What changed in this filing

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Item 1. Financial Statements

2026-08-12 compared with 2026-05-13 · 337 added, 225 removed, 398 unchanged (59% of the section changed)

1 unchanged sentence

VALLEY VINEYARDS, INC.

BALANCE SHEETS

CONDENSED BALANCE SHEETS

CURRENT ASSETS

27 unchanged sentences

SHAREHOLDERS’ EQUITY

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

Redeemable preferred stock, no par value, 100,000,000 shares authorized, 11,019,872 shares issued and outstanding, liquidation preference $ 46,944,611 , at June 30, 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 June 30, 2026 and December 31, 2025, respectively.

Retained earnings

5 unchanged sentences

VALLEY VINEYARDS, INC.

STATEMENTS OF OPERATIONS

CONDENSED STATEMENTS OF OPERATIONS

Three months ended

Six months ended

COST OF SALES

3 unchanged sentences

Total operating expenses

LOSS FROM OPERATIONS

INCOME (LOSS) FROM OPERATIONS

( 1,353,969 )

( 2,031,763 )

OTHER INCOME (EXPENSE)

1 unchanged sentence

Other income, net

LOSS BEFORE INCOME TAXES

INCOME (LOSS) BEFORE INCOME TAXES

( 1,619,413 )

INCOME TAX BENEFIT

( 2,377,900 )

INCOME TAX (EXPENSE) BENEFIT

NET INCOME (LOSS)

( 1,389,876 )

( 1,954,948 )

Accrued preferred stock dividends

( 1,212,142 )

( 1,126,353 )

LOSS APPLICABLE TO COMMON SHAREHOLDERS

1 unchanged sentence

$ ( 470,381 )

$ ( 3,167,090 )

$ ( 1,762,539 )

Loss per common share after preferred dividends, basic and diluted

2 unchanged sentences

VALLEY VINEYARDS, INC.

STATEMENTS OF SHAREHOLDERS EQUITY

Three-Month Period Ended March 31, 2026

CONDENSED STATEMENTS OF SHAREHOLDERS EQUITY

Six-Month Period Ended June 30, 2026

Preferred Stock

4 unchanged sentences

Balance at March 31, 2026

Three-Month Period Ended March 31, 2025

Issuance of preferred stock, net

Stock based compensation

Preferred stock dividends accrued

( 1,389,876 )

Balance at June 30, 2026

Six-Month Period Ended June 30, 2025

Preferred Stock

Balance at December 31, 2024

Issuance of preferred stock, net

Preferred stock dividends accrued

Balance at March 31, 2025

Preferred stock dividends accrued

Balance at June 30, 2025

accompanying notes are an integral part of this condensed financial statement

VALLEY VINEYARDS, INC.

STATEMENTS OF CASH FLOWS

Three months ended March 31,

CONDENSED STATEMENTS OF CASH FLOWS

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Depreciation and amortization

Provision for credit losses

Common stock compensation expense

4 unchanged sentences

Prepaid expenses and other current assets

Income tax receivable

Income taxes receivable

Unearned revenue

5 unchanged sentences

Net cash from operating activities

( 1,337,263 )

CASH FLOWS FROM INVESTING ACTIVITIES

5 unchanged sentences

Proceeds from (payments on) bank overdraft

Payment on line of credit, net

Payments on line of credit, net

( 2,505,298 )

Payment on long-term debt

( 1,958,933 )

Payments on long-term debt

Proceeds from long-term debt

1 unchanged sentence

Net cash from financing activities

( 2,442,535 )

NET CHANGE IN CASH AND CASH EQUIVALENTS

3 unchanged sentences

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

Reduction in investor deposits exchanged for preferred stock

Reduction in investor deposits for preferred stock

Accrued preferred stock dividends

2 unchanged sentences

BASIS OF PRESENTATION

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

accompanying unaudited interim financial statements as of June 30, 2026 and for the three and six months ended June 30, 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.

GAAP) for 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.

(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.

information or footnote disclosures normally included in financial statements prepared in accordance with U.S.

GAAP have been condensed

or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

In the opinion of management, the accompanying

financial statements include all adjustments necessary (which are of a normal recurring nature) for the fair statement of the results

of the interim periods presented.

The accompanying 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 and six months ended June 30, 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.

