Wilson Holdings, Inc. - Annual Report (Small Business Issuers) (10KSB)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-KSB

£ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year

x TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from January 1, 2007 to September 30, 2007

Commission file number: 000-23819

WILSON HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada		76-0547762
(State or other jurisdiction of incorporation or organization) 8121 Bee Caves Road, Austin, Texas (Address of principal executive offices)		(I.R.S. Employer Identification No.) 78746 (Zip Code)

(512) 732-0932

(Issuer’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. £

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

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-K. £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) £ Yes x No

State issuers revenues for its most recent fiscal year. $4,444,500

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based upon the closing sale price of its common stock on December 26, 2007 was approximately $7,095,824(affiliates being, for these purposes only, directors, executive officers and holders of more than 5% of the registrant’s common stock).

As of December 26, 2007 the registrant had 23,135,539 outstanding shares of common stock.

Wilson Holdings, Inc.

Whenever we refer in this filing 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 subsidiaries, Wilson Family Communities, Inc., a Delaware corporation (“WFC”), and Green Builders, Inc., a Texas corporation (“Green Builders”). All references in this report to “$” or “dollars” are to United States of America currency.

Table of Contents

Item 1.	Description of Business	1
Item 2.	Description of Property	19
Item 3.	Legal Proceedings	19
Item 4.	Submission of Matters to a Vote of Security Holders	19
Item 5.	Market for Common Equity and Related Stockholder Matters	20
Item 6.	Management’s Discussion and Analysis or Plan of Operation.	22
Item 7.	Financial Statements	32
Item 8.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	32
Item 8A.	Controls and Procedures .	32
Item 8B.	Other Information .	33
Item 9.	Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act	34
Item 10.	Executive Compensation	34
Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	34
Item 12.	Certain Relationships and Related Transactions, and Director Independence	34
Item 13.	Exhibits	34
Item 14.	Principal Accountant Fees and Services	34

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-KSB for the transition period from January 1, 2007 to September 30, 2007 contains forward-looking statements. All statements regarding our expected financial position and operating results, our business strategy, and our financing plans are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project,” or “intend.” These forward-looking statements reflect our plans, expectations and beliefs and, accordingly, are subject to certain risks and uncertainties. We cannot guarantee that any of such forward-looking statements will be realized.

Statements regarding factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, or cautionary statements, include, among others, those under the caption “Management’s Discussion and Analysis or Plan of Operation - Overview,” and elsewhere in this Annual Report on Form 10-KSB, including in conjunction with the forward-looking statements included in this Annual Report on Form 10-KSB. All of our subsequent written and oral forward-looking statements (or statements that may be attributed to us) are expressly qualified by the cautionary statements. Our forward-looking statements are based on information available to us today, and we will not update these statements. Our actual results may differ significantly from the results discussed.

EXPLANATORY NOTE

In September 2007 our Board of Directors approved an amendment to our Bylaws to change our fiscal year-end from December 31 to September 30, effective with our 2007 fiscal year, in order to align our fiscal year more closely with our business cycle. In this report, when we refer to “fiscal 2007” we are referring to the fiscal period from January 1, 2007 to September 30, 2007. When we refer to “fiscal 2008” we are referring to the fiscal year from October 1, 2007 to September 30, 2008.

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PART I

Item 1. Description of Business

Overview

Wilson Holdings, Inc. is a real estate development and homebuilding company. We are focused on the acquisition of undeveloped land that we believe, based on our understanding of population growth patterns and infrastructure development, is strategically located. The acquisition of land for development has required, and is expected to continue to require, the majority of our financial resources. We have funded these real estate acquisitions primarily with bank debt. In tandem with our land acquisition efforts and based upon our market analysis, we also prepare land for homebuilding and commenced homebuilding activities in June 2007. We believe that the central Texas economy will continue to expand, and with this expansion our strategic land purchases, land development activities and homebuilding activities will allow us to capitalize on the new population growth centers we expect will be created.

We commenced our homebuilding operations in June 2007 with the purchase of Green Builders, Inc. We are in the process of developing the Green Builders brand and our homebuilding strategy which is to build homes that are environmentally responsible, resource efficient and consistent with local style. Our home designs will be selected and prepared for each of our markets based on local community tastes and the preferences of homebuyers, with substantially all of the construction work performed by subcontractors.

Until we commenced our homebuilding operations in June 2007, the primary focus of our business had been the sale of developed lots to homebuilders, including national homebuilders. During the second quarter 2007, demand for finished lots from national homebuilders was reduced and orders placed for some of our finished lots were cancelled. We believe that retaining these lots for use by our new homebuilding business is the most efficient use of our finished lots and will allow us to generate homebuilding revenue to replace revenue from the loss of sales of these finished lots. We believe that national homebuilders are trying to reduce their real estate holdings and their demand for real estate has been reduced in all parts of the country, including areas which have been less affected from the recent slowdown in housing starts, such as central Texas. We plan to build homes on the majority of the lots that we currently have under development, will sell some of our lots to other homebuilders and may build our homes on lots that we purchase from other land builders or developers.

Industry Overview

The real estate industry is fragmented and highly competitive. We compete with numerous developers, builders and others for the acquisition of property and with local, regional and national developers, homebuilders and others with respect to the sale of residential lots. Additionally we compete with local, regional and national homebuilders in the sale of new homes, and with homebuilders and developers for raw materials, skilled labor, and to obtain financing on commercially reasonable terms.

A primary focus of our business has been the sale of developed lots to homebuilders, including national homebuilders. During the second quarter of calendar 2007, demand for finished lots from national homebuilders was reduced and orders placed for some of our finished lots were cancelled. We believe that retaining these lots for use by our new homebuilding business is the most efficient use of our finished lots and will allow us to generate homebuilding revenue to replace revenue from the loss of sales of these finished lots. We believe that national homebuilders are trying to reduce their real estate holdings and their demand for real estate has been reduced in all parts of the country, including areas which have been less affected from the recent slowdown in housing starts, such as central Texas.

Although central Texas has been less affected than other areas, national real estate trends impact home buyers and lenders and we believe that sales of new homes in our market may slow in fiscal 2008 due to these national trends. Given our relative lack of exposure to areas of the country that have been hardest hit by the slowdown in the residential real estate industry, we believe that we can strategically acquire lots from national builders who are trying to reduce their holdings as we as enter into joint venture arrangements with other land developers and builders in order to preserve cash in case the slowdown impacts our business for a longer period than expected. Our activities have been focused in the central Texas area. Most of our competitors have substantially greater financial resources than we do, as well as much larger staffs and marketing organizations. However, we believe we compete effectively in our existing market as a result of our development and homebuilding expertise, our environmentally conscious approach and our reputation as a producer of quality residential lots. Since our activities to date have been in the central Texas area we also believe we have significantly less exposure to some of the issues impacting larger homebuilders in areas where the real estate environment is less robust than in Texas.

Our Strategy

Our business strategy is focused on two segments:

Homebuilding and related services; and

Land acquisition, development and related services.

Homebuilding and Related Services

Our strategy is to target “green” building. Green building today is most often thought of in terms of products and technology. True green building is an approach to the entire business from land planning to plan design and from administration procedures to field processes. Green is recognition that there are other options and choices within most areas of how we conduct our business. We start the homebuilding process by evaluating our process options for earth-friendly alternatives that are attainable yet reasonably cost-effective and are a sustainable value for the customer. In our homebuilding activities, we follow earth-friendly and efficient processes such as:

considering employees’ attitude and awareness of efficiency in their work space, processes and daily routines;

partnering with vendors and trades in the field to eliminate waste, and create earth-friendly processes and procedures for job sites that are efficient and mutually beneficial;

incorporating sustainable building practices and energy-saving systems that respond to the demands of a particular environment in a specific region;

monitoring the marketplace and industry for new technology;

emphasizing job-site awareness, supervision and communication pursuing earth-friendly procedures;

evaluating the marketplace for new home design and product technology acceptance;

exploring earth-friendly options for consumer choice, efficient applications and implementations;

emphasizing lot and site considerations, home orientations, sustainable lot improvements, low-maintenance landscaping and energy, water, green materials and methods; and

Using environmentally-friendly products.

Land Acquisition

Our plan for land development is to secure land strategically, based on our understanding of population growth patterns and infrastructure development. We believe that national homebuilding companies focus their acquisition efforts on very large tracts of land. National homebuilders have also significantly reduced their land acquisition efforts as the industry has struggled in recent months. In our opinion, these factors create an opportunity for us to secure high-quality, smaller tracts that may be overlooked, as well as tracts that national homebuilders may be trying to sell in an effort to reduce their land holdings. Additionally, by providing a timely and diligent land acquisition effort with decisions approved locally, we expect to have an advantage in the pursuit of larger tracts that may become available in our market.

We expect to use our available assets, (primarily cash from issuances of equity and subordinated notes, cash drawn from our credit facility, plus cash from operations) for land acquisition, development and homebuilding activities. We are not limited by the amount we can invest in any particular stage of development of the land. Almost all of the land and related development projects will be financed by conventional real estate loans or through the use of our current credit facility. Additionally, we defer payment for land when possible and use owner-financed payment plans, such as the rolling option. The rolling option has a variety of forms. One variation allows us to pay the landowner for sections of lots as they are actually needed and utilized in our business. We expect that a substantial portion of our future revenues will be generated through the development of subdivisions and land sales.

Our anticipated land sales will include sections of lots that are ready for immediate home construction with all infrastructures in place, as well as sections of lots that have all necessary approvals to begin construction but have yet to be physically improved.

While we anticipate that the majority of our revenues will come from sales to national and regional homebuilders, we also expect additional revenues from the sale of lots and homebuilding services to smaller, local builders. Lot sales to local builders will typically involve fewer lots per transaction than sales to larger national and regional companies.

We plan to support the purchase of land and development of our communities with specific analysis of our target markets. We intend to utilize more thorough research processes used within industries such as the auto, retail and banking to go beyond benchmarking the current competition in the marketplace. For example, successful automakers target their products to a type of consumer, based on the consumer’s age range, family and lifestyle attributes. We will utilize a similar approach, gathering consumer preference data and customizing our product offerings for a variety of buyer segments. We strive to attract a diverse group of buyers by designing multi-product neighborhoods within each community that will be desirable for homebuyers at differing income levels and with different needs. By providing a more customized product mix of varying lot sizes and amenities in our communities and addressing underserved segments, we believe we can accelerate the absorption of our subdivisions and earn superior returns for our stockholders.

Land Development and Related Services

In tandem with our land acquisition efforts and based upon our strategic market analysis, we plan to subcontract for the preparation of land for development. We seek to add value to the land through the process of development, which may include permitting and constructing water and wastewater infrastructure, master-planning of the community, and the construction of roads and community amenities. We also plan to sell entitled land to others for development. Entitled land is land subject to development agreements, tentative maps or recorded plats, depending on the jurisdiction within which the land is located.

In conjunction with our land acquisition activities, we expect a portion of our land revenues to come from sales of entitled land, developed land and bulk lot sales. To date, our revenues have been derived from lot sales and sales of undeveloped parcels of land plus revenues from services provided to two homebuilder customers. The revenue from these sales has been consolidated into our results. We expect that sales of large parcels of land and sections of developed lots will be sporadic, resulting in fluctuations in our revenues and gross margins, while the sale of parcels of developed lots and delivery of services to homebuilders will be less volatile.

We intend to invest in real estate and real estate related activities and are not limited as to the percentage of our assets that we may invest in any single type of investment or as to the kinds of real estate assets in which we can invest. A vote of our security holders is not required to change the allocation or concentration of such assets. However, we may be subject to certain limits from time to time because of covenant requirements under our agreements with lenders.

Current and Future Properties

We intend to sell some of the lots in our various projects and buy and sell additional properties on an opportunistic basis as market conditions warrant. We believe that our properties are adequately insured, and are suitable for their intended purposes. Because of the nature of our land sales and land development services operations, significant amounts of property are held as inventory in the ordinary course of our business.

Details of the properties we own or have options to purchase are set forth below:

Name of Project	Date Purchased /Optioned	Location	Finished Lots/ Homes	Approx- imate Acreage Owned	Approx- imate Acreage Under Option
Rutherford West	June 30, 2005	Northern Hays County, Texas, Hays Independent School District	54	521	n/a
Georgetown Village	August 22, 2005	The City of Georgetown, Texas, Georgetown Independent School District	50	149	419
Villages of New Sweden	October 18, 2005	Eastern Travis County, Texas, Pflugerville Independent School District	-	521	-
Elm Grove	December 15, 2005	The City of Buda, Texas, Hays Independent School District	-	30	61
Highway 183	May 31, 2005	U.S. Route 183 at Evelyn Rd., Travis County, Texas	-	5	n/a

Rutherford West – Rutherford West is a residential community located southwest of Austin . Rutherford West is planned as an “earth-friendly” acreage development and each lot includes a deed restricted conservation easement. We commenced the development of this project in October 2006 and will continue through 2010 in five phases by geography and/or regulation which limit the amount of the land that is able to be developed. Phase 1 for this property is financed through a development loan. The loan is secured by the property being developed at an interest rate of prime plus 0.5%. The loan requires monthly interest payments and principal pay downs as lots are closed. The outstanding balance of the loan is approximately $1.5 million. Phases 2 through 5 are financed through a land loan. The loan is secured by the land. The interest rate is 12.5% annually and requires monthly interest payments. The outstanding balance of the loan is $7.3 million. The loan matures in March 2009. It is renewable for an additional year for a fee of 1% of the principal balance at the time of the extension.

Georgetown Village — Georgetown Village is a mixed use master-planned development in Williamson County, located just north of Austin, Texas in Georgetown. We purchased the land for this project pursuant to an option contract in August 2005. Under the option contract we are required to purchase a minimum of 30 acres per year through 2017. We own approximately 150 acres as of September 30, 2007. We commenced the development of this project in January 2006 and will continue through 2013. We have completed development on a total of 120 lots in Section 6. To date, 50 lots are finished and ready for delivery and we have delivered 70 lots. The property is pledged as collateral on a $3.0 million land, development, and construction loan, with an outstanding balance of approximately $470,000 as of September 30, 2007 which matures in March 2008. The loan for Section 6 requires monthly interest payments and principal pay downs as lots are closed. Interest payments are at 0.5% over prime and are due monthly and principal payments are due as lots are closed. We closed on Section 9 which is approximately 130 acres of this project in 2007. The loan for Section 9 is financed through our credit facility. Construction commenced on this section in October 2007.

Villages of New Sweden — New Sweden is a master planned, mixed-use community which includes single family residential homes, commercial properties, an onsite school, an amenity center, a fire station, and an open green space in Manor, Texas. We purchased the land for this project in October 2005 with a combination of bank financing, seller financing and cash on hand. The development of this project will commence in fiscal 2008, and will continue through 2017. The property is pledged as collateral for a $4.7 million land loan and seller-financed notes totaling $2.5 million. The interest rate on the land loan is 12.5% with interest payable monthly. The interest payments on the seller-financed notes are fixed at 7% for approximately $1.9 million of the notes and at prime plus 2% for the remaining $600 thousand. The total principal payments for the seller financed notes are due annually in the amount of approximately $1.1 million in 2007, $0.3 million in 2008, $0.5 million in 2009 and $0.5 million in 2010. The land loan and seller-financed notes payable mature in March 2009 and October 2010, respectively.

Elm Grove — Elm Grove is a residential project located south of Austin, Texas in the city of Buda. The master plan includes single-family residential and open green space all within walking distance to Elm Grove elementary school. We acquired the first phase of land for this project in December 2006 with a combination of bank financing and cash on hand. Development of this project commenced May 2007 and will continue through 2010. The property is pledged as collateral on an approximate $3 million land, development, and construction loan, with an outstanding balance of approximately $1.44 million as of September 30, 2007. Interest payments are at 0.5% over prime and the principal on the loan will be paid downs as lots are closed.

Highway 183 — We own approximately five acres in Travis County which are currently under an option agreement to sell to an outside buyer. Ten of the original fifteen acres located along the Highway 183 corridor were condemned by the State in 2007.

Our business plan for land development is to secure land strategically, based on our understanding of population growth patterns and infrastructure development in central Texas and its surrounding areas. We believe that our management team has the expertise to acquire large tracts of land in central Texas, and get them entitled in a relatively short time frame. In our opinion, this creates an opportunity for us to secure high-quality tracts that may have been overlooked or which larger homebuilders are trying to sell. Additionally, we have developed a set of guidelines which address environmental responsiveness, resource efficiency, and cultural sensitivity. Some of our guidelines are:

planning of homesite orientation;

preserving natural open space;

respecting conservation easements;

connecting and enhancing our communities with walking and biking paths that provide easy access for meeting neighbors;

reserving land to provide public space for neighborhood public gardens;

establishing common areas irrigated with “gray water” along with rainwater collection and drip irrigation systems that will help minimize water usage;

ensuring that storm water runoff is filtered and/or treated by the use of wet ponds and vegetative filter strips prior to its release;

respecting the local history of the land and cultural diversity;

creating mixed-used communities that encourage foot traffic with less vehicular traffic;

seeking opportunities to enhance our relationships with builders, partners, governmental agencies, and partnerships with environmental and community-based organizations; and

restoring or recycling of existing structures.

Geographic Expansion

We are pursuing a strategic expansion philosophy based on potential growth opportunities within what we believe are the most stable areas throughout the United States. We plan to grow by investing available capital in our existing market and into operations and strategic acquisitions in new markets. Based on current market conditions and issues that are facing the national homebuilders, we may delay our expansion into future markets until such time as we believe that conditions are favorable for expansion. We will expand into additional markets that show the following trends:

a steady increase in the employment rate over the past three to five years;

an unemployment rate below the national average;

population growth reported steady and positive population rates greater than the national average;

an increase in average home price or less devaluation than the national average;

the presence of national builders that have been active for a considerable amount of time (Greater than ten years);

being rated in the top 50 cities with the most stable growth rate; and

being rated in the top 50 cities moving in the direction of being environmentally sensitive either in their governmental attitudes or in their planning and entitlement processes for each city.

Through strategic acquisitions in markets with the qualifications above we hope to gain established land positions and inventories; existing relationships with local governments, land owners, and developers; and a positive impact on our sources of revenues. This diversification strategy will mitigate the effects of regional economic cycles and position us for greater future growth.

Target Market and Market Data

Our current market, Austin, Texas has an unemployment rate of 3.5% in November 2007, which is far below the national average of 4.5%. Job growth continues to be strong with a projected annual growth of 29,500 jobs in September 2007 according to the Texas Workforce Commission.

The low unemployment rate, strong job growth rate and the slow down of the expected starts among national builders has created a short fall of housing starts and closings in the Austin market area. The number of closings exceeds starts for the first time since 2002, according to Metrostudy, a national market research company. We believe that this shortfall may provide opportunities for new homebuilders.

Texas currently leads the nation in job growth, according to Metrostudy. We believe that this job growth will continue and that Texas will continue to be among the strongest housing markets in the country.

We believe that recent media attention and events focusing on “green” living and sustainability has increased awareness of green building. A recent survey conducted by McGraw Hill indicated that the profile of the green home owner was highly educated and 45 years old. According to the Brookings Institution Metropolitan Policy Program, Austin adults are more likely to have a college degree, and are more likely to have graduate degrees than the U.S. averages. Newcomers to the Austin market are also more likely to have college degrees. We believe that these factors make central Texas a desirable location for “green” homebuilding.

