What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-13 · 281 added, 257 removed, 414 unchanged (57% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30,

CURRENT ASSETS

27 unchanged sentences

SHAREHOLDERS EQUITY

Redeemable preferred stock, no par value, 100,000,000 shares authorized, 10,239,573 shares issued and outstanding, liquidation preference $ 43,620,654 , at June 30, 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 June 30, 2024 and December 31, 2023, respectively.

Redeemable preferred stock, no par value, 100,000,000 shares authorized, 10,239,573 shares issued and outstanding, liquidation preference $ 44,183,904 , at September 30, 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 September 30, 2024 and December 31, 2023, respectively.

Retained earnings

7 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

COST OF SALES

3 unchanged sentences

Total operating expenses

INCOME (LOSS) FROM OPERATIONS

LOSS FROM OPERATIONS

OTHER INCOME (EXPENSE)

1 unchanged sentence

Other income, net

INCOME (LOSS) BEFORE INCOME TAXES

INCOME TAX (EXPENSE) BENEFIT

NET INCOME (LOSS)

LOSS BEFORE INCOME TAXES

( 1,326,748 )

INCOME TAX BENEFIT

Accrued preferred stock dividends

1 unchanged sentence

( 1,535,158 )

LOSS APPLICABLE TO COMMON SHAREHOLDERS

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS

$ ( 846,195 )

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STATEMENTS OF SHAREHOLDERS EQUITY

Six-Month Period Ended June 30, 2024

Preferred Stock

Period Ended September 30, 2024

Balance at December

Issuance of preferred stock, net

Issuance of preferred stock,

Preferred stock dividends accrued

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Balance at June 30, 2024

Six-Month Period Ended June 30, 2023

Preferred Stock

Preferred stock dividends accrued

at September 30, 2024

Period Ended September 30, 2023

Balance at December

Issuance of preferred stock, net

Issuance of preferred stock,

Preferred stock dividends accrued

2 unchanged sentences

Balance at June 30, 2023

Preferred stock dividends accrued

at September 30, 2023

accompanying notes are an integral part of this condensed financial statement

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OF CASH FLOWS

Six months ended June 30,

Nine months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

8 unchanged sentences

( 3,046,229 )

( 3,864,269 )

Prepaid expenses and other current assets

4 unchanged sentences

( 1,886,226 )

( 1,208,673 )

Accounts payable

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Payment on installment note for property purchase

Proceeds from bank overdraft

Proceeds from line of credit

Proceeds from (reduction of) bank overdraft

Proceeds from (payments on) line of credit

Payments on long-term debt

Proceeds from investor deposits held as liability

Proceeds from long-term debt

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BASIS OF PRESENTATION

accompanying unaudited interim financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023

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

GAAP) for 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.

accompanying unaudited interim financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024

and 2023 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, 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

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

GAAP 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, 2023, as presented in the Companys Annual Report on Form 10-K.

results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the entire

year ending December 31, 2024, or any portion thereof.

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, 2023, as presented in the Companys Annual Report on Form 10-K.

results for the three and nine months ended September 30, 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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Schedule of Earnings Per Share

Three months ended June 30,

Six months ended June 30,

Net income (loss)

Three months ended September 30,

Nine months ended September 30,

$ ( 282,945 )

$ ( 326,982 )

$ ( 608,772 )

$ ( 963,352 )

Accrued preferred stock dividends

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of Inventories

June 30, 2024

September 30, 2024

December 31, 2023

Winemaking and packaging materials

Work-in-process (costs relating to unprocessed and/or unbottled wine products)

Work-in-process (costs relating to unprocessed and/or unbottled

wine products)

Finished goods (bottled wine and related products)

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Schedule of Property and Equipment, Net

June 30, 2024

September 30, 2024

December 31, 2023

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Property and equipment, net

expense for the three months ended June 30, 2024 and 2023 was $ 790,970 and $ 744,048 , respectively.

Depreciation expense for the six

months ended June 30, 2024 and 2023 was $ 1,582,956 and $ 1,459,612 , respectively.

expense for the three months ended September 30, 2024 and 2023 were $ 785,581 and $ 738,354 , respectively.

