What changed in this filing

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Item 1. Financial Statements

2024-05-13 compared with 2023-11-14 · 206 added, 274 removed, 411 unchanged (54% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30,

CURRENT ASSETS

8 unchanged sentences

$ 106,188,125

$ 105,708,149

LIABILITIES AND SHAREHOLDERS EQUITY

5 unchanged sentences

Line of credit

Current portion of note payable

Current portion of long-term debt

9 unchanged sentences

SHAREHOLDERS EQUITY

Redeemable preferred stock, no par value, 10,000,000 shares authorized, 9,303,988 shares issued and outstanding, liquidation preference of $ 40,146,708 , at September 30, 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 September 30, 2023 and December 31, 2022, respectively.

Redeemable preferred stock, no par value, 100,000,000 shares authorized, 10,239,573 shares issued and outstanding, liquidation preference $ 43,057,405 , at March 31, 2024 and 10,046,833 shares issued and outstanding, liquidation preference $ 41,694,357 , at December 31, 2023.

Common stock, no par value, 10,000,000 shares authorized, 4,964,529 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.

Retained earnings

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$ 106,188,125

accompanying notes are an integral part of this condensed financial statement

$ 105,708,149

The accompanying notes are an integral part of this condensed financial statement

VALLEY VINEYARDS, INC.

1 unchanged sentence

Three months ended

Nine months ended

September 30,

COST OF SALES

4 unchanged sentences

LOSS FROM OPERATIONS

( 1,226,035 )

OTHER INCOME (EXPENSE)

Interest income

Interest expense

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( 1,025,786 )

( 1,326,748 )

( 1,089,879 )

INCOME TAX BENEFIT

Accrued preferred stock dividends

( 1,535,158 )

( 1,399,837 )

LOSS APPLICABLE TO COMMON SHAREHOLDERS

1 unchanged sentence

$ ( 1,256,542 )

$ ( 2,498,510 )

$ ( 2,191,199 )

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 this condensed financial statement

The accompanying notes are an integral part of this condensed financial statement

VALLEY VINEYARDS, INC.

STATEMENTS OF SHAREHOLDERS EQUITY

Nine-Month Period Ended September 30, 2023

Three-Month Period Ended March 31, 2024

Preferred Stock

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Balance at March 31, 2024

Preferred stock dividends accrued

Balance at June 30, 2023

Preferred stock dividends accrued

Balance at September 30, 2023

Nine-Month Period Ended September 30, 2022

Three-Month Period Ended March 31, 2023

Preferred Stock

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Balance at March 31, 2023

Preferred stock dividends accrued

Balance at June 30, 2022

Preferred stock dividends accrued

Balance at September 30, 2022

accompanying notes are an integral part of this condensed financial statement

The accompanying notes are an integral part of this condensed financial statement

VALLEY VINEYARDS, INC.

OF CASH FLOWS

Nine months ended September 30,

STATEMENTS OF CASH FLOWS

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

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$ ( 744,823 )

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

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

Depreciation and amortization

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Accounts receivable

( 3,864,269 )

( 1,781,097 )

Prepaid expenses and other current assets

Income taxes receivable

Income tax receivable

Unearned revenue

2 unchanged sentences

( 2,446,233 )

( 1,208,673 )

Accounts payable

2 unchanged sentences

( 3,012,769 )

( 1,279,932 )

CASH FLOWS FROM INVESTING ACTIVITIES

2 unchanged sentences

( 1,480,944 )

( 13,117,674 )

Net cash from investing activities

( 1,500,176 )

( 13,645,084 )

CASH FLOWS FROM FINANCING ACTIVITIES

1 unchanged sentence

Proceeds from bank overdraft

Payments on line of credit

Payments on long-term debt

Proceeds from investor deposits held as liability

Proceeds from line of credit

Payment on long-term debt

Proceeds from long-term debt

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NET CHANGE IN CASH AND CASH EQUIVALENTS

( 13,383,922 )

CASH AND CASH EQUIVALENTS, beginning of period

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Right of use assets obtained in exchange for operating lease liabilities

accompanying notes are an integral part of this condensed financial statement

The accompanying notes are an integral part of this condensed financial statement

TO UNAUDITED INTERIM FINANCIAL STATEMENTS

BASIS OF PRESENTATION

accompanying unaudited interim financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023

and 2022 have been prepared in conformity with accounting principles generally accepted in the United States (U.S.

for interim financial statements.

