17,504       88,685        65,617
In-state sales      1,834,900     1,751,116    5,102,144     4,777,055
Out-of-state sales    942,395     1,458,141    4,117,865     3,490,478
Bulk wine/
 Misc. sales           14,900         8,828       32,485       111,090
                   __________    __________   __________    __________
Total Revenue       3,390,464     3,750,013   10,709,016     9,752,671

Less Excise Taxes      82,421       131,957      262,373       247,039
                   __________    __________   __________    __________
Net Revenue       $ 3,308,043   $ 3,618,056  $10,446,643   $ 9,505,632
                   ==========    ==========   ==========    ==========

Net revenues for the three months ended September 30, 2006 decreased $310,013,
or 9%, compared to the corresponding period in the preceding year.  This
decrease is due primarily to the decrease in out-of-state sales during the 3
months ended September 30, 2006 as a result of inventory constraints.  Net
revenue for the nine months ended September 30, 2006 increased $941,011, or
10%, compared to the corresponding prior year period.  This increase is due
primarily to the increases in out-of-state sales and in-state sales.

Tasting room sales and rental income for the three months ended September 30,
2006 increased $45,245, or 9%, compared to the corresponding prior year period,
primarily as a result increased purchases in the tasting room and increased
key customer phone sales. Tasting room sales increased during the nine months
ended September 30, 2006 $59,406, or 5% due primarily to increased purchases
in the tasting room.

Sales in the state of Oregon, through the Company's wholesale department,
Bacchus Fine Wines, increased $83,784, or 5%, in the three months ended
September 30, 2006, compared to the corresponding prior year period.  The
Company's direct instate sales to its largest customer increased $47,099, or
18%, in the three months ended September 30, 2006, over the comparable prior
year period.  These increases are largely the result of the increased sales of
the wholesale department's portfolio of brands produced by wineries outside of
Oregon, driven by the Company's largest instate customer.  Sales of Company
produced products by this department decreased during the third quarter.
Sales in the state of Oregon, through Bacchus Fine Wines increased $325,089,
or 7%, in the nine months ended September 30, 2006, compared to the
corresponding prior year period.  This increase is largely the result of
increased sales of the broader product lines presented and increased product
placements through the development of the wholesale department's portfolio of
brands produced by wineries outside of Oregon.

Out-of-state sales in the three months ended September 30, 2006 decreased
$515,746, or 35%, over the comparable prior year period.  The decreased sales
are primarily the result of inventory constraints.  Out-of-state sales in the
nine months ended September 30, 2006 increased $627,387, or 18%, over the
comparable prior year period. This increase is due primarily to the higher
sales in the first six months of 2006 that were primarily a result of strong
demand for the Company's varietals, significant sales efforts undertaken by
the Company's out-of-state sales force and depletion allowances on particular
products, resulting in significant by-the-glass restaurant placements.

Excise taxes

The Company's excise taxes for the three months ended September 30, 2006
decreased 38% compared to the corresponding prior year period.  This was due
primarily to decreased sales, thereby decreasing overall sales volumes and
taxes calculated based on volume during the three months ended September 31,
2006.  The Company's excise taxes for the nine months ended September 30, 2006
increased 6% as compared to the corresponding prior year period.  This was
due primarily to the increased sales, thereby increasing overall sales volumes
and taxes calculated based on volume.


Gross Profit

Winery Operations

As a percentage of net revenue, gross profit increased to 47% in the three
months ended September 30, 2006, compared to 46% in the comparable prior year
period.  As a percentage of net revenue, gross profit increased to 48% in the
nine months ended September 30, 2006, compared to 46% in the comparable prior
year period.  The revenue generated by the sale of the Company's higher margin
products to out-of-state distributors, and the select, upward price adjustments
used to address inventory constraints, in the nine months ended September 30,
2006, reversed the trend of decreasing margins in prior periods.  While the
Company is continuing to focus on improving distribution of higher margin
products as well as reducing grape and production costs, we anticipate that
our increased representation of brands other than our own through our Oregon
sales force will erode gross margins due to the lower margins associated with
selling those brands.  While gross margin may erode due to such representation,
the Company does not anticipate that net income attributable to those sales
will follow that trend.


