What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-26 compared with 2023-03-28 · 269 added, 199 removed, 560 unchanged (46% of the section changed)

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Notes to Financial Statements

of Independent Registered Public Accounting Firm

Report of Independent Registered Public

Accounting Firm

The Shareholders and the Board of Directors of

Willamette Valley Vineyards, Inc.

on the Financial Statements

have audited the accompanying balance sheets of Willamette Valley Vineyards, Inc.

(the Company) as of December 31, 2022

and 2021, the related statements of operations, shareholders equity, and cash flows for the years then ended and the related

notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations

and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of

financial statements are the responsibility of the Companys management.

Our responsibility is to express an opinion on the Companys

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Companys internal control over financial reporting.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Willamette Valley

Vineyards, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related statements of operations,

shareholders’ equity, and cash flows for the years then ended and the related notes (collectively referred to as the

“financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for

the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public

accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to

be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit

of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control

over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control

over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

Our audits included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters

arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

We determined that there are no critical audit matters.

Moss Adams LLP

/s/ Moss Adams LLP

Portland, Oregon

March 26, 2024

have served as the Companys auditor since 2004.

VALLEY VINEYARDS, INC.

We have served as the Company’s auditor since 2004.

WILLAMETTE VALLEY VINEYARDS, INC.

CURRENT ASSETS

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Operating lease right of use assets

$ 105,708,149

LIABILITIES AND SHAREHOLDERS EQUITY

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Investor deposits for preferred stock

Bank overdraft

Line of credit

Current portion of note payable

Current portion of long-term debt

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Redeemable preferred stock, no par value, 100,000,000 shares authorized, 10,046,833 shares issued and outstanding, liquidation preference $ 41,694,357 at December 31, 2023 and 9,185,666 shares issued and outstanding, liquidation preference $ 38,120,514 at December 31, 2022

Common stock, no par value, 10,000,000 shares authorized,

4,964,529 shares issued and outstanding at December 31, 2022 and December 31, 2021.

Common stock, no par value, 10,000,000 shares authorized, 4,964,529 shares issued and outstanding at December 31, 2023 and December 31, 2022

Retained earnings

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LIABILITIES AND SHAREHOLDERS EQUITY

$ 105,708,149

accompanying notes are an integral part of the financial statements.

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Total operating expenses

INCOME (LOSS) FROM OPERATIONS

LOSS FROM OPERATIONS

( 1,207,202 )

OTHER INCOME (EXPENSE)

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Other income, net

INCOME (LOSS) BEFORE INCOME TAXES

INCOME TAX (EXPENSE) BENEFIT

LOSS BEFORE INCOME TAXES

( 1,686,454 )

NET INCOME (LOSS)

INCOME TAX BENEFIT

( 1,198,593 )

Preferred stock dividends

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( 1,866,451 )

INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS

LOSS APPLICABLE TO COMMON SHAREHOLDERS

$ ( 3,245,690 )

Earnings (loss) per common share after preferred dividends, basic and diluted

Weighted-average number of common shares outstanding, basic and diluted

$ ( 2,512,943 )

Loss per common

share after preferred dividends, basic and diluted

Weighted-average

number of common shares outstanding, basic and diluted

accompanying notes are an integral part of the financial statements.

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Issuance of preferred stock, net

Stock based compensation

Preferred stock dividends declared

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( 2,047,097 )

( 1,198,593 )

Balance at December 31, 2023

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CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$ ( 1,198,593 )

Adjustments to reconcile net income (loss) to net cash from operating activities:

$ ( 646,492 )

Adjustments to reconcile net loss to net cash from operating activities:

Depreciation and amortization

Gain on disposition of property & equipment

Preferred stock compensation expense

Non-cash lease expense

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Lease liabilities

( 1,097,192 )

Grapes payable

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( 1,988,850 )

( 2,666,228 )

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposition of property and equipment

Additions to vineyard development costs

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Payment on installment note for property purchase

Proceeds from bank overdraft

Proceeds from line of credit

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Payment of preferred stock dividend

Net cash from financing activities

Net cash provided by financing activities

NET CHANGE IN CASH AND CASH EQUIVALENTS

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Interest paid

Income tax paid

Income tax paid (received)

$ ( 394,268 )

accompanying notes are an integral part of the financial statements.

