WILLAMETTE VALLEY VINEYARDS INC 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT Commission File Number 001-37610 WILLAMETTE VALLEY VINEYARDS, INC. (Exact name of registrant as specified in charter) Oregon 93-0981021 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 8800 Enchanted Way , S.E. , Turner , Oregon 97392 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (503) 588-9463 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: x Yes o NO Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): x Yes o NO Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: o Large accelerated filer o Accelerated filer x Non-accelerated Filer x Smaller reporting company o Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): o YES x No Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock WVVI NASDAQ Capital Market Series A Redeemable Preferred Stock WVVIP NASDAQ Capital Market Number of shares of common stock outstanding as of May 13, 2025: 4,964,529 1 WILLAMETTE VALLEY VINEYARDS, INC. INDEX TO FORM 10-Q Part I - Financial Information 3 Item 1 - Financial Statements (unaudited) 3 Condensed Balance Sheets 3 Condensed Statements of Operations 4 Condensed Statements of Shareholders’ Equity 5 Condensed Statements of Cash Flows 6 Notes to Unaudited Interim Financial Statements 7 Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3 - Quantitative and Qualitative Disclosures about Market Risk 16 Item 4 - Controls and Procedures 16 Part II - Other Information 16 Item 1 - Legal Proceedings 16 Item 1A - Risk Factors 16 Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 16 Item 3 - Defaults Upon Senior Securities 17 Item 4 - Mine Safety Disclosures 17 Item 5 - Other Information 17 Item 6 - Exhibits 18 Signatures 19 2 PART I: FINANCIAL INFORMATION Item 1 – Financial Statements WILLAMETTE VALLEY VINEYARDS, INC. CONDENSED BALANCE SHEETS (Unaudited) March 31, December 31, 2025 2024 ASSETS CURRENT ASSETS Cash and cash equivalents $ 332,889 $ 320,883 Accounts receivable, net 2,323,815 3,151,810 Inventories 33,598,355 32,907,489 Prepaid expenses and other current assets 453,541 519,608 Income tax receivable 316,009 19,267 Total current assets 37,024,609 36,919,057 Other assets 13,824 13,824 Vineyard development costs, net 8,735,052 8,769,542 Property and equipment, net 51,342,018 52,012,151 Operating lease right of use assets 11,129,070 11,302,566 TOTAL ASSETS $ 108,244,573 $ 109,017,140 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 2,125,472 $ 1,584,466 Accrued expenses 1,802,698 2,097,736 Bank overdraft 391,394 473,016 Line of credit 1,203,983 2,405,815 Note payable 968,348 995,968 Current portion of long-term debt 965,668 952,171 Current portion of lease liabilities 477,060 481,801 Unearned revenue 2,351,336 2,470,125 Grapes payable - 1,519,087 Total current liabilities 10,285,959 12,980,185 Long-term debt, net of current portion and debt issuance costs 15,679,848 12,911,831 Lease liabilities, net of current portion 11,237,369 11,354,746 Deferred income taxes 2,536,648 2,536,648 Total liabilities 39,739,824 39,783,410 COMMITMENTS AND CONTINGENCIES (NOTE 9) SHAREHOLDERS’ EQUITY 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, 2025 and 10,239,573 shares issued and outstanding, liquidation preference $ 42,494,228 , at December 31, 2024. 43,920,573 43,357,396 Common stock, no par value, 10,000,000 shares authorized, 4,964,529 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively. 8,512,489 8,512,489 Retained earnings 16,071,687 17,363,845 Total shareholders’ equity 68,504,749 69,233,730 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 108,244,573 $ 109,017,140 The accompanying notes are an integral part of this condensed financial statement 3 WILLAMETTE VALLEY VINEYARDS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Three months ended March 31, 2025 2024 SALES, NET $ 7,541,583 $ 8,803,080 COST OF SALES 2,782,475 3,530,358 GROSS PROFIT 4,759,108 5,272,722 OPERATING EXPENSES: Sales and marketing 3,967,710 4,027,782 General and administrative 1,661,376 1,847,517 Total operating expenses 5,629,086 5,875,299 LOSS FROM OPERATIONS ( 869,978 ) ( 602,577 ) OTHER INCOME (EXPENSE) Interest expense, net ( 298,221 ) ( 229,678 ) Other income, net 142,476 98,043 LOSS BEFORE INCOME TAXES ( 1,025,723 ) ( 734,212 ) INCOME TAX BENEFIT 296,742 212,407 NET LOSS ( 728,981 ) ( 521,805 ) Accrued preferred stock dividends ( 563,177 ) ( 563,177 ) LOSS APPLICABLE TO COMMON SHAREHOLDERS $ ( 1,292,158 ) $ ( 1,084,982 ) Loss per common share after preferred dividends, basic and diluted $ ( 0.26 ) $ ( 0.22 ) Weighted-average number of common shares outstanding, basic and diluted 4,964,529 4,964,529 The accompanying notes are an integral part of this condensed financial statement 4 WILLAMETTE VALLEY VINEYARDS, INC. CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) Three-Month Period Ended March 31, 2025 Redeemable Preferred Stock Common