UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
_____________ FORM 10-QSB  ý
		
		QUARTERLY REPORT
		UNDER SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT  OF 1934FOR THE QUARTERLY PERIOD ENDED:SEPTEMBER 30, 2006o
		
		TRANSITION REPORT
		UNDER SECTION 13 OR 15(d) OF THE 
		SECURITIES EXCHANGE ACT OF 1934Forthe transition period from  to Commission file number: 000-23819  
WILSON HOLDINGS, INC. (Name of
small business issuer in its charter) Nevada
		
		76-0547762(State or
other jurisdiction of Incorporation or organization)
		
		(I.R.S Employer
Identification No.)8121 Bee Caves Rd., Austin, TX 78746(Address of
Principal Executive Offices) 512-732-0932 (Issuer's Telephone Number) 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 time period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes
ýNo
o Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act): Yes
o   No
x State the number of shares outstanding of each of the issuers classes of common equity as of the latest practicable date:As of November 13, 2006 the registrant had 17,706,625 shares of common stock, par value $0.001, outstanding.  Transitional Small Business Issuer Disclosure Format:Yes
oNo
ý 
  Index

ITEM

PART I  FINANCIAL INFORMATION
Item 1.
			Financial Statements
			1
Item 2.
			Managements Discussion and Analysis or Plan of Operation
			20
Item 3.
			Controls and Procedures
			25
PART II  OTHER INFORMATION
Item 1.
			Legal Proceedings
			25
Item 2.
			Unregistered Sales of Equity Securities and Use of Proceeds
			25
Item 3.
			Defaults Upon Senior Securities
			25
Item 4.
			Submission of Matters to a Vote of Security Holders
			25
Item 5.
			Other Information
			25
Item 6.
			Exhibits
			26



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Table of Contents
INTRODUCTORY NOTE

This Report on Form 10-QSB for Wilson Holdings, Inc. (we, us, or the Company) may contain forward-looking statements. You can identify these statements by forward-looking words such as may, will, expect, intend, anticipate, believe, estimate, and continue or similar words. Forward-looking statements include information concerning possible or assumed future business success or financial results. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able
to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties set forth under Risk Factors in our Form 10-KSB and any other periodic reports filed with the Securities and Exchange Commission. Accordingly, to the extent that this Quarterly Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the Company, please be advised that the Companys actual financial condition, operating results and business performance may differ materially from that projected or estimated by the Company in forward-looking statements.

Whenever we refer in this report to Wilson Holdings, the Company, we, us, or our, we mean Wilson Holdings, Inc., a Nevada corporation, and, unless the context indicates otherwise, its predecessors and subsidiaries, including its wholly-owned subsidiary, Wilson Family Communities, Inc., a Delaware corporation.





ii


Table of Contents
Item 1.
			Financial Statements
WILSON HOLDINGS, INC.Consolidated Balance SheetsAs of September 30, 2006 and December 31, 2005September 30,2006
			
			December 31, 2005(unaudited)ASSETSCurrent assets:Cash and cash equivalents
			$
			8,803,777
			
			10,019,816InventoryLand
			
			10,435,621
			
			12,299,872Construction in progress
			
			10,139,978
			
			655,145Total inventory
			
			20,575,599
			
			12,955,017Other assets
			
			115,819
			
			48,056Total current assets
			
			29,495,195
			
			23,022,889Non-current assets:Debt issuance costs, net of amortization
			
			1,460,807
			
			1,420,669Equipment and software, net of accumulated depreciation and amortization
			
			108,594
			
			70,875Total assets
			
			31,064,596
			
			24,514,433LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
			
			695,335
			
			260,137Notes payable
			
			11,000
			
			6,683,879Lines of credit
			
			3,467,340
			
			253,945Accrued expenses
			
			819,347
			
			135,168Accrued interest
			
			200,398
			
			237,592Deferred revenue
			
			11,223
			
			11,223Current portion of long term notes payable
			
			1,600,000
			
			-Notes payable, related party
			
			-
			
			279,800Total current liabilities
			
			6,804,643
			
			7,861,744Long term liabilities:Notes payable
			
			4,600,000
			
			424,700Notes payable, related party
			
			279,800
			
			-Convertible debt, net of $8,577,362 and $5,002,500 discount, respectively
			
			7,922,638
			
			4,997,500Derivative liability, convertible note compound embedded derivative
			
			3,412,500
			
			4,500,000Derivative liability, contingent warrants issued to convertible debt holders
			
			698,344
			
			675,000Total long term liabilities
			
			16,913,282
			
			10,597,200Total liabilities
			
			23,717,925
			
			18,458,944STOCKHOLDERS EQUITYCommon stock, $0.001 par value, 80,000,000 shares authorized, 17,706,625 shares issued and outstanding at September 30, 2006 and December 31, 2005
			
			17,707
			
			17,707Additional paid in capital
			
			16,614,875
			
			7,697,868Accumulated deficit
			
			(9,285,911)
			
			(1,660,086)Total stockholders equity
			
			7,346,671
			
			6,055,489Total liabilities and stockholders equity
			$
			31,064,596
			
			24,514,433
See accompanying notes to the consolidated financial statements.

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Table of Contents
WILSON HOLDINGS, INC.Consolidated Statements of OperationsFor the Three Months and Nine Months Ended September 30, 2006 and 20053 Months Ended September 30,
			
			9 Months Ended September 30,2006
			
			2005
			
			2006
			
			2005(unaudited)
			
			(unaudited)
			
			(unaudited)
			
			(unaudited)Revenues:Homebuilding and related services
			$
			1,482,933
			
			-
			
			4,184,905
			
			-Land sales
			
			413,811
			
			255,000
			
			1,079,811
			
			255,000Total revenues
			
			1,896,744
			
			255,000
			
			5,264,716
			
			255,000Cost of revenues:Homebuilding and related services
			
			1,255,959
			
			-
			
			3,480,403
			
			-Land sales
			
			273,332
			
			114,587
			
			624,487
			
			114,587Total cost of revenues
			
			1,529,291
			
			114,587
			
			4,104,890
			
			114,587Gross profit:Homebuilding and related services
			
			226,974
			
			-
			
			704,502
			
			-Land sales
			
			140,479
			
			140,413
			
			455,324
			
			140,413Total gross profit
			
			367,453
			
			140,413
			
			1,159,826
			
			140,413Costs and expenses:Corporate general and administration
			
			1,168,128
			
			369,270
			
			3,369,843
			
			434,305Sales and marketing
			
			282,328
			
			105,200
			
			640,421
			
			112,372Total costs and expenses
			
			1,450,456
			
			474,470
			
			4,010,264
			
			546,677Operating loss
			
			(1,083,003)
			
			(334,057)
			
			(2,850,438)
			
			(406,264)Other income (expense):Loss on fair value of derivatives
			
			(460,000)
			
			-
			
			(3,392,500)
			
			-Interest and other income
			
			54,413
			
			36,248
			
			260,199
			
			44,122Interest expense
			
			(570,430)
			
			(127,968)
			
			(1,643,086)
			
			(144,710)Total other expense
			
			(976,017)
			
			(91,720)
			
			(4,775,387)
			
			(100,588)Net loss
			$
			(2,059,020)
			
			(425,777)
			
			(7,625,825)
			
			(506,852)Basic and diluted loss per share
			$
			(0.12)
			
			(0.04)
			
			(0.43)
			
			(0.11)Basic and diluted weighted average common shares outstanding
			
			17,706,625
			
			10,000,000
			
			17,706,625
			
			4,444,444

See accompanying notes to the consolidated financial statements.

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Table of Contents
WILSON HOLDINGS, INC.Consolidated Statements of Cash FlowsFor the Nine Months Ended September 30, 2006 and 2005September 30,2006
			
			September 30,2005(unaudited)
			
			(unaudited)Cash flows from operating activities:Net loss
			$
			(7,625,825)
			
			(506,852)Non cash adjustments:Loss on fair value of derivative liability
			
			3,392,500
			
			-Amortization of convertible debt discount
			
			535,983
			
			-Amortization of debt issuance costs
			
			157,927
			
			-Compensation expense
			
			349,507
			
			-Depreciation and amortization
			
			44,940
			
			1,091Adjustments to reconcile net loss to net cash used in operating activities:Increase in total inventory
			
			(7,620,582)
			
			(646,269)Increase in other assets
			
			(67,763)
			
			(121,114)Increase in accounts payable
			
			435,198
			
			262,557Increase in accrued expenses
			
			684,179
			
			180,671(Decrease) increase in accrued interest
			
			(37,194)
			
			86,516Net cash used in operating activities
			
			(9,751,130)
			
			(743,400)Cash flows from investing activities:Purchase of fixed assets
			
			(68,479)
			
			(29,430)Net cash provided (used) in investing activities
			
			(68,479)
			
			(29,430)Cash flows from financing activities:Advances from related parties, net
			
			-
			
			119,000Issuances (repayments) of notes payable, net
			
			(897,579)
			
			(207,109)Advances (repayments) on lines of credit, net
			
			3,213,395
			
			17,481Proceeds from issuance of convertible debt
			
			6,500,000
			
			-Proceeds from common stock sales
			
			-
			
			60,000Proceeds from Series A convertible preferred stock
			
			-
			
			4,400,000Cash paid for debt issuance costs
			
			(212,246)
			
			-Net cash provided by financing activities
			
			8,603,570
			
			4,389,372Net decrease in cash and cash equivalents
			
			(1,216,039)
			
			3,616,542Cash and cash equivalents at beginning of period
			
			10,019,816
			
			8,943Cash and cash equivalents at end of period
			$
			8,803,777
			
			3,625,485Cash paid for interest
			$
			1,064,421
			
			51,138Cash paid for income taxes
			$
			-
			
			-Supplemental disclosures of cash flow information:Notes payable issued for land
			$
			-
			
			6,890,988Preferred stock issued for land
			
			-
			
			2,404,788Land
			$
			-
			
			9,295,776Common stock exchanged for partnership interests
			$
			-
			
			18,286

See accompanying notes to the consolidated financial statements.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(1)
			Organization and Business Activity
Wilson Holdings, Inc., (the Company) is a Nevada corporation formerly known as Cole Computer Corporation, a Nevada corporation. Effective October 11, 2005 pursuant to an Agreement and Plan of Reorganization dated as of September 2, 2005 by and among Wilson Holdings, Inc., a Delaware corporation and a majority of its shareholders, Wilson Acquisition Corp., a Delaware corporation and now, a Subsidiary of the Company and Wilson Family Communities, Inc., a Delaware corporation (WFC), Wilson Acquisition Corp. and WFC merged and WFC became a wholly-owned Subsidiary of the Company. The Companys common stock is quoted on the Over-the-Counter Bulletin Board under the symbol WSHD.OB.
The consolidated financial statements and the notes of the Company as of September 30, 2006 and December 31, 2005, and for the three months and nine months ended September 30, 2006 and 2005 have been prepared by management without audit, pursuant to rules and regulations of the Securities Exchange Commission and should be read in conjunction with the December 31, 2005 audited financials statements contained in the Companys Form 10-KSB, filed March 31, 2006. In the opinion of management, all normal, recurring adjustments necessary for the fair presentation of such financial information have been included. The preparation of financials statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Certain
information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.
The Company is focused on three principal activities: strategic land acquisition, land development and related services, and services to homebuilders.

			Strategic Land Acquisition: The core business plan is to acquire land and land rights either through purchase or option agreements.

