What changed in this filing

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Item 1. Business

2024-03-26 compared with 2023-03-28 · 220 added, 268 removed, 304 unchanged (62% of the section changed)

Looking Statements

Annual Report on Form 10-K, including any information incorporated by reference, contains forward-looking statements within the meaning

of Section 27A of the Securities Act of 1933, as amended, referred to as the Securities Act, and Section 21E of the Securities

Exchange Act of 1934, as amended, referred to as the Exchange Act.

These forward-looking statements involve risks and uncertainties

that are based on current expectations, estimates and projections about the Companys business, and beliefs and assumptions made

by management.

Words such as expects, anticipates, intends, plans, believes,

seeks, estimates, predicts, potential, should, or will or the

negative thereof and variations of such words and similar expressions are intended to identify such forward-looking statements.

actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous

factors, including, but not limited to:

availability of financing for growth, availability of adequate supply of high quality grapes,

successful performance of internal operations, impact of competition, changes in wine broker or distributor relations or performance,

impact of possible adverse weather conditions, impact of reduction in grape quality or supply due to disease or smoke from forest fires,

changes in consumer spending.

In addition, such statements could be affected by general industry and market conditions and growth rates,

and general domestic economic conditions.

of these risks as well as other risks that may have a material adverse impact on our operations and business, are identified in Item

1A Risk Factors in this Annual Report on Form 10-K.

We urge you to carefully review the disclosures we make concerning risks

and other factors that may affect our business and operations.

The forward-looking statements in this report are made as of the date

hereof, and, except as otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking

statements or to update the reasons why the actual results could differ materially from those projected in the forward-looking statements,

whether as a result of new information, future events or otherwise.

– The Company was formed in May 1988 to produce and sell premium, super premium and ultra-premium varietals.

The Company was

originally established as a sole proprietorship by Oregon winegrower Jim Bernau in 1983.

The Company is headquartered in Turner, Oregon,

which is just south of the state capitol of Salem, Oregon.

The Companys wines are made from grapes grown in vineyards owned, leased

or contracted by the Company, and from grapes purchased from other vineyards.

The grapes are harvested, fermented and made into wine

primarily at the Companys winery in Turner, Oregon (the Estate Winery or Winery) and the wines are sold

principally under the Companys Willamette Valley Vineyards label, but also under the Domaine Willamette, Griffin Creek, Tualatin

Estate, Pambrun, Maison Bleue, Natoma, Metis, Pere Ami and Elton labels.

The Company also owns the Tualatin Estate Vineyards and Winery,

located near Forest Grove, Oregon (the Tualatin Winery).

– The Company has identified two operating segments, direct sales and distributor sales, based upon their different distribution

– The Company was incorporated in May 1988 to produce and sell premium, super premium and ultra-premium varietals.

was originally established as a sole proprietorship by Oregon winegrower Jim Bernau in 1983.

The Company is headquartered in Turner,

Oregon, which is just south of the state capitol of Salem, Oregon.

The Companys wines are made from grapes grown in vineyards

owned, leased or contracted by the Company, and from grapes purchased from other vineyards.

The grapes are harvested, fermented and made

into wine primarily at the Companys winery in Turner, Oregon (the Estate Winery or Winery) and the

wines are sold principally under the Companys Willamette Valley Vineyards label, but also under the Domaine Willamette, Griffin

Creek, Tualatin Estate, Pambrun, Maison Bleue, Natoma, Metis, Pere Ami and Elton labels.

The Company also owns the Tualatin Estate Vineyards

and Winery, located near Forest Grove, Oregon (the Tualatin Winery).

– The Company has identified two operating segments:

direct sales and distributor sales, based upon their different distribution

channels, margins and selling strategies.

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Under its Willamette Valley Vineyards label, the Company produces and sells the following types of wine in 750 ml bottles:

Pinot Noir, the brands flagship and its largest selling varietal in 2022, $24 to $100 per bottle;

the brands flagship and its largest selling varietal, $30 to $120 per bottle;

Chardonnay, $28 to $60 per bottle;

Pinot Gris, $18 per bottle;

Pinot Gris, $24

Pinot Blanc, $30 per bottle;

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Gruner Veltliner, $39 per bottle;

to $25 per bottle;

Brut, $50 to $65 per bottle;

Brut Rose, $65, and Riesling, $14 per bottle (all bottle prices included herein are the

suggested retail prices).

The Companys mission for this brand is to become the premier producer of Pinot Noir in the Pacific Northwest.

Rose, $27 to $32 per bottle ;

$75 per bottle;

Brut Rose, $75 per bottle;

and Riesling, $19 per bottle (all bottle prices included

herein are the suggested retail prices).

