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

We are a real estate development and homebuilding company. We commenced our homebuilding operations in June 2007 with the purchase of Green Builders, Inc. We build energy efficient homes in Austin, Texas and we make it a priority to fully utilize sustainable building practices and to use earth-friendly products and materials.

From late 2007 through March 31, 2009 our business has been significantly impacted by the continued deterioration of the real estate and homebuilding industry. Although central Texas has been less affected than other areas, national real estate trends and global economic conditions have had a significant impact on home buyers and lenders and we believe that sales of new homes in our market may continue to decline in fiscal 2009. We believe this slowdown is attributable to a decline in consumer confidence, the inability of some buyers to sell their current homes and the direct and indirect impact of the well-publicized turmoil in the mortgage and credit markets.

In June 2007 we purchased Green Builders, Inc. and commenced our homebuilding operations under that name. Our strategy is to build homes that are environmentally responsible, resource efficient and consistent with local style. Substantially all of our construction work is performed by subcontractors who are retained for specific subdivisions pursuant to contracts entered in. We intend to build homes on some of the lots we currently have completed and sell those as finished homes as well as continue to sell lots to other builders. We are currently exploring options with other developers to enter into agreements that would give us the option to purchase additional finished lots in the future. In November 2008 we updated our homebuilding services to include "build on your lot". "Build on your lot" allows customers to build our existing plans on lots that they own.

Prior to our acquisition of Green Builders, we were solely focused on the acquisition of undeveloped land that we believed, based on our research of population growth patterns and infrastructure development, was strategically located. We have funded these acquisitions primarily with bank debt and cash we raised from financing activities. We currently have completed 220 lots in Georgetown Village, 105 lots in Elm Grove and 58 lots in Rutherford West. This portion of our business focus has required the majority of our financial resources. Due to the continued deterioration of the homebuilding industry and based on our current liquidity, we are currently in negotiations to dispose of some of our land positions including but not limited to deed in lieu of foreclosure of these assets.

In tandem with our land acquisition efforts and based upon our strategic market analysis, we also prepare land for homebuilding. A focus of our business had been the sale of developed lots to homebuilders, including national homebuilders. Due to deteriorating conditions in the homebuilding industry both nationally and to a lesser extent locally, during the second quarter of 2007 and continuing through March 31, 2009, demand for finished lots by national homebuilders is, and we expect will continue to be, significantly reduced. As a result, orders placed for some of our finished lots were cancelled. We elected to retain some of our lots for use in our homebuilding business. We believe that retaining some of our lots for use in homebuilding activities will allow us to generate homebuilding revenue to replace some of the revenue from the loss of sales of these finished lots. We will continue to pursue lot sales contracts with both national and regional builders.

In November 2008 we expanded our services to include "green" remodeling of existing homes. We have taken a comprehensive approach to engaging in the green remodeling business and offer customers a "one-stop" process for updating their existing home with a focus on energy efficiency. Our green remodeling program currently caters to existing homeowners in the Austin, Texas area who want to reduce home energy demands and utility bills, lessen home maintenance costs and increase the comfort of their home. Initially we anticipate that substantially all of our construction work will be performed by subcontractors. By subcontracting out the work, there is limited additional capital required to enter this business line. We also feel that entering into remodeling will help us supplement revenue during this slowdown in the real estate industry. To date we have received some energy audit requests and are reviewing the results and discussing the next steps with our customers. At March 31, 2009 we had approximately $340,000 in backlog for a signed contract for future remodeling contract work.

Results of Operations

Comparison of Three Months Ended March 31, 2009 and 2008

                                            Three Months       Three Months
                                            Ended March        Ended March
                                              31, 2009           31, 2008          Change         Change %
Revenues
Homebuilding and related services
revenues                                   $    3,145,323     $      484,511     $ 2,660,812            549 %
Land revenues                                      47,000            657,036        (610,036 )          -93 %
Remodeling revenues                                   270                  -             270            n/a
Gross Profit
Homebuilding and related services gross
profit                                            470,846             78,953         391,893            496 %
Land gross profit                                  14,310            434,552        (420,242 )          -97 %
Remodeling gross profit                               (30 )                -             (30 )          n/a
Inventory impairments and land option
cost write-offs                                   (11,000 )                -         (11,000 )          n/a
Costs & Expenses
Operating expenses                                894,263          1,450,493        (556,230 )          -38 %
Operating Loss                                   (420,137 )         (936,988 )       516,851            -55 %
Net Loss                                   $   (1,406,554 )   $   (1,645,662 )   $   239,108            -15 %