			Land Development and Related Services:  In connection with the Companys land acquisition efforts, and based upon its strategic market analysis, it develops residential real estate for homebuilding, sells residential lots, and sells land in various stages of development. It offers assistance and site-specific analysis to land owners desiring to maximize land values. Such analysis can help owners design neighborhoods with pocket parks, natural space and varying lot sizes to attract a broader range of buyers; accelerating the absorption of the subdivision and thereby maximizing value. Its primary target group for sales is regional and national homebuilders.

			Services to Homebuilders: The Company delivers residential lots and customized services to local builders who have strong technical skills but who may lack the financial resources to compete effectively against national companies. In addition to selling residential lots to the builders, the Company offers a package of services designed to help them effectively manage their business. These services include marketing, sales, accounting, bill payment, compliance reviews, financing, surety and management services. The Companys homebuilding services represent a complimentary strategy to accelerate the rate of sales of its residential lot and land holdings. The Company is currently evaluating whether to continue providing these services.
(2)
			Summary of Significant Accounting Policies
(a)
			Consolidation of Variable Interest Entities
The Company offers certain homebuilder clients surety for their interim construction loans and cash advances to facilitate sales of the Companys residential lots. The Company may be considered the primary beneficiary as defined under FASB Interpretation No. 46(R) (FIN 46(R)), Consolidation of Variable Interest Entities (VIE), and the Company may have a significant, but less than controlling, interest in the entities. The Company accounts for each of these entities in accordance with FIN 46(R). Management uses its judgment when determining if the Company is the primary beneficiary of, or has a controlling interest in, any of these entities. Factors considered in determining whether the Company has significant influence or has control include risk and reward sharing, experience and financial condition of the other partners, voting rights, involvement in
day-to-day capital and operating decisions and continuing involvement.


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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(2)
			Summary of Significant Accounting Policies (continued)
(b)
			Stock-Based Compensation (continued)
Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123 (revised 2004), Share-Based Payment, (SFAS 123R) using the prospective-transition method. Under this transition method, compensation expense recognized during the three months and nine months ended September 30, 2006 included: (a) compensation expense for all share-based awards granted prior to, but not yet vested as of December 31, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation expense for all share-based awards granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. In accordance with the modified-prospective-transition method, results for prior periods have not been restated. The adoption of SFAS 123R resulted in a charge to net losses of
approximately $109 thousand and $350 thousand for the three months and the nine months ended September 30, 2006, respectively. Before January 1, 2006, the Company accounted for its stock options using the intrinsic value method under Accounting Principles Board Opinion No. 25.
If the Company had elected to recognize compensation expense for options granted based on their fair values at the grant dates, consistent with SFAS No. 123, net income and earnings per share would have changed to the pro forma amounts indicated below:
Periods ended September 30, 2005Three months
			
			Nine monthsNet loss as reported
			$
			(425,777)
			
			(506,852)Deduct: Total stock based employee compensation expense determined under the fair value based method for all awards, net of the related tax effects
			
			(29,483)
			
			(88,448)Pro forma net loss
			$
			(455,260)
			
			(595,300)Net loss per shareBasic and diluted - as reported
			$
			(0.04)
			
			(0.11)Basic and diluted - pro forma
			$
			(0.05)
			
			(0.13)

The fair value of the options was calculated at the date of grant using the Black-Scholes pricing model with the following weighted-average assumptions for the three months and nine months ended September 30, 2005: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 5 years, and a 60% volatility factor.
(c)
			Loss per Common Share
Incremental common shares attributable to the exercise of outstanding options and warrants totaling 2,520,000 and 2,360,000 for the three months and nine months ended September 30, 2006, respectively, and 6,890,989 preferred shares and 850,000 options for the three and nine months ended September 30, 2005, respectively, were excluded from the computation of diluted loss per share because the effect would be antidilutive.
(3)
			Inventory
The Companys inventory includes real estate held for sale or development and land, which includes real estate under development, development costs, prepaid development costs, development costs on land under option but not yet owned, and earnest money on land purchase options. As of September 30, 2006, it had approximately 2,395 acres of land under contract, including 681 acres under development and construction in Hays County, Travis County and Williamson County, Texas. Earnest money deposits for land costs and development costs on land under option, not owned, totaled $3.6 million at September 30, 2006, all of which is non-refundable if the Company does not exercise the option and purchase the land. During October 2006, the Company subsequently purchased the property which it had invested approximately $2.2 million of the total $3.6 million. Earnest money deposits for land options
included above totaled approximately $863 thousand at September 30, 2006, all of which is non-refundable.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(3)Inventory (continued)
Below is a summary of the property that is owned or under contract by the Company:

Property
			Approximate Acreage
			Approximate Owned Acreage
			Approximate Acreage Under Option
			Project Costs to Date
			In Thousands
			Approximate Acreage under Development
			Texas CountyRutherford West
			648
			648
			n/a
			$9,983
			648
			HaysHighway 183
			15
			15
			n/a
			388
			-
			TravisGeorgetown Village
			665
			54
			611
			5,667
			33
			WilliamsonVillages of New Sweden
			534
			-
			534
			1,974
			-
			TravisElm Grove
			90
			-
			90
			418
			-
			HaysBohls Ranch
			428
			-
			428
			885
			-
			TravisOther land projects
			-
			-
			-
			53Sub-total land
			2,380
			717
			1,663
			$19,368
			681Homebuilding inventory
			-
			-
			-
			1,207
			-Total inventory
			2,380
			717
			1,663
			20,575
			681

(4)
			Consolidation of Variable Interest Entities
We exercise significant influence over, but hold no controlling interest in our homebuilder clients. We bear the majority of the rewards and risk of loss. At September 30, 2006, the Company determined it was the primary beneficiary in certain homebuilder agreements as defined under FASB Interpretation No. 46(R) (FIN 46(R)), Consolidation of Variable Interest Entities (VIEs), (Note 2 (a)) that we have a significant, but less than controlling, interest in the entities. The results of these clients have been consolidated into our financial statements. Below is a summary of the effect of the consolidation of these entities for the nine months ended September 30, 2006:
Nine Months Ended September 30, 2006WFC
			
			VIEs
			
			Consolidating entries
			
			ConsolidatedRevenues
			$
			1,887,579
			
			4,196,905
			(a)
			(819,768)
			
			5,264,716ExpensesCost of Revenues
			
			1,114,829
			
			3,802,341
			(a)
			(812,280)
			
			4,104,890General, administrative, sales and marketing
			3,534,899
			
			287,654
			(b)
			187,711
			
			4,010,264Costs and expenses before interest
			
			4,649,728
			
			4,089,995
			
			(624,569)
			
			8,115,154Operating income/(loss)
			$
			(2,762,149)
			
			106,910
			
			(195,199)
			
			(2,850,438)
(a) Eliminates WFC revenues in VIE expenses, eliminates VIE expenses in WFC.
(b)  Loss of VIEs.
Below is a summary of the effect of the consolidation of these entities for the three months ended September 30, 2006:

Three Months Ended September 30, 2006WFC
			
			VIEs
			
			Consolidating entries
			
			ConsolidatedRevenues
			$
			695,592
			
			1,482,933
			(a)
			(281,781)
			
			1,896,744ExpensesCost of revenues
			
			429,157
			
			1,374,427
			(a)
			(274,293)
			
			1,529,291General, administrative, sales and marketing
			1,293,284
			
			82,698
			(b)
			74,474
			
			1,450,456Costs and expenses before interest
			
			1,722,441
			
			1,457,125
			
			(199,819)
			
			2,979,747Operating income/(loss)
			$
			(1,026,849)
			
			25,808
			
			(81,962)
			
			(1,083,003)

(a)  Eliminates WFC revenues in VIE expenses, eliminates VIE expenses in WFC.
(b)  Loss of VIEs.
No VIEs were consolidated into the operating results during the three months and six months ended September 30, 2005.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(5)
			Operating and Reporting Segments
The Company has two reporting segments: Homebuilding and Related Services, and Land Sales. The Companys reporting segments are strategic business units that offer different products and services. The homebuilding and related services segment includes home sales and services provided to homebuilders. The Company does not build or sell homes but is required to consolidate its homebuilder services clients per FIN (46), (Note 4). The Company identifies the clients it consolidates as VIEs. Land sales consist of land in various stages of development sold, including finished lots. The Company eliminates land sales to its homebuilder clients. The Company charges identifiable direct expenses and interest to each segment and allocates corporate expenses and interest based on an estimate of each segments relative use of those expenses. Depreciation expense is included in
selling, general and administrative and is immaterial.
The following table presents segment operating results before taxes for the nine months ended September 30:
2006
			
			2005Homebuilding and Related Services
			
			Land Sales
			
			Total
			
			Homebuilding and Related Services
			
			Land Sales
			
			TotalRevenues from external customers
			$
			4,184,905
			
			1,079,811
			
			5,264,716
			
			-
			
			255,000
			
			255,000Costs and expenses:Cost of revenues
			
			3,480,403
			
			624,487
			
			4,104,890
			
			-
			
			114,587
			
			114,587Selling, general and administrative
			
			2,651,143
			
			1,359,121
			
			4,010,264
			
			63,477
			
			483,200
			
			546,677Loss of fair value of derivatives
			
			-
			
			3,392,500
			
			3,392,500
			
			-
			
			-
			
			-Interest & other income
			
			(143,751)
			
			(116,448)
			
			(260,199)
			
			-
			
			(44,122)
			
			(44,122)Interest expense
			
			650,716
			
			992,370
			
			1,643,086
			
			-
			
			144,710
			
			144,710Total costs and expenses
			
			6,638,511
			
			6,252,030
			
			12,890,541
			
			63,477
			
			698,375
			
			761,852Loss before taxes
			$
			(2,453,606)
			
			(5,172,219)
			
			(7,625,825)
			
			(63,477)
			
			(443,375)
			
			(506,852)Segment Assets
			$
			3,048,126
			
			28,016,470
			
			31,064,596
			
			-
			
			14,092,338
			
			14,092,338Capital expenditures
			$
			-
			
			68,479
			
			68,479
			
			-
			
			29,430
			
			29,430
The following table presents segment operating results before taxes for the three months ended September 30:
2006
			
			2005Homebuilding and Related Services
			
			Land Sales
			
			Total
			
			Homebuilding and Related Services
			
			Land Sales
			
			TotalRevenues from external customers
			$
			1,482,933
			
			413,811
			
			1,896,744
			
			-
			
			255,000
			
			255,000Costs and expenses:Cost of revenues
			
			1,255,959
			
			273,332
			
			1,529,291
			
			-
			
			114,587
			
			114,587Selling, general and administrative
			
			993,067
			
			457,389
			
			1,450,456
			
			63,477
			
			410,993
			
			474,470Loss of fair value of derivatives
			
			-
			
			460,000
			
			460,000
			
			-
			
			-
			
			-Interest and other income
			
			(143,741)
			
			89,328
			
			(54,413)
			
			-
			
			(36,248)
			
			(36,248)Interest expense
			
			286,237
			
			284,193
			
			570,430
			
			-
			
			127,968
			
			127,968Total costs and expenses
			
			2,391,522
			
			1,564,242
			
			3,955,764
			
			63,477
			
			617,300
			
			680,777Loss before taxes
			$
			(908,589)
			
			(1,150,431)
			
			(2,059,020)
			
			(63,477)
			
			(362,300)
			