Homebuilders, developers and market researchers generally consider a 24 month supply of vacant developed lots to be at equilibrium in the marketplace. As indicated in the chart below, the Austin market during the 3 rd quarter 2007 had less than a 21 month supply of vacant developed lots. Both developers and builders have decreased their production of new homes and lot inventory. We are carefully considering the inventory that does exist to maximize market opportunities. The homes and lots developed by us have been designed to take advantage of the short fall of supply and the reduction of lot positions by the national builders as a result of their national condition.

Water District Receivables

A Water Control and Improvement District or a Municipal Utility District No. 1 (collectively a “District”), is a political subdivision of the State of Texas, subject to the oversight of the Texas Environmental Quality Commission, or TCEQ.

Districts, by definition, may in engage in some, or all, of the following: residential and commercial supply of water and wastewater services, solid waste disposal, wastewater treatment, conservation, irrigation, drainage, fire fighting, emergency services, and recreational facilities. Texas law gives a District the power to incur debt, levy taxes, charge for specific services, and adopt rules for those services, enter into contracts, obtain easements, and condemn property.

Typically, Districts are formed by real estate developers in areas where the provision of utility services will not otherwise be furnished by another public or private entity (e.g., an area outside the geographic confines of a city or village, or a rural area). Funding for a District’s initial creation and operating costs and for its infrastructure (e.g. pipelines, water storage plants, and treatments facilities or payments for capacity in such facilities under wholesale supply agreements with third parties) usually comes from the developer because the District has no funds available for these purposes when it is first created. In certain Districts (as further discussed below), a developer may also fund, and receive payment from the District for, costs of land set aside for endangered species protection. Once a critical mass of taxable property (usually residential houses) is constructed in a District, the District is able to provide its own financing for operating costs; however, the developer often continues to provide funding for infrastructure through the period of full build-out of the District.

Any creation, operating and infrastructure costs of a District paid by the developer are repaid by the District from time to time pursuant to a reimbursement agreement whereby the District issues its bonds payable from ad valorem taxes on property in the District and uses the bond proceeds to repay the developer’s costs for these District items. Issuance of the District’s bonds is subject to prior review and approval by the TCEQ and the Texas Attorney General’s office.

The time period for issuance of a District’s bonds (which are issued in installments over a period of many years usually continuing through the period of full build out of the District) and the consequent recovery period of the developer’s costs for a District can be over either a long or short period of time. If development in the District moves at a rapid pace, full recovery of a developer’s initial creation and operating costs (which is usually made from the District’s first bond issue) can occur, but cannot be guaranteed, in as quickly as within twelve to eighteen months after District creation. Residential developments that grow more slowly will, accordingly, result in a more extended period of time for the recovery of the District’s initial creation and operating costs. And, since the full recovery of all the developer’s costs for infrastructure during the full build out of the District goes on for the life of the subdivision development, the pace at which the District issues its bond installments from time to time (and the corresponding recovery of the developer’s costs incurred for infrastructure from time to time during the build out period) is closely related to the pace at which houses (and corresponding taxable property value) are added in the District.

A District typically charges its customers for the following services:

an initial tap fee ranging from approximately $600 to $2,000 to cover the cost of installing the water and sewer tap;

an annual ad valorem tax to recover its annual operating costs and to pay debt service on any District bonds which have been issued; and

monthly fees for water and wastewater services, based primarily on a consumption model.

The costs for these services are determined by the District and are usually not reviewed by any county or state review board for reasonableness. These tap fee and monthly service costs are in addition to the developer-funded creation, operating and infrastructure costs described above.

District operations are usually geographically limited to the lands within the District which pay District ad valorem property taxes. If a nearby area lacks any utility service, a District could annex that area or otherwise provide service to it subject to reaching an equitable agreement with the owner of the land to be annexed or otherwise served and meeting certain state law requirements. However, Districts rarely agree to expand their services unless the original developer is agreeable and the owner of the annexed land is willing to enter into a reimbursement agreement similar to the one the original developer signed with the District.

We currently have the community of Villages of New Sweden planned that is within the boundaries of New Sweden Municipal Utility District No. 1 and the community of Rutherford West planned in Greenhawe Water Control and Improvement District No. 2. We incur development costs for the initial creation and operating costs of these Districts and continuing costs for the water, sewer and drainage infrastructure for these Districts. Also, in the case of Greenhawe Water Control and Improvement District No. 2, we have paid for property set aside by us for the preservation of endangered species and that District will reimburse those costs from future District bond sales, too. Under reimbursement agreements with each of these Districts, we expect to be reimbursed partially for the above-described developments costs. The Districts will issue bonds from time to time, in installments, to repay us as there is sufficient assessed value of property in each District to enable it to issue bonds to raise funds to repay us while maintaining a reasonable tax rate so as not to impair continued development within the District. As homes are constructed within the District, the assessed value increases. It can take several years before there is enough assessed value to recapture the costs. At this time, we estimate that we will recover approximately 50 to 100% of eligible initial creation and operating costs spent through September 2007 at such time as each District issues its first bond issue. Usually a District issues its first bond issue only after completion of construction of approximately 200 houses. Since developer - funded infrastructure costs have been minimal to date in each District, we have no estimate of the percentage of those costs which will be recovered from each District or the time when they will be recovered. To the extent that the estimates are dramatically different to the actual facts, it could have a material effect on the financial statements.

Regulation

The housing and land development industries are subject to increasing environmental, building, zoning and real estate sales regulations by various federal, state and local authorities. Such regulations affect home building by specifying, among other things, the type and quality of building materials that must be used, certain aspects of land use and building design. Some regulations affect development activities by directly affecting the viability and timing of projects.

We must obtain the approval of numerous governmental authorities that regulate such matters as land use and level of density, the installation of utility services, such as water and waste disposal, and the dedication of acreage for open space, parks, schools and other community purposes. If these authorities determine that existing utility services will not adequately support proposed development, building moratoria may be imposed. As a result, we use substantial resources to evaluate the impact of government restrictions imposed upon new residential development. Furthermore, as local circumstances or applicable laws change, we may be required to obtain additional approvals or modifications of approvals previously obtained or we may be forced to stop work. These increasing regulations may result in a significant increase in resources between our initial acquisition of land and the commencement and the completion of developments. In addition, the extent to which we participate in land development activities subjects us to greater exposure to regulatory risks.

The residential homebuilding industry is also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. These environmental laws include such areas as storm water and surface water management, soil, groundwater and wetlands protection, subsurface conditions and air quality protection and enhancement. Environmental laws and existing conditions may result in delays, may cause us to incur substantial compliance and other costs and may prohibit or severely restrict homebuilding activity in environmentally sensitive regions or areas.

Employees

On September 30, 2007, we had 19 full-time employees, one part-time employee and three full-time consultants. None of our employees are represented by a labor union and we consider our relations with our employees and consultants to be good.

Company History

Wilson Holdings, Inc. is a Nevada corporation formed on August 4, 1987. We were originally incorporated as Pandora's Golden Box and were renamed Cole Computer Corporation in February 1999. Effective October 11, 2005 pursuant to an Agreement and Plan of Reorganization dated as of September 2, 2005 by and among us , a majority of our stockholders, Wilson Acquisition Corp. and Wilson Family Communities, Inc., Wilson Family Communities became our wholly-owned subsidiary. In June 2007 we acquired Green Builders, Inc. and commenced homebuilding operations under the Green Builders name.

WFC’s business was originally conducted in 2002, by Athena Equity Partners-Hays, L.P., a Texas limited partnership, or Athena. Athena engaged in various land acquisition and development activities, including the purchase, entitling, and sale of a 2,400 acre mixed-use tract composed of office, retail and residential lots in central Texas. From October 2003 to May 2005, Athena did not have significant operations. In May 2005, Athena merged with WFC.

Risk Factors

Set forth below and elsewhere in this Report and in other documents we file with the Securities and Exchange Commission are risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward looking statements contained in this Report. Prospective and existing investors are strongly urged to carefully consider the various cautionary statements and risks set forth in this Report and our other public filings.

Risks Related to Our Business

We have only recently commenced our homebuilding operations and there is no assurance that we will be successful.

We commenced our homebuilding operations in June 2007 though the acquisition of Green Builders, Inc. While members of our management team have extensive experience in homebuilding, our company has never conducted homebuilding operations and there is no assurance that we will be successful.

A significant decline in demand for new homes would adversely affect our business.

The homebuilding industry continues to experience a significant decline in demand for newly built homes in many markets. While the central Texas market has not been as significantly impacted by this decline, if demand for new houses were to decline it could have a significant impact on our business. In addition, even in the central Texas market is not as significantly impacted as other areas, national real estate trends impact home buyers and lenders which could lead to a slowdown in sales of new homes in the central Texas area which could negatively impact our business.

Demand for new homes is sensitive to economic conditions over which we have no control.

Demand for homes is sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, the availability of financing and interest rate levels. Although the market has experienced some increase in mortgage interest rates over the past year, mortgage interest rates remain lower than their historical averages. If mortgage interest rates increase or if any of these other economic factors adversely change nationally, or in the market in which we operate, the ability or willingness of prospective buyers to purchase new homes could be adversely affected.

Our results of operations and financial condition are greatly affected by the performance of the real estate industry.

Our real estate activities are subject to numerous factors beyond our control, including local real estate market conditions, substantial existing and potential competition, general national, regional and local economic conditions, fluctuations in interest rates and mortgage availability and changes in demographic and environmental conditions. Real estate markets have historically been subject to strong periodic cycles driven by numerous factors beyond the control of market participants.

Real estate investments often cannot easily be converted into cash and market values may be adversely affected by these economic circumstances, market fundamentals, competition and demographic conditions. Because of the effect these factors have on real estate values, it is difficult to predict with certainty the level of future sales or sales prices that will be realized for individual assets.

Our real estate operations are also dependent upon the availability and cost of mortgage financing for potential customers, to the extent they finance their purchases, and for buyers of the potential customers’ existing residences.

Increasing interest rates could cause defaults for homebuyers who financed homes using non-traditional financing products, which could increase the number of homes available for resale.

During the recent time of high demand in the homebuilding industry, many homebuyers financed their purchases using non-traditional adjustable rate or interest only mortgages or other mortgages, including sub-prime mortgages that involve significantly lower initial monthly payments. As a result, new homes have been more affordable in recent years. However, as monthly payments for these homes increase either as a result of increasing adjustable interest rates or as a result of principal payments coming due, some of these homebuyers could default on their payments and have their homes foreclosed, which would increase the inventory of homes available for resale. In addition, if lenders perceive deterioration in credit quality among homebuyers, lenders may eliminate some of the available non-traditional and sub-prime financing products or increase the qualifications needed for mortgages or adjust their terms to address any increased credit risk. In general, if mortgage rates increase or lenders make it more difficult for prospective buyers to finance home purchases, it could become more difficult or costly for customers to purchase our homes, which would have an adverse affect on our sales volume.

Inflation can adversely affect us, particularly in a period of declining home sale prices.

Inflation can have a long-term impact on us because increasing costs of land, materials and labor may require us to attempt to increase the sale prices of homes in order to maintain satisfactory margins. However, in the event the housing market in central Texas were to decline, we may be forced to decrease prices in order to maintain sales volume. This deflation in sales price, in addition to impacting our margins on new homes, also reduces the value of our land inventory and makes it more difficult for us to recover the full cost of previously purchased land in new home sales prices or, if we choose, to dispose of land assets. In addition, depressed land values may cause us to walk away from deposits on option contracts if we cannot satisfactorily renegotiate the purchase price of the optioned land.

We face significant competition in our efforts to sell homes.

The homebuilding industry is highly competitive. We compete with numerous national, regional and local homebuilders. This competition with other homebuilders could reduce the number of homes we deliver, or cause us to accept reduced margins in order to maintain sales volume.

We also compete with the resale of existing homes, including foreclosed homes, sales by housing speculators and available rental housing. In the event that demand for homes has slows, competition, including competition with homes purchased for speculation rather than as places to live, will create increased downward pressure on the prices at which we are able to sell homes, as well as upon the number of homes we can sell.

Our current operating business has a limited operating history and revenues.

In October 2005, we acquired Wilson Family Communities, Inc., or WFC, which has a limited operating history. Accordingly, our business is subject to substantial risks inherent in the commencement of a new business enterprise in an intensely competitive industry. The business of WFC was conducted, beginning in 2002, by Athena Equity Partners-Hays, L.P., or Athena, to engage in land acquisition and development and, beginning in 2005, to provide homebuilder services. Prior to its merger with WFC, Athena did not generate significant revenues, and, through September 30, 2007, our company has generated revenues of only approximately $4.4 million and has incurred cumulative net losses of approximately $13 million. We recently entered the homebuilding business and have little experience building homes and there is no assurance that we will be successful.

There can be no assurance that we will be able to successfully acquire, develop and/or market land, develop and market our homebuilder services, commence our homebuilding activities, generate revenues, or ever operate on a profitable basis. Any investment in our company should be considered a high-risk investment because the investor will be placing funds at risk in a company with unknown costs, expenses, competition, and other problems to which new ventures are often subject. Investors should not invest in our company unless they can afford to lose their entire investment.

We have incurred a significant amount of debt but will require additional substantial capital to continue to pursue our operating strategy.

We had approximately $13.1 million in cash and cash equivalents at September 30, 2007. We have secured lines of credit totaling approximately $55 million. Approximately $2.7 million has been drawn against these lines of credit as of September 30, 2007.

We have issued and sold an aggregate of $16.75 million in principal amount of convertible promissory notes since December 2005. These notes bear interest at a fixed rate of 5.0% per annum, with the principal amount of such notes convertible into shares of our common stock at the rate of one share per $2.00 of principal, which conversion rate is subject to proportionate adjustment for stock splits, stock dividends and recapitalizations as well as an anti-dilution adjustment which will apply if we sell shares of our common stock in the future at a price per share of less than $2.00, provided that such conversion rate may not be reduced below a rate of one share of common stock for each $1.00 of note principal.

Our growth plans will require substantial amounts of cash for earnest money deposits, land purchases, development costs and 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 our monthly operating expenses, costs associated with our sales, marketing and general and administrative activities will deplete cash. Our articles of incorporation contain no limits on the amount of indebtedness we may incur.

Market conditions may reduce the amount available to us under our lines of credit.

Due to covenants in our lines of credit and the market conditions surrounding the mortgage and related industries, we may not be able to utilize the entire line of available funds. The amount available under our line of credit is tied to the appraisal value of our real estate holdings or property on which we have an option. In the event that there is a devaluation of our land holdings upon which our line of credit is secured, the lenders under our primary line of credit may elect to reduce the amount of credit available to us under the line.

We may seek additional credit lines to finance land purchases and development costs.

Through September 30, 2007, we have closed on four major land development projects. The majority of our expenditures in the past have been for inventory, consisting of land, land development and land options totaling over $3.2 million as of September 30, 2007. To secure additional inventory, we will be required to put up earnest money deposits, make cash down payments, and acquire acreage tracts and pay for certain land development activities costing several million dollars. This amount includes the development of land, including costs for the installation of water, sewage, streets and common areas. 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. We currently have approximately $525,000 in capitalized development costs, earnest money and deposits outstanding of which the entire amount would be forfeited and expensed if we were to cancel all of these agreements.

Should our financing efforts be insufficient to execute our business plan, we may be required to seek additional sources of capital, which may include partnering with one or more established operating companies that are interested in our emerging business or entering into joint venture arrangements for the development of certain of our properties. However, if we were required to resort to partnering or joint venture relationships as a means to raise needed capital or reduce our cost burden, we likely will be required to cede some control over our activities and negotiate our business plan with our business or joint venture partners.

We are vulnerable to concentration risks because our initial operations have been limited to the central Texas area and we have focused on the residential rather than commercial market.

Our real estate activities have to date been conducted almost entirely in the central Texas region, which we define as encompassing the Austin Metropolitan Statistical Area and the San Antonio Metropolitan Statistical Area. This geographic concentration, combined with a limited number of projects that we plan to pursue, make our operations more vulnerable to local economic downturns and adverse project-specific risks than those of larger, more diversified companies.

The performance of the central Texas economy will affect our sales and, consequently, the underlying values of our properties. For example, the economy in the Austin MSA is heavily influenced by conditions in the technology industries. During periods of weakness or instability in technology industries, we may experience reduced sales, particularly with respect to “high-end” properties, which can significantly affect our financial condition and results of operations. The San Antonio MSA economy is dependent on the service industry (including tourism), government/military and businesses specializing in international trade. To the extent there is a significant reduction in tourism or in staffing levels of military or other government employers in the San Antonio MSA, we would expect to see reduced sales of lower priced homes due to a likely reduction in lower paying tourism- and government-related jobs.

In addition, we have focused our development efforts on residential rather than commercial properties. Economic shifts affect residential and commercial property markets, and thus our business, in different ways. A developer with diversified projects in both sectors may be better able to survive a downturn in the residential market if the commercial market remains strong. Our focus on the residential sector can make us more vulnerable than a diversified developer.

Fluctuations in market conditions may affect our ability to sell our land at expected prices, if at all, which could adversely affect our revenues, earnings and cash flows.

We are subject to the potential for significant fluctuations in the market value of our land inventories. Our land and homes under development represent our primary assets. There is a lag between the time we acquire control of undeveloped land and the time that we can improve that land for sale to home builders or begin building homes. This lag time varies from site to site as it is impossible to determine in advance the length of time it will take to obtain government approvals and permits. The risk of owning undeveloped land can be substantial as the market value of undeveloped land can fluctuate significantly as a result of changing economic and market conditions. Inventory carrying costs can be significant and can result in losses in a poorly performing development or market. Material write-downs of the estimated value of our land inventories could occur if market conditions deteriorate or if we purchase land at higher prices during stronger economic periods and the value of those land inventories subsequently declines during weaker economic periods. We could also be forced to sell land or lots for prices that generate lower profit than we anticipate, and may not be able to dispose of an investment in a timely manner when we find dispositions advantageous or necessary. Furthermore, a decline in the market value of our land inventories may give rise to a breach of financial covenants contained in our credit facilities, which could cause a default under one or more of those credit facilities.

Homebuilding is subject to warranty and liability claims in the ordinary course of business that can be significant.

As a homebuilder, we are subject to home warranty and construction defect claims arising in the ordinary course of business. We are also subject to liability claims arising in the course of construction activities. We record warranty and other reserves for the homes we sell based on historical experience in our markets and our judgment of the qualitative risks associated with the types of homes built. We have, and many of our subcontractors have, general liability, property, errors and omissions, workers compensation and other business insurance. These insurance policies protect us against a portion of our risk of loss from claims, subject to certain self-insured retentions, deductibles and other coverage limits. However, because of the uncertainties inherent in these matters, we cannot provide assurance that our insurance coverage or our subcontractor arrangements will be adequate to address all warranty, construction defect and liability claims in the future. Additionally, the coverage offered by and the availability of general liability insurance for construction defects are currently limited and costly. There can be no assurance that coverage will not be further restricted and become even more costly.

We may be subject to risks as a result of our entry into joint ventures.