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from those estimates under different assumptions or conditions.

COVID-19 outbreak in Oregon and other parts of the United States, as well as the response to COVID-19 by federal, state and local governments

have had a material adverse impact on economic and market conditions in the United States.

Although most restrictive measures have been

lifted, the COVID-19 pandemic and the government responses to the outbreak presents continued uncertainty and risk with respect to the

Company and its performance and financial results.

instruments and concentrations of risk – The Company has the following financial instruments:

cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, grapes payable, short and long-term debt.

cash and cash equivalents, accounts

receivable, accounts payable, accrued liabilities, grapes payable, and short and long-term debt.

and cash equivalents are maintained at five financial institutions.

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approximately 17.5 % of total Company revenue.

December 31, 2022, two customers accounted for approximately 27% and 14% of accounts receivable.

At December 31, 2021, two customers

accounted for approximately 11% and 11% of accounts receivable.

December 31, 2023, one customer accounted for approximately 27 % of accounts receivable.

At December 31, 2022, two customers accounted

for approximately 27 % and 14 % of accounts receivable.

comprehensive income – The nature of the Companys business and related transactions do not give rise to other comprehensive

and cash equivalents – Cash and cash equivalents include money market funds.

receivable – The Company performs ongoing credit evaluations of its customers and does not require collateral.

is maintained for potential credit losses.

The allowance for doubtful accounts is based on an assessment of the collectability of customer

The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of

the accounts receivable balances, and current economic conditions that may affect a customers ability to pay.

The Company has credit

risk associated with uncollateralized trade accounts receivable from all operations totaling $ 4,226,948 and $ 3,163,375 as of December

31, 2022 and 2021, inclusive of the allowance for doubtful accounts.

The allowance for doubtful accounts is further discussed in Note

receivable – The

Company performs ongoing credit evaluations of its customers and does not require collateral.

A reserve is maintained for potential

credit losses.

The allowance for credit losses is based on an assessment of the collectability of customer accounts.

regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts

receivable balances, and current economic conditions that may affect a customers ability to pay.

The Company has credit risk

associated with uncollateralized trade accounts receivable from all operations totaling $ 2,994,829 as

of December 31, 2023, net of the allowance for credit losses.

The Company had credit risk associated with uncollateralized trade

accounts receivable from all operations totaling $ 4,226,948 and $ 3,163,375 as of December 31, 2022 and 2021, net of the allowance

for credit losses.

The allowance for credit losses is further discussed in Note 2.

– For Company produced wines, after a portion of the vineyard becomes commercially productive, the annual crop and production

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and ready for sale.

cost of finished goods is recognized as cost of sales when the wine product is sold.

Inventories are stated at the lower of first-in,

first-out (FIFO) cost or net realizable value by variety.

Net realizable value is the value of an asset that can be

realized upon the sale of the asset, less a reasonable estimate of the costs associated with either the eventual sale or the disposal

of the asset in question.

The cost of finished goods is recognized as cost of

sales when the wine product is sold.

Finished goods and work-in-process inventories are stated at the lower of first-in, first-out cost

or net realizable value by variety.

Winemaking and packaging materials are stated at the lower of average cost or net realizable value.

Net realizable value is the value of an asset that can be realized upon the sale of the asset, less a reasonable estimate of the costs

associated with either the eventual sale or the disposal of the asset in question.

accordance with general practices in the wine industry, wine inventories are generally included in current assets in the accompanying

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a component of cost of goods sold.

For the years ending December 31, 2022 and 2021, $ 284,980 and $ 245,339 , respectively, was amortized

For the years ending December 31, 2023 and 2022, $ 163,596 and $ 284,980 , respectively, was capitalized

into inventory costs.

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over 3 to 15 years , depending on the classification of the asset.

Leasehold improvements are depreciated over the shorter of the term of

the lease or useful life.

Depreciation is discussed further in Note 4.

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gain or loss is included in operations.

of long-lived assets for impairment – The Company evaluates long-lived assets for impairment whenever events or changes in circumstances

indicate that the carrying amount of an asset or asset group may not be recoverable.

