Core Viewpoint - Willamette Valley Vineyards, Inc. reported a net loss for the first quarter of 2025, reflecting challenges in national distribution and a significant decrease in sales revenue compared to the previous year [6][5]. Financial Performance - The company generated a loss per common share after preferred dividends of $0.26 for the three months ended March 31, 2025, compared to $0.22 for the same period in 2024, marking an increase of $0.04 [1]. - Sales revenue decreased to $7,541,583 for the three months ended March 31, 2025, down from $8,803,080 in 2024, representing a decline of $1,261,497 or 14.3% [2]. - Gross profit for the same period was $4,759,108, a decrease of $513,614 or 9.7% from $5,272,722 in 2024, primarily due to lower distributor sales [3]. - Selling, general and administrative expenses decreased to $5,629,086 in the first quarter of 2025, down from $5,875,299 in 2024, a reduction of $246,213 or 4.2% [4]. - The net loss increased to $728,981 in the first quarter of 2025, compared to $521,805 in 2024, an increase of $207,176 or 39.7% [5]. Management Changes - The company has appointed Mike Osborn as the new Chief Executive Officer to address distribution challenges, bringing extensive experience from the wine industry [6]. Company Overview - Willamette Valley Vineyards, Inc. is headquartered near Salem, Oregon, and its common stock is traded on NASDAQ under the ticker WVVI [7].

```markdown [PART I: FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1 - Financial Statements (Unaudited)](index=3&type=section&id=Item%201%20-%20Financial%20Statements%20(unaudited)) Unaudited condensed financial statements for Q1 2025 and 2024, including balance sheets, statements of operations, shareholders' equity, cash flows, and related notes [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) | ASSETS (March 31, 2025) | Amount ($) | | :------------------------ | :----------- | | Cash and cash equivalents | 332,889 | | Accounts receivable, net | 2,323,815 | | Inventories | 33,598,355 | | Total current assets | 37,024,609 | | Total Assets | 108,244,573 | | LIABILITIES & EQUITY (March 31, 2025) | Amount ($) | | :------------------------------------ | :----------- | | Accounts payable | 2,125,472 | | Line of credit | 1,203,983 | | Total current liabilities | 10,285,959 | | Total Liabilities | 39,739,824 | | Total Shareholders' Equity | 68,504,749 | | Total Liabilities and Shareholders' Equity | 108,244,573 | - Total assets decreased from **$109,017,140** at December 31, 2024, to **$108,244,573** at March 31, 2025[8](index=8&type=chunk) - Total current liabilities decreased significantly from **$12,980,185** at December 31, 2024, to **$10,285,959** at March 31, 2025, primarily due to a reduction in grapes payable and line of credit[8](index=8&type=chunk) [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) | Metric (Three months ended March 31) | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | SALES, NET | 7,541,583 | 8,803,080 | (1,261,497) | -14.3% | | COST OF SALES | 2,782,475 | 3,530,358 | (747,883) | -21.2% | | GROSS PROFIT | 4,759,108 | 5,272,722 | (513,614) | -9.7% | | Total operating expenses | 5,629,086 | 5,875,299 | (246,213) | -4.2% | | LOSS FROM OPERATIONS | (869,978) | (602,577) | (267,401) | 44.4% | | NET LOSS | (728,981) | (521,805) | (207,176) | 39.7% | | LOSS APPLICABLE TO COMMON SHAREHOLDERS | (1,292,158) | (1,084,982) | (207,176) | 19.1% | | Loss per common share (basic and diluted) | (0.26) | (0.22) | (0.04) | 18.2% | - Net sales decreased by **14.3%** year-over-year, primarily due to a decline in distributor sales, partially offset by an increase in direct-to-consumer sales[10](index=10&type=chunk)[67](index=67&type=chunk) - Gross profit margin improved from **59.9%** in Q1 2024 to **63.1%** in Q1 2025, driven by higher prices for products sold through retail locations[10](index=10&type=chunk)[70](index=70&type=chunk) [Condensed Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Statements%20of%20Shareholders'%20Equity) | Shareholder Equity Component | Dec 31, 2024 ($) | March 31, 2025 ($) | Change ($) | | :--------------------------- | :--------------- | :----------------- | :--------- | | Redeemable Preferred Stock | 43,357,396 | 43,920,573 | 563,177 | | Common Stock | 8,512,489 | 8,512,489 | 0 | | Retained Earnings | 17,363,845 | 16,071,687 | (1,292,158) | | Total Shareholders' Equity | 69,233,730 | 68,504,749 | (728,981) | - Total shareholders' equity decreased by **$728,981** from December 31, 2024, to March 31, 2025, primarily due to the net loss of **$728,981** and accrued preferred stock dividends of **$563,177**[12](index=12&type=chunk) [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (Three months ended March 31) | 2025 ($) | 2024 ($) | Change ($) | | :----------------------------------------------- | :------- | :------- | :--------- | | Net cash from operating activities | (1,337,263) | (3,012,769) | 1,675,506 | | Net cash from investing activities | (115,344) | (330,298) | 214,954 | | Net cash from financing activities | 1,464,613 | 3,361,057 | (1,896,444) | | NET CHANGE IN CASH AND CASH EQUIVALENTS | 12,006 | 17,990 | (5,984) | | CASH AND CASH EQUIVALENTS, end of period | 332,889 | 256,472 | 76,417 | - Net cash used in operating activities significantly decreased from **$3,012,769** in Q1 2024 to **$1,337,263** in