SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

___________________________________________________________

FORM 10-QSB
___________________________________________________________

Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

For the Quarter Ended June 30, 2006

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)

___________________________________________________________

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

                                            [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 June 30, 2006
4,754,202 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
                                          June 30,         December 31,
                                            2006                2005
                                        (unaudited)
ASSETS.                                 __________          __________
Current Assets:
  Cash and cash equivalents            $ 1,976,224         $   415,591
  Accounts receivable trade, net           787,622           1,568,255
  Inventories                            6,089,800           6,950,993
  Prepaid expenses and other
  current assets                            59,526              22,561
  Prepaid income taxes                      89,514                   -
  Deferred income taxes                     91,000              91,000
                                        __________          __________
Total current assets                     9,093,686           9,048,400

Vineyard development cost, net           1,502,356           1,526,073
Property and equipment, net              3,949,686           4,037,160
Debt issuance costs, net                    31,834              35,410
Other assets                                79,377              80,071
                                        __________          __________
Total assets                           $14,656,939         $14,727,114
                                        ==========          ==========
LIABILITIES AND SHAREHOLDERS EQUITY

Current liabilities
  Current portion of long term debt    $   283,334         $   283,334
  Accounts payable                         589,248             811,141
  Accrued expenses                         333,447             348,169
  Income taxes payable                           -             344,987
  Grapes payable                           294,386             471,873
                                        __________          __________
Total current liabilities                1,500,415           2,259,504

Long-term debt                           1,845,881           1,986,531
Deferred rent liability                    174,458             164,771
Deferred gain                              426,167             442,214
Deferred income taxes                      148,000             148,000
                                        __________          __________
Total liabilities                        4,094,921           5,001,020
                                        __________          __________
Shareholders' equity
  Common stock, no par value - 10,000,000
  shares authorized, 4,754,202 and 4,660,202
  shares issued and outstanding at June 30,
  2006 and December 31, 2005             7,832,646           7,613,222
Retained earnings                        2,729,372           2,112,872
                                        __________          __________
Total shareholders' equity              10,562,018           9,726,094
                                        __________          __________
Total liabilities and shareholders'
equity                                 $14,656,939         $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 June 30,  Six months ended June 30,
                      2006          2005         2006          2005
                   __________    __________   __________    __________
Net revenues
  Case revenue    $ 3,426,838   $ 3,500,676  $ 7,121,014   $ 5,785,314
  Custom crush-facility lease-
    bulk revenue        8,793        11,823       17,586       102,263
                   __________    __________   __________    __________
Total net revenues  3,435,631     3,512,499    7,138,600     5,887,577

Cost of sales
  Case              1,779,274     1,931,401    3,730,693     3,161,917
  Bulk                      -             -        4,631        55,926
                   __________    __________   __________    __________
Total cost of sales 1,779,274     1,931,401    3,735,324     3,217,843

Gross profit        1,656,357     1,581,098    3,403,276     2,669,734

Selling, general and administrative
  expenses          1,200,629     1,069,561    2,329,745     1,961,984
                   __________    __________   __________    __________
Net operating
  income              455,728       511,537    1,073,531       707,750

Other income (expense)
  Interest income      18,878           260       23,156           426
  Interest expense    (42,597)      (52,597)     (86,083)     (118,380)
  Other income
    (expense)               -             -       16,895        17,336
                   __________    __________   __________    __________
Net income before
  income taxes        432,009       459,200    1,027,499       607,132

Income tax            172,803       183,680      410,999       242,853
                   __________    __________   __________    __________
Net income            259,206       275,520      616,500       364,279

Retained earnings beginning of
  period            2,470,166     1,044,692    2,112,872       955,933
                   __________    __________   __________    __________
Retained earnings
  end of period   $ 2,729,372   $ 1,320,212  $ 2,729,372   $ 1,320,212
                   ==========    ==========   ==========    ==========
Basic earnings per
  common share    $       .06   $       .06  $       .13   $       .08

Diluted earnings per
  common share    $       .05   $       .06  $       .13   $       .08

Weighted average number of
basic common shares
outstanding         4,711,620     4,492,602    4,692,942     4,489,573

Weighted average number of
diluted common shares
outstanding         4,893,871     4,598,281    4,875,194     4,595,252


The accompanying notes are an integral part of this financial statement.