Long-lived assets consist primarily of property

and equipment, vineyard development costs, and operating lease right of use assets.

Circumstances that might cause the Company to evaluate

its long-lived assets for impairment could include a significant decline in the prices the Company or the industry can charge for its

products, which could be caused by general economic or other factors, changes in laws or regulations that make it difficult or more costly

for the Company to distribute its products to its markets at prices which generate adequate returns, natural disasters, significant decrease

in demand for the Companys products or significant increase in the costs to manufacture the Companys products.

of long-lived assets for impairment – The Company evaluates long-lived assets for impairment whenever events or changes in

circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

Long-lived assets consist primarily

of property and equipment, vineyard development costs, and operating lease right of use assets.

Circumstances that might cause the Company

to evaluate its long-lived assets for impairment could include a significant decline in the prices the Company or the industry can charge

for its products, which could be caused by general economic or other factors, changes in laws or regulations that make it difficult or

more costly for the Company to distribute its products to its markets at prices which generate adequate returns, natural disasters, significant

decrease in demand for the Companys products or significant increase in the costs to manufacture the Companys products.

Recoverability

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Company files U.S.

federal income tax returns with the Internal Revenue Service (IRS) as well as income tax returns in Oregon

and California.

federal income tax returns with the Internal Revenue Service (IRS) as well as income tax returns in

Oregon and California.

The Company may be subject to examination by the IRS for tax years 2020 through 2023.

Additionally, the Company may be

subject to examinations by state taxing jurisdictions for tax years 2018 through 2022.

The Company is not aware of any current examinations

by the IRS or the state taxing authorities.

Additionally, the Company

may be subject to examinations by state taxing jurisdictions for tax years 2019 through 2023.

The Company is not aware of any current

examinations by the IRS or the state taxing authorities.

recognition – The Company recognizes revenue once its performance obligation to the customer is completed, and control

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Company defers the revenue until all conditions are met.

As of December 31, 2023, the Company has recorded deferred revenue in the amount

of $ 490,523, which

is included in unearned revenue on the balance sheet.

As of December 31, 2022, and December 31, 2021, the Company has recorded deferred

revenue in the amount of $ 335,431 and $ 255,376 , respectively, which is included in unearned revenue on the balance sheet.

that have been issued but not used are also treated as unearned revenue and were $ 1,106,970 and $ 682,881 as of December 31, 2022 and

2021, respectively.

that have been issued but not used are also treated as unearned revenue and were $ 1,480,138

as of December 31, 2023.

Gift cards that have been issued but not used are also treated as unearned

revenue and were $ 1,106,970 and $ 682,881 as of December 31, 2022 and 2021, respectively.

Sales Segment – Wholesale wine sales are through distributors and the Company recognizes revenue when the product is shipped,

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For the years ended December

2022 and 2021, these costs, which are included in selling, general and administrative expenses, $87,996 and $71,227, respectively.

31, 2023 and 2022, these costs, which are included in selling, general and administrative expenses were, $ 93,272

and $ 87,996 ,

respectively.

and handling costs – Amounts paid by customers to the Company for shipping and handling costs are included in net sales.

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31, 2023 and 2022, excise taxes incurred were $ 431,714 and $ 312,103 respectively.

(loss) per common share after preferred dividends – Income (loss) per share is computed based on the weighted-average

number of common shares outstanding each year.

per common share after preferred dividends – loss per share is computed based on the weighted-average number of common

shares outstanding each year.

– We determine if an arrangement is a lease at inception.

On our balance sheets, our operating leases are included in Operating lease

right-of-use (ROU) assets, Current portion of lease liabilities and Lease liabilities, net of current portion.

does not currently have any finance leases.

On our balance sheets, our operating leases are included in Operating

lease right of use (ROU) assets, Current portion of lease liabilities and Lease liabilities, net of current portion.

Company does not currently have any finance leases.

Leases that have a term of twelve months or less upon commencement date are considered short-term in nature.

short-term leases are not included on the balance sheets and are expensed on a straight-line basis over the lease term, which commences

on the date we have the right to control the property.

assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease

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these judgments.

issued accounting pronouncements not yet adopted

are no recently issued accounting pronouncements that the Company has yet to adopt that management believes will have a significant impact

on the Companys financial statements.