Q1 2025, primarily due to reduced grapes payable and lower receivables, partially offset by increased inventories[14](index=14&type=chunk)[77](index=77&type=chunk) - Cash generated from financing activities decreased from **$3,361,057** in Q1 2024 to **$1,464,613** in Q1 2025, mainly due to lower proceeds from preferred stock issuance and payments on the line of credit[14](index=14&type=chunk)[79](index=79&type=chunk) [Notes to Unaudited Interim Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Interim%20Financial%20Statements) [1) BASIS OF PRESENTATION](index=8&type=section&id=1)%20BASIS%20OF%20PRESENTATION) - The interim financial statements are prepared in conformity with U.S. GAAP and should be read in conjunction with the 2024 Annual Report on Form 10-K[15](index=15&type=chunk) - Operating results for the three months ended March 31, 2025, are not necessarily indicative of the full year's results[16](index=16&type=chunk) - The Company's revenues include direct-to-consumer sales and national sales to distributors, utilizing shared resources[16](index=16&type=chunk) [2) INVENTORIES](index=9&type=section&id=2)%20INVENTORIES) | Inventory Classification | March 31, 2025 ($) | December 31, 2024 ($) | | :----------------------- | :----------------- | :-------------------- | | Winemaking and packaging materials | 1,587,348 | 1,303,152 | | Work-in-process | 14,147,911 | 14,990,375 | | Finished goods | 17,863,096 | 16,613,962 | | Total inventories | 33,598,355 | 32,907,489 | - Total inventories increased by **$690,866** from December 31, 2024, to March 31, 2025, primarily driven by an increase in finished goods[19](index=19&type=chunk) [3) PROPERTY AND EQUIPMENT, NET](index=9&type=section&id=3)%20PROPERTY%20AND%20EQUIPMENT,%20NET) | Property and Equipment Component | March 31, 2025 ($) | December 31, 2024 ($) | | :------------------------------- | :----------------- | :-------------------- | | Construction in progress | 652,726 | 633,179 | | Land, improvements, and other buildings | 15,342,674 | 15,342,674 | | Winery buildings and tasting rooms | 44,187,393 | 44,146,543 | | Equipment | 20,875,346 | 20,835,506 | | Accumulated depreciation | (29,716,121) | (28,945,751) | | Property and equipment, net | 51,342,018 | 52,012,151 | - Net property and equipment decreased from **$52,012,151** at December 31, 2024, to **$51,342,018** at March 31, 2025[20](index=20&type=chunk) - Depreciation expense for the three months ended March 31, 2025, was **$770,370**, down from **$791,986** in the prior year period[20](index=20&type=chunk) [4) DEBT](index=9&type=section&id=4)%20DEBT) - The Company's line of credit balance decreased from **$2,405,815** at December 31, 2024, to **$1,203,983** at March 31, 2025, with an interest rate of **7.0%**[21](index=21&type=chunk) - Notes payable for property purchase decreased from **$995,968** at December 31, 2024, to **$968,348** at March 31, 2025[23](index=23&type=chunk) - Long-term debt with AgWest increased from **$14,042,910** at December 31, 2024, to **$16,818,597** at March 31, 2025, with various fixed and variable interest rates and maturity dates up to 2039[24](index=24&type=chunk) [5) INTEREST AND TAXES PAID](index=10&type=section&id=5)%20INTEREST%20AND%20TAXES%20PAID) - The Company paid **$228,105** in interest on long-term debt and the line of credit for the three months ended March 31, 2025, an increase from **$134,979** in the prior year[26](index=26&type=chunk) - No income taxes were paid for the three months ended March 31, 2025, or 2024[26](index=26&type=chunk) [6) SEGMENT REPORTING](index=10&type=section&id=6)%20SEGMENT%20REPORTING) - The Company operates in two segments: Direct Sales (retail, wine club, internet, events) and Distributor Sales (wholesale)[27](index=27&type=chunk) - Performance is evaluated based on gross profit of respective segments; centralized selling and G&A expenses are not allocated[28](index=28&type=chunk) | Segment (Three months ended March 31) | Direct Sales 2025 ($) | Direct Sales 2024 ($) | Distributor Sales 2025 ($) | Distributor Sales 2024 ($) | | :------------------------------------ | :-------------------- | :-------------------- | :------------------------- | :------------------------- | | Sales, net | 4,310,474 | 4,286,156 | 3,231,109 | 4,516,924 | | Cost of Sales | 1,185,593 | 1,295,145 | 1,596,882 | 2,235,213 | | Gross Profit | 3,124,881 | 2,991,011 | 1,634,227 | 2,281,711 | | Selling and Marketing Expenses | 3,086,255 | 3,263,381 | 640,035 | 504,424 | | Contribution Margin | 38,626 | (272,370) | 994,192 | 1,777,287 | [7) SALE OF PREFERRED STOCK](index=11&type=section&id=7)%20SALE%20OF%20PREFERRED%20STOCK) - The Company has issued Series A Redeemable Preferred Stock through various offerings, with net proceeds of **$3,558,807** and **$3,938,066** received as of March 31, 2025, from offerings filed in 2022 and 2023, respectively[31](index=31&type=chunk)[32](index=32&type=chunk) - Shareholders can receive dividends as cash or gift cards; unused dividend gift cards totaled **$1,637,861** at March 31, 2025, recorded as unearned revenue[33](index=33&type=chunk) - The Company has the option to redeem outstanding preferred stock at the original issue price plus accrued unpaid dividends and a **3%** redemption premium after June 1, 2021[34](index=34&type=chunk) [8) LEASES](index=11&type=section&id=8)%20LEASES) - The