                                             Six Months         Six Months
                                            Ended March        Ended March
                                              31, 2009           31, 2008           Change         Change %
Revenues
Homebuilding and related services
revenues                                   $    7,381,773     $      484,511     $  6,897,262           1424 %
Land revenues                                     393,146          1,765,348       (1,372,202 )          -78 %
Remodeling revenues                                   540                  -              540            n/a
Gross Profit
Homebuilding and related services gross
profit                                            945,041             78,953          866,088           1097 %
Land gross profit                                  88,224            833,809         (745,585 )          -89 %
Remodeling gross profit                              (360 )                -             (360 )          n/a
Inventory impairments and land option
cost write-offs                                   (22,900 )                -          (22,900 )          n/a
Costs & Expenses
Operating expenses                              2,206,466          3,386,506       (1,180,040 )          -35 %
Operating Loss                                 (1,196,461 )       (2,473,744 )      1,277,283            -52 %
Net Loss                                   $   (3,067,657 )   $   (4,002,800 )   $    935,143            -23 %

Homebuilding and Related Services Revenues

Background - Homebuilding and related services revenue consists of revenue from home sales. Prior to fiscal 2008, all home sales were generated by our homebuilder customers utilizing our homebuilder services. In June 2007 we acquired Green Builders, Inc and commenced our homebuilding activities. We sell homes in the Austin, Texas area for prices ranging from $170,000 to $550,000. For the three months ended March 31, 2009 we had sixteen home sales and four cancellations for a total of twelve net sales. We had twelve home closings. Revenue is not recognized on the sale of a home until closing.. At March 31, 2009, we had four speculative units, seven completed models, and 17 units in backlog. Backlog is defined as homes under contract but not yet delivered to our home buyers. We believe that the turmoil in the mortgage market combined with national publicity of significantly deteriorating general and economic conditions has caused a lack of urgency for buyers. We expect that they will continue to be slow throughout fiscal 2009. In accordance with these anticipated market conditions, our strategy is to build a limited number of speculative units per community and build the majority of our homes after a contract is entered into with a homebuyer.

Revenues - During the three months ended March 31, 2009, home sales accounted for approximately 99% of revenues. For the three months ended March 31, 2009 there were twelve home closings at an average sales price of $262,000. During the three months ended March 31, 2008 we had two home closings at an average sales price of $242,000.

Gross Profit - Gross profit percentage before impairments was 15% for the three months ended March 31, 2009. During the quarter we reviewed our homebuilding inventory for impairments. We determined that we had $11,000 in impairments on speculative units. The impairment analysis for each of our communities generally assumed that sales prices in future periods would be equal to current sold unit's prices.

Land and Land Development

Background - Land sales revenue consists of revenues from the sale of undeveloped land and developed lots. Developing finished lots from raw land takes approximately one to three years. In response to the slowdown in the national housing market and the reduction in demand for finished lots, we changed our strategy and have elected to use some of our developed lots for our own homebuilding operations. We may still sell our lots to national, regional and local homebuilders that may purchase anywhere from five to one hundred or more lots at a time. The delivery of these lots would likely be scheduled over periods of several months or years.

Revenues - Revenues from the sale of land decreased by 93% during the three months ended March 31, 2009 compared to the three months ended March 31, 2008. During the three months ended March 31, 2009 we closed one finished lot as compared to thirteen finished lots for the three months ended March 31, 2008. The decrease in revenues in 2009 was due to the cancellation of lot sales contracts from regional and local homebuilders during the last twelve months.

Gross Profit - Gross profit as a percentage of revenues decreased for the three months ended March 31, 2009 compared to the same period in 2008. The decrease in margin percentage is due to a $240,000 refund of previously written off refunds of Living Unit Equivalent (LUE) fees from the Bohl's Tract. Gross profit percentage excluding the refund of LUE fees was 30% for the three months ended March 31, 2009 and 2008.