4 unchanged sentences

Schedule of Earning Per Share

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Net income (loss)

$ (1,389,876 )

1 unchanged sentence

Accrued preferred stock dividends

Net loss applicable to common shareholders

( 1,212,142 )

( 1,126,353 )

Weighted-average number of common shares outstanding basic and

Net loss applicable to common shares

$ ( 1,995,947 )

$ ( 470,381 )

$ ( 3,167,090 )

$ ( 1,762,539 )

Weighted-average number of common shares outstanding basic and diluted

Loss per common share after preferred dividends, basic and diluted

3 unchanged sentences

Schedule of Inventories

March 31, 2026

June 30, 2026

December 31, 2025

5 unchanged sentences

Companys property and equipment consists of the following, as of the dates shown:

Schedule of Property and Equipment, Net

March 31, 2026

Schedule of Inventories

June 30, 2026

December 31, 2025

1 unchanged sentence

Land, improvements, and other buildings

Winery buildings and tasting rooms

Winery, tasting room buildings, and hospitality center

Property and equipment, gross

3 unchanged sentences

Property and equipment, net

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 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 $ 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%.

expense for the three months ended June 30, 2026 and 2025 was $ 749,899 and $ 761,496 , respectively.

Depreciation expense for the six months

ended June 30, 2026 and 2025 was $ 1,499,725 and $ 1,531,865 , respectively.

Line 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 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 7.0%, is payable monthly, and is subject to renewal.

In July 2026 the line of credit was renewed for $ 4,000,000 .

The Company had an outstanding line of credit balance of $ 634,842 at June 30, 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

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

As of March 31, 2026, the Company

As of June 30, 2026, the Company

had a balance of $ 825,152 due on this note.

1 unchanged sentence

Debt – The Company has four long term debt agreements with AgWest with an aggregate outstanding balance of $ 14,686,418 and

$ 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.

$ 15,184,395 as of June 30, 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.

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.

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

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 1, 2027.

The general purposes of these loans were to make capital improvements to the winery

and vineyard facilities.

of June 30, 2026, future minimum principal payments of long-term debt are as follows for the years ending December 31:

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

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

As of December 31, 2025, the Company had unamortized

debt issuance costs of $ 158,837 .

of June 30, 2026, the Company had unamortized debt issuance costs of $ 149,342 .

As of December 31, 2025, the Company had unamortized debt

issuance costs of $ 158,837 .

INTEREST AND TAXES PAID

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.

taxes – The Company paid $ 15,828 in income taxes for the three months ended June 30, 2026 and $ 45,000 in income taxes for the

three months ended June 30, 2025.

The Company paid $ 15,828 in income taxes for the six months ended June 30, 2026 and $ 45,000 in income

taxes for the six months ended June 30, 2025.

– The Company paid $ 287,136 and $ 267,696 for the three months ended June 30, 2026 and 2025, respectively, in interest on debt

and the line of credit.

The Company paid $ 487,928 and $ 495,801 for the six months ended June 30, 2026 and 2025, respectively, in interest

on 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 margin, directly attributable selling expenses, and contribution margin of the

segments for the three months ended March 31, 2026 and 2025.

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

segments for the three and six month periods ended June 30, 2026 and 2025.

Sales figures are net of related excise taxes.

Schedule of Segment reporting

Three Months Ended March 31,

Months Ended June 30,

Distributor Sales

Cost of sales

Selling and Marketing Expenses

Contribution Margin (Loss)

Percent of Sales

Selling expenses

Contribution margin

Percent of total sales

General and administration expenses

Income (loss) from operations

$ (1,353,969 )

Ended June 30,

Cost of sales

Selling expenses

Contribution margin

Percent of total sales

General and administration expenses

Loss from operations

2 unchanged sentences

SALE OF PREFERRED STOCK

July 1, 2022, the Company filed a shelf Registration Statement on Form S-3 (the July 2022 Form S-3) with the United States

Securities and Exchange Commission (the SEC) pertaining to the potential future issuance of one or more classes or series

of debt, equity, or derivative securities.

The maximum aggregate offering amount of securities sold pursuant to the June 2022 Form S-3

is not to exceed $20,000,000.

From August 1, 2022 to November 1, 2022 the Company filed with the SEC four Prospectus Supplements to the

July 2022 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to an aggregate of

1,076,578 shares of Series A Redeemable Preferred Stock having proceeds not to exceed an aggregate of $5,636,714.

Each of these Prospectus

Supplements established that our shares of preferred stock were to be sold in one to three offering periods offering prices including

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

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

31, 2026 for the issuance of Preferred Stock.