The Companys mission for this brand is to become the premier producer of Pinot Noir in

the Pacific Northwest.

its Domaine Willamette label, the Company produces and sells the following types of wine in 750 ml bottles:

Brut, $75 per bottle;

Blanc de Blancs, $85.

This brands mission is to be the highest quality producer of Sparkling Wines in Oregon.

its Tualatin Estate Vineyards label, the Company currently produces and sells the following type of wine in 750 ml bottles:

Semi-Sparkling

Muscat, $22 per bottle.

Rose, $75 per bottle;

and Blanc de Blancs, $115 per bottle.

This brands mission is to be the highest quality producer of Sparkling

Wines in Oregon.

its Tualatin Estate Vineyards label, the Company currently produces and sells 750 ml bottles of Semi-Sparkling Muscat, $28 per bottle.

its Griffin Creek label, the Company produces and sells the following types of wine in 750 ml bottles:

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its Elton label, the Company produces and sells the following types of wine in 750 ml bottles:

Pinot Noir, $75 per bottle and Chardonnay,

Pinot Noir, $79 per bottle;

and Chardonnay,

$79 per bottle.

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Bourgeois Grenache, $55 per bottle;

and Voltigeur Viognier, $40

per bottle and Lisette Rose, $30 per bottle.

Voltigeur Viognier, $45 per

and Lisette Rose, $34 per bottle.

Company holds U.S.

federal and/or Oregon state trademark registrations for the trademarks material to the business, including but not

limited to, WILLAMETTE VALLEY VINEYARDS, DOMAINE WILLAMETTE, OREGONS LANDMARK WINERY, GRIFFIN CREEK, GRIFFIN, ELTON, WILLAMETTE,

SAVE, WHOLE CLUSTER, GIVE YOUR WHOLE HEART WITH WILLAMETTE WHOLE CLUSTER, OREGON BLOSSOM, NOG, OREGON NOG, INGRAM ESTATE, ITS

WILLAMETTE, DAMMIT, FULLER, TUALATIN, TUALATIN ESTATE, MAISON BLEUE WINERY, MÉTIS, OBRIEN, EAGLES CLUTCH, WILLAMETTE

WINEWORKS, JORY CLAIM, COTE DU BLEUE, PÈRE AMI, KAYAK, DAEDALUS and NATOMA marks.

Additionally, the Company has allowed use on

PAMBRUN and PIERRE PAMBRUN and PINOT BLACK.

overview – The United States wine industry has seen a rapid increase in wineries established nationwide.

The United States

wine industry added 400 new wineries in 2022, a 3% increase from 2021, according to Wine Analytics Report .

From 2009 to 2021,

wineries grew from 6,357 to 11,053, according to Statista, and consequently can be considered one of the fastest-growing segments

in agriculture.

The total retail value of wine sales has increased from $26.3 billion in 2000 to $78.4 billion in 2021, according to

According to the report, the U.S.

value of direct-to-consumer wine shipments grew by 13.4 percent during 2021.

Total wine consumption

in the United States has also grown 46 percent since 2005.

Additionally, 1.1 Billion gallons of wine were consumed in 2021, an increase

of 413 million from 2005 (Statista).

Wine consumption has been increasing in the United States, as since 2005, the average annual consumption

resident has increased by 33 percent to a high of 3.18 gallons in 2021.

to Statista revenue in the U.S.

wine market is worth $56.65 billion as of 2023, up 7.5% from the prior year, and is expected to grow

annually by 5.85% through 2027.

Wine Grand View Research in their report believes millennials and younger generations drive this increase

as wine consumption has become a sign of social status.

In addition, Wine Grand View Research believe innovations in flavors, color,

and packaging have also contributed to the growth.

to Wine Intelligence Ltd., the total wine-drinking population in the U.S.

increased to a record high of 118 million in 2019, an increase

of 8 million people drinking wine at least once a year compared with 2015.

However, according to this same report the number of consumers

drinking wine at least once a month declined by 11 million over that same time.

Wine Intelligence reports in that this trend is driven

by 21-34 year olds who are moderating consumption and switching to other beverages.

Yet, Wine Intelligence found that Millennials

who remain regular wine drinkers, say they are more highly involved, adventurous and higher spending wine drinkers than more mature

consumers. According to the Wine Market Council of U.S.

wine consumers in 2022, 54% were female and 42% male, with 34% drinking

wine more than once a week.

Further, domestic wine accounted for 66.9% of U.S.

sales in 2019, according to a Wines & Vines Analytics.

Within the total wine market, the five most popular wines in 2022 were cabernet sauvignon, chardonnay, red blends, pinot gris, and pinot

noir, according to Nielsen.

