What changed in this filing

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Item 1. Financial Statements

2026-05-13 compared with 2025-11-13 · 224 added, 315 removed, 399 unchanged (57% of the section changed)

2 unchanged sentences

BALANCE SHEETS

September 30,

CURRENT ASSETS

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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 $ 44,183,758 , at September 30, 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 September 30, 2025 and December 31, 2024, respectively.

Redeemable preferred stock, no par value, 100,000,000 shares authorized, 11,019,472 shares issued and outstanding, liquidation preference $ 46,336,880 , at March 31, 2026 and 10,239,573 shares issued and outstanding, liquidation preference $ 42,494,228 , at December 31, 2025.

Common stock, no par value, 10,000,000 shares authorized, 4,979,529 shares issued and outstanding at March 31, 2026 and 4,979,529 shares issued and outstanding at December 31, 2025

Retained earnings

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Three months ended

Nine months ended

September 30,

COST OF SALES

4 unchanged sentences

LOSS FROM OPERATIONS

( 1,213,527 )

( 1,685,341 )

OTHER INCOME (EXPENSE)

Interest expense, net

Other income (expense), net

Other income, net

LOSS BEFORE INCOME TAXES

( 1,025,723 )

( 2,432,300 )

INCOME TAX BENEFIT

( 1,092,450 )

( 1,728,636 )

Accrued preferred stock dividends

( 1,689,530 )

( 1,689,676 )

LOSS APPLICABLE TO COMMON SHAREHOLDERS

1 unchanged sentence

$ ( 1,292,158 )

$ ( 3,418,166 )

$ ( 2,298,448 )

Loss per common

share after preferred dividends, basic and diluted

Weighted-average

number of common shares outstanding, basic and diluted

Loss per common share after preferred dividends, basic and diluted

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

accompanying notes are an integral part of this condensed financial statement

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STATEMENTS OF SHAREHOLDERS EQUITY

Nine-Month Period Ended September 30, 2025

Three-Month Period Ended March 31, 2026

Preferred Stock

Balance at December 31, 2025

Preferred stock dividends accrued

Balance at March 31, 2025

Preferred stock dividends accrued

Balance at June 30, 2025

Issuance of preferred stock, net

Stock based compensation

Preferred stock dividends accrued

( 1,092,450 )

Balance at September 30, 2025

Nine-Month Period Ended September 30, 2024

Balance at March 31, 2026

Three-Month Period Ended March 31, 2025

Preferred Stock

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Balance at March 31, 2025

Preferred stock dividends accrued

Balance at June 30, 2024

Preferred stock dividends accrued

Balance at September 30, 2024

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

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Depreciation and amortization

Loss on disposition of property & equipment

Common stock compensation expense

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Accounts receivable

( 1,359,690 )

( 3,046,229 )

Prepaid expenses and other current assets

Income taxes receivable

Income tax receivable

Unearned revenue

6 unchanged sentences

( 1,337,263 )

( 2,159,828 )

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

Additions to property and equipment

( 1,487,687 )

Net cash from investing activities

( 1,655,152 )

CASH FLOWS FROM FINANCING ACTIVITIES

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Proceeds from (payments on) bank overdraft

Proceeds from (payments on) line of credit

( 1,241,257 )

Payments on long-term debt

Payment on line of credit, net

( 1,201,832 )

Proceeds from investor deposits held as liability

Payment on long-term debt

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

Reduction in investor deposits for preferred stock

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

Reduction in investor deposits exchanged for preferred stock

Accrued preferred stock dividends

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BASIS OF PRESENTATION

accompanying unaudited interim financial statements as of September 30, 2025 and for the three and nine months ended September 30, 2025

and 2024 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, 2024 is derived from the audited financial statements

presented in the Willamette Valley Vineyards, Inc.

accompanying unaudited interim condensed financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and

2025 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, 2025 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, 2025

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, 2024, as presented in the Companys Annual Report on Form 10-K.

results for the three and nine months ended September 30, 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 2025 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, 2025, as presented

in the Companys Annual Report on Form 10-K.

results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the entire year

ending December 31, 2026, or any portion thereof.

