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Item 8. Financial Statements and Supplementary Data

2026-03-24 compared with 2025-03-25 · 173 added, 117 removed, 711 unchanged (29% of the section changed)

1 unchanged sentence

TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm ( Moss Adams LLP , Portland, Oregon , PCAOB ID No.

Report of Independent Registered Public Accounting Firm ( Baker Tilly US, LLP , Portland, Oregon, PCAOB ID No.

Balance Sheets

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the Shareholders and the Board of Directors of

Willamette Valley Vineyards, Inc.

Valley Vineyards, Inc.

on the Financial Statements

We have audited the accompanying balance sheets of Willamette Valley

Vineyards, Inc (the Company) as of December 31, 2024, and 2023, the related statements of operations, shareholders

equity and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2024, and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States of America.

have audited the accompanying balance sheets of Willamette Valley Vineyards, Inc.

(the Company) as of December 31,

2025, and 2024, the related statements of operations, shareholders equity and cash flows for the years then ended, and the related

notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2025, and 2024, and the results of its operations

and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Companys management.

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audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and

communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

Moss Adams LLP

March 25, 2025

Baker Tilly US, LLP

have served as the Companys auditor since 2004.

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SHAREHOLDERS EQUITY

Redeemable preferred stock, no par value, 100,000,000 shares authorized, 10,239,573 shares issued and outstanding, liquidation preference $ 42,494,228 at December 31, 2024 and 10,046,833 shares issued and outstanding, liquidation preference $ 41,694,357 at December 31, 2023

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

Redeemable preferred stock, no par value, 100,000,000

shares authorized, 10,239,573 shares issued and outstanding, liquidation preference $ 42,494,228 at December 31, 2025 and December

31, 2024, respectively.

Common stock, no par value, 10,000,000 shares authorized, 4,979,529 shares

issued and outstanding at December 31, 2025 and 4,964,529 shares issued and outstanding at December 31, 2024

Retained earnings

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( 1,167,722 )

( 1,016,180 )

Other income, net

2 unchanged sentences

INCOME TAX BENEFIT

( 1,198,593 )

Preferred stock dividends

1 unchanged sentence

( 2,252,941 )

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS

LOSS APPLICABLE TO COMMON SHAREHOLDERS

$ ( 3,170,626 )

1 unchanged sentence

Loss per common share after preferred dividends, basic and diluted

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

Weighted-average number of common shares

outstanding, basic and diluted

accompanying notes are an integral part of the financial statements.

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( 2,252,941 )

( 1,198,593 )

Balance at December 31, 2024

Issuance of preferred stock, net

Stock based compensation

Preferred stock dividends declared

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Depreciation and amortization

Loss on disposition of property & equipment

Common stock compensation expense

Non-cash lease expense

Loan fee amortization

Debt issuance costs

Deferred income taxes

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Lease liabilities

( 1,097,192 )

Grapes payable

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( 1,852,268 )

( 4,307,947 )

Net cash from investing activities

( 2,089,705 )

( 4,726,970 )

CASH FLOWS FROM FINANCING ACTIVITIES

1 unchanged sentence

Payment on installment note for property purchase

Proceeds from bank overdraft

Proceeds from (payments on) bank overdraft

Proceeds from (payments on) line of credit

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( 1,870,212 )

( 3,547,749 )

Proceeds from long-term debt

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NON-CASH INVESTING AND FINANCING ACTIVITIES

Purchases of property and equipment and vineyard development costs included in accounts payable

Purchases of property and equipment

and vineyard development costs included in accounts payable

Reduction in investor deposits for preferred stock

4 unchanged sentences

Interest paid

Income tax paid (received)

$ ( 394,268 )

Income tax paid

accompanying notes are an integral part of the financial statements.

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the accounts receivable balances, and current economic conditions that may affect a customers ability to pay.

The Company has

credit risk associated with uncollateralized trade accounts receivable from all operations totaling $ 3,151,810 as of December 31, 2024,

net of the allowance for credit losses.

The Company had credit risk associated with uncollateralized trade accounts receivable from all

operations totaling $ 2,994,829 and $ 4,226,948 as of December 31, 2023 and 2022, net of the allowance for credit losses.