			(425,777)Segment Assets
			$
			3,048,126
			
			28,016,470
			
			31,064,596
			
			-
			
			14,092,338
			
			14,092,338Capital expenditures
			$
			-
			
			-
			
			-
			
			-
			
			23,183
			
			23,183
(6)
			Related Party Transactions
In 2004, Clark N. Wilson, the Company President and Chief Executive Officer, became the sole remaining partner of Athena Equity Partners-Hays, L.P., a Texas limited partnership. On May 31, 2005 Athena merged with WFC and the remaining Athena assets and partnership interests were exchanged for 9,000,000 shares of WFC common stock. In addition, at the time of the merger, trusts belonging to various members of the Wilson family purchased 1,000,000 shares of WFC common stock for $60 thousand.
In March of 2005, some of the trusts belonging to the Wilson family purchased a note for approximately $280 thousand from a third party that is secured by approximately 15 acres of land. At the time of purchase, the terms of the note payable to the trusts belonging to family members of Clark Wilson remained the same at 8% per annum but the maturity date was
changed from October 7, 2005 to

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(6)
			Related Party Transactions (continued)
April 4, 2006 when the entire principal and interest would be due and payable. On March 29, 2006, the note was extended for two years, changing the maturity date to April 4, 2008 (Note 9).
In June 2005, Clark N. Wilson, President and CEO of the Company and another investor purchased 2,200,000 and 2,000,000 shares, respectively, of Series A Convertible Preferred Stock from WFC for $1.00 per share.
In August 2005, WFC repaid $121 thousand that Mr. Wilson had advanced to WFC before the merger with Athena for working capital. In October 2005, WFC repaid the remaining $140 thousand advanced by Mr. Wilson to WFC.
In 2005, WFC obtained a line of credit of $2 million that was personally guaranteed by Mr. Wilson. The personal guarantee was released during May 2006.
During the nine months ended September 30, 2006, Mr. Wilsons brother provided services to the Company for which he was paid approximately $20 thousand. These services were primarily related to the development of information systems for the Company. Management believes that these services were provided at fair market value. Mr. Wilsons brother did not provide services to the Company during the three months ended September 30, 2006.
Real Property Purchase
SGL Development, Ltd. and SGL Investments, Ltd., (collectively, SGL) were owners of approximately 736 acres of undivided land in Hays County, Texas. Clark N. Wilson directly and beneficially (through Steamboat Joint Venture) owned 13.59% (the Wilson Beneficial Interest) of the property and John O. Gorman indirectly owned 12.33% (the Gorman Beneficial Interest) of the property. In June 2005, SGL distributed to Mr. Wilson and Mr. Gorman their beneficial ownership in the property which they sold to WFC in exchange for 1,260,826 and 1,143,963, respectively, of the 2,404,789 preferred shares issued by WFC in the transaction. SGL then sold the remaining property, approximately 74.08%, to WFC in exchange for notes payable of approximately $6.9 million. The Company believes that WFC purchased the property at fair market value due to the price paid for
the preferred stock paid by the other parties involved in the transaction. The notes payable issued had principal and interest due at maturity on June 30, 2006, with interest at the prime rate as reported in the Wall Street Journal adjusted for changes, (Prime Rate) for the first six months, Prime Rate plus 2.00% for the second six months and Prime Rate plus 2.25% with an exercise of an extension period of 90 days on the notes if the notes are not in default. The interest rate on the notes increased to 9.75% as of March 31, 2006. The notes are secured by the entire property acquired. There is a provision for partial releases of the land, lots, and tracts, with assignments ranging from 100% to 140% of the par value per acre as a condition of the releases.
During September 2006, the Company refinanced the loan balance of $6.2 million with a financial institution (Note 9).
Issuance of Convertible Debt
As part of the December 2005 convertible debt issuance discussed in Note 9, an existing common stock investor purchased $800 thousand of the $10 million of convertible debt that was issued. As part of the convertible debt 2006 discussed in Note 9, existing common stock investors purchased $1.2 million of the $7.0 million convertible debt that was issued.
In connection with the placement of an additional $7 million of the Companys convertible promissory notes in September 2006, it entered into an additional agreement with Tejas Securities Group, Inc. pursuant to which Tejas served as the Companys Placement Agent in connection with the offering. Pursuant to this agreement, the Company paid Tejas commissions of $70,000 and reimbursed the Placement Agent for its expenses. John J. Gorman is the Chairman of the Board of the Placement Agent and of Tejas Incorporated (Tejas), the parent company of the Placement Agent. Mr. Gorman is the beneficial owner of 4,088,963 shares of our common stock. Clark N. Wilson, who serves as our President and Chief Executive Officer and is a director, has served on the board of directors of Tejas Incorporated, since October 1999, and is compensated for such service. Mr. Wilson owns 1,000 shares
of Tejas Incorporated common stock and options to purchase an additional 10,000 shares of common stock  Our largest stockholder, who is also our President and Chief Executive Officer, will continue to control our company.
Barry A. Williamson is a member of our Board of Directors and, until January 31, 2006 was a member of the Board of Directors of Tejas Incorporated, the parent company of our Placement Agent for the sale of our convertible notes.
Mr. Williamson was re-elected to the Board of Directors of Tejas Incorporated in
November 2006.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(6)
			Related Party Transactions (continued)
In September 2006, the Company entered into an agreement to lease approximately 5,000 square feet for its corporate offices, which it began occupying on October 1, 2006. The lease requires monthly payments of approximately $6,042 per month for 36 months. The lease is with an affiliate of Tejas Incorporated. The Company believes that the lease is at fair market value for similar space in the Austin, TX commercial real estate market.
(7)
			Liquidity and Capital Resources
Liquidity
The Company had approximately $8.8 million in cash and cash equivalents at September 30, 2006. It plans to commit several million dollars in cash to exercise option rights to purchase land, develop land and guarantee certain payments regarding the development of the optioned land over the next year. The Company has secured lines of credit totaling approximately $9.7 million. It had approximately $3.5 million drawn against these lines of credit, which will be repaid as finished lots and completed homes are sold. At September 30, 2006, the Company owed $0 on a $2 million line of credit which was previously reduced to a zero balance in July 2006. Approximately $834 thousand of the notes payable relate to VIEs that had drawn on lines of credit, guaranteed by the Company, to build homes, that will be repaid as the completed homes are sold. The Company currently does not expect to experience
losses from these guarantees.
The Company anticipates investing approximately $8 million for the purchase of land, installment payments, options fees and development costs over the next six months and approximately $15 million for the purchase of land, installment payments, options fees and development costs over the next twelve months. This includes the development of land including the installation of water and wastewater infrastructure, streets and common areas. The Company intends to and expects to purchase or obtain options to purchase additional acreage for development and additional finished lots for sale. The Company is actively seeking additional debt financing and intends to raise additional equity, possibly using joint venture financing as well as cash generated from lot and land sales, to finance these activities.
The Companys growth will require substantial amounts of cash for earnest money deposits, land purchases, development costs, interest payments and to provide financing or surety services to its homebuilder clients. Until it begins to sell an adequate number of lots and services to cover monthly operating expenses, sales, marketing, general and administrative costs will deplete cash.
To maintain its liquidity, the Company has financed the majority of its land and development activities with debt and equity, and believes it can continue to do so in the future, through a combination of conventional and convertible debt, joint venture financing, sales of selected lot positions, sales of land and lot options, and raising additional equity. The Companys current short term financing is indexed to the prime rate, which could increase substantially in the future.
An increase in interest rates could have a material adverse effect on the Companys operations by increasing expenses and cash outlays, decreasing profitability or increasing losses, depleting cash and thereby making it difficult to meet its cash obligations, and make it unlikely that the Company could meet the borrowing criteria of future lenders.
Land comprises the majority of the Companys assets, which could suffer devaluation if the housing and real estate markets suffer a significant downturn, due to interest rate increases or other reasons. The Companys debt might then be called, requiring liquidation of assets to satisfy its debt obligations or the use of its cash. A significant downturn could also make it more difficult for the Company to liquidate assets to raise cash and pay off debts, which could have a material adverse effect upon the Company.
In the normal course of business, the Company enters into various land purchase option agreements that require earnest money deposits. In order for the Company to start or continue the development process on optioned land, it may incur development costs if it purchases the land. At September 30, 2006, the Company had capitalized development costs of $2.6 million, all of which is non-refundable if the Company does not exercise the option and purchase the land. Currently it has approximately $814 thousand in earnest money and deposits outstanding classified in inventory of which the entire amount would be forfeited and expensed if the Company were to cancel the agreements.
On December 19, 2005, the Company issued $10 million in aggregate principal amount of 5% Convertible Debt due December 1, 2012, with interest payments due September 1 and December 1 beginning in 2006 until converted. These interest payments will be paid from cash and total approximately $500 thousand per year.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(7)
			Liquidity and Capital Resources (continued)
Liquidity (continued)
In September 2006, we issued an additional $7 million in aggregate principal amount of subordinated convertible notes due September 1, 2013, bearing interest at 5% per annum with semi-annual interest payments due February 1 and September 1 beginning in February 1, 2007. These interest payments will be paid from cash and total approximately $350 thousand per year.
During October 2006, the Company secured a $15.5 million line of credit for the purchase and development of approximately 534 acres located in eastern Travis County and subsequently closed on the purchase of the property. The first phase of the loan is $10.2 million and covers the purchase, a portion of the first two phases of construction, offsite utilities and provides letters of credit totaling $4.3 million, required for the development of municipal utility facilities, at the banks prime rate plus 0.50%, and is secured by the underlying property. Loan origination fees were 1% of the $10.2 million. The Company is required to maintain certain cash balances at the bank and is subject to additional financial covenants. Interest is payable quarterly, commencing January 2007. Principal is payable in quarterly installments commencing 90 days after completion of construction which is
projected to be during 2007. The required pay down amount under the loan is equal to 75% of gross sales price as set forth in a sales contract. The Company currently projects required pay down amounts of approximately $ 600 thousand per quarter. The purchase price of the property was approximately $8.4 million, with $2.6 million of owner financing, $3.7 million from the bank loan and cash from the Company of approximately $2.1 million. The Company has invested an additional amount of approximately $1.9 million for development of the property. The financial covenants require the Company to maintain liquid assets of more than $4 million, effective the third quarter of 2007. The Company is seeking to raise additional Capital and may not be in compliance should it not be able to raise the additional capital. It is in discussions with the financial institution to get the financial covenant compliance waived for 2007 if the Company is unable to raise additional capital.