Depreciation expense for

the nine months ended September 30, 2024 and 2023 were $ 2,368,537 and $ 2,197,966 , 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

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

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 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 $ 2,334,415 at June 30, 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%.

The Company had an outstanding

line of credit balance of $ 3,460,004 at September 30, 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 June 30, 2024, the Company

had a balance of $1,049,587 due on this note.

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

As of September 30, 2024,

the Company had a balance of $1,022,778 due on this note.

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

Debt – The Company has three long term debt agreements with AgWest with an aggregate outstanding balance of $ 10,701,405 and

$ 7,590,659 as of June 30, 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.

$ 7,590,659 as of September 30, 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.

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 June 30, 2024, and December 31, 2023, respectively, with interest

due annually and principal at maturity on November 1, 2025.

of June 30, 2024, future minimum principal payments of long-term debt are as follows for the years ending December 31:

The collateral for these two loans include the land and buildings at the main estate.

The third loan bears interest at Northwest Variable

base, which was 7.80% at September 30, 2024, and December 31, 2023, respectively, with interest due annually and principal at maturity

on November 1, 2025.

In November 2024 the Company replaced the third loan with a $10,0000,000

loan with monthly principal and interest payments with maturity in October 2039 and a current interest rate of 6.66%.

of September 30, 2024, future 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 June 30, 2024, the Company had unamortized debt issuance costs of $ 99,365 .

As of December 31, 2023, the Company had unamortized debt

issuance costs of $ 105,989 .

of September 30, 2024, the Company had unamortized debt issuance costs of $ 96,054 .

As of December 31, 2023, the Company had unamortized

debt issuance costs of $ 105,989 .

INTEREST AND TAXES PAID

taxes – The Company paid zero in income taxes for the three months ended June 30, 2024 and 2023, respectively.

paid zero in income taxes for the six months ended June 30, 2024 and received $ 19,456 in income tax refunds for the six months ended

June 30, 2023.

– The Company paid $ 129,539 and $ 92,379 for the three months ended June 30, 2024 and 2023, respectively, in interest on short

and long-term debt.

The Company paid $ 264,518 and $ 186,184 for the six months ended June 30, 2024 and 2023, respectively, in interest

on short and long-term debt.

taxes – The Company paid $ 27,000 and zero in income taxes for the three months ended September 30, 2024 and 2023, respectively.

The Company paid $ 27,000 in income taxes for the nine months ended September 30, 2024 and received $ 19,456 in income tax refunds for

the nine months ended September 30, 2023.

– The Company paid $ 127,444 and $ 99,861 for the three months ended September 30, 2024 and 2023, respectively, in interest on

short and long-term debt.

The Company paid $ 391,962 and $ 286,045 for the nine months ended September 30, 2024 and 2023, respectively,

in interest on short and long-term debt.

SEGMENT REPORTING

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

segments for the three and six month periods ended June 30, 2024 and 2023.

segments for the three and nine month periods ended September 30, 2024 and 2023.

Sales figures are net of related excise taxes.

Schedule of Segment reporting

Three Months Ended June 30,

Three Months Ended September 30,

Distributor Sales

Cost of sales

Selling expenses

Sales and marketing expenses

Contribution margin

$ ( 255,602 )

Percent of total sales

General and administration expenses

Income from operations

Six Months Ended June 30,

Loss from operations

$ ( 136,506 )

$ ( 282,768 )

Nine Months Ended September 30,

Distributor Sales

Cost of sales

Selling expenses

Sales and marketing expenses

Contribution margin (deficit)

$ ( 321,995 )

Percent of total sales

2 unchanged sentences

$ ( 202,177 )

were no bulk wine sales for the three months ended June 30, 2024 and June 30, 2023.

There were no bulk wine sales for the six months

ended June 30, 2024 and $ 10,000 of bulk wine sales included in direct sales for the six months ended June 30, 2023.

$ ( 948,879 )

were no bulk wine sales for the three months ended September 30, 2024 and September 30, 2023.

