Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 10, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | WILLAMETTE VALLEY VINEYARDS INC | ||
Entity Central Index Key | 838,875 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 30,560,166 | ||
Entity Common Stock, Shares Outstanding | 4,995,216 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 4,010,664 | $ 519,761 |
Restricted cash (Note 1) | 1,476,232 | 0 |
Accounts receivable, net | 1,684,502 | 1,612,124 |
Inventories (Note 3) | 10,632,462 | 9,910,570 |
Prepaid expenses and other current assets | 131,173 | 150,024 |
Income tax receivable | 204,513 | 323,014 |
Total current assets | 18,139,546 | 12,515,493 |
Investment in Kore Wine Company | 60,000 | 0 |
Vineyard development costs, net | 3,699,947 | 3,368,545 |
Property and equipment, net (Note 4) | 16,729,162 | 15,038,659 |
Debt issuance costs, net | 50,221 | 54,604 |
TOTAL ASSETS | 38,678,876 | 30,977,301 |
CURRENT LIABILITIES | ||
Accounts payable | 386,137 | 742,024 |
Accrued expenses | 604,580 | 551,587 |
Investor deposits for preferred stock (Note1) | 1,476,232 | 0 |
Current portion of note payable | 245,417 | 0 |
Current portion of long-term debt | 349,003 | 329,255 |
Deferred income taxes | 0 | 206,000 |
Current portion of deferred revenue-distribution agreement | 142,857 | 142,857 |
Unearned revenue | 73,200 | 34,435 |
Grapes payable | 816,879 | 698,851 |
Total current liabilities | 4,094,305 | 2,705,009 |
Note payable, net of current portion | 245,417 | 0 |
Long-term debt, net of current portion | 4,824,015 | 5,173,039 |
Deferred rent liability | 140,756 | 163,696 |
Deferred revenue-distribution agreement, net of current portion | 238,083 | 380,943 |
Deferred gain | 121,267 | 153,362 |
Deferred income taxes | 1,848,000 | 1,211,000 |
Total liabilities | $ 11,511,843 | $ 9,787,049 |
COMMITMENTS AND CONTINGENCIES (Note 12) | ||
SHAREHOLDERS' EQUITY | ||
Redeemable preferred stock, no par value, 10,000,000 shares authorized, 1,074,338 shares, liquidation preference $4,458,710, issued and outstanding at December 31, 2015 and 0 shares issued and outstanding at December 31, 2014, respectively. | $ 3,735,437 | $ 0 |
Common stock, no par value, 10,000,000 shares authorized, 5,139,177 and 4,983,206 shares issued at December 31, 2015 and December 31, 2014, respectively, 4,989,216 and 4,869,788 shares outstanding at December 31, 2015 and December 31, 2014, respectively. | 9,674,362 | 9,026,739 |
Retained earnings | 14,432,836 | 12,588,615 |
Less: Common stock held in treasury, at cost, 149,961 and 113,418 shares at December 31, 2015 and December 31, 2014, respectively | (675,602) | (425,102) |
Total shareholder's equity | 27,167,033 | 21,190,252 |
LIABILITIES AND SHAREHOLDERS' EQUITY | $ 38,678,876 | $ 30,977,301 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
SHAREHOLDERS' EQUITY | ||
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 1,074,338 | 0 |
Preferred stock, outstanding shares | 1,074,338 | 0 |
Liquidation preference | $ 4,458,710 | $ 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, authorized shares | 10,000,000 | 10,000,000 |
Common stock, issued shares | 5,139,177 | 4,983,206 |
Common stock, outstanding shares | 4,989,216 | 4,869,788 |
Common stock held in treasury | 149,961 | 113,418 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
SALES, NET | $ 17,938,872 | $ 15,156,159 |
COST OF SALES | 7,092,111 | 6,139,553 |
GROSS PROFIT | 10,846,761 | 9,016,606 |
SELLING GENERAL & ADMINISTRATIVE EXPENSES | 7,578,184 | 6,210,384 |
INCOME FROM OPERATIONS | 3,268,577 | 2,806,222 |
OTHER INCOME (EXPENSE) | ||
Interest income | 2,237 | 1,031 |
Interest expense | (306,805) | (289,020) |
Other income, net | 213,239 | 419,106 |
INCOME BEFORE INCOME TAXES | 3,177,248 | 2,937,339 |
INCOME TAX PROVISION | (1,275,416) | (775,999) |
NET INCOME | 1,901,832 | 2,161,340 |
Preferred stock dividends | (57,611) | 0 |
INCOME APPLICABLE TO COMMON SHAREHOLDERS | $ 1,844,221 | $ 2,161,340 |
Basic income per common share after preferred dividends | $ 0.37 | $ 0.45 |
Diluted income per common share after preferred dividends | $ 0.37 | $ 0.44 |
Weighted average number of basic common shares outstanding | 4,928,712 | 4,849,614 |
Weighted average number of diluted common shares outstanding | 4,963,999 | 4,930,494 |
STATEMENTS OF SHAREHOLDERS' EQU
STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Redeemable Preferred Stock | Common Stock | Treasury Stock | Retained Earnings | Total |
Beginning Balance, shares at Dec. 31, 2013 | 0 | 4,832,559 | |||
Beginning Balance, amount at Dec. 31, 2013 | $ 0 | $ 8,857,085 | $ (425,102) | $ 10,427,275 | $ 18,859,258 |
Stock based compensation expense | $ 21,164 | 21,164 | |||
Common stock issued and options exercised, shares | 37,229 | ||||
Common stock issued and options exercised, amount | $ 148,490 | 148,490 | |||
Net income | $ 2,161,340 | 2,161,340 | |||
Ending Balance, shares at Dec. 31, 2014 | 0 | 4,869,788 | |||
Ending Balance, amount at Dec. 31, 2014 | $ 0 | $ 9,026,739 | $ (425,102) | 12,588,615 | 21,190,252 |
Issuance of preferred stock (net), shares | 1,074,338 | ||||
Issuance of preferred stock (net), amount | $ 3,735,437 | 3,735,437 | |||
Preferred stock dividends declared | (57,611) | (57,611) | |||
Stock based compensation expense | $ 17,685 | 17,685 | |||
Common stock issued and options exercised, shares | 155,971 | ||||
Common stock issued and options exercised, amount | $ 629,938 | 629,938 | |||
Treasury stock purchased, shares | (36,543) | ||||
Treasury stock purchased, amount | (250,500) | (250,500) | |||
Net income | 1,901,832 | 1,901,832 | |||
Ending Balance, shares at Dec. 31, 2015 | 1,074,338 | 4,989,216 | |||
Ending Balance, amount at Dec. 31, 2015 | $ 3,735,437 | $ 9,674,362 | $ (675,602) | $ 14,432,836 | $ 27,167,033 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS | ||
Net income | $ 1,901,832 | $ 2,161,340 |
Adjustments to reconcile net income to net cash from operating activities | ||
Depreciation and amortization | 1,274,243 | 1,074,737 |
Gain on disposition of property & equipment | (1,900) | 0 |
Stock based compensation expense | 17,685 | 21,164 |
Deferred rent liability | (22,940) | (18,794) |
Deferred income taxes | 431,000 | (20,000) |
Deferred revenue-distribution agreement | (142,860) | (142,860) |
Deferred gain | (32,095) | (32,094) |
Change in operating assets and liabilities: | ||
Accounts receivable, net | (72,378) | (382,733) |
Inventories | (721,892) | (77,258) |
Prepaid expenses and other current assets | 18,851 | 27,745 |
Distribution agreement receivable | 0 | 250,000 |
Income taxes receivable | 118,501 | (179,651) |
Unearned revenue | 38,765 | 34,435 |
Grapes payable | 118,028 | 9,823 |
Accounts payable | (280,856) | 185,949 |
Accrued expenses | 52,993 | 94,745 |
Net cash from operating activities | 2,696,977 | 3,006,548 |
CASH FLOWS FROM INVESTING ACTIVITIES OF CONTINUING OPERATIONS | ||
Investment in Kore Wine Company | (60,000) | 0 |
Additions to vineyard development | (915,091) | (1,186,997) |
Additions to property and equipment | (2,451,705) | (2,529,512) |
Proceeds from sale of property and equipment | 1,900 | 0 |
Net cash from investing activities | (3,424,896) | (3,716,509) |
CASH FLOWS FROM FINANCING ACTIVITIES OF CONTINUING OPERATIONS | ||
Proceeds from investor deposits held as restricted cash | (1,476,232) | 0 |
Proceeds from investor deposits held as liability | 1,476,232 | 0 |
Proceeds from installment note for property purchase | 490,834 | 0 |
Proceeds from long-term debt held as restricted cash | 0 | 450,000 |
Payments on long-term debt | (329,276) | (314,451) |
Issuance of preferred stock, net | 3,735,437 | 0 |
Payment of preferred stock dividend | (57,611) | 0 |
Proceeds from stock option exercised | 629,938 | 148,490 |
Repurchase of common stock | (250,500) | 0 |
Net cash from financing activities | 4,218,822 | 284,039 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 3,490,903 | (425,922) |
CASH AND CASH EQUIVALENTS, beginning of year | 519,761 | 945,683 |
CASH AND CASH EQUIVALENTS, end of year | 4,010,664 | 519,761 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Purchases of property and equipment included in accounts payable | $ 16,088 | $ 92,119 |
1. SUMMARY OF OPERATIONS, BASIS
1. SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