                  WILLAMETTE VALLEY VINEYARDS, INC.
                       Statement of Cash Flows
                             (unaudited)

                                           Six months ended June 30,
                                            2006                2005
                                        __________          __________
Cash flows from operating activities:
  Net income                           $   616,500        $    364,279
Reconciliation of net income to
 net cash provided by (used in)
 operating activities:
  Depreciation and amortization            267,152             276,843
  Stock based compensation expense          16,780                   -

Changes in assets and liabilities:
  Accounts receivable trade                780,633            (136,842)
  Inventories                              861,193             610,068
  Prepaid expenses and other
    current assets                         (36,965)            (46,153)
  Prepaid income taxes                     (89,514)                  -
  Note receivable                                -               5,000
  Other assets                                 694               1,294
  Accounts payable                        (221,893)             77,497
  Accrued expenses                         (14,722)            (47,213)
  Income taxes payable                    (344,987)           (194,046)
  Grape payables                          (177,487)           (163,504)
  Deferred rent liability                    9,687              16,493
  Deferred gain                            (16,047)            (16,048)
                                        __________          __________
Net cash provided by
  operating activities                   1,651,024             747,668
                                        __________          __________

Cash flows from investing activities;
  Additions to property and equipment     (135,458)            (77,596)
  Vineyard development expenditures        (16,927)           (171,095)
                                        __________          __________
Net cash used in investing activities     (152,385)           (248,691)
                                        __________          __________

Cash flows from financing activities:
  Debt issuance costs                            -              (4,622)
  Net (decrease) increase in line of
    credit balance                               -          (1,097,772)
  Proceeds from stock options exercised    202,644              23,160
  Repayments of long-term debt            (140,650)           (181,423)
                                        __________          __________
Net cash provided by (used in)
  financing activities                      61,994          (1,260,657)
                                        __________          __________
Net increase (decrease) in cash and
  cash equivalents                       1,560,633            (761,680)

Cash and cash equivalents:
  Beginning of period                      415,591             851,492
                                        __________          __________
  End of period                        $ 1,976,224         $    89,812
                                        ==========          ==========

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
six months ended June 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 six months ended June 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 182,251 shares are included in the computation of dilutive earnings
per share for the three and six months ended June 30, 2006. Total potentially
dilutive shares of 105,679 shares are included in the computation of dilutive
earnings per share for the three and six months ended June 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:
                           Quarter to date         Year to date
                           June 30, 2006           June 30, 2006
                           _______________         _______________
                                  Weighted                Weighted
                                   Average                 average
                                  Exercise                exercise
                           Shares   price          Shares   price
Outstanding at
    beginning of period   597,500  $ 3.60         609,500  $ 3.57
  Granted                       -       -               -       -
  Exercised               (67,000) $ 1.85         (79,000) $ 1.92
  Forfeited                     -       -               -       -
                          --------                --------
Outstanding at
    end of Period         530,500  $ 3.82         530,500  $ 3.82
                          ________                ________


The following table presents information on stock options outstanding for the
periods shown:
                              Quarter Ended          Quarter Ended
                              June 30, 2006          June 30, 2005
                           __________________     __________________
Intrinsic value of options
    exercised in the period        $  408,375             $   31,950
Stock options fully vested and
    expected to vest
  Number                     530,500                412,200
  Weighted average exercise
    Price                          $     3.82             $     2.36
  Aggregate intrinsic value        $2,616,381             $  658,116
  Weighted average contractual
    term of options                7.11 years             7.09 years

Stock options vested and
    Currently exercisable
  Number                     478,300
  Weighted average exercise
    Price                          $     3.85
  Aggregate intrinsic value        $2,342,144
  Weighted average contractual
    term of options                6.94 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

