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What changed 10-Q

Item 1. Financial Statements

2025-05-13 compared with 2024-11-12 · 225 added, 314 removed, 381 unchanged (59% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30,

CURRENT ASSETS

13 unchanged sentences

Accrued expenses

Investor deposits for preferred stock

Bank overdraft

11 unchanged sentences

SHAREHOLDERS EQUITY

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.

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.

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.

Retained earnings

Total shareholders equity

LIABILITIES AND SHAREHOLDERS EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$ 108,244,573

$ 109,017,140

accompanying notes are an integral part of this condensed financial statement

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

VALLEY VINEYARDS, INC.

1 unchanged sentence

Three months ended

Nine months ended

September 30,

September 30,

COST OF SALES

11 unchanged sentences

Accrued preferred stock dividends

( 1,689,676 )

( 1,535,158 )

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS

$ ( 846,195 )

$ ( 838,701 )

LOSS APPLICABLE TO COMMON SHAREHOLDERS

$ ( 1,292,158 )

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

accompanying notes are an integral part of this condensed financial statement

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

VALLEY VINEYARDS, INC.

STATEMENTS OF SHAREHOLDERS EQUITY

Period Ended September 30, 2024

Balance at December

Issuance of preferred stock,

Preferred stock dividends accrued

Balance at March 31, 2024

Preferred stock dividends accrued

Balance at June 30, 2024

Preferred stock dividends accrued

at September 30, 2024

Period Ended September 30, 2023

Balance at December

Issuance of preferred stock,

Preferred stock dividends accrued

Balance at March 31, 2023

Preferred stock dividends accrued

Balance at June 30, 2023

Preferred stock dividends accrued

at September 30, 2023

accompanying notes are an integral part of this condensed financial statement

Period Ended March 31, 2025

at December 31, 2024

of preferred stock, net

stock dividends accrued

at March 31, 2025

Period Ended March 31, 2024

at December 31, 2023

of preferred stock, net

stock dividends accrued

at March 31, 2024

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

VALLEY VINEYARDS, INC.

OF CASH FLOWS

Nine months ended September 30,

STATEMENTS OF CASH FLOWS

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

7 unchanged sentences

Accounts receivable

( 3,046,229 )

( 3,864,269 )

Prepaid expenses and other current assets

Income taxes receivable

Income tax receivable

Unearned revenue

2 unchanged sentences

( 1,519,087 )

( 2,446,233 )

Accounts payable

2 unchanged sentences

( 1,337,263 )

( 3,012,769 )

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

Additions to property and equipment

( 1,487,687 )

( 3,378,914 )

Net cash from investing activities

( 1,655,152 )

( 3,718,612 )

CASH FLOWS FROM FINANCING ACTIVITIES

Payment on installment note for property purchase

Proceeds from (reduction of) bank overdraft

Proceeds from bank overdraft

Proceeds from (payments on) line of credit

Payments on long-term debt

Proceeds from investor deposits held as liability

( 1,201,832 )

Payment on long-term debt

Proceeds from long-term debt

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Accrued preferred stock dividends

Right of use assets obtained in exchange for operating lease liabilities

accompanying notes are an integral part of this condensed financial statement

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

TO UNAUDITED INTERIM FINANCIAL STATEMENTS

BASIS OF PRESENTATION

accompanying unaudited interim financial statements as of September 30, 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.

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.

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

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.

(the 2024 Report).

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

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

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

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

The accompanying unaudited interim condensed financial statements

should be read in conjunction with the Companys audited financial statements for the year ended December 31, 2024, as presented

in the Companys Annual Report on Form 10-K.

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.

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

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Schedule of Earnings Per Share

Three months ended September 30,

Nine months ended September 30,

$ ( 282,945 )

$ ( 326,982 )

Three months ended March 31,

$ ( 728,981 )

1 unchanged sentence

Accrued preferred stock dividends

( 1,689,676 )

( 1,535,158 )

Net loss applicable to common shares

$ ( 846,195 )

$ ( 838,701 )

Net loss applicable to common shareholders

$ ( 1,292,158 )

5 unchanged sentences

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

of Inventories

September 30, 2024

Schedule of Inventories

March 31, 2025

December 31, 2024

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)

3 unchanged sentences

Schedule of Property and Equipment, Net

September 30, 2024

March 31, 2025

December 31, 2024

1 unchanged sentence

Land, improvements, and other buildings

Winery, tasting room buildings, and hospitality center

Winery buildings and tasting rooms

Property and equipment, gross

3 unchanged sentences

Property and equipment, net

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.

expense for the three months ended March 31, 2025 and 2024 was $770,370 and $791,986, 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 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.

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

in the agreement.

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

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

In November 2022, the Company increased

the borrowing line up to $ 5,000,000 .