2021, off-premise sales accounted for roughly 80% of the U.S.

market, with an average bottle price of $12.05, according to Grand View

Research and Statista.

In addition, a Sovos ShipCompliant and Wines Vines Analytics report from 2022 shows direct-to-consumer wine shipments

remained consistent with 2021 at 12% of the total off-premise wine market in the U.S.

However, according to this report the average price

per bottle within these shipments increased by 9.7% in 2022 versus the prior year, up to $45.16.

Pinot Noir was the second most-shipped

varietal during the year.

summary, we believe the wine industry is on a solid trajectory and continues to grow.

Overall, we believe the industry is expected to

stabilize in 2023 at the current levels.

However, of concern, consumption growth is mainly amongst those over 60 years old, with

the most significant growth area among 70-80-year-olds.

Consequently, we believe future positive sales and growth will depend on the

industry targeting younger consumers.

According to the State of the Wine Industry 2023 by Rob McMillan, younger wine consumers are not

limited by cost;

instead, they seek something enticing to draw them in to learn more about wine, including but not limited to health,

sustainability, social values, and transparent labeling,

Willamette, Willamette Valley Vineyards, WVV, Domaine Willamette, Willamette Whiskey, Willamette+, Whole Cluster, Give Your

Whole Heart with Willamette Whole Cluster, Daedalus Cellars, Elton, Griffin, Griffin Creek, Ingram Estate, Its Willamette, Dammit!,

Jory Claim, Pambrun, Pambrun Cross Logo, SIP.

SAVE., Made in Oregon Cellars, Heart Vine, Camp Willamette, Natoma, Salem Hills, Oregon

Blossom, Oregons Landmark Winery, Oregons Nog, Club Willamette, Eagles Clutch, Kayak, W and Circle Design and W

Willamette Valley Vineyards and Circle Design, Fuller, Maison Bleue Winery, Métis, Willamette Wineworks, Tualatin Estate, Tualatin,

Natoma, Côte du Bleue and Père Ami.

overview – The United States wine industry has seen a rapid increase in wineries established

The United States wine industry added 400 new wineries in 2022, a 3% increase from 2021, according to Wine Analytics Report .

From 2009 to 2021, the number of U.S.

wineries grew from 6,357 to 11,053, according to Statista, and consequently the wine industry can

be considered one of the fastest-growing segments in agriculture.

According to Wine Business Monthly’s

February 2024 report, the number of US active wineries in 2023 stood at 11,620, showing a 1% decrease compared to the peak in 2022.

total retail value of wine sales has increased from $26.3 billion in 2000 to $78.4 billion in 2021, according to Statista.

Additionally,

1.1 billion gallons of wine were consumed in 2021, an increase of 413 million from 2005 (Statista).

This growth rate has recently slowed and according

to Silicon Valley Bank’s 2024 annual report premium wineries faced a challenging landscape in 2023.

According to this report, while

the value of premium wine continued to grow, volume sales were anticipated to finish lower for the year.

Additionally, direct-to-consumer

volume and value sales declined and tasting room visitation dropped for the second consecutive year and consumer demand for the overall

wine category continued its decline, with fewer U.S.

consumers opting for wine and choosing alternatives such as ready-to-drink beverages,

spirits, cannabis, or abstaining altogether.

A 2023 study conducted by the Wine

Market Council of 1,500 U.S.

consumers identified a significant downward trend in wine consumption attributed to a general reduction

in alcohol consumption, primarily for health reasons.

Previously considered a “healthy” option on the Healthy Eating Pyramid,

alcohol consumption is now cautioned against by organizations like the World Health Organization.

we believe the industry is expected to stabilize in 2024 around the current levels.

However, of concern, consumption growth is mainly

amongst those over 60 years old, with the most significant growth area among 70-80-year-olds.

Consequently, we believe future positive

sales and growth will depend on the industry targeting younger consumers.

According to the State of the Wine Industry 2023 by Rob McMillan,

younger wine consumers are not limited by cost;

instead, they seek something enticing to draw them in to learn more about wine, including

but not limited to health, sustainability, social values, and transparent labeling,

Companys Board of Directors and management believe the winerys focus on integrity in winemaking, small scale, storied estate

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were harvested.

Oregon wine grapes produced a 2021 crop with a total value of $271 million, an increase of 72% from 2020 primarily due

to a more normal fruit set compared to the preceding 2020 harvest according to UOIPRE.

Pinot Noir leads all varieties accounting for

60% of planted acreage and 61% of production.

According to UOIPRE, Oregon case sales in 2021 were 5.3 million, which was a 13% increase

UOIPRE reported case sales in dollars for 2021 were approximately $844 million, a 21% increase from 2020.