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

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Schedule of Earning Per Share

Three months ended September 30,

Nine months ended September 30,

$ ( 1,092,450 )

$ ( 282,945 )

Three months ended March 31,

$ ( 565,073 )

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Accrued preferred stock dividends

( 1,689,530 )

( 1,689,676 )

Net loss applicable to common shares

$ ( 1,655,627 )

$ ( 846,195 )

Net loss applicable to common shareholders

$ ( 1,171,144 )

$ ( 1,292,158 )

Weighted-average number of common shares outstanding basic and diluted

Weighted-average number of common shares outstanding basic and

Loss per common share after preferred dividends, basic and diluted

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Schedule of Inventories

September 30, 2025

March 31, 2026

December 31, 2025

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Schedule of Property and Equipment, Net

September 30, 2025

March 31, 2026

December 31, 2025

1 unchanged sentence

Land, improvements, and other buildings

Winery, tasting room buildings, and hospitality center

Winery buildings and tasting rooms

Property and equipment, gross

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Property and equipment, net

expense for the three months ended September 30, 2025 and 2024 was $ 757,851 and $ 785,581 , respectively.

Depreciation expense for the

nine months ended September 30, 2025 and 2024 was $ 2,289,716 and $ 2,368,537 , respectively.

expense for the three months ended March 31, 2026 and 2025 was $ 749,825 and $ 770,370 , respectively.

of Credit Facility – In 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 agreement.

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

defined in the Credit 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 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 $ 1,164,558 at September 30, 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, 2024, the Company was in compliance with these financial covenants.

In July 2025, the Company renewed

the Credit Agreement until July 31, 2026.

The Company had an outstanding line of credit balance of $ 2,359,437 at March 31, 2026, at an

interest rate of 7.0%, and an outstanding line of credit balance of $ 3,140,140 at December 31, 2025, 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.

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

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

As of September 30, 2025, the

Company had a balance of $ 913,103 due on this note.

As of March 31, 2026, the Company

had a balance of $ 854,907 due on this note.

As of December 31, 2025, the Company had a balance of $ 884,221 due on this note.

Debt – The Company has four long term debt agreements with AgWest with an aggregate outstanding balance of $ 14,935,020 and

$ 14,042,910 as of September 30, 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.

$ 15,184,395 as of March 31, 2026 and December 31, 2025 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.

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 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 6.35% 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.

These loans are collateralized against the property on the Company estates in Salem and Tualatin.

of September 30, 2025, 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:

Schedule of Future Minimum Principal Payment for Long-Term Debt Maturities

of September 30, 2025, the Company had unamortized debt issuance costs of $ 163,586 .

of March 31, 2026, the Company had unamortized debt issuance costs of $ 154,090 .

As of December 31, 2025, the Company had unamortized

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INTEREST AND TAXES PAID

taxes – The Company paid $ 17,500 in income taxes for the three months ended September 30, 2025 and $ 27,000 in income taxes

for the three months ended September 30, 2024.

The Company paid $ 62,500 in income taxes for the nine months ended September 30, 2025

and $ 27,000 in income taxes for the nine months ended September 30, 2024.

On July 4, 2025, a budget and reconciliation package

referred to as the One Big Beautiful Bill Act ("OBBBA") was signed into law.

The OBBBA enacts significant changes to

tax and related laws, including, among other things, expensing of domestic research expenses, increasing the limit of the interest

expense deduction to thirty percent of EBITDA, and one hundred percent bonus depreciation on eligible property acquired after January

There was no material change to the Company’s effective income tax rate as a result of these changes for the period

ending September 30, 2025.

– The Company paid $ 227,510 and $ 127,444 for the three months ended September 30, 2025 and 2024, respectively, in interest

on debt and the line of credit.

The Company paid $ 723,311 and $ 391,962 for the nine months ended September 30, 2025 and 2024, respectively,

in interest on debt and the line of credit.

taxes – The Company paid zero in income taxes for the three months ended March 31, 2026, and 2025.