There were no bulk wine sales for the nine

months ended September 30, 2024 and $10,000 of bulk wine sales included in direct sales for the nine months ended September 30, 2023.

SALE OF PREFERRED STOCK

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July 2022 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to an aggregate of

1,076,578 shares of Series A Redeemable Preferred Stock having proceeds not to exceed and aggregate of $5,636,714.

1,076,578 shares of Series A Redeemable Preferred Stock having proceeds not to exceed an aggregate of $5,636,714.

Each of these Prospectus

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$5.15 per share, $5.25 per share and $5.35 per share.

Net proceeds of $3,558,807 have been received under these offerings as of June

Net proceeds of $3,558,807 have been received under these offerings as of September

30, 2024 for the issuance of Preferred Stock.

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

September 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

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with an offering price of $4.85 per share.

Net proceeds of $3,938,066 have been received under these offering as of June 30, 2024 for

the issuance of Preferred Stock.

Net proceeds of $3,938,066 have been received under these offerings as of September 30, 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 June 30, 2024 and December 31, 2023 was $ 953,072 and $ 1,480,138 , respectively, and is recorded as unearned revenue on the balance

at September 30, 2024 and December 31, 2023 was $ 851,286 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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the lease in January 2019 until January 2025.

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 Company extended the lease in July 2024 until January 2030.

For right of use asset

and liability calculations the Company has concluded it is reasonably certain to extend available options through January 2035.

property is referred to as the Peter Michael Vineyard and includes approximately 69 acres of producing vineyards.

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 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.

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

In June 2021 the company

entered into a new 11

year lease for this property.

of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through November

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.

In June 2021 the Company entered

into a new 11 year lease for this property.

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.

For right of use asset and liability calculations

the Company has concluded it is reasonably certain to extend available options through December 2031.

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

2 unchanged sentences

Terms of this agreement contain rent increases,

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

that rise 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.

For right of use

asset and liability calculations the Company has concluded it is reasonably certain to extend available options through December 2053.

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

This lease contains

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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.

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.

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

2023, the Company entered into a new lease to December 2027 with one five year renewal option, and defined payments over the term of

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

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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 ,

with two five-year renewal options for a retail wine facility in Vancouver, Washington.

The lease defines the payments over the term

of the lease and option periods.

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

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of Lease Cost and Information

Six Months Ended

June 30, 2024

June 30, 2023

Nine Months Ended

September 30, 2024

September 30, 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 zero and $ 1,090,735 for the six months ended June 30, 2024 and 2023,

respectively.

of June 30, 2024, maturities of lease liabilities were as follows:

assets obtained in exchange for new operating lease obligations were zero and $ 1,090,735 for the nine months ended September 30, 2024

and 2023, respectively.

of September 30, 2024, maturities of lease liabilities were as follows:

of Maturities of Lease Liabilities

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Managements Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-Q contain

forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

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.

Therefore, 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, and the reduction in consumer demand for premium wines.

such statements could be affected by general industry and market conditions and growth rates, and general domestic economic conditions.

Many 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 the Companys Annual Report on Form 10-K for the year ended December 31, 2023, as well as

in the Companys other Securities and Exchange Commission filings and reports.

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.

forward looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended

(the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (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.

Therefore, 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:

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, and the reduction in

consumer demand for premium wines.

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

rates, and general domestic economic conditions.

Many 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 the Companys Annual Report on Form 10-K for

the year ended December 31, 2023, as well as in the Companys other Securities and Exchange Commission filings and reports.

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.

Accounting Policies

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Such policies

were unchanged during the three months ended June 30, 2024.

were unchanged during the three months ended September 30, 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 91,102 and 96,269 cases of produced wine during the six months ended June 30, 2024 and 2023, respectively, a decrease of

5,167 cases, or 5.4% in the current year period over the prior year period.

The decrease in wine case sales was primarily the result

of decreased case sales through distributors.