Oregon wine grapes produced a 2022 crop with a total value of $330 million, an increase of 22% from 2021.

leads all varieties accounting for 71% of planted acreage and 67% of production.

According to UOIPRE, Oregon case sales in 2022 were

5.7 million, an 8% increase from 2021.

of climate, soil and other growing conditions, we believe the Willamette Valley in western Oregon is ideally suited to growing superior

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have developed outstanding reputations, winning numerous national and international awards.

does have certain disadvantages as a wine-producing region.

Oregon has certain disadvantages as a wine-producing region.

Oregons wines are lesser known to consumers worldwide, and the total

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phylloxera, an aphid-like insect that feeds on the roots of grapevines, has been found in several commercial vineyards in Oregon.

to the California experience, most Oregon phylloxera infestations have expanded very slowly and done only minimal damage.

to the California experience, most Oregon phylloxera infestations have expanded very slowly and have done only minimal damage.

Nevertheless,

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of phylloxera to other vineyards.

a result of these factors, subject to the risks and uncertainties identified in this Annual Report, the Company believes that long-term

prospects for growth in the Oregon wine industry are excellent.

The Company believes that over the next several years the Oregon wine

industry will grow at a faster rate than the overall domestic wine industry, and that much of this growth will favor producers of premium,

super premium and ultra-premium wines such as the Companys Estate, Elton, Domaine Willamette, Pambrun, Maison Bleue and Griffin

Creek brands.

a result of these factors, subject to the risks and uncertainties identified in this Annual Report on Form 10-K, the Company believes

that long-term prospects for growth in the Oregon wine industry are good.

The Company believes that over the next several years,

the Oregon wine industry will grow at a faster rate than the overall domestic wine industry, and that much of this growth will favor

producers of premium, super premium and ultra-premium wines such as the Companys Estate, Elton, Domaine Willamette, Pambrun, Maison

Bleue and Griffin Creek brands.

Company, one of the largest wine producers in Oregon by volume, believes its success is dependent upon its ability to:

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and (5) continue to build on its base of direct to consumer sales.

The Companys goal is to continue to build on a reputation

for producing some of Oregons finest, most sought-after wines.

The Companys goal is to continue to build on a

reputation for producing some of Oregons finest, most sought-after wines.

upon several highly regarded surveys of the U.S.

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remain competitive in the premium, super premium and ultra-premium market, the Company has embarked on a brand expansion project including

developing a brand and winery in the Walla Walla AVA under the names Pambrun, Maison Bleue and Metis.

This future winery is expected

to produce small vintages of Cabernet Sauvignon and other Bordeaux-varietals, under the Pambrun brand, and Syrah and other Rhone-varietals,

under the Maison Bleue brand, to compete in the ultra-premium wine market.

The Company has released wines under the Pambrun label beginning

with the 2015 vintage year and Maison Bleue label beginning with the 2016 vintage.

Additionally, the Company has developed a single vineyard

brand near Hopewell, Oregon adjacent to the current site of Elton Vineyards to produce wine under the Elton label.

This brand produces

primarily Pinot Noir and Chardonnay, also for sale in the ultra-premium space.

The Company has released wines under the Elton label beginning

with the 2015 vintage year.

In 2020, the Company opened a microwinery featuring wine tasting and a custom blending experience under the

name Willamette Wineworks, in historic Folsom, California, and began selling wine under the brand name Natoma.

In 2022, the Company has

opened a sparkling wine facility and tasting room called Domaine Willamette, at Bernau Estate that features the Companys sparkling

wines, as well as its other reserve wines, and its biodynamic farming practices.

Company owns and leases approximately 1,018 acres of land, of which 801 acres are currently planted as vineyards or is suitable for future

vineyard planting.

The vineyards the Company owns and leases are all certified sustainable by LIVE (Low Input Viticulture and Enology)

and Salmon Safe.

At full production, the Company anticipates these vineyards would enable the Company to grow approximately 72% of the

grapes needed to meet the winerys current production capacity, of 654,000 gallons (275,000 cases), at its Estate Winery.

developing a brand and winery in the Walla Walla American Viticultural Area (AVA) under the names Pambrun, Maison Bleue

This future winery is expected to produce small vintages of Cabernet Sauvignon and other Bordeaux-varietals, under the Pambrun

brand, and Syrah and other Rhone-varietals, under the Maison Bleue brand, to compete in the ultra-premium wine market.

The Company has

released wines under the Pambrun label beginning with the 2015 vintage year and Maison Bleue label beginning with the 2016 vintage.

Additionally,

the Company has developed a single vineyard brand near Hopewell, Oregon adjacent to the current site of Elton Vineyards to produce wine

under the Elton label.