Stock Retained Shares Dollars Shares Dollars Earnings Total Balance at December 31, 2024 10,239,573 $ 43,357,396 4,964,529 $ 8,512,489 $ 17,363,845 $ 69,233,730 Issuance of preferred stock, net - - - - - - Preferred stock dividends accrued - 563,177 - - ( 563,177 ) - Net loss - - - - ( 728,981 ) ( 728,981 ) Balance at March 31, 2025 10,239,573 $ 43,920,573 4,964,529 $ 8,512,489 $ 16,071,687 $ 68,504,749 Three-Month Period Ended March 31, 2024 Redeemable Preferred Stock Common Stock Retained Shares Dollars Shares Dollars Earnings Total Balance at December 31, 2023 10,046,833 $ 42,388,036 4,964,529 $ 8,512,489 $ 19,734,680 $ 70,635,205 Issuance of preferred stock, net 192,740 969,359 - - - 969,359 Preferred stock dividends accrued - 563,177 - - ( 563,177 ) - Net loss - - - - ( 521,805 ) ( 521,805 ) Balance at March 31, 2024 10,239,573 $ 43,920,572 4,964,529 $ 8,512,489 $ 18,649,698 $ 71,082,759 The accompanying notes are an integral part of this condensed financial statement 5 WILLAMETTE VALLEY VINEYARDS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 728,981 ) $ ( 521,805 ) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 820,854 833,510 Non-cash lease expense 173,496 140,302 Loan fee amortization 5,827 3,312 Change in operating assets and liabilities: Accounts receivable 827,995 ( 216,815 ) Inventories ( 690,866 ) ( 566,885 ) Prepaid expenses and other current assets 66,067 15,096 Income tax receivable ( 296,742 ) ( 211,400 ) Unearned revenue ( 118,789 ) ( 30,705 ) Lease liabilities ( 122,118 ) ( 109,509 ) Grapes payable ( 1,519,087 ) ( 2,446,233 ) Accounts payable 540,119 ( 198,720 ) Accrued expenses ( 295,038 ) 297,083 Net cash from operating activities ( 1,337,263 ) ( 3,012,769 ) CASH FLOWS FROM INVESTING ACTIVITIES Additions to vineyard development costs ( 15,994 ) ( 23,644 ) Additions to property and equipment ( 99,350 ) ( 306,654 ) Net cash from investing activities ( 115,344 ) ( 330,298 ) CASH FLOWS FROM FINANCING ACTIVITIES Payment on installment note for property purchase ( 27,620 ) ( 26,023 ) Proceeds from bank overdraft ( 81,622 ) 129,105 Proceeds from (payments on) line of credit ( 1,201,832 ) 635,946 Payment on long-term debt ( 236,010 ) ( 128,473 ) Proceeds from long-term debt 3,011,697 2,500,000 Proceeds from issuance of preferred stock - 250,502 Net cash from financing activities 1,464,613 3,361,057 NET CHANGE IN CASH AND CASH EQUIVALENTS 12,006 17,990 CASH AND CASH EQUIVALENTS, beginning of period 320,883 238,482 CASH AND CASH EQUIVALENTS, end of period $ 332,889 $ 256,472 NON-CASH INVESTING AND FINANCING ACTIVITIES Purchases of property and equipment and vineyard development costs included in accounts payable $ 11,354 $ 194,351 Reduction in investor deposits for preferred stock $ - $ 718,857 Accrued preferred stock dividends $ 563,177 $ 563,177 The accompanying notes are an integral part of this condensed financial statement 6 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS 1) BASIS OF PRESENTATION The accompanying unaudited interim condensed financial statements as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 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, 2024 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, 2024 (the “2024 Report”). Certain 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 unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024, as presented in the Company’s Annual Report on Form 10-K. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2025, or any portion thereof. The Company’s revenues include direct to consumer sales and national sales to distributors. These sales channels utilize shared resources for production, selling, and distribution. Basic loss per share after preferred stock dividends are computed based on the weighted-average number of common shares outstanding each period. The following table presents the earnings per share after preferred stock dividends calculation for the periods shown: Schedule of Earnings Per Share Three months ended March 31, 2025 2024 Numerator Net loss $ ( 728,981 ) $ ( 521,805 ) Accrued preferred stock dividends ( 563,177 ) ( 563,177 ) Net loss applicable to common shareholders $ ( 1,292,158 ) $ ( 1,084,982 ) Denominator Weighted-average number of common shares outstanding basic and diluted 4,964,529 4,964,529 Loss per common share after preferred dividends, basic and diluted $ ( 0.26 ) $ ( 0.22 ) Subsequent to the filing of the 2024 Report there were no accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) that would have a material effect on the Company’s unaudited interim condensed financial statements. 