– The Company paid $ 248,682 and $ 228,105 for the three months ended March 31, 2026 and 2025, respectively, in interest on long-term

debt and the line of credit.

SEGMENT REPORTING

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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, 2025 and 2024.

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, 2026 and 2025.

Sales figures are net of related excise taxes.

Schedule of Segment reporting

Months Ended September 30,

Cost of sales

$ ( 105,308 )

Percent of total sales

and administration expenses

from operations

$ ( 1,213,527 )

$ ( 136,506 )

Months Ended September 30,

Three Months Ended March 31,

Distributor Sales

Cost of Sales

Percent of total sales

and administration expenses

from operations

Selling and Marketing Expenses

Contribution Margin (Loss)

Percent of Sales

General and Administration Expenses

Loss from Operations

$ ( 677,794 )

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

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

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

31, 2026 for the issuance of Preferred Stock.

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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, 2025

for the issuance of Preferred Stock.

Net proceeds of $3,938,066 have been received under these offerings as of March 31, 2026 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

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Net proceeds of $2,142,588

have been received under these offerings as of September 30, 2025 for the issuance of Preferred Stock.

have been received under these offerings as of March 31, 2026 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, 2025 and December 31, 2024 was $1,321,760 and $1,853,982, respectively, and is recorded as unearned revenue on the balance

at March 31, 2026 and December 31, 2025 was $1,800,515 and $2,031,377, 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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to the original issue price plus accrued but unpaid dividends and a redemption premium equal to 3% of the original issue price.

8) EQUITY INCENTIVE PLAN

The Willamette Valley Vineyards

Inc, 2025 Omnibus Equity Incentive Plan ("2025 Plan") was adopted by the Company's board of directors on September 9, 2025.

The 2025 Plan provides for the grant of Options, Share Appreciation Rights, Restricted Share Units, Other Share-based Awards or any combination

of the foregoing to selected employees, directors and independent contractors of the Company.

During the three months ended

September 30, 2025, the Company granted 285,000 restricted shares and share units under the 2025 Plan.

As of September 30, 2025, no shares

had been registered with the SEC under this plan.

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

Plan on November 12, 2025.

The 15,000 shares that vested prior to November 12, 2025 will be issued during the three month period ended

December 31, 2025.

The Company recognized $89,132

in stock-based compensation expense during the three months ended September 30, 2025 related to the 2025 Plan.

STOCK INCENTIVE PLAN

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

board of directors on May 27, 2025, and was approved by the Companys shareholders on July 12, 2025.

The 2025 Plan provides for

the grant of incentive stock options, non-statutory stock options, share appreciation rights, restricted shares, restricted share units,

other share-based awards or any combination of the foregoing to selected employees, directors and independent contractors of the

The Company filed on November 12, 2025 a registration statement Form S-8 to register under the U.S.

Securities Act of 1933,

as amended, the Companys shares of common stock to be issued pursuant to awards granted under the 2025 Plan.

the three months ended March 31, 2026, the Company granted no awards under the 2025 Plan.

As of March 31, 2026, 15,000 shares of the

Companys common stock had been issued under the 2025 Plan and an additional 270,000 shares of the Companys common stock

were issuable pursuant to outstanding awards granted under the 2025 Plan.

Company recognized $21,035 in stock-based compensation expense during the three months ended March 31, 2026 related to the 2025 Plan

and no stock-based compensation expense during the three months ended March 31, 2025.

determine if an arrangement is a lease at inception.

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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

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 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.

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.

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.

December 2004 , under a sale-leaseback agreement, the Company sold approximately 75 acres of the Tualatin Vineyards property with a net

book value of approximately $551,000 for approximately $ 727,000 cash and entered into a 15 year operating lease agreement, with three

five-year extension options, for the vineyard portion of the property.

The first two five year extensions have been exercised.

contains a formula-based escalation provision with a maximum increase of 4% every three years.

This property is referred to as the Meadowview

Vineyard and includes approximately 49 acres of producing vineyards.

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.

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

the Company entered into a 25-year

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.

Leases – Non-Vineyard – 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

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.

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.