The financial information as of December 31, 2022 is derived from the audited financial statements

presented in the Willamette Valley Vineyards, Inc.

accompanying unaudited interim condensed financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and

2023 have been prepared in conformity with accounting principles generally accepted in the United States (U.S.

interim financial statements.

The financial information as of December 31, 2023 is derived from the audited financial statements presented

in the Willamette Valley Vineyards, Inc.

(the Company) Annual Report on Form 10-K for the year ended December 31, 2023

Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S.

have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

In the opinion of management,

the accompanying financial statements include all adjustments necessary (which are of a normal recurring nature) for the fair statement

of the results of the interim periods presented.

The accompanying financial statements should be read in conjunction with the Companys

audited financial statements for the year ended December 31, 2022, as presented in the Companys Annual Report on Form 10-K.

results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for

the entire year ending December 31, 2023, or any portion thereof.

(the 2023 Report).

Certain information or footnote disclosures normally included in financial statements prepared in accordance

GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

opinion of management, the accompanying financial statements include all adjustments necessary (which are of a normal recurring nature)

for the fair statement of the results of the interim periods presented.

The accompanying unaudited interim condensed financial statements

should be read in conjunction with the Companys audited financial statements for the year ended December 31, 2023, as presented

in the Companys Annual Report on Form 10-K.

results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the entire year

ending December 31, 2024, or any portion thereof.

Companys revenues include direct to consumer sales and national sales to distributors.

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for production, selling, and distribution.

earnings (loss) per share after preferred stock dividends are computed based on the weighted-average number of common shares outstanding

loss per share after preferred stock dividends are computed based on the weighted-average number of common shares outstanding each period.

following table presents the earnings per share after preferred stock dividends calculation for the periods shown:

Schedule of Earnings Per Share

Three months ended September 30,

Nine months ended September 30,

$ ( 326,982 )

$ ( 949,821 )

Three months ended March 31,

$ ( 521,805 )

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Accrued preferred stock dividends

( 1,535,158 )

( 1,399,837 )

Net loss applicable to common shares

$ ( 838,701 )

$ ( 1,416,433 )

Net loss applicable to common shareholders

$ ( 1,084,982 )

$ ( 1,256,542 )

Weighted-average common shares outstanding

Weighted-average number of common shares outstanding basic and diluted

Loss per common share after preferred dividends, basic and diluted

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Companys inventories, by major classification, are summarized as follows, as of the dates shown:

September 30, 2023

of Inventories

March 31, 2024

December 31, 2023

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Schedule of Property and Equipment, Net

September 30, 2023

March 31, 2024

December 31, 2023

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Land, improvements, and other buildings

Winery, tasting room buildings, and hospitality center

Winery buildings and tasting rooms

Property and equipment, gross

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Property and equipment, net

expense for the three months ended September 30, 2023 and 2022 was $ 738,354 and $ 567,394 , respectively.

Depreciation expense for the

nine months ended September 30, 2023 and 2022 was $ 2,197,966 and $ 1,384,200 , respectively.

of Credit Facility – In December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank that

allows borrowing up to $ 2,000,000 against eligible accounts receivable and inventories, as defined in the agreement.

The revolving line

bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal.

In July 2021, the Company renewed

the credit agreement until July 31, 2023.

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

In July 2023 the

line of credit was renewed for an additional two years.