This brand produces primarily Pinot Noir and Chardonnay, also for sale in the ultra-premium space.

has released wines under the Elton label beginning with the 2015 vintage year.

In 2020, the Company opened a microwinery featuring wine

tasting and a custom blending experience under the name Willamette Wineworks, in historic Folsom, California, and began selling wine

under the brand name Natoma.

In 2022, the Company opened a sparkling wine facility and tasting room called Domaine Willamette, at Bernau

Estate that features the Companys sparkling wines, as well as its other reserve wines, and its biodynamic farming practices.

Company owns and leases approximately 1,018 acres of land, of which 801 acres are either currently planted as vineyards or are suitable

for future vineyard planting.

The vineyards the Company owns and leases are all certified sustainable by LIVE (Low Input Viticulture

and Enology) and Salmon Safe.

At full production, the Company anticipates these vineyards would enable the Company to grow approximately

73% of the grapes needed to meet the winerys current production capacity of 654,000 gallons (275,000 cases) at its Estate Winery.

following table summarizes the Companys acreage:

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acreage is estimated

Estate – Established in 1983, the Companys Estate Vineyard (the Estate Vineyard) is located at the

Winery location south of Salem, near Turner, Oregon.

The Estate Vineyard uses an elaborate trellis design known as the Geneva Double

The Company has incurred the additional expense of constructing this trellis because it doubles the number of canes upon

which grape clusters grow and spreads these canes for additional solar exposure and air circulation.

Research and practical

applications of this trellis design indicate that it should improve grape quality through smaller clusters and berries over

traditional designs.

Estate – Established in 1983, the Companys Estate Vineyard (the Estate Vineyard) is located at the Winery

location south of Salem, near Turner, Oregon.

The Estate Vineyard uses an elaborate trellis design known as the Geneva Double Curtain.

The Company has incurred the additional expense of constructing this trellis because it doubles the number of canes upon which grape

clusters grow and spreads these canes for additional solar exposure and air circulation.

Research and practical applications of this

trellis design indicate that it should improve grape quality through smaller clusters and berries over traditional designs.

Estate Vineyard – Established in 1973 at the Tualatin Winery location near Forest Grove, Oregon, the Companys Tualatin

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Estate – The Company purchased approximately 17 acres in Dundee, Oregon in January 2017 comprised of 13 acres of producing

Additionally, the Company added 3 acres through a lot line adjustment to add to the parcel.

Additionally, the Company added three acres through a lot line adjustment to add to the parcel.

The Company leases 17 adjoining

Vineyard – The Company purchased 40 acres in Dayton, Oregon in December 2016.

The Company intends to plant vineyards and construct

a new winery at this location.

Vineyard – The Company purchased 36 acres in January 2018.

The Company intends to plant vineyards at this

Vineyard – The Company purchased 36 acres in Lafayette, Oregon in January 2018.

The Company intends to plant vineyards at this

Claim Vineyard – The Company purchased 69 acres south of Salem, Oregon in 2019.

Vines – Beginning in 1997, the Company embarked on a major effort to improve the quality of its flagship varietal by planting new

Pinot Noir clones that originated directly from the cool climate growing region of Burgundy rather than the previous source, Napa, California,

where winemakers believe the variety adapted to the warmer climate over the many years it was grown there.

new French clones are called Dijon clones after the University of Dijon in Burgundy, which assisted in their selection and

shipment to a U.S.

The Company intends to plant vineyards at this

in 1997, the Company embarked on a major effort to improve the quality of its flagship varietal by planting Pinot Noir clones that originated

directly from the cool climate growing region of Burgundy rather than the previous source of Napa, California, where winemakers believe

the variety adapted to the warmer climate over the many years it was grown there.

new French clones are called Dijon clones after the University of Dijon in Burgundy, which assisted in their selection

and shipment to a U.S.

government authorized quarantine site, and then two years later to Oregon winegrowers.

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and 777 clones have been grafted onto seven acres of self-rooted, non-phylloxera-resistant vines at the Companys Estate Vineyard.

2022, crop yields were above the 7-year average and the Companys producing acres in the Estate Vineyard and Tualatin Estate yielded

approximately 206 tons and 279 tons of grapes, respectively.

2023, crop yields were roughly 14% below the 10-year average and the Companys producing acres yielded approximately 867 tons of

Company fulfills its remaining grape needs by purchasing grapes from other nearby vineyards at competitive prices.

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plant more acres and purchase properties for future vineyards.

believes that the grapes grown on the Companys vineyards establish a foundation of quality through the Companys farming practices,

upon which the quality of the Companys wines is built.

Wine produced from grapes grown in the Companys own vineyards may

be labeled as Estate Bottled wines.

believes that the grapes grown on the Companys vineyards establish a foundation of quality through the Companys farming

practices, upon which the quality of the Companys wines is built.