Capital Resources
During June 2006, the Company refinanced $6.2 million of notes. The terms of the new loan include a $6.2 million principal balance, an interest rate indexed to the New York prime rate plus 0.75% per annum with a floor of 7.0%, a term not to exceed 24 months and required principal reductions of $800 thousand per quarter beginning June 2007. Principal reductions from sales of real estate are credited towards the $800 thousand per quarter requirement.
The Company anticipates purchasing and committing to various agreements to purchase land that could have performance clauses requiring several million dollars in cash and borrowings. The majority of its expenditures in the past have been for inventory, consisting of land, land development and land options totaling approximately $20 million as of September 30, 2006. To secure additional inventory, it will be required to put up earnest money deposits, make cash down payments, acquire acreage tracts and pay for certain land development activities costing several million dollars.
The Company also provides financing services to its homebuilder clients, acting as surety on their interim construction loans or by providing interim construction financing for their homebuilding activities. The Company may also provide working capital loans to its homebuilder clients. The Company plans to raise additional equity, combined with its current equity and convertible debt, to obtain additional interim construction, and development financing. The Company believes that it can finance 50% to 80% of the cost of the land and development costs for acquired properties.
To address the Companys cash needs, it raised $10 million of subordinated convertible debt in December 2005 maturing December 1, 2012, at 5% per annum with semi-annual interest payments due May and December, beginning in May 2006. In September 2005, it obtained a $2 million line of credit for interim construction financing which had a zero balance at September 30, 2006. In March 2006, the Company obtained an additional construction loan of approximately $3.0 million, which will be repaid during the year following completion, through lot sales to builders. The Company must make cumulative principal reductions in the aggregate amount of approximately $494 thousand every three months beginning in the fourth quarter of 2006. At September 30, 2006, the Company had drawn approximately $2.9 million against the line of credit and repaid approximately $300 thousand from lot sales with a
balance owed of $2.6 million. In September 2006, we issued an additional $7 million in aggregate principal amount of subordinated convertible notes due September 1, 2013, bearing interest at 5% per annum with semi-annual interest payments due February 1 and September 1 beginning in February 1, 2007. These interest payments will be paid from cash and total approximately $350 thousand per year.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(7)
			Liquidity and Capital Resources (continued)
Capital Resources (continued)
The Company anticipates that it will be able to obtain additional financing through the sale of stock or other debt or equity instruments to finance its growth. The Company also may participate in joint ventures to develop and secure additional land holdings, which would decrease the need for cash, versus purchasing the property outright, but could pose other risks such as dependence on the financial condition of the joint venture partner, which would be disclosed upon reaching definitive agreements.
(8)
			Commitments and Contingencies
Options Purchase Agreements
In order to ensure the future availability of land for development and homebuilding, the Company plans to enter into lot-option purchase agreements with unaffiliated third parties. Under the proposed option agreements, the Company pays a stated deposit in consideration for the right to purchase land at a future time, usually at predetermined prices or a percentage of proceeds as homes are sold. These options generally do not contain performance requirements from the Company nor obligate the Company to purchase the land. In order for the Company to start or continue the development process on optioned land, it may incur development costs on land it does not own, before it exercises its option agreement. At September 30, 2006, the Company had capitalized development costs of $3.1 million, all of which is non-refundable if the Company does not exercise the option and purchase the underlying land.
Non-Compete
Clark Wilson, the Companys executive officer, served as the President and Chief Executive Officer of Clark Wilson Homes, Inc., a subsidiary of Capital Pacific Holdings, from 1992 to 2002. Pursuant to an agreement executed in connection with the sale of Clark Wilson Homes to J.M. Peters Company in 1994, Mr. Wilson agreed not to engage in the businesses of acquisition, ownership, development, construction or sale of dwelling units in certain portions of the United States in which we plan to do business, including the Central Texas region, as well as in any other county in the United States in which J.M. Peters Company conducts business.
The stated term of the covenant not to compete is five years from the date his employment terminated, for certain enumerated counties in Texas, including the counties in and around Austin, Dallas, Houston and San Antonio, Texas, and for three years for certain other counties in the United States, beginning on the date Mr. Wilsons employment with Capital Pacific terminated, which occurred in 2002. The covenant not to compete relates to the business of building homes and not the purchase and sale of real estate as contemplated by us. In the Companys opinion, its current activities do not violate the terms of the covenant and we do not intend to engage in homebuilding activities until the covenant terminates in June of 2007. The Companys consolidation of its homebuilding clients required under certain reporting requirements, specifically FIN 46(R) should not be construed
as a legal merger of the entities. If J. M. Peters determines that these activities do violate the covenant, and if that determination results in a claim, the Company will likely incur material legal costs as a result.
The Company is not aware of any material pending legal proceedings, or other litigation incidental to our business, which would have a material adverse affect, to which the Company or any of its subsidiaries is a party or of which any of their property is the subject.
Office Lease
In September 2006, the Company entered into an agreement to lease approximately 5,000 square feet for its corporate offices, which it began occupying on October 1, 2006. The lease requires monthly payments of approximately $6,042 per month for 36 months.
Loan Guarantees
The Company is the guarantor of a $5 million master construction line of credit that matures on January 11, 2007, for one of its homebuilding clients. Under the agreement, the Company, as Guarantor, is subject to certain covenants. Among others, the Company must maintain a minimum tangible net worth of $2.5 million, its debt to equity ratio shall not exceed 7.5 to 1 as of the end of any calendar quarter, and Mr. Clark Wilson must remain active in the day to day business management affairs of the Company. At September 30, 2006, approximately $834 thousand drawn against the line and the Company was in compliance with the above loan covenants.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(9)
			Indebtedness
In October 2003, a predecessor entity of the Company exchanged notes payable of approximately $280 thousand and approximately $95 thousand in cash for approximately 15 acres of land in Travis County, Texas. Interest on the note was 8% per annum, payable quarterly with a maturity date of October 7, 2008. In March of 2005, the note was purchased by trusts belonging to some members of Clark Wilsons family. The interest rate remained the same at 8% per annum but the maturity date changed to April 4, 2006. In March 2006, the Company renegotiated an extension on the note until April 4, 2008. All other terms remained the same.
In June 2005, the Company issued notes payable of approximately $6.9 million with a maturity date of June 30, 2006 at an escalating interest rate for approximately 74% of 736 acres of land. These notes had a total balance of approximately $6.7 at December 31, 2005. The Company reduced the principal balance through sales of acreage tracts to approximately $6.2 million and during June 2006, it refinanced the notes with a new lender. The terms of the new loan include a $6.2 million principal balance, an interest rate indexed to the New York prime rate plus 0.75% per annum with a floor of 7.0%, a term not to exceed 24 months or June 2008, and required principal reductions of $800 thousand per quarter beginning June 12, 2007. Principal reductions from sales of the real estate are credited towards the $800 thousand per quarter requirement.
In November of 2005, the Company paid cash and issued a long-term note payable of approximately $425 thousand with a maturity date of February 15, 2008 at an interest rate of 6.5% for the purchase of approximately 31 acres of land. The terms of the note payable called for one installment of approximately $213 thousand plus interest, payable on February 15, 2007, and the balance of the principal and accrued interest due and payable on February 15, 2008. The interest rate would increase to 12% on matured, unpaid amounts. The note can be prepaid at anytime without penalty and is secured by the real estate purchased. The Company repaid the note in March 2006.
Lines of Credit
In September 2005, the Company secured a $2 million, one year, line of credit master construction loan that provides for draws and repayments for construction and lots. Interest is payable monthly and each draw must be repaid within one year. At December 31, the interest rate on borrowings was 7.25% per annum. Loans made on specific lots and construction is collateralized by such property and construction with interest due monthly. Mr. Wilson personally guaranteed the Loan. The Company had drawn approximately $254 thousand against the loan at December 31, 2005 which was the balance owed. During May 2006, the lending institution released Mr. Wilsons personal guarantee and extended the maturity date to April 2007. As of September 30, 2006 the balance owed on the line is zero.
In March 2006, the Company secured, from a different lending institution, a $3.0 million development loan, maturing on March 30, 2008, at prime plus 0.50% with a minimum floor of 7.00%, and interest payable monthly. The loan is secured by property being developed into single-family home lots, totaling approximately 32.6 acres located in Williamson County, Texas. Each of the lots will be released upon payment to the bank of either 125% of the loan basis or 90% of the net sales proceeds for each lot to be released. The Company must make cumulative principal reductions in the aggregate amount of approximately $494 thousand every three months in the calendar year beginning at the end of the first calendar month in which the completion date occurs, which was during July, 2006. At September 30, 2006, the Company had drawn approximately $2.9 million against the line of credit and repaid
approximately $325 thousand with a balance owed of $2.6 million.
During October 2006, the Company secured a $15.5 million line of credit for the purchase and development of approximately 534 acres located in eastern Travis County and subsequently closed on the purchase of the property. The first phase of the loan is $10.2 million and covers the purchase, a portion of  the first two phases of construction, offsite utilities and provides letters of credit totaling $4.3 million, required for the development of municipal utility facilities, at the banks prime rate plus 0.50%, and is secured by the underlying property. Loan origination fees were 1% of the $10.2 million. The Company is required to maintain certain cash balances at the bank and is subject to additional financial covenants. Interest is payable quarterly, commencing January 2007. Principal is payable in quarterly installments commencing 90 days after completion of construction which is
projected to be during 2007. The required pay down amount under the loan is equal to 75% of gross sales price as set forth in a sales contract. The Company currently projects required pay down amounts of approximately $ 600 thousand per quarter. The purchase price of the property was approximately $8.4 million, with $2.6 million of owner financing, $3.7 million from the bank loan and cash from the Company of approximately $2.1 million.

