WVVI 10-Q
Willamette Valley Vineyards Inc (WVVI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
EXCHANGE ACT OF 1934
For
the quarterly period ended
Commission
File Number
(Exact name of registrant as specified in charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||
| (Address of principal executive offices) | (Zip Code) | ||
Registrant’s
telephone number, including area code:
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days: x
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files): x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
| o Large accelerated filer | o Accelerated filer |
| x |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
o YES
x
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Number of shares of common stock outstanding as of August 12, 2026:
1
WILLAMETTE VALLEY VINEYARDS, INC.
INDEX TO FORM 10-Q
2
PART I: FINANCIAL INFORMATION
Item 1 – Financial Statements
WILLAMETTE
VALLEY VINEYARDS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
| ASSETS | ||||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Income tax receivable | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Vineyard development costs, net | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right of use assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Investor deposits for preferred stock | ||||||||
| Bank overdraft | ||||||||
| Line of credit | ||||||||
| Note payable | ||||||||
| Current portion of long-term debt | ||||||||
| Current portion of lease liabilities | ||||||||
| Unearned revenue | ||||||||
| Grapes payable | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, net of current portion and debt issuance costs | ||||||||
| Lease liabilities, net of current portion | ||||||||
| Deferred income taxes | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 10) | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Redeemable preferred stock, par value, shares authorized, shares issued and outstanding, liquidation preference $ | ||||||||
| Common stock, par value, shares authorized, shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively. | ||||||||
| Retained earnings | ||||||||
| Total shareholders' equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of this condensed financial statement
3
WILLAMETTE
VALLEY VINEYARDS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| SALES, NET | $ | $ | $ | $ | |||||||||||||
| COST OF SALES | |||||||||||||||||
| GROSS PROFIT | |||||||||||||||||
| OPERATING EXPENSES | |||||||||||||||||
| Sales and marketing | |||||||||||||||||
| General and administrative | |||||||||||||||||
| Total operating expenses | |||||||||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ( | ) | ( | ) | |||||||||||
| OTHER INCOME (EXPENSE) | |||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Other income, net | |||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | |||||||||||
| INCOME TAX (EXPENSE) BENEFIT | ( | ) | |||||||||||||||
| NET INCOME (LOSS) | ( | ) | ( | ) | ( | ) | |||||||||||
| Accrued preferred stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| LOSS APPLICABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Loss per common share after preferred dividends, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Weighted-average number of common shares outstanding, basic and diluted | |||||||||||||||||
The accompanying notes are an integral part of this condensed financial statement
4
WILLAMETTE
VALLEY VINEYARDS, INC.
CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
| Six-Month Period Ended June 30, 2026 | ||||||||||||||||||||||||
| Redeemable | ||||||||||||||||||||||||
| Preferred Stock | Common Stock | Retained | ||||||||||||||||||||||
| Shares | Dollars | Shares | Dollars | Earnings | Total | |||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||
| Issuance of preferred stock, net | - | |||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||
| Preferred stock dividends accrued | - | - | ( | ) | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance at March 31, 2026 | ||||||||||||||||||||||||
| Issuance of preferred stock, net | - | |||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||
| Preferred stock dividends accrued | - | - | ( | ) | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ||||||||||||||||||||
| Six-Month Period Ended June 30, 2025 | ||||||||||||||||||||||||
| Redeemable | ||||||||||||||||||||||||
| Preferred Stock | Common Stock | Retained | ||||||||||||||||||||||
| Shares | Dollars | Shares | Dollars | Earnings | Total | |||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ||||||||||||||||||||
| Preferred stock dividends accrued | - | - | ( | ) | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance at March 31, 2025 | ||||||||||||||||||||||||
| Preferred stock dividends accrued | - | - | ( | ) | ||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ||||||||||||||||||||
The accompanying notes are an integral part of this condensed financial statement
5
WILLAMETTE
VALLEY VINEYARDS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Provision for credit losses | ||||||||
| Common stock compensation expense | ||||||||
| Non-cash lease expense | ||||||||
| Debt issuance costs | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Income taxes receivable | ( | ) | ( | ) | ||||