Company has operating leases for vineyards and non-vineyard properties (tasting rooms), with ROU assets and lease liabilities recognized on the balance sheet[35](index=35&type=chunk)[38](index=38&type=chunk)[43](index=43&type=chunk) | Lease Cost (Three months ended March 31) | 2025 ($) | 2024 ($) | | :--------------------------------------- | :------- | :------- | | Operating lease cost - Vineyards | 125,181 | 114,782 | | Operating lease cost - Other | 246,341 | 250,640 | | Short-term lease cost | 10,166 | 8,427 | | Total lease cost | 381,688 | 373,849 | - As of March 31, 2025, total minimal lease payments for operating leases amount to **$20,287,511**, with operating lease liabilities (net of current portion) of **$11,237,369**[51](index=51&type=chunk) [9) COMMITMENTS AND CONTINGENCIES](index=13&type=section&id=9)%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company is involved in legal proceedings in the normal course of business, but management believes these will not have a material adverse effect on financial position, results of operations, or cash flows[52](index=52&type=chunk) - Long-term grape purchase agreements are in place, but minimum/maximum payments cannot be calculated due to unknowns like fruit quantity needed and quality standards[53](index=53&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of financial condition and results of operations for Q1 2025, covering business strategy, revenue, expenses, net loss, liquidity, and capital resources [Forward Looking Statements](index=14&type=section&id=Forward%20Looking%20Statements) - The report contains forward-looking statements subject to risks and uncertainties, including financing availability, grape supply, competition, weather, consumer spending, and economic conditions[55](index=55&type=chunk) - The Company disclaims any obligation to update or revise forward-looking statements, except as required by law[55](index=55&type=chunk) [Critical Accounting Policies](index=14&type=section&id=Critical%20Accounting%20Policies) - The Company's critical accounting policies, including revenue recognition, accounts receivable, inventory valuation, and vineyard development costs amortization, remained unchanged during the three months ended March 31, 2025[56](index=56&type=chunk) - Management's estimates are based on historical experience and reasonable assumptions, with actual results potentially differing under various conditions[56](index=56&type=chunk) [Overview](index=14&type=section&id=Overview) - The Company's success relies on growing/purchasing high-quality grapes, vinifying premium wines, achieving brand recognition, effective distribution, and building direct-to-consumer sales[57](index=57&type=chunk) - Strategic growth through property purchases, development, and preferred stock issuance is expected to negatively impact near-term financial results due to associated costs[58](index=58&type=chunk) - Wine case sales decreased by **23.5%** (**10,128** cases) in Q1 2025 compared to Q1 2024, primarily due to lower wholesale case sales[62](index=62&type=chunk) [Results of Operations](index=15&type=section&id=RESULTS%20OF%20OPERATIONS) Key Financial Performance Indicators (Three months ended March 31) | Metric | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Sales, Net | 7,541,583 | 8,803,080 | (1,261,497) | -14.3% | | Cost of Sales | 2,782,475 | 3,530,358 | (747,883) | -21.2% | | Gross Profit | 4,759,108 | 5,272,722 | (513,614) | -9.7% | | Gross Profit as % of Net Sales | 63.1% | 59.9% | 3.2 pp | 5.3% | | Selling, General and Administrative Expenses | 5,629,086 | 5,875,299 | (246,213) | -4.2% | | Interest Expense, net | 298,221 | 229,678 | 68,543 | 29.8% | | Income Tax Benefit | 296,742 | 212,407 | 84,335 | 39.7% | | Net Loss | (728,981) | (521,805) | (207,176) | 39.7% | | Net Loss Applicable to Common Shareholders | (1,292,158) | (1,084,982) | (207,176) | 19.1% | - The decrease in net sales was primarily due to a **$1,285,815** decrease in distributor sales, partially offset by a **$24,318** increase in direct-to-consumer sales, mainly from higher wine club revenues[67](index=67&type=chunk) - The increase in net loss was primarily driven by lower case sales to distributors in 2025[74](index=74&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2025, the Company had a working capital balance of **$26.7 million** and a current working capital ratio of **3.60:1**[76](index=76&type=chunk) - Cash and cash equivalents increased slightly to **$332,889** at March 31, 2025, from **$320,883** at December 31, 2024[76](index=76&type=chunk) - The Company believes that cash flow from operations, existing credit facilities, and preferred stock sales will be sufficient to meet long-term needs[84](index=84&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures about Market Risk](index=17&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the Company is exempt from providing quantitative and qualitative disclosures about market risk - The Company is exempt from providing market risk disclosures as it qualifies as a smaller reporting company[85](index=85&type=chunk) [Item 4 - Controls and Procedures](index=17&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[86](index=86&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[87](index=87&type=chunk) [PART II: OTHER