Wine produced from grapes grown in the Companys own vineyards

may be labeled as Estate Bottled wines.

These wines traditionally sell at a premium over non-estate bottled wines.

conditions – Oregons Willamette Valley is recognized as a premier location for growing certain varieties of high-quality

wine grapes, particularly Pinot Noir, Pinot Gris, Chardonnay and Riesling.

The Company believes that the Estate Vineyards growing

conditions, including its soil, elevation, slope, rainfall, evening marine breezes and solar orientation are among the most ideal conditions

in the United States for growing certain varieties of high-quality wine grapes.

The Estate Vineyards grape growing conditions compare

favorably to those found in some of the famous Viticultural regions of France.

Western Oregons latitude (42 o –46 o

North) and relationship to the eastern edge of a major ocean is very similar to certain centuries-old wine grape growing regions

the Willamette Valley, permanent vineyard irrigation generally is not required.

Willamette Valley is recognized as a premier location for growing certain varieties of high-quality wine grapes, particularly Pinot Noir,

Pinot Gris, Chardonnay and Riesling.

The Company believes that the Estate Vineyards growing conditions, including its soil, elevation,

slope, rainfall, evening marine breezes and solar orientation are among the most ideal conditions in the United States for growing certain

varieties of high-quality wine grapes.

The Estate Vineyards grape growing conditions compare favorably to those found in some

of the famous Viticultural regions of France.

Western Oregons latitude (42 o –46 o North) and relationship

to the eastern edge of a major ocean is very similar to certain centuries-old wine grape growing regions of France, such as Burgundy.

the Willamette Valley, permanent vineyard irrigation is generally not required.

The average annual rainfall provides sufficient moisture

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At the Tualatin Vineyard, the Company has water rights to a year-round spring that feeds an irrigation

The Company also has water rights at the Pambrun Vineyard and Maison Bleue Vineyards.

The Company also has water rights at each of the Pambrun and Maison Bleue Vineyards.

Susceptibility

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In 2023, the Winery produced approximately

186,792 cases (444,107 gallons) primarily from its 2020 and 2021 harvest.

234,086 cases (556,700 gallons) of wine, primarily from its 2021 and 2022 harvest.

Winery is 12,784 square feet in size and contains areas for processing, fermenting, aging and bottling wine, as well as an underground

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There is a 12,500 square foot outside production area for harvesting, pressing and fermenting

wine grapes The Company also has a 23,000 square foot storage building to store its inventory of bottled product with a capacity of approximately

135,000 cases of wine.

The production area is equipped with a settling tank and sprinkler system for disposing of wastewater from the

production process in compliance with environmental regulations.

The Company also has a 23,000 square foot storage building to store its inventory of bottled product with a capacity of

approximately 135,000 cases of wine.

The production area is equipped with a settling tank and sprinkler system for disposing of wastewater

from the production process in compliance with environmental regulations.

addition to the production capacity discussed above, the Tualatin Winery has 20,000 square feet of production capacity.

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balance of $4,565,710 at December 31, 2023.

The two outstanding loans require monthly principal and interest payments of $62,067 for

the life of the loans, at annual fixed interest rates of 4.75% and 5.21%, and with maturity dates of 2028 and 2032.

The two outstanding loans require aggregate monthly principal and interest payments of $62,067

for the life of the loans, at annual fixed interest rates of 4.75% and 5.21%, and with maturity dates of 2028 and 2032, respectively.

production – The Company operates on the principle that winemaking is a natural, but highly technical, process requiring the

attention and dedication of the winemaking staff.

The Companys Winery is equipped with current technical innovations and uses modern

laboratory equipment and computers to monitor the progress of each wine through all stages of the winemaking process.

Companys recent annual grape harvest and wine production is as follows:

produced per ton harvested often vary between years mainly due to the timing of when the cases are produced.

The Companys Winery is equipped with current technical innovations and uses

modern equipment and software to monitor the progress of each wine through all stages of the winemaking process.

Companys historical annual grape harvest and wine production from 2005 to 2023 is as follows:

produced per ton harvested vary between years mainly due to the timing of when the cases are produced.

and Distribution

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sales – The Estate Winery is located on a visible hill adjacent to Oregons major north-south freeway (Interstate 5),

approximately 2 miles south of the states second-largest metropolitan area (Salem), and 50 miles in either direction from the states

first and third-largest metropolitan areas (Portland and Eugene).

We believe the unique location along Interstate 5 has resulted in a greater amount of wines sold at the Estate Winery as compared to the Oregon industry standard.

approximately 2 miles south of the states second-largest metropolitan area (Salem), and 50 miles in either direction from the

states first and third-largest metropolitan areas (Portland and Eugene).