Selling, General and Administrative Expense

Selling, general and administrative expenses for the three and nine months
ended September 30, 2006 increased 7% and 15%, respectively, compared to the
corresponding prior year periods.  These increases are due primarily to higher
fixed Oregon wholesale sales and delivery costs, increased shipping and fuel
costs, and expenses related to the investment in building a professional staff
and sales mechanism to support anticipated production volumes.  As a
percentage of net revenue from winery operations, selling, general and
administrative expenses increased to 35% for the three months ended
September 30, 2006, compared to 30% for the comparable prior year period,
primarily as a result of increased expenses.  As a percentage of net revenue
from winery operations, selling, general and administrative expenses increased
to 33% for the nine months ended September 30, 2006, compared to 32% for the
comparable prior year period.


Interest Income, Other Income and Expense

Interest income increased to $19,729 and $42,885, respectively, for the three
and nine months ended September 30, 2006, compared to $349 and $775 for the
corresponding prior year periods.  Interest income increased primarily to the
Company's increased deposits in interest bearing accounts.  Interest expense
decreased 27% for both the three and nine months ended September 30, 2006
compared to the corresponding prior year periods.  Interest costs were lower
primarily due to less debt outstanding during the period.

Other income for the three and nine months ended September 30, 2006 was an
interest rebate from Farm Credit Services for interest paid on the Company's
long-term debt in 2005, in the amount of $16,895, received in the first
quarter of 2006, compared to $17,336, received from Farm Credit Services for
interest paid on the Company's long-term debt in 2004, during the first
quarter of 2005.


Income Taxes

Income tax expense was $152,041 and $563,040, respectively, for the three and
nine months ended September 30, 2006, compared to $212,165 and $455,018,
respectively for the prior year periods due to the Company's net profit for
the three and nine months ended September 30, 2006.  The Company's estimated
tax rate for the three and nine months ended September 30, 2006 and 2005 was
40 percent.

Net Income and Earnings per Share

As a result of the factors listed above, net income for the three and nine
months ended September 30, 2006 was $228,063 and $844,563, or $0.05 and $0.17
per diluted share, respectively, compared to net income of $318,246 and
$682,525, or $0.07 and $0.15 per diluted share, respectively, in the
comparable prior year periods.

Liquidity and Capital Resources

At September 30, 2006, the Company had a working capital balance of $7.8
million and a current ratio of 5.35:1.  At December 31, 2005, the Company had
a working capital balance of $6.8 million and a current ratio of 4.00:1.  The
Company had a cash balance of $2,414,142 at September 30, 2006, compared to a
cash balance of $415,591 at December 31, 2005.  The increase in cash was
primarily due to the Company's increased revenue and collection of accounts
receivable.

Total cash provided by operating activities in the nine months ended
September 30, 2006 was $2,243,388, compared to $1,898,491 for the
corresponding prior year period, primarily due to an increase in net income,
collection of receivables, and conversion of inventory to cash through sales
in the nine months ended September 30, 2006 compared to the prior year period.
Cash provided by operating activities in the nine months ended September 30,
2006 consisted of net income of $844,563, plus depreciation of $404,748, plus
changes in assets and liabilities and other non-cash charges of $994,077.

Total cash used in investing activities in the nine months ended September 30,
2006 was $287,383, compared to $364,196 in the prior year period.  Cash used
in investing activities consisted of property and equipment additions.

Total cash provided by financing activities in the nine months ended
September 30, 2006 was $42,546, compared to $1,884,975 used in financing
activities in the prior year period.  Cash provided by financing activities
primarily consisted of stock option proceeds offset by payments on the long
term debt.

At September 30, 2006, the line of credit balance was $0, on a maximum
borrowing amount of $2,000,000.  The Company has a loan agreement with Umpqua
Bank that contains, among other things, certain restrictive financial
covenants with respect to total equity, debt-to-equity and debt coverage, that
must be maintained by the Company on a quarterly basis.  As of September 30,
2006, the Company was in compliance with all of the financial covenants.