12


Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(9)
			Indebtedness (continued)
The Company has invested an additional approximately $1.9 million for development of the property. The financial covenants require the Company to maintain liquid assets of more than $4 million, effective the third quarter of 2007. The Company is seeking to raise additional Capital and may not be in compliance should it not be able to raise the additional capital. It is in discussions with the financial institution to get the financial covenant compliance waived for the entire 2007 as the Company is seeking to raise additional capital.
Convertible Debt - 2005
On December 19, 2005, the Company issued $10 million in aggregate principal amount of 5% Convertible Debt due December 1, 2012 to certain purchasers. The following are the key features of the Convertible Debt: Interest accrues on the principal amount of the Convertible Debt at a rate of 5% per annum, the debt is payable semi-annually on June 1 and December 1 of each year, with interest payments beginning on June 1, 2006. The Convertible Debt is due on December 1, 2012 and is convertible, at the option of the holder, into shares of our common stock at a conversion price of $2.00 per share. The conversion price is subject to adjustment for stock splits, reverse stock splits, recapitalizations and similar corporate actions. An adjustment in the conversion price is also triggered upon the issuance of certain equity or equity-linked securities with a conversion price, exercise price, or share
price less than $2.00 per share. The anti-dilution provisions state the conversion price cannot be lower than $1.00 per share.
The Company may redeem all or a portion of the Convertible Debt after December 1, 2008 at a redemption price that incorporates a premium that ranges from 10% to 3% during the period beginning December 1, 2008 and ending on the Due Date. In addition, the redemption price will include any accrued but unpaid interest on the Convertible Debt. Upon a change in control event, each holder of the Convertible Debt may require us to repurchase some or all of its Convertible Debt at a purchase price equal to 100% of the principal amount of the Convertible Debt plus accrued and unpaid interest. The Due Date may accelerate in the event the Company commences any case relating to bankruptcy or insolvency, or related events of default. The Companys assets will be available to pay obligations on the Convertible Debt only after all senior indebtedness has been paid.
The Convertible Debt has a Registration Rights Agreement whereby the Company must use its best efforts to have its associated registration statement effective not later than 120 days after the closing (December 19, 2005). Further, the Company must maintain the registration statement in an effective status until the earlier to occur of (i) the date after which all the registrable shares registered thereunder shall have been sold and (ii) the second anniversary of the later to occur of (a) the closing date, and (b) the date on which each Warrant has been exercised in full and after which by the terms of such Warrant there are no additional warrant shares as to which the warrant may become exercisable; provided that in either case, such date shall be extended by the amount of time of any suspension period. Thereafter the Company shall be entitled to withdraw the registration statement, and
upon such withdrawal and notice to the investors, the investors shall have no further right to offer or sell any of the registrable shares pursuant to the registration statement. The registration statement filed pursuant to the Registration Rights Agreement was declared effective by the SEC on August 1, 2006.
The Company also issued warrants to purchase an aggregate of 750,000 shares of common stock to the purchasers of the Convertible Debt, 562,500 of which were vested on June 30, 2006. The warrants are exercisable only upon the occurrence of certain events and then only in the amount specified as follows: (i) with respect to 25% of the Warrant Shares, on February 3, 2006 if this registration statement shall not have been filed with the SEC by such date (the Company filed a Form SB-2 registration statement on February 2, 2006); (ii) with respect to an additional 25% of the Warrant Shares, on April 19, 2006 if this registration statement shall not have been declared effective by the SEC by such date; (iii) with respect to an additional 25% of the Warrant Shares, on May 19, 2006 if this registration statement shall not have been declared effective by the SEC by such date; and (iv) with respect to
the final 25% of the Warrant Shares, on June 18, 2006 if this registration statement shall not have been declared effective by the SEC by such date. Management has recorded the fair value of these warrants due to the uncertainty surrounding the timeline of getting the registration statement effected and the
high probability that these warrants would be issued. The Company received notice that the shelf registration relating to these warrants was declared effective on August 1, 2006 and 562,500 of these warrants have vested and the remaining 187,500 warrants will never vest.
Wilson Holdings accounts for all derivative financial instruments in accordance with SFAS No. 133. The derivative financial instruments are recorded as liabilities in the consolidated balance sheet and measured at fair value.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(9)
			Indebtedness (continued)
Convertible Debt  2005 (continued)
When available, quoted market prices are used in determining fair value. However, if quoted market prices are not available, the Company estimates fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. These derivative liabilities will be marked-to-market each quarter with the change in fair value recorded in the income statement.
The Convertible Note is a hybrid instrument which contains both freestanding derivative financial instruments and more than one embedded derivative feature which would individually warrant separate accounting as derivative instruments under SFAS 133. The freestanding derivative financial instruments are the Penalty Warrants, which were initially valued individually and totaled approximately $653 thousand. The various embedded derivative features have been bundled together as a single, compound embedded derivative instrument that has been bifurcated from the debt host contract, referred to as the Single Compound Embedded Derivatives. The single compound embedded derivative features include the conversion feature within the Convertible Note, the early redemption option and the Fixed Price Conversion adjustment. The initial value of the single compound embedded derivative liability
was bifurcated from the debt host contract and recorded as a derivative liability, which resulted in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Note of approximately $4.4 million. The unamortized discount will be amortized using the straight-line method over the life of the Convertible Note, or 7 years. The Penalty Warrants were valued based on the fair value of the Companys common stock on the issuance date of $1.60, using a Black-Scholes valuation model, risk free interest rate of 4.25%; dividend yield of 0%; weighted-average expected life of the warrants of 10 years; and a 60% volatility factor. The unamortized discount is being amortized to interest expense over the 7-year life of the notes using the straight-line method.
The Company also incurred closing costs of $635 thousand which included placement agent fees of $300 thousand, plus, reimbursement of expenses to the placement agent of $125 thousand, plus 750,000 fully vested warrants to purchase the Companys common stock at $2.00 per share with a 10 year exercise period, valued at $829 thousand, for a total of $1.4 million, recorded as debt issuance costs, to be amortized over the 7-year life of the notes using the effective interest rate method. These warrants were valued based on the fair value of the Companys common stock of $1.60, using a Black-Scholes valuation model, at a $2.00 exercise price, risk free interest rate of 4.25%; dividend yield of 0%; weighted-average expected life of warrants of 10 years; and a 60% volatility factor.
Using a Black-Scholes model, the fair value of the Derivative Liability with Single Compound Embedded Derivatives within Convertible Note was computed at approximately $4.4 million as of December 31, 2005, using substantially the same assumptions as stated above. The fair value of the additional embedded derivative instruments was immaterial at December 31, 2005. The value of this single, compound embedded derivative instrument was bifurcated from the debt host contract and recorded as a derivative liability which resulted in a reduction of the initial carrying amount (as unamortized discount) to the notional amount of the Convertible Note.
Convertible Note at September 30, 2006 and at December 31, 2005
September 30, 2006
			
			December 31, 2005Notional balance
			$
			10,000,000
			
			10,000,000Unamortized discount
			
			4,582,500
			
			5,002,500Convertible debt balance, net of unamortized discount
			$
			5,417,500
			
			4,997,500

The above derivative liabilities were re-valued as of December 31, 2005 based on fair value of the Companys common stock of $1.64, using an independent valuation, and substantially the same assumptions stated above. This resulted in a loss on fair value of derivative liabilities and an increase in the derivative liabilities by approximately $173 thousand.
At June 30, 2006, the derivative liabilities were re-valued based on the fair value of the Companys common stock of $2.26, using an independent valuation. These warrants were valued using a Black-Scholes valuation model, at a $2.00 exercise price, risk free interest rate of 4.25%; dividend yield of 0%; weighted-average expected life of warrants of 10 years; and a 60% volatility factor. The valuation resulted in a loss on the fair value of the derivative liabilities and an increase in the derivative liabilities by approximately $3.6 million. During the three months ended September 30 2006, the registration statement to register the underlying shares of the convertible debt and warrants became effective.

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Table of Contents
WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(9)
			Indebtedness (continued)
Convertible Debt  2005 (continued)
The derivatives were revalued on the effective date, using the same assumptions above, resulting in a charge to Loss on Fair Value of Derivatives of $460 thousand. In accordance with EITF 00-19, the related derivative liabilities were reclassified as equity as additional paid in capital, and totaled approximately $8.6 million.
Convertible Debt  2006
On September 29, 2006, the Company raised capital of $7.0 million in aggregate principal amount of 5% Convertible Debt due September 1, 2013, to certain purchasers. As of September 30, 2006, only $6.5 million had been received in cash. The remaining $500 thousand is a receivable from an owner of the land that the Company has under option to purchase. The amounts are contingent upon the Company closing on the purchase of two parcels of land. $250 thousand will be received upon the closing of each parcel. The Company received $ 250 thousand upon closing of New Sweden land in October 2006. The following are the key features of the Convertible Debt: Interest accrues on the principal amount of the Convertible Debt at a rate of 5% per annum, the interest is payable semi-annually on February 1 and September 1 of each year, with interest payments beginning on February 1, 2006. The Convertible Debt
is due on September 1, 2013 and is convertible, at the option of the holder, into shares of common stock at a conversion price of $2.00 per share. The conversion price is subject to adjustment for stock splits, reverse stock splits, recapitalizations and similar corporate actions. An adjustment in the conversion price is also triggered upon the issuance of certain equity or equity-linked securities with a conversion price, exercise price, or share price less than $2.00 per share. The anti-dilution provisions state the conversion price cannot be lower than $1.00 per share.
The Company may redeem all or a portion of the Convertible Debt after September 1, 2009 at a redemption price that incorporates a premium that ranges from 10% to 3% during the period beginning September 1, 2009 and ending on the Due Date. In addition, the redemption price will include any accrued but unpaid interest on the Convertible Debt. Upon a change in control event, each holder of the Convertible Debt may require us to repurchase some or all of its Convertible Debt at a purchase price equal to 100% of the principal amount of the Convertible Debt plus accrued and unpaid interest. The Due Date may accelerate in the event the Company commences any case relating to bankruptcy or insolvency, or related events of default. The Companys assets will be available to pay obligations on the Convertible Debt only after all senior indebtedness has been paid.
The Convertible Debt has a Registration Rights Agreements (RRA), whereby the Company must use its best efforts to have its associated registration statement effective not later than 120 days after the closing (January 27, 2007). Further, the Company must maintain the registration statement in an effective status until the earlier to occur of (i) the date after which all the registrable shares registered thereunder shall have been sold and (ii) the second anniversary of the later to occur of (a) the closing date, and (b) the date on which each Warrant has been exercised in full and after which by the terms of such Warrant there are no additional warrant shares as to which the warrant may become exercisable; provided that in either case, such date shall be extended by the amount of time of any suspension period. Thereafter the Company shall be entitled to withdraw the registration statement,
and upon such withdrawal and notice to the investors, the investors shall have no further right to offer or sell any of the registrable shares pursuant to the registration statement.
The Company also issued warrants to purchase an aggregate of 487,500 shares of common stock to the purchasers of the Convertible Debt. The warrants are exercisable only upon the occurrence of certain events and then only in the amount specified as follows: (i) with respect to 25% of the Warrant Shares, on November 13, 2006 if the registration statement shall not have been filed with the SEC by such date (the Company filed a Form SB-2 registration statement on October 16, 2006); (ii) with respect to an additional 25% of the Warrant Shares, on January 27, 2007 if the registration statement shall not have been declared effective by the SEC by such date; (iii) with respect to an additional 25% of the Warrant Shares, on February 26, 2007 if the registration statement shall not have been declared effective by the SEC by such date; and (iv) with respect to the final 25% of the Warrant Shares, on
March 28, 2007 if the registration statement shall not have been declared effective by the SEC by such date. Management has recorded 75% of the fair value of these warrants since it has filed the initial registration in (i) above so the first 25% of the warrants dont vest, and due to the uncertainty surrounding the timeline of getting the registration statement effected and the high probability that the remaining warrants would be issued.
The Company accounts for all derivative financial instruments in
accordance with SFAS No. 133. The derivative financial instruments are recorded
as liabilities in the consolidated balance sheet and measured at fair value.
When available, quoted market prices are used in determining fair value.
However, if quoted market prices are not available, the Company estimates fair
value using either quoted market

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WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(9)
			Indebtedness (continued)
Convertible Debt  2006 (continued)
prices of financial instruments with similar characteristics or other valuation techniques. These derivative liabilities will be marked-to-market each quarter with the change in fair value recorded in the income statement. The Company employed an independent valuation firm to calculate the fair values of the derivatives.
The Convertible Note is a hybrid instrument which contains both freestanding derivative financial instruments and more than one embedded derivative feature which would individually warrant separate accounting as derivative instruments under SFAS 133. The freestanding derivative financial instruments are the Penalty Warrants, which were initially valued individually and totaled approximately $698 thousand. The Penalty Warrants value were based on the fair value of the Companys common stock on the issuance date of $1.91, using a Black-Scholes approach, risk free interest rate of 4.64%; dividend yield of 0%; weighted-average expected life of the warrants of 10 years; and a 60% volatility factor.

The various embedded derivative features have been bundled together as a single, compound embedded derivative instrument that has been bifurcated from the debt host contract, referred to as the Single Compound Embedded Derivatives. In the analysis of the fair value of the Embedded Derivatives, consideration was given to the following scenarios: (1) the Company experiences an event of default on the Notes and they are redeemed by the holders, (2) the Company experiences a change in control and the Notes are redeemed by the holders, (3) the Notes are converted into Company stock by the holders, or (4) the Notes are repurchased by the Company.

In order to consider these scenarios a decision tree was set up taking into account their likelihood of occurring, given assumptions provided by the Company.


			In year one, there is a 30% chance of default on the Notes.

			In year two there is a 15% chance of default.

			Thereafter, there is no chance of default on the Notes.

This was broken down into approximate biannual chances of 15% in the first two periods and 7.5% in the next two biannual periods in the probability weighted cash flow model. In years four through seven, there is a 20% chance of change in control each year. This was broken down into a 10% chance of change in control per biannual period beginning after year three. It is assumed the Company would elect to repurchase the shares once the stock price reaches $4 per share after two years. If the share price reached $4 per share and the Company elected to redeem the Notes, the note holders would most likely convert their Notes before they could be repurchased. It is highly likely that the Company would issue new equity, but the price is not expected to drop below $2 per share which would not cause any repricing of the convertible shares.

