WILLAMETTE VALLEY VINEYARDS INC 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s Common Stock is traded on the NASDAQ Capital Market under the symbol “WVVI.” Holders As of March 25, 2025, the Company had approximately 3,249 Common Stock stockholders of record. As some of our shares of Common Stock are held in “street name” by brokers on behalf of stockholders, we are unable to estimate the total number of beneficial holders of our Common Stock represented by these record holders. Dividends The Company has paid dividends on the Preferred Stock. The Company has not paid any dividends on its Common Stock, and the Company does not anticipate paying any dividends on Common Stock in the foreseeable future. The Company intends to use its earnings to expand its vineyards, winemaking, and customer service facilities. 20 Equity Compensation Plans The Company had no equity compensation plan pursuant to which equity awards could be granted and no outstanding options or other equity awards as of December 31, 2024. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. ITEM 6. [RESERVED] ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s financial statements and related notes. Some statements and information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are not historical facts but are forward-looking statements. For a discussion of these forward-looking statements, and of important factors that could cause results to differ materially from the forward-looking statements contained in this report, see “Cautionary Note on Forward-Looking Statements.” While our significant accounting policies are described in more detail in Note 1 to our financial statements, we believe the following accounting policies are those most critical to the judgements and estimates used in the preparation of our financial statements. Critical Accounting Policies and Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses Willamette Valley Vineyards’ financial statements, which have been prepared in accordance with generally accepted accounting principles. As such, management is required to make certain estimates, judgments and assumptions that are believed to be reasonable based upon the information available. On an on-going basis, management evaluates its estimates and judgments, including those related to product returns, bad debts, inventories, leases, investments, income taxes, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Revenue – The Company’s principal sources of revenue are derived from direct sales and sales through distributors of wine. Distributor sales are recognized from wine sales at the time of shipment and passage of title. The Company’s payment arrangements with wholesalers provide primarily 30-day terms and, to a limited extent, 45-day, 60-day, or longer terms for some international wholesalers. Direct sales through the Company’s tasting rooms are recognized at the point of sales. Sales through the internet and wine club sales are recognized when the product has shipped to the customer or is ready for the scheduled pickup. The Company pays depletion allowances to the Company’s distributors based on their sales to their customers. The Company sets these allowances on a monthly basis and the Company’s distributors bill them back on a monthly basis. All depletion expenses associated with a given month are recognized in that month as a reduction of revenues. The Company also reimburses for samples used by distributors up to 1.5% of product sold to the distributors. Sample expenses are recognized at the time the Company is billed by the distributor as a selling, general and administrative expense. 21 Amounts paid by customers to the Company for shipping and handling expenses are included in the net revenue. Expenses incurred for outbound shipping and handling charges are included in selling, general and administrative expense. Inventory – The Company values inventories at the lower of actual cost to produce the inventory or net realizable value. The Company regularly reviews inventory quantities on hand and adjusts its production requirements for the next twelve months based on estimated forecasts of product demand. A significant decrease in demand could result in an increase in the amount of excess inventory quantities on hand. In the future, if the Company’s inventory cost is determined to be greater than the net realizable value of the inventory upon sale, the Company would be required to recognize such excess costs in its cost of goods sold at the time of such determination. Therefore, although the Company makes every effort to ensure the accuracy of its forecasts of future product demand, any significant unanticipated changes in demand could have a significant impact on the ultimate selling price and cases sold and, therefore, the carrying value of the Company’s inventory and its reported operating results. Additionally, the Company regularly evaluates inventory for obsolescence and marketability and if it determines that the inventory is obsolete, or no longer suitable for use or marketable, the cost of that inventory is recognized in cost of sales at the time of such determination. Other Accounting Policies and Estimates Vineyard Development – The Company capitalizes internal vineyard development costs prior to the vineyard land becoming fully productive. These costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. Amortization of such costs as annual crop costs is done on a straight-line basis for the estimated economic useful life of the vineyard, which is estimated to be 30 years. The Company regularly evaluates the recoverability of capitalized