INFORMATION](index=17&type=section&id=Part%20II%20-%20Other%20Information) [Item 1 - Legal Proceedings](index=17&type=section&id=Item%201%20-%20Legal%20Proceedings) Legal proceedings in the ordinary course of business are not expected to materially adversely affect the Company's financial condition or results - Management believes that current legal proceedings will not materially adversely affect the Company's financial position, results of operations, or cash flows[88](index=88&type=chunk) [Item 1A - Risk Factors](index=17&type=section&id=Item%201A%20-%20Risk%20Factors) Readers are referred to the Annual Report on Form 10-K for risk factors, acknowledging potential impact from unknown risks - Readers should consider risk factors outlined in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[89](index=89&type=chunk) - Additional unknown or currently immaterial risks may eventually prove to materially adversely affect the business[90](index=90&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=17&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the reporting period - No unregistered sales of equity securities or use of proceeds occurred[91](index=91&type=chunk) [Item 3 - Defaults Upon Senior Securities](index=18&type=section&id=Item%203%20-%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - There were no defaults upon senior securities[92](index=92&type=chunk) [Item 4 - Mine Safety Disclosures](index=18&type=section&id=Item%204%20-%20Mine%20Safety%20Disclosures) This item is not applicable to the Company's operations - Mine Safety Disclosures are not applicable to the Company[93](index=93&type=chunk) [Item 5 - Other Information](index=18&type=section&id=Item%205%20-%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or Non-Rule 10b5-1 trading arrangements in Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 or Non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[94](index=94&type=chunk) [Item 6 - Exhibits](index=19&type=section&id=Item%206%20-%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents and iXBRL-formatted financial information - The exhibits include various corporate documents such as Articles of Incorporation, Bylaws, and certifications from the CEO and CFO[96](index=96&type=chunk) - Financial information for the quarter ended March 31, 2025, is provided in Inline Extensible Business Reporting Language (iXBRL) format[96](index=96&type=chunk) [SIGNATURES](index=20&type=section&id=SIGNATURES) - The report was signed by James W. Bernau, Chief Executive Officer, and John Ferry, Chief Financial Officer, on May 13, 2025[98](index=98&type=chunk) ```

Core Insights - Willamette Valley Vineyards has appointed Mike Osborn as the new CEO, succeeding founder Jim Bernau, who will remain as President and Chairperson as part of a long-term succession plan [1][2][5] - The leadership change is aimed at accelerating the company's growth and enhancing its market presence, particularly in the evolving wine market [2][5] Company Overview - Willamette Valley Vineyards was founded in 1983 by Jim Bernau, who has built it into a respected winery known for its commitment to community ownership and environmental stewardship [2][5] - The winery has been recognized for its high-quality Pinot Noir and has received accolades such as "One of America's Great Pinot Noir Producers" from Wine Enthusiast Magazine [5] - The company operates under a unique shareholder model, with thousands of wine enthusiasts as co-owners, and has expanded to include 10 tasting rooms across Oregon, Washington, and California [4][5] Leadership Background - Mike Osborn, the new CEO, is known for founding Wine.com and has extensive experience in wine retail, having built it into the leading online wine retailer in the U.S. over the past 27 years [3] - Osborn's leadership is expected to bring a fresh perspective to the winery, focusing on enhancing its national and global presence while maintaining its core values of integrity, community, and quality [4][5]

Core Viewpoint - Willamette Valley Vineyards, Inc. reported a reduced net loss per common share for the year ended December 31, 2024, indicating improved financial performance compared to the previous year, despite ongoing challenges in the wine industry [1][6]. Financial Performance - The company generated net sales revenues of $39,782,442 for 2024, reflecting a 1.7% increase from $39,136,114 in 2023, primarily due to a rise in direct sales revenue [2]. - Gross profit increased to $24,195,456 in 2024, up 7.3% from $22,557,128 in 2023, attributed to higher product prices and a greater proportion of sales from direct channels [3]. - Selling, general and administrative expenses decreased slightly to $23,623,598 in 2024 from $23,764,330 in 2023, mainly due to lower labor selling costs [4]. - The company reported income from operations of $571,858 in 2024, a significant improvement from a loss of $1,207,202 in 2023, marking an increase of 147.4% [5]. Operational Insights - The CEO highlighted the company's strategy to leverage newly established retail locations to counteract declining sales trends in the industry, emphasizing the potential for long-term shareholder value through a unique ownership model [6]. - The company’s operational results indicate a focus on enhancing direct sales and managing costs effectively to navigate the changing wine market [6].