We have made the decision to be very selective in our immediate growth plans and to seek joint venture partners for both future and existing land transactions. While joint ventures by their very nature tend to have a lower pure dollar margin they also transfer risk to the joint venture entity thus helping preserve the viability of our company. However, to the extent that we undertake joint ventures to develop properties or conduct our business, we may be liable for all obligations incurred by the joint venture, even though such obligations may not have been incurred by us, and our share of the potential profits from such joint venture may not be commensurate with our liability. Moreover, we will be exposed to greater risks in joint ventures should our co-ventures’ financial condition become impaired during the term of the joint venture, as creditors will increasingly look to our company to support the operations and fund the obligations of the joint venture.

Our operations are subject to weather-related risks.

Our land development operations and the demand for our homebuilder services may be adversely affected from time to time by weather conditions that damage property. The central Texas region is prone to tornados, hurricanes entering from the Gulf of Mexico, floods, hail storms, severe heat and droughts. In 2007, the central Texas region has received significant levels of rain that have delayed and in some cases stopped construction projects. We maintain only limited insurance coverage to protect the value of our assets against natural disasters. Additionally, weather conditions can and have delayed our development and construction projects by weeks or months, which could delay and decrease our anticipated revenues. To the extent we encounter significant weather-related delays, our business would suffer.

The availability of water could delay or increase the cost of land development and adversely affect our future operating results.

The availability of water is becoming an increasingly difficult issue in the central Texas region and other areas of the southwestern United States. Many jurisdictions are now requiring that builders provide detailed information regarding the source of water for any new community that they intend to develop. Similarly, the availability of treatment facilities for sanitary sewage is a growing concern. Many urban areas have insufficient resources to meet the demand for waste-water and sanitary sewage treatment. To the extent we are unable to find satisfactory solutions to these issues with respect to future development projects, our operations could be adversely affected.

If our customers are not able to obtain suitable financing, our business may decline.

Our business and earnings also depend on the ability of our potential customers to obtain mortgages for the purchase of our homes. The uncertainties created by recent events in the sub-prime mortgage market and their impact on the overall mortgage market, including the tightening of credit standards, could adversely affect the ability of our customers to obtain financing for a home purchase, thus preventing our potential customers from purchasing our homes. If our potential customers or the buyers of our customers’ current homes are not able to afford or obtain suitable financing under such circumstances, our sales and revenues could decline. Similar risks apply to those buyers who are in our backlog of homes to be delivered. If our customers cannot obtain suitable financing in order to purchase our homes, our sales and profitability could be materially affected.

We are a small company and have a correspondingly small financial and accounting organization. Being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified directors.

We are a small company with a finance and accounting organization that we believe is of appropriate size to support our current operations; however, the rigorous demands of being a public reporting company may lead to a determination that our finance and accounting group is undersized. In addition, our President and Chief Executive Officer is our majority shareholder and controls the company. He also has significant control over our daily operations and we are required to implement proper and effective controls and procedures due to the extent of his control over the company. As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002 and in fiscal 2008 we will be required to comply with the Section 404 of the Sarbanes-Oxley Act which will require us and our independent public accounting firm to report on the effectiveness of our internal controls over financial reporting. The requirements of these laws and the rules and regulations promulgated there under entail significant accounting, legal and financial compliance costs, and have made, and will continue to make, some activities more difficult, time consuming or costly and may place significant strain on our personnel, systems and resources. We may be required to increase the size of our finance and accounting group or to retain consultants to assist us with our Sarbanes-Oxley Section 404 compliance which may be a significant expense and we will incur additional fees with our independent public accounting firm.

The Securities Exchange Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, and in order to comply with the burden of Section 404 of the Sarbanes-Oxley Act, significant resources and management oversight are required. As a result, management’s attention may be diverted from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.

These rules and regulations also have made it more difficult and more expensive for us to maintain director and officer liability insurance, and in the future we may be required to accept reduced coverage or incur substantially higher costs to maintain such coverage. If we are unable to maintain adequate director and officer insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent, will be significantly curtailed.

We depend on our key personnel to manage our business effectively.

We believe our future success will depend in large part upon our ability to attract and retain highly skilled managerial and sales and marketing personnel. In particular, due to the relatively early stage of our business, we believe that our future success is dependent on Clark N. Wilson, our Chief Executive Officer and the founder of WFC, to provide the necessary leadership to execute our growth plans. Although we intend to acquire a key-man life insurance policy for Mr. Wilson, the loss of the services of Mr. Wilson or the inability to attract or retain qualified personnel in the future or delays in hiring required personnel will impede our ability to become profitable.

We have borrowed money at floating interest rates and if interest rates were to significantly increase, our financial results could suffer.

As of September 30, 2007 we have borrowed approximately $6.2 million at interest rates of prime plus 0.50% to 2.00% that adjust in relation to the prime rate. If the prime rate were to significantly increase, we will be required to pay additional amounts in interest under these notes and line of credit and our financial results could suffer.

Land and homes under construction comprise the majority of our assets. These assets could suffer devaluation if the housing and real estate market suffers 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 the use of our cash. A significant downturn could also make it more difficult for us to liquidate assets, to raise cash and to pay off debts, which could have a material adverse effect.

Our growth strategy to expand into new geographic areas poses risks.

We may expand our business into new geographic areas outside of the central Texas region. We will face additional risks if we expand our operations in geographic areas or climates in which we do not have experience, including:

adjusting our land development methods to different geographies and climates;

obtaining necessary entitlements and permits under unfamiliar regulatory regimes;

attracting potential customers in a market in which we do not have significant experience; and

the cost of hiring new employees and increased infrastructure costs.

We may not be able to successfully manage the risks of such an expansion, which could have a material adverse effect on our revenues, earnings, cash flows and financial condition.

If we are unable to generate sufficient cash from operations or secure additional borrowings, we may find it necessary to curtail our development activities.

Our performance continues to be substantially dependent on future cash flows from real estate financing and sales and there can be no assurance that we will generate sufficient cash flow or otherwise obtain sufficient funds to meet the expected development plans for our current and future properties. If we are unsuccessful in obtaining adequate loans or in generating positive cash flows, we could be forced to abandon some of our development activities, including the development of sub-divisions and entitling of land for development; forfeit option fees and deposits; default on loans; violate covenants with our current lenders and convertible note holders thereby putting us in default; and possibly be forced to liquidate a substantial portion of our asset holdings at unfavorable prices.

Regulatory Risks

Our operations are subject to an intensive regulatory approval process, including governmental and environmental regulation, which may delay, increase the cost of, prohibit or severely restrict our development projects and reduce our revenues and cash flows.

We are subject to extensive and complex laws and regulations that affect the land development process. Before we can develop a property, we must obtain a variety of approvals from local, state and federal governmental agencies with respect to such matters as zoning, density, parking, subdivision, site planning and environmental issues. Certain of these approvals are discretionary by nature. Because certain government agencies and special interest groups have in the past expressed concerns about development plans in or near the central Texas region, our ability to develop these properties and realize future income from them could be delayed, reduced, made more expensive or prevented altogether.

Real estate development is subject to state and federal regulations as well as possible interruption or termination because of environmental considerations, including, without limitation, air and water quality and the protection of endangered species and their habitats. We are making and will continue to make expenditures and other accommodations with respect to our real estate development for the protection of the environment. Emphasis on environmental matters may result in additional costs to us in the future or a reduction in the amount of acreage that we can use for development or sales activities.

We are subject to risks related to environmental damages.

We may be required to undertake expensive and time-consuming clean-up or remediation efforts in the event that we encounter environmental hazards on the lots we own, even if we were not originally responsible for or aware of such hazards. In the event we are required to undertake any such remediation activities, our business could suffer.

Federal laws and regulations that adversely affect liquidity in the secondary mortgage market could hurt our business.

Recent federal laws and regulations could have the effect of curtailing the activities of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These organizations provide significant liquidity to the secondary mortgage market. Any curtailment of their activities could increase mortgage interest rates and increase the effective cost of our homes, which could reduce demand for our homes and adversely affect our results of operations.

The federal financial institution agencies recently issued their final Interagency Guidance on Nontraditional Mortgage Products (“Guidance”). This Guidance applies to credit unions, banks and savings associations and their subsidiaries, and bank and savings association holding companies and their subsidiaries. Although the Guidance does not apply to independent mortgage companies, it likely will affect the origination operations of many mortgage companies that broker or sell nontraditional mortgage loan products to such entities. This Guidance could reduce the number of potential customers who could qualify for loans to purchase homes from us and others.

Compliance with federal, state and local regulations related to our business could create substantial costs both in time and money, and some regulations could prohibit or restrict some homebuilding ventures.

We are subject to extensive and complex laws and regulations that affect the land development and homebuilding process, including laws and regulations related to zoning, permitted land uses, levels of density, building design, elevation of properties, water and waste disposal and use of open spaces. In addition, we are subject to laws and regulations related to workers’ health and safety. We also are subject to a variety of local, state and federal laws and regulations concerning the protection of health and the environment. We may be required to pay environmental impact fees, use energy-saving construction materials and give commitments to municipalities to provide certain infrastructure such as roads and sewage systems. We generally are required to obtain permits, entitlements and approvals from local authorities to commence and carry out residential development or home construction. Such permits, entitlements and approvals may, from time-to-time, be opposed or challenged by local governments, neighboring property owners or other interested parties, adding delays, costs and risks of non-approval to the process. Our obligation to comply with the laws and regulations under which we operate, and our obligation to ensure that our employees, subcontractors and other agents comply with these laws and regulations, could result in delays in construction and land development, cause us to incur substantial costs and prohibit or restrict land development and homebuilding activity in certain areas in which we operate.

Tax law changes could make home ownership more expensive or less attractive.

Significant expenses of owning a home, including mortgage interest expense and real estate taxes, generally are deductible expenses for the purpose of calculating an individual’s federal, and in some cases state, taxable income, subject to various limitations under current tax law and policy. If the federal government or a state government changes income tax laws, as has been discussed recently, to eliminate or substantially reduce these income tax deductions, then the after-tax cost of owning a new home would increase substantially. This could adversely impact demand for, and/or sales prices of, new homes.

Risks Related to Investment in Our Securities

Our company is a holding company, and the obligations of our company are subordinate to those of our operating subsidiary.

Our company is a holding company with no material assets other than our equity interest in our wholly owned subsidiary, Wilson Family Communities, or WFC. WFC conducts substantially all of our operations and directly owns substantially all of our assets. WFC also has entered into a credit facility to finance the purchase of some of our land holdings and this credit facility is secured by the assets of WFC. The holding company structure places any obligations of Wilson Holdings subordinate to those of our operating subsidiary, WFC. Therefore, in the event of a liquidation, creditors of WFC would be repaid prior to any distribution to the stockholders of Wilson Holdings. After the repayment of all obligations incurred by WFC and the repayment of all obligations of Wilson Holdings, any remaining assets could then be distributed to Wilson Holdings as the holder of all shares of common stock of WFC and subsequently would be distributed among the holders of our common stock.

Our largest stockholder, who is also our President and Chief Executive Officer, will continue to control our company.

Clark N. Wilson, our President and Chief Executive Officer, owns or controls approximately 59% of our issued and outstanding common stock. This ownership position will provide Mr. Wilson with the voting power to significantly influence the election of all members of our Board of Directors and, thereby, to exert substantial control over all corporate actions and decisions for an indefinite period.

We issued $16.75 million in convertible notes and if these notes are converted into shares of common stock, or if the warrants issued in conjunction with such notes are exercised, our stockholders would suffer substantial dilution.

In December 2005 and September 2006, we issued convertible promissory notes which may be converted, at the election of the holders of the notes, into shares of our common stock at a conversion price of $2.00 per share. In conjunction with these note financings, we also issued warrants to the purchasers which have vested and to the placement agent evidencing the right to purchase an aggregate of 1,157,187 shares of our common stock at an exercise price of $2.00 per share. While the holders of these notes and warrants have not indicated to us that they plan to convert their notes into, or exercise their warrants for, shares of our common stock, in the event they elect to do so we would be required to issue up to 8,375,000 additional shares of our common stock in conversion of the notes and 1,157,187 shares of our common stock upon exercise of the warrants, which would be dilutive to our existing stockholders. Each convertible note is convertible into shares of our common stock at the option of the holder. The conversion price is subject to adjustment for stock splits, reverse stock splits, recapitalizations and similar corporate actions. An anti-dilution adjustment in the conversion price, and the corresponding rate at which the convertible notes may be converted into shares of our common stock, also is triggered upon the issuance of certain equity securities or equity-linked securities with a conversion price, exercise price or share price of less than $2.00 per share, provided that the conversion price cannot be lower than $1.00 per share.

Future sales or the potential for sale of a substantial number of shares of our common stock could cause the trading price of our common stock to decline and could impair our ability to raise capital through subsequent equity offerings.

Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our stock to decline and could materially impair our ability to raise capital through the sale of additional equity securities. For example, the grant of a large number of stock options or other securities under an equity incentive plan or the sale of our equity securities in private placement transactions at a discount from market value could adversely affect the market price of our common stock.

We have anti-takeover provisions that could discourage, delay or prevent our acquisition.

Provisions of our articles of incorporation and bylaws could have the effect of discouraging, delaying or preventing a merger or acquisition that a stockholder may consider favorable. Our authorized but unissued shares of common stock are available for our Board to issue without stockholder approval. We may use these additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of our authorized but unissued shares of common stock could render it more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or other transaction. In the future, we may elect to amend our charter to provide for authorized but unissued shares of preferred stock that would be issuable at the discretion of the Board of Directors. We can amend and restate our charter by action of the Board of Directors and the written consent of a majority of stockholders.

We may become subject to Nevada’s Control Share Acquisition Act (Nevada Revised Statutes 78.378 -78.3793), which prohibits an acquirer, under certain circumstances, from voting shares of a corporation’s stock after crossing specific threshold ownership percentages, unless the acquirer obtains the approval of the issuing corporation’s stockholders. The first such threshold is the acquisition of at least one-fifth but less that one-third of the outstanding voting power. Wilson Holdings may become subject to Nevada’s Control Share Acquisition Act if it has 200 or more stockholders of record at least 100 of whom are residents of the State of Nevada and does business in the State of Nevada directly or through an affiliated corporation. Currently, we do not conduct business in the State of Nevada directly or through an affiliated corporation.

As a Nevada corporation, we also are subject to Nevada’s Combination with Interested Stockholders Statute (Nevada Revised Statutes 78.411 - 78.444) which prohibits an “interested stockholder” from entering into a “combination” with the corporation, unless certain conditions are met. An “interested stockholder” is a person who, together with affiliates and associates, beneficially owns (or within the prior three years, did beneficially own) 10 percent or more of the corporation’s voting stock.

Clark N. Wilson, our President and Chief Executive Officer owns approximately 59% of our issued and outstanding common stock. All of these factors may decrease the likelihood that we would be, or the perception that we can be, acquired, which may depress the market price of our common stock.

Item 2. Description of Property

Our corporate office, which we lease from a third party, contains approximately 5,000 square feet, and is located in Austin, Texas. We believe this facility is adequate to meet our requirements at our current level of business activity.

Item 3. Legal Proceedings

We are not a party to any legal proceedings.

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

None.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Our common stock is traded on the American Stock Exchange under the symbol “WIH.”

The following table represents the range of the high and low bid prices of our common stock as reported by the American Stock Exchange (for prices since May 19, 2007) and the OTC Bulletin Board Historical Data Service (for prices before May 19, 2007). These quotations represent prices between dealers and may not include retail markups, markdowns, or commissions and may not necessarily represent actual transactions. The market prices reported prior to October 11, 2005 were prices reported for Cole Computer Corporation, our predecessor entity that was a shell corporation with no material assets or liabilities. The share prices reported below have been adjusted to take into account a 350-to-1 reverse stock split with respect to the outstanding shares of our common stock that was affected on September 22, 2005.

2007	High	Low
January 1 to March 31	$6.25	$4.25
April 1 to June 30	$5.25	$2.65
July 1 to September 30	$2.65	$1.70
October 1 to December 27	$2.00	$0.90
2006	High	Low
January 1 to March 31	$7.50	$2.90
April 1 to June 30	$5.25	$3.00
July 1 to September 30	$4.95	$2.00
October 1 to December 31	$6.00	$2.50
2005	High	Low
January 1 to March 31	$10.49	$3.85
April 1 to June 30	$13.46	$3.85
July 1 to September 30	$13.99	$3.85
October 1 to December 31	$13.00	$4.00

The last reported sale price of our common stock on the American Stock Exchange on December 26, 2007 was $1.10 per share. According to the records of our transfer agent, there were approximately 334 record holders of our common stock as of December 26, 2007.

Dividends

We have not declared or paid any dividends, and do not intend to pay any dividends in the foreseeable future, with respect to our common stock. We intend to retain any future earnings for use in the operation and expansion of our business. Any future decision to pay dividends on our common stock will be at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, capital requirements and other factors our Board of Directors may deem relevant.

Recent Sales of Unregistered Securities

We did not sell any unregistered securities in the period covered by this report.

Issuer Repurchases of Equity Securities

We did not repurchase any shares of our common stock during the third quarter of ended September 30, 2007.

The following table provides information as of September 30, 2007 with respect to compensation plans under which our equity securities are authorized for issuance.

Equity Compensation Plan Informaiton

Plan Category	Number of securities to be issued upon exercise of outstanding warrants		Weighted average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans

Equity compensation plans approved by security holders		1,835,000	$	2.24		665,000

Equity compensation plans not approved by security holders		-		-		-

Total		1,835,000	$	2.24		665,000

Item 6. Management’s Discussion and Analysis or Plan of Operation.

This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. When used herein, the words “believes,” “plans,” “expects,” “anticipates,” “intends,” “continue,” “may,” “will,” “could,” “should,” “future,” “potential,” “estimate,” or the negative of such terms and similar expressions as they relate to us or our management are intended to identify forward-looking statements. 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 herein. These risks and uncertainties are beyond our control and, in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. Historical results and percentage relationships among any amounts in our consolidated financial statements are not necessarily indicative of trends in operating results for any future periods.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Consolidated Financial Information” and our financial statements and accompanying notes included elsewhere in this document.

Overview

Our business plan focuses on the acquisition of undeveloped land that we believe, based on our understanding of population growth patterns and infrastructure development, is strategically located. This portion of our business focus has required, and is expected to continue to require, the majority of our financial resources. We have funded these acquisitions primarily with bank debt. In tandem with our land acquisition efforts, and based upon our strategic market analysis, we also prepare land for homebuilding. We believe that as the central Texas economy expands, the strategic land purchases, land development activities and homebuilding activities that we have recently commenced will enable us to capitalize on the new growth centers we expect will be created.

We commenced our homebuilding operations in June 2007 with the purchase of Green Builders. We are in the process of developing the Green Builders brand and developing our homebuilding strategy. Our strategy is to build homes that are environmentally responsible, resource efficient and consistent with local style. We will build homes on the majority of the lots that we currently have under development. We may build on lots that we purchase from other land builders or developers. We plan on continuing to acquire and develop land and sell some of those lots to homebuilders. Our home designs will be selected and prepared for each of our markets based on local community tastes and the preferences of homebuyers. Substantially all of our construction work will be performed by subcontractors. Subcontractors will be retained for specific subdivisions pursuant to contracts entered in 2007.