June 30, 2023, the Company filed with the SEC a Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company proposed

to offer and sell, on a delayed or continuous basis, up to 727,835 shares of Series A Redeemable Preferred Stock having proceeds not

to exceed $3,530,000.

This Prospectus Supplement established that our shares of preferred stock were to be sold in two offering periods

with two separate offering prices beginning with an offering price of $4.85 per share and concluding with an offering of $5.35 per share.

On October 27, 2023, the Company filed with the SEC a Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company

proposed to offer and sell, on a delayed or continuous basis, up to 288,659 shares of Series A Redeemable Preferred Stock having proceeds

not to exceed $1,400,000.

This Prospectus Supplement established that our shares of preferred stock were to be sold in one offering period

with an offering price of $4.85 per share.

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

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

On July 1, 2022, the Company filed a shelf Registration

Statement on Form S-3 (the “July 2022 Form S-3”) with the United States Securities and Exchange Commission (the “SEC”)

pertaining to the potential future issuance of one or more classes or series of debt, equity, or derivative securities.

The maximum aggregate

offering amount of securities sold pursuant to the July 2022 Form S-3 is not to exceed $20,000,000.

From August 1, 2022 to November 1,

2022 the Company filed with the SEC four Prospectus Supplements to the July 2022 Form S-3, pursuant to which the Company proposed to offer

and sell, on a delayed or continuous basis, up to an aggregate of 1,076,578 shares of Series A Redeemable Preferred Stock having proceeds

not to exceed an aggregate of $5,636,714.

Each of these Prospectus Supplements established that our shares of preferred stock were to

be sold in one to three offering periods offering prices including $5.15 per share, $5.25 per share and $5.35 per share.

of $3,558,807 have been received under these offerings as of June 30, 2026 for the issuance of Preferred Stock.

On June 30, 2023, the Company filed with the SEC a

Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous

basis, up to 727,835 shares of Series A Redeemable Preferred Stock having proceeds not to exceed $3,530,000.

Net proceeds of $2,142,588

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 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.

When the likelihood of a gift card being

redeemed by a customer is determined to be remote and the Company expects to be entitled to the breakage, then the value of the unredeemed

gift card is recognized as revenue.

This Prospectus Supplement

established that our shares of preferred stock were to be sold in two offering periods with two separate offering prices beginning with

an offering price of $4.85 per share and concluding with an offering of $5.35 per share.

On October 27, 2023, the Company filed with the

SEC a Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous

basis, up to 288,659 shares of Series A Redeemable Preferred Stock having proceeds not to exceed $1,400,000.

This Prospectus Supplement

established that our shares of preferred stock were to be sold in one offering period with an offering price of $4.85 per share.

of $3,938,066 have been received under these offerings as of June 30, 2026 for the issuance of Preferred Stock.

On June 17, 2025, the Company filed a shelf Registration

Statement on Form S-3 (the “June 2025 Form S-3”) with the United States Securities and Exchange Commission (the “SEC”)

pertaining to the potential future issuance of one or more classes or series of debt, equity, or derivative securities.

The maximum aggregate

offering amount of securities sold pursuant to the June 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.

of $2,142,588 have been received under this offering as of June 30, 2026 for the issuance of Preferred Stock.

On June 26, 2026, 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 555,555 shares of Series A Redeemable Preferred Stock having proceeds not to exceed $1,750,000.

net proceeds have been received under this offering as of June 30, 2026.

Shareholders have the option to receive dividends

as cash or as a gift card for purchasing Company products.

The amount of unused dividend gift cards at June 30, 2026 and December 31,

2025 was $1,635,557 and $2,031,377, respectively, and is recorded as unearned revenue on the balance sheets.

Revenue from gift cards is

recognized when the gift card is redeemed by a customer.

When the likelihood of a gift card being redeemed by a customer is determined

to be remote and the Company expects to be entitled to the breakage, then the value of the unredeemed gift card is recognized as revenue.

We determine the gift card breakage rate based upon Company-specific historical redemption patterns.

To date we have determined that no breakage should be recognized related to our gift cards.

accrued but not paid will be added to the liquidation preference of the stock until the dividend is declared and paid.

At any time after

June 1, 2021, the Company has the option, but not the obligation, to redeem all of the outstanding preferred stock in an amount equal

to the original issue price plus accrued but unpaid dividends and a redemption premium equal to 3% of the original issue price.