7 2) INVENTORIES The Company’s inventories, by major classification, are summarized as follows, as of the dates shown: Schedule of Inventories March 31, 2025 December 31, 2024 Winemaking and packaging materials $ 1,587,348 $ 1,303,152 Work-in-process (costs relating to unprocessed and/or unbottled wine products) 14,147,911 14,990,375 Finished goods (bottled wine and related products) 17,863,096 16,613,962 Total inventories $ 33,598,355 $ 32,907,489 3) PROPERTY AND EQUIPMENT, NET The Company’s property and equipment consists of the following, as of the dates shown: Schedule of Property and Equipment, Net March 31, 2025 December 31, 2024 Construction in progress $ 652,726 $ 633,179 Land, improvements, and other buildings 15,342,674 15,342,674 Winery buildings and tasting rooms 44,187,393 44,146,543 Equipment 20,875,346 20,835,506 Property and equipment, gross 81,058,139 80,957,902 Accumulated depreciation ( 29,716,121 ) ( 28,945,751 ) Property and equipment, net $ 51,342,018 $ 52,012,151 Depreciation expense for the three months ended March 31, 2025 and 2024 was $770,370 and $791,986, respectively. 4) DEBT Line 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 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 $ 1,203,983 at March 31, 2025, at an interest rate of 7.0%, and an outstanding line of credit balance of $ 2,405,815 at December 31, 2024, at an interest rate of 7.0%. The line of credit agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment. As of December 31, 2024, the Company was in compliance with these financial covenants. Notes Payable – In February 2017, the Company purchased property, including vineyard land, bare land, and structures in the Dundee Hills American Viticultural Area (AVA) under terms that included a 15 year note payable with quarterly payments of $42,534, bearing interest at 6%. The note may be called by the owner, up to the outstanding balance, with 180 days written notice. As of March 31, 2025, the Company had a balance of $ 968,348 due on this note. As of December 31, 2024, the Company had a balance of $ 995,968 due on this note. 8 Long-Term Debt – The Company has four long term debt agreements with AgWest with an aggregate outstanding balance of $ 16,818,597 and $ 14,042,910 as of March 31, 2025 and December 31, 2024 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. These loans are collateralized against the property on the main estate in Salem. The third loan requires monthly principal and interest payments of $87,989 at an annual interest rate of 6.66%, and with a maturity date of 2039. The fourth loan allows borrowings up to $4,350,000 against property defined in the agreement. The line of credit bears interest at 7.10% and has a maturity date of April, 2027. The general purposes of these loans were to make capital improvements to the winery and vineyard facilities. Future minimum principal payments of long-term debt are as follows for the years ending December 31: Schedule of Future Minimum Principal Payment for Long-Term Debt Maturities 2025 711,361 2026 1,008,215 2027 4,079,492 2028 1,130,789 2029 1,007,284 Thereafter 8,881,456 Total $ 16,818,597 As of March 31, 2025, the Company had unamortized debt issuance costs of $ 173,081 . As of December 31, 2024, the Company had unamortized debt issuance costs of $ 178,908 . 5) INTEREST AND TAXES PAID Income taxes – The Company paid zero in income taxes for the three months ended March 31, 2025, and 2024. Interest – The Company paid $ 228,105 and $ 134,979 for the three months ended March 31, 2025 and 2024, respectively, in interest on long-term debt and the line of credit. 6) SEGMENT REPORTING The Company has identified two operating segments, Direct Sales and Distributor Sales, based upon their different distribution channels, margins and selling strategies. Direct Sales include retail sales in the tasting rooms, wine club sales, internet sales, on-site events, kitchen and catering sales and other sales made directly to the consumer without the use of an intermediary, including sales of bulk wine or grapes. Distributor Sales include all sales through a third party where prices are given at a wholesale rate. The two segments reflect how the Company’s operations are evaluated by senior management and the structure of its internal financial reporting. The Company evaluates performance based on the gross profit of the respective business segments. Selling expenses that can be directly attributable to the segment, including depreciation of segment specific assets, are included, however, centralized selling expenses and general and administrative expenses are not allocated between operating segments. Therefore, net income (loss) information for the respective segments is not available. Discrete financial information related to segment assets, other than segment specific depreciation associated with selling, is not available and that information continues to be aggregated. The 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, 2025 and 2024. Sales figures are net of related excise taxes. Schedule of Segment reporting Three Months Ended March 31, Direct Sales Distributor Sales Unallocated Total 2025 2024 2025 2024 2025 2024 2025 2024 Sales, net $ 