Reclassifications

– Certain immaterial amounts from prior periods have been reclassified to conform to current years presentation.

adopted accounting pronouncements

June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial

Instruments, and in May 2019 issued ASU 2019-05, Credit Losses (Topic 326):

Targeted Transition Relief (collectively referred to as Topic

Topic 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on

all relevant information, such as historical experience, current conditions, and reasonable and supportable forecasts that could impact

the collectability of the amounts.

Company adopted Topic 326 effective January 1, 2023, using the modified retrospective approach.

No cumulative effect adjustment was required

to opening retained earnings.

The Company measures expected credit losses of financial assets based on historical loss and other information

available to management.

These expected credit losses are recorded to an allowance for credit losses valuation account that is deducted

from accounts receivable to present the net amount expected to be collected on the financial assets in the balance

As of December 31, 2023, no change to allowance for credit losses was deemed necessary.

Recently issued accounting pronouncements

In November 2023, the Financial

Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment

Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures

about significant segment expenses.

The expanded annual disclosures are effective for our year ending December 31, 2024, and the expanded

interim disclosures are effective in 2025 and will be applied retrospectively to all prior periods presented.

The Company is currently

evaluating the impact that ASU 2023-07 will have on our consolidated financial statements.

In December 2023, the FASB

issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires, among other things, additional

disclosures primarily related to the income tax rate reconciliation and income taxes paid.

The expanded annual disclosures are effective

for our year ending December 31, 2025.

The Company is currently evaluating the impact that ASU 2023-09 will have on our consolidated

financial statements and whether we will apply the standard prospectively or retrospectively.

2 – ACCOUNTS RECEIVABLE, NET

Companys accounts receivable balance is net of an allowance for doubtful accounts of $ 10,000 and $ 10,000 at December 31, 2022 and

2021, respectively.

Changes in the allowance for doubtful accounts are as follows:

Companys accounts receivable balance is net of an allowance for credit losses of $ 10,000 at December 31, 2023 and 2022.

in the allowance for credit losses are as follows:

of Changes in Allowance for Credit Losses

Year ended December 31,

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consists of the following at December 31, 2023 and 2022:

of Inventories

Winemaking and packaging materials

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In November 2022, the Company increased the borrowing line up to $5,000,000.

The Company had an outstanding line of credit

balance of $ 166,617 at December 31, 2022, at an interest rate of 6.5%, and zero outstanding balance at December 31, 2021.

In July 2023 the line of credit was renewed for

an additional two years.

The Company had an outstanding line of credit balance of $ 2,684,982 at December 31, 2023, at an interest rate

of 8.0%, and an outstanding line of credit balance of $ 166,617 at December 31, 2022, at an interest rate of 6.5%.

line of credit agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible

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of Long-term Debt

Northwest Farm Credit Services Loan #4

Northwest Farm Credit Services Loan #5

Northwest Farm Credit Services Loan

AgWest Loan #4

AgWest Loan #5

AgWest loan #6

Long-Term Debt, Gross

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Long-Term Debt

Company has three long term debt agreements with Northwest Farm Credit Services (FCS) with an aggregate outstanding

balance of $ 7,062,654 and $ 5,535,096

as of December 31, 2022 and 2021, respectively.

The first 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,

respectively.

The general purposes of these loans were to make capital improvements to the winery and vineyard facilities.

loan bears interest at Northwest Variable base which was 6.50% at December 31, 2022, with interest due annually and principal at maturity on

November 1, 2025.

minimum principal payments of long-term debt mature as follows for the years ending December 31:

Future minimum principal payments of long-term debt total

Company has three long term debt agreements with AgWest with an aggregate outstanding balance of $ 7,590,659 and $ 7,062,654 as of December

31, 2023 and 2022, respectively.

The first 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, respectively.

purposes of these loans were to make capital improvements to the winery and vineyard facilities.