                                           June 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 six months ended June 30, 2006, the
Company recognized pretax compensation expense related to stock options of
$8,390 and $16,780, 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   Six Months Ended
                                                June 30, 2005
                                        (unaudited)      (unaudited)
                                        __________       __________

Net income, as reported                $   275,520      $   364,279

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                                  (44,918)         (89,835)
                                        __________       __________

Pro forma net income                   $   230,602      $   274,444

Earnings per share:
  Basic - as reported                  $      0.06      $      0.08
  Basic - pro forma                    $      0.06      $      0.08

  Diluted - as reported                $      0.06      $      0.08
  Diluted - pro forma                  $      0.05      $      0.06




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

  Stock Options Exercised       7,500     $ 3.76
                                1,000       2.75
                               10,000       1.75
                                6,500       1.69
                               30,000       1.5625
                                4,000       1.50
                                8,000       1.46

3) INVENTORIES BY MAJOR CLASSIFICATION ARE SUMMARIZED AS FOLLOW:

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

Winemaking and packaging materials     $    57,889         $   223,389
Work-in-progress (costs relating
  to unprocessed and/or bulk
  wine products)                         1,786,592           1,790,472
Finished goods (bottled wines            4,245,319           4,937,132
  and related products)                 __________          __________

Current inventories                    $ 6,089,800         $ 6,950,993
                                        ==========          ==========


4) PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING:

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

Land and improvements                  $   787,454         $   769,644
Winery building and hospitality center   4,744,669           4,707,802
Equipment                                4,056,433           3,975,652
                                        __________          __________
                                         9,588,556           9,453,098

Less accumulated depreciation           (5,638,870)         (5,415,938)
                                        __________          __________
                                       $ 3,949,686         $ 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
uch 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 six months ended
June 30, 2006.

Overview

Awareness of the Company's wine quality received national circulation in the
quarter ended June 30, 2006 from the publication of renowned author and
sommelier Kevin Zraly's '06 edition of the American Wine Guide in which he
featured the Willamette Valley Vineyards '02 Vintage Pinot Noir label and
recommended the winery's Pinot Noir in the chapter "Kevin Zraly's Best Picks."
This wine also earned 92 points from Cheers magazine, a hospitality trade
publication.  The '04 Estate and '05 Whole Cluster Pinot Noirs earned gold
medals from the Taster's Guild International Wine Competition.  The winery's
'05 Pinot Gris has earned 6 gold medals from national and international wine
competitions, received 91 points in the August '06 issue of Wine & Spirits
Magazine and was featured in Karen MacNeil's '07 Wine Lovers calendar as a
"must try wine."

The continued increase in demand for the Company's products has continued to
constrain the Company's inventory of its core products.  All winery
Departments and distributors have been given case allocations available to
each for 2006.  The Company received orders in the quarter ended June 30, 2006
from particular distributors in excess of their respective allocations and
those orders were "shorted" and filled only to the amount of their annual
allocation, stopping the continued growth in winery sales revenue.

Revenues decreased 2% and Net Income before taxes decreased 6% for the three
months ended June 30, 2006, as compared to the prior year period.  For the six
months ended June 30, 2006 revenues increased 21% and Net Income before taxes
increased 69%, as compared to the prior year period.

Depletions of the Company's products by its out-of-state distributors to
their retail customers increased 130% in the six months ended June 30, 2006
compared to the prior year period.  Specifically, increases in depletions of
the following core products were:  265% Estate Pinot Noir, 201% Vintage Pinot
Noir, 97% Whole Cluster Fermented Pinot Noir, 123% Pinot Gris and 54% Riesling.