Company sold 135,424 and 143,286 cases of produced wine during the nine months ended September 30, 2024 and 2023, respectively, a decrease

of 7,862 cases, or 5.5% in the current year period over the prior year period.

The decrease in wine case sales was primarily the

result of decreased case sales through distributors.

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

2 unchanged sentences

of vineyard development costs.

June 30, 2024, wine inventory included 183,974 cases of bottled wine and 456,315 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 138,253 cases during the six months ended June 30, 2024.

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

bloggers including the accolades below.

in the Salem Hills clinched the award for the Best Wine Tasting Room in the country

in USA Todays 10 Best Readers Choice Awards.

The company also received the award for #2

Best Wine Club in the nation.

Enthusiast Magazine awarded the Companys Willamette Valley Vineyards 2021 Bernau Block Pinot Noir 93 points and the 2022 Dijon

Clone Chardonnay was also awarded 91 points.

Sunset International Wine Competition awarded Gold and 93 points to 2022 Estate

Chardonnay, 2022 White Pinot Noir was also awarded Gold/Best of Class and 90 points.

Suckling rated the 2021 Elton Chardonnay 91 points.

September 30, 2024, wine inventory included 247,003 cases of bottled wine and 304,354 gallons of bulk wine in various stages of the

aging process.

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

The Winery bottled 245,193 cases during the nine months ended September 30, 2024.

continue to receive positive recognition through national magazines, regional publications, local newspapers and online bloggers including

the accolades below.

tasting room at the Companys Estate Winery in the Salem Hills, Oregon clinched the award for the Best Wine Tasting

Room in the country in USA Todays 10 Best Readers Choice Awards.

The Company also received the award

for #2 Best Wine Club in the nation.

Companys Willamette Valley Vineyards 2021 Elton Pinot Noir received a 93 score, the 2022 Reisling scored 92 points, 2022 Estate

Pinot Noir scored 91 points and the 2022 Whole Cluster Pinot Noir scored 90 points from the International Wine Report.

The International

Wine Report also scored the 2019 Pambrun Chrysologue at 93 points.

2021 Domaine Willamette Brut scored 92 points.

International Wine

Report rated the 2022 Maison Bleue Voltigeur Viognier 92 points and 2021 Maison Bleue Frontière Syrah 91 points.

The Companys 2021 Bernau Block Pinot Noir received a 95 score from Beverage Dynamics.

Bargreen rated the Companys 2023 Pinot Blanc and 2022 Tualatin Estate White Pinot Noir 92 points.

SommCons Domestic and International Wine and Spirits Competition awarded the National Sales 2023 Pinot Gris a Gold Medal.

OF OPERATIONS

revenue for the three months ended June 30, 2024 and 2023 were $10,332,358 and $10,726,243, respectively, a decrease of $393,885, or 3.7%,

in the current year period over the prior year period.

This decrease was caused by a decrease in

sales through distributors of $597,059 partly offset by an increase in direct sales of $203,174 in the current year three-month period

over the prior year period.

The decrease in revenue from sales through distributors was primarily related to lower case sales

in this market.

The increase in direct sales to consumers was primarily the result of opening a new tasting room in late 2023.

revenue for the six months ended June 30, 2024 and 2023 were $19,135,438 and $19,035,183, respectively, an increase of $100,255, or 0.5%,

in the current year period over the prior year period.

This increase was caused by an increase

in revenues from direct sales of $417,682 partly offset by a decrease in revenues from sales through distributors of $317,427 in the

current year period over the prior year period.

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

of an extra tasting room in the current year.

The decrease in sales through distributors was primarily the result of a decrease in off-premise

of Sales for the three months ended June 30, 2024 and 2023 were $3,860,668 and $4,475,665, respectively, a decrease of $614,997, or 13.7%,

in the current period over the prior year period.

This change was primarily the result of fewer products sold in the current quarter

compared to the same quarter last year.

Cost of Sales for the six months ended June 30, 2024 and 2023 were $7,391,026 and $8,306,142,

respectively, a decrease of $915,116 or 11.0%, in the current period over the prior year period.