4,310,474 $ 4,286,156 $ 3,231,109 $ 4,516,924 $ - $ - $ 7,541,583 $ 8,803,080 Cost of Sales 1,185,593 1,295,145 1,596,882 2,235,213 - - 2,782,475 3,530,358 Gross Profit 3,124,881 2,991,011 1,634,227 2,281,711 - - 4,759,108 5,272,722 Selling and Marketing Expenses 3,086,255 3,263,381 640,035 504,424 241,420 259,977 3,967,710 4,027,782 Contribution Margin $ 38,626 $ ( 272,370 ) $ 994,192 $ 1,777,287 Percent of Sales 57.2 % 48.7 % 42.8 % 51.3 % General and Administration Expenses 1,661,376 1,847,517 1,661,376 1,847,517 Loss from Operations $ ( 869,978 ) $ ( 602,577 ) 9 7) SALE OF PREFERRED STOCK On July 1, 2022, the Company filed a shelf Registration Statement on Form S-3 (the “July 2022 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 June 2022 Form S-3 is not to exceed $20,000,000. From August 1, 2022 to November 1, 2022 the Company filed with the SEC four Prospectus Supplements 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 an aggregate of 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 Supplements established that our shares of preferred stock were to be sold in one to three offering periods offering prices including $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 March 31, 2025 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. 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 $4.85 per share. Net proceeds of $3,938,066 have been received under these offerings as of March 31, 2025 for the issuance of Preferred Stock. Shareholders 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 March 31, 2025 and December 31, 2024 was $1,637,861 and $1,853,982, respectively, and is recorded as unearned revenue on the balance sheets. Revenue from gift cards is recognized when the gift card is redeemed by a customer. When the likelihood of a gift card being redeemed by a customer is determined to be remote and the Company expects to be entitled to the breakage, then the value of the unredeemed gift card is recognized as revenue. We determine the gift card breakage rate based upon Company-specific historical redemption patterns. To date we have determined that no breakage should be recognized related to our gift cards. Dividends accrued but not paid will be added to the liquidation preference of the stock until the dividend is declared and paid. At any time after June 1, 2021, the Company has the option, but not the obligation, to redeem all of the outstanding preferred stock in an amount equal to the original issue price plus accrued but unpaid dividends and a redemption premium equal to 3% of the original issue price. 8) LEASES We determine if an arrangement is a lease at inception. 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. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For leases that do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Significant judgment may be required when determining whether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and non-lease components, and the determination of the discount rate included in our leases. We review the underlying objective of each contract, the terms of the contract, and consider our current and future business conditions when making these judgments. Operating leases – Vineyard - In December 1999 , under a sale-leaseback agreement, the Company sold approximately 79 acres of the Tualatin Vineyards property with a net book value of approximately $1,000,000 for approximately $ 1,500,000 cash and entered into a 20 year operating lease agreement, with three five-year extension options, and contains an escalation provision of 2.5% per year. The Company extended the lease in January 2019 until January 2025. The Company extended the lease in July 2024 until January 2030. This property is referred to as the Peter Michael Vineyard and includes approximately 69 acres of producing vineyards. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through January 2035. 10 In 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. 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. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through November 2033. In 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. This 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. In July 2008 , the Company entered into a 34-year lease agreement with a property owner in the Eola Hills for approximately 110 acres adjacent to the existing Elton Vineyards site. These 110 acres are being developed into vineyards. Terms of this agreement contain rent increases, 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. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through December 2053. In March 2017 , the Company entered into a 25-year lease for approximately 17 acres of agricultural land in Dundee, Oregon. 