A primary focus of our business has been the sale of developed lots to homebuilders, including national homebuilders. During the second quarter of 2007, demand for finished lots from national homebuilders was reduced and orders placed for some of our finished lots were cancelled. We believe that retaining these lots for use by our new homebuilding business is the most efficient use of our finished lots and will allow us to generate homebuilding revenue to replace revenue from the loss of sales of these finished lots. National homebuilders have been trying to reduce their real estate holdings for the past several months and we believe this will continue. Demand for real estate has been reduced in all parts of the country, including areas which have been less affected from the recent slowdown in housing starts, such as central Texas. We believe that the national slowdown will impact central Texas as national homebuilders continue to sell their real estate holdings.

We terminated our relationship with our last remaining homebuilder client on August 2, 2007 subsequent to the sale of all the homes for which we had guaranteed the loans. As a result of the termination of the relationship, we recorded approximately a $260,000 increase to stockholders equity.

Comparison of Nine Months Ended September 2007 and 2006

	Nine Months Ended September 30,
	2007			2006			Change			% Change
	(in thousands)
Homebuilding and related services revenues	$	1,295		$	4,185		$	(2,889	)		-69	%
Land revenues	$	3,149		$	1,080		$	2,069			192	%
Homebuilding and related services gross profit	$	270		$	705		$	(435	)		-62	%
Land gross profit	$	(646	)	$	455		$	(1,101	)		-242	%
Operating expenses	$	4,244		$	4,010		$	234			6	%
Operating loss	$	(4,620	)	$	(2,850	)	$	(1,770	)		62	%
Net loss	$	(6,556	)	$	(7,626	)	$	1,070			-14	%

Results of Operations

Homebuilding and Related Services Revenues

Background - Homebuilding and related services consists of home sales and homebuilder services. All of the home sales have been 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 refer to these clients as Variable Interest Entities, or VIEs.

Revenues - During the nine months ended September 30, 2007, home sales accounted for approximately 29% of revenues at a gross profit margin of approximately 21%. All of the homebuilding revenues were generated by one VIE consolidated into our operating results. During the nine months ended September 30, 2007, home sales declined approximately 69% from the same periods in 2006, primarily due to the reduced home sales from our VIEs.

In June 2007 we acquired Green Builders and have commenced our homebuilding activities under the name “Green Builders, Inc.” Our strategy is to build homes that are environmentally responsible, resource efficient and built consistently with local styles and standards. We plan to sell homes in central Texas, initially in the Austin, Texas area for prices ranging from $200,000 to $700,000. We have derived our historical revenue from the sale of real estate and residential lots, and from services provided to homebuilder clients. We ceased providing services to homebuilder clients in August 2007. Prior to August 2007, we exercised significant influence over, but held no controlling interest in, homebuilder clients, but in some cases we retained the majority of the risk of loss. At September 30, 2007 and December 31, 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.

Land and Land Development

Background – Land sales revenue consists of revenues from the sale of undeveloped land and developed lots. Developing finished lots from land takes approximately one to three years. We may sell our lots to national, regional and local homebuilders that may purchase anywhere from five to one hundred or more lots at a time, although the delivery of these lots would likely be scheduled over periods of several months or years. We may use our developed lots for our own homebuilding operations.

Revenues – During the nine months ended September 30, 2007, land sales accounted for approximately 71% of our total revenues at a gross loss of approximately 21% due to the write-off of approximate $1.3 million of development expenses incurred on the Bohls tract that we elected not to exercise described below. For the nine months ended September 30, 2007, approximately $800,000 of our land sale revenue came from the sale of undeveloped acreage tracts of land, approximately $2.3 million of the revenue from the sale of developed finished lots. Revenues from land and lot sales increased approximately 119% for the nine months ended September 30, 2007 from the same periods in 2006, primarily due to the completion and sale of residential lots. Excluding the write-off of the Bohls tract, gross profit declined as a percentage of total land revenues over the same period in the prior year due to the low volume and mix of land sold. Land sales during the same periods of 2006 consisted of a land purchase option and undeveloped acreage tracts with lower cost of sales, whereas the current year land sales were primarily single family lots.

Costs and Expenses

Cost of Sales

In May 2007 we elected not to exercise a land purchase option to purchase the Bohls tract of approximately 428 acres for approximately $7.2 million. Due to the market conditions in the homebuilding industry, our revenue projections for the sale of residential lots to other homebuilders have substantially declined. We concluded that we currently have adequate single-family lots, excluding the Bohls tract. We recorded a loss provision of approximately $1.3 million relating to development expenses incurred on the tract and expenses expected to be incurred due to the expiration of the option period.

General and Administrative Expenses

	Nine Months Ended September 30,
Breakdown of G&A Expenses	2007		2006		Change			% Change
Salaries, benefits, taxes and related employee expenses	$	1,197,000	$	1,300,000		(103,000	)		-8	%
Stock compensation		541,000		350,000		191,000			55	%
Legal, accounting, and audit		666,000		664,000		2,000			0	%
Warranty expense, architecture fees, and consulting services		288,000		535,000		(247,000	)		-46	%
General overhead, including rent, office expenses and insurance		662,000		320,000		342,000			107	%
Depreciation expense		22,000		44,000		(22,000	)		-50	%
Amortization of subordinated debt issuance costs		320,000		157,000		163,000			104	%
Loss on homebuilder services clients		176,000		-		176,000			n/a
Total G&A	$	3,872,000	$	3,370,000		502,000			15	%

General and administrative expenses are composed primarily of salaries of general and administrative personnel and related employee benefits and taxes, accounting and legal and general office expenses and insurance. During the nine months ended September 30, 2007 and 2006, salaries, benefits, taxes and related employee expenses totaled approximately $1.2 million and $1.3 million, respectively, and represented approximately 31% and 39%, respectively, of total general and administrative expenses for the periods. While there was an overall increase in both employees and salaries in 2007 as compared to 2006, it was offset by a 2006 accrual of $200,000 for severance, thus resulting in the 2007 decrease of approximately $100,000.

Stock compensation expense was approximately $541,000 and $350,000 for the nine months ended September 30, 2007 and 2006, respectively. The increase in stock compensation expense was due primarily to an increase in acceleration of stock options vesting for our CFO in connection with the terms of his new consulting agreement.

Legal, accounting, audit and transaction expense, which includes the expense of filing our registration statements and other SEC filings, totaled $666,000 and $664,000 for the nine months ended September 30, 2007 and 2006, respectively. In 2007, we saw an increase in these expenses due to an increase in overall filings for the Company in 2007, offset by a reduction in expenses relating to the 2007 offering that were a reduction in net proceeds versus expenses in the same periods the prior year.

Warranty expense, architecture fees and consulting services were approximately $288,000 and $535,000 for the nine months ended September 30, 2007 and 2006, respectively. These expenses declined predominately due to a decrease in consulting services in 2007.

There was approximately $662,000 and $320,000 for general overhead, including rent, office expenses and insurance, respectively, for the nine months ended September 30, 2007 and 2006. This increase is due to approximately a $204,000 increase for directors and officers insurance and general liability insurance. This increase was to due to an increase in directors and officers insurance for the public offering and the general liability insurance increase due to an increase in land development activities. The additional increase for general overhead expenses is due to the ramping up of our homebuilding activities in 2007.

Depreciation expense was approximately $22,000 and $44,000 for the nine months ended September 30, 2007 and 2006, respectively. This expense decreased primarily due to the disposal of model furnishing assets in August 2006 which eliminated the associated depreciation expense.

Amortization of subordinated convertible debt issuance costs was approximately $320,000 and $157,000 for the nine months ended September 30, 2007 and 2006, respectively. This expense increased due to the issuance of $6.75 million of subrogated convertible debt in September 2006, thus increasing the associated amortization of the issuance costs for 2007.

There was a loss of $176,000 for homebuilder services for the nine months ended September 30, 2007 due to indirect operating losses of variable interest entities that we incurred in 2007.

We expect total general and administrative expenses to increase over the next year as we continue to ramp up the homebuilding business.

Sales and Marketing Expenses

Sales and marketing expenses include salaries and related taxes and benefits, marketing activities including website, brochures, catalogs, signage, and billboards, and market research that benefit our corporate presence and are not included as homebuilding cost of sales.

We expect sales and marketing expenses to increase substantially as we continue to ramp up our homebuilding business and develop our green building strategy and corporate branding.

Interest Expense and Income

Interest expense for the nine months ended September 30, 2007 and 2006 increased by $584,000, which was related to the increased subordinated convertible debt issued in September 2006 and the increase in interest expensed instead of capitalized for property temporarily not under development. Included in the interest expense was amortization of subordinated convertible debt. For the nine months ended September 30, 2007 and 2006, the amortization expense of the subordinated debt discount was approximately $536,000 for each period. To the extent we purchase additional land that we hold for future development, our interest expenses will increase.

Interest and other income increased for the nine months ended September 30, 2007 over the same period in 2006 due to the increase in cash from our public offering in May 2007 and consisted of interest earned on our cash and cash equivalents and immaterial amounts of miscellaneous other income.

Comparison of Fiscal Years 2006 and 2005

	Year Ended December 31,
	2006			2005			Change			% Change
	(in thousands)
Homebuilding and related services revenues	$	5,218		$	-		$	5,218			n/a
Land revenues	$	1,517		$	255		$	1,262			495	%
Homebuilding and related services gross profit	$	871		$	-		$	871			n/a
Land gross profit	$	446		$	140		$	306			218	%
Operating expenses	$	5,171		$	1,425		$	3,746			263	%
Operating loss	$	(3,853	)	$	(1,284	)	$	(2,569	)		200	%
Net loss	$	(14,393	)	$	(1,714	)	$	(12,679	)		740	%

Results of Operations

Homebuilding and Related Services Revenues

Revenues - During the year ended December 31, 2006, home sales accounted for approximately 77% of revenues at a gross profit margin of approximately 17%. All of the homebuilding revenues were generated by our two VIEs consolidated into our operating results. Revenues from each homebuilder client were approximately $1.8 and $3.4 million, respectively. The client that generated $1.8 million of revenues has not commenced any new homes or utilized our homebuilding services since June 30, 2006.

We had no homebuilding revenues during the year ended December 31, 2005 as no homes were built.

Land Sales

Revenues - Land sales accounted for approximately 23% of our total revenues, totaling approximately $1.5 million for the year ended December 31, 2006, at a gross profit margin of approximately 29%. For the year ended December 31, 2006, approximately $616,000 of our land sale revenue came from the sale of undeveloped acreage tracts of land, approximately $851,000 of the revenue from the sale of developed finished lots and $50,000 from land option revenue. During the year ended December 31, 2005, we were in the process of acquiring and developing land and generated revenues of approximately $255,000 through the sale of undeveloped acreage lots at a gross profit of approximately $140,000.

Costs and Expenses

General and Administrative Expenses

	Year Ended December 31,
Breakdown of G&A Expenses	2006		2005		Change		% Change
Salaries, benefits, taxes and related employee expenses	$	1,540,000	$	386,000		1,154,000		299	%
Stock compensation expense		545,000		-		545,000		n/a
Legal, accounting, and audit		776,000		292,000		484,000		166	%
Transaction cost amortization		367,000		-		367,000		n/a
Warranty expense, architecture fees, and consulting services		482,000		283,000		199,000		70	%
General overhead, including rent, office expenses and insurance		643,000		239,000		404,000		169	%
Total G&A	$	4,353,000	$	1,200,000		3,153,000		263	%

During the year ended December 31, 2006, salaries, benefits, taxes and related employee expenses totaled approximately $1.5 million and represented approximately 35% of total general and administrative costs for the period. Also included is an accrual of approximately $180,000 for severance payments that were paid to our former Chief Financial Officer over a ten month period. Stock compensation expense totaled approximately $545,000, which is 13% of total general and administrative expenses. Legal, accounting, and audit expense which includes the expense of filing our registration statements and other SEC filings, totaled approximately $776,000. Transaction cost amortization and other transaction costs totaled approximately $367,000. Warranty expense, architecture fees, and consulting services were approximately $482,000. Miscellaneous expenses were approximately $643,000 for general overhead, including rent, office expenses and insurance. Depreciation expense included in general and administrative expenses was approximately $56,000 for the year ended December 31, 2006. General and administrative expenses included from the consolidation of our VIEs were less than 5% of the total general and administrative expenses for the year ended December 31, 2006.

Prior to our merger with Athena in May 2005, we had minimal business activity. From June 2005 until December 2005, we spent money on developing our business strategy, hiring staff, acquiring a 752 acre land tract and merging with a public company, issuing $10 million of convertible debt and preparing all the documents and filings related to the merger activities. At December 31, 2005, we had nine employees as compared to three at June 30, 2005. The majority of expenses were for salaries and related employee expenses of $386,000, legal fees of $203,000, consulting relating to the preparation of home plans and designs of $283,000, accounting and auditing fees of $89,000 and office rent, software, equipment and general expenses of $156,000. Legal and accounting expenses related primarily to the mergers of WFC with Athena, and Wilson Holdings and Cole. 64% of our general and administrative expenses were incurred in the fourth quarter of 2005.

Sales and Marketing Expenses

Sales and marketing expenses for the year ended December 31, 2006 were approximately $243,000 and represented approximately 30% of our total marketing costs for the period. Expenses for advertising, brochures and catalogs, signage, public relations and other selling expenses for the year ended December 31, 2006 were approximately $378,000 and represented approximately 46% of total sales and marketing costs for the period. The remaining expenses for the year ended December 31, 2006, were for other incidental items and services. Approximately 17% of the sales and marketing expenses in the period resulted from the consolidation of the VIEs.

Sales and marketing expenses for the year ended 2005 were for salaries and related expenses which included $129,000 and $73,000 of website expenses, signage, advertising and marketing. Sales and marketing expenses for the year ended December 31, 2005 reflect our limited operations prior to June 2005.

Interest Expense and Income

Interest expense for the year ended December 31, 2006 of approximately $2.4 million is related to debt on properties purchased, convertible debt interest costs and amortization of the convertible debt discounts. The convertible debt discount amortization was approximately $917,000 for the year ended December 31, 2006. Interest on the convertible debt was approximately $586,000 for the year ended December 31, 2006.

Interest expense for the year ended December 31, 2005 of approximately $358,000 was for interest costs on land acquired and held for sale or development, a line of credit, bridge loans and convertible debt.

We experienced a loss on the fair value of derivatives during the years ended December 31, 2006 and 2005 of approximately $8.5 million and $173,000, respectively, due to the increases in the fair value of the derivative liabilities related to the convertible notes and contingent warrants. These increases were primarily the result of the increase in value of our common stock and warrants.

Interest income of approximately $291,000, $290,000 and $100,000 for the years ended September 30, 2007, December 31, 2006 and December 31, 2005 respectively, consisted of interest earned on our cash and cash equivalents and immaterial amounts of other income.

Financial Condition and Capital Resources

Liquidity

At September 30, 2007 we had approximately $13.1 million in cash and cash equivalents. We completed a successful public offering of the Company’s common stock in May 2007, netting approximately $14 million of cash.

On June 29, 2007, WFC entered into a three-year $55 million revolving credit facility (the “Credit Facility”) with a syndicate of banks led by RBC Centura Bank, as administrative agent. We have guaranteed all of the obligations of WFC under the Credit Facility. The obligations of WFC under the Credit Facility will be secured by the assets of each subdivision to be developed with the proceeds of loans available under the Credit Facility. We currently have approximately $2.7 million borrowings outstanding under the Credit Facility.

The Credit Facility allows WFC to obtain revolving credit loans and provides for the issuance of letters of credit. The amount available at any time under the Credit Facility for revolving credit loans or the issuance of letters of credit is determined by a borrowing base. The borrowing base is calculated as the sum of the values for homes and lots in the subdivision to be developed as agreed to by the WFC and the agent.

Outstanding borrowings under the Credit Facility will bear interest at the prime rate plus 0.25%. WFC is charged a letter of credit fee equal to 1.10% of each letter of credit issued under the Credit Facility. WFC may elect to prepay the Credit Facility at any time without premium or penalty.

The Credit Facility contains customary covenants limiting our ability to take certain actions, including covenants that

affect how we can develop WFC’s properties;

limit WFC’s ability to pay dividends and other restricted payments;

limit WFC’s ability to place liens on its property;

limit WFC’s ability to engage in mergers and acquisitions and dispositions of assets;

require WFC to maintain a minimum net worth of $20,000,000, including subordinated debt (although the minimum net worth may be $17,000,000 for one quarter);

prohibit WFC’s ratio of debt(excluding convertible debt) to equity(including convertible debt) from exceeding (A) 1.75 to 1.0 prior to September 30, 2007, (B) 1.85 to 1.0 from September 30, 2007 until March 30, 2008 and (C) 2.0 to 1.0 thereafter; and

require WFC to maintain working capital of at least $15,000,000.

An event of default will occur under the Credit Facility if certain events occur, including the following:

a failure to pay principal or interest on any loan under the Credit Facility;

the inaccuracy of a representation or warranty when made;

the failure to observe or perform covenants or agreements;

an event of default beyond any applicable grace period with respect to any other indebtedness;

the commencement of proceedings under federal, state or foreign bankruptcy, insolvency, receivership or similar laws;

any loan document, or any lien created thereunder, ceases to be in full force and effect;

the entry of a judgment greater than $1,000,000 that remains undischarged; or

a change of control.

If an event of default occurs under the Credit Facility, then the lenders may: (1) terminate their commitments under the Credit Facility; (2) declare any outstanding indebtedness under the Credit Facility to be immediately due and payable; and (3) foreclose on the collateral securing the obligations. We are currently in compliance with our covenants as of September 30, 2007.

Our growth will require substantial amounts of cash for earnest money deposits, land purchases, development costs, interest payments and homebuilding costs. Until we begin to sell an adequate number of lots and homes 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 believe we can continue to do so in the future through a combination of conventional and subordinated convertible debt, joint venture financing, sales of selected lot positions, sales of land and lot options, and by raising additional equity.

During 2007 we elected not to exercise a land purchase option to purchase the Bohls tract of approximately 428 acres for approximately $7.2 million. Our decision not to exercise the option was based on the following factors:

Due to the current market conditions in the homebuilding industry, revenue projections for sales of residential lots to other homebuilders have substantially declined. We concluded that we currently have adequate single-family lots for our needs, excluding the Bohls tract. While these discussions are ongoing the option expired in June 2007. We recorded a loss provision of approximately $1.3 million relating to development costs incurred on the tract and expenses expected to be incurred due to the expiration of the option period; and

We commenced homebuilding under Green Builders in June 2007 and plan to build and sell homes in the central Texas area, initially in the Austin, Texas area, for prices ranging from $200,000 to $700,000.

Capital Resources

We have raised approximately $16.8 million of subordinated convertible debt, and approximately $14 million in a public offering of the Company’s common stock completed in May 2007. WFC also entered into a three-year $55 million revolving credit facility with a syndicate of banks mentioned previously. The Credit Facility may be increased to $100 million with the consent of the lenders.

Due to market conditions stated above and longer than expected ramp up of homebuilding operations our financial projections have changed. We expect to incur significant losses during fiscal 2008.

We believe that the capital we raised in May 2007, the closing of the revolving credit facility and future land and home sales and financing will provide adequate capital resources for the next twelve months, but we may be required to raise additional capital in fiscal 2008 if market opportunities for land development and homebuilding growth arise.