costs. Amortization of vineyard development costs are included in capitalized crop costs that in turn are included in inventory costs and ultimately become a component of cost of goods sold. Income Taxes – The Company accounts for income taxes using the asset and liability approach. This requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and the tax basis of assets and liabilities at the applicable tax rates. The Company evaluates deferred tax assets, and records a valuation allowance against those assets, if available evidence suggests that some of those assets will not be realized. The effect of uncertain tax positions would be recorded in the financial statements only after determining a more likely than not probability that the uncertain tax positions would withstand an examination by tax authorities based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As facts and circumstances change, management reassesses these probabilities and would record any changes in the financial statements as appropriate. Overview The Company generates revenue from the sales of wine to wholesalers and direct to consumers. The Company is experiencing increased levels of competition in traditional wholesale to retail grocery distribution from large California based wineries that are acquiring, producing, and marketing Oregon branded wines. Direct to consumer sales primarily include sales through the Company’s tasting rooms and wine club. Direct to consumer sales provide a higher gross profit to the Company due to prices received being closer to retail than those prices paid by wholesalers. The Company continues to emphasize growth in direct-to-consumer sales through use of the Hospitality Center, opening new tasting rooms and growth in wine club membership. The Company had 11,183 wine club memberships for the year ended December 31, 2024, a net decrease of 358 when compared to 2023. Additionally, the Company’s Preferred Stock sales since August 2015 have resulted in approximately 14,715 preferred stockholders, many of which the Company believes are wine enthusiasts. When considering joint ownership, we believe these new shareholders represent approximately 22,072 potential customers of the Company. The Company also has approximately 3,249 shareholders of Common Stock which we believe represent an estimated 4,873 potential customers when considering joint ownership. Additionally, the Company has made a significant investment in developing alternative wine brands, products, direct sales methods, and locations. 22 Periodically, the Company will sell grapes or bulk wine, which primarily consist of inventory that does not meet Company standards or is in excess of production targets. However, this activity is not a significant part of the Company’s activities. The Company sold approximately 186,419 and 191,619 cases of produced wine during the years ended December 31, 2024 and 2023, respectively, a decrease of 5,200 cases, or 2.7% in the current year over the prior year. The decrease in case sales was the result of lower sales to wholesalers in 2024 when compared to 2023. Cost of sales includes grape costs, whether purchased or grown at Company vineyards, crush costs, winemaking and processing costs, bottling, packaging, warehousing, and shipping and handling costs associated with purchased production materials. For grapes grown at Company vineyards, costs include farming expenditures and amortization of vineyard development costs. At December 31, 2024, wine inventory included 204,438 cases of bottled wine and 736,396 gallons of bulk wine in various stages of the aging process. Cased wine is expected to be sold over the next 12 to 24 months (and generally before the release date of the next vintage). The Winery bottled 253,974 cases during the year ended December 31, 2024. Results of Operations 2024 compared to 2023 Net loss was $117,894 and $1,198,593, for the years ended December 31, 2024 and 2023, respectively, a decrease of $1,080,699, or 90.2%, for the year ended December 31, 2024 over the prior year period. The primary reason for this decrease was a higher gross profit from additional sales revenue at higher margins in the current year being partially offset by higher interest expense in 2024 compared to the previous year. Net loss applicable to common shareholders was $2,370,835 and $3,245,690, for the years ended December 31, 2024 and 2023, respectively, a decrease of $874,855, or 27.0%, for the year ended December 31, 2024 over the prior year period. This decrease was primarily driven by a lower net loss, being partially offset by higher preferred stock dividends. The Company had net sales revenues of $39,782,442 and $39,136,114 for the years December 31, 2024 and 2023, respectively, an increase of $646,328, or 1.7%, for the year ended December 31, 2024 over the prior year period primarily as a result of an increase in revenue from direct sales, net of excise taxes, of $736,057, or 3.6% in 2024 compared to 2023, being partially offset by a decrease in revenue from sales to distributors of $89,729 or 0.5% in 2024 compared to 2023. The Company has three primary sales channels: direct-to-consumer retail sales, in-state sales to distributors, and out-of-state sales to distributors. During 2024, revenues from retail sales increased 3.8%, revenues from in-state sales increased 13.8%, and revenues from out-of-state sales decreased 6.7%, compared to 2023. Direct sales included $0 and $69,924 of bulk wine and grape sales in the years ended December 31, 2024 and 2023, respectively, and represented approximately 53.4% and 52.4% of the Company’s total revenue for 2024 and 2023, respectively, while the Company’s remaining revenues came from sales through distributors. 