General and Administrative Expenses

                                           Three Months      Three Months
                                            Ended March       Ended March
Breakdown of G&A Expenses                    31, 2009          31, 2008          Change        Change %
Salaries, benefits, payroll taxes and
related emp. exps.                         $     226,523     $     375,230     $ (148,707 )          -40 %
Stock compensation expense                        36,523            35,935            588              2 %
Legal, accounting, auditing,
consultants, and investor relations               86,311           269,840       (183,529 )          -68 %
General overhead, including office
expenses, insurance, and travel                  111,160           208,985        (97,825 )          -47 %
Restructuring expenses                            13,040                 -         13,040            n/a
Amortization of subordinated debt costs
and transaction costs                             59,253            59,253              -              0 %
Total G&A                                  $     532,810     $     949,243     $ (416,433 )          -44 %



                                             Six Months         Six Months
                                            Ended March        Ended March
Breakdown of G&A Expenses                     31, 2009           31, 2008           Change         Change %
Salaries, benefits, payroll taxes and
related emp. exps.                         $      510,486     $      877,979     $   (367,493 )          -42 %
Stock compensation expense                         78,809            675,635         (596,826 )          -88 %
Legal, accounting, auditing,
consultants, and investor relations               209,032            494,646         (285,614 )          -58 %
General overhead, including office
expenses, insurance, and travel                   251,740            463,191         (211,451 )          -46 %
Restructuring expenses                            182,526                  -          182,526            n/a
Amortization of subordinated debt costs
and transaction costs                             118,506            118,506                -              0 %
Total G&A                                  $    1,351,099     $    2,629,957     $ (1,278,858 )          -49 %

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 three months ended March 31, 2009 and 2008, salaries, benefits, taxes and related employee expenses totaled approximately $227,000 and $375,000, respectively, and represented approximately 43% and 40%, respectively, of total general and administrative expenses for the periods. The decrease for the year is due to a decrease in headcount from an average of 18 employees during the three months ended March 31, 2008 to an average of 8 employees during the three months ended March 31, 2009

Legal, accounting, audit, consulting and investor relation expense totaled $86,000 and $270,000 for the three months ended March 31, 2009 and 2008, respectively. General overhead, including office expenses, insurance, and travel totaled $111,000 and $209,000 for the three months ended March 31, 2009 and 2008, respectively. The decrease in these general and administrative costs resulted from our initiative to control costs.

Restructuring expenses relates to expenses incurred to restructure our debt agreement with Graham Mortgage Capital and our syndicate of banks. In the prior year we incurred no expenses for restructuring.

Sales and Marketing Expenses

Sales and marketing expenses include selling costs, commissions, salaries and
related taxes and benefits, finished inventory maintenance and property tax
expense, marketing activities including websites, brochures, catalogs, signage,
and billboards, and market research, all of which benefit our corporate presence
and are not included as homebuilding cost of sales. The increase was due to an
increase in commissions and closing costs due to an increase in homebuilding
revenue for the three months ended March 31, 2009.

Interest Expense and Income

                                                Three Months      Three Months
                                                 Ended March       Ended March
                                                  31, 2009          31, 2008         Change        Change %
Interest expense - convertible debt             $     206,250     $     214,689        (8,439 )           -4 %
Interest discount expense - convertible debt          139,587           139,587             -              0 %
Interest expense - land and development loans         653,567           420,161       233,406             56 %
Interest income and misc income                       (12,987 )         (65,763 )      52,776            -80 %
Total interest and other expense and income     $     986,417     $     708,674       277,743             39 %



                                                  Six Months         Six Months
                                                 Ended March        Ended March
                                                   31, 2009           31, 2008         Change        Change %
Interest expense - convertible debt             $      412,500     $      420,939        (8,439 )           -2 %
Interest discount expense - convertible debt           279,174            279,174             -              0 %
Interest expense - land and development loans        1,290,352            987,901       302,451             31 %
Interest income and misc income                       (110,830 )         (158,958 )      48,128            -30 %
Total interest and other expense and income     $    1,871,196     $    1,529,056       342,140             22 %

Interest expense for land and development loans increased by approximately $233,000 for the three months ended March 31, 2009 over the same period in 2008. The increase is primarily attributable to expense of interest expense for property not under development and an increase in interest expense for Rutherford West and New Sweden property due to the increase in interest rate from 12.5% to 14%.

Financial Condition and Capital Resources

Liquidity

On March 31, 2009 we had $1.4 million in cash and cash equivalents. We will need to raise additional cash to continue our business, whether through the sale of debt, equity, or combination thereof or through the sale of certain of our assets.