The allowance

for credit losses is further discussed in Note 2.

The Company had

credit risk associated with uncollateralized trade accounts receivable from all operations totaling $ 4,411,116 and $ 2,994,829 as of December

31, 2025 and 2024, net of the allowance for credit losses.

The allowance for credit losses is further discussed in Note 2.

– For Company produced wines, after a portion of the vineyard becomes commercially productive, the annual crop and production

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room sales are recognized as revenue at the point of sale and internet sales are recognized at time of shipment.

Hospitality sales,

that are paid in advance of the event, are accrued as unearned revenue, and are subsequently recognized as revenue in the period of

Wine club sales are made under an agreement with the customer, which specifies the quantity and timing of the wine club

Wine club charges are billed to the customers credit card, at the time of shipment, and revenue is then recognized.

For Club Willamette the customer is charged a monthly subscription and 45% of the monthly fee is recognized by the Company in the

month billed.

As of December 31, 2024, the Company has recorded a liability for unused club points in the amount of $263,327, which

is included in unearned revenue on the balance sheet.

Hospitality sales, that

are paid in advance of the event, are accrued as unearned revenue, and are subsequently recognized as revenue in the period of the event.

Wine club sales are made under an agreement with the customer, which specifies the quantity and timing of the wine club shipment.

club charges are billed to the customers credit card, at the time of shipment, and revenue is then recognized.

For Club Willamette

the customer is charged a monthly subscription and 45% of the monthly fee is recognized by the Company in the month billed.

For the years

ended December 31, 2025 and 2024, the Company has recorded a liability for unused club points in the amount of $371,971, and $263,327,

respectively, which is included in unearned revenue on the balance sheet.

Company periodically sells bulk wine or grapes that either do not meet the Companys quality standards or are in excess of production

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31, 2025 and 2024, excise taxes incurred were $ 427,491 and $ 405,392 respectively.

per common share after preferred dividends – loss per share is computed based on the weighted-average number of common

shares outstanding each year.

Loss per common share after preferred dividends

– loss per share is computed based on the weighted-average number of common shares outstanding each year.

per share is calculated by dividing net income (loss) by the weighted-average shares of common stock and dilutive common equivalent shares

outstanding during the period.

Dilutive common equivalent shares included in this calculation consist of dilutive shares issuable upon

the assumed vesting of outstanding restricted stock units and restricted stock awards, the assumed issuance of awards for contingently

issuable performance-based awards, as computed using the treasury stock method.

Restricted stock units and restricted stock awards are

included in the number of shares used to calculate diluted earnings per share after evaluating the applicable performance criteria as

of period end and under the assumption the end of the reporting period was the end of the contingency period, and the effect is dilutive.

As of December 31, 2025, 200,000 performance restricted stock units (“PRSU”)

have been excluded from the diluted weighted average share count, as their performance and/or market conditions have not

been achieved and 70,000 restricted stock units have been excluded as their effect would be anti-dilutive.

– We determine if an arrangement is a lease at inception.

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adopted accounting pronouncements

November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280):

to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through

enhanced disclosures about significant segment expenses.

The expanded annual disclosures are effective for our year ending December 31,

2024, and the expanded interim disclosures are effective in 2025 and were applied retrospectively to all prior periods presented.

issued accounting pronouncements

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The expanded annual disclosures

are effective for our year ending December 31, 2025.

The Company is currently evaluating the impact that ASU 2023-09 will have on our

consolidated financial statements and whether we will apply the standard prospectively or retrospectively.

are effective for our year ending December 31, 2025 and were applied retrospectively to all prior periods presented.

issued accounting pronouncements

November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income-Expense Disaggregation Disclosures

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5 – LINE OF CREDIT FACILITY

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.

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

The Company had an outstanding line of credit balance of $ 2,405,815

at December 31, 2024, at an interest rate of 7.0%, and an outstanding line of credit balance of $ 2,684,982 at December 31, 2023, at an

interest rate of 8.0%.

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

In February 2025 the Company entered into an additional line of credit

agreement with AgWest that 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.

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

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

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

In November 2022,

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

In July 2025, the Company renewed the Credit Agreement until July 31, 2026.

The Company had an outstanding line of credit balance of $ 3,140,140 at December 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%.