To date we have determined that no

breakage should be recognized related to our gift cards.

Dividends accrued but not paid will be added to the

liquidation preference of the stock until the dividend is declared and paid.

At any time after June 1, 2021, the Company has the option,

but not the obligation, to redeem all of the outstanding preferred stock in an amount equal to the original issue price plus accrued but

unpaid dividends and a redemption premium equal to 3% of the original issue price.

STOCK INCENTIVE PLAN

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

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.

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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.

the six months ended June 30, 2026, the Company granted no awards under the 2025 Plan.

As of June 30, 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.

recognized $21,035 in stock-based compensation expense during the three months ended June 30, 2026 related to the 2025 Plan

and no stock-based compensation expense during the three months ended June 30, 2025.

Company recognized $42,070 in stock-based compensation expense during the six months ended June 30, 2026 related to the 2025 Plan and

no stock-based compensation expense during the six months ended June 30, 2025.

determine if an arrangement is a lease at inception.

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

In January 2025 the Company amended the renewal

In September 2025 the Company amended the renewal

options and extended the lease until February 2027.

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Schedule of Lease Cost and Other Lease Information

Three Months Ended

March 31, 2026

March 31, 2025

Six Months Ended

June 30, 2026

June 30, 2025

Operating lease cost - Vineyards

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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

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Weighted-average discount rate - Operating leases

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:

assets obtained in exchange for new operating lease obligations were zero for the six months ended June 30, 2026 and 2025.

of June 30, 2026, maturities of lease liabilities were as follows:

of Maturities of Lease Liabilities

Years Ended December 31,

Total minimal lease payments

Total minimum lease payments

Less present value adjustment

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but, due to the nature of litigation, the ultimate outcome of any potential actions cannot presently be determined.

Bankruptcy and Subsequent Reserve Adjustment – On July 26, 2026, Republic National Distributing Company (RNDC),

a distributor of the Company, filed for Chapter 11 bankruptcy protection.

Following this filing, the Company evaluated the collectability

of receivables associated with the specific RNDC territories identified in the bankruptcy petition and increased its allowance

for credit losses by approximately $1.1 million.

This targeted reserve reflects managements estimate of expected credit

losses related to those territories.

Company is in the process of transitioning all distributor relationships in the affected markets and based on current plans

and contracted partners, does not anticipate any long-term disruption to its ability to distribute products effectively.

Purchases – The Company has entered into long-term grape purchase agreements with a number of Willamette Valley wine grape

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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 three months ended March 31, 2026.

were unchanged during the six months ended June 30, 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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Winery) and the wines are sold principally under the Companys Willamette Valley Vineyards label, but also under

the Griffin Creek, Pambrun, Elton, Maison Bleue, Metis, Natoma, Pere Ami, Elton, Domaine Willamette and Tualatin Estates labels.

the Griffin Creek, Pambrun, Elton, Maison Bleue, Metis, Natoma, Pere Ami, Domaine Willamette and Tualatin Estates labels.

Company also owns the Tualatin Estate Vineyards and Winery, located near Forest Grove, Oregon and the Domaine Willamette Winery located

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

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

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 21,381 new preferred stockholders many of which the Company believes are wine enthusiasts that are

current and potential customers of the Company.

Periodically,

1 unchanged sentence

this is not a significant part of the Companys activities.

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 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,

warehousing, and shipping and handling costs.

For grapes grown at Company vineyards, costs include farming expenditures and amortization

of vineyard development costs.

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 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.

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.

The Company sold 87,655 and 80,489 cases of produced

wine during the six months ended June 30, 2026 and 2025, respectively, an increase of 7,166 cases, or 8.9% in the current year period

over the prior year period.

The increase in wine case sales was the result of increased case sales through distributors.

Cost of sales includes grape costs, whether purchased

or grown at Company vineyards, winemaking and processing costs, bottling, packaging, warehousing, and shipping and handling costs.

grapes grown at Company vineyards, costs include farming expenditures and amortization of vineyard development costs.

At June 30, 2026, wine inventory included 165,930

cases of bottled wine and 523,103 gallons of bulk wine in various stages of the aging process.

Case wine is expected to be sold over

the next 12 to 24 months and generally before the release date of the next vintage.

The Winery bottled 67,212 cases during the six months

ended June 30, 2026.