In spite of these historically high levels of customer demand, management
expects to receive less revenue from the sales of its core products, Vintage
Pinot Noir, Whole Cluster Pinot Noir, Pinot Gris and Riesling in the second
half of 2006 and in 2007 than it did in 2005, and the six months ended
June 30, 2006.  The Company has placed these varieties on allocation with its
distributors, and has made careful, upward price adjustments as new vintages
were released in order to address these inventory constraints.  The upward
adjustments have contributed to improved gross margins for the Company as more
revenue was associated with sales of products produced by the Company.

In the year ended December 31, 2005, the Company sold approximately 35,000
cases of vintage level Pinot Noir.  In the six months ended June 30, 2006, the
Company sold approximately 19,000 cases of vintage level Pinot Noir.  This
equates to 71% of the vintage level Pinot Noir the Company allocated for sale
in all of 2006.  The Company plans to bottle approximately 20,000 cases of its
2005 vintage of vintage level Pinot Noir in 2006 and currently plans on
approximately 21,000 cases of vintage level Pinot Noir from the 2006 harvest.

The Company sold approximately 11,000 cases of Whole Cluster Pinot Noir during
the year ended December 31, 2005.  The Company has sold approximately 8,500
cases of Whole Cluster Pinot Noir in the six months ended June 30, 2006, or
80% of the Whole Cluster Pinot Noir allocated for sale in 2006.  The Company
currently plans to produce approximately 12,000 cases of Whole Cluster Pinot
Noir from the 2006 harvest.

The Company sold approximately 17,000 cases of Pinot Gris in the year ended
December 31, 2005, and during the six months ended June 30, 2006 the Company
sold approximately 10,500 cases of Pinot Gris.  This equates to 63% of the
Pinot Gris the Company allocated for sale in 2006.  The Company currently
plans to produce approximately 17,500 cases of Pinot Gris from the 2006
harvest.

In the year ended December 31, 2005 the Company sold approximately 18,500
cases of Riesling.  During the six months ended June 30, 2006 the Company sold
approximately 6,000 cases of Riesling, or 35% of the Riesling the Company
allocated for sale in 2006.  Currently, the Company expects to produce
approximately 14,000 cases of Riesling from the 2006 harvest.

The total owned and contracted vineyard totals 505 acres, including 290 acres
not yet productive, which together will produce approximately 120,000 cases
when fully productive.  The current production estimate for the 2006 harvest
is approximately 80,000 cases.  The Company presently owns 48 acres of
producing vineyard at its Willamette Valley Vineyards Estate Vineyard and owns
or leases approximately 180 acres at its Tualatin Estate Vineyard. The Company
is in the process of planting an additional 5 acres at the Tualatin site.  In
addition, it leases the 50 acre Belle Provenance Vineyard in the Eola Hills,
of which 2006 is the last year of the 10 year lease.  The Company has chosen
not to renew that lease.  This will result in a decrease in production of
approximately 10,000 cases, offset by increases of approximately 12,000 cases
from vineyards that are expected to come into production in 2007.  All of the
Company's vineyards are certified sustainable by LIVE (Low Input Viticulture
and Enology) and Salmon Safe by the Pacific Rivers Council.

The Company has contracted on a long term basis (10 years) for 90 acres of
Pinot Gris and Riesling, which were planted in 2005, and 100 acres of Pinot
Noir, 50 acres of Pinot Gris and 20 acres of Riesling, which were planted in
2006.  We expect that the white varietal cases from these long term contracts
will be available for sale beginning mid-year 2008 with substantial volumes of
all varietals anticipated in 2010.  When fully productive, management expects
to produce from the acreage it owns or controls approximately 45,000 cases of
Pinot Noir, 37,500 cases of Pinot Gris and 28,000 cases of Riesling, in
addition to other quantities of other wine grape varieties.

In order to meet the demand for the Company's products until the new plantings
are productive, the Company will continue to purchase wine grapes as the
Company has done historically from quality growers throughout the Willamette
Valley Appellation on shorter term contracts.  However, the recent, significant
increase in demand for Oregon wine has increased demand for available fruit
supplies.  While plantings are increasing, fruit yields are lagging behind
demand and prices are high for contract grapes.