23 The following table sets forth certain information regarding the Company’s revenue, excluding excise taxes, from the Winery’s operations for the twelve months ended December 31, 2024 and 2023: Year ended December 31, 2024 2023 Retail sales $ 21,465,475 $ 20,680,024 In-state sales 6,470,363 5,686,517 Out-of-state sales 12,251,996 13,131,363 Bulk wine/miscellaneous sales - 69,924 Total revenue 40,187,834 39,567,828 Less excise taxes (405,392 ) (431,714 ) Sales, net $ 39,782,442 $ 39,136,114 Retail sales revenues for the years ended December 31, 2024 and 2023 were $21,465,475 and $20,680,024 respectively, an increase of $785,451, or 3.8%, for the year ended December 31, 2024 over the prior year period. The increase in retail sales revenues in 2024 compared to 2023 was mostly a result of increased revenues from a new retail location being open for longer during 2024. In-state sales revenues for the years ended December 31, 2024 and 2023 were $6,470,363 and $5,686,517, respectively, an increase of $783,846, or 13.8%, for the year ended December 31, 2024 over the prior year period. Out-of-state sales revenues for the years ended December 31, 2024 and 2023 were $12,251,996 and $13,131,363, respectively, a decrease of $879,367, or 6.7%. The Company pays alcohol excise taxes to both the OLCC and to the TTB. These taxes are based on product sales volumes. The Company is liable for the taxes upon the removal of product from the Company’s warehouse on a per gallon basis. The Company also pays taxes on its grape harvest on a per ton basis to the OLCC for the Oregon Wine Board. The Company’s excise related taxes for the years ended December 31, 2024 and 2023 were $405,392 and $431,714, respectively, a decrease of $26,322, for the year ended December 31, 2024 over the prior year period. This decrease was due primarily to the timing of removals in 2024. Cost of Sales was $15,586,986 and $16,578,986 for the years ended December 31, 2024 and 2023, respectively, a decrease of $992,000, or 6.0%, for the year ended December 31, 2024, over the prior year period. This change was primarily the result of a reduction in the volume of product sold and lower unit costs when compared to the prior year. Gross profit was $24,195,456 and $22,557,128 for the years ended December 31, 2024 and 2023, respectively, an increase of $1,638,328 or 7.3%, for the year ended December 31, 2024 over the prior year period. 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 2024 compared to the prior year. The gross margin percentage was 60.8% and 57.6% for the years ended December 31, 2024 and 2023, respectively, an increase of 3.2 percentage points, for the year ended December 31, 2024 over the prior year period. This increase in the gross profit percentage was primarily the result of higher direct sales prices and more sales coming from direct to consumer sales in 2024. 24 Selling, general and administrative expenses were $23,623,598 and $23,764,330 for the years ended December 31, 2024 and 2023, respectively, a decrease of $140,732, or 0.6%, for the year ended December 31, 2024 over the prior year period. This decrease was primarily as a result of lower labor selling costs in 2024. Income(loss) from operations was $571,858 and $(1,207,202) for the years ended December 31, 2024 and 2023, respectively, an increase of $1,779,060, or 147.4%, for the year ended December 31, 2024 compared to the prior year period. This increase was primarily the result of a higher gross profit and lower labor operating expenses in 2024. Interest expense, net was $1,016,180 and $594,079 for the years ended December 31, 2024 and 2023, respectively, an increase of $422,101, or 71.1%, for the year ended December 31, 2024 over the prior year period. The increase in interest expense was mainly due to the increase in average loan balances in 2024 compared to the previous year. Other income, net, was $99,629 and $114,827 for the years ended December 31, 2024 and 2023, respectively, a decrease of $15,198, or 13.2%, for the year ended December 31, 2024 over the prior year period. Provision for income tax benefit was $226,799 and $487,861 for the years ended December 31, 2024 and 2023, respectively, a decrease of $261,062, or 53.5%, for the year ended December 31, 2024 over the prior year period. This decrease in income tax benefit in 2024 compared to 2023 was primarily the result of a higher income from operations in 2024 compared to 2023 along with the impact of a change in the tax rate related to amended returns to claim the credit for employer social security and medicare taxes paid on certain employee tips. Loss per common share after preferred dividends was $0.48 and $0.65 for the years ended December 31, 2024 and 2023, respectively, a decrease of $0.17, or 26.0%, for the year ended December 31, 2024 over the prior year period. The primary reason for this decrease was a lower net loss partially offset by higher preferred stock dividends in 2024 compared to 2023. The Company had cash balances of $320,883 at December 31, 2024, and $238,482 at December 31, 2023. The Company had an outstanding line of credit balance of $2,405,815 at December 31, 2024, and $2,684,982 at December 31, 2023. The Company had a bank overdraft of $473,016 at December 31, 2024, and $393,416 at December 31, 2023. EBITDA In 2024, the Company’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”) increased 71.1% to $3,995,135 from $2,334,629 in 2023, primarily as a result of a lower net loss in 2024. EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs. EBITDA