The Company had no outstanding line of credit balance at September 30, 2023,

at an interest rate of 8.00%, and an outstanding balance of $ 166,617 at December 31, 2022.

expense for the three months ended March 31, 2024 and 2023 was $ 791,986 and $ 726,564 , respectively.

of Credit Facility – In December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank (the

Credit Agreement) that allows borrowing up to $ 2,000,000 against eligible accounts receivable and inventories, as defined

in the agreement.

The revolving line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to

In July 2021, the Company renewed the Credit Agreement until July 31, 2023.

In November 2022, the Company increased the borrowing

line up to $ 5,000,000 .

In July 2023 the line of credit was renewed for an additional two years.

The Company had an outstanding line of

credit balance of $ 3,320,928 at March 31, 2024, at an interest rate of 8.0%, and an outstanding line of credit balance of $ 2,684,982

at December 31, 2023, at an interest rate of 8.0%.

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

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The note may be called by the owner, up to the outstanding balance, with 180 days written notice.

As of September 30, 2023, the

Company had a balance of $ 1,126,374 due on this note.

As of March 31, 2024, the Company

had a balance of $ 1,074,712 due on this note.

As of December 31, 2023, the Company had a balance of $ 1,100,735 due on this note.

Debt – The Company has three long term debt agreements with AgWest with an aggregate outstanding balance of $ 9,962,186 and

$ 7,062,654 as of September 30, 2023 and December 31, 2022, respectively.

The first loan requires monthly principal and interest payments

of $15,557 for the life of the loan, at an annual fixed interest rate of 4.75% with a maturity date of 2028, and outstanding balance

of $ 865,933 and $ 972,940 as of September 30, 2023 and December, 31, 2022, respectively.

The second loan requires monthly principal and

interest payments of $46,510 for the life of the loan, at an annual fixed interest rate of 5.21% with a maturity date of 2032, and outstanding

balance of $3,826,502 and $4,089,714 as of September 30, 2023 and December, 31, 2022, respectively.

The general 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% at September 30, 2023 and 6.50% at December 31,2022, with interest due annually and principal at maturity on November 1, 2025

with an available line of $ 5,000,000 and outstanding balance of $ 3,025,000 and $ 2,000,000 as of September 30, 2023 and December, 31,

$ 7,590,659 as of March 31, 2024 and December 31, 2023, 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.

In July 2023 the available line was increased to $ 10,000,000 .

of September 30, 2023, the Company had unamortized debt issuance costs of $ 109,302 .

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

third loan bears interest at Northwest Variable base, which was 7.80% at March 31, 2024, and December 31, 2023, 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

of March 31, 2024, the Company had unamortized debt issuance costs of $ 102,677 .

As of December 31, 2023, the Company had unamortized

debt issuance costs of $ 105,989 .

Company believes that cash flow from operations and funds available under the Companys existing credit facilities will be sufficient

to meet the Companys short-term needs.

The Company will continue to evaluate funding mechanisms to support our long-term funding

requirements.

INTEREST AND TAXES PAID

taxes – The Company paid zero in income taxes for the three months ended September 30, 2023 and 2022.

The Company received

$ 19,456 and paid $ 502,000 in income taxes for the nine months ended September 30, 2023, and 2022, respectively.

– The Company paid $ 99,861 and $ 88,102 for the three months ended September 30, 2023 and 2022, respectively, in interest on

short and long-term debt.

The Company paid $ 286,045 and $ 263,326 for the nine months ended September 30, 2023 and 2022, respectively,

in interest on short and long-term debt.

taxes – The Company paid zero in income taxes for the three months ended March 31, 2024, and received $ 19,456 in income tax

refunds for the three months ended March 31, 2023.

– The Company paid $ 134,979 and $ 93,805 for the three months ended March 31, 2024 and 2023, respectively, in interest on long-term

debt, line of credit and the bank overdraft.

SEGMENT REPORTING

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

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

segments for the three and nine month periods ended September 30, 2023 and 2022.

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

segments for the three months ended March 31, 2024 and 2023.

Sales figures are net of related excise taxes.