At September 30, 2006, the Company had a total long-term debt balance of
$2,057,516 owed to Farm Credit Services. The debt with Farm Credit Services
was used to finance the Hospitality Center, invest in winery equipment to
increase the Company's winemaking capacity, complete the storage facility, and
purchase Tualatin Vineyards.

At September 30, 2006, the Company owed $281,331 on grape contracts.  This
amount is primarily owed to a single grape grower, which will be paid as the
wine made from those grapes is sold.

The Company believes that cash flow from operations and funds available under
its existing credit facilities will be sufficient to meet the Company's
foreseeable needs.



ITEM 3
Controls and Procedures

a) We carried out an evaluation, under the supervision and with the
participation of the Chief Executive Officer, Chief Financial Officer and
other management personnel, of the effectiveness of our disclosure controls
and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
and Exchange Act of 1934 as of September 30, 2006.  Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures as of September 30, 2006 were effective to
ensure that information required to be disclosed by the Company in the reports
it files or submits under the Securities and Exchange Act of 1934 is recorded,
processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

The Company does not expect that its disclosure controls and procedures will
prevent all error and all fraud. A control procedure, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control procedure are met. Because of the inherent
limitations in all control procedures, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or
more people, or by management override of the control. The Company considered
these limitations during the development of it disclosure controls and
procedures, and will continually reevaluate them to ensure they provide
reasonable assurance that such controls and procedures are effective.

b) There were no changes in the Company's internal control procedures over
financial reporting that occurred during the three and nine months ended
September 30, 2006 that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting, except as
noted above.


PART II.               OTHER INFORMATION


Item 1. 	Legal proceedings.  None.

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
            None.

Item 3.	Default Upon Senior Securities.  None.

Item 4.	Submission of Matters to a Vote of Security holders.  None.

Item 5.	Other Information

(a)	The Audit Committee of the Board Of Directors has approved the
following non-audit services, which are being performed by Moss Adams, our
independent accountants, during the calendar year ending December 31, 2006:

		- Income tax advisory services related to: income tax returns

(b)	There were no material changes in the procedures by which security
holders may recommend nominees to the Board of Directors during the three
months ended September 30, 2006.

Item 6.	Exhibits

The exhibits filed herewith are listed in the Exhibit Index following the
signature page of this report.


SIGNATURES


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


                 WILLAMETTE VALLEY VINEYARDS, INC.




Date: Nov 14, 2006       By /s/ James W. Bernau
                                  James W. Bernau
                                  President


Date: Nov 14, 2006       By /s/ Sean M. Cary
                                  Sean M. Cary
                                  Controller



EXHIBIT INDEX

Exhibit

3.1 Articles of Incorporation of Willamette Valley Vineyards, Inc.
(incorporated by reference from the Company's Regulation A Offering Statement
on Form 1-A [File No. 24S-2996])

3.2 Bylaws of Willamette Valley Vineyards, Inc. (incorporated by reference
from the Company's Regulation A Offering Statement on Form 1-A
[File No. 24S-2996])


4 1992 Stock Incentive Plan (incorporated by reference to the Company's
Registration Statement on Form S-8 (333-61181) filed September 10, 2001)

4.1 Amendment dated July 21, 1996 (incorporated by reference to the Company's
Registration Statement on Form S-8 (333-61181) filed September 10, 2001)

4.2 Amendment dated July 25, 1998 (incorporated by reference to the Company's
Registration Statement on Form S-8 (333-61181) filed September 10, 2001)

4.3 Amendment dated April 15, 1999 (incorporated by reference to the Company's
Registration Statement on Form S-8 (333-61181) filed September 10, 2001)

4.4 Amendment dated July 25, 2000 (incorporated by reference to the Company's
Registration Statement on Form S-8 (333-61181) filed September 10, 2001)

4.5 Sample Incentive Stock Option Agreement (incorporated by reference to the
Company's Registration Statement on Form S-8 (333-61181) filed
September 10, 2001)

4.6 Sample Nonqualified Stock Option Agreement (incorporated by reference to
the Company's Registration Statement on Form S-8 (333-61181) filed
September 10, 2001)



31.1 Certification by James W. Bernau pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934

31.2 Certification by Sean M. Cary pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934

32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.