| Unearned revenue | ( | ) | ( | ) | ||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Grapes payable | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Net cash from operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Additions to vineyard development costs | ( | ) | ( | ) | ||||
| Additions to property and equipment | ( | ) | ( | ) | ||||
| Net cash from investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Payment on installment note for property purchase | ( | ) | ( | ) | ||||
| Proceeds from (payments on) bank overdraft | ( | ) | ||||||
| Payments on line of credit, net | ( | ) | ( | ) | ||||
| Payments on long-term debt | ( | ) | ( | ) | ||||
| Proceeds from long-term debt | ||||||||
| Proceeds from issuance of preferred stock | ||||||||
| Net cash from financing activities | ( | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ||||||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Purchases of property and equipment and vineyard development costs included in accounts payable | $ | $ | ||||||
| Reduction in investor deposits for preferred stock | $ | $ | ||||||
| Accrued preferred stock dividends | $ | $ | ||||||
The accompanying notes are an integral part of this condensed financial statement
6
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
The 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. 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. Certain 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 Company’s audited financial statements for the year ended December 31, 2025, as presented in the Company’s Annual Report on Form 10-K.
Operating 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.
The Company’s revenues include direct to consumer sales and national sales to distributors. These sales channels utilize shared resources for production, selling, and distribution.
Basic loss per share after preferred stock dividends are computed based on the weighted-average number of common shares outstanding each period.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator | ||||||||||||||||
| Net income (loss) | $ | (1,389,876 | ) | $ | 92,795 | $ | (1,954,948 | ) | $ | (636,186 | ) | |||||
| Accrued preferred stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss applicable to common shares | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator | ||||||||||||||||
| Weighted-average number of common shares outstanding basic and diluted | ||||||||||||||||
| Loss per common share after preferred dividends, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Subsequent to the filing of the 2025 Report there were no accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) that would have a material effect on the Company’s unaudited interim condensed financial statements.
2) INVENTORIES
The Company’s inventories, by major classification, are summarized as follows, as of the dates shown:
| June 30, 2026 | December 31, 2025 | |||||||
| Winemaking and packaging materials | $ | $ | ||||||
| Work-in-process (costs relating to unprocessed and/or unbottled wine products) | ||||||||
| Finished goods (bottled wine and related products) | ||||||||
| Total inventories | $ | $ | ||||||
7
3) PROPERTY AND EQUIPMENT, NET
The Company’s property and equipment consists of the following, as of the dates shown:
| June 30, 2026 | December 31, 2025 | |||||||
| Construction in progress | $ | $ | ||||||
| Land, improvements, and other buildings | ||||||||
| Winery, tasting room buildings, and hospitality center | ||||||||
| Equipment | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended June 30, 2026 and 2025 was $
4) DEBT
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 $
The Credit Agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment. As of December 31, 2025, the Company was out of compliance with a debt covenant. The Company has received a waiver from Columbia Bank waiving this violation until the next measurement date of December 31, 2026.
Notes
Payable – In February 2017, the Company purchased property, including vineyard land, bare land, and structures in the Dundee
Hills American Viticultural Area (AVA) under terms that included a 15 year note payable with quarterly payments of $42,534, bearing interest
at 6%. The note may be called by the owner, up to the outstanding balance, with 180 days written notice. As of June 30, 2026, the Company
had a balance of $
Long-Term
Debt – The Company has four long term debt agreements with AgWest with an aggregate outstanding balance of $
8
As of June 30, 2026, future minimum principal payments of long-term debt are as follows for the years ending December 31:
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| $ |
As
of June 30, 2026, the Company had unamortized debt issuance costs of $
5) INTEREST AND TAXES PAID
Income
taxes – The Company paid $
Interest
– The Company paid $
6) SEGMENT REPORTING
The Company has identified two operating segments, Direct Sales and Distributor Sales, based upon their different distribution channels, margins and selling strategies. Direct Sales include retail sales in the tasting rooms, wine club sales, internet sales, on-site events, kitchen and catering sales and other sales made directly to the consumer without the use of an intermediary, including sales of bulk wine or grapes. Distributor Sales include all sales through a third party where prices are given at a wholesale rate.