Schedule of Segment reporting

Three Months Ended September 30,

Distributor Sales

Cost of sales

Selling expenses

Contribution margin (deficit)

$ ( 255,602 )

$ ( 805,362 )

Percent of total sales

General and administration expenses

Loss from operations

$ ( 282,768 )

Months Ended March 31,

and Marketing Expenses

$ ( 272,370 )

Nine Months Ended September 30,

Distributor Sales

Cost of sales

Selling expenses

Contribution margin (deficit)

$ ( 432,785 )

Percent of total sales

General and administration expenses

Loss from operations

and Administration Expenses

from Operations

$ ( 602,577 )

$ ( 974,950 )

sales include zero bulk wine sales for the three months ended September 30, 2023 and September 30, 2022.

Direct sales include $ 10,000

bulk wine sales for the nine months ended September 30, 2023 and $ 10,500 bulk wine sales for the nine months ended September 30, 2022.

sales include zero bulk wine sales in the three months ended March 31, 2024 compared to $ 10,000 bulk wine sales in the three months ended

March 31, 2023.

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 was 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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of $5.35 per share.

Net proceeds of $3,558,807 have been received under these offerings as of September, 30 2023 for the issuance of

Preferred Stock.

On 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.

Net proceeds of $1,935,821 have been received under this offering as of September, 30 2023 for the issuance of Preferred

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

Net proceeds of $3,558,807 have been received under these offerings as of March 31, 2024 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 $3,938,066 have been received under these offering as of March 31, 2024 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 September 30, 2023 and December 31, 2022 was $ 738,183 and $ 1,106,970 , respectively, and is recorded as unearned revenue on the balance

at March 31, 2024 and December 31, 2023 was $ 1,099,872 and $ 1,480,138 , 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.

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to the original issue price plus accrued but unpaid dividends and a redemption premium equal to 3% of the original issue price.

COMMITMENTS AND CONTINGENCIES

determine if an arrangement is a lease at inception.

On our condensed balance sheet, our operating leases are included in Operating lease

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

The Company does not

currently have any finance leases.

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

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

The Company does

not currently have any finance leases.

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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the lease in January 2019 until January 2025.

December 2004 , under a sale-leaseback agreement, the Company sold approximately 75 acres of the Tualatin Vineyards property with a net

book value of approximately $551,000 for approximately $ 727,000 cash and entered into a 15-year operating lease agreement, with three

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 Peter Michael Vineyard and includes approximately 69 acres of producing vineyards.

2004 , under a sale-leaseback agreement, the Company sold approximately 75 acres of the Tualatin Vineyards property with a net

book value of approximately $551,000 for approximately $ 727,000

cash and entered into a 15-year

operating lease agreement, with three five-year extension options, for the vineyard portion of the property.

The first two five year extensions have been exercised.

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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The lease contains an escalation provision tied to the CPI not to exceed 2% per annum.

property includes 54 acres of producing vineyards and 2 additional plantable acres.

July 2008 , the Company entered into a 34-year lease agreement with a property owner in the Eola Hills for approximately 110 acres adjacent

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that rises as the vineyard is developed, and contains an escalation provision of CPI plus 0.5% per year capped at 4%.

This property is

referred to as part of Ingram Vineyard and includes 93 acres of producing vineyards and 17 additional plantable acres.

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.

This property is referred to as part of Bernau Estate Vineyard

and includes 9 acres of producing vineyards.

Leases – Non-Vineyard – In September 2018 , the Company renewed an existing lease for three years , with two one-year renewal

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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.

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

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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.

2021 , the Company entered into a lease for 10 years ,

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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.