Finally, the holders of the Notes would most likely exercise the conversion feature of the Notes once the share price reaches $4 per share. Given these assumptions, the possible outcomes are redemption of the Notes upon default or a change in control, or a conversion of the Notes into stock once a $4 per share price is reached. These percentage chances are incorporated into the Embedded Derivatives scenario model. In order to determine the expected time to conversion of the Notes, a binomial model was used. Once this time was known, a probability weighted cash flow model was developed.

The risk-free rate was the next input required for the model. Although there is no true risk free security from which to derive a risk-free rate, we utilized Treasury securities backed by the U.S. government, which reflect minimal level of reinvestment risk. Because the contractual life of the Notes was seven years, we used the yield on the seven-year U.S. Treasury note as of the Valuation Date of 4.60%.

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WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(9)
			Indebtedness (continued)
Convertible Debt  2006 (continued)
A proprietary binomial model was used in the valuation. The model began with a traditional binomial model based on the Cox, Ross, and Rubinstein binomial-lattice model first introduced in 1979. This model requires the same six parameters as Black- Scholes model, which are:
1. The stock price
2. The exercise price
3. The life of the option
4. The expected dividend yield
5. The risk-free rate of interest
6. The expected stock price volatility
The Cox, Ross and Rubinstein model provides an equivalent valuation for the conversion feature as the Black-Scholes model. The model was then adjusted to account for the following additional factor relevant to the conversion feature: Early exercise behaviorsince investors in the Notes are expected to convert when the stock price reaches $4 per share, it is likely that the Notes will be converted prior to the Notes due date. Given the assumptions from Management, the Notes are expected to be converted into common stock after approximately four years, in the model which assumes this occurs on September 1, 2010.

Based on discussions with Management, it was assumed that the Company would have a debt rating of between CC and CCC+. Based on the analysis of 109 non-convertible bonds with maturities of between five to seven years and debt ratings of between CC and CCC+, the average yield to maturity was 11.01% as of November 3, 2006. Therefore, we elected to use 11% as an appropriate discount rate for the Companys debt. This discount rate was incorporated into both discounted cash flow models. In order to determine the fair value for the Embedded Derivatives the valuation firm developed cash flow models for the Embedded Derivatives scenario and a normal bond scenario without embedded derivatives. The difference between the two is the fair value of the Embedded Derivatives. The difference between the present value of the Debt with the Embedded Derivatives and without gives a fair value of
approximately $3,412,500.

The initial value of the single compound embedded derivative liability was bifurcated from the debt host contract and recorded as a derivative liability, which resulted in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Note of approximately $3.4 million. The unamortized discount will be amortized using the effective interest rate method over the life of the Convertible Note, or 7 years. The unamortized discount is being amortized to interest expense over the 7-year life of the notes effective interest rate method.
The Company also incurred closing costs of $140 thousand, including placement agent fees of $70 thousand, plus, reimbursement of expenses to the placement agent of $25 thousand, for a total of $95 thousand, recorded as debt issuance costs, to be amortized over the 7-year life of the notes using the effective interest rate method.
Convertible Note at September 30, 2006
September 30, 2006Notional balance
			$
			6,500,000Unamortized discount
			
			4,110,844Convertible debt balance, net of unamortized discount
			$
			2,389,156
The following is a summary of derivative liabilities:
September 30, 2006Convertible note compound embedded derivatives
			$
			3,412,500Warrants
			
			698,344Total derivative liabilities
			$
			4,110,844
(10)
			Common Stock
The Company is authorized to issue 80,000,000 shares of common stock. Each common stockholder is entitled to one vote per share of common stock owned.

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WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(11)
			Common Stock Option / Stock Incentive Plan
Stock Option Plan
In August 2005, the Company adopted the Wilson Family Communities, Inc. 2005 Stock Option/Stock Issuance Plan, the Stock Option Plan. The plan contains two separate equity programs: 1) the Option Grant Program for eligible persons at the discretion of the plan administrator, be granted options to purchase shares of common stock and 2) the Stock Issuance Program under which eligible persons may, at the discretion of the plan administrator, be issued shares of common stock directly, either through the immediate purchase of such shares or as a bonus for services rendered to the Company or any parent or subsidiary. The market value of the shares underlying option issuance prior to the Merger was determined by the Board of Directors as of the grant date. This plan was assumed by Wilson Holdings, Inc. at the time of the merger of the Company and WFC. The fair value of the
options granted under the plan was determined by the Board of Directors (Board) prior to the merger of the Company and WFC.
The Board is the plan administrator and has full authority (subject to provisions of the plan) and it may delegate a committee to carry out the functions of the administrator. Persons eligible to participate in the plan are employees, non-employee members of the Board or members of the board of directors of any parent or subsidiary.
The stock issued under the Stock Option Plan shall not exceed 1,680,478 shares. Unless terminated at an earlier date by action of the Board of Directors, the Plan terminates upon the earlier of (1) the expiration of the ten year period measured from the date the Plan is adopted by the Board or (2) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares.
The Company had 535,478 shares of common stock available for future grants under the Plan at September 30, 2006. Compensation expense related to the Companys share-based awards during the three months and nine months ended September 30, 2006, was $147 thousand and $350 thousand, respectively. The compensation expense for the three months and nine months ended September 30, 2005, was immaterial since the stock based compensation plan was in put in place during August 2005.
Before January 1, 2006, options granted to non-employees were recorded at fair value in accordance with SFAS No. 123 and EITF 96-18. These options are issued pursuant to the Plan and are reflected in the disclosures below. None of the options issued to date were vested as of December 31, 2005. The Company issued options to purchase 850,000 shares of common stock at a strike price of $2.00 per share during 2005. These options had a fair value of $1.45 per share at the grant date. The fair value of options issued in 2005 was calculated at the date of grant using the Black-Scholes pricing model with the following weighted-average assumptions for the year ended December 31, 2005: risk free interest rate of 4.25%; dividend yield of 0%; weighted-average expected life of options of 5 years; and a 60% volatility factor. Options issued during 2005 to employees had a fair value of $1.45 per share.
There were no options issued before the Plans inception in August 2005.
During the nine months ended September 30, 2006, the Company issued options to purchase 555,000 shares of common stock at an average strike price of $2.00 per share. The Black-Scholes pricing model was used with the following assumptions for the year ended December 31, 2005: risk free interest rate of 4.25%; dividend yield of 0%; weighted-average expected life of options of 5 years; and a 60% volatility factor. During the nine months ended September 30, 2006: risk free interest rate of 4.25% to 4.75%; dividend yield of 0%; weighted-average expected life of options of 5 years; and a 60% to 50% volatility factor. Management has estimated the average fair market value of the grants to be $1.14 per share. Management estimated the volatility factor based on an average of comparable companies.

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WILSON HOLDINGS, INC.
Notes to Unaudited Consolidated Financial Statements

(11)
			Common Stock Option / Stock Incentive Plan (continued)
Stock Option Plan (continued)
A summary of activity in common stock options for the nine months ended September 30, 2006 and year ended December 31, 2005 are as follow:
Shares
			Range of Exercise  Prices
			Weighted-Average  Exercise PriceOptions granted at plan inception
			850,000
			$2.00
			$2.00Options exercised
			-
			-
			-Options forfeited
			(70,000)
			$2.00
			$2.00Options outstanding, December 31, 2005
			780,000
			$2.00
			$2.00Options granted
			555,000
			$2.00
			$2.00Options exercised
			-
			-
			-Options forfeited
			(190,000)
			$2.00
			$2.00Options outstanding, September 30, 2006
			1,145,000
			$2.00
			$2.00Add: Available for issuance
			535,478Total available under plan
			1,680,478

The following is a summary of options outstanding and exercisable at September 30, 2006:
Outstanding
			Vested and OutstandingNumber of 
			Shares Subject to Options Outstanding
			Weighted 
			Average Remaining Contractual Life 
			(in years)
			Weighted 
			Average Exercise Price
			Number of 
			Vested Shares
			Weighted Average Remaining Contractual Life
 (in years)
			Weighted Average Exercise Price1,145,000
			9.8
			$2.00
			273,500
			9.2
			$2.00

At September 30, 2006, there was approximately $1,166,306 thousand of unrecognized compensation expense related to unvested share-based awards granted under the Companys stock option plan. That expense is expected to be recognized over a weighted-average period of 3.6 years.
(12)
			Subsequent Events
During October 2006, the Company secured a $15.5 million line of credit for the purchase and development of approximately 534 acres located in eastern Travis County and subsequently closed on the purchase of the property. The first phase of the loan is $10.2 million and covers the purchase, a portion of the first two phases of construction, offsite utilities and provides letters of credit totaling $4.3 million, required for the development of municipal utility facilities, at the banks prime rate plus 0.50%, and is secured by the underlying property. Loan origination fees were 1% of the $10.2 million. The Company is required to maintain certain cash balances at the bank and is subject to additional financial covenants. Interest is payable quarterly, commencing January 2007. Principal is payable in quarterly installments commencing 90 days after completion of construction which is
projected to be during 2007. The required pay down amount under the loan is equal to 75% of gross sales price as set forth in a sales contract. The Company currently projects required pay down amounts of approximately $ 600 thousand per quarter. The purchase price of the property was approximately $8.4 million, with $2.6 million of owner financing, $3.7 million from the bank loan and cash from the Company of approximately $2.1 million. The Company has invested an additional amount of approximately $1.9 million for development of the property. The financial covenants require the Company to maintain liquid assets of more than $4 million, effective the third quarter of 2007. The Company is seeking to raise additional Capital and may not be in compliance should it not be able to raise the additional capital. It is in discussions with the financial institution to get the financial covenant compliance waived for the entire 2007 if the Company is unable to raise additional capital.
The Company received proceeds of $250 thousand for issuance of convertible debt discussed in Note 9.
The Company filed an SB-2 Registration Statement with the Securities and Exchange Commission to register the shares underlying the convertible debt discussed in Note 9.
On November 9, 2006, Daniel Allen,
our Vice President and Chief Financial Officer, resigned his position with the
Company. Pursuant to an employment agreement dated July 13, 2006, in certain
circumstances the Company is required to pay Mr. Allen one year of his current
salary as a severance payment and is required to accelerate unvested stock
options held by Mr. Allen up to a maximum of 75,000 shares. The Company is in
the process of finalizing a severance agreement and release with Mr.
Allen.

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Item 2.
			Managements Discussion and Analysis or Plan of Operations
The information presented in this section should be read in conjunction with our audited financial statements and related notes for the periods ended December 31, 2005 and 2004 included in our Form 10-KSB, as well as the information contained in the financial statements, including the notes thereto, appearing elsewhere in this report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled Risk Factors and elsewhere in this report.

Whenever we refer in this prospectus to Wilson Holdings, the Company, we, us, or our, we mean Wilson Holdings, Inc., a Nevada corporation, and, unless the context indicates otherwise, its predecessors and subsidiaries, including its wholly-owned subsidiary, Wilson Family Communities, Inc., a Delaware corporation.

Corporate Information

Wilson Holdings is a holding company and was formerly known as Cole Computer Corporation. In connection with its acquisition of Wilson Family Communities, Inc., or WFC, in October 2005, Cole Computer Corporation changed its name to Wilson Holdings, Inc. Wilson Holdings is the sole stockholder of Wilson Family Communities, which is our sole operating company. Our common stock trades on the Over-the-Counter Bulletin Board under the symbol WSHD. Our business was originally conducted, beginning in 2002, by Athena Equity Partners-Hays, L.P., a Texas limited partnership. In May 2005, Athena merged into WFC. Our principal executive offices are located at 8121 Bee Caves Rd, Austin, Texas 78746 and the telephone number of our offices is (512) 732-0932. Our website is www.wilsonfamilycommunities.com.