The two segments reflect how the Company’s operations are evaluated by senior management and the structure of its internal financial reporting. The Company evaluates performance based on the gross profit of the respective business segments. Selling expenses that can be directly attributable to the segment, including depreciation of segment specific assets, are included, however, centralized selling expenses and general and administrative expenses are not allocated between operating segments. Therefore, net income (loss) information for the respective segments is not available. Discrete financial information related to segment assets, other than segment specific depreciation associated with selling, is not available and that information continues to be aggregated.
The 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.
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
| Direct Sales | Distributor Sales | Unallocated | Total | |||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Sales, net | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||
| Selling expenses | ||||||||||||||||||||||||||||||||
| Contribution margin | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Percent of total sales | % | % | % | % | ||||||||||||||||||||||||||||
| General and administration expenses | ||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | (1,353,969 | ) | $ | 398,164 | |||||||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
| Direct Sales | Distributor Sales | Unallocated | Total | |||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Sales, net | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||
| Selling expenses | ||||||||||||||||||||||||||||||||
| Contribution margin | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Percent of total sales | % | % | % | % | ||||||||||||||||||||||||||||
| General and administration expenses | ||||||||||||||||||||||||||||||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
9
7) SALE OF PREFERRED STOCK
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. Net proceeds 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. 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 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. Net proceeds 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. No 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.
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.
8) STOCK INCENTIVE PLAN
The Willamette Valley Vineyards, Inc. 2025 Omnibus Equity Incentive Plan (“2025 Plan”) was adopted by the Company’s board of directors on May 27, 2025, and was approved by the Company’s shareholders on July 12, 2025. The 2025 Plan provides for the grant of incentive stock options, non-statutory stock options, share appreciation rights, restricted shares, restricted share units, other share-based awards or any combination of the foregoing to selected employees, directors and independent contractors of the Company. The Company filed on November 12, 2025 a registration statement Form S-8 to register under the U.S. Securities Act of 1933, as amended, the Company’s shares of common stock to be issued pursuant to awards granted under the 2025 Plan.
During 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 Company’s common stock had been issued under the 2025 Plan and an additional 270,000 shares of the Company’s common stock were issuable pursuant to outstanding awards granted under the 2025 Plan.
The Company 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.
The 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.
10
9) LEASES
We determine if an arrangement is a lease at inception. On our condensed balance sheets, our operating leases are included in Operating lease right-of-use assets (ROU), Current portion of lease liabilities, and Lease liabilities, net of current portion. The Company does not currently have any finance leases.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For leases that do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
Significant judgment may be required when determining whether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and non-lease components, and the determination of the discount rate included in our leases. We review the underlying objective of each contract, the terms of the contract, and consider our current and future business conditions when making these judgments.
Operating
leases – Vineyard -
Operating
Leases – Non-Vineyard –
11
The following tables provide lease cost and other lease information:
| Six Months Ended | Six Months Ended | |||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Lease Cost | ||||||||
| Operating lease cost - Vineyards | $ | $ | ||||||
| Operating lease cost - Other | ||||||||
| Short-term lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
| Other Information | ||||||||
| Cash paid for amounts included in the measurement | ||||||||
| of lease liabilities | ||||||||
| Operating cash flows from operating leases - Vineyard | $ | $ | ||||||
| Operating cash flows from operating leases - Other | $ | $ | ||||||
| Weighted-average remaining lease term - Operating leases in years | 13.64 | 14.37 | ||||||
| Weighted-average discount rate - Operating leases | % | % | ||||||
Right-of-use assets obtained in exchange for new operating lease obligations were zero for the six months ended June 30, 2026 and 2025.