On June 29, 2007, WFC entered into a $55 million revolving credit facility (the "Credit Facility") with a syndicate of banks led by RBC Bank (formerly RBC Centura Bank), as administrative agent pursuant to a Borrowing Base Loan Agreement ("the Loan Agreement"). IBC Bank and Franklin Bank, S.S.B. ("Franklin Bank") are the other two banks that make up the syndicate of banks. The Credit Facility was reduced to $30 million in June 2008. The initial maturity date for the Credit Facility was June 29, 2008. We entered into an agreement to extend the maturity date to October 1, 2008. On October 1, 2008, the Credit Facility expired pursuant to its terms. Although we are currently out of compliance with certain covenants set forth in the Borrowing Base Agreement under the Loan Agreement, the syndicate of banks has continued to make amounts available to WFC pursuant to the Loan Agreement for loans made prior to the expiration of the facility. We were notified on November 7, 2008 that Franklin Bank was closed by the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation (the "FDIC") was named Receiver.

Green Builders has guaranteed the obligations of WFC under the Credit Facility. 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 by us and the agent. Our obligations under the Credit Facility are secured by the assets of each subdivision that was to be developed with the proceeds of loans available under the Credit Facility.

Outstanding borrowings under the Credit Facility bear interest at the prime rate plus 0.25%, with a floor of 5.5%. We are charged a letter of credit fee equal to 1.10% of each letter of credit issued under the Credit Facility. We may elect to prepay the Credit Facility at any time without premium or penalty. Quarterly principal reductions are required during the final 12 months of the term.

The Credit Facility contains customary covenants limiting our ability to take certain actions. At March 31, 2009, we were not in compliance with the terms of the Borrowing Base Agreement under the Credit Facility. We were not in compliance with the tangible net worth, the ratio of debt to equity, working capital, number of completed speculative homes and number of land and developed lot loans covenants. On May 14, 2009 we entered into a Fourth Agreement to Modify Loan Documents ("Modification"). See Part I, Item 1, "Financial Statements, Footnote 12" and Part II, Item 5, "Other Information" for a description of the modification.

In March 2009 we entered into an agreement with LNZCO that LNZCO will provide between $1 and $2 million in financing for the construction of single family residences. Each promissory note bears interest at a rate of prime plus 5.0%, has a one point origination fee, and matures in one year. The loan for each residence is 65% of the sales price of the associated improved property.

Our growth will require substantial amounts of cash for earnest money deposits, development costs, interest payments and homebuilding costs. Until we begin to sell an adequate number of lots and homes to cover our monthly operating expenses, our sales, marketing, general and administrative costs will deplete cash. Due to current market conditions and slow home and land sales, we will need to obtain additional capital. We are currently in negotiations to dispose of some of our current land positions, but there is no assurance that we will be successful in selling these land positions at an acceptable price or at all. If we are not able to sell the New Sweden and Rutherford West tracts of land by December 31, 2009 we will deed in lieu of foreclosure the land back to our lender In addition we are seeking additional capital in the form of debt or equity to support future growth and current operations. We do not have sufficient cash to continue operations for the next twelve months. We will need to raise additional cash to continue our business, whether through the sale of debt, equity, or combination thereof or through the sale of certain of our assets.

Capital Resources

We have raised approximately $16.5 million of subordinated convertible debt, and approximately $14 million in a public offering of our common stock completed in May 2007. We entered into a $55 million revolving Credit Facility that was reduced to $30 million in June 2008. On October 1, 2008, the Credit Facility expired pursuant to its terms. Although we are currently out of compliance with certain covenants set forth in the Borrowing Base Agreement under the Loan Agreement, RBC and IBC have continued to make amounts available to WFC pursuant to the Loan Agreement for loans made prior to the expiration of the facility. We were notified on November 7, 2008 that Franklin Bank was closed by the Texas Department of Savings and Mortgage Lending and the FDIC was named receiver. We evaluate the financial stability of the remaining syndicate banks making up the Credit Facility and believe the remaining banks have the ability to satisfy their obligations under the Credit Facility. On May 14, 2009 we entered into a Fourth Agreement to Modify Loan Documents ("Modification"). See Part I, Item 1, "Financial Statements, Footnote 12" and Part II, Item 5, "Other Information" for a description of the modification.

In March 2009 we entered into an agreement with LNZCO to provide up to $2 million in financing for homebuilding construction.

Land and homes under construction comprise the majority of our assets. These assets have suffered devaluation due to the downturn in the housing and real estate market for central Texas. We are considering selling tracts of commercial and residential land in order to increase sales revenues and increase cash. We are also in negotiations to deed in lieu of foreclosure some of our land positions. We expect that we will incur losses in 2009. Due to current market conditions and slow home and land sales, we anticipate that we will need additional capital to support operations for the next twelve months.

Off-Balance Sheet Arrangements

As of March 31, 2009, 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.

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, homebuilding costs, interest and real estate taxes incurred during development and construction phases.

Revenue Recognition

. . .