The third loan bears interest at Northwest

Variable base, which was 7.80 % and 6.50 % at December 31, 2023, and 2022, respectively, with interest due annually and principal at maturity

on November 1, 2025.

minimum principal payments of long-term debt are as follows for the years ending December 31:

of Future Minimum Principal Payment for Long-Term Debt Maturities

weighted-average interest rates on the aforementioned borrowings for the years ended December 31, 2023 and 2022, was 6.19 % and 5.57 % respectively.

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was no unrecognized compensation expense related to stock options.

part of an incentive program, the Company issued no preferred stock during the year ended December 31, 2022 and minimal shares in 2021,

resulting in stock compensation expense of zero and $ 39,059 , respectively.

10 – INCOME TAXES

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Current tax expense

Deferred tax expense:

Deferred tax expense (benefit)

Deferred tax benefit:

Deferred tax benefit

$ ( 487,861 )

$ ( 119,646 )

effective income tax rate differs from the federal statutory rate as follows:

of Effective Income Tax Rate

Year Ended December 31,

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Permanent differences

State tax rate change

Prior year adjustments

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differences for the periods consist primarily of changes in non-deductible gifts, meals and entertainment as well as political contributions.

Changes in tax rate are described above.

Changes in tax rate are detailed above.

The State tax rate change is related

to a decrease in apportionable income to the States.

deferred tax assets and (liabilities) at December 31 consist of:

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ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset

to the extent that management assesses that realization is more likely than not. Realization of the future tax benefits is

dependent on the Companys ability to generate sufficient taxable income within the carryforward period.

Management believes that

the Company will generate sufficient taxable income in the timeframe required to utilize existing net operating losses and therefore

to the extent that management assesses that realization is more likely than not. Realization of the future tax benefits

is dependent on the Companys ability to generate sufficient taxable income within the carryforward period.

Management believes

that the Company will generate sufficient taxable income in the timeframe required to utilize existing net operating losses and therefore

no valuation allowance has been recognized.

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housing provided for its CEO.

The Company engages James Ellis a Board member for consulting services.

The amount of this compensation was $9,446 in 2023 and $9,400 in 2022.

12 – COMMITMENTS AND CONTINGENCIES

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five-year extension options, for the vineyard portion of the property.

The first five year extension has been exercised.

The lease contains

a formula-based escalation provision with a maximum increase of 4% every three years.

This property is referred to as the Meadowview

Vineyard and includes approximately 49 acres of producing vineyards.

The first two five year extension has been exercised.

The lease contains a formula-based escalation provision with a maximum increase of 4% every three years.

This property is referred to as the Meadowview Vineyard and includes approximately 49 acres of producing vineyards.

February 2007 , the Company entered into a lease agreement for 59 acres of vineyard land at Elton Vineyard.

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March 2017 , the Company entered into a 25 -year lease for approximately 17 acres of agricultural land in Dundee, Oregon.

These acres are

being developed into vineyards.

This lease contains an annual payment that remains constant throughout the term of the lease.

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year renewal option and defined payments over the term of the lease.

January 2018 , the Company assumed a lease, through December 2022, for its Maison Bleue tasting room in Walla Walla, Washington.

2022, the Company entered into a new lease to December 2027 with one five year renewal option, and defined payments over the term of

February 2020 , the Company entered into a lease for 5 years , with three five-year renewal options for a retail wine facility in Folsom,

California, referred to as Willamette Wineworks.

The lease contains an escalation provision tied to the CPI not to exceed 3% per annum

with increases not allowed in any year being carried forward to following years.

2018 , the Company assumed a lease, through December 2022, for its Maison Bleue tasting room in Walla Walla, Washington.

In January 2023, the

Company entered into a new lease to December 2027 with one five year renewal option, and defined payments over the term of the lease.

For right of use asset and liability calculations the Company has not included the renewal option.

2020 , the Company entered into a lease for 5

years , with three five-year renewal options for a retail wine facility in Folsom, California, referred to as Willamette

The lease contains an escalation provision tied to the CPI not to exceed 3% per annum with increases not allowed in any

year being carried forward to the following years.

For right of use asset and liability calculations the Company has concluded it is

reasonably certain to extend available options through February 2040.

March 2021 , the Company entered into a lease for 10 years , with two five-year renewal options for a retail wine facility in Vancouver,

The lease defines the payments over the term of the lease and option periods.