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, 2025, the Company was out of compliance with a debt covenant.

The Company has received a waiver from Columbia Bank waiving

this violation until the next measurement date of December 31, 2026.

6 – NOTES PAYABLE

10 unchanged sentences

AgWest Loan #2

AgWest loan Operating line #6

AgWest 15 year Note

AgWest 15 year Note Loan #3

AgWest loan #4

Long-Term Debt, Gross

1 unchanged sentence

Current portion of long-term debt

( 1,008,215 )

Long-Term Debt

Company has four long term debt agreements with AgWest with an aggregate outstanding balance of $ 15,184,395 and $ 14,042,910 as of December

31, 2024 and 2023, respectively.

The first two outstanding loans require monthly principal and interest payments of $62,067 for the life

of the loans, at annual fixed interest rates of 4.75 % and 5.21 % , and with maturity dates of 2028 and 2032, respectively.

The third loan

was repaid, and the fourth loan requires monthly principal and interest payments of $87,989 at an annual interest rates of 6.66%, and

with a maturity date of 2039.

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

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 fourth loan bears interest at 6.60 % and has a maturity date of April 2027.

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

These loans are collateralized against

the property on the Company estates in Salem and Tualatin.

The agreement includes a current ratio financial covenant.

As of December

31, 2025, the Company was in compliance with the financial covenant.

minimum principal payments of long-term debt are as follows for the years ending December 31:

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9 – STOCK INCENTIVE PLAN

Company had a stock incentive plan, originally created in 1992, most recently amended in 2001.

No additional grants may be made under

All stock options contained an exercise price that was equal to the fair market value of the Companys stock on the date

the options were granted.

There were no stock options outstanding or exercisable at December 31, 2024 and 2023.

stock compensation expense under this plan was recognized for the years ended December 31, 2024 and 2023.

As of December 31, 2024, there

was no unrecognized compensation expense related to stock options.

Willamette Valley Vineyards Inc, 2025 Omnibus Equity Incentive Plan (2025 Plan) was adopted by the Companys

board of directors on September 9, 2025.

The 2025 Plan provides for the grant of Options, Share Appreciation Rights, Restricted

Share Units (“RSU”), Other Share-based Awards or any combination of the foregoing to selected employees, directors and

independent contractors of the Company.

The Company filed the registration statement to register the shares related to the 2025

Plan on November 12, 2025

the twelve months ended December 31, 2025, the Company granted 285,000 restricted shares and share units under the 2025 Plan to a member

of senior management.

15,000 shares that vested have been issued during the twelve month period ended December 31, 2025.

the restricted shares and share units granted, 85,000 of the options vest based on achieving length of service requirements and 200,000

of the options vest in increments subject to achieving four share price hurdles ranging from $12 to $25 per share, measured over a ten

year performance period which expire on the tenth anniversary of the employment start date.

A Monte Carlo simulation model incorporating

500,000 scenarios over a weighted average contractual period remaining of 4.9 years was used to calculate the value of $470,412.

valuation model utilized the following assumptions:

of Valuation Model Assumption

Risk-free interest rate

Expected volatility rates

Weighted-average grant date fair value of options

A summary of RSUs (performance and time-based)

outstanding as of December 31, 2025, and activity during the year then ended, is presented below:

Schedule of Restricted Stock Units Outstanding

Restricted Stock Unit Awards

(In thousands)

Weighted-Average

Value Per Share

Outstanding at December 31, 2024

Outstanding at December 31, 2025

Company recognized $125,071 in stock-based compensation expense during the twelve months ended December 31, 2025 related to the 2025

The unrecognized compensation cost of $795,841 will be recognized ratably over the next 9.5 years.

10 – INCOME TAXES

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Year Ended December 31,

Current tax expense:

Current tax expense (benefit):

Current tax expense

4 unchanged sentences

effective income tax rate differs from the federal statutory rate as follows:

of Effective Income Tax Rate

Year Ended December 31,

Federal statutory rate

State taxes, net of federal benefit

Permanent differences

$ ( 246,203 )

State & local taxes net of federal income tax effect (1)

Nontaxable or nondeductible items:

Prior Year Adjustments

Changes in State Blended Tax Rate and Other

General Business Credit

Other adjustments

tax effect in this category primarily reflects state taxes in Oregon, California and Texas.

in the tax rate are detailed in the table above.