This change was primarily the result

of a reduction in product sales in the first six months of 2024 when compared to the same period in 2023.

profit as a percentage of net sales for the three months ended June 30, 2024 and 2023 was 62.6% and 58.3%, respectively, an increase

of 4.3 percentage points in the current year period over the prior year period, mostly as a result of higher prices charged for products

compared to the same quarter of 2023.

Gross profit as a percentage of net sales for the six months ended June 30, 2024 and 2023 was 61.4%

and 56.4%, respectively, an increase of 5.0 percentage points in the current year period over the prior year period.

The increase was

primarily the result of higher prices being charged for products and a higher percentage of sales coming from direct sales in the first

six months of 2024 compared to the same period in the prior year.

General and Administrative Expenses

general and administrative expenses for the three months ended June 30, 2024 and 2023 was $5,934,784 and $5,941,739 respectively, a decrease

of $6,955, or 0.1%, in the current quarter over the same quarter in the prior year.

This decrease was primarily the result of a decrease

in selling and marketing expenses of $11,872, or 0.3% being partially offset by an increase in general and administrative expenses of

$4,917, or 0.3% in the current quarter compared to the same quarter last year.

Selling, general and administrative expense for the six

months ended June 30, 2024 and 2023 was $11,810,083 and $11,395,152, respectively, an increase of $414,931, or 3.6%, in the current year

revenue for the three months ended September 30, 2024 and 2023 were $9,370,713 and $9,348,066, respectively, an increase of $22,647,

or 0.2%, in the current year period over the prior year period.

This increase was caused by an

increase in direct sales of $245,797 partly offset by a decrease in sales through distributors of $223,150 in the current year three-month

period over the prior year period.

This increase was primarily the result of an increase in selling and marketing expenses of $32,330,

or 0.4% combined with an increase in general and administrative expenses of $382,601, or 12.5% in the current year period compared to

the same period in 2023.

General and administrative expenses increased in the first six months of 2024 compared to the same period in

the prior year primarily as a result of higher legal costs.

expense for the three months ended June 30, 2024 and 2023 was $263,694 and $164,610, respectively, an increase of $99,084 or 60.2%, in

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

Interest expense for the six months ended June 30, 2024 and 2023

was $493,381 and $289,032, respectively, an increase of $204,349 or 70.7%, in the current year period over the prior year period.

increase in interest expense for the second quarter and first six months of 2024 was primarily the result of increased debt compared

to the second quarter and first six months of 2023.

income tax expense for the three months ended June 30, 2024 and 2023 was $79,775 and $40,911, respectively, an increase of $38,864 or

95.0%, in the second quarter of 2024 over the same quarter in the prior year mostly as a result of the higher pre-tax income in the second

The increase in direct sales to consumers in the third quarter of 2024 compared to the same

quarter of 2023 was primarily the result of revenues from opening a new tasting room in late 2023.

The decrease in revenue from sales

through distributors was primarily related to lower case sales in this market.

Sales revenue for the nine months ended September 30,

2024 and 2023 were $28,506,151 and $28,383,249, respectively, an increase of $122,902, or 0.4%, in the current year period over the prior

This increase was caused by an increase in revenues from direct sales of $663,479

partly offset by a decrease in revenues from sales through distributors of $540,577 in the current year period over the prior year period.

The increase in revenues from direct sales to consumers in the first nine months of 2024 compared to the same period in 2023 was

primarily the result of revenues from a new tasting room opened in late 2023.

The decrease in sales through distributors was primarily

the result of a decrease in off-premise sales.

of Sales for the three months ended September 30, 2024 and 2023 were $3,562,599 and $3,663,488, respectively, a decrease of $100,889,

or 2.8%, in the current period over the prior year period.

This change was primarily the result of fewer products sold in the current

quarter compared to the same quarter last year.

Cost of Sales for the nine months ended September 30, 2024 and 2023 were $10,953,625

and $11,969,630, respectively, a decrease of $1,016,005 or 8.5%, in the current period over the prior year period.