Land and homes under construction comprise the majority of our assets. These assets could suffer devaluation if the housing and real estate market suffers a significant downturn, due to interest rate increases or other reasons. Our debt secured by our real estate holdings might then be called which may require us to liquidate assets to satisfy our debt obligations. A significant downturn could also make it more difficult for us to liquidate assets, to raise cash and to pay off debts, which could have a material adverse effect.

In October 2007 we amended our four seller-financed notes payable for New Sweden, the 534 acre project in Travis County described above. The notes payable maturity date has been extended to October 12, 2011. The terms of the notes payable now call for quarterly interest payments commencing October 12, 2007 and principal payments of $1.4 million in October 2010 and $1.0 million due in October 2011.

In October 2007 we refinanced our land obligation on a land loan for approximately 120 acres in Georgetown Village Section 9 of approximately $1.1 million and obtained a new loan of approximately $4.3 million to finance development for Georgetown Village Section 9. The interest rate is 12.5% annually and requires monthly interest payments, with a maturity of two years.

Off-Balance Sheet Arrangements

As of September 30, 2007, we had no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

The SEC defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our accounting policies are more fully described in the notes to our consolidated financial statements.

As discussed in the notes to the consolidated financial statements, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such differences may be material to our consolidated financial statements. Listed below are those policies and estimates that we believe are critical and require the use of significant judgment in their application.

Consolidation of Variable Interest Entities

We offer certain homebuilder clients surety for their interim construction loans and cash advances to facilitate sales of our residential lots. We 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. We account for each of these entities in accordance with FIN 46(R). Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling interest in, any of these entities. Factors considered in determining whether we have 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.

Inventory

Inventory is stated at cost unless it is determined to be impaired, in which case the impaired inventory would be written down to the fair market value. Inventory costs include land, land development costs, deposits on land purchase contracts, model home construction costs, advances to builders and real estate taxes incurred during development and construction phases.

Revenue Recognition

Revenues from property sales are recognized in accordance with SFAS No. 66, “Accounting for Sales of Real Estate.” Revenues from land development services to builders are recognized when the properties associated with the services are sold, when the risks and rewards of ownership are transferred to the buyer and when the consideration has been received, or the title company has processed payment. For projects that are consolidated, homebuilding revenues and services will be categorized as homebuilding revenues and revenues from property sales or options will be categorized as land sales.

Use of Estimates

We have estimated and accrued liabilities for real estate property taxes on our purchased land in anticipation of development, and other liabilities including the beneficial conversion liability and the fair value of warrants and options. To the extent that the estimates are different than the actual amounts, it could have a material effect on the financial statements.

Municipal Utility and Water District Receivables

Concentrations

Our current activities are currently in the geographical area of central Texas, which we define as encompassing the Austin Metropolitan Statistical Area and the San Antonio Metropolitan Statistical Area. This geographic concentration makes our operations more vulnerable to local economic downturns than those of larger, more diversified companies.

We are also dependent upon a limited number of homebuilder services customers which are subject to numerous uncertainties related to homebuilding including weather delays and damage, labor and material shortages, insufficient capital, materials theft or poor workmanship. Revenues from one homebuilder customer accounted for 100% of our total homebuilding revenue for the three months and nine months ended September 30, 2007.

Convertible Debt

The subordinated convertible debt and the related warrants have been accounted for in accordance with Emerging Issues Task Force (EITF) No. 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios”, EITF No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” EITF 00-27, “Application of issue 98-5 to Certain Convertible Instruments”, EITF 05-02 “Meaning of ‘Conventional Convertible Debt Instrument’ in Issue No. 00-19”, and EITF 05-04 “The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument Subject to Issue No. 00-19” updated with FSP EITF 00-19-2”, Accounting for Registration Payment Arrangements.

Recent Accounting Pronouncements

In January 2007, the Company adopted FASB Staff Position (FSP) No. EITF 00-19-2 (“FSP EITF 00-19-2”), Accounting for Registration Payment Arrangements. This addresses an issuer’s accounting for registration payment arrangements and specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies. The guidance in FSP EITF 00-19-2 amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, and FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, to include scope exceptions for registration payment arrangements. The FSP EITF 00-19-2 further clarifies that a financial instrument subject to a registration payment arrangement should be accounted for in accordance with other applicable generally accepted accounting principles (GAAP) without regard to the contingent obligation to transfer consideration pursuant to the registration payment arrangement. This pronouncement shall be effective immediately for registration payment arrangements and the financial instruments subject to those arrangements that are entered into or modified subsequent to the date of issuance of this pronouncement, or for financial statements issued for fiscal years beginning after December 15, 2006, and interim periods within those fiscal years.

The cumulative effect of the re-characterization of the derivative liabilities is shown in the table below:

	As filed December 31, 2006			Cumulative effect of re- characterization of derivative liabilities			Net effect of re-characterization
LIABILITY ACCOUNTS
Subordinated convertible debt, net of discount, respectively	$	8,395,876			4,572,674			12,968,550
Derivative liability, convertible note compound embedded derivative		7,462,659			(7,462,659	)		-
Derivative liability, contingent warrants issued to subordinated convertible debt holders		1,883,252			(1,883,252	)		-
Total debt, net of discount and derivative liabilities		17,741,787			(4,773,237	)		12,968,550
STOCKHOLDERS' EQUITY ACCOUNTS
Common stock		18,056			-			18,056
Additional paid in capital		16,809,885			(4,577,938	)		12,231,947
Retained deficit		(16,053,143	)		9,351,175			(6,701,968	)
Total stockholders' equity	$	774,798			4,773,237			5,548,035

In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement 109" ("FIN 48") which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48, effective for fiscal years beginning after December 15, 2006, requires that the tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The amount of tax benefits recognized from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company has completed the process of evaluating the effect of FIN 48 on its consolidated financial statements. The company has analyzed its tax positions and concluded that there is no cumulative or current effect from the adoption of the provisions of FIN 48. The Company's income tax returns are not currently under examination by the Internal Revenue Service or other tax authorities. The Company does not foresee any recognition of any unrecognized tax benefits during the next twelve months.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides guidance for using fair value to measure assets and liabilities. The standard also responds to investors’ request for expanded information about the extent to which a company measures assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 will be effective for the Company’s fiscal year beginning October 1, 2008. The Company is currently reviewing the effect SFAS 157 will have on its financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115.” The statement permits entities to choose to measure certain financial assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective as of the beginning of an entity’s fiscal year that begins after November 15, 2007. The Company is currently evaluating the impact of the adoption of SFAS No. 159; however, it is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" (FAS 141(R)), which establishes accounting principles and disclosure requirements for all transactions in which a company obtains control over another business. The Company is currently evaluating the impact of the adoption of SFAS No. 141; however, it is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements" (FAS 160), which prescribes the accounting by a parent company for minority interests held by other parties in a subsidiary of the parent company. The Company is currently evaluating the impact of the adoption of SFAS No. 160; however, it is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Item 7. Financial Statements

The Financial Statements required by this item are included in Part III, Item 13 and are presented beginning on Page F-1.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 8A. Controls and Procedures.

Evaluation of Effectiveness of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and our Principal 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, 2007, the period covered by this Annual Report on Form 10-KSB. 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, 2007 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.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Also, projections of any evaluation of internal control effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with internal control policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of our internal control over financial reporting. Based on our evaluation, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2007.

We will be required to be in compliance with Sarbanes Oxley Section 404 certification requirements relating to internal controls for the fiscal year ended September 30, 2008. We have recently commenced our homebuilding operations. We have also recently implemented a new enterprise wide information technology system. In addition, following the filing of this report, our principal financial officer will leave his position with us and become a consultant to the company. We will need to replace him with a new principal financial officer. We are continuing to work with our Audit Committee to implement internal controls due to the above noted activities. Any failure to develop adequate these internal controls or in the retention of a qualified principal financial officer may result in a material weakness in our internal control.

Item 8B. Other Information.

None.

PART III

Items 9 through 12 and Item 14 will be included in our proxy statement for our 2008 Annual Meeting of Shareholders, and are incorporated herein by reference.

Item 9. Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act

The information required by this Item will be included under the section captioned “Election of Directors ” in our Proxy Statement for the 2008 Annual Meeting of Shareholders, which information is incorporated into this Annual Report by reference.

Item 10. Executive Compensation

The information required by this Item will be included under the sections captioned “Executive Compensation” and “Certain Relationships and Related Transactions” in our Proxy Statement for the 2008 Annual Meeting of Shareholders, which information is incorporated into this Annual Report by reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item will be included under the section captioned “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement for the 2008 Annual Meeting of Shareholders, which information is incorporated into this Annual Report by reference.

Item 12. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item will be included under the section captioned “Certain Relationships and Related Transactions” in our Proxy Statement for the 2008 Annual Meeting of Shareholders, which information is incorporated into this Annual Report by reference.

Item 13. Exhibits

The Exhibit Index set forth below is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

Information required by this Item will be included under the section captioned “Ratification of the Appointment of the Independent Auditors” in our Proxy Statement for the 2008 Annual Meeting of Shareholders, which information is incorporated into this Annual Report by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WILSON HOLDINGS, INC.

	By:	/s/ Clark N. Wilson
		Clark N. Wilson
Date: December 31, 2007		President and Chief Executive Officer

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints, Clark Wilson and Arun Khurana , and each or any of them, his true and lawful attorney-in-fact and agent, each with the power of substitution and resubstitution, for him in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on December 31, 2007.

Name		Title

/s/ Clark N. Wilson
Clark N. Wilson		President, Chief Executive Officer and Director
		(Principal Executive Officer)

/s/ Arun Khurana		Principal Financial Officer
Arun Khurana

/s/ Victor Ayad		Director
Victor Ayad

/s/ Jay Gouline		Director
Jay Gouline

/s/ Sidney Christopher Ney		Director
Sidney Christopher Ney

/s/ Barry A. Williamson		Director
Barry A. Williamson

EXHIBIT INDEX

LIST OF EXHIBITS

Exhibit No.	Description
1.1	Underwriting Agreement, dated May 14, 2007, by and between Wilson Holdings, Inc. and Capital Growth Financial, LLC (filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K dated May 15, 2007 and incorporated herein by reference)
3.1	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)
3.2	Amended and Restated Articles of Incorporation of Registrant (filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K dated May 15, 2007 and incorporated herein by reference)
4.1	Amended and restated Articles of Incorporation of Registrant (filed as Exhibit 3.6 to the Registrant’s Registration Statement on Form SB-2 (File No. 333-131486) and incorporated herein by reference)
4.2	Underwriter Warrant issued by Registrant to Capital Growth Financial, LLC (filed as Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-140747) (the “2007 S-1”) and incorporated herein by reference)
10.1	Lease Agreement dated September 14, 2006 by and between Registrant and TI Building Partnership, Ltd. (filed as Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2006 and incorporated herein by reference)
10.2+	Wilson Family Communities, Inc. 2005 Stock Option/Stock Issuance Plan (filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated October 11, 2005 and incorporated herein by reference)
10.3+	Amendment No. 1 to Wilson Holdings, Inc. 2005 Stock Option/Stock Issuance Plan (filed as Exhibit 10.2 to the 2007 S-1 and incorporated herein by reference)
10.4	Master Construction Loan Agreement dated September 28, 2005 by and among Registrant and Plains Capital Bank (filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated October 11, 2005 and incorporated herein by reference)
10.5	Promissory Note dated September 28, 2005 issued by Registrant to Plains Capital Bank (filed as Exhibit 10.5 to Registrant’s Current Report on Form 8-K dated October 11, 2005 and incorporated herein by reference)
10.6	Registration Rights Agreement by and among the Registrant and the purchasers of Registrant’s Convertible Notes issued December 19, 2005 (filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 19, 2005 and incorporated herein by reference)
10.7	Form of Warrant issued to Purchasers of Convertible Notes dated December 19, 2005 (filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated December 19, 2005 and incorporated herein by reference)
10.8	Registration Rights Agreement dated September 29, 2006 by and among the Registrant and the purchasers of the Registrant’s Convertible Notes issued September 29, 2006 (filed as Exhibit 10.2 to Registrants Current Report on Form 8-K dated October 4, 2006 and incorporated herein by reference)
10.9	Form of Warrant issued to Purchasers of Convertible Notes dated September 29, 2006 (filed as Exhibit 10.3 to Registrants Current Report on Form 8-K dated October 4, 2006 and incorporated herein by reference)
10.10+	Letter Agreement dated December 14, 2006 by and between Registrant and Capital Growth Financial (filed as Exhibit 10.12 to the 2007 S-1 and incorporated herein by reference)
10.11+	Amendment No. 1 to Letter Agreement by and between Registrant and Capital Growth Financial (filed as Exhibit 10.13 to the 2007 S-1 and incorporated herein by reference)
10.12+	Employment Letter Agreement dated February 14, 2007 by and between Registrant and Clark Wilson (filed as Exhibit 10.10 to Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2006 and incorporated herein by reference)
10.13+	Employment Letter Agreement dated February 14, 2007 by and between Registrant and Arun Khurana (filed as Exhibit 10.11 to Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2006 and incorporated herein by reference)
10.14	Borrowing Base Loan Agreement by and between Wilson Family Communities, Inc and RBC Centura Bank, with Franklin Bank SSB and International Bank of Commerce as co-lenders dated June, 30, 2007 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-KQSB for the quarter ended June 30, 2007 and incorporated herein by reference)
10.15+	Consulting Agreement dated September 18, 2007 by and between Registrant and Arun Khurana (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated September 20, 2007 and incorporated herein by reference)
21*	Subsidiaries of Registrant
24*	Power of Attorney (included in signature page).
31.1*	Certification of Principal Executive Officer
31.2*	Certification of Principal Financial Officer
32*	Certification of Principal Executive Officer and Principal Financial Officer

* Filed herewith

+ Indicates a management contract or compensatory plan or arrangement.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Wilson Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Wilson Holdings, Inc. as of September 30, 2007 and December 31, 2006 and 2005, and the related consolidated statements of operations, partners’ equity and stockholders’ equity, and cash flows for the nine months ended September 30, 2007 and for the years ended December 31, 2006 and 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2007 and December 31, 2006 and 2005 and the consolidated results of their operations and their cash flows for the nine months ended September 30, 2007 and the years ended December 31, 2006 and 2005 in conformity with generally accepted accounting principles in the United States of America.

PMB HELIN DONOVAN, LLP

/s/ PMB Helin Donovan, LLP

Austin, Texas

December 31, 2007

F-1

WILSON HOLDINGS, INC.
Consolidated Balance Sheets
September 30, 2007 and December 31, 2006 and 2005

	September 30,			December 31,
	2007			2006			2005
ASSETS
Cash and cash equivalents	$	13,073,214		$	2,673,056		$	10,019,816
Restricted cash		-			2,192,226
Inventory
Land and land development		32,463,411			29,908,325			12,299,872
Homebuilding inventories		2,843,704			847,653			655,145
Total inventory		35,307,115			30,755,978			12,955,017
Other assets		729,471			196,195			48,056
Debt issuance costs, net of amortization		1,265,218			1,458,050			1,420,669
Equipment and software, net of accumulated depreciation and amortization of $32,294 and $46,358, respectively		232,357			97,956			70,875
Total assets	$	50,607,375		$	37,373,461		$	24,514,433
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	1,404,151		$	1,376,117		$	111,275
Accrued real estate taxes payable		405,060			454,764			148,862
Accrued liabilities and expenses		215,372			529,090			135,168
Accrued interest		464,809			302,555			237,592
Deferred revenue		159,381			11,223			11,223
Lines of credit		472,365			6,436,706			253,945
Notes payable		20,165,993			9,466,621			7,108,579
Notes payable, related party		-			279,800			279,800
Subordinated convertible debt, net of $3,384,807, $5,224,502, and $5,002,500 discount, respectively		13,254,780			8,395,876			4,997,500
Derivative liability, convertible note compound embedded derivative		-			7,462,659			4,500,000
Derivative liability, contingent warrants issued to subordinated convertible debt holders		-			1,883,252			675,000
Total liabilities		36,541,911			36,598,663			18,458,944
STOCKHOLDERS' EQUITY

Common stock, $0.001 par value, 100,000,000, 80,000,000, and 80,000,000 shares authorized, respectively, 23,135,538, 18,055,538, and 17,706,625 shares issued and outstanding at September 30, 2007, December 31, 2006 and 2005, respectively		23,136			18,056			17,707
Additional paid in capital		27,040,304			16,809,885			7,697,868
Retained deficit		(12,997,976	)		(16,053,143	)		(1,660,086	)
Total stockholders' equity		14,065,464			774,798			6,055,489
Commitments and contingencies		-			-			-
Total liabilities and stockholders' equity	$	50,607,375		$	37,373,461		$	24,514,433

See accompanying notes to the consolidated financial statements.

F-2

WILSON HOLDINGS, INC.
Consolidated Statements of Operations
For the Nine Months Ended September 30, 2007 and 2006
And for the Years Ended December 31, 2006 and 2005

	Nine Months Ended Sept 30,						Year Ended December 31,
	2007			2006			2006			2005
				(Unaudited)
Revenues:
Homebuilding and related services	$	1,295,406		$	4,184,905		$	5,217,564		$	-
Land sales		3,149,093			1,079,811			1,516,952			255,000
Total revenues		4,444,499			5,264,716			6,734,516			255,000

Cost of revenues:
Homebuilding and related services		1,025,514			3,480,403			4,346,186			-
Land sales		3,794,712			624,487			1,070,856			114,587
Total cost of revenues		4,820,226			4,104,890			5,417,042			114,587

Gross profit:
Homebuilding and related services		269,892			704,502			871,378			-
Land sales		(645,619	)		455,324			446,096			140,413
Total gross profit		(375,727	)		1,159,826			1,317,474			140,413

Costs and expenses:
Corporate general and administration		3,871,587			3,369,843			4,352,999			1,199,578
Sales and marketing		372,820			640,421			817,595			224,936
Total costs and expenses		4,244,407			4,010,264			5,170,594			1,424,514
Operating loss		(4,620,134	)		(2,850,438	)		(3,853,120	)		(1,284,101	)
Other income (expense):
Loss on fair value of derivatives		-			(3,392,500	)		(8,469,457	)		(172,500	)
Interest and other income		291,478			260,199			290,335			100,346
Interest expense		(2,227,233	)		(1,643,086	)		(2,360,815	)		(358,188	)
Total other expense		(1,935,755	)		(4,775,387	)		(10,539,937	)		(430,342	)
Net loss	$	(6,555,889	)	$	(7,625,825	)	$	(14,393,057	)	$	(1,714,443	)

Basic and diluted loss per share	$	(0.32	)	$	(0.43	)	$	(0.81	)	$	(0.22	)

Basic and diluted weighted average common shares outstanding		20,586,649			17,706,625			17,711,405			7,755,646

See accompanying notes to the consolidated financial statements.