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. Operating Leases – Non-Vineyard – In September 2018 , the Company renewed an existing lease for three years , with two one-year renewal options, for its McMinnville tasting room. In May 2022 the Company amended the lease to extend the lease to August 2025 with one three 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. In January 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. In February 2020 , the Company entered into a lease for 5 years , with three five-year renewal options for a retail wine facility in Folsom, California, referred to as Willamette Wineworks. The lease contains an escalation provision tied to the CPI not to exceed 3% per annum with increases not allowed in any year being carried forward to the following years. In January 2025 the Company amended the renewal options and extended the lease until February 2026. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through February 2040. In March 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. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through August 2041. In February 2022 , the Company entered into a lease for 10 years , with three five-year renewal options for a retail wine facility in Lake Oswego, Oregon. 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 . In 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, Oregon. 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. In January 2023 , the Company entered into a lease for 10 years , with three five-year renewal options for a retail wine facility in Bend, Oregon. The lease defines the payments over the term of the lease. For right of use asset and liability calculations the Company has not included the renewal option. 11 The following tables provide lease cost and other lease information: Schedule of Lease Cost and Information Three Months Ended Three Months Ended March 31, 2025 March 31, 2024 Lease Cost Operating lease cost - Vineyards $ 125,181 $ 114,782 Operating lease cost - Other 246,341 250,640 Short-term lease cost 10,166 8,427 Total lease cost $ 381,688 $ 373,849 Other Information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases - Vineyard $ 116,816 $ 115,266 Operating cash flows from operating leases - Other $ 220,667 $ 219,363 Weighted-average remaining lease term - Operating leases in years 14.63 15.59 Weighted-average discount rate - Operating leases 7.65 % 7.88 % Right-of-use assets obtained in exchange for new operating lease obligations were zero for the three months ended March 31, 2025 and 2024. As of March 31, 2025, maturities of lease liabilities were as follows: Schedule of Maturities of Lease Liabilities Operating Years Ended December 31, Leases 2025 $ 996,967 2026 1,312,758 2027 1,373,710 2028 1,366,420 2029 1,376,565 Thereafter 13,861,091 Total minimal lease payments 20,287,511 Less present value adjustment ( 8,573,082 ) Operating lease liabilities 11,714,429 Less current lease liabilities ( 477,060 ) Lease liabilities, net of current portion $ 11,237,369 9) COMMITMENTS AND CONTINGENCIES Litigation – From time to time, in the normal course of business, the Company is a party to legal proceedings. Management believes that these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows, but, due to the nature of litigation, the ultimate outcome of any potential actions cannot presently be determined. Grape Purchases – The Company has entered into long-term grape purchase agreements with a number of Willamette Valley wine grape growers. With these agreements the Company purchases an annually agreed upon quantity of fruit, at pre-determined prices, within strict quality standards and crop loads. The Company cannot calculate the minimum or maximum payment as such a calculation is dependent in large part on unknowns such as the quantity of fruit needed by the Company and the availability of grapes produced that meet the strict quality standards in any given year. If no grapes are produced that meet the contractual quality levels, the grapes may be refused, and no payment would be due. 12 ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our” and “the Company” refer to Willamette Valley Vineyards, Inc. Forward Looking Statements This Management’s 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 Company’s 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. 