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:

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Three Months Ended

Nine Months Ended

September 30, 2023

Three Months Ended

March 31, 2024

March 31, 2023

Operating lease cost - Vineyards

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Weighted-average discount rate - Operating leases

assets obtained in exchange for new operating lease obligations were $1,090,735 and $3,360,917 for the nine months ended September 30,

2023 and 2022, respectively.

of September 30, 2023, maturities of lease liabilities were as follows:

assets obtained in exchange for new operating lease obligations were zero and $ 695,565 for the three months ended March 31, 2024 and

2023, respectively.

of March 31, 2024, maturities of lease liabilities were as follows:

of Maturities of Lease Liabilities

Years Ended December 31,

2023, for remaining 3 months

Total minimal lease payments

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Lease liabilities, net of current portion

COMMITMENTS AND CONTINGENCIES

– From time to time, in the normal course of business, the Company is a party to legal proceedings.

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would be due.

There were $1,904,736 and $1,208,673 in grape purchases for the three and nine months periods ended September 30, 2023

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Such policies

were unchanged during the three months ended September 30, 2023.

were unchanged during the three months ended March 31, 2024.

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

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this is not a significant part of the Companys activities.

Company sold 143,286 and 127,007 cases of produced wine during the nine months ended September 30, 2023 and 2022, respectively, an increase

Company sold 43,208 and 42,387 cases of produced wine during the three months ended March 31, 2024 and 2023, respectively, an increase

of 821 cases, or 2.0% in the current year period over the prior year period.

The increase in wine case sales was primarily the

result of increased case sales through both distributors and direct to the consumer.

result of having more locations and more availability of some vintages in the quarter when compared to the prior year period.

of sales includes grape costs, whether purchased or grown at Company vineyards, winemaking and processing costs, bottling, packaging,

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of vineyard development costs.

September 30, 2023, wine inventory included 172,280 cases of bottled wine and 519,138 gallons of bulk wine in various stages of the aging

March 31, 2024, wine inventory included 147,351 cases of bottled wine and 658,454 gallons of bulk wine in various stages of the aging

Case wine is expected to be sold over the next 12 to 24 months and generally before the release date of the next vintage.

Winery bottled 205,486 cases during the nine months ended September 30, 2023.

Winery bottled 57,908 cases during the three months ended March 31, 2024.

Valley Vineyards continues to receive positive recognition through national magazines, regional publications, local newspapers and online

bloggers including the accolades below.

Enthusiast Magazine rated the Companys 2022 Whole Cluster Pinot Noir 90 points, 2022 White Pinot Noir 91 points, 2022 Maison Bleue

Voltigeur Viognier 90 points, 2020 Métis Red Blend 92 points and Cellar Selection.

Suckling rated the Companys 2021 Elton Pinot Noir 92 points and the 2021 Signature Cuvée Pinot Noir 91 points.

rated the Companys 2021

Estate Pinot Noir 91 points, Dijon Clone Chardonnay 91 points and the 2022 Pinot Gris 90 points.

Bargreen rated the Companys 2020 Domaine Willamette Méthode Traditionnelle Brut Rosé, 2022 Tualatin Estate Chardonnay,

2021 Mètis Red Blend and 2022 Dry Riesling all 92 points.

Bargreen also scored the 2022 Dry Gewürztraminer at 91 points.

OF OPERATIONS

revenue for the three months ended September 30, 2023 and 2022 were $9,348,066 and $7,602,878, respectively, an increase of $1,745,188,

or 23.0%, in the current year period over the prior year period.

This increase was caused by an

increase in sales through distributors of $412,728 and an increase in direct sales of $1,332,460 in the current year three-month period

over the prior year period.

The increase in revenue from sales through distributors was primarily attributed to more availability

of new vintage wines compared to the prior year.

The increase in direct sales to consumers was primarily the result of retail sales in

new tasting rooms in 2023.

Sales revenue for the nine months ended September 30, 2023 and 2022 were $28,383,249 and $22,546,057, respectively,

an increase of $5,837,192, or 25.9%, in the current year period over the prior year period.

This increase was caused by an

increase in revenues from direct sales of $4,134,603 and an increase in revenues from sales through distributors of $1,702,589 in the

current year period over the prior year period.

The increase in revenues from direct sales to consumers was primarily the result

of more tasting room locations in the current year.