We believe the unique location along Interstate 5 has

resulted in a greater amount of wines sold at the Estate Winery as compared to the Oregon industry standard.

Direct sales from the Winery

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The Company has one of the largest wine club memberships in Oregon.

September 2022, the Company opened a new sparkling winery, Domaine Willamette, located adjacent to Highway 99 in Dundee, Oregon (the

Domaine Willamette Winery, approximately 30 miles southwest of the states largest metropolitan area (Portland) and 25 miles

northwest of the states second-largest metropolitan area (Salem).

We believe the location of the Domaine Willamette Winery along

Highway 99 in Dundee provides an ideal location for direct wine sales and wine tourism.

Domaine Willamette Winerys Tasting Room

is open daily for wine tasting, restaurant service and education by trained personnel.

It features méthode traditionelle sparkling

wines and a wine club.

The Company offers by-appointment private tours giving a behind-the-scenes look at sparkling wine production.

Domaine Willamette Winerys biodynamic garden is another attraction for visitors.

September 2022, the Company opened a new sparkling winery, the Domaine Willamette Winery, located adjacent to Highway 99 in Dundee, Oregon,

approximately 30 miles southwest of Portland, the states largest metropolitan area, and 25 miles northwest of Salem, the states

second-largest metropolitan area.

We believe the location of the Domaine Willamette Winery along Highway 99 in Dundee provides an ideal

location for direct wine sales and wine tourism.

Domaine Willamette Winerys Tasting Room is open for wine tasting, restaurant

service and education by trained personnel.

It features méthode traditionelle sparkling wines and a wine club.

The Company offers

by-appointment private tours, giving a behind-the-scenes look at sparkling wine production.

Domaine Willamette Winerys biodynamic

garden is another attraction for visitors.

2014, the Company launched daily food pairings to accompany its wines.

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The culinary offering has now expanded to include Pairings Wine Dinners,

community-style wine dinners hosted regularly throughout each month.

In 2019, the Company added a new experience offered throughout the

week called Pairings Exploration that features four wines paired with four small bites to educate guests on food and wine pairing.

December 2021, the Company debuted a Pinot Noir Clonal Blending experience giving guests the ability to be a winemaker for a day by crafting

their own custom blends from barrel.

which are community-style wine dinners hosted regularly throughout each month.

In 2019, the Company added a new experience offered throughout

the week called Pairings Exploration that features four wines paired with four small bites to educate guests on food and wine pairing.

In December 2021, the Company debuted a Pinot Noir Clonal Blending experience giving guests the ability to be a winemaker for a day by

crafting their own custom blends from barrel.

Winery has developed a Winery Ambassador program, which connects its Ambassadors with customers throughout the United States

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website and direct ships where permissible.

Company also operates seven additional tasting rooms at the following locations:

Company also operates eight additional tasting rooms at the following locations:

(i) historic downtown McMinnville, Oregon;

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(vi) Vancouver,

Washington and (vii) Folsom, California.

(vii) Folsom, California, and (viii) Bend, Oregon.

Company holds various festivals and events at its locations throughout the year.

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sales produce a higher profit margin because the Company can sell its wine directly to consumers at retail prices, rather than to distributors

at free-on-board or FOB prices.

Sales made directly to consumers at retail prices result in an increased profit margin equal

to the difference between retail prices and distributor prices.

For 2022 and 2021, direct sales contributed approximately 46.4% and 41.8%

of the Companys net sales, respectively.

and wine brokers – The Company uses both independent distributors and wine brokers primarily to market the Companys wines

in specific targeted areas.

Only those distributors and wine brokers who have demonstrated knowledge of and a proven ability to market

premium, super premium, and ultra-premium wines are utilized.

The Companys products are distributed in 49 states and the District

of Columbia, and there are 3 non-domestic (export) customers.

For 2022 and 2021, sales to distributors and wine brokers contributed approximately

53.6% and 58.2% of the Companys revenue from operations, respectively.

at free-on-board prices.

Sales made directly to consumers at retail prices result in an increased profit margin equal to the difference

between retail prices and distributor prices.

For 2023 and 2022, direct sales contributed approximately 52.4% and 46.4% of the Companys

net sales, respectively.

and wine brokers – The Company uses both independent distributors and wine brokers, primarily to market the Companys

wines in specific targeted areas.

Only those distributors and wine brokers who have demonstrated knowledge of and a proven ability to

market premium, super premium, and ultra-premium wines are utilized.

The Companys products are distributed in 49 states and the

District of Columbia, and there are three non-domestic (export) customers.

For 2023 and 2022, sales to distributors and wine brokers

contributed approximately 47.6% and 53.6% of the Companys revenue from operations, respectively.