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as well as in the Company’s 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. Critical Accounting Policies The foregoing discussion and analysis of the Company’s financial condition and results of operations are based upon our unaudited condensed financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue recognition, collection of accounts receivable, valuation of inventories, and amortization of vineyard development costs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. A description of the Company’s critical accounting policies and related judgments and estimates that affect the preparation of the Company’s financial statements is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Such policies were unchanged during the three months ended March 31, 2025. Overview The Company, one of the largest wine producers in Oregon by volume, believes its success is dependent upon its ability to: (1) grow and purchase high quality vinifera wine grapes; (2) vinify the grapes into premium, super premium and ultra-premium wine; (3) achieve significant brand recognition for its wines, first in Oregon, and then nationally and internationally; (4) effectively distribute and sell its products nationally; and (5) continue to build on its base of direct to consumer sales. The Company’s goal is to continue to build on a reputation for producing some of Oregon’s finest, most sought-after wines. The Company has focused on positioning itself for strategic growth through property purchases, property development and issuance of the Company’s Series A Redeemable Preferred Stock (the “Preferred Stock”). Management expects near term financial results to be negatively impacted by these activities as a result of incurring costs of accrued preferred stock dividends, strategic planning and development costs and other growth associated costs. The Company’s wines are made from grapes grown in vineyards owned, leased or contracted by the Company, and from grapes purchased from other vineyards. The grapes are harvested, fermented and made into wine primarily at the Company’s winery in Turner Oregon (the “Winery”) and the wines are sold principally under the Company’s Willamette Valley Vineyards label, but also under the Griffin Creek, Pambrun, Elton, Maison Bleue, Metis, Natoma, Pere Ami, Elton, Domaine Willamette and Tualatin Estates labels. The Company also owns the Tualatin Estate Vineyards and Winery, located near Forest Grove, Oregon and the Domaine Willamette Winery located near Dundee, Oregon. The Company generates revenues from the sales of wine to wholesalers and direct to consumers. 13 Direct to consumer sales primarily include sales through the Company’s tasting rooms, telephone, internet and wine club. Direct to consumer sales are at a higher unit price than sales through distributors 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 the Company’s existing tasting rooms and the opening of new locations, and growth in wine club membership. Additionally, the Company’s Preferred Stock sales since August 2015 have resulted in approximately 14,385 new preferred stockholders many of which the Company believes are wine enthusiasts. When considering joint ownership, we believe these new stockholders represent approximately 21,577 current and potential customers of the Company. Periodically, the Company will sell grapes or bulk wine, due to them not meeting Company standards or being in excess of production targets, however this is not a significant part of the Company’s activities. The Company sold 33,080 and 43,208 cases of produced wine during the three months ended March 31, 2025 and 2024, respectively, a decrease of 10,128 cases, or 23.5% in the current year period over the prior year period. The decrease in wine case sales was primarily the result of having lower wholesale case sales in the current quarter when compared to the same quarter last year. Cost of sales includes grape costs, whether purchased or grown at Company vineyards, winemaking and processing costs, bottling, packaging, warehousing, and shipping and handling costs. For grapes grown at Company vineyards, costs include farming expenditures and amortization of vineyard development costs. At March 31, 2025, wine inventory included 213,444 cases of bottled wine and 628,019 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 vintage. The Winery bottled 40,216 cases during the three months ended March 31, 2025. Willamette Valley Vineyards continues to receive positive recognition through national magazines, regional publications, local newspapers and online bloggers including the accolades below. James Suckling rated the Company’s 2022 Bernau Estate Pinot Noir 92 points and the 2023 Tualatin Estate Chardonnay 91 points. RESULTS OF OPERATIONS Revenue Sales revenue for the three months ended March 31, 2025 and 2024 was $7,541,583 and $8,803,080, respectively, a decrease of $1,261,497, or 14.3%, in the current year period over the prior year period. This decrease was caused by a decrease in revenues from distributor sales of $1,285,815, partly offset by an increase in direct sales to consumers of $24,318 in the current year’s 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. The decrease in revenue from distributors was primarily attributed to fewer points of distribution in the current year three-month period over the same period in the prior year. Cost of Sales Cost of sales for the three months ended March 31, 2025 and 2024 was $2,782,475 and $3,530,358, respectively, a decrease of $747,883, or 21.2%, in the current period