F-3

WILSON HOLDINGS, INC.
Statements of Partners’ Equity and Stockholders' Equity
For the Nine Months Ended September 30, 2007
And for the Years Ended December 31, 2006, and 2005

				Series A Preferred Stock									Common Stock
	Partners’ Equity			Shares			Amount			Additional Paid In Capital			Shares		Amount		Additional Paid In Capital			Accumulated Deficit			Total
Balances at December 31, 2004		72,643			-			-			-			-		-		-			-			72,643
Net loss through May31, 2005		(54,357	)		-			-			-			-		-		-			-			(54,357	)
Common Stock issued in exchange Cash and Partnership interests		(18,286	)		-			-			-			9,000,000		9,000		9,286			-			-
Sale of Common Stock		-			-			-			-			1,000,000		1,000		59,000			-			60,000
Sales of Series A Convertible Preferred Stock		-			4,400,000			4,400			4,395,600			-		-		-			-			4,400,000
Series A Preferred Stock exchanged for land		-			2,404,789			2,405			2,402,384			-		-		-			-			2,404,789
Preferred Stock exchanged for Common Stock		-			(6,804,789	)		(6,805	)		(6,797,984	)		6,804,789		6,805		6,797,984			-			-
Shares Issued in Merger		-			-			-			-			901,836		902		(902	)		-			-
Warrants issued for transaction costs for convertible debt		-			-			-			-			-		-		832,500			-			832,500
Net loss from June 1 through December 31, 2005		-			-			-			-			-		-		-			(1,660,086	)		(1,660,086	)
Balances December 31, 2005		-			-			-			-			17,706,625		17,707		7,697,868			(1,660,086	)		6,055,489
Stock-based compensation expense		-			-			-			-			-		-		544,866			-			544,866
Warrants issued at fair value		-			-			-			-			-		-		1,117,500			-			1,117,500
Benificial conversion feature at fair value		-			-			-			-			-		-		7,450,000			-			7,450,000
Cashless exercise of warrants		-			-			-			-			348,913		349		(349	)		-			-
Net loss		-			-			-			-			-		-		-			(14,393,057	)		(14,393,057	)
Balances at December 31, 2006	$	-			-		$	-		$	-			18,055,538	$	18,056	$	16,809,885		$	(16,053,143	)	$	774,798
Cumulative adjustment for restatement per FSP 00-19-2		-			-			-			-			-				(4,577,938	)		9,351,175			4,773,237
Stock-based compensation expense		-			-			-			-			-		-		540,900			-			540,900
Sale of common stock, net of transaction costs		-			-			-			-			5,000,000		5,000		14,031,377			-			14,036,377
Issuance of common stock for purchase of Green Builders, Inc., net of transaction costs		-			-			-			-			80,000		80		216,080			-			216,160
Services provided without compensation by principal shareholder		-			-			-			-			-		-		20,000			-			20,000
Effect of deconsolidation of variable interest entity		-			-			-			-			-		-		-			259,880			259,880
Net loss		-			-			-			-			-		-		-			(6,555,889	)		(6,555,889	)
Balances at September 30, 2007	$	-		$	-		$	-		$	-			23,135,538	$	23,136	$	27,040,304		$	(12,997,977	)	$	14,065,463

F-4

WILSON HOLDINGS, INC.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2007
And for the Years Ended December 31, 2006 and 2005

	Nine Months Ended Sept 30,						Year Ended December 31,
	2007			2006			2006			2005
				(Unaudited)
Cash flows from operating activities:
Net loss	$	(6,555,889	)	$	(7,625,825	)	$	(14,393,057	)	$	(1,714,443	)
Non cash adjustments:
Loss on fair value of derivatives		-			3,392,500			8,469,457			172,500
Amortization of convertible debt discount		536,230			535,983			917,330			-
Amortization of debt issuance costs		192,832			157,927			216,037			-
Stock-based compensation expense		540,900			349,507			544,866			-
Services provided without compensation by principal shareholders		20,000			-			-			-
Depreciation and amortization		55,309			44,940			55,577			4,961
Loss on land option purchase		1,254,968			-			-			-
Effect of deconsolidation of variable interest entity		259,880			-			-			-
Adjustments to reconcile net loss to net cash used in operating activities:
Increase in total inventory		(5,806,105	)		(7,620,582	)		(10,946,924	)		(3,283,886	)
Increase in other assets		(272,341	)		(67,763	)		(148,139	)		(48,056	)
Increase in accounts payable		28,034			435,198			1,264,842			111,276
(Decrease) in real estate taxes payable		(49,704	)		-			305,902			148,862
(Decrease) increase in accrued expenses		(313,718	)		684,179			393,922			135,108
Increase in deferred revenue		148,158			-			-			5,641
(Decrease) increase in accrued interest		162,254			(37,194	)		64,963			232,380
Net cash used in operating activities		(9,799,193	)		(9,751,130	)		(13,255,224	)		(4,235,657	)
Cash flows from investing activities:
Purchase of fixed assets		(201,565	)		(68,479	)		(82,658	)		(75,836	)
Cash paid for Green Builders, Inc.		(32,919	)		-			-			-
Net cash used in investing activities		(234,484	)		(68,479	)		(82,658	)		(75,836	)
Cash flows from financing activities:
Decrease in restricted cash		2,192,226			-			(2,192,226	)		-
Repayments to related parties, net		(279,800	)		-			-			(21,000	)
Issuances (repayments) of notes payable, net		10,699,372			(897,579	)		(908,579	)		217,591
(Repayments) advances on lines of credit, net		(5,964,341	)		3,213,395			2,595,345			253,945
Proceeds from issuance of convertible debt		-			6,500,000			6,750,000			10,000,000
Cash paid for debt issuance costs		-			(212,246	)		(253,418	)		(588,170	)
Proceeds from issunace of Series A convertible preferred stock		-			-			-			4,400,000
Partnership contributions		-			-			-			-
Common stock sales, net of transaction costs		13,786,377			-			-			60,000
Net cash provided by financing activities		20,433,834			8,603,570			5,991,122			14,322,366
Net increase (decrease) in cash and cash equivalents		10,400,158			(1,216,039	)		(7,346,760	)		10,010,873
Cash and cash equivalents at beginning of period		2,673,056			10,019,816			10,019,816			8,943
Cash and cash equivalents at end of period	$	13,073,214		$	8,803,777		$	2,673,056		$	10,019,816

Cash paid for interest	$	1,872,716		$	1,064,421		$	1,519,168		$	96,168
Cash paid for income taxes	$	-		$	-		$	-		$	-

Non cash in financing activities:
Assets and Liabilities acquired from Green Builders, Inc.
Accounts Receivable	$	2,900		$	-		$	-		$	-
Accounts Payable	$	6,190		$	-		$	-		$	-
Issuance of common stock for notes payable, cancellation of notes payable in exchange for cancellation of subordinated debt	$	250,000		$	-		$	-		$	-

See accompanying notes to the consolidated financial statements.

F-5

WILSON HOLDINGS, INC.

Notes to 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 stockholders, 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.

In September 2007, the Company changed the fiscal year end from December 31 to September 30 in order to align the Company’s fiscal year more closely with its business cycle.

The Company is currently focused on building and selling homes and making strategic land acquisitions and developing residential communities.

Homebuilding and Related Services: The Company commenced its homebuilding operations in June 2007 with the purchase of Green Builders, Inc. The Company’s strategy is to build homes that are environmentally responsible, resource efficient and consistent with local style. The Company will build homes on the majority of the lots that it currently has under development. Its home designs will be selected and prepared for each of its markets based on local community tastes and preferences of homebuyers. Substantially all of the Company’s construction work will be performed by subcontractors.

Land Acquisition and Development: The Company’s land development business plan is to secure land strategically, based on its understanding of population growth patterns and infrastructure development. In tandem with its land acquisition efforts and based upon its strategic market analysis, the Company plans to subcontract for the preparation of land for development. They seek to add value to the land through the process of development, which may include permitting and constructing water and wastewater infrastructure, master-planning of the community, and the construction of roads and community amenities. The Company also plans to sell entitled land to others for development.

(2) Summary of Significant Accounting Policies

(a) Basis of Accounting

These financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles whereby revenues are recognized in the period earned and expenses when incurred.

(b) Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all short term, highly liquid investments with an original maturity of three months or less to be cash and cash equivalents.

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.

The Company terminated its relationship with its homebuilder clients in 2007.

F-6

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(d) Inventory

Inventory is stated at cost unless it is determined to be impaired, in which case the impaired inventory would be written down to the fair market value. Inventory costs include land, land development costs, deposits on land purchase contracts, model home construction costs, capitalized interest, real estate taxes incurred during development and construction phases, and homebuilding costs. No significant impairments of inventory were recorded in 2007, 2006 or 2005.

(e) Land Held Under Option Agreements, Not Owned

In order to ensure the future availability of land for development, the Company enters into lot option purchase agreements with unaffiliated third parties. Under the agreements, the Company pays a stated deposit in consideration for the right to purchase land at a future time, usually at predetermined prices or 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. Lot option payments are initially capitalized as inventory costs. If the lot option is exercised the option cost is included in the cost of the land acquired. At the earlier of the time that it is determined that the lot option will not be exercised or, at the date the lot option expires, the cost of the lot option will be expensed. Earnest money deposits for land costs and development costs on land under option, not owned, totaled approximately $525,000, $625,000 and $525,000 at September 30, 2007 and December 31, 2006 and 2005 respectively, of which approximately $520,000, $625,000, and $420,000 is non-refundable if the Company does not exercise the option and purchase the land.

(f) Interest and Real Estate Taxes

Interest and real estate taxes attributable to land and homes are capitalized as inventory while they are being actively developed. As of September 30, 2007 and December 31, 2006 and 2005, there were approximately $405,000, $460,000, and $151,000 of estimated real estate taxes. As of September 30, 2007 and December 31, 2006 there was approximately $816,000 and $241,000 of interest in inventory.

(g) Revenue Recognition

(h) Income Taxes

Prior to the merger of Athena with WFC at May 31, 2005, Athena was a partnership and therefore did not have income taxes as the income and losses passed through to the partners. Also, the VIEs are pass through entities. Since the merger, income taxes are accounted for in accordance with SFAS No. 109, “Accounting for Income Taxes,” deferred tax assets and liabilities are determined based on temporary differences between financial reporting carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized in the period that includes the enactment date. A valuation allowance is recorded for the entire deferred tax assets due to the uncertainty of the net realizable value of the asset.

(i) Advertising and Selling Costs

The Company has incurred advertising, marketing, selling, and promotion costs as part of the sales efforts to market the real estate for sale and services offered. These costs, including the cost of developing and printing various brochures and mail out documents, are expensed as incurred. For the nine months ended September 30, 2007 and 2006 the Company incurred approximately $370,000 and $640,000 of advertising and selling costs, respectively. For the years ended December 31, 2006, and 2005, the Company incurred $820,000 and $230,000 of advertising and selling costs, respectively.

F-7

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(j) Property and Equipment

Property and equipment is carried at cost less accumulated depreciation. Depreciation and amortization is recorded using the straight-line method over the estimated useful life of the asset. Depreciation and amortization for equipment and computer software typically ranges from 2 to 5 years. Leasehold improvements are depreciated over the shorter of the life of the respective leases or the assets. Repairs and maintenance are expensed as incurred. Costs and accumulated depreciation applicable to assets retired or sold are eliminated from the accounts and any resulting gains or losses are recognized at such time.

(k) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

The Company has estimated and accrued liabilities for real estate property taxes on its purchased land in anticipation of development, and other liabilities including the beneficial conversion liability, the fair value of warrants and options. To the extent that the estimates are dramatically different to the actual amounts, it could have a material effect on the financial statements.

(l) Municipal Utility and Water District Receivables

The Company has one of its properties in a Municipal Utility District (MUD) and one property in a Water Control and Improvement District (WCID). The Company incurs development costs for water, sewage lines and associated treatment plants and other development costs and fees for these properties. Under the agreement with the districts, the Company expects to be reimbursed partially for the above developments costs. The Districts will issue bonds to repay the Company, once there is enough assessed value on the property for the District taxes to repay the bonds. As homes are sold within the District, the assessed value increases. It can take several years before there is enough assessed value to recapture the costs. The Company has estimated that it will recover approximately 50% to 100% of eligible costs spent through September 30, 2007. In some circumstances, the Districts will pay for property set aside for the preservation of endangered species, greenbelts and similar uses. To the extent that the estimates are dramatically different to the actual amounts, it could have a material effect on the financial statements.

(l) Impairment of Long-Lived Assets

The Company reviews its long-lived assets, which consist primarily of trademarks, equipment and software, and real estate inventory for impairment according to whenever events or changes in

F-8

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(2) Summary of Significant Accounting Policies (continued)

(m) Impairment of Long-Lived Assets (continued)

circumstances indicate. Inventory is stated at the lower of cost (including direct construction costs, capitalized interest and real estate taxes) or fair value less cost to sell. Equipment and software is carried at cost less accumulated depreciation. The Company assesses these assets for recoverability in accordance with the provisions of statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” or SFAS No. 144. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. These evaluations for impairment are significantly impacted by estimates of revenues, costs and expenses and other factors. If long-lived assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No significant impairments of long-lived assets were recorded in 2007, 2006 or 2005.

(n) Loss per Common Share

Earnings per share is accounted for in accordance with SFAS No. 128, “Earnings per Share,” which require a dual presentation of basic and diluted earnings per share on the face of the statements of earnings. Basic loss per share is based on the weighted effect of common shares issued and outstanding, and is calculated by dividing net loss by the weighted average shares outstanding during the period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares used in the basic loss per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding.

The Company has issued stock options, warrants convertible into shares of common stock. These shares and warrants have been excluded from loss per share at September 30, 2007 and 2006, and December 31, 2006 and 2005 because the effect would be anti-dilutive as summarized in the table below:

	September				December
	2007		2006		2006		2005
			(Unaudited)

Stock options		1,835,000		1,145,000		925,000		780,000
Common stock warrants		1,143,125		1,312,500		1,283,750		1,500,000
Subordinated convertible debt warrants		8,250,000		8,375,000		8,375,000		5,000,000
Total		11,228,125		10,832,500		10,583,750		7,280,000

(o) Financial Instruments and Credit Risk

Financial instruments that potentially subject the Company to credit risk include cash and cash equivalents. Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk. Although the balances in these accounts exceeded the federally insured limit by $12.9 million at September 30, 2007, the Company has not incurred losses related to these deposits. Cash equivalents consist of money market accounts and are typically held in accounts with investment brokers or banks which are secured with high quality short maturity investment securities.

The amounts reported for cash and cash equivalents, notes payable, accounts payable, accrued liabilities, and line of credit are considered to approximate their market values based on comparable market information available at the respective balance sheet dates and their short-term nature.

F-9

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(2) Summary of Significant Accounting Policies (continued)

(p) Concentrations

In prior periods we have been dependent upon a limited number of homebuilder services customers which are subject to numerous uncertainties related to homebuilding including weather delays and damage, labor and material shortages, insufficient capital, materials theft or poor workmanship. Revenues from one homebuilder customer accounted for 100% of our total homebuilding revenue for the nine months ended September 30, 2007. At September 30, 2007 we no longer have homebuilder services customers.

(q) Subordinated Convertible Debt

(r) Derivative Financial Instruments

Wilson Holdings accounts for all derivative financial instruments in accordance with SFAS No. 133. Derivative financial instruments are recorded as liabilities in the consolidated balance sheet, measured at fair value. When available, quoted market prices are used in determining fair value.

F-10

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(2) Summary of Significant Accounting Policies (continued)

(r) Derivative Financial Instruments (continued)

However, if quoted market prices are not available, Wilson Holdings estimates fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques.

The value of the derivative liabilities relating to the convertible note in the consolidated financial statements are subject to the changes in the trading value of Wilson Holdings common stock and other assumptions. As a result, our quarterly financial statements may fluctuate from quarter to quarter based on factors, such as the trading value of Wilson Holdings common stock, the amount of shares converted by subordinated convertible debt holders in connection with the subordinated convertible notes and exercised in connection with the subordinated convertible debt holders’ penalty warrants. Consequently, the consolidated financial position and results of operations may vary from quarter to quarter based on conditions other than Wilson Holdings operating revenues and expenses. See Note 10 regarding valuation methods used for derivative liabilities.

Derivative financial instruments that are not designated as hedges or that do not meet the criteria for hedge accounting under SFAS No. 133 are recorded at fair value, with gains or losses reported currently in earnings. All derivative financial instruments held by the Company as of September 30, 2007 and December 31, 2006 and 2005, were not designated as hedges.

(s) Stock-Based Compensation

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 year ended December 31, 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. 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 for the year ended December 31, 2005 would have changed to the pro forma amounts indicated below:

	2005
Net loss as reported	$	(1,714,443	)
Deduct: Total stock based employee compensation expense determined under the fair value based method for all awards, net of the related tax effects		(123,479	)
Pro forma net loss	$	(1,837,922	)
Net loss per share
Basic and diluted - as reported	$	(0.22	)
Basic and diluted - pro forma	$	(0.23	)

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 year ended 2005. For the year ended 2005, the following assumptions were used: risk free interest rate of 4.25%, dividend yield of 0%, weighted-average life of options of 5 years, and a 60% volatility factor.

(t) Adoption of New Accounting Pronouncements

F-11

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

The cumulative effect of the re-characterization of the derivative liabilities is shown in the table below:

	As filed December 31, 2006			Cumulative effect of re-characterization of derivative liabilities			Net effect of re-characterization
LIABILITY ACCOUNTS
Subordinated convertible debt, net of discount, respectively	$	8,395,876			4,572,674			12,968,550
Derivative liability, convertible note compound embedded derivative		7,462,659			(7,462,659	)		-
Derivative liability, contingent warrants issued to subordinated convertible debt holders		1,883,252			(1,883,252	)		-
Total debt, net of discount and derivative liabilities		17,741,787			(4,773,237	)		12,968,550
STOCKHOLDERS' EQUITY ACCOUNTS
Common stock		18,056			-			18,056
Additional paid in capital		16,809,885			(4,577,938	)		12,231,947
Retained deficit		(16,053,143	)		9,351,175			(6,701,968	)
Total stockholders' equity	$	774,798			4,773,237			5,548,035

In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- An Interpretation of FASB Statement 109" ("FIN 48") which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48, effective for fiscal years beginning after December 15, 2006, requires that the tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The amount of tax benefits recognized from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company has completed the process of evaluating the effect of FIN 48 on its consolidated financial statements. The company has analyzed its tax positions and concluded that there is no cumulative or current effect from the adoption of the provisions of FIN 48. The Company's income tax returns are not currently under examination by the Internal Revenue Service or other tax authorities. The Company does not foresee recognition of unrecognized tax benefits during the next twelve months.

F-12

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(u) Reclassification

Certain prior period amounts have been reclassified to conform to current period presentation.

(3) Inventory

The Company’s land inventory includes real estate held for sale or under development and earnest money on land purchase options. Construction in progress includes development costs, prepaid development costs, and development costs on land under option but not owned. Homebuilding inventory represents speculative homes under construction. The Company expects the homebuilding inventory to increase as it begins to build in additional communities.

Earnest money deposits for land costs and development costs on land under option, not owned, totaled approximately $525,000, $625,000 and $525,000 at September 30, 2007 and December 31, 2006 and 2005 respectively, of which approximately $520,000, $625,000, and $420,000 is non-refundable if the Company does not exercise the option and purchase the land.

As of September 30, 2007 it had approximately 738 acres under development and construction in Hays County, Travis County and Williamson County, Texas. The Company completed Phase 1 in Rutherford West in 2007 and Phase 6 in Georgetown Village in 2006. During 2007, the Company elected not to exercise the option on Bohl’s tract. The Company recorded approximately $1.3 million of cost of sales during the nine months ended September 30, 2007 to reflect the development costs which accumulated on this property.