The lease was not renewed in 2025.

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

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

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

February 2020 , the Company entered into a lease for 5 years, with three five-year renewal options for a retail wine facility in Folsom,

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with increases not allowed in any year being carried forward to the following years.

In September 2025 the Company amended the renewal

In January 2025 the Company amended the renewal

options and extended the lease until February 2026.

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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.

For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through August 2041.

February 2022 , the Company entered into a lease for 10 years , with three five-year renewal options for a retail wine facility in Lake

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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 .

For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through January 2042.

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,

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.

For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through May 2042.

January 2023 , the Company entered into a lease for 10 years , with three five-year renewal options for a retail wine facility in Bend,

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following tables provide lease cost and other lease information:

of Lease Cost and Information

Nine Months Ended

September 30, 2025

September 30, 2024

Schedule of Lease Cost and Other Lease Information

Three Months Ended

March 31, 2026

March 31, 2025

Operating lease cost - Vineyards

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Weighted-average discount rate - Operating leases

assets obtained in exchange for new operating lease obligations were $22,362 for the nine months ended September 30, 2025 and zero for

the nine months ended September 30, 2024.

of September 30, 2025, maturities of lease liabilities were as follows:

of Maturities of Lease Liabilities

assets obtained in exchange for new operating lease obligations were zero for the three months ended March 31, 2026 and 2025.

of March 31, 2026, maturities of lease liabilities were as follows:

Years Ended December 31,

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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

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Such policies

were unchanged during the nine months ended September 30, 2025.

were unchanged during the three months ended March 31, 2026.

Company, one of the largest wine producers in Oregon by volume, believes its success is dependent upon its ability to:

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The Company continues to emphasize growth in direct to consumer sales through the Companys existing tasting rooms

and the opening of new locations, and growth in wine club membership.

Additionally, the Companys 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.

and growth in wine club membership.

Additionally, the Companys Preferred Stock sales since August 2015 have resulted in approximately

16,287 current preferred stockholders many of which the Company believes are wine enthusiasts are current and potential customers of

Periodically,

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this is not a significant part of the Companys activities.

Company sold 124,254 and 135,424 cases of produced wine during the nine months ended September 30, 2025 and 2024, respectively, a decrease

Company sold 38,892 and 31,835 cases of produced wine during the three months ended March 31, 2026 and 2025, respectively, an increase

of 7,057 cases, or 22.2% in the current year period over the prior year period.

The decrease in wine case sales was the result of

decreased case sales through distributors.

The increase in wine case sales was primarily the result

of having higher 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, 2025, wine inventory included 231,368 cases of bottled wine and 612,224 gallons of bulk wine in various stages of the aging

March 31, 2026, wine inventory included 152,337 cases of bottled wine and 681,857 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 146,176 cases during the nine months ended September 30, 2025.

Winery bottled 2,587 cases during the three months ended March 31, 2026.

Valley Vineyards continues 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 was awarded the Best Wine Tasting Room in

the country by USA Today in their 10 Best Readers Choice Awards for the second consecutive year.

The Company was

also awarded the #2 Best Wine Club in the nation by USA Today for the second consecutive year.

Enthusiast Magazine rated the 2022 Père Ami Red Blend 93 points, 2022 Métis Red Blend 94 points, Willamette Valley

Vineyards 2023 Founders Reserve Pinot Noir and 2023 Dijon Clone Chardonnay 92 points, and the 2023 Founders Reserve Chardonnay

Suckling rated the 2023 Founders Reserve Pinot Noir and Chardonnay 93 points.

National Sales 2023 White Pinot Noir received

91 points and 2023 Pinot Gris 90 points.

Wine Ratings Competition awarded the Companys 2023 Estate Pinot Noir 94 points, 2023 Whole Cluster Pinot Noir 93 points, National

Sales 2023 Pinot Gris and 2023 White Pinot Noir 92 points, the 2023 Dijon Clone Pinot Noir rated 92 points.

Companys 2022 Domaine Willamette Blanc de Noirs received 92 points from Wine Spectator Magazine, Owen Bargreen and James Suckling.