over the prior year period. This change was primarily the result of the lower number of cases sold in the first quarter of 2025 when compared to the same quarter in 2024. Gross Profit Gross profit for the three months ended March 31, 2025 and 2024 was $4,759,108 and $5,272,722, respectively, a decrease of $513,614, or 9.7%, in the first quarter of 2025 over the same quarter in the prior year. This decrease was primarily the result of a decrease in sales through distributors. Gross profit as a percentage of net sales for the three months ended March 31, 2025 and 2024 was 63.1% and 59.9%, respectively, an increase of 3.2 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 retail locations in the first quarter of 2025 when compared to the same quarter in 2024. 14 Selling, General and Administrative Expenses Selling, general and administrative expenses for the three months ended March 31, 2025 and 2024 was $5,629,086 and $5,875,299, respectively, a decrease of $246,213, or 4.2%, in the current quarter over the same quarter in the prior year. This decrease was primarily the result of a decrease in selling expenses of $60,072, or 1.5% and a decrease in general and administrative expenses of $186,141, or 10.1% in the current quarter compared to the same quarter last year. General and administrative expenses decreased in the first quarter of 2025 compared to the same quarter of 2024 primarily as a result of lower legal costs. Interest Expense Interest expense for the three months ended March 31, 2025 and 2024 was $298,221 and $229,678, respectively, an increase of $68,543 or 29.8%, in the first quarter of 2025 over the same quarter in the prior year. The increase in interest expense for the first quarter was primarily the result of higher debt compared to the first quarter of 2024. Income Tax Benefit The income tax benefit for the three months ended March 31, 2025 and 2024 was $296,742 and $212,407, respectively, an increase of $84,335 or 39.7%, in the first quarter of 2025 over the same quarter in the prior year, primarily as a result of a higher pre-tax loss in the first quarter of 2025, compared to the same quarter in 2024. The Company’s estimated federal and state combined income tax rate for the three months ended March 31, 2025 and 2024 was 28.9% and 28.9% respectively. Net Loss Net loss for the three months ended March 31, 2025 and 2024 was $728,981 and $521,805, respectively, an increase of $207,176, or 39.7%, in the first quarter of 2025 over the same quarter in the prior year. The increase in net loss for the first quarter of 2025, compared to the comparable period in 2024, was primarily the result of lower case sales to distributors in 2025. Net Loss Applicable to Common Shareholders Net loss applicable to common shareholders for the three months ended March 31, 2025 and 2024 was $1,292,158 and $1,084,982, respectively, an increase of $207,176, or 19.1%, in the first quarter of 2025 over the same quarter in the prior year. The increase in loss applicable to common shareholders in the first quarter of 2025, compared to the same period of 2024, was the result of a higher net loss in the current period. Liquidity and Capital Resources At March 31, 2025, the Company had a working capital balance of $26.7 million and a current working capital ratio of 3.60:1. At March 31, 2025, the Company had a cash balance of $332,889. At December 31, 2024, the Company had a cash balance of $320,883. Total cash used for operating activities in the three months ended March 31, 2025 was $1,337,263. Cash used in operating activities for the three months ended March 31, 2025 was primarily associated with reduced grapes payable and increased inventories, being partially offset by depreciation and amortization and lower receivables. Total cash used in investing activities in the three months ended March 31, 2025 was $115,344. Cash used in investing activities for the three months ended March 31, 2025 consisted of cash used for equipment and vineyard development costs. Total cash generated from financing activities in the three months ended March 31, 2025 was $1,464,613. Cash generated from financing activities for the three months ended March 31, 2025 primarily consisted of proceeds from long-term debt, being partially offset by the repayment on the line of credit. 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 $1,203,983 at March 31, 2025, at an interest rate of 7.0%, and an outstanding line of credit balance of $2,405,815 at December 31, 2024, at an interest rate of 7.0%. 