Overview
We merged with Wilson Family Communities, Inc., or WFC, in October 2005. WFC was formed early in 2005 with the intention of focusing on acquiring and developing residential land in the central Texas region. In May 2005, WFC merged with a limited partnership that had engaged in various land acquisition and development services.

The core of our business plan is to secure land strategically based on our understanding of population growth patterns and infrastructure development. This portion of our business will require the majority of our financial resources. In tandem with our land acquisition efforts, and based upon our strategic market analysis, we plan to prepare raw real estate for homebuilding and sell raw and developed land.
We believe that as the central Texas economy expands, our strategic land purchases, land development activities and partnering model with local builders will enable us to capitalize on the new growth centers we expect will be created.
To both increase and accelerate lot sales, we also intend to deliver residential lots and financial support to local homebuilders who have strong technical skills but who may lack the personnel and financial resources to compete effectively against national homebuilding companies. We will earn revenue from the sale of real estate and residential lots, as well as on services provided to clients. The amount of payments that we receive will typically be determined by the gross selling price of the builders finished homes as well as the specific services we provide to individual homebuilders. We currently have signed agreements to provide these services to two homebuilder clients, although one client has informed us that it does not intend to initiate any new projects. We are evaluating whether to continue providing such services to homebuilders in the future.
We exercise significant influence over, but hold no controlling interest in, homebuilder clients, but we may retain the majority of the risk of loss. At September 30, 2006, we determined that we were the primary beneficiary in certain homebuilder agreements, as defined under FASB Interpretation No. 46(R), or FIN 46(R), entitled Consolidation of Variable Interest Entities, where we have a significant, but less than controlling, interest in our clients. In accordance with FIN 46(R), the results of these clients have been consolidated into our financial statements.

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Results of Operations

Homebuilding and Related Services Revenues

Homebuilding and related services consists of home sales and homebuilder services. All of the home sales are generated by our clients utilizing our homebuilder services. We consolidate these clients into our operating results based on accounting requirements according to FIN 46(R) and are referred to as variable interest entities or VIEs.
During the nine months ended September 30, 2006, home sales accounted for approximately 79% of revenues at a gross profit margin of approximately 17%. We expect the revenues from home sales to increase as more homes are started and sold in the coming quarters by our client. However, we are evaluating whether to continue providing homebuilder services. One client has not started construction of any new homes and accounted for approximately $1.8 million or 43%, of the approximately $4.2 million of home sales. We do not expect the inactivity of this client to have a material affect in future periods. If we discontinue offering the services, or our remaining client does not perform as expected, or if both occur, our revenues would decrease materially and could have a material adverse affect upon our financial performance. Homebuilder services revenues are eliminated in the consolidation of our financial statements
as cost of revenues to our VIEs. There were no revenues during the nine months ended September 30, 2005 as the Company had limited operations.
During the three months ended September 30, 2006, home sales accounted for approximately 78% of revenues with a gross profit margin of approximately 15%. Approximately $1.5 million of the $1.9 million of homebuilding revenue was produced in the three months ended September 30, 2006. We have one active client that accounted for 57% of the revenue for the nine months ended September 30, 2006, and it accounted for $1.5 million of the revenue generated in the three months ended September 30, 2006. Gross profit margins were approximately 15% for the three months ended September 30, 2006. We expect home sales to increase and margins to remain approximately the same, unless our homebuilding client does not perform as expected.

Land Sales
Land sales were approximately $1.1 million for the nine months ended September 30, 2006 at a gross profit margin of approximately 42%, of which approximately $414 thousand was generated in the three months ended September 30, 2006 at a gross profit margin of approximately 34%. Approximately $616 thousand of the revenue for the nine months ended September 30, 2006 was from the sale of acreage tracts. The $414 thousand of revenue for the three months ended September 30, 2006 was from sales of developed lots. For the three months and nine months ended September 30, 2006, approximately $114 thousand and $406 thousand of lots was sold to our VIEs for their homebuilding activities but was eliminated in consolidation of the financial statements.

It takes approximately 2 years to develop raw land into finished lots. During the three months and nine months ended September 30, 2005, we were in the process of acquiring and developing land and generated revenues of approximately $255 thousand through the sale of undeveloped acreage lots.

The Company has been developing and acquiring land for sale to homebuilders and expects to see a significant increase in its land sales as its VIEs expand their operations and the Company offers more land for sale to national and regional homebuilders as well as local homebuilders. Developing finished lots from raw land takes approximately two years and we expect sales of finished lots to increase in the coming quarters as lots we are currently developing are completed and sold. We plan to sell the majority of our lots to national, regional and local homebuilders that may purchase anywhere from 5 to a 100 or more lots at a time. We also plan to sell lots under contract, whereby the purchaser commits to buy a large number of lots, but actually takes possession and pays for the lots in blocks over a period of months up to five or more years. We expect lot sales to vary significantly from quarter to quarter
causing significant fluctuations in revenues and gross profit.

Costs and Expenses

General and Administrative Expenses

General and administrative expenses are composed primarily of salaries and
related employee benefits and taxes, accounting and legal, and general office
expenses and insurance. During the three months and nine months ended September
30, 2006, salaries, benefits and taxes totaled approximately $564 thousand and
$1.3 million respectively and represented approximately 48% and 39% of total
general and administrative costs for the same periods. Also included, is an
accrual of approximately $200 thousand for severance payments that will be paid
to the former Chief Financial Officer over the next twelve months. Legal, accounting, audit
and transaction cost amortization, which includes the expenses of filing our
shelf registration and other SEC filings, totaled approximately $176 thousand
and $664 thousand for the three months and nine months ended September 30, 2006,
respectively and represented approximately 15% and 20%, respectively, of total

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general and administrative costs. Fees and expenses, warranty expense, architecture fees, consulting services were $113 thousand and $535 thousand for the three months and nine months ended September 30, 2006, respectively, and represented approximately 10% and 16% of total general and administrative expenses, respectively. The remaining expenses were for general overhead such as rent, office expenses and insurance. Depreciation expense included in general and administrative was $13 thousand and approximately $45 thousand for the three months and nine months ended September 30, 2006, respectively. General and administrative expenses included from the consolidation of our VIEs were less than 7% of the total general and administrative expenses for the three months and nine months ended September 30, 2006 respectively. We expect total general and administrative expenses to remain at approximately the
same level for the next quarter.

Sales and marketing expenses include salaries and related taxes and benefits, marketing activities including website, brochures and catalogs, signage, billboards and market research. Sales and marketing salaries and related expenses for the three months and nine months ended September 30, 2006 were approximately $48 thousand and $180 thousand, respectively and represented approximately 17% and 28% of total marketing costs for the respective periods. Expenses for advertising, brochures and catalogs, signage, public relations and other selling expenses for the three months and nine months ended September 30, 2006 was approximately $94 thousand and $295 thousand respectively and represented approximately 38% and 48% of total sales and marketing costs for the same periods. The remaining expenses for the three months and nine months ended September 30, 2006, were for other incidental items and services.
Approximately 13% of our sales and marketing expenses resulted from the consolidation of the VIEs.

Operating expenses for the three months and nine months ended September 30, 2005 were not comparable, as the Company had limited operations during the period as we had just commenced our operations.

Interest expense for the three months and nine months ended September 30, 2006 of approximately $570 thousand and $1.6 million, respectively, relates directly to debt on properties purchased, convertible debt interest costs and amortization of the convertible debt discount. The convertible debt discount amortization was approximately $179 thousand and $536 thousand respectively, for the three months and nine months ended September 30, 2006. Interest on the convertible debt was $125 thousand and $250 thousand for the three months and nine months, respectively. Our interest expense will increase if interest rates increase, and as we continue borrowing to finance land acquisitions and land development.

We experienced a loss on the fair value of derivatives during the three months and nine months ended September 30, 2006 of approximately $460 thousand and $3.4 million, respectively, which is the increase in the fair value of the derivative liabilities related to the convertible notes and contingent warrants. This increase was primarily the result of the increase in value of our common stock and warrants. We intend to finance a major portion of land purchases and expect interest expense to increase with borrowings in future periods.

Interest and other income of approximately $54 thousand and $260 thousand for the three months and nine months ended September 30, 2006 was interest earned on our cash and cash equivalents and immaterial amounts of other income.

Financial Condition and Capital Resources
Liquidity
We had approximately $8.8 million in cash and cash equivalents at September 30, 2006. We plan to commit several million dollars in cash to exercise option rights to purchase land, develop land and guarantee certain payments regarding the development of the optioned land over the next year. We have secured lines of credit totaling approximately $9.7 million. Approximately $ 5 million was drawn against these lines of credit as of September 30, 2006, which we intend to repay as finished lots and completed homes are sold. At September 30, 2006, approximately $834 thousand of the lines of credit relate to VIEs that had drawn on the lines of credit that are guaranteed by us, to build homes that will be repaid as the completed homes are sold. We currently do not expect to experience losses from these guarantees.

We anticipate investing approximately $10 million for the purchase of land, installment payments, options fees and development costs over the next nine months and approximately $15 million for purchase of land, installment payments, options fees and development costs over the next twelve months. This includes the development of land including the installation of water and wastewater infrastructure, streets and common areas. We intend to and expect to purchase or obtain options to purchase additional acreage for development and additional finished lots for sale. We are actively seeking additional debt financing and intend to raise additional equity, possibly using joint venture financing as well as cash generated from lot and land sales, to finance these activities.

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Our growth will require substantial amounts of cash for earnest money deposits, land purchases, development costs, interest payments and to provide financing or surety services to our homebuilder clients. Until we begin to sell an adequate number of lots and services to cover monthly operating expenses, sales, marketing, general and administrative costs will deplete cash.

To maintain our liquidity, we have financed the majority of our land and development activities with debt and equity, and believe we can continue to do so in the future, through a combination of conventional and convertible debt, joint venture financing, sales of selected lot positions, sales of land and lot options, and additional equity. Our current short term financings are indexed to the prime rate, which has increased over the past few months and could increase substantially in the future. An increase in interest rates could have a material adverse effect on our operations by increasing expenses and cash outlays, decreasing profitability or increasing losses, depleting cash and thereby making it difficult to meet the our cash obligations, and make it unlikely that we could meet the borrowing criteria of future lenders.

Land comprises the majority of our assets, which could suffer devaluation if the housing and real estate markets suffer a significant downturn, due to interest rate increases or other reasons. Our debt might then be called requiring liquidation of assets to satisfy our debt obligations or use our cash. A significant downturn could also make it more difficult for us to liquidate assets to raise cash and pay off debts, which could have a material adverse effect upon our business.

In the normal course of business, we enter into various land purchase option agreements that require earnest money deposits. In order for us to start or continue the development process, we may incur development costs before we exercise an option agreement. At September 30, 2006, we had capitalized development costs of $2.6 million, all of which is non-refundable if we do not exercise the option and purchase the land. Currently we have approximately $814 thousand in earnest money and deposits outstanding of which the entire $863 thousand would be forfeited and expensed if we were to cancel the agreements.

On December 19, 2005, we issued $10 million in aggregate principal amount of 5% Convertible Debt due December 1, 2012, with interest payments due June 1 and December 1 beginning in 2006 until converted. These interest payments will be paid from cash and total approximately $500 thousand per year.