Market Overview - The total U.S. wine market was estimated at $81.3 billion in 2023, with average wine consumption per resident at 2.68 gallons, down 15% from the 2021 peak[24]. - The number of U.S. active wineries in 2023 was 11,620, representing a 1% decrease compared to 2022, despite the addition of 400 new wineries in 2022[24]. - The Oregon wine industry is expected to grow at a faster rate than the overall domestic wine industry, favoring premium, super premium, and ultra-premium producers[34]. Company Production and Capacity - The Company owns and leases approximately 1,018 acres of land, with 801 acres currently planted or suitable for future vineyard planting, aiming to grow 73% of the grapes needed for its production capacity of 654,000 gallons[41]. - The Company produced approximately 253,974 cases of wine in 2024, an increase from 234,086 cases in 2023, representing a growth of 8.5%[59]. - The company's producing acres yielded approximately 913 tons of grapes in 2024, which is a 5.3% increase from 867 tons produced in 2023[51]. - The total acreage of vineyards owned and leased by the company is 1,356 acres, with 873 acres currently producing grapes[42]. - The company has a production capacity of up to 275,000 cases of wine per year across its facilities, with the Tualatin Winery adding approximately 28,000 cases of capacity[59][61]. - The Company believes its production capacity of 720,000 gallons (303,000 cases) per year provides a competitive advantage over most Oregon wineries[79]. Sales and Marketing Strategy - The Company’s marketing strategy includes direct sales at wineries and through independent distributors, targeting high-quality premium wines[39]. - Direct sales contributed approximately 53.4% of the Company's net sales in 2024, up from 52.4% in 2023[73]. - The Company’s marketing strategy includes direct sales, mailing lists, and distribution through brokers, with increased sales to out-of-state markets[65]. - The Company has one of the largest wine club memberships in Oregon, which supports direct sales and customer engagement[67]. - The Company opened a new sparkling winery, Domaine Willamette Winery, in September 2022, enhancing direct sales and wine tourism opportunities[68]. Financial Performance - The Company reported a net loss of $117,894 for the year ended December 31, 2024, a decrease of 90.2% compared to a net loss of $1,198,593 in 2023[148]. - Net sales revenues increased by $646,328, or 1.7%, to $39,782,442 in 2024, primarily due to a $736,057, or 3.6% increase in direct sales revenue[150]. - The Company sold approximately 186,419 cases of wine in 2024, a decrease of 2.7% from 191,619 cases sold in 2023[145]. - Total revenue for the Company was $40,187,834 in 2024, up from $39,567,828 in 2023, after deducting excise taxes[154]. - Gross profit increased by $1,638,328, or 7.3%, to $24,195,456 in 2024, driven by higher product prices and a greater percentage of direct sales[158]. - The gross margin percentage improved by 3.2 percentage points to 60.8% in 2024, compared to 57.6% in 2023[159]. - Income from operations increased by $1,779,060, or 147.4%, to $571,858 in 2024, attributed to higher gross profit and lower labor expenses[161]. - EBITDA rose by 71.1% to $3,995,135 in 2024, compared to $2,334,629 in 2023, primarily due to a lower net loss[167]. Challenges and Risks - The wine industry is highly competitive, with significant competition from both domestic and foreign producers, which may adversely affect the Company's profitability[98]. - Fluctuations in grape supply due to weather, diseases, or pests could reduce the quantity and quality of wine produced, negatively impacting sales[102]. - A reduction in consumer demand for premium wines could harm the Company's business, influenced by economic conditions and health concerns[104]. - Changes in consumer spending patterns could negatively impact the Company's financial condition and sales[105]. - Increased regulation and taxation in the wine industry could adversely affect the Company's financial results and operations[106]. Debt and Financial Health - As of December 31, 2024, the Company's outstanding long-term debt was approximately $14.0 million, with $2.4 million drawn under its short-term line of credit[96]. - The total long-term debt balance rose to $14,042,910 as of December 31, 2024, up from $7,590,659 in 2023, primarily due to financing for the Estate Hospitality Center and vineyard development[190]. - The Company has incurred a total mortgage principal balance of $14,042,910 on its winery facilities as of December 31, 2024[62]. - The Company has not paid dividends on its Common Stock and does not anticipate doing so in the foreseeable future[129]. - The ability to pay dividends on Preferred Stock is contingent on the Company's financial health and cash generation capabilities[110]. Future Plans and Developments - The Company plans to develop new vineyards on approximately 54 acres of land currently owned or leased, expected to begin producing grapes within the next one to three years[179]. - The Company has continued to invest in vineyard development, with additions costing $237,437 in 2024, down from $419,023 in 2023, indicating a potential shift in capital allocation strategy[212].