2 unchanged sentences

Changes in tax rate are detailed above.

claiming of general business credits related to amended returns to claim the credit for employer social security and medicare taxes paid

on certain employee tips which include carryforwards and permanent item addbacks have a disproportional impact on the rate.

deferred tax assets and (liabilities) at December 31 consist of:

of Net Deferred Tax Assets and Liabilities

Deferred tax assets:

Net Operating Losses

Prepaid expenses

Gift Card Payable

ROU Lease Liability

General Business Credits

Interest Expense Limitation Carryforward

Total deferred tax assets

Valuation allowance

Total deferred tax assets net of valuation allowance

Deferred tax liabilities

( 3,482,532 )

( 3,804,348 )

General Business Credits

Section 163(j) Carryforward

Net noncurrent deferred tax liability

Total deferred tax liabilities

( 4,251,950 )

( 4,585,585 )

Valuation allowance

Net deferred tax assets (liabilities)

( 2,180,660 )

16 unchanged sentences

carryforwards of $ 2,447,627 which will start expiring in 2033.

paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09

of Cash Paid for Income Taxes

State - Oregon

State - Texas

State - Other

Total Cash Taxes Paid (Net)

11 – RELATED PARTY TRANSACTIONS

Company provides living accommodations in a residence on the Companys premises, at its convenience, for the Companys chief

executive officer (CEO).

The CEO provides security and lock-up services and is required to live on premises as a condition

Company provides living accommodations in a residence on the Companys premises, at its convenience, for the Companys President

(the President).

The President provides security and lock-up services and is required to live on premises as a condition

of his employment.

Over the years the Company has recorded annual expenses less than $12,000, exclusive of depreciation, related to the

housing provided for its CEO.

housing provided for its President.

Company engages James Ellis a Board member for consulting services.

The amount of this compensation was $9,628 in 2025 and $9,865 in

The Willamette Wineworks lease discussed in Note

12 is with a related party.

The Company paid $ 136,863 and $ 128,919 related to this lease for the years ended December 31, 2024 and 2023,

respectively.

Willamette Wineworks lease discussed in Note 12 is with a related party.

The Company paid $ 130,045 and $ 136,863 related to this lease

for the years ended December 31, 2025 and 2024, respectively.

12 – COMMITMENTS AND CONTINGENCIES

144 unchanged sentences

for the issuance of Preferred Stock.

June 17, 2025, the Company filed a shelf Registration Statement on Form S-3 (the June 2025 Form S-3) with 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 2025 Form S-3 is not to exceed $20,000,000.

On July 3, 2025, the Company filed with the

SEC a Prospectus Supplement to the June 2025 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous

basis, up to 1,343,284 shares of Series A Redeemable Preferred Stock having proceeds not to exceed $4,500,000.

Net proceeds of $2,057,265

have been received under these offerings as of December 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.

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the statements of operations are significant and there are no other significant segment expenses that would require disclosure.

Selling expenses that can be directly attributable to the segment, including depreciation of segment specific assets, are included, however,

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.

3 unchanged sentences

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

Companys Chief Executive Officer (CEO) uses results from operations to assess operating performance as compared to

prior results, the annual operating plan and our competitors.

The CEO uses this information to allocate future operating and capital

expenditures.

Companys President uses results from operations to assess operating performance as compared to prior results, the annual operating

plan and our competitors.

The President uses this information to allocate future operating and capital expenditures.

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

2 unchanged sentences

Schedule of Segment reporting

Months Ended December 31,

and administrative expenses

(loss) from operations

Twelve Months Ended December 31,

Distributor Sales

Cost of sales

Selling expenses

Contribution margin

Percent of sales

General and administrative expenses

Income (loss) from operations

$ ( 1,436,172 )

sales include $ 0 and $ 69,924 of bulk wine and grape sales in the years ended December 31, 2024 and 2023, respectively.

sales include $ 0 of bulk wine and grape sales in the years ended December 31, 2025 and 2024.

direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 54.4% and 53.4% of total

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data