NOTE 1. SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | Organization and operations The Company has direct-to-consumer sales and national sales to distributors. These sales channels offer comparable products to customers and utilize similar processes and share resources for production, selling and distribution. Direct-to-consumer sales generate a higher gross profit margin than national sales to distributors due to differentiated pricing between these segments. Direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 38.5% and 34.1% of total revenue for 2015 and 2014, respectively. In state sales through distributors represented approximately 18.2% and 16.6% of total revenue for 2015 and 2014, respectively. Out-of-state sales, including foreign sales, represented approximately 43.3% and 49.2% of total revenue for 2015 and 2014, respectively. Foreign sales represent approximately 1% of total revenue. Basis of presentation Financial instruments and concentrations of risk Cash and cash equivalents are maintained at four financial institutions. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with a financial institution of reputable credit and therefore bear minimal credit risk. In 2015, sales to one distributor represented approximately 18.2% of total Company revenue. In 2014, sales to one distributor represented approximately 16.6% of total Company revenue. Other comprehensive income Cash and cash equivalents Restricted cash - In August 2015, the Company commenced a public offering of our Series A Redeemable Preferred Stock pursuant to a registration statement filed with the Securities and Exchange Commission. Under the terms of this agreement, the Company remits cash received for stock subscriptions to the transfer agent who holds those funds in escrow until released in accordance with the registration statement. As of December 31, 2015, the Company held restricted cash of $224,328 associated with funds for subscription agreements that had not yet been processed through the transfer agent. Additionally, the Company held restricted cash of $1,251,904 in escrow with the transfer agent for a total restricted cash of $1,476,232. The Company established a corresponding liability for this preferred stock funding. Accounts receivable – Inventories – The cost of finished goods is recognized as cost of sales when the wine product is sold. Inventories are stated at the lower of first-in, first-out (“FIFO”) cost or market by variety. In accordance with general practices in the wine industry, wine inventories are generally included in current assets in the accompanying balance sheets, although a portion of such inventories may be aged for more than one year (Note 3). Vineyard development costs Amortization of vineyard development costs are included in capitalized crop costs that in turn are included in inventory costs and ultimately become a component of cost of goods sold. For the years ending December 31, 2015 and 2014, approximately $75,669 and $75,670, respectively, was amortized into inventory costs. Property and equipment Expenditures for repairs and maintenance are charged to operating expense as incurred. Expenditures for additions and betterments are capitalized. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in operations. Review of long-lived assets for impairment - Recoverability of assets is measured by a comparison of the carrying amount of an asset group to future net undiscounted cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company groups its long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (or asset group). This would typically be at the winery level. The Company did not recognize any impairment charges associated with long-lived assets during the years ended December 31, 2015 and 2014. Debt issuance costs Distribution agreement receivable Income taxes – The Company had no unrecognized tax benefits as of December 31, 2015 or 2014. The Company recognizes interest assessed by taxing authorities as a component of tax expense. The Company recognizes any penalties assessed by taxing authorities as a component of tax expense. Interest and penalties for the years ended December 31, 2015 and 2014 were not material. The Company files U.S. federal income tax returns with the Internal Revenue Service (“IRS”) as well as income tax returns in Oregon, California and Connecticut. The Company may be subject to examination by the IRS for tax years 2012 through 2015. Additionally, the Company may be subject to examinations by state taxing jurisdictions for tax years 2011 through 2015. The Company is not aware of any current examinations by the IRS or the state taxing authorities. Deferred rent liability Revenue recognition – The Company has price incentive programs with its distributors to encourage