Willamette Valley Vineyards continues to receive

positive recognition through national magazines, regional publications, local newspapers and online bloggers including the accolades

The tasting room at the Company’s Estate

Winery in the Salem Hills, Oregon was awarded the Best Wine Tasting Room in the country by USA Today in

their 10 Best Readers’ Choice Awards for the third consecutive year.

The Company was also awarded the #1 Best Wine

Club in the nation by USA Today.

James Suckling rated the 2024 Ingram

Estate Pinot Noir, 2024 Kittyhawk Pinot Noir and 2024 Dry Riesling 94 points, the 2024 Whole Cluster Pinot Noir, 2023 Fuller Pinot Noir

and 2024 Tualatin Estate Chardonnay 93 points, plus the 2024 Dry Gewürztraminer 92 points.

Paul Gregutt rated the Company’s

2023 Bernau Estate Pinot Noir and 2022 Elton Pinot Noir 92 points, and 91 points to the 2024 Estate Pinot Gris.

The Company’s National Sales 2024 Pinot Gris was awarded 92 points and a Gold Medal from the 2026 Sunset Magazine Competition.

Beverage Dynamics scored the 2024 Dijon Clone Chardonnay 94 points and the Company’s National Sales 2024 Pinot Gris 90 points.

Vinous scored the Company’s 2023 Maison Bleue Frontière Syrah 94 points, 92 points for the 2022 Domaine Willamette Brut,

2022 Domaine Willamette Blanc de Noirs, 2023 Pambrun Malbec, 2023 Maison Bleue Bourgeois Grenache and 2023 Hannah Pinot Noir, plus the

2024 Dijon Clone Chardonnay received 90 points.

Wine Enthusiast Magazine rated the 2017 Domaine Willamette Extended Tirage Brut 94 points and Editor’s Choice, the 2022 Loeza Pinot

Noir 93 points and Cellar Selection, the 2022 Domaine Willamette Blanc de Noirs 93 points, the 2024 Dijon Clone Chardonnay 92 points,

2022 Domaine Willamette Brut and 2023 Pambrun Malbec both received 90 points.

OF OPERATIONS

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%,

revenue for the three months ended June 30, 2026 and 2025 were $10,036,275 and $10,195,763, respectively, a decrease of $159,488, or

1.6%, 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

This decrease was caused by a decrease

in direct sales of $262,493, partly offset by an increase in sales through distributors of $103,005 in the current year three-month period

over the prior year period.

The decrease in revenue from direct sales was primarily related to lower outpost sales.

Sales revenue

for the six months ended June 30, 2026 and 2025 were $18,292,428 and $17,737,346, respectively, an increase of $555,082, or 3.1%, in

the current year period over the prior year period.

This increase was caused by an increase in

revenues from distributor sales of $900,684 and a decrease in revenues from direct sales of $345,602 in the current year period over

the prior year period.

The decrease in revenues from direct sales was primarily the result of lower outpost sales in the current

of Sales for the three months ended June 30, 2026 and 2025 were $4,262,550 and $3,979,145, respectively, an increase of $283,405, or

7.1%, 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.

This change was primarily the result of higher cost products sold in the current

quarter compared to the same quarter last year.

Cost of Sales for the six months ended June 30, 2026 and 2025 were $7,489,639 and $6,761,620,

respectively, an increase of $728,019 or 10.8%, in the current period over the prior year period.

This change was primarily the result

of higher cost products sold in the first six months of 2026 when compared to the same period in 2025.

profit as a percentage of net sales for the three months ended June 30, 2026 and 2025 was 57.5% and 61.0%, respectively, a decrease of

3.5 percentage points in the current year period over the prior year period, mostly as a result of higher costs of products compared

to the same quarter of 2025.

Gross profit as a percentage of net sales for the six months ended June 30, 2026 and 2025 was 59.1% and

61.9%, respectively, a decrease of 2.8 percentage points in the current year period over the prior year period.

The decrease was primarily

the result of higher costs of products in direct and distributor sales in the first six months of 2026 compared to the same period in

the prior year.

General and Administrative Expenses

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.

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

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.

Selling, general and administrative expenses for the

three months ended June 30, 2026 and 2025 was $7,127,694 and $5,818,454 respectively, an increase of $1,309,240, or 22.5%, in the current

quarter over the same quarter in the prior year.