The increase in sales through distributors was primarily the result of an increase

in off-premise sales.

of Sales for the three months ended September 30, 2023 and 2022 were $3,663,488 and $3,708,695, respectively, a decrease of $45,207,

or 1.2%, in the current period over the prior year period.

This change was primarily the result of an increase in direct sales compared

to sales through distributors in the third quarter of 2023 compared to the same quarter of 2022.

Cost of Sales for the nine months ended

September 30, 2023 and 2022 were $11,969,630 and $10,104,588, respectively, an increase of $1,865,042 or 18.5%, in the current period

over the prior year period.

This change was primarily the result of an increase in both direct and distributor sales in 2023.

profit as a percentage of net sales for the three months ended September 30, 2023 and 2022 was 60.8% and 51.2%, respectively, an increase

of 9.6 percentage points in the current year period over the prior year period, mostly as a result of the change in mix of products compared

to the same quarter of 2022.

Gross profit as a percentage of net sales for the nine months ended September 30, 2023 and 2022 was 57.8%

and 55.2%, respectively, an increase of 2.6 percentage points in the current year period over the prior year period.

This increase was

primarily the result of an increase in direct sales compared to sales through distributors.

revenue for the three months ended March 31, 2024 and 2023 was $8,803,080 and $8,308,940, respectively, an increase of $494,140, or 5.9%,

in the current year period over the prior year period.

This increase was caused by an increase in revenues from direct sales of

$214,507 and an increase in revenues from shipments to distributors of $279,633 in the current years three-month period over the

same period in the prior year.

The increase in

direct sales to consumers was primarily the result of higher wine club revenues and having an additional tasting room open in 2024 when

compared to 2023.

The increase in revenue from the distributors was primarily attributed to higher

prices in the current year three-month period over the same period in the prior year.

of sales for the three months ended March 31, 2024 and 2023 was $3,530,358 and $3,830,477, respectively, a decrease of $300,119, or 7.8%,

in the current period over the prior year period.

This change was primarily the result of the change in the mix of products sold in the

first quarter of 2024 when compared to the same quarter in 2023.

profit for the three months ended March 31, 2024 and 2023 was $5,272,722 and $4,478,463, respectively, an increase of $794,259, or 17.7%,

in the first quarter of 2024 over the same quarter in the prior year.

This increase was primarily the result of a combination of an increase

in direct sales combined with higher margins from our sales through distributors in the first three months of the current year compared

to the same period in 2023.

profit as a percentage of net sales for the three months ended March 31, 2024 and 2023 was 59.9% and 53.9%, respectively, an increase

of 6.0 percentage points in the current quarter over the same quarter in the prior year.

The increase was primarily the result of the

higher prices charged for our products sold through distributors in the current quarter.

General and Administrative Expenses

general and administrative expenses for the three months ended September 30, 2023 and 2022 was $5,967,346 and $5,120,218 respectively,

an increase of $847,128 or 16.5%, in the current quarter over the same quarter in the prior year.

general and administrative expenses for the three months ended March 31, 2024 and 2023 was $5,875,299 and $5,453,413, respectively, an

increase of $421,886, or 7.7%, in the current quarter over the same quarter in the prior year.

This increase was primarily the result

of an increase in selling and marketing expenses of $577,384, or 15.3% and an increase in general and administrative expenses of $269,744,

or 20.0% in the current quarter compared to the same quarter in the prior year.

Selling, general and administrative expense for the nine

months ended September 30, 2023 and 2022 was $17,362,498 and $13,359,293, respectively, an increase of $4,003,205 or 30.0%, in the current

year period over the prior year period.

This increase was primarily the result of an increase in selling and marketing expenses of $3,413,667,

or 36.8% combined with an increase in general and administrative expenses of $589,538, or 14.4% in the current year period compared to

the same period in 2022.

Selling expenses increased primarily as a result of having more tasting room locations in 2023.

expense for the three months ended September 30, 2023 and 2022 was $171,272 and $87,220, respectively, an increase of $84,052 or 96.4%,

in the third quarter of 2023 over the same quarter in the prior year.

