Willamette Valley Vineyards, Inc.(WVVIP) - 2025 Q1 - Quarterly Report

Part I - Financial Information Item 1 - Financial Statements This section presents the unaudited condensed financial statements for the three months ended March 31, 2025, covering balance sheets, operations, equity, and cash flows, with accompanying notes Condensed Balance Sheets Total assets slightly decreased to $108.2 million as of March 31, 2025, with stable liabilities and a decline in shareholders' equity due to the net loss Condensed Balance Sheet Summary (as of March 31, 2025 vs. December 31, 2024) | Account | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Total Current Assets | $37,024,609 | $36,919,057 | | Total Assets | $108,244,573 | $109,017,140 | | Total Current Liabilities | $10,285,959 | $12,980,185 | | Total Liabilities | $39,739,824 | $39,783,410 | | Total Shareholders' Equity | $68,504,749 | $69,233,730 | Condensed Statements of Operations Net sales decreased by 14.3% to $7.5 million for Q1 2025, resulting in a widened net loss and increased loss per common share Q1 2025 vs. Q1 2024 Statement of Operations | Metric | Three months ended March 31, 2025 (USD) | Three months ended March 31, 2024 (USD) | | :--- | :--- | :--- | | Sales, Net | $7,541,583 | $8,803,080 | | Gross Profit | $4,759,108 | $5,272,722 | | Loss from Operations | ($869,978) | ($602,577) | | Net Loss | ($728,981) | ($521,805) | | Loss per common share | ($0.26) | ($0.22) | Condensed Statements of Shareholders' Equity Total shareholders' equity decreased by approximately $0.7 million in Q1 2025, primarily due to the net loss and accrued preferred stock dividends - The decrease in retained earnings for Q1 2025 was a result of the net loss ($728,981) and accrued preferred stock dividends ($563,177)[12] Condensed Statements of Cash Flows Net cash used in operating activities was $1.3 million in Q1 2025, offset by $1.5 million from financing activities, resulting in a slight increase in cash and cash equivalents Q1 2025 vs. Q1 2024 Cash Flow Summary | Cash Flow Activity | Three months ended March 31, 2025 (USD) | Three months ended March 31, 2024 (USD) | | :--- | :--- | :--- | | Net cash from operating activities | ($1,337,263) | ($3,012,769) | | Net cash from investing activities | ($115,344) | ($330,298) | | Net cash from financing activities | $1,464,613 | $3,361,057 | | Net change in cash | $12,006 | $17,990 | Notes to Unaudited Interim Financial Statements These notes provide additional details on financial statements, including inventory, debt, segment performance, preferred stock, and lease obligations, highlighting a significant decline in Distributor Sales Inventory Breakdown (as of March 31, 2025) | Inventory Type | Value (USD) | | :--- | :--- | | Winemaking and packaging materials | $1,587,348 | | Work-in-process (unbottled wine) | $14,147,911 | | Finished goods (bottled wine) | $17,863,096 | | Total Inventories | $33,598,355 | - The company has four long-term debt agreements with AgWest, with an aggregate outstanding balance of $16.8 million as of March 31, 2025[24] Segment Performance (Q1 2025 vs. Q1 2024) | Segment | Sales (Q1 2025, USD) | Sales (Q1 2024, USD) | Gross Profit (Q1 2025, USD) | Gross Profit (Q1 2024, USD) | | :--- | :--- | :--- | :--- | :--- | | Direct Sales | $4,310,474 | $4,286,156 | $3,124,881 | $2,991,011 | | Distributor Sales | $3,231,109 | $4,516,924 | $1,634,227 | $2,281,711 | Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial performance, attributing the 14.3% revenue decrease to lower distributor sales and an increased net loss, while affirming sufficient liquidity for long-term needs Overview The company's strategy focuses on producing high-quality Oregon wines, building brand recognition, and growing direct-to-consumer sales, though near-term results may be impacted by strategic growth costs - The company's success is dependent on its ability to: (1) grow high-quality grapes, (2) produce premium wine, (3) achieve brand recognition, (4) effectively distribute products, and (5) grow direct-to-consumer sales[57] - Wine case sales decreased by 23.5% in Q1 2025 compared to Q1 2024, falling from 43,208 cases to 33,080 cases, primarily due to lower wholesale case sales[62] Results of Operations Sales revenue decreased by $1.3 million (14.3%) in Q1 2025, primarily due to lower distributor sales, while gross profit margin improved and net loss widened - The decrease in sales revenue was caused by a $1,285,815 decline in distributor sales, partially offset by a $24,318 increase in direct sales to consumers[67] - Gross profit as a percentage of net sales increased to 63.1% in Q1 2025 from 59.9% in Q1 2024, attributed to higher prices for products sold through retail locations[70] - The increase in net loss for Q1 2025 was primarily the result of lower case sales to distributors compared to the same period in 2024[74] Liquidity and Capital Resources As of March 31, 2025, the company maintained $26.7 million in working capital, with financing activities offsetting operational cash usage, and management believes current resources are sufficient for long-term needs Key Liquidity Metrics (as of March 31, 2025) | Metric | Value | | :--- | :--- | | Working Capital | $26.7 million | | Current Ratio | 3.60:1 | | Cash Balance | $332,889 | - Cash generated from financing activities in Q1 2025 was $1,464,613, mainly from long-term debt proceeds, which offset repayments on the line of credit[79] - The company believes that cash flow from operations, existing credit facilities, and preferred stock sales will be sufficient to meet its long-term needs[84] Item 3 - Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - The Company is not required to provide information for this item as it qualifies as a smaller reporting company[85] Item 4 - Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the Company's disclosure controls and procedures are effective[86] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[87] Part II - Other Information Item 1 - Legal Proceedings The company is occasionally involved in ordinary course legal proceedings, which management believes will not materially adversely affect its financial position or results of operations - Management believes that any potential liability from legal proceedings is not likely to have a material effect on the Company's liquidity, financial condition, or results from operations[88] Item 1A - Risk Factors This section refers investors to the detailed discussion of risk factors in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - The report refers readers to the risk factors discussed in Part I, "Item 1A. Risk Factors" in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[89] Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - None[91] Item 3 - Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - None[92] Item 5 - Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the first quarter of 2025 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "Non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025[94] Item 6 - Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, CEO and CFO certifications, and iXBRL formatted financial statements - The exhibits filed with this report include: * Articles of Incorporation and Bylaws * Certifications of the CEO and CFO pursuant to Rule 13a-14(a) * Certifications of the CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act * Financial statements formatted in Inline Extensible Business Reporting Language (iXBRL)[96]