– Oregon wineries are a popular tourist destination with many bed & breakfasts, motels and fine dining restaurants available.

The Willamette Valley, Oregons leading wine region has approximately 74% of the states wineries and vineyards, is home to

approximately 781 wineries and was selected by Wine Enthusiast Magazine as its 2016 Wine Region of the Year.

An additional advantage

for Willamette Valley wine tourism is the proximity of the wineries to Portland (Oregons largest city and most popular destination).

From Portland, tourists can visit the Willamette Valley winery of their choice in anywhere from a 45 minute to a two-hour drive.

Company believes the location of the Estate Winery next to Interstate 5, and Domaine Willamette Winery next to Highway 99W, significantly

increases direct sales opportunities to consumers.

The Willamette Valley, Oregons leading wine region has approximately 69% of the states wineries and vineyards, is home

to approximately 1,016 wineries.

An additional advantage for Willamette Valley wine tourism is the proximity of the wineries to Portland

(Oregons largest city and most popular destination).

From Portland, tourists can visit the Willamette Valley winery of their choice

in anywhere from a 45 minute to a two-hour drive.

Company believes the locations of the Estate Winery next to Interstate 5, and the Domaine Willamette Winery next to Highway 99W, significantly

increase direct sales opportunities to consumers.

The Company believes these locations provide high visibility for the Company to passing

motorists, thus enhancing recognition of the Companys products in retail outlets and restaurants.

These wineries are also each

approximately a 45-minute drive from Portland.

motorists, enhancing recognition of the Companys products in retail outlets and restaurants.

These wineries are each an approximately

45-minute drive from Portland, the states largest metropolitan area .

on Major Customers

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Currently, no Oregon winery dominates the Oregon wine market.

Several Oregon wineries, however, are older and better established and

There are several Oregon wineries that are older, better established and

have greater label recognition than that of the Company.

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these factors.

The Company has primarily received Excellent to Recommended reviews in tastings of its wines and

believes its prices are competitive with other Oregon wineries.

Larger scale production is necessary to satisfy retailers and restaurants

demand and the Company believes that additional production capacity will be needed to meet estimated future demand.

Furthermore, the

Company believes that its estimated aggregate production capacity of 720,000 gallons (303,000 cases) per year at its Estate and Tualatin

locations give it significant competitive advantages over most Oregon wineries in areas such as marketing, distribution arrangements,

grape purchasing, and access to financing.

The current production level of most Oregon wineries is generally much smaller than the estimated

production capacity level of the Companys Wineries.

With respect to label recognition, the Company believes that its unique structure

as a publicly owned company will give it a significant advantage in gaining market share in Oregon, as well as penetrating other wine

The Company has primarily received Excellent to Recommended reviews in tastings of its wines

and believes its prices are competitive with other Oregon wineries.

Larger scale production is necessary to satisfy retailers

and restaurants demand and the Company believes that additional production capacity will be needed to meet estimated future demand.

Furthermore, the Company believes that its estimated aggregate production capacity of 720,000 gallons (303,000 cases) per year at its

Estate and Tualatin locations give it significant competitive advantages over most Oregon wineries in areas such as marketing, distribution

arrangements, grape purchasing, and access to financing.

The current production level of most Oregon wineries is generally much smaller

than the estimated production capacity level of the Companys Wineries.

With respect to label recognition, the Company believes

that its unique structure as a publicly owned company will give it a significant advantage in gaining market share in Oregon, as well

as penetrating other wine markets.

Regulation of the Wine Industry

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Department of the Treasury, Alcohol and Tobacco Tax and Trade

Bureau and the Oregon Liquor Control Commission.

The Company is licensed by and meets the bonding requirements of each of these governmental

Sale of the Companys wine is subject to federal alcohol tax, payable at the time wine is removed from the bonded area

of a winery for shipment to customers or for sale in its tasting room.

Bureau (the TTB) and the Oregon Liquor and Cannabis Commission (the OLCC).

The Company is licensed by and

meets the bonding requirements of each of these governmental agencies.

Sale of the Companys wine is subject to federal alcohol

tax, payable at the time wine is removed from the bonded area of a winery for shipment to customers or for sale in its tasting room.

December 2017, the federal government passed comprehensive tax legislation which included the Craft Beverage Modernization and Tax Reform

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of December 31, 2023, the Company had approximately 223 full-time employees and 123 part-time, or on call employees.

In addition, the

Company hires additional employees for seasonal work as required.

The Companys employees are not represented by any collective

bargaining unit.

addition, the Company hires additional employees for seasonal work as required.

The Companys employees are not represented by

any collective bargaining unit.

The Company believes it maintains positive relations with its employees.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business