Interest expense for the nine months ended September 30, 2023 and

2022 was $460,309 and $269,037, respectively, an increase of $191,272 or 71.1%, in the current year period over the prior year period.

The increase in interest expense for the third quarter and first nine months of 2023 was primarily the result of increased debt at higher

interest rates in the current periods compared to the third quarter and first nine months of 2022.

income tax benefit for the three months ended September 30, 2023 and 2022 was $123,344 and $358,414, respectively, a decrease of $235,070

or 65.6%, in the third quarter of 2023 compared to the same quarter in the prior year mostly as a result of the lower pre-tax loss in

the third quarter of 2023, compared to the same quarter in 2022.

The Companys estimated federal and state combined income tax

rate was 27.4% for the three months ended September 30, 2023 and 2022, respectively.

The income tax benefit for the nine months ended

September 30, 2023 and 2022 was $363,396 and $298,517, respectively, an increase of $64,879 or 21.7%, in the current year period over

the prior year period, mostly a result of a higher pre-tax loss in the first nine months of 2023, compared to the same period in 2022.

The Companys estimated federal and state combined income tax rate was 27.4% for the nine months ended September 30, 2023 and 2022,

respectively.

loss for the three months ended September 30, 2023 and 2022 was $326,982 and $949,821, respectively, a decrease of $622,839, or 65.6%,

in the third quarter of 2023 over the same quarter in the prior year.

Net loss for the nine months ended September 30, 2023 and 2022

was $963,352 and $791,362, respectively, an increase of $171,990, or 21.7%, in the current year period over the prior year period.

of an increase in selling expenses of $44,202, or 1.1% and an increase in general and administrative expenses of $377,684, or 25.7% in

the current quarter compared to the same quarter last year.

Selling expenses increased in 2024 compared to 2023 primarily as a result

of having an additional tasting room location in 2024.

General and administrative expenses increased in the first quarter of 2024 compared

to the same quarter of 2023 primarily as a result of higher legal costs.

expense for the three months ended March 31, 2024 and 2023 was $229,687 and $124,422, respectively, an increase of $105,265 or 84.6%,

in the first quarter of 2024 over the same quarter in the prior year.

The increase in interest expense for the first quarter was primarily

the result of higher debt and higher interest rates compared to the first quarter of 2023.

income tax benefit for the three months ended March 31, 2024 and 2023 was $212,407 and $280,963, respectively, a decrease of $68,556

or 24.4%, in the first quarter of 2024 over the same quarter in the prior year, primarily as a result of a lower pre-tax loss in the

first quarter of 2024, compared to the same quarter in 2023.

The Companys estimated federal and state combined income tax rate

for the three months ended March 31, 2024 and 2023 was 28.9% and 27.4% respectively.

loss for the three months ended March 31, 2024 and 2023 was $521,805 and $744,823, respectively, a decrease of $223,018, or 29.9%, in

the first quarter of 2024 over the same quarter in the prior year.

The decrease in net loss for the first quarter of 2024, compared to

the comparable period in 2023, was primarily the result of higher prices of products sold in 2024.

Loss Applicable to Common Shareholders

loss applicable to common shareholders for the three months ended September 30, 2023 and 2022 was $838,701 and $1,416,433, respectively,

a decrease of $577,732, or 40.8%, in the third quarter of 2023 over the same quarter in the prior year.

Net loss applicable to common

shareholders for the nine months ended September 30, 2023 and 2022 was $2,498,510 and $2,191,199, respectively, an increase of $307,311,

or 14.0%, in the current year period over the prior year period.

The decrease in the loss applicable to common shareholders in the third

quarter was the result of a lower net loss in the current period.

The increase in the loss applicable to common shareholders in the first

nine months of 2023, compared to the same period of 2022, was the result of a higher net loss and higher dividend costs in the current

loss applicable to common shareholders for the three months ended March 31, 2024 and 2023 was $1,084,982 and $1,256,542, respectively,

a decrease of $171,560, or 13.7%, in the first quarter of 2024 over the same quarter in the prior year.