In April 2007 10 acres of Highway 183 was condemned by the State. In July 2007 the Company received final judgment from the State and received proceeds of approximately $410,000 for the condemned land. The Company currently has an option agreement from an outside buyer for the remaining 5 acres.

Effective July 2007, the Company put a hold on development of phases 2 through 5 of Rutherford West. From that date, all interest costs related to holding this property has been recorded as an expense.

F-13

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

Below is a summary of the property completed, owned or under contract by the Company at September 30, 2007:

Property	Finished Lots/Homes		Approximate Owned Acreage		Approximate Acreage Under Option		Land and Project Costs at Sept. 30, 2007 In thousands		Approximate Acreage under Development		Texas County
Rutherford West		54		521		n/a	$	12,369		521	Hays
Highway 183		-		5		n/a		113		-	Travis
Georgetown Village		50		149		419		6,199		42	Williamson
Villages of New Sweden		-		521		-		10,716		-	Travis
Elm Grove		-		30		61		3,011		30	Hays
Other land projects		-		-		-		55		-
Sub-total land		104		1,266		480	$	32,463		593
Homebuilding inventory		-		-		-		2,844		-
Total inventory		104		1,266		480	$	35,307		593

Below is a summary of the property completed, owned or under contract by the Company at December 31, 2006:

Property	Finished Lots/Homes		Approximate Owned Acreage		Approximate Acreage Under Option		Land and Project Costs at December 31, 2006 In thousands		Approximate Acreage under Development		Texas County
Rutherford West		-		697		n/a	$	11,251		697	Hays
Highway 183		-		15		n/a		377		-	Travis
Georgetown Village		102		52		613		5,342		52	Williamson
Villages of New Sweden		-		521		-		10,120		-	Travis
Elm Grove		-		30		61		1,755		-	Hays
Bohls Ranch		-		-		428		1,011		-	Travis
Other land projects		-		-		-		52
Sub-total land		102		1,315		1,102		29,908		749
Homebuilding inventory		-		-		-		848		-
Total inventory		102		1,315		1,102	$	30,756		749

Below is a summary of the property completed, owned or under contract by the Company at December 31, 2005:

Property	Finished Lots/Homes		Approximate Owned Acreage		Approximate Acreage Under Option		Land and Project Costs at December 31, 2005 In thousands		Approximate Acreage under Development		Texas County
Rutherford West		-		732		n/a	$	9,592		-	Hays
Highway 183		-		15		n/a		388		-	Travis
Georgetown Village		-		52		613		1,614		52	Williamson
Villages of New Sweden		-		-		534		270		-	Travis
Elm Grove		-		-		91		50		-	Hays
Other projects		-		-		-		1,041
Total inventory		-		799		1,238		12,955		52

(4) Consolidation of Variable Interest Entities

The Company exercises significant influence over, but holds no controlling interest in, our homebuilder client. It bears the majority of the rewards and risk of loss. At December 31, 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), that it has a significant, but less than controlling, interest in the entity. The results of this client have been consolidated into its financial statements.

Below is a summary of the effect of the consolidation of these entities for the nine months ended September 30, 2007 and 2006 and the year ended December 31, 2006:

F-14

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

	Nine Months Ended September 30, 2007
	WFC			VIEs			Consolidating entries			Consolidated
Revenues		3,233,233			1,295,406	(a)		(84,139	)		4,444,500
Expenses
Cost of Revenues		3,794,712			1,109,653	(a)		(84,139	)		4,820,227
General, administrative, sales and marketing		4,078,820			165,587						4,244,407
Costs and expenses before interest		7,873,532			1,275,240			(84,139	)		9,064,634
Operating income/(loss)		(4,640,300	)		20,166			-			(4,620,134	)

	Nine Months Ended September 30, 2006
	(unaudited)
	WFC			VIEs			Consolidating entries			Consolidated
Revenues		1,887,579			4,196,905	(a)		(819,768	)		5,264,716
Expenses
Cost of revenues		1,114,829			3,802,341	(a)		(812,280	)		4,104,890
General, administrative, sales and marketing		3,534,899			287,654	(b)		187,711			4,010,264
Costs and expenses before interest		4,649,728			4,089,995			(624,569	)		8,115,154
Operating income/(loss)		(2,762,149	)		106,910			(195,199	)		(2,850,438	)

	Year Ended December 31, 2006
	WFC			VIEs			Consolidating entries			Consolidated
Revenues		2,592,878			5,229,564	(a)		(1,087,926	)		6,734,516
Expenses
Cost of revenues		1,654,436			4,850,532	(a)		(1,087,926	)		5,417,042
General, administrative, sales and marketing		4,674,060			342,467	(b)		154,067			5,170,594
Costs and expenses before interest		6,328,496			5,192,999			(933,859	)		10,587,636
Operating income/(loss)		(3,735,618	)		36,565			(154,067	)		(3,853,120	)

(a) Eliminates WFC revenues in VIE expenses, eliminates VIE expenses in WFC.

(b) Loss of VIE.

On June 19, 2007, the Company purchased one of its variable interest entities, Green Builders, Inc, now a wholly owned subsidiary of Wilson Holdings.

The Company terminated its relationship with its final homebuilder client on August 2, 2007 subsequent to the sale of all the homes for which the Company had guaranteed the loans. As a result of the termination of the relationship, the Company recorded approximately a $260,000 increase in stockholders equity.

(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 is required to consolidate its homebuilder services clients per FIN 46(R). 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, 2007 and 2006:

F-15

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

	2007									2006
	Homebuilding and Related Services			Land Sales			Total			Homebuilding and Related Services			Land Sales			Total
Revenues from external customers	$	1,295,407			3,149,093			4,444,500			4,184,905			1,079,811			5,264,716
Costs and expenses:
Cost of revenues		1,025,514			3,794,712			4,820,227			3,480,403			624,487			4,104,890
Selling, general and administrative		2,646,613			1,597,794			4,244,407			2,651,143			1,359,121			4,010,264
Loss on fair value of derivatives		-			-			-			-			3,392,500			3,392,500
Interest & other income		(151,239	)		(140,240	)		(291,478	)		(143,751	)		(116,448	)		(260,199	)
Interest expense		1,585,634			641,599			2,227,233			650,716			992,370			1,643,086
Total costs and expenses		5,106,523			5,893,865			11,000,389			6,638,511			6,252,030			12,890,541
Loss before taxes	$	(3,811,116	)		(2,744,772	)		(6,555,889	)		(2,453,606	)		(5,172,219	)		(7,625,825	)
Segment Assets	$	11,236,511			39,370,864			50,607,374			3,048,126			28,016,470			31,064,596
Capital expenditures	$	181,409			20,157			201,565			-			68,479			68,479

The following table presents segment operating results before taxes for the years ended December 31, 2006 and 2005:

	2006									2005
	Homebuilding and Related Services			Land Sales			Total			Homebuilding and Related Services			Land Sales			Total
Revenues from external customers	$	5,217,564			1,516,952			6,734,516			-			255,000			255,000
Costs and expenses:
Cost of revenues		4,346,186			1,070,856			5,417,042			-			114,587			114,587
Selling, general and administrative		3,342,924			1,827,670			5,170,594			63,477			483,200			546,677
Loss of fair value of derivatives		-			8,469,457			8,469,457			-			-			-
Interest & other income		(129,840	)		(160,495	)		(290,335	)		-			(44,122	)		(44,122	)
Interest expense		1,453,099			907,716			2,360,815			-			144,710			144,710
Total costs and expenses		9,012,369			12,115,204			21,127,573			63,477			698,375			761,852
Loss before taxes	$	(3,794,805	)		(10,598,252	)		(14,393,057	)		(63,477	)		(443,375	)		(506,852	)
Segment Assets	$	4,293,166			33,080,295			37,373,461			-			14,092,338			14,092,338
Capital expenditures	$	81,229			1,429			82,658			46,406			29,430			75,836

(6) Related Party Transactions

Notes Payable

In March of 2005, some of the trusts belonging to the Wilson family purchased a note for approximately $280,000 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 April 4, 2006 when the entire principal and interest would be due and payable. On March 29, 2006 the note was extended till April 4, 2008. In August 2007 all outstanding principal and interest was paid.

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 $121,000 that Mr. Wilson had advanced to WFC before the merger with Athena for working capital. In October 2005, WFC repaid the remaining $140,000 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 twelve months ended December 31, 2006, Mr. Wilson’s brother provided services to the Company for which he was paid approximately $20,000. 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.

F-16

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

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 were 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 June 2006, the Company refinanced the loan balance of $6.2 million with a financial institution (Note 10).

Issuance of Convertible Debt

As part of the December 2005 subordinated convertible debt issuance discussed in Note 10, an existing common stock investor purchased $800,000 of the $10 million of subordinated convertible debt that was issued. As part of the subordinated convertible debt in 2006 discussed in Note 10, existing common stock investors purchased $1.0 million of the $6.75 million subordinated convertible debt that was issued.

In connection with the placement of an additional $6.75 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 Securities Group, Inc. served as the Company’s Placement Agent in connection with the offering. Pursuant to this agreement, the Company paid Tejas Securities Group, Inc. commissions of $70,000, issued 750,000 warrants, 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, 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 of the Company, 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 60,000 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 is 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.

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 $10,000 per month for 36 months. The lease is with a subsidiary of Tejas Incorporated. The Company believes that the lease is at fair market value for similar space in the Austin, Texas commercial real estate market.

In September 2006, the Company’s Chairman and Chief Executive Officer purchased $250,000 of subordinated convertible debt under the same terms and conditions as the others participating in the issuance.

In December 2006, Tejas Securities Group, Inc. exercised 535,000 warrants, exercisable at $2.00 per share, in a cashless exercise netting the warrant holder 348,913 shares of common stock.

F-17

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

Consulting Arrangement with Audrey Wilson

In February 2007 the Company entered into a consulting agreement with Audrey Wilson, the wife of Clark N. Wilson, our President and Chief Executive Officer. Pursuant to the consulting agreement, the Company has agreed to pay Ms. Wilson $10,000 per month for a maximum of 6 months. Ms. Wilson agreed to devote at least twenty-five hours per week assisting the Company with the following activities: (i) the establishment of “back-office” processes for homebuilding activities, including procurement, sales and marketing and other related activities, and (ii) developing our marketing strategy for marketing and sale of land to homebuilders. Subsequent to the completion of the six month period in July 2007, Ms. Wilson continues to provide consulting services to the Company at no cost to the Company. In accordance with Staff Accounting Bulletin 5A, the Company has recorded $20,000 as compensation expense and credited equity for two months of services recorded at fair market value.

(7)

Liquidity and Capital Resources

Liquidity

At September 30, 2007, the Company had approximately $13.1 million in cash and cash equivalents. The Company completed a successful public offering of the Company’s common stock in May 2007, netting the Company approximately $14 million of cash.

On June 29, 2007, WFC entered into a three-year $55 million revolving credit facility with a syndicate of banks led by RBC Centura Bank, as administrative agent. The Company has guaranteed all of WFC’s obligations under the Credit Facility. The obligations of WFC under the Credit Facility will be secured by assets of each subdivision to be developed with the proceeds of loans available under the Credit Facility. WFC currently has approximately $2.7 million in borrowings under the Credit Facility.

The Company’s growth will require substantial amounts of cash for earnest money deposits, land purchases, development costs, interest payments and homebuilding costs. Until it begins to sell an adequate number of lots and homes 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 believes it can continue to do so in the future through a combination of conventional and subordinated convertible debt, joint venture financing, sales of selected lot positions, sales of land and lot options, and by raising additional equity.

In May 2007 the Company elected not to exercise a land purchase option to purchase the Bohls tract of approximately 428 acres for approximately $7.2 million. The Company’s decision not to exercise the option was based on the following factors:

Due to the current market conditions in the homebuilding industry, revenue projections for sale of residential lots to other homebuilders have substantially declined. The Company concluded that it currently has adequate single-family lots, excluding the Bohls tract. Therefore, the Company entered into negotiations with sellers of the Bohls tract to renegotiate the purchase price and other significant terms of the contract to purchase the property. The discussions are ongoing; however, the option expired in June 2007. The Company recorded a loss provision of approximately $1.3 million relating to development costs incurred on the tract and expenses expected to be incurred due to the expiration of the option period.

The Company commenced homebuilding through its wholly owned subsidiary Green Builders, Inc. effective June 20, 2007 and plans to build and sell homes in the Central Texas area, initially in Austin, Texas, for prices ranging from $200,000 to $700,000.

Capital Resources

The Company has raised approximately $16.8 million of subordinated convertible debt, and approximately $14 million in a public offering of the Company’s common stock completed in May 2007. The Company also entered into a three-year $55 million revolving credit facility with a syndicate of banks mentioned previously. The Credit Facility may be increased to $100 million with the consent of the lenders.

F-18

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

Due to market conditions discussed above, weather related delays and longer than expected ramp up of homebuilding operations, the Company’s financial projections have changed. The Company expects to incur significant losses for its first and second quarters of fiscal 2008.

The Company believes that capital raised, the closing of the revolving credit facility and future land and home sales and financing will provide adequate capital resources for the next twelve months, but the Company may be required to raise additional capital in fiscal 2008 as additional market opportunities arise for homebuilding and land development.

Land and homes under construction comprises the majority of the Company’s assets, which could suffer devaluation if the housing and real estate market suffers 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 to pay off debts, which could have a material adverse effect.

In October 2007 the Company amended its four notes payable, seller financed, that serve as part of the purchase of 534 acres in Travis County described above. The notes payable maturity date has been extended to October 12, 2011. The terms of the notes payable now call for quarterly interest payments commencing October 12, 2007 and principal payments of $1.4 million in October 2010 and $1.0 million in October 2011.

In October 2007 the Company refinanced its land obligation on a land loan for approximately 120 acres in Georgetown Village Section 9 of approximately $1.1 million and obtained a new loan of approximately $4.3 million to finance development for Georgetown Village Section 9. The interest rate is 12.5% annually and requires monthly interest payments, with a maturity of two years.

(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.

Lease Obligations

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 $10,000 per month for 36 months. The Company also has office equipment leases. The Company’s future minimum lease payments for future fiscal years are as follows:

		2008				2009				2010				2011				2012
Lease obligations		$	139,484				113,208				3,966				240				240

Employment Agreements with Executive Officers

On February 14, 2007, the Company entered into an employment agreement with Clark N. Wilson, its President and Chief Executive Officer. In the event of the involuntary termination of Mr. Wilson’s service with the Company, the agreement provides for monthly payments equal to Mr. Wilson’s monthly salary payments to continue for 12 months. The agreement contains a provision whereby Mr. Wilson is not permitted to be employed in any position in which his duties and responsibilities comprise residential land development and homebuilding in Texas or in areas within 200 miles of any city in which the Company is conducting land development or homebuilding operations at the time of such termination of employment for a period of one year from the termination of his employment, if such termination is voluntary or for cause, or involuntary and in connection with a corporate transaction.

F-19

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

Consulting Arrangement with Arun Khurana

On September 18, 2007, Wilson Holdings, Inc. entered into a consulting agreement with Arun Khurana, its Vice President and Chief Financial Officer, pursuant to which Mr. Khurana will transition from his position as an executive officer of the Company into a consulting role, beginning on the later to occur of October 31, 2007 or the date the Company files its Annual Report on Form 10-KSB for the transition period ending September 30, 2007 and ending on October 31, 2008 (the Consulting Term). Mr. Khurana will remain as the Company’s Vice President and Chief Financial Officer, and principal financial officer, until the beginning of the Consulting Term. Mr. Khurana intends to transition into a consulting role as a part of the Company’s efforts to reduce its expenditures through fiscal 2008 as the Company has decided to focus its efforts on commencing its homebuilding operations, as described in detail in its Quarterly Report on Form 10-QSB for the fiscal quarter ended June 30, 2007. The Company anticipates naming a replacement principal financial officer beginning in early 2008.

Pursuant to the consulting agreement, during the consulting term Mr. Khurana will (i) review and provide comments on the Company’s periodic filings with the Securities and Exchange Commission, (ii) advise the Company on its Sarbanes-Oxley Act compliance and implementation efforts, (iii) advise the Company regarding financing and joint venture matters, and (iv) transition his responsibilities to the Chief Accounting Officer of the Company. During the consulting term, Mr. Khurana will receive a consulting fee of $11,500 per month and all unvested options to purchase the Company’s common stock will vest in full. Mr. Khurana will have 90 days following October 31, 2008 to exercise any vested stock options.

(9) Income Taxes

The Company's provision for income taxes for the tax year ended September 30, 2007 consists of approximately $11,400 of Texas gross margin tax. A reconciliation of expected income tax benefit (computed by applying a statutory income tax rate of 34% to income before income tax expense) to total tax expense (benefit) in the accompanying consolidated statements of operations follows:

	September			December 31,
	2007			2006			2005
Tax benefit at Statutory Rate (34%)	$	2,229,002		$	4,893,639		$	505,779
State income tax benefit		-			379,977			59,503
Texas tax		113			-			-
Loss on fair value of derivatives		-			(3,218,394	)		-
Other		6,733			194,615			-
Impact on change in Texas tax law		(379,977	)		-
Net increase in valuation allowance	$	(1,844,495	)	$	(2,249,837	)	$	(565,282	)
Provision for income taxes		11,376			-			-

The effect of the change in Texas tax law represents a decrease in the state rate applied to the temporary differences, and the exclusion of the deferred tax assets related to Texas loss carryforwards. The state rate applied to the temporary difference has been reduced as the temporary differences do not affect the Company's Texas gross margin tax and thus, do not represent a future tax benefit or liability for the Texas tax.

F-20

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at September 30, 2007 and December 31, 2006 and 2005 are as follows:

	September			December 31,
	2007			2006			2005
Deferred tax assets (liabilities)
Stock compensation	$	369,160		$	207,049		$	-
Accrued expenses		34,000			38,000			-
Other temporary differences		12,966			(4,107	)		-
Net operating loss carryforwards		4,243,488			2,574,177			565,282
Valuation allowance		(4,659,614	)		(2,815,119	)		(565,282	)
Net deferred tax asset (liability)	$	-		$	-		$	-

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the lack of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will not realize the benefits of these deductible differences. The Company has provided a 100% valuation allowance on its deferred tax assets.

For the nine months ended September 30, 2007, the Company had net operating loss carryforwards of approximately $12.5 million which begin to expire in 2025 if not utilized. The Internal Revenue Code Section 382 limits net operating loss carryforwards when an ownership change of more than fifty percent of the value of the stock in a loss corporation occurs within a three-year period. Accordingly, the ability to utilize net operating loss carryforwards may be significantly restricted.