In November 2022, the Company increased the borrowing

line up to $ 5,000,000 .

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

The Company had an outstanding

line of credit balance of $ 3,460,004 at September 30, 2024, at an interest rate of 8.0%, and an outstanding line of credit balance of

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%.

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net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment.

of December 31, 2023, the Company was out of compliance with a debt covenant.

The Company has received a waiver from Umpqua Bank waiving

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

of December 31, 2024, the Company was in compliance with these financial covenants.

Payable – In February 2017, the Company purchased property, including vineyard land, bare land, and structures in the Dundee

1 unchanged sentence

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

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 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.

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.

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.

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:

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

of March 31, 2025, the Company had unamortized debt issuance costs of $ 173,081 .

As of December 31, 2024, the Company had unamortized

1 unchanged sentence

INTEREST AND TAXES PAID

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.

taxes – The Company paid zero in income taxes for the three months ended March 31, 2025, and 2024.

– 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.

SEGMENT REPORTING

14 unchanged sentences

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

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

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

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 September 30,

Three Months Ended March 31,

Distributor Sales

Cost of Sales

Sales and marketing expenses

Selling and Marketing Expenses

Contribution Margin

$ ( 272,370 )

Percent of total sales

General and administration expenses

Loss from operations

$ ( 136,506 )

$ ( 282,768 )

Nine Months Ended September 30,

Distributor Sales

Cost of sales

Sales and marketing expenses

Contribution margin (deficit)

$ ( 321,995 )

Percent of total sales

Percent of Sales

General and Administration Expenses

2 unchanged sentences

$ ( 602,577 )

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

10 unchanged sentences

$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 September

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

31, 2025 for the issuance of Preferred Stock.

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

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

7 unchanged sentences

with an offering price of $4.85 per share.

Net proceeds of $3,938,066 have been received under these offerings as of September 30, 2024

for the issuance of Preferred Stock.

Net proceeds of $3,938,066 have been received under these offerings as of March 31, 2025 for

the issuance of Preferred Stock.

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

The amount of unused dividend gift cards

at September 30, 2024 and December 31, 2023 was $ 851,286 and $ 1,480,138 , respectively, and is recorded as unearned revenue on the balance

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

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

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these judgments.

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.

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

The Company extended the lease in January 2019 until January 2025.

The Company extended the lease in July 2024 until January

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.

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.

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

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

January 2035.

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.

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.

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

32 unchanged sentences

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

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of Lease Cost and Information

Nine Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

Three Months Ended

Three Months Ended

March 31, 2025

March 31, 2024

Operating lease cost - Vineyards

3 unchanged sentences

Other Information

Cash paid for amounts included in the measurement of lease liabilities

Cash paid for amounts included in the

measurement of lease liabilities

Operating cash flows from operating leases - Vineyard

2 unchanged sentences

Weighted-average discount rate - Operating leases

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:

assets obtained in exchange for new operating lease obligations were zero for the three months ended March 31, 2025 and 2024.

of March 31, 2025, 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

used in this Quarterly Report on Form 10-Q, we, us, our and the Company

refer to Willamette Valley Vineyards, Inc.

used in this Quarterly Report on Form 10-Q, we, us, our and the Company refer

to Willamette Valley Vineyards, Inc.

Looking Statements

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

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.

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, 2024, 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.

Accounting Policies

14 unchanged sentences

Such policies

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

were unchanged during the three months ended March 31, 2025.

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

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 decreased case sales through distributors.

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.

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.

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.

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

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 40,216 cases during the three months ended March 31, 2025.

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

bloggers including the accolades below.

Suckling rated the Companys 2022 Bernau Estate Pinot Noir 92 points and the 2023 Tualatin Estate Chardonnay 91 points.

OF OPERATIONS

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.

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.

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 years three-month period over

the same period in the prior year.

The increase in direct sales to consumers was primarily the result of higher wine club revenues.

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.

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.

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.

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

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.

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 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 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.

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.

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 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 Companys 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.

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.

Loss Applicable to Common Shareholders

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.

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.

and Capital Resources

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.

March 31, 2025, the Company had a working capital balance of $26.7 million and a current working capital ratio of 3.60:1.

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.

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 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.

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.

cash generated from financing activities in the three months ended March 31, 2025 was $1,464,613.

Cash generated from financing activities

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.

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.

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 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.

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.

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 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%.

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%.

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.

of December 31, 2023, the Company was out of compliance with a debt covenant.

The Company has received a waiver from Umpqua Bank waiving

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

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 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

of December 31, 2024, the Company was in compliance with these financial covenants.

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.

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.

1 unchanged sentence

exclusive of debt issuance costs of $178,908.

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

to meet the Companys short-term needs.

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

preferred stock sales will be sufficient to meet the Companys long-term needs.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.

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

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.