The 2022 Domaine Willamette Blanc de Blancs rated 93 points from Owen Bargreen and 90 points from James Suckling.

2017 Domaine Willamette Extended Tirage Brut scored 94 points from Owen Bargreen.

Bargreen rated the 2022 Elton Pinot Noir 93 points and 2024 Estate Pinot Gris 92 points.

International

Wine Report scored the 2022 Elton Florine Pinot Noir and 2023 Elton Chardonnay both 92 points.

OF OPERATIONS

revenue for the three months ended September 30, 2025 and 2024 were $8,353,200 and $9,370,713, respectively, a decrease of $1,017,513,

or 10.9%, in the current year period over the prior year period.

This decrease was caused by a

decrease in direct sales of $384,420, and a decrease in sales through distributors of $633,093 in the current year three-month period

over the prior year period.

The decrease in revenue from direct sales was primarily related to lower internet and telephone sales.

Sales revenue for the nine months ended September 30, 2025 and 2024 were $26,090,546 and $28,506,151, respectively, a decrease of $2,415,605,

or 8.5%, in the current year period over the prior year period.

This decrease was caused by a decrease

in revenues from direct sales of $583,300 and a decrease in revenues from sales through distributors of $1,832,305 in the current year

period over the prior year period.

The decrease in revenues from sales through distributors was primarily the result of lower

case sales in the current year.

of Sales for the three months ended September 30, 2025 and 2024 were $3,349,228 and $3,562,599, respectively, a decrease of $213,371,

or 6.0%, in the current period over the prior year period.

This change was primarily the result of lower sales in the current quarter

compared to the same quarter last year.

Cost of Sales for the nine months ended September 30, 2025 and 2024 were $10,110,848 and $10,953,625,

respectively, a decrease of $842,777 or 7.7%, in the current period over the prior year period.

This change was primarily the result

of lower case sales in the first nine months of 2025 when compared to the same period in 2024.

profit as a percentage of net sales for the three months ended September 30, 2025 and 2024 was 59.9% and 62.0%, respectively, a decrease

of 2.1 percentage points in the current year period over the prior year period, mostly as a result of higher percentage rebates paid

to distributors compared to the same quarter of 2024.

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

2025 and 2024 was 61.2% and 61.6%, respectively, a decrease of 0.4 percentage points in the current year period over the prior year period.

The decrease was primarily the result of higher percentage rebates paid to distributors in the first nine months of 2025 compared to

revenue for the three months ended March 31, 2026 and 2025 was $8,256,153 and $7,541,583, respectively, an increase of $714,570, or 9.5%,

in the current year period over the prior year period.

This increase was caused by an increase in revenues from distributor sales of

$797,678, being partly offset by a decrease in direct sales to consumers of $83,108 in the current years three-month period over

the same period in the prior year.

The increase in revenue from distributors was primarily attributed to higher case sales in the current

year three-month period over the same period in the prior year.

The decrease in direct sales to consumers was primarily the result of

lower wine club and internet revenues.

of sales for the three months ended March 31, 2026 and 2025 was $3,227,089 and $2,782,475, respectively, an increase of $444,614, or

16.0%, in the current period over the prior year period.

This change was primarily the result of the higher number of cases sold in the

first quarter of 2026 when compared to the same quarter in 2025.

profit for the three months ended March 31, 2026 and 2025 was $5,029,064 and $4,759,108, respectively, an increase of $269,956, or 5.7%,

in the first quarter of 2026 over the same quarter in the prior year.

This increase was primarily the result of an increase in sales

through distributors.

profit as a percentage of net sales for the three months ended March 31, 2026 and 2025 was 60.9% and 63.1%, respectively, a decrease

of 2.2 percentage points in the current quarter over the same quarter in the prior year.

The decrease was primarily the result of a higher

percentage of sales coming from distribution which has a lower gross margin combined with the mix of vintages sold in the first quarter

of 2026 when compared to the same quarter in 2025.