As of June 30, 2026, maturities of lease liabilities were as follows:
| Operating | ||||
| Years Ended December 31, | Leases | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total minimum lease payments | ||||
| Less present value adjustment | ( | ) | ||
| Operating lease liabilities | ||||
| Less current lease liabilities | ( | ) | ||
| Lease liabilities, net of current portion | $ | |||
12
10) COMMITMENTS AND CONTINGENCIES
Litigation – From time to time, in the normal course of business, the Company is a party to legal proceedings. Management believes that these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows, but, due to the nature of litigation, the ultimate outcome of any potential actions cannot presently be determined.
Distributor 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 management’s estimate of expected credit losses related to those territories.
The 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.
Grape Purchases – The Company has entered into long-term grape purchase agreements with a number of Willamette Valley wine grape growers. With these agreements the Company purchases an annually agreed upon quantity of fruit, at pre-determined prices, within strict quality standards and crop loads. The Company cannot calculate the minimum or maximum payment as such a calculation is dependent in large part on unknowns such as the quantity of fruit needed by the Company and the availability of grapes produced that meet the strict quality standards in any given year. If no grapes are produced that meet the contractual quality levels, the grapes may be refused, and no payment would be due.
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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our” and “the Company” refer to Willamette Valley Vineyards, Inc.
Forward Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-Q contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that are based on current expectations, estimates and projections about the Company’s business, and beliefs and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates”, “predicts,” “potential,” “should,” or “will” or the negative thereof and variations of such words and similar expressions are intended to identify such forward-looking statements. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including, but not limited to: availability of financing for growth, availability of adequate supply of high quality grapes, successful performance of internal operations, impact of competition, changes in wine broker or distributor relations or performance, impact of possible adverse weather conditions, impact of reduction in grape quality or supply due to disease or smoke from forest fires, changes in consumer spending, and the reduction in consumer demand for premium wines. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic economic conditions. Many of these risks as well as other risks that may have a material adverse impact on our operations and business, are identified in Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as well as in the Company’s other Securities and Exchange Commission filings and reports. The forward-looking statements in this report are made as of the date hereof, and, except as otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements or to update the reasons why the actual results could differ materially from those projected in the forward-looking statements, whether as a result of new information, future events or otherwise.
Critical Accounting Policies
The foregoing discussion and analysis of the Company’s financial condition and results of operations are based upon our unaudited condensed financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenue recognition, collection of accounts receivable, valuation of inventories, and amortization of vineyard development costs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. A description of the Company’s critical accounting policies and related judgments and estimates that affect the preparation of the Company’s financial statements is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Such policies were unchanged during the six months ended June 30, 2026.
Overview
The Company, one of the largest wine producers in Oregon by volume, believes its success is dependent upon its ability to: (1) grow and purchase high quality vinifera wine grapes; (2) vinify the grapes into premium, super premium and ultra-premium wine; (3) achieve significant brand recognition for its wines, first in Oregon, and then nationally and internationally; (4) effectively distribute and sell its products nationally; and (5) continue to build on its base of direct to consumer sales.
The Company’s goal is to continue to build on a reputation for producing some of Oregon’s finest, most sought-after wines. The Company has focused on positioning itself for strategic growth through property purchases, property development and issuance of the Company’s Series A Redeemable Preferred Stock (the “Preferred Stock”). Management expects near term financial results to be negatively impacted by these activities as a result of incurring costs of accrued preferred stock dividends, strategic planning and development costs and other growth associated costs.