This increase was primarily the result of an increase in the allowance for credit losses

associated with the bankruptcy filing of Republic National Distributing Company (“RNDC”), a distributor of the Company.

addition, selling labor and benefits in the current quarter compared to the same quarter last year were up slightly.

Selling, general

and administrative expense for the six months ended June 30, 2026 and 2025 was $12,834,552 and $11,447,540, respectively, an increase

of $1,387,012, or 12.1%, in the current year period over the prior year period.

This increase was primarily the result of an increase

in the allowance for credit losses associated with the RNDC bankruptcy filing.

In addition, selling labor and benefits in the first six

months compared to the first six months last year were up slightly.

Interest expense for the three months ended June

30, 2026 and 2025 was $267,994 and $270,145, respectively, a decrease of $2,151 or 0.8%, in the second quarter of 2026 over the same

quarter in the prior year.

Interest expense for the six months ended June 30, 2026 and 2025 was $555,307 and $568,366, respectively,

a decrease of $13,058 or 2.3%, in the current year period over the prior year period.

The decrease in interest expense for the second

quarter and first six months of 2026 was primarily the result of lower credit line balances compared to the second quarter and first

six months of 2025.

The income tax impact for the three months ended June

30, 2026 and 2025 was a benefit of $229,537 and expense of $37,774.

The Company’s estimated federal and state combined income tax

rate was 25.5% and 28.9% for the three months ended June 30, 2026 and 2025.

The income tax benefit for the six months ended June 30, 2026

and 2025 was $422,952 and $258,968, respectively, an increase of $163,984 or 63.3% in the current year period over the prior year period,

mostly a result of a higher pre-tax loss in the first six months of 2026, compared to the same period in 2025.

The Company’s estimated

federal and state combined income tax rate was 25.5% and 28.9% for the six months ended June 30, 2026 and 2025.

Income (Loss)

Net income (loss) for the three months ended June

30, 2026 and 2025 was ($1,389,876) and $92,795, respectively, a decrease of $1,482,671, in the second quarter of 2026 over the same quarter

in the prior year.

Net loss for the six months ended June 30, 2026 and 2025 was $1,954,948 and $636,186, respectively, an increase of

$1,318,763, or 207.3%, in the current year period over the prior year period.

The decrease in net income for the second quarter and increase

in net loss for the first half of 2026, compared to the comparable periods in 2025, was primarily the result of lower gross profit and

higher selling expenses and increased allowance for credit losses in 2026.

Loss Applicable to Common Shareholders

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

Net loss applicable to common shareholders for the

three months ended June 30, 2026 and 2025 was $1,995,947 and $470,381, respectively, an increase of $1,525,566, or 324.3%, in the second

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

Net loss applicable to common shareholders for the six months ended June 30,

2026 and 2025 was $3,167,091 and $1,762,539, respectively, an increase in net loss of $1,404,552, or 79.7%, in the current year period

over the prior year period.

The increase in loss applicable to common shareholders in the second quarter and the first six months of 2026,

compared to the same period of 2025, was the result of a higher net loss in the current period.

and Capital Resources

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.

June 30, 2026, the Company had a working capital balance of $23.7 million and a current working capital ratio of 2.92:1.

June 30, 2026, the Company had a cash balance of $589,502.

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

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 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 $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%.

Total cash generated from operating activities in

the six months ended June 30, 2026 was $2,745,399.

Cash generated from operating activities for the six months ended June 30, 2026 was

primarily associated with lower accounts receivables, lower inventories and higher accounts payable, being partially offset by reduced

grapes payable.

Total cash used in investing activities in the six

months ended June 30, 2026 was $124,248.

Cash used in investing activities for the six months ended June 30, 2026 consisted of cash used

on equipment and vineyard development costs.

Total cash used in financing activities in the six

months ended June 30, 2026 was $2,442,535.

Cash used in financing activities for the six months ended June 30, 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.

In December of 2005, the Company entered into a revolving

line of credit agreement with Columbia Bank (the "Credit Agreement") that allows borrowing 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 7.0%, is payable monthly,

and is subject to renewal.

In July 2026 the line of credit was renewed for $4,000,000.

The Company had an outstanding line of credit balance

of $634,842 at June 30, 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

3 unchanged sentences

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

of June 30, 2026, the Company had a 15-year installment note payable of $825,152, 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

of June 30, 2026, the Company had a total long-term debt balance of $14,686,418, including the portion due in the next year, owed to

AgWest, exclusive of debt issuance costs of $149,342.

6 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