Core Viewpoint - Willamette Valley Vineyards, Inc. reported a net loss of $0.17 per common share for the third quarter of 2024, consistent with the same period in 2023, despite a slight increase in sales revenue and gross profit margin [1][5]. Financial Performance - Sales revenue for the three months ended September 30, 2024, was $9,370,713, representing a 0.2% increase from $9,348,066 in the same period of 2023, driven by a rise in direct sales [2]. - Gross profit as a percentage of net sales increased to 62.0% in Q3 2024 from 60.8% in Q3 2023, attributed to a higher proportion of direct sales, which have better margins [3]. - Selling, general and administrative expenses decreased by 0.4% to $5,944,620 in Q3 2024 from $5,967,346 in Q3 2023, mainly due to a reduction in selling and marketing expenses [4]. Net Loss and Operational Insights - The net loss for the three months ended September 30, 2024, was $282,945, a decrease of 13.5% from $326,982 in the same quarter of 2023 [5]. - The CEO noted that the company is adapting to market changes, with wholesalers and retailers reducing wine inventories and focusing on alternative alcoholic beverages, influenced by interest costs and inflation [6]. Strategic Initiatives - The company aims to enhance direct consumer engagement and improve outreach to wholesalers and retail accounts, leveraging its tasting rooms and hospitality experiences to drive positive results [7].

Core Points - Willamette Valley Vineyards, Inc. declared a cash dividend of $0.22 per share on its Series A Redeemable Preferred stock, payable on December 31, 2024 [1] - The dividend is for shareholders of record at the close of business on December 6, 2024 [1] - Future dividends will require approval from the company's board of directors and will be based on the terms outlined in the Amended and Restated Certificate of Designation [1] Company Information - Willamette Valley Vineyards, Inc. is a leading producer of Pinot Noir based in Oregon [1] - The company's common stock is traded on NASDAQ under the ticker WVVI [2] - The company operates its Estate Vineyard near Salem, Oregon [2]

Core Viewpoint - Willamette Valley Vineyards, Inc. reported a loss per common share of $0.07 for the three months ended June 30, 2024, a slight improvement from a loss of $0.08 in the same period of 2023, indicating a challenging market environment influenced by various economic factors [1]. Financial Performance - Sales revenue decreased by $393,885, or 3.7%, from $10,726,243 in Q2 2023 to $10,332,358 in Q2 2024, primarily due to a $597,059 drop in distributor sales, partially offset by a $203,174 increase in direct sales [2]. - Gross profit margin improved to 62.6% in Q2 2024 from 58.3% in Q2 2023, an increase of 4.3 percentage points, attributed to higher product prices [3]. - Selling, general and administrative expenses slightly decreased by $6,955, or 0.1%, from $5,941,739 in Q2 2023 to $5,934,784 in Q2 2024, with a notable reduction in selling and marketing expenses [4]. - Net income rose significantly by $87,525, or 80.7%, from $108,453 in Q2 2023 to $195,978 in Q2 2024, driven by higher product prices [5]. Market Challenges - The CEO highlighted a rapidly changing market influenced by interest costs, inflation, and shifting consumer trends, with wholesalers and retailers reducing wine inventories and reallocating shelf space to alternative alcoholic beverages [6]. - The company aims to enhance direct consumer engagement through wine, culinary, and hospitality experiences at its ten locations, hoping to improve financial results in both wholesale and retail segments [6]. Operational Overview - The company’s headquarters is located at its Estate Vineyard near Salem, Oregon, and its common stock is traded on NASDAQ under the ticker WVVI [7].