General and Administrative Expenses

general and administrative expenses for the three months ended September 30, 2025 and 2024 was $6,217,499 and $5,944,620 respectively,

an increase of $272,879, or 4.6%, in the current quarter over the same quarter in the prior year.

The increase was primarily the result

of an increase in selling and marketing expenses of $117,582, or 2.7% and an increase in general and administrative expenses of $155,297,

general and administrative expenses for the three months ended March 31, 2026 and 2025 was $5,706,858 and $5,629,086, respectively, an

increase of $77,772, or 1.4%, in the current quarter over the same quarter in the prior year.

This increase was primarily the result

of an increase in selling expenses of $116,135, or 2.9% being partly offset by a decrease in general and administrative expenses of $38,363,

or 2.3% in the current quarter compared to the same quarter last year.

Selling, general and administrative expense for the nine months

ended September 30, 2025 and 2024 was $17,665,039 and $17,754,703, respectively, a decrease of $89,664, or 0.5%, in the current year

period over the prior year period.

This decrease was primarily the result of a decrease in selling and marketing expenses of $87,026,

or 0.7% combined with a decrease in general and administrative expenses of $2,638, or 0.1% in the current year period compared to the

same period in 2024.

General and administrative expenses decreased in the first nine months of 2025 compared to the same period in the

prior year primarily as a result of lower legal costs being partly offset by higher administration costs.

expense for the three months ended September 30, 2025 and 2024 was $304,957 and $257,192, respectively, an increase of $47,765 or 18.6%,

in the third quarter of 2025 over the same quarter in the prior year.

Interest expense for the nine months ended September 30, 2025 and

2024 was $873,323 and $750,573, respectively, an increase of $122,750 or 16.4%, in the current year period over the prior year period.

The increase in interest expense for the third quarter and first nine months of 2025 was primarily the result of increased long term

debt in these periods compared to the third quarter and first nine months of 2024.

income tax benefit for the three months ended September 30, 2025 and 2024 was $444,696 and $115,177, respectively, an increase of $329,519

or 286.1%, in the third quarter of 2025 over the same quarter in the prior year mostly as a result of the higher pre-tax loss in the

third quarter of 2025, compared to the same quarter in 2024.

expense for the three months ended March 31, 2026 and 2025 was $287,313 and $298,221, respectively, a decrease of $10,908 or 3.7%, in

the first quarter of 2026 over the same quarter in the prior year.

income tax benefit for the three months ended March 31, 2026 and 2025 was $193,414 and $296,742, respectively, a decrease of $103,328

or 34.8%, in the first quarter of 2026 over the same quarter in the prior year, primarily as a result of a lower pre-tax loss in the

first quarter of 2026, compared to the same quarter in 2025.

The Companys estimated federal and state combined income tax rate

was 28.9% and the three months ended September 30, 2025 and 2024.

The income tax benefit for the nine months ended September 30, 2025

and 2024 was $703,664 and $247,809, respectively, an increase of $455,855 or 184.0% in the current year period over the prior year period,

mostly a result of a higher pre-tax loss in the first nine months of 2025, compared to the same period in 2024.

The Companys estimated

federal and state combined income tax rate was 28.9% for the nine months ended September 30, 2025 and 2024.

loss for the three months ended September 30, 2025 and 2024 was $1,092,450 and $282,945, respectively, an increase of $809,505, or 286.1%,

in the third quarter of 2025 over the same quarter in the prior year.

Net loss for the nine months ended September 30, 2025 and 2024

was $1,728,636 and $608,772, respectively, an increase of $1,119,864, or 184.0%, in the current year period over the prior year period.

The increase in net loss for the third quarter and increase in net loss for the nine months of 2025, compared to the comparable periods

in 2024, was primarily the result of lower revenue in 2025.

for the three months ended March 31, 2026 and 2025 was 25.5% and 28.9% respectively.

loss for the three months ended March 31, 2026 and 2025 was $565,073 and $728,981, respectively, a decrease of $163,908 or 22.5%, in

the first quarter of 2026 over the same quarter in the prior year.

The decrease in net loss for the first quarter of 2026, compared to

the comparable period in 2025, was primarily the result of higher case sales to distributors in 2026.