The decrease in loss applicable

to common shareholders in the first quarter of 2024, compared to the same period of 2023, was the result of a lower net loss being partially

offset by a higher accrued preferred stock dividend in the current period.

and Capital Resources

September 30, 2023, the Company had a working capital balance of $17.7 million and a current working capital ratio of 2.44:1.

September 30, 2023, the Company had a cash balance of $213,432.

March 31, 2024, the Company had a working capital balance of $21.6 million and a current working capital ratio of 2.87:1.

March 31, 2024, the Company had a cash balance of $256,472.

At December 31, 2023, the Company had a cash balance of $238,482.

decrease is primarily the result of investments in property and equipment and inventories.

cash used for operating activities in the nine months ended September 30, 2023 was $68,089.

cash used for operating activities in the three months ended March 31, 2024 was $3,012,769.

Cash used in operating activities for the

nine months ended September 30, 2023 was primarily associated with increased inventories, being partially offset by decreased accounts

receivable and depreciation and amortization.

cash used in investing activities in the nine months ended September 30, 2023 was $3,718,612.

Cash used in investing activities for the

nine months ended September 30, 2022 consisted of cash used on property and equipment and vineyard development costs.

cash generated from financing activities in the nine months ended September 30, 2023 was $3,661,457.

three months ended March 31, 2024 was primarily associated with reduced grapes payable and increased inventories, being partially offset

by depreciation and amortization.

cash used in investing activities in the three months ended March 31, 2024 was $330,298.

Cash used in investing activities for the three

months ended March 31, 2024 consisted of cash used on property and equipment and vineyard development costs.

cash generated from financing activities in the three months ended March 31, 2024 was $3,361,057.

Cash generated from financing activities

for the nine months ended September 30, 2023 primarily consisted of proceeds from the issuance of Preferred Stock, proceeds from the

for the three months ended March 31, 2024 primarily consisted of proceeds from the issuance of Preferred Stock and proceeds from the

line of credit and long-term debt, being partially offset by the repayment of long-term debt.

December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank that allows borrowing up to $2,000,000

against eligible accounts receivable and inventories, as defined in the agreement.

The revolving line bears interest at prime less 0.5%,

with a floor of 3.25%, is payable monthly, and is subject to renewal.

In July 2021, the Company renewed the credit agreement until July

December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank (the Credit Agreement)

that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories, as defined in the agreement.

The revolving

line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal.

In July 2021, the Company

renewed the Credit Agreement until July 31, 2023.

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

The Company had no outstanding line of credit

balance at September 30, 2023, at an interest rate of 8.00%, and an outstanding balance of $166,617 at December 31, 2022.

2023 the line of credit was renewed for an additional two years.

The Company had an outstanding line of credit balance of $3,320,928

at March 31, 2024, at an interest rate of 8.0%, and an outstanding line of credit balance of $2,684,982 at December 31, 2023, at an interest

rate of 8.0%.

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

3 unchanged sentences

this violation until the next measurement date of December 31, 2024.

of September 30, 2023, the Company had a 15-year installment note payable of $1,126,374, due in quarterly payments of $42,534, associated

of March 31, 2024, the Company had a 15-year installment note payable of $1,074,712, due in quarterly payments of $42,534, associated

with the purchase of property in the Dundee Hills AVA.

of September 30, 2023, the Company had a total long-term debt balance of $7,717,435, including the portion due in the next year, owed

to AgWest, exclusive of debt issuance costs of $109,301.

of March 31, 2024, the Company had a total long-term debt balance of $9,962,186, including the portion due in the next year, owed to

AgWest, exclusive of debt issuance costs of $102,677.

As of December 31, 2023, the Company had a total long-term debt balance of $7,590,659,

5 unchanged sentences

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-Q

Item 1. Financial Statements