For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through August 2041.

February 2022 , the Company entered into a lease for 10 years , with three five-year renewal options for a retail wine facility in Lake

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The lease defines the payments over the term of the lease and option periods.

For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through January 2042.

May 2022 , the Company entered into a lease for 10 years , with two five-year renewal options for a retail wine facility in Happy Valley,

The lease defines the payments over the term of the lease and option periods.

following tables provide lease cost and other lease information for the year ended December 31, 2022:

December 31, 2022

For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through May 2042.

January 2023 , the Company entered into a lease for 10 years , with three five-year renewal options for a retail wine facility in Bend,

The lease defines the payments over the term of the lease.

For right of use asset and liability calculations the Company has

assumed it will operate in this location for 10 years.

following tables provide lease cost and other lease information:

of Lease Cost and Other Lease Information

Year Ended December 31,

Operating Lease cost - Vineyards

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Other information

Cash paid for amounts included in the measurement of lease liabilities,

Cash paid for amounts included in the measurement of lease

Operating cash flows from operating leases - Vineyard

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2022, respectively.

Company has two additional operating leases that has not yet commenced as of December 31, 2022, and as such, has not been recognized

in the Companys balance sheet.

These operating leases are expected to commence in 2023 with lease terms of 5 and 10 years.

2023, the Company concluded it was reasonably certain it would exercise the available extension options on certain leases as described

As a result, a remeasurement of the lease liability was completed resulting in an increase to the right-of-use assets and lease

liabilities in the amount of $2,979,145, which is included in the $3,674,710 disclosed above for the right-of-use assets obtained in exchange

for new operating lease liabilities.

of December 31, 2023, maturities of lease liabilities were as follows:

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Lease liabilities, net of current portion

Purchases – The Company has entered into long-term grape purchase agreements with a number of Willamette Valley wine grape growers.

With these agreements the Company purchases an annually agreed upon quantity of fruit, at pre-determined prices, within strict quality

standards and crop loads.

The Company cannot calculate the minimum or maximum payment as such a calculation is dependent in large part

on unknowns such as the quantity of fruit needed by the Company and the availability of grapes produced that meet the strict quality

Purchases – The Company has entered into long-term grape purchase agreements with a number of Willamette Valley wine grape

With these agreements the Company purchases an annually agreed upon quantity of fruit, at pre-determined prices, within strict

quality standards and crop loads.

The Company cannot calculate the minimum or maximum payment as such a calculation is dependent in large

part on unknowns such as the quantity of fruit needed by the Company and the availability of grapes produced that meet the strict quality

standards in any given year.

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February 2006, the Company instituted a 401(k) profit sharing plan (the Plan) covering all eligible employees.

who participate may elect to make salary deferral contributions to the Plan up to 100% of the employees eligible payroll

subject to annual Internal Revenue Code maximum limitations.

The Company may make a discretionary contribution to the entire

qualified employee pool, in accordance with the Plan.

For the years ended December 31, 2022, and 2021 there were $ 196,198

and $ 164,188

of contributions made by the Company to the Plan, respectively.

who participate may elect to make salary deferral contributions to the Plan up to 100% of the employees eligible payroll subject

to annual Internal Revenue Code maximum limitations.

The Company may make a discretionary contribution to the entire qualified employee

pool, in accordance with the Plan.

For the years ended December 31, 2023, and 2022, there were $ 186,636 and $ 196,198 of contributions

made by the Company to the Plan, respectively.

14 – SALE OF PREFERRED STOCK

January 24, 2020, the Company filed a shelf Registration Statement on Form S-3 (the 2020 Form S-3) with the United States

Securities and Exchange Commission (the SEC) pertaining to the potential future issuance of one or more classes or series

of debt, equity, or derivative securities.

The maximum aggregate offering amount of securities sold pursuant to the January 2020 Form

S-3 is not to exceed $20,000,000.

The Company subsequently filed with the SEC prospectus supplement on June 10, 2020, pursuant to which

the Company sold an aggregate of 1,902,155 shares of its Series A Redeemable Preferred Stock for aggregate proceeds of $8,533,086, net

of acquisition costs.