(10) Indebtedness

The following schedule lists the Company’s notes payable and lines of credit balances at September 30, 2007 and December 31, 2006 and 2005:

In Thousands		Rate		Maturity Date	2007		2006		2005
Line of Credit, $3 million, development	a	Prime+.50%		Mar-1-08	$	472		2,250		-
Line of Credit, $15.5 million, purchase and development	b	Prime+2.00%		Oct-1-08		-		3,587		-
Line of Credit, $2 million, land and construction	c		7.25%	April-1-07		-		-		254
Notes payable, land	d		12.50%	Mar-1-09		4,700		-		-
Notes payable, seller financed	e		7.00%	Oct. 2009/10		2,475		2,474		-
Line of Credit, $5 million / $10 million, land and construction	f	Prime+.50%		Feb-6-08		-		600		-
Notes payable, land	g	Prime+.75%		Jun-1-08		-		6,200		6,683
Notes payable, land	h		12.50%	Mar-1-09		7,300		-		-
Notes payable, development	i	Prime+.50%		Feb-1-10		1,502		-		-
Notes payable, family trust	j		8.00%	Apr-1-08		-		280		280
Notes payable, land, due	k	Prime+.75%		Dec-1-09		-		792		-
Notes payable, land and development	l	Prime+3.00%		Feb-1-09		1440		-		-
Line of Credit, $55 million facility, land, land development, and homebuilding	m	Prime+.25%		June-29-08		2749		-		-
Notes payable, land	n		6.5%	2-15-08		-		-		425
2005 $10 million, Subordinated convertible notes, net of discount of $459 thousand and $4,288 thousand, respectively			5.00%	Dec-1-12		9,541		5,712		4,998
2006 $6.50 million as of June 30, 2007, $6.75 million, Subordinated convertible notes, net of discount of $2,786 and $4,066 thousand respectively			5.00%	Sep-1-13		3,714		2,684		-
		Total			$	33,893		24,579		12,640

F-21

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(a) In March 2006, the Company secured a $3.0 million line of credit 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.

(b) 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 debt has financial covenants which (1) require the Company to keep a debt to equity ratio of 2:1, and (2) keep liquid assets in excess of $7 million, except for 2006 and first and second quarters of 2007 in which it is required to maintain $4 million in liquid assets, which includes $2.2 million of restricted cash, in the financial institution. During February 2007, the Company obtained a release from the bank whereby its restricted cash was released, except for $315,000, and financial covenants for the third quarter of 2007 were modified requiring the Company to keep liquid assets of only $4 million. 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 the Company’s contracts for sales of lots. Its current projects require pay down amounts of approximately $600,000 per quarter. The purchase price of the property was approximately $8.5 million, with $2.5 million of owner financing, $3.6 million from the bank loan and cash from us of approximately $2.4 million. The Company has invested an additional amount for development of the property of approximately $1.9 million. This note was refinanced and paid off in March 2007 (d).

(c) In September 2005, the Company secured a $2 million one year 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. The Company had drawn approximately $254,000 against the loan at December 31, 2005. The note was paid completely in 2006.

(d) In March 2007, the Company replaced the $15.5 million line of credit (b) with a $4.7 million term loan maturing March 2009. The interest rate on the loan is 12.5%, with interest payable monthly. The loan has no financial covenants and is secured by the underlying property described above.

(e) As part of the purchase of 534 acres in Travis County described above, the Company entered into four notes payable, seller financed, due 2009 and 2010, with a cumulative balance of approximately $2.5 million. The notes payable have a maturity date of October 12, 2010. Three of the notes payable with a cumulative balance of $1.9 million are at an interest rate of 7.0% and the fourth note payable issued for approximately $600,000 is at an interest rate of the Wall Street Journal’s prime rate plus 2.0%. The terms of the notes payable call for annual principal repayments of $1.1 million in 2007, $0.3 million in 2008, $500,000 in 2009 and $500,000 in 2010, payable on October 12. The notes can be prepaid at anytime without penalty and are secured by the real estate purchased.

(f) The Company had a $5 million master construction line of credit that matured on January 11, 2007, used by 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. The Company complied with the above loan covenants. During February 2007, the line of credit was replaced by a $10 million line of credit for land and home construction under the same terms with a maturity date of February 6, 2008.

F-22

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(g) 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 million 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 payable, land, 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 $800,000 per quarter beginning June 12, 2007. Principal reductions from sales of the real estate are credited towards the $800,000 per quarter requirement. This loan was refinanced in February 2007 (h).

(h) On February 13, 2007 the Company refinanced its land obligation on a land loan of approximately $6.2 million and obtained a new loan of approximately $7.2 million to finance approximately 538 acres. The interest rate is 12.5% annually and requires monthly interest payments, with a maturity of two years and is renewable for an additional year for a 1% loan fee. The loan is secured by the underlying land.

(i) On February 9, 2007, the Company obtained a development loan of approximately $4.6 million. The loan matures on February 1, 2010 and requires quarterly interest payments and principal pay downs as lots are sold. The loan is secured by the property being developed at an interest rate of prime plus 0.50%.

(j) In October 2003, a predecessor entity of the Company exchanged notes payable of approximately $280,000 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 notes payable, family trust, 8%, due April 2008. This note was paid completely in August 2007.

(k) In December of 2006, the Company paid cash and issued notes payable, land, due 2009, a long-term note payable of $792 thousand with a maturity date of December 21, 2007 at an interest rate of the bank’s prime rate plus 0.5% for the purchase of approximately 30 acres of land. The terms of the note payable called for interest only payable quarterly, and the balance of the principal and accrued interest due and payable upon maturity. It is secured by the real estate purchased. This note was replaced in February 2007.

(l) This property was refinanced in February 2007 with a land purchase and development loan of approximately $3.1 million. The loan matures in February 2009, with two nine-month extensions, at an interest rate of prime plus 3.00%, with interest payable monthly.

(m) In June 2007, the Company established a $55 million credit facility with a syndicate of banks. The Company currently has approximately $2.7 million in borrowing for land and home construction.

(n) In November 2005, the Company paid cash and issued a long term note payable of $424,700 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 Company paid the note in March 2006.

Subordinated Convertible Debt

Derivatives Associated with Subordinated Convertible Debt

Prior to 2007, derivative financial instruments were recorded as liabilities in the consolidated balance sheet and measured at fair value. The Company accounted for the various embedded derivative features as being bundled together as a single, compound embedded derivative instrument that was 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 notes. The unamortized discount was 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 using a Black-Scholes valuation model and the unamortized discount was to be amortized as interest expense over the 7-year life of the notes using the straight-line method.

F-23

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

In January 2007, the Company adopted “FSP EITF 00-19-2” as discussed in Note 2.

Prior to adoption of FSP EITF 00-19-2, the uncertainty of a successful registration of the shares underlying the subordinated convertible debt required that the freestanding and embedded derivatives be characterized as derivative liabilities. FSP EITF 00-19-2 specifically addressed the accounting for a registration rights agreement and the requirement to classify derivative instruments subject to registration rights agreements as liabilities was withdrawn. The Company re-evaluated its accounting for the subordinated debt transaction and determined that the liability for the penalty warrants be included in the allocation of the proceeds to the various components of the transaction according to paragraph 16 of APB Opinion No. 14, Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants. The Company also determined the notes contained a beneficial conversion feature under Issues 98-5 and 00-27, and used the effective conversion price based on the proceeds allocated to the convertible instrument to compute the intrinsic value of the embedded conversion option. The Company recalculated the discount on the convertible debt at its intrinsic value and re-characterized the freestanding and embedded derivatives as equity. The previous valuation adjustments of the derivative liabilities were reversed and the amortization of the discounts was adjusted based upon the recalculation. Per FSP EITF 00-19-2, the Company was permitted to adjust the previous amounts as a cumulative accounting adjustment.

The net effect of the change increased the net carrying amount of the subordinated convertible debt and eliminated the derivative liabilities. There was also an increase of $4.8 million in total stockholders’ equity. During the year ended December 31, 2006, the Company recognized approximately $8.5 million of loss on fair value of derivatives related to the subordinated convertible debt. Under the new FSP EITF 00-19-2 the derivatives were eliminated and hence there will no longer be gains and losses related to the current subordinated convertible debt.

2005, $10MM, 5%, Subordinated Convertible Debt.

On December 19, 2005, the Company issued $10 million in aggregate principal amount of 5% subordinated convertible debt due December 1, 2012 to certain purchasers. The following are the key features of the subordinated convertible debt: interest accrues on the principal amount of the subordinated convertible debt at a rate of 5% per annum and the debt is payable semi-annually on May 1 and December 1 of each year, with interest payments beginning on June 1, 2006. The subordinated 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 subordinated convertible debt after December 1, 2008 at a redemption price that incorporates a premium that ranges from 3% to 10% 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 subordinated convertible debt. Upon a change in control event, each holder of the subordinated convertible debt may require us to repurchase some or all of its subordinated convertible debt at a purchase price equal to 100% of the principal amount of the subordinated 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 subordinated convertible debt only after all senior indebtedness has been paid.

The subordinated 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.

F-24

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

The Company also issued warrants to purchase an aggregate of 750,000 shares of common stock to the purchasers of the subordinated convertible debt, 562,500 shares which vested and the remaining shares will never vest. The warrants were 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 the 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 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 May 19, 2006 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 June 18, 2006 if the registration statement shall not have been declared effective by the SEC by such date. Management recorded the fair value of these warrants at the time of the subordinated convertible debt issuance due to the uncertainty surrounding the timeline of getting the registration statement effected and the high probability that these warrants would be issued. The shelf registration statement 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.

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 approach, 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, resulting in an allocated value of approximately $613 thousand. The penalty warrants are recorded as part of the debt discount and an increase in additional paid in capital, and amortized over the 7-year life of the notes using the straight-line rate method.

The Company also incurred closing costs of $588 thousand which included placement agent fees of $450,000 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 straight line 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.

Subordinated Convertible Note at September 30, 2007, December 31, 2006 and 2005

		September 30,		December 31,
		2007		2006		2005
Notional balance	$	10,000,000	$	10,000,000	$	10,000,000
Unamortized discount		(459,400)		(4,287,857)		(5,002,500)
Subordinated convertible debt balance, net of unamortized discount	$	9,540,600	$	5,712,143	$	4,997,500

2006, $6.75MM, 5%, Subordinated Convertible Debt

On September 29, 2006, the Company raised capital of $6.75 million in aggregate principal amount of 5% subordinated convertible debt due September 1, 2013, to certain purchasers. As of December 31, 2006, $6.75 million had been received in cash, the remaining $250,000 was a receivable from an owner of land that the Company had under option to purchase. During the quarter ended June 2007, the Company did not exercise its option to purchase the land and therefore does not expect to receive the additional $250,000. In addition, during the quarter ended June 30, 2007, one of our convertible debt holders who is also the seller of Bohls tract purchased common stock with a promissory note. Under the terms of the promissory note, should the Company not exercise the option to purchase the Bohls tract the convertible debt would be used for repayment of the promissory note. As the Company did not exercise the option to purchase Bohls tract the promissory note was repaid from the proceeds of the convertible debt. The following are the key features of the subordinated convertible debt: interest accrues on the principal amount of the subordinated convertible debt at a rate of 5% per annum, payable semi-annually on February 1 and September 1 of each year, with interest payments beginning on February 1, 2006. The subordinated 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.

F-25

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

The Company may redeem all or a portion of the subordinated convertible debt after September 1, 2009 at a redemption price that incorporates a premium that ranges from 3% to 10% 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 subordinated convertible debt. Upon a change in control event, each holder of the subordinated convertible debt may require us to repurchase some or all of its subordinated convertible debt at a purchase price equal to 100% of the principal amount of the subordinated 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 subordinated convertible debt only after all senior indebtedness has been paid.

The subordinated 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 (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 506,250 shares of common stock to the purchasers of the subordinated 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 its timely filed registration statement but such registration statement was not declared effective prior to March 28, 2007.

The Company also incurred closing costs of $140,000, including placement agent fees of approximately $70,000 plus reimbursement of expenses to the placement agent of $25 thousand, for a total of $95 thousand to the placement agent, recorded as debt issuance costs, to be amortized over the 7-year life of the notes using the straight-line rate method.

The issuance of the debt resulted in an embedded beneficial conversion feature valued at approximately $2.5 million, which will be recorded as part of the debt discount and an increase in additional paid in capital, and amortized over the 7-year life of the notes using the straight-line rate method.

The penalty warrants were valued 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 allocated value of the penalty warrants totaled approximately $846 thousand and are recorded as part of the debt discount and an increase in additional paid in capital, and amortized over the 7-year life of the notes using the straight-line rate method.

F-26

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

Convertible Note at September 30, 2007 and December 31, 2006:

		September 30,		December 31,
		2007		2006
Notional balance	$	6,500,000	$	6,750,000
Unamortized discount		(2,785,820)		(4,066,267)
Subordinated convertible debt balance, net of unamortized discount	$	3,714,180	$	2,683,733

(11) Common Stock

The Company is authorized to issue 100,000,000 shares of common stock. Each common stockholder is entitled to one vote per share of common stock owned. The Company has 23,135,538 shares outstanding and has reserved for 11,228,125 options and warrants.

The Company sold 5,000,000 shares of common stock in a public offering at $3.25 per share that closed on May 19, 2007 and concurrently began trading on the American Stock Exchange under the symbol “WIH”. Related to the financing, the Company incurred the following transaction costs:

(In thousands)
Cash paid to investment banker for underwriting and other fees	$	1,219
Legal, printing, accounting and stock exchange registration fees		544
Travel and selling related costs		503
Warrants to purchase 500,000 shares at $4.06 with a fair value based on the Black-Scholes option pricing model with a risk free interest rate of 4.64%; dividend yield of 0%; weighted-average expected life of the warrants of 1 year; and a 60% volatility factor at $0.56 per warrant.		280
Total expenses	$	2,546

During June 2007, the Company issued 80,000 shares of common stock for the purchase of Green Builders, Inc.

(12)	Common Stock Option / Stock Incentive Plan

In August 2005, the Company adopted the Wilson Family Communities, Inc. 2005 Stock Option/Stock Issuance Plan or 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 of the Company and WFC was determined by the Board of Directors as of the grant date. This plan was assumed by Wilson Holdings, Inc. The fair value of the options granted under the plan was determined by the Board of Directors or the 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 2,500,000 shares. Unless terminated at an earlier date by action of the Board of Directors, the Stock Option Plan terminates upon the earlier of (1) the expiration of the ten year period measured from the date the Stock Option Plan is adopted by the Board or (2) the date on which all shares available for issuance under the Stock Option Plan shall have been issued as fully-vested shares.

F-27

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

The Company had 665,000 shares of common stock available for future grants under the Stock Option Plan at September 30, 2007. Compensation expense related to the Company’s share-based awards for the nine months ended September 30, 2007 and 2006 was approximately $541,000 and $350,000 thousand, respectively. Compensation expense related to the Company’s share-based awards during the year ended December 31, 2006, was approximately $545,000.

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 Stock Option Plan and are reflected in the disclosures below.

During the nine months ended September 30, 2007, the Company issued options to purchase 1,370,000 shares of common stock at exercise prices ranging from $1.65 to 3.25 per share. Using the Black-Scholes pricing model with the following weighted-average assumptions: risk free interest rate of 4.64%; dividend yields of 0%; weighted average expected life of options of 1-5 years; and a 60% volatility factor, management estimated the fair market value of the grants to range from $0.56 to $1.43 per share. Management estimated the volatility factor based on an average of comparable companies due to its limited trading history.

A summary of activity in common stock options for the years ended December 31, 2005 and 2006 and the nine months ended September, 2007 are as follows:

	Shares	Range of Exercise Prices	Weighted-Average Exercise Price
Options granted at plan inception	850,000	$2.00	$2.00
Options forfeited	(70,000)	$2.00	$2.00
Options outstanding, December 31, 2005	780,000	$2.00	$2.00
Options granted	555,000	$2.00 - $2.26	$2.16
Options forfeited	(410,000)	$2.00 - $2.26	$2.03
Options outstanding, December 31, 2006	925,000	$2.00 - $2.26	$2.17
Options granted	1,370,000	$1.65 - $3.25	$2.82
Options forfeited	(460,000)	$2.00 - $3.25	$2.45
Options outstanding, September 30, 2007	1,835,000	$2.00 - $3.25	$2.24
Add: Available for issuance	665,000
Total available under plan	2,500,000

The following is a summary of options outstanding and exercisable at September 30, 2007:

Outstanding			Vested
Number 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 Price
1,835,000	6.76	$2.24	805,965	5.62	$2.54

At September 30, 2007, there was approximately $1.8 million 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 6.76 years. In February 2007, the Company’s Board approved an 819,522 share increase in the number of shares issuable pursuant to its option plan for a total of 2,500,000 shares issuable under the plan. This increase will be effective when approved by the Company’s shareholders.

(13) Employee Benefits

In 2006, the Company instituted a defined contribution plan under section 401(k) of the Internal Revenue Code. The plan allows all employees who are over 21 years old to defer a predetermined portion of their compensation for federal income tax purposes. The Company will match 100% up to the first 4% of the employee’s contribution subject to Internal Revenue Service limitations. The Company contributed approximately $9,000 and $35,000 for the nine months ended September 30, 2007 and 2006 and $13 thousand for the year ended December 31, 2006.

F-28

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(14)	Purchase of Green Builders

On June 19, 2007, the Company purchased Green Builders, Inc. for $65,000 in cash and 80,000 shares of the Company’s common stock valued at $2.70 per share on the date of the transaction. The total purchase price for the acquisition was approximately $281,000. In addition the Company spent approximately $24,000 in legal fees for the purchase. The Company allocated the purchase price and legal fees to trademark with indefinite life in accordance with SFAS 142.


Cash	$	17,081
Accounts Receivable		2,900
Accounts Payable		(6,190	)
Trademarks		292,192
Others		(8,776	)
	$	297,207

In conjunction with the acquisition, the Company increased the size of its Board of Directors from four to five persons, and appointed Victor Ayad as a director of the Company. Mr. Ayad was the President and sole shareholder of Green Builders, Inc. prior to the acquisition. The pro forma effect of the acquisition on the Company’s income was not material and is already consolidated into the Company’s results as a VIE under FIN 46(R).

(15)	Quarterly Results (Unaudited)

The following tables set forth selected quarterly consolidated statements of operations information for the quarters ended December 31, 2005 through September 30, 2007.

	Dec. 31,			March 31.			June 30,			Sept. 30,			Dec. 31,			March 31,			June 30,			Sept, 30,
	2005			2006			2006			2006			2006			2007			2007			2007
	(In thousands)
Sales	$	-		$	1,033		$	2,355		$	1,897		$	1,470		$	1,767		$	1,384		$	1,293
Gross profit	$	-		$	374		$	418		$	367		$	158		$	289		$	(885	)	$	220
Operating expenses	$	878		$	1,119		$	1,441		$	1,450		$	1,160		$	1,072		$	1,769		$	1,403
Operating loss	$	(878	)	$	(745	)	$	(1,022	)	$	(1,083	)	$	(1,002	)	$	(783	)	$	(2,654	)	$	(1,183	)
Net loss	$	(1,208	)	$	(1,508	)	$	(4,059	)	$	(2,059	)	$	(6,767	)	$	(1,354	)	$	(3,316	)	$	(1,886	)
Basic and diluted loss per share	$	(0.16	)	$	(0.09	)	$	(0.23	)	$	(0.12	)	$	(0.38	)	$	(0.07	)	$	(0.16	)	$	(0.08	)

F-29

WILSON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(16) Subsequent Events

In October 2007 the Company amended its four notes payable, seller financed, that serve a part of the purchase of 534 acres in Travis County described above. The notes payable maturity date has been extended to October 12, 2011. The terms of the notes payable now call for quarterly interest payments commencing October 12, 2007 and principal payments of $1.4 million in October 2010 and $1.1 million due in October 2011.

The Company is currently considering refinancing some of its land and land development loans.

F-30

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