is not a measure of financial performance under the accounting principles generally accepted in the United States of America, referred to as “GAAP”, and should not be considered as an alternative to net income (loss) or income (loss) from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. We use EBITDA as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider it to be a meaningful supplement to operating income (loss) as a performance measure primarily because depreciation and amortization expense are not actual cash costs, and depreciation expense varies widely from company to company in a manner that we consider largely independent of the underlying cost efficiency of our operating facilities. EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our GAAP results as reported. Because of these limitations, EBITDA should only be considered as a supplemental performance measure and should not be considered as a measure of liquidity or cash available to us to invest in the growth of our business. See the Statement of Cash Flows set out in our financial statements included herein. 25 The following table provides a reconciliation of net loss (the most comparable GAAP measure) to EBITDA for the periods indicated: Year Ended December 31, 2024 2023 Net loss $ (117,894 ) $ (1,198,593 ) Depreciation and amortization expense 3,323,613 3,426,977 Interest expense 1,016,215 594,106 Income tax benefit (226,799 ) (487,861 ) EBITDA $ 3,995,135 $ 2,334,629 Sales Wine case sales for the years ended December 31, 2024 and 2023 and ending inventory amounts for the year ended December 31, 2024, are shown in the following table: Cases Sold Cases Sold Cases On-Hand Varietal/Product 2024 2023 December 31, 2024 Pinot Noir/Estate 16,176 17,334 13,222 Pinot Noir/Barrel Select 17,774 10,093 9,714 Pinot Noir/Founders Reserve 4,031 3,988 11,202 Pinot Noir/Special Designates 14,371 12,706 25,150 Pinot Noir/Whole Cluster 58,367 60,070 58,604 Pinot Gris 30,162 33,279 19,183 Riesling 13,237 19,982 12,743 Chardonnay 4,708 5,191 15,598 Other 27,593 28,976 39,023 Total 186,419 191,619 204,438 Approximately 59% of the Company’s case sales during 2024 were of the Company’s flagship varietal, Pinot Noir. Case sales of Pinot Gris and Riesling follow with approximately 16% and 7% of case sales, respectively. The Company sold approximately 186,419 and 191,619 cases of Company-produced wine during the years ended December 31, 2024 and 2023, respectively. This represents a decrease of approximately 5,200 cases, or 2.7%, 2024 compared to 2023. The decrease in case sales in 2024 compared to 2023 was the result of a decrease in sales to distributors. The Company has three primary sales channels: 1) direct-to-consumer sales; 2) in-state sales to distributors; and 3) out-of-state sales to distributors. These three sales channels represent 53.4%, 16.1% and 30.5%, of total revenue for the year ended December 31, 2024, respectively. This compares to 52.4%, 14.4% and 33.2% of total revenue for the year ended December 31, 2023, respectively. Miscellaneous and grape sales are included in direct-to-consumer sales. The Company’s direct-to-consumer sales and national sales to distributors offer comparable products to customers and utilize similar processes and share resources for production, selling and distribution. Direct-to-consumer sales generate a higher gross profit margin than national sales to distributors due to differentiated pricing between these segments. 26 Wine Inventory The Company had 204,438 cases of bottled wine on-hand at the end of 2024. Management believes sufficient bulk wine inventory is on-hand to bottle approximately 310,000 cases of wine in 2025, and that sufficient stock is on hand to meet current demand levels until the 2024 vintage becomes available. Production Capacity Current production volumes are within the current production capacity constraints of the Winery, when including storage capacity at the Tualatin Winery and utilization of temporary storage when appropriate. In 2024, 253,974 cases were produced. We have the capacity to store and process about 275,000 cases of wine per year at the Estate Winery but can expand that capacity by utilizing storage at the Tualatin Winery and temporary storage. Management continues to invest in new production technologies intended to increase the efficiency and quality of wine production. The Tualatin Winery has capacity to produce approximately 28,000 cases of wine. Management intends to fully utilize the production capacity at the Estate Winery before expanding into the Tualatin Winery. Grape Supply For the 2024 and 2023 vintages, the Company grew approximately 60% and 42% of all grapes harvested, respectively. The remaining grapes harvested were purchased from other growers. In 2024 and 2023, 11% and 18% of grapes harvested were purchased under short-term contracts, and 29% and 40% of grapes harvested were purchased under long-term contracts, respectively. The Company considers short-term contracts to be for single vintage years and long-term contracts to cover multiple vintage years. Grapes are typically harvested and received in September and October of the vintage year. Upon receipt, the grapes are weighed, and a quality analysis is performed to ensure the grapes meet the standards set forth in the purchase contract. Based on the quantity of qualifying grapes received, the full amount payable to the grower is recorded to the Grapes payable liability account. Approximately 50% of the grapes payable amount is due in November of the vintage year. The remaining amount is due in March of the following year. The