This change was primarily

the result of a reduction in product sales in the first nine months of 2024 when compared to the same period in 2023.

profit as a percentage of net sales for the three months ended September 30, 2024 and 2023 was 62.0% and 60.8%, respectively, an increase

of 1.2 percentage points in the current year period over the prior year period, mostly as a result of a higher percentage of total sales

coming from direct sales, which have higher margins than sales through distributors combined with a change in product mix in the third

quarter of 2024 compared to the same quarter of 2023.

Gross profit as a percentage of net sales for the nine months ended September 30,

2024 and 2023 was 61.6% and 57.8%, respectively, an increase of 3.8 percentage points in the current year period over the prior year

This increase was primarily the result of higher prices being charged for products and a higher percentage of total sales coming

from direct sales in the first nine months of 2024 compared to the same period in the prior year.

General and Administrative Expenses

general and administrative expenses for the three months ended September 30, 2024 and 2023 were $5,944,620 and $5,967,346 respectively,

a decrease of $22,726, or 0.4%, in the current quarter over the same quarter in the prior year.

This decrease was primarily the result

of a decrease in selling and marketing expenses of $25,028, or 0.6% being partially offset by an increase in general and administrative

expenses of $2,302, or 0.1% in the current quarter compared to the same quarter last year.

Selling, general and administrative expense

for the nine months ended September 30, 2024 and 2023 were $17,754,703 and $17,362,498, respectively, an increase of $392,205, or 2.3%,

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 $7,302, or 0.1% combined with an increase in general and administrative expenses of $384,903, or 8.2% in the current year

period compared to the same period in 2023.

General and administrative expenses increased in the first nine months of 2024 compared to

the same period in the prior year primarily as a result of higher legal costs.

expense, net for the three months ended September 30, 2024 and 2023 were $257,192 and $171,272, respectively, an increase of $85,920

or 50.2%, in the third quarter of 2024 over the same quarter in the prior year.

Interest expense, net for the nine months ended September

30, 2024 and 2023 were $750,573 and $460,309, respectively, an increase of $290,264 or 63.1%, in the current year period over the prior

The increase in interest expense for the third quarter and first nine months of 2024 was primarily the result of increased

debt compared to the third quarter and first nine months of 2023.

income tax benefit for the three months ended September 30, 2024 and 2023 was $115,177 and $123,344, respectively, a decrease of $8,167

or 6.6%, in the third quarter of 2024 over the same quarter in the prior year mostly as a result of the lower pre-tax loss in the third

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

The Companys estimated federal and state combined income tax rate was 28.9%

and 27.4% for the three months ended June 30, 2024 and 2023, respectively.

The income tax benefit for the six months ended June 30, 2024

and 2023 was $132,632 and $240,052, respectively, a decrease of $107,420 or 44.7% in the current year period over the prior year period,

mostly a result of lower pre-tax loss in the first six months of 2024, compared to the same period in 2023.

The Companys estimated

federal and state combined income tax rate was 28.9% and 27.4% for the six months ended June 30, 2024 and 2023, respectively.

Income (Loss)

income for the three months ended June 30, 2024 and 2023 was $195,978 and $108,453, respectively, an increase of $87,525, or 80.7%, in

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

Net loss for the six months ended June 30, 2024 and 2023 was $325,827

and $636,370, respectively, a decrease of $310,543, or 48.8%, in the current year period over the prior year period.

The increase in

net income for the second quarter and decrease in net loss for the first half of 2024, compared to the comparable periods in 2023, was

primarily the result of higher prices for products sold in 2024.

and 27.4% for the three months ended September 30, 2024 and 2023, respectively.

The income tax benefit for the nine months ended September

30, 2024 and 2023 was $247,809 and $363,396, respectively, a decrease of $115,587 or 31.8% in the current year period over the prior

year period, mostly a result of the lower pre-tax loss in the first nine months of 2024, compared to the same period in 2023.