Loss Applicable to Common Shareholders

loss applicable to common shareholders for the three months ended September 30, 2025 and 2024 was $1,655,627 and $846,195 respectively,

an increase of $809,432, or 95.7%, in the third quarter of 2025 over the same quarter in the prior year.

Net loss applicable to common

shareholders for the nine months ended September 30, 2025 and 2024 was $3,418,166 and $2,298,448, respectively, an increase of $1,119,718,

or 48.7%, in the current year period over the prior year period.

The increase in loss applicable to common shareholders in the third

quarter and the first nine months of 2025, compared to the same period of 2024, was the result of a higher net loss in the current periods.

loss applicable to common shareholders for the three months ended March 31, 2026 and 2025 was $1,171,144 and $1,292,158, respectively,

a decrease of $121,014, or 9.4%, in the first quarter of 2026 over the same quarter in the prior year.

The decrease in loss applicable

to common shareholders in the first quarter of 2026, compared to the same period of 2025, was the result of a lower net loss in the current

and Capital Resources

September 30, 2025, the Company had a working capital balance of $25.8 million and a current working capital ratio of 3.12:1.

September 30, 2025, the Company had a cash balance of $372,566.

March 31, 2026, the Company had a working capital balance of $26.6 million and a current working capital ratio of 3.45:1.

March 31, 2026, the Company had a cash balance of $404,712.

At December 31, 2025, the Company had a cash balance of $410,886.

cash used for operating activities in the nine months ended September 30, 2025 was $1,445,702.

Cash used in operating activities for

the nine months ended September 30, 2025 was primarily associated with a net loss, as well as reduced grapes payable and increased inventory,

being partially offset by depreciation and amortization and a reduction in accounts receivable.

cash used in investing activities in the three months ended September 30, 2025 was $312,548.

Cash used in investing activities for the

nine months ended September 30, 2025 consisted of cash used on equipment and vineyard development costs.

cash generated from financing activities in the nine months ended September 30, 2025 was $1,809,933.

Cash generated from financing activities

for the nine months ended September 30, 2025 primarily consisted of proceeds from long-term debt and investor deposits for preferred

stock partially offset by the repayment of long-term debt and the line of credit.

cash generated from operating activities in the three months ended March 31, 2026 was $794,947.

Cash generated from operating activities

for the three months ended March 31, 2026 was primarily associated with lower accounts receivables and lower inventories, being partially

offset by reduced grapes payable.

cash used in investing activities in the three months ended March 31, 2026 was $70,750.

Cash used in investing activities for the three

months ended March 31, 2026 consisted of cash used for computer equipment and vineyard development costs.

cash used in financing activities in the three months ended March 31, 2026 was $730,371.

Cash used in financing activities for the three

months ended March 31, 2026 primarily consisted of payments on the line of credit and payments on long term debt, being partially offset

by an increase in bank overdraft proceeds.

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 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 November 2022, the Company

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

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.

had an outstanding line of credit balance of $1,164,558 at September 30, 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, 2024, the Company was in compliance with these financial covenants.

of September 30, 2025, the Company had a 15-year installment note payable of $913,103, due in quarterly payments of $42,534, associated

with the purchase of property in the Dundee Hills AVA.

of September 30, 2025, the Company had a total long-term debt balance of $15,428,093, including the portion due in the next year, owed

to AgWest, exclusive of debt issuance costs of $163,586.

The Company had an outstanding line of credit balance of $2,359,437 at March 31, 2026, at an interest rate of 7.0%, and an outstanding

line of credit balance of $3,140,140 at December 31, 2025, 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.

of March 31, 2026, the Company had a 15-year installment note payable of $854,907, due in quarterly payments of $42,534, associated with

the purchase of property in the Dundee Hills AVA.

of March 31, 2026, the Company had a total long-term debt balance of $14,935,020, including the portion due in the next year, owed to

AgWest, exclusive of debt issuance costs of $154,090.

As of December 31, 2025, the Company had a total long-term debt balance of $15,184,395,

5 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-Q

Item 1. Financial Statements