Financial Performance - Net sales for the three months ended March 31, 2024, were $8.80 million, up from $8.31 million in the same period of 2023, representing a year-over-year increase of 5.95%[15] - Gross profit for Q1 2024 was $5.27 million, compared to $4.48 million in Q1 2023, indicating a 17.73% increase[15] - The net loss for the three months ended March 31, 2024, was $521,805, an improvement from a net loss of $744,823 in Q1 2023[19] - For the three months ended March 31, 2024, the net loss applicable to common shareholders was $1,084,982, a decrease from a net loss of $1,256,542 in the same period of 2023, resulting in a loss per common share of $0.22 compared to $0.25[24] - The company reported a net loss of $521,805 for the three months ended March 31, 2024, compared to a net loss of $744,823 for the same period in 2023, showing a reduction in losses[15] - The company reported a loss from operations of $(602,577) for the three months ended March 31, 2024, compared to a loss of $(974,950) in 2023[38] Assets and Liabilities - Total assets increased to $106.19 million as of March 31, 2024, compared to $105.71 million at December 31, 2023, reflecting a growth of 0.45%[9] - Total current liabilities decreased to $11.58 million as of March 31, 2024, from $13.80 million at December 31, 2023, a reduction of 16.01%[11] - The company's property and equipment, net, was valued at $53,009,801 as of March 31, 2024, slightly down from $53,369,637 as of December 31, 2023, with depreciation expense for the period at $791,986[27] - Long-term debt increased to $9,962,186 as of March 31, 2024, from $7,590,659 as of December 31, 2023, with future minimum principal payments outlined for the next five years[32] - The outstanding line of credit balance was $3,320,928 at March 31, 2024, up from $2,684,982 at December 31, 2023, both at an interest rate of 8.0%[28] Cash Flow - Cash and cash equivalents at the end of Q1 2024 were $256,472, up from $238,482 at the beginning of the period, marking a 7.67% increase[19] - The company reported a cash outflow from operating activities of $3.01 million for Q1 2024, compared to an outflow of $1.28 million in Q1 2023[19] - The company reported cash flows from operating activities of $(3,012,769) for the three months ended March 31, 2024, compared to $(1,279,932) for the same period in 2023, indicating a decline in cash flow[20] - The company’s cash and cash equivalents at the end of the period were $256,472, compared to $154,340 at the end of the same period in 2023, showing a 66% increase[20] Inventory and Sales - Total inventories as of March 31, 2024, amounted to $28,881,664, an increase from $28,314,779 as of December 31, 2023, with work-in-process inventory at $15,417,269[26] - Direct Sales generated $4,286,156 in net sales for the three months ended March 31, 2024, compared to $4,071,649 in 2023, while Distributor Sales increased to $4,516,924 from $4,237,291[38] - The contribution margin for Direct Sales was $(272,370) for the three months ended March 31, 2024, an improvement from $(432,785) in the same period of 2023[38] - For the three months ended March 31, 2024, total net sales were $8,803,080, an increase of 5.93% from $8,308,940 in the same period of 2023[38] - Gross profit for the same period was $5,272,722, up 17.74% from $4,478,463 in 2023, resulting in a gross margin of 59.9%[38] Shareholder Equity and Stock - The company issued 192,740 shares of preferred stock during the quarter, increasing the total to 10,239,573 shares outstanding[17] - The company has received net proceeds of $3,938,066 from the issuance of Preferred Stock as of March 31, 2024, under various offerings[41] - The company accrued preferred stock dividends of $563,177 for the three months ended March 31, 2024, compared to $511,719 for the same period in 2023, representing a 10% increase[24] - The company’s total shareholders' equity increased to $71,082,759 as of March 31, 2024, compared to $70,635,205 at the end of 2023[12] Lease and Operating Expenses - Operating expenses for Q1 2024 totaled $5.88 million, compared to $5.45 million in Q1 2023, reflecting an increase of 7.93%[15] - Total lease cost for the three months ended March 31, 2024, was $373,849, up from $338,339 in the same period of 2023, indicating a 10.5% increase[59] - Operating lease liabilities as of March 31, 2024, totaled $11,743,657, with a weighted-average remaining lease term of 15.59 years[61] - The weighted-average discount rate for operating leases increased to 7.88% as of March 31, 2024, from 5.36% in the previous year[59] - Selling and marketing expenses rose to $4,027,782 in 2024, compared to $3,983,580 in 2023, reflecting a 1.11% increase[38] Legal and Agreements - The Company is involved in legal proceedings, but management believes these will not materially affect its financial position or cash flows[62] - The company has entered into long-term grape purchase agreements with Willamette Valley wine grape growers, although specific financial terms are not calculable due to variable factors[63] - Payment for grape purchases is contingent on the availability of grapes that meet strict quality standards, with potential refusal of grapes if standards are not met[63]