During this period of high demand and limited supply, management is focused on
positioning the Company's Willamette Valley Vineyards brand and flagship
varietal Pinot Noir as the consumer's brand of choice for the varietal at
price points that management believes significant growth and margin opportunity
exists.  The Company is identifying and nurturing Pinot Noir enthusiasts at
all levels of distribution through its "Customers for Life" program.
Additionally, the Company is developing its professional staff and sales
mechanism and to support the expected increasing production volumes.  These
efforts are increasing sales, general and administrative expenses in the near
term in an effort to build and maintain the ability to handle the expected
volume increases in the long term.

Revenues from the Company's Oregon Wholesale Department, Bacchus Fine Wines,
decreased 4% in the three months ended June 30, 2006, compared to the prior
year period.  In the year ended December 31, 2005, the Company sold 27,217
cases of products other than its own through Bacchus Fine Wines.  In the six
months ended June 30, 2006, the Company sold 12,662 cases of products other
than it is own through Bacchus Fine Wines.  The Company receives a gross
margin of approximately 23% from the sales of products other than it is own
compared to a gross margin of approximately 55% for the sale of products the
Company produces.  As the Company's revenue attributable to the sale of
products other than it is own through Bacchus Fine Wines increases, the
Company's gross margin will be negatively impacted, particularly when the sale
of Company produced products is constrained by inventory shortages.

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.
On December 12, 2005 the Board of Directors of Willamette Valley Vineyards,
Inc. approved the accelerated vesting (the "Acceleration") of unvested stock
options to purchase 130,750 shares of common stock previously granted to
employees and officers under the Company's 1992 Stock Incentive Plan and 2001
Stock Option Plan with exercise prices ranging from $1.46 to $4.98 per share.
The Acceleration was effective December 23, 2005, and none of the exercise
prices of the options vested were changed.  There now remains 33,466 shares
available in the pool.  Given the new accounting rules, Management expects the
Board to be reluctant to issue options from this pool and does not expect the
Board to seek any additional options from the Shareholders.  There are several
employee incentive option grants outstanding which management expects to lead
to an expense  of approximately $8,400 per quarter in 2006.


RESULTS OF OPERATIONS

Revenue

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

                  Three months ended June 30,  Six months ended June 30,
                      2006          2005         2006          2005
                   __________    __________   __________    __________

Tasting Room Sales and
 Rental Income    $   429,184   $   460,109  $   808,168   $   794,007
On-site and off-site
 festivals             14,052         2,112       50,085        48,113
In-state sales      1,718,509     1,789,147    3,267,244     3,025,939
Out-of-state sales  1,351,703     1,310,633    3,175,469     2,032,337
Bulk wine/
 Misc. sales            8,793        11,823       17,586       102,263
                   __________    __________   __________    __________
Total Revenue       3,522,241     3,573,824    7,318,552     6,002,659

Less Excise Taxes      86,610        61,325      179,952       115,082
                   __________    __________   __________    __________
Net Revenue       $ 3,435,631   $ 3,512,499  $ 7,138,600   $ 5,887,577
                   ==========    ==========   ==========    ==========

Net revenues for the three months ended June 30, 2006 decreased $76,868, or
2%, compared to the corresponding period in the preceding year.  This decrease
is due primarily to the decreases in tasting room sales and rental income and
in-state sales.  Net revenue for the six months ended June 30, 2006 increased
$1,251,023, or 21%, compared to the corresponding prior year period.  This
increase is due primarily to the increase in out-of-state sales.

Tasting room sales and rental income for the three months ended June 30, 2006
decreased $30,925, or 7%, compared to the corresponding prior year period,
primarily as a result of turnover in the key customer phone sales staff and a
decrease in rental income. Tasting room sales increased during the six months
ended June 30, 2006 $14,161, or 2% due primarily to increased purchases in the
tasting room and increased key customer phone sales during the prior quarter.

