UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 20222023

oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

Commission File Number 001-37610

WILLAMETTE VALLEY VINEYARDS, INC.

(Exact name of registrant as specified in charter)

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 Yes o NO

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 Yes o NO

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:

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):

oYES xNo

Securities registered pursuant to Section 12(b) of the Act:

Number of shares of common stock outstanding as of August 11, 2022:14, 2023: 4,964,529

WILLAMETTE VALLEY VINEYARDS, INC.

INDEX TO FORM 10-Q

PART I: FINANCIAL INFORMATION

Item 1 – Financial Statements

WILLAMETTE VALLEY VINEYARDS, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

The accompanying notes are an integral part of this condensed financial statement

WILLAMETTE VALLEY VINEYARDS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

The accompanying notes are an integral part of this condensed financial statement

WILLAMETTE VALLEY VINEYARDS, INC.

CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

The accompanying notes are an integral part of this condensed financial statement

WILLAMETTE VALLEY VINEYARDS, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of this condensed financial statement

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1) BASIS OF PRESENTATION

The accompanying unaudited interim financial statements as of June 30, 20222023 and for the three and six months ended June 30, 20222023 and 20212022 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, 20212022 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, 2021.2022. 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, 2021,2022, as presented in the Company’s Annual Report on Form 10-K.

Operating results for the three and six months ended June 30, 20222023 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2022,2023, or any portion thereof.

The COVID-19 outbreak in Oregon and other parts of the United States, as well as the response to COVID-19 by federal, state and local governments have had a material adverse impact on economic and market conditions in the United States. Although most restrictive measures have been lifted, the COVID-19 pandemic and the government responses to the outbreak presents continued uncertainty and risk with respect to the Company and its performance and financial results.

Exceeding the required Oregon Healthy Authority protocols, a state-of-the-art UV light filtration has been installed in the Company’s HVAC system to reduce harmful viruses in the air at its tasting room locations and staff offices.

We have not yet experienced significant disruptions to our supply chain network; however, any future restrictions imposed by our local or state governments may have a negative impact on our future direct to consumer sales.

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 earnings (loss) per share after preferred stock dividends are computed based on the weighted-average number of common shares outstanding each period.

The following table presents the earnings per share after preferred stock dividends calculation for the periods shown:

Schedule of Earnings Per Share

Subsequent to the filing of the 20212022 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.

Reclassifications - Certain immaterial amounts from prior periods have been reclassified to conform to current years’ presentation.

2) INVENTORIES

The Company’s inventories, by major classification, are summarized as follows, as of the dates shown:

Schedule of InventoriesInventory

3) PROPERTY AND EQUIPMENT, NET

The Company’s property and equipment consists of the following, as of the dates shown:

Schedule of Property and Equipment, Net

Depreciation expense for the three months ended June 30, 2023 and 2022 was $744,048 and $432,826, respectively. Depreciation expense for the six months ended June 30, 20222023 and 20212022 was $816,8061,459,612 and $818,116, respectively. Depreciation expense for the three months ended June 30, 2022 and 2021 was $432,826 and $406,759816,806, respectively.

4) DEBT

Line of Credit Facility – In December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank that allows borrowing up to $2,000,000$2,000,000 against eligible accounts receivable and inventories, as defined in the agreement at July 29, 2021.agreement. The revolving line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal. In July 2021, the Company renewed the credit agreement until July 31, 2023. AtIn November 2022, the Company increased the borrowing line up to $5,000,000. The Company had an outstanding line of credit balance of $1,505,793 at June 30, 20222023, at an interest rate of 7.75%, and an outstanding balance of $166,617 at December 31, 2021, there was no outstanding balance on this revolving2022. In July 2023 the line of credit.credit was renewed for an additional two years.

The line of credit agreement includes various covenants, which among other things; requirethings, requires the Company to maintain a minimum current ratio, debt toamounts of tangible net worth, debt-to-equity, and debt service coverage, as defined. defined, and limits the level of acquisitions of property and equipment. As of June 30,December 31, 2022, the Company was inout of compliance with these financial covenants.a debt covenant. The Company has received a waiver from Umqua Bank waiving this violation until the next measurement date of December 31, 2023.

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, 2022,2023, the Company had a balance of $1,248,993$1,151,633 due on this note. As of December 31, 2021,2022, the Company had a balance of $1,295,541$1,201,038 due on this note.

Long-Term Debt – The Company has two long-termthree long term debt agreements with Farm Credit Services (FCS)AgWest with an aggregate outstanding balance of $5,301,4927,841,963 and $5,535,0977,062,654 as of June 30, 20222023 and December 31, 2021,2022, respectively. The outstanding loans requirefirst loan requires monthly principal and interest payments of $62,067$15,557 for the life of the loans,loan, at an annual fixed interest ratesrate of 4.75% and 5.21%, and with a maturity datesdate of 2028, and 2032.outstanding balance of $901,949 and $972,940 as of June 30, 2023 and December, 31, 2022, respectively. The second loan requires monthly principal and interest payments of $46,510 for the life of the loan, at an annual fixed interest rate of 5.21% with a maturity date of 2032, and outstanding balance of $3,915,014 and $4,089,714 as of June 30, 2023 and December, 31, 2022, respectively. The general purposes of these loans were to make capital improvements to the winery and vineyard facilities.

The third loan agreements contain covenants,bears interest at Northwest Variable base which require the Company to maintain certain financial ratioswas 7.50% at June 31, 2023 and balances. As6.50% at December 31,2022, with interest due annually and principal at maturity on November 1, 2025 with an available line of $5,000,000 and outstanding balance of $3,025,000 and $2,000,000 as of June 30, 2023 and December, 31, 2022, respectively. In July 2023 the Companyavailable line was in compliance with these covenants. In the event of future noncompliance with the Company’s debt covenants, FCS would have the rightincreased to declare the Company in default, and at FCS option without notice or demand, the unpaid principal balance of the loan, plus all accrued unpaid interest thereon and all other amounts due would immediately become due and payable.$10,000,000.

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

Schedule of Long term debt maturity

As of June 30, 2023, the Company had unamortized debt issuance costs of $112,613. As of December 31, 2022, the Company had unamortized debt issuance costs of $125,860. As of December 31, 2021, the Company had unamortized debt issuance costs of $132,484119,237.

The Company believes that cash flow from operations and funds available under the Company’s existing credit facilities will be sufficient to meet the Company’s short-term needs. Due to the uncertainty surrounding the future impact of the COVID-19 pandemic on theThe Company we will continue to evaluate funding mechanisms to support our long-term funding requirements.

5) INTEREST AND TAXES PAID

Income taxes – The Company paid $502,000zero and $40,000502,000 in income taxes for the three months ended June 30, 20222023 and 2021,2022, respectively. The Company received $19,456 and paid $502,000 and $40,000 in income taxes for the six months ended June 30, 20222023 and 2021,2022, respectively.

Interest – The Company paid $83,77692,379 and $95,05283,776 for the three months ended June 30, 20222023 and 2021,2022, respectively, in interest on long-term debt. The Company paid $175,222186,184 and $190,783175,222 for the six months ended June 30, 20212022 and 2020, respectively, in interest on long-term debt.

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 ending June 30, 20222023 and 2021.2022. Sales figures are net of related excise taxes.

Schedule of Revenue by Reporting SegmentsSegment reporting