grapes are processed into wine, which is typically bottled and available for sale between five months and two years from the date of harvest. The Company received $2,275,162 and $3,313,483 worth of grapes from long-term contracts during the years ended December 31, 2024 and 2023, respectively. The Company received $681,705 and $1,941,572 worth of grapes from short-term contracts during the years ended December 31, 2024 and 2023, respectively. Total grapes payable was $1,519,087 and $2,446,233 as of December 31, 2024 and 2023, respectively. Total grapes payable includes $1,023,171 and $1,357,649 of grapes payable from long-term contracts as of December 31, 2024 and 2023, respectively. The Company plans to address long-term grape supply needs by developing new vineyards on properties currently owned or secured by lease. The Company has approximately 54 acres of vineyards that have been planted but are in the pre-productive stage. We anticipate that these vineyards will begin producing grapes within the next one to three years. The Company has approximately 212 acres of land that is suitable for future vineyard development. The Company intends to seek out opportunities to acquire land for future grape plantings in order to continue to increase available quantities, maintain control over farming practices, more effectively manage grape costs and mitigate uncertainty associated with long-term contracts. Wine Quality Continued awareness of the Willamette Valley Vineyards brand and the quality of its wines was enhanced by national and regional media coverage throughout 2024 including the accolades below. The tasting room at the Company’s Estate Winery in the Salem Hills, Oregon was awarded the Best Wine Tasting Room in the country by USA Today in their 10 Best Readers’ Choice Awards. The Company was also awarded the #2 Best Wine Club in the nation by USA Today. The Company’s Willamette Valley Vineyards 2021 Elton Pinot Noir received a 93 score, the 2022 Reisling scored 92 points, 2022 Estate Pinot Noir scored 91 points, 2022 Dijon Clone Chardonnay scored 90 points, 2022 Riesling scored 92 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, 2022 Maison Bleue Voltigeur Viognier 92 points and 2021 Maison Bleue Frontière Syrah 91 points. 27 The Company’s 2021 Bernau Block Pinot Noir received a score of 95 from Beverage Dynamics. Wine Enthusiast Magazine awarded the Company’s 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. James Suckling rated the Company’s 2021 Elton Pinot Noir 92 points and the 2021 Signature Cuvée Pinot Noir 91 points. He also rated the Company’s 2021 Estate Pinot Noir 91 points, Dijon Clone Chardonnay 91 points, 2021 Elton Chardonnay 91 points and the 2022 Pinot Gris 90 points. Owen Bargreen rated the Company’s 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 and the 2023 Pinot Blanc and 2022 Tualatin Estate White Pinot Noir 92 points. Seasonality The Company has historically experienced and expects to continue to experience seasonal fluctuations in its revenue and net income. Typically, first quarter sales are the lowest of any given year, and sales volumes increase progressively through the fourth quarter, mostly because of consumer buying habits. Liquidity and Capital Resources At December 31, 2024, the Company had a working capital balance of $23.9 million and a current ratio of 2.84:1. The Company had cash balances of $320,883, at December 31, 2024. Total cash used in operating activities for the year ended December 31, 2024 was $3,237,743, which resulted primarily from a net loss in 2024 as well as increased inventory and lower grapes payable. This was partially offset by depreciation, and an increase in accrued expenses. Total cash used in investing activities for the year ended December 31, 2024 was $2,089,705, which primarily consisted of cash used on land purchase, property development and vineyard development costs. Total cash provided from financing activities for the year ended December 31, 2024 was $5,409,849, which primarily consisted of proceeds from long term debt, being partially offset by the payment of a preferred stock dividend and payments on long term debt. 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 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 an outstanding line of credit balance of $2,405,815 at December 31, 2024, at an interest rate of 7.0%, and an outstanding line of credit balance of $2,684,982 at December 31, 2023, at an interest rate of 8.0%. As of December 31, 2024, the Company had a total long-term debt balance of $14,042,910 owed to AgWest, including the portion due in the next year, exclusive of debt issuance costs of $178,908. 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. The debt with AgWest was used to finance the Estate Hospitality Center and subsequent remodels, invest in winery equipment to increase the Company’s winemaking capacity, acquire new vineyard land for future development and finance new tasting room locations. 28 As of December 31, 2024, the Company had an installment note payable of $995,968, due in quarterly payments of $42,534 through February 2032, associated with the purchase of property in the Dundee Hills AVA. The Company believes that cash flow from operations and funds available under its existing credit facilities and preferred stock program will be sufficient to meet the Company’s foreseeable short and long-term operating needs. Inflation The Company’s management does not believe inflation has had a material impact on the Company’s revenues or loss during 2024 or 2023. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required. 29