Sales in the state of Oregon, through the Company's wholesale department,
Bacchus Fine Wines, decreased $70,638, or 4%, in the three months ended
June 30, 2006, compared to the corresponding prior year period.  The Company's
direct instate sales to its largest customer decreased $78,238, or 23%, in the
three months ended June 30, 2006, over the comparable prior year period.
These decreases are largely the result of the decreased 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 increased during the Second Quarter.  Sales in the
state of Oregon, through Bacchus Fine Wines increased $241,305, or 8%, in the
six months ended June 30, 2006, compared to the corresponding prior year
period.  This increase is largely the result of increased sales of Company
produced products and, to a lesser degree, 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 and six months ended June 30, 2006 increased
$41,070 and $1,143,132, or 3% and 56%, respectively, over the comparable prior
year periods.  The higher sales are 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.  The leveling off
of out-of-state sales in the three months ended June 30, 2006 is due to
present inventory constraints.

Excise taxes

The Company's excise taxes for the three and six months ended June 30, 2006
increased 41% and 56%, respectively, as compared to the corresponding prior
year periods.  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 48% in the three and
six months ended June 30, 2006, as compared to 45% in the comparable prior year
periods.  The revenue generated by the sale of the Company's higher margin
products to out of state distributors in the three and six months ended
June 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 the gross margins due to the lower margins
associated with selling those brands.  While the 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 six months
ended June 30, 2006 increased 12% and 19%, 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 the upcoming production volumes.  As a
percentage of net revenue from winery operations, selling, general and
administrative expenses increased to 35% for the three months ended
June 30, 2006, as 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 was
unchanged at 33% for the six months ended June 30, 2006, as compared to the
comparable prior year period.


Interest Income, Other Income and Expense

Interest income increased to $18,878 and $23,156, respectively, for the three
and six months ended June 30, 2006, compared to $260 and $426 for the
comparable prior year periods.  Interest income increased primarily to the
Company's increased deposits in interest bearing accounts.  Interest expense
for the three and six months ended June 30, 2006 decreased 23% and 27%,
respectively, compared to the corresponding prior year periods.  Interest
costs were lower primarily due to less debt outstanding during the period.

Other income for the first six months of 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 $172,803 and $410,999, respectively, for the three and
six months ended June 30, 2006, compared to $183,680 and $242,853,
respectively for the prior year periods due to the Company's net profit for the
three and six months ended June 30, 2006.  The Company's estimated tax rate for
the three and six months ended June 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 six
months ended June 30, 2006 was $259,206 and $616,500, or $0.05 and $0.13 per
diluted share, respectively, compared to net income of $275,520 and $364,279,
or $0.06 and $0.08 per diluted share, respectively, in the comparable prior
year periods.

Liquidity and Capital Resources

At June 30, 2006, the Company had a working capital balance of $7.6 million
and a current ratio of 6.06:1.  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 $1,976,224 at June 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 six months ended
June 30, 2006 was $1,651,024, compared to $747,668 for the prior year period,
primarily as an increase in net income, collection of receivables, and
conversion of inventory to cash through sales in the six months ended
June 30, 2006 compared to the prior year period.  Cash provided by operating
activities in the six months ended June 30, 2006 consisted of net income of
$616,500, plus depreciation of $267,152, plus changes in assets and
liabilities and other non-cash charges of $767,372.

Total cash used in investing activities in the six months ended June 30, 2006
was $152,385, compared to $248,691 in the prior year period.  Cash used in
investing activities consisted of property and equipment additions.

Total cash provided by financing activities in the six months ended
June 30, 2006 was $61,994, compared to $1,260,657 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 June 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 June 30, 2006, the
Company was in compliance with all of the financial covenants.

As of June 30, 2006, the Company had a total long-term debt balance of
$2,129,215 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 June 30, 2006, the Company owed $294,386 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 June 30, 2006.  Based on that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures as of June 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 period ended June 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 June 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: Aug 14, 2006       By /s/ James W. Bernau
                                  James W. Bernau
                                  President


Date: Aug 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.