June 11, 2021, the Company filed with the SEC an additional Prospectus Supplement to the 2020 Form S-3, pursuant to which the Company

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Net proceeds of $3,558,807 have been received under these offerings as of December, 31 2023 for the issuance of Preferred

June 30, 2023, the Company filed with the SEC a Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company proposed

to offer and sell, on a delayed or continuous basis, up to 727,835 shares of Series A Redeemable Preferred Stock having proceeds not

to exceed $3,530,000.

This Prospectus Supplement established that our shares of preferred stock were to be sold in two offering periods

with two separate offering prices beginning with an offering price of $4.85 per share and concluding with an offering of $5.35 per share.

On October 27, 2023, the Company filed with the SEC a Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company

proposed to offer and sell, on a delayed or continuous basis, up to 288,659 shares of Series A Redeemable Preferred Stock having proceeds

not to exceed $1,400,000.

This Prospectus Supplement established that our shares of preferred stock were to be sold in one offering period

with an offering price of $5.35 per share.

Net proceeds of $3,687,564 have been received under these offering as of December, 31 2023

for the issuance of Preferred Stock.

have the option to receive dividends as cash or as a gift card for purchasing Company products.

The amount of unused dividend gift

cards at December 31, 2022 and 2021 was $ 1,106,970

and $ 682,881 , respectively

and is recorded as unearned revenue on the balance sheets.

Revenue from gift cards is recognized when the gift card

is redeemed by a customer.

When the likelihood of a gift card being redeemed by a customer is determined to be remote and the Company

expects to be entitled to the breakage, then the value of the unredeemed gift card is recognized as revenue.

We determine the gift card

breakage rate based upon Company-specific historical redemption patterns.

To date we have determined that no breakage should be recognized

related to our gift cards.

The amount of unused dividend gift cards

at December 31, 2023 and December 31, 2022 was $ 1,480,138 and $ 1,106,970 , respectively, and is recorded as unearned revenue on the balance

Revenue from gift cards is recognized when the gift card is redeemed by a customer.

When the likelihood of a gift card being

redeemed by a customer is determined to be remote and the Company expects to be entitled to the breakage, then the value of the unredeemed

gift card is recognized as revenue.

We determine the gift card breakage rate based upon Company-specific historical redemption patterns.

To date we have determined that no breakage should be recognized related to our gift cards.

accrued but not paid will be added to the liquidation preference of the stock until the dividend is declared and paid.

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Distributor Sales include all sales through a third party where prices are given at a wholesale rate.

two segments reflect how the Companys operations are evaluated by senior management and the structure of its internal financial

two segments reflect how the Companys operations are evaluated by senior management and the structure of its internal

financial reporting.

The Company evaluates performance based on the gross profit of the respective business segments.

Selling expenses that can

be directly attributable to the segment, including depreciation of segment specific assets, are included, however, centralized selling

expenses and general and administrative expenses are not allocated between operating segments.

Therefore, net income information for

the respective segments is not available.

Discrete financial information related to segment assets, other than segment specific depreciation

associated with selling, is not available and that information continues to be aggregated.

expenses that can be directly attributable to the segment, including depreciation of segment specific assets, are included, however,

centralized selling expenses and general and administrative expenses are not allocated between operating segments.

Therefore, net

income (loss) information for the respective segments is not available.

Discrete financial information related to segment assets,

other than segment specific depreciation associated with selling, is not available and that information continues to be

following table outlines the sales, cost of sales, gross margin, directly attributable selling expenses, and contribution margin of the

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and administrative expenses

(loss) from operations

from operations

$ ( 1,207,202 )

$ ( 546,418 )

sales include $ 69,924 and $ 97,652 of bulk wine and grape sales in the years ended December 31, 2023 and 2022, respectively.

direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 52.4 % and 46.4 % of total

net revenue for 2022 and 2021, respectively.

sales through distributors represented approximately 53.6 % and 58.2 % of total net revenue for 2022 and 2021, respectively.

net sales for 2023 and 2022, respectively.

sales through distributors represented approximately 47.6 % and 53.6 % of total net sales for 2023 and 2022, respectively.

16 – SUBSEQUENT EVENTS

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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 8. Financial Statements and Supplementary Data