Wine Production and Sales - The Company produced and sold various types of wine under multiple labels, with Pinot Noir being the flagship varietal priced between $30 to $120 per bottle[19][21]. - In 2023, the company produced approximately 234,086 cases (556,700 gallons) of wine, primarily from its 2021 and 2022 harvests[61]. - The total grape harvest in 2023 was 4,192 tons, which includes 1,771 tons grown and 2,421 tons purchased from other growers[66]. - The company's producing acres yielded approximately 867 tons of grapes in 2023, which is roughly 14% below the 10-year average[53]. - The Company sold approximately 191,619 cases of wine in 2023, a 2.3% increase from 187,371 cases in 2022[148]. - Direct-to-consumer retail sales revenue increased by 31.0% in 2023, while in-state sales decreased by 5.0%[154]. - The Company has an estimated aggregate production capacity of 720,000 gallons (303,000 cases) per year, providing a competitive advantage in the market[83]. Financial Performance - The Company reported a net loss of $1,198,593 for the year ended December 31, 2023, an increase of 85.4% compared to a net loss of $646,492 in 2022[151]. - Net sales revenues increased by $5,202,033, or 15.3%, to $39,136,114 in 2023, driven by a 30.4% increase in direct sales revenue[153]. - Total revenue for the year ended December 31, 2023, was $39,567,828, an increase of $5,321,644, or 15.6%, compared to $34,246,184 in 2022[156]. - Gross profit rose to $22,557,128 in 2023, an increase of $3,743,032, or 19.9%, compared to $18,814,096 in 2022[161]. - The gross margin percentage improved to 57.6% in 2023, up 2.2 percentage points from 55.4% in 2022, driven by higher direct sales prices[162]. - Selling, general and administrative expenses increased by $4,403,816, or 22.7%, to $23,764,330 in 2023 from $19,360,514 in 2022[164]. - Loss from operations increased by $660,784, or 120.9%, to $1,207,202 in 2023 compared to $546,418 in 2022, influenced by higher depreciation costs[165]. - EBITDA for 2023 was $2,334,602, reflecting a 22.1% increase from $1,912,012 in 2022[171]. Market Trends and Industry Insights - The U.S. wine industry added 400 new wineries in 2022, marking a 3% increase from 2021, with a total retail value of wine sales rising from $26.3 billion in 2000 to $78.4 billion in 2021[25]. - The Oregon wine industry saw a 22% increase in the total value of wine grapes produced in 2022, reaching $330 million, with Pinot Noir accounting for 71% of planted acreage[29]. - The Company believes that the Oregon wine industry will grow at a faster rate than the overall domestic wine industry in the coming years, favoring premium wine producers[35]. - The number of active wineries in the U.S. decreased by 1% in 2023 compared to the peak in 2022, indicating a slowdown in industry growth[25][26]. - The wine industry is highly competitive, with significant pressure on selling and promotional expenses due to competition from both domestic and foreign wines[102]. Operational Developments - The Company has embarked on a brand expansion project in the Walla Walla AVA, aiming to produce small vintages of Cabernet Sauvignon and other Bordeaux varietals under the Pambrun brand[40]. - The Company opened a sparkling wine facility and tasting room called Domaine Willamette in 2022, featuring its sparkling wines and biodynamic farming practices[40]. - The Company opened a new sparkling winery, Domaine Willamette Winery, in September 2022, enhancing direct sales and wine tourism opportunities[71]. - The Company operates eight additional tasting rooms across various locations, expanding its market presence[75]. - The Company has developed a Winery Ambassador program to enhance customer engagement and facilitate wine ordering[74]. Grape Supply and Quality - The Company anticipates that its vineyards will enable it to grow approximately 73% of the grapes needed to meet its current production capacity of 654,000 gallons (275,000 cases)[42]. - The company’s contracted grape purchases are considered an important component of its long-term growth and risk-management plan[54]. - The company believes that high-quality grapes will be available for purchase in sufficient quantity to meet its requirements[54]. - Fluctuations in grape supply quality and quantity could adversely affect wine production, impacting sales and operational results[106]. Employee and Corporate Structure - The Company had approximately 223 full-time employees and 123 part-time employees as of December 31, 2023[89]. - The Company believes its unique structure as a publicly owned entity will provide significant advantages in gaining market share[83]. Risks and Challenges - Contamination risks could lead to product recalls, damaging the Company's reputation for quality[107]. - A reduction in consumer demand for premium wines could negatively impact the Company's business, influenced by economic conditions and health trends[108]. - Changes in consumer spending patterns could adversely affect the Company's financial condition and sales[109]. - Increased regulation and taxation in the wine industry could negatively impact the Company's financial results[110]. - The Company relies heavily on independent distributors for sales, which represent a substantial portion of net revenue, and any changes in distributor relationships could harm sales[104]. - The Company's common stock is thinly traded, resulting in lower liquidity compared to other investments[112]. - The issuance of additional shares of Preferred Stock could adversely affect the market price and rights of Common Stock holders[116].