The Companys

estimated federal and state combined income tax rate was 28.9% and 27.4% for the nine months ended September 30, 2024 and 2023, respectively.

loss for the three months ended September 30, 2024 and 2023 was $282,945 and $326,982, respectively, a decrease of $44,037, or 13.5%,

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

Net loss for the nine months ended September 30, 2024 and 2023

was $608,772 and $963,352, respectively, a decrease of $354,580, or 36.8%, in the current year period over the prior year period.

decrease in the net loss for the third quarter and the first nine months of 2024, compared to the comparable periods in 2023, was primarily

the result of higher prices for products sold in 2024.

Loss Applicable to Common Shareholders

loss applicable to common shareholders for the three months ended June 30, 2024 and 2023 was $367,271 and $403,267, respectively, a decrease

of $35,996, or 8.9%, in the second quarter of 2024 over the same quarter in the prior year.

Net loss applicable to common shareholders

for the six months ended June 30, 2024 and 2023 was $1,452,253 and $1,659,809, respectively, a decrease of $207,556, or 12.5%, in the

current year period over the prior year period.

The decrease in loss applicable to common shareholders in the second quarter and the

first six months 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.

loss applicable to common shareholders for the three months ended September 30, 2024 and 2023 was $846,195 and $838,701, respectively,

an increase of $7,494, or 0.9%, in the third quarter of 2024 over the same quarter in the prior year, mostly as a result of a lower net

loss being more than offset by a higher accrued preferred stock dividend in the third quarter of 2024 compared to the same period of

Net loss applicable to common shareholders for the nine months ended September 30, 2024 and 2023 was $2,298,448 and $2,498,510,

respectively, a decrease of $200,062, or 8.0%, in the current year period over the prior year period.

The decrease in loss applicable

to common shareholders in the first nine months 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

June 30, 2024, the Company had a working capital balance of $22.8 million and a current working capital ratio of 3.08:1.

June 30, 2024, the Company had a cash balance of $279,807.

September 30, 2024, the Company had a working capital balance of $22.6 million and a current working capital ratio of 2.85:1.

September 30, 2024, the Company had a cash balance of $303,195.

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

cash used for operating activities in the six months ended June 30, 2024 was $2,212,072.

Cash used in operating activities for the six

months ended June 30, 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 June 30, 2024 was $1,188,276.

Cash used in investing activities for the six

months ended June 30, 2024 consisted of cash used on property and equipment and vineyard development costs.

cash generated from financing activities in the six months ended June 30, 2024 was $3,441,673.

cash used for operating activities in the nine months ended September 30, 2024 was $2,159,828.

Cash used in operating activities for

the nine months ended September 30, 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 September 30, 2024 was $1,655,152.

Cash used in investing activities for

the nine months ended September 30, 2024 consisted of cash used on property and equipment and vineyard development costs.

cash generated from financing activities in the nine months ended September 30, 2024 was $3,879,693.

Cash generated from financing activities

for the six months ended June 30, 2024 primarily consisted of proceeds from the issuance of Preferred Stock and proceeds from long-term

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

for the nine months ended September 30, 2024 primarily consisted of proceeds from the issuance of Preferred Stock and proceeds from long

and short 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 (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.

that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories as collateral, 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.

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

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

The Company had an outstanding line of credit balance of $3,460,004

at June 30, 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%.

at September 30, 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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this violation until the next measurement date of December 31, 2024.

of June 30, 2024, the Company had a 15-year installment note payable of $1,049,587, due in quarterly payments of $42,534, associated

of September 30, 2024, the Company had a 15-year installment note payable of $1,022,778, due in quarterly payments of $42,534, associated

with the purchase of property in the Dundee Hills AVA.

of June, 2024, the Company had a total long-term debt balance of $10,832,629, including the portion due in the next year, owed to AgWest,

of September, 2024, the Company had a total long-term debt balance of $10,701,405, including the portion due in the next year, owed to

AgWest, exclusive of debt issuance costs of $96,054.

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

exclusive of debt issuance costs of $105,989.

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

of 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

1 unchanged sentence

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a smaller reporting company, the Company is not required to provide the information required by this item.

Company is not required to provide the information required by this Item as it is a smaller reporting company, as defined

in Rule 12b-2 of the Exchange Act.

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