On September 29, 2006, we issued $7.0 million in aggregate principal amount of 5% Convertible Debt due September 1, 2013, with interest payments due February 1 and September 1, beginning in February 2007. These interest payments will be paid from cash and total approximately $325 thousand per year.

During October 2006, we secured a $15.5 million line of credit for the purchase and development of approximately 534 acres located in eastern Travis County and subsequently closed on the purchase of the property. The first phase of the loan is $10.2 million and covers the purchase, a portion of the first two phases of construction, offsite utilities and provides letters of credit totaling $4.3 million, required for the development of municipal utility facilities, at the banks prime rate plus 0.50%, and is secured by the underlying property. Loan origination fees were 1% of the $10.2 million. We required to maintain certain cash balances at the bank and are subject to additional financial covenants. Interest is payable quarterly, commencing January 2007. Principal is payable in quarterly installments commencing 90 days after completion of construction which is projected to be during 2007. The required pay
down amount under the loan is equal to 75% of gross sales price as set forth in a sales contract. We currently project required pay down amounts of approximately $ 600 thousand per quarter. The purchase price of the property was approximately $8.4 million, with $2.6 million of owner financing, $3.7 million from the bank loan and cash from the Company of approximately $2.1 million. We have invested an additional amount of approximately $1.9 million for development of the property. The financial covenants require us to maintain liquid assets of more than $4 million, effective the third quarter of 2007. We are seeking to raise additional Capital and may not be in compliance should we not be able to raise additional capital. We are in discussions with the financial institution to get the financial covenant compliance waived for the entire year of 2007.
Capital Resources
During June 2006, we refinanced $6.2 million of notes. The terms of the new loan include a $6.2 million principal balance, an interest rate indexed to the New York prime rate plus 0.75% per annum with a floor of 7.0%, a term not to exceed 24 months and required principal reductions of $800 thousand per quarter beginning 12 months from the date of closing. Principal reductions from sales of real estate are credited towards the $800 thousand per quarter requirement.

We anticipate purchasing and committing to various agreements to purchase land that could have performance clauses requiring several million dollars in cash and borrowings. The majority of our expenditures in the past have been for inventory, consisting of land, land development and land options totaling almost $20 million as of September 30, 2006. To secure additional inventory, we will
be required to put up earnest money deposits,

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make cash down payments, acquire acreage tracts and pay for certain land development activities costing several million dollars.

We also provide financing services to our homebuilder clients, acting as surety on their interim construction loans or by providing interim construction financing for their homebuilding activities. We may also provide working capital loans to our homebuilder clients. We plan to raise additional equity, combined with our current equity and convertible debt, to obtain additional interim construction, and development financing. We believe that we can finance 50% to 80% of the cost of the land and development costs for acquired properties.

To address our cash needs, we raised $10 million of subordinated convertible debt in December 2005 due December 1, 2012, at 5% per annum with semi-annual interest payments due May and December, beginning in May 2006. In September 2005, we obtained a $2 million line of credit for interim construction financing owed $0 at September 30, 2006. In March 2006, we obtained an additional construction loan of approximately $3.0 million, which will be repaid during the year following completion, through lot sales to builders. We must make cumulative principal reductions in the aggregate amount of approximately $494 thousand every three months, beginning at the end of the first calendar month in which the completion date occurs which was during July 2006.

We anticipate that we will be able to obtain additional financing through the sale of stock or other debt or equity instruments to finance our growth. We also may participate in joint ventures to develop and secure additional land holdings, which would decrease the need for cash, versus purchasing the property outright, but could pose other risks such as the financial condition of the joint venture partner, which would be disclosed upon reaching definitive agreements.

During June 2006, we refinanced $6.2 million of notes. The terms of the new loan include a $6.2 million principal balance, an interest rate indexed to the New York prime rate plus 0.75% per annum with a floor of 7.0%, a term not to exceed 24 months and required principal reductions of $800 thousand per quarter beginning 12 months from the date of closing. Principal reductions from sales of real estate are credited towards the $800 thousand per quarter requirement.

On September 29, 2006, we issued $7.0 million in aggregate principal amount of 5% Convertible Debt due September 1, 2013, with interest payments due February 1 and September 1, beginning in February 2007. These interest payments will be paid from cash and total approximately $325 thousand per year.

During October 2006, we secured a $15.5 million line of credit for the purchase and development of approximately 534 acres located in eastern Travis County and subsequently closed on the purchase of the property. The first phase of the loan is $10.2 million and covers the purchase, a portion of  the first two phases of construction, offsite utilities and provides letters of credit totaling $4.3 million, required for the development of municipal utility facilities, at the banks prime rate plus 0.50%, and is secured by the underlying property. Loan origination fees were 1% of the $10.2 million. We required to maintain certain cash balances at the bank and are subject to additional financial covenants. Interest is payable quarterly, commencing January 2007. Principal is payable in quarterly installments commencing 90 days after completion of construction which is projected to be during 2007. The required
pay down amount under the loan is equal to 75% of gross sales price as set forth in a sales contract. We currently project required pay down amounts of approximately $ 600 thousand  per quarter. The purchase price of the property was approximately $8.4 million, with $2.6 million of owner financing, $3.7 million from the bank loan and cash from the Company of approximately $2.1 million. We have invested an additional amount of approximately $1.9 million for development of the property. The financial covenants require us to maintain liquid assets of more than $4 million, effective the third quarter of 2007. We are seeking to raise additional Capital and may not be in compliance should we not be able to raise additional capital. We are in discussions with the financial institution to get the financial covenant compliance waived for the entire year of 2007 if it is unable to raise additional capital.

Off-Balance Sheet Arrangements

As of September 30, 2006, we had no off-balance sheet arrangements.

Contractual Obligations and Commitments

We are the guarantors of a $5 million master construction line of credit that matures on January 11, 2007, for one of our homebuilding clients. Under the agreement, the Company as guarantor is subject to certain covenants. Among others, we must maintain a minimum tangible net worth of $2.5 million, the debt to equity ratio shall not exceed 7.5 to 1 as of the end of any calendar quarter. Debt excludes our convertible debt, and equity is defined as tangible net worth. In addition, Mr. Wilson must remain active in the day-to-day
business management affairs of the Company. At September 30, 2006, approximately $834 thousand was owed on the line of credit.

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Item 3.
			Controls and Procedures

Our management, including our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the period ended September 30, 2006, the period covered by this Quarterly Report on Form 10-QSB. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2006 to ensure the timely collection, evaluation and disclosure of information relating to our company that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
There were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting during the three months ended September 30, 2006.


PART II  OTHER INFORMATION

Item 1.
			Legal Proceedings

None.

Item 2.
			Unregistered Sales of Equity Securities and Use of Proceeds
On September 29, 2006, we sold $7.0 million in aggregate principal amount of 5% Convertible Notes due September 1, 2013 to certain purchasers, all of whom were believed by us based on representations made to be accredited investors. These notes are convertible into shares of our common stock at a conversion price of $2.00 per share. The conversion price is subject to adjustment for stock splits, reverse stock splits, recapitalizations and similar corporate actions. An adjustment in the conversion price is also triggered upon the issuance of certain equity or equity-linked securities with a conversion price, exercise price, or share price less than $2.00 per share. The anti-dilution provisions state the conversion price cannot be lower than $1.00 per share. In connection with the sale of such notes, we granted to each note purchaser warrants equal to 15% of the principal value of notes purchased that are
exercisable only upon the occurrence of certain events, including the filing of a Registration Statement with the Securities and Exchange Commission (SEC) with respect to the shares issuable upon conversion of the notes and upon exercise of the warrants on or prior to November 13, 2006 and the declaration of effectiveness of such Registration Statement by the SEC on or prior to specified dates thereafter.

The convertible notes and warrants were offered and sold by us in reliance upon the exemption provided for in Section 4(2) of the Securities Act, relating to sales not involving any public offering. The sales were made to a limited number of purchasers without the use of an underwriter and the certificates representing the securities sold contain a restrictive legend that prohibits transfer without registration or an applicable exemption. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising. No underwriters were involved in any of the foregoing distributions of securities.

Item3.
			Defaults Upon Senior Securities
None.

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

Item5.
			Other Information

On November 9, 2006, Daniel Allen, our Vice President and Chief Financial Officer, resigned his position with Wilson Holdings. Arun Khurana, our Vice President of Corporate Development and Governance will assume the responsibilities of Chief Financial Officer and Treasurer, effective November 9, 2006.

Mr. Khurana has served as our Vice President of
Corporate Development and Governance since July 2006, and as an accounting and
financial consultant from September 2005 to July 2006. From April 2005 to
September 2005, he served as a partner with Stout Casey, providing financial
advisory services to public companies. From 2004 to April 2005, Mr. Khurana
served with David Powell of Texas, providing corporate governance services to
public companies. From 1989 to 2003 Mr. Khurana was a senior audit manager with
PricewaterhouseCoopers and Ernst & Young. Mr. Khurana holds an undergraduate
degree in accounting from University of New Delhi, India and an MBA from the
University of Missouri. He is a Certified Public Accountant.

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Item6.
			Exhibits
Exhibit No.
			Description3.1
			Amended and Restated Bylaws of Registrant (filed as Exhibit 3.1 to Registrants Current Report on Form 8-K dated July 19, 2006 and incorporated herein by reference)10.1
			Securities Purchase Agreement dated September 29, 2006 by and among the Registrant and the Purchasers set forth therein (filed as Exhibit 10.1 to Registrants Current Report on Form 8-K dated September 29, 2006 (the September 2006 8-K) and incorporated herein by reference)10.2
			Registration Rights Agreement dated September 29, 2006 by and among the Registrant and the holders of the Registrants Convertible Notes (filed as Exhibit 10.2 to the September 2006 8-K and incorporated herein by reference)10.3
			Form of Warrant dated September 29, 2006 (filed as Exhibit 10.3 to the September 2006 8-K and incorporated herein by reference)10.4
			Lease Agreement dated September 14, 2006 by and between Registrant and TI Building Partnership, Ltd.31.1
			Certification31.2
			Certification31.3
			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


WILSON HOLDINGS, INC.November 14, 2006
		
		/s/ Clark WilsonClark Wilson, President and Chief Executive Officer
November 14, 2006
		
		/s/ Arun KhuranaArun Khurana, Vice President of Corporate Development, Chief Financial Officer and Secretary

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EXHIBIT INDEX
LIST OF EXHIBITS

Exhibit No.
			Description3.1
			Amended and Restated Bylaws of Registrant (filed as Exhibit 3.1 to Registrants Current Report on Form 8-K dated July 19, 2006 and incorporated herein by reference)10.1
			Securities Purchase Agreement dated September 29, 2006 by and among the Registrant and the Purchasers set forth therein (filed as Exhibit 10.1 to Registrants Current Report on Form 8-K dated September 29, 2006 (the September 2006 8-K) and incorporated herein by reference)10.2
			Registration Rights Agreement dated September 29, 2006 by and among the Registrant and the holders of the Registrants Convertible Notes (filed as Exhibit 10.2 to the September 2006 8-K and incorporated herein by reference)10.3
			Form of Warrant dated September 29, 2006 (filed as Exhibit 10.3 to the September 2006 8-K and incorporated herein by reference)10.4
			Lease Agreement dated September 14, 2006 by and between Registrant and TI Building Partnership, Ltd.31.1
			Certification31.2
			Certification31.3
			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





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