The Company’s wines are made from grapes grown in vineyards owned, leased or contracted by the Company, and from grapes purchased from other vineyards. The grapes are harvested, fermented and made into wine primarily at the Company’s winery in Turner, Oregon (the “Winery”) and the wines are sold principally under the Company’s Willamette Valley Vineyards label, but also under the Griffin Creek, Pambrun, Elton, Maison Bleue, Metis, Natoma, Pere Ami, Domaine Willamette and Tualatin Estates labels. The Company also owns the Tualatin Estate Vineyards and Winery, located near Forest Grove, Oregon and the Domaine Willamette Winery located near Dundee, Oregon. The Company generates revenues from the sales of wine to wholesalers and direct to consumers.
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Direct to consumer sales primarily include sales through the Company’s tasting rooms, telephone, internet and wine club. Direct to consumer sales are at a higher unit price than sales through distributors due to prices received being closer to retail than those prices paid by wholesalers. The Company continues to emphasize growth in direct to consumer sales through the Company’s existing tasting rooms and the opening of new locations, and growth in wine club membership. Additionally, the Company’s 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, the Company will sell grapes or bulk wine, due to them not meeting Company standards or being in excess of production targets, however this is not a significant part of the Company’s activities.
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. For 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 below.
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.
RESULTS OF OPERATIONS
Revenue
Sales 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 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 year.
Cost of Sales
Cost 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 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.
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Gross Profit
Gross 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.
Selling, General and Administrative Expenses
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. In 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
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.
Income Taxes
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.
Net 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.
Net Loss Applicable to Common Shareholders
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.
Liquidity and Capital Resources
At June 30, 2026, the Company had a working capital balance of $23.7 million and a current working capital ratio of 2.92:1.
At 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.
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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%.
The Credit Agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment. As of December 31, 2025, the Company was out of compliance with a debt covenant. The Company has received a waiver from Columbia Bank waiving this violation until the next measurement date of December 31, 2026.
As 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.
As 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. As of December 31, 2025, the Company had a total long-term debt balance of $15,184,395, exclusive of debt issuance costs of $158,837.
The Company believes that cash flow from operations and funds available under the Company’s existing credit facilities and through preferred stock sales will be sufficient to meet the Company’s long-term needs.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, the Company is not required to provide the information required by this item.
ITEM 4: CONTROLS AND PROCEDURES
Disclosure Controls and Procedures – The Company carried out an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, under the supervision and with the participation of the Company’s management, including the Company’s President and the Company’s Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to paragraph (b) of Rule 13a-15 and 15d-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that review, the President and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective, as of the end of the period covered by this report, to ensure that information required to be disclosed by the Company in the reports the Company files or submit under the Exchange Act (1) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting – There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II: OTHER INFORMATION
Item 1 - Legal Proceedings
From time to time, the Company is a party to various judicial and administrative proceedings arising in the ordinary course of business. The Company’s management and legal counsel have reviewed the probable outcome of any proceedings that were pending during the period covered by this report, the costs and expenses reasonably expected to be incurred, the availability and limits of the Company’s insurance coverage, and the Company’s established liabilities. While the outcome of legal proceedings cannot be predicted with certainty, based on the Company’s review, the Company believes that any unrecorded liability that may result as a result of any legal proceedings is not likely to have a material effect on the Company’s liquidity, financial condition or results from operations.
Item 1A - Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which could materially affect our business, results of operations or financial condition.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to materially adversely affect our business, impact our results of operations or financial condition.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Mine Safety Disclosures
Not applicable.
Item 5 – Other Information
During the three months ended June 30, 2026, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “Non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.
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Item 6 – Exhibits
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SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WILLAMETTE VALLEY VINEYARDS, INC. | |||
| Date: August 12, 2026 | By | /s/ James W. Bernau | |
| James W. Bernau | |||
| President | |||
| (Principal Executive Officer) | |||
| Date: August 12, 2026 | By | /s/ John Hazlett | |
| John Hazlett | |||
| Chief Financial Officer | |||
| (Principal Accounting and Financial Officer) | |||
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