15 The line of credit agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment. As of December 31, 2024, the Company was in compliance with these financial covenants. As of March 31, 2025, the Company had a 15-year installment note payable of $968,348, due in quarterly payments of $42,534, associated with the purchase of property in the Dundee Hills AVA. As of March 31, 2025, the Company had a total long-term debt balance of $16,818,597, including the portion due in the next year, owed to AgWest, exclusive of debt issuance costs of $173,801. As of December 31, 2024, the Company had a total long-term debt balance of $14,042,910, exclusive of debt issuance costs of $178,908. The Company believes that cash flow from operations and funds available under the Company’s existing credit facilities and through preferred stock sales will be sufficient to meet the Company’s long-term needs. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, the Company is not required to provide the information required by this item. ITEM 4: CONTROLS AND PROCEDURES Disclosure Controls and Procedures – The Company carried out an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 and 15d-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that review, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective, as of the end of the period covered by this report, to ensure that information required to be disclosed by the Company in the reports the Company files or submit under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting – There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II: OTHER INFORMATION Item 1 - Legal Proceedings From time to time, the Company is a party to various judicial and administrative proceedings arising in the ordinary course of business. The Company’s management and legal counsel have reviewed the probable outcome of any proceedings that were pending during the period covered by this report, the costs and expenses reasonably expected to be incurred, the availability and limits of the Company’s insurance coverage, and the Company’s established liabilities. While the outcome of legal proceedings cannot be predicted with certainty, based on the Company’s review, the Company believes that any unrecorded liability that may result as a result of any legal proceedings is not likely to have a material effect on the Company’s liquidity, financial condition or results from operations. Item 1A - Risk Factors In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which could materially affect our business, results of operations or financial condition. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to materially adversely affect our business, impact our results of operations or financial condition. Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds None. 16 Item 3 - Defaults Upon Senior Securities None. Item 4 - Mine Safety Disclosures Not applicable. Item 5 – Other Information During the three months ended March 31, 2025, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “Non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K. 17 Item 6 – Exhibits 3.1 Articles of Incorporation of Willamette Valley Vineyards, Inc. (Filed herewith) 3.2 Articles of Amendment, dated August 22, 2000 (incorporated herein by reference to Exhibit 3.4 to the Company’s Form 10-Q for the quarterly period ended June 30, 2008, filed on August 14, 2008, File No. 000-21522) 3.3 Articles of Correction to the Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated June 22, 2015 (Filed herewith) 3.4 Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated June 22, 2015, as corrected on July 22, 2015 (Filed herewith) 3.5 Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated March 15, 2016 (Filed herewith) 3.6 Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated August 9, 2022 (incorporated herein by reference to Exhibit 3.3 to the Company’s Form 10-Q for the quarterly period ended June 30, 2022, filed on August 11, 2022, File No. 001-37610) 3.7 Amended and Restated Bylaws of Willamette Valley Vineyards, Inc. (incorporated by reference from the Company’s Current Reports on Form 8-K filed on November 20, 2015, File No. 001-37610) 31.1 Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 (Filed herewith) 31.2 Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 (Filed herewith) 32.1 Certification of James W. Bernau pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith) 32.2 Certification of John Ferry pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith) 101 The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Balance Sheets, (ii) Condensed Statements of Operations; (iii) Condensed Statements of Shareholders’ Equity; (iv) Condensed Statements of Cash Flows; and (iv) Notes to Financial Statements, tagged as blocks of text. (Filed herewith) 104 The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 has been formatted in Inline XBRL 18 SIGNATURES Pursuant to the requirements of the Security Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WILLAMETTE VALLEY VINEYARDS, INC. Date: May 13, 2025 By /s/ James W. Bernau James W. Bernau Chief Executive Officer (Principal Executive Officer) Date: May 13, 2025 By /s/ John Ferry John Ferry Chief Financial Officer (Principal Accounting and Financial Officer) 19