product placement and depletions. When recording a sale to the customer, an incentive program liability is recorded to accrued liabilities and sales are reported net of incentive program expenses. Incentive program payments are made when completed incentive program payment requests are received from the customers. Incentive payments to a customer reduce the incentive program accrued liability. For the years ended December 31, 2015 and 2014, the Company recorded incentive program expenses of $449,930 and $325,509, respectively, as a reduction in sales on the income statement. As of December 31, 2015 and 2014, the Company has recorded an incentive program liability in the amount of $42,456 and $48,000, respectively, which is included in accrued expenses on the balance sheet. Cost of goods sold Administrative support, purchasing, receiving and most other fixed overhead costs are expensed as selling, general and administrative expenses without regard to inventory units. Warehouse and winery production and facilities costs, which make up approximately 12% of total costs, are allocated to inventory units on a per gallon basis during the production of wine, prior to bottling the final product. No further costs are allocated to inventory units after bottling. Selling, general and administrative expenses The Company provides an allowance to distributors for providing sample of products to potential customers. For the years ended December 31, 2015 and 2014, these costs, which are included in selling, general and administrative expenses, totaled approximately $153,299 and $129,918, respectively. Shipping and handling costs Excise taxes – Stock based compensation – Basic and diluted income per common share after preferred dividends – Options to purchase 67,000 shares of common stock were outstanding at December 31, 2015 and diluted weighted-average shares outstanding at December 31, 2015 include the effect of 35,287 stock options. Options to purchase 222,971 shares of common stock were outstanding at December 31, 2014 and diluted weighted-average shares outstanding at December 31, 2014 include the effect of 80,800 stock options. There were no potentially dilutive shares from stock options included in the computation of dilutive income per share for 2015 and 2014 as their impact would have been anti-dilutive. Year ended December 31, 2015 2014 Numerator Net income $ 1,901,832 $ 2,161,340 Preferred stock dividends (57,611 ) - Net income applicable to common shares $ 1,844,221 $ 2,161,340 Denominator Basic weighted average common shares 4,928,712 4,849,614 Dilutive stock options 35,287 80,880 4,963,999 4,930,494 Basic income per common share after preferred dividends $ 0.37 $ 0.45 Diluted income per common share after preferred dividends $ 0.37 $ 0.44 Statement of cash flows – 2015 2014 Income tax paid $ 719,550 $ 975,650 Interest paid (net of capitalized interest) $ 308,437 $ 282,490 Supplemental schedule of noncash investing and financing activities: Purchases of property, plant, and equipment included in accounts payable $ 16,088 $ 92,119 Recently issued accounting standards Revenue from Contracts with Customers In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes |
2. ACCOUNTS RECEIVABLE
2. ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2015 | |
Accounts Receivable, Net [Abstract] | |
NOTE 2. ACCOUNTS RECEIVABLE | The CompanyÂ’s accounts receivable balance is net of an allowance for doubtful accounts of $11,944 and $11,944 at December 31, 2015 and 2014, respectively. Changes in the allowance for doubtful accounts are as follows: Year ended December 31, 2015 2014 Balance at Beginning of Period $ 11,944 $ 14,740 Charged to costs and expenses - - Charged to other accounts - - Write-offs, net of recoveries - (2,796 ) Balance at End of Period $ 11,944 $ 11,944 |
3. INVENTORIES
3. INVENTORIES | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
NOTE 3. INVENTORIES | December 31, December 31, 2015 2014 Winemaking and packaging materials $ 690,292 $ 629,841 Work-in-process (costs relating to unprocessed and/or unbottled wine products) 6,058,701 4,796,223 Finished goods (bottled wine and related products) 3,883,469 4,484,506 Current inventories $ 10,632,462 $ 9,910,570 |
4. PROPERTY AND EQUIPMENT
4. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
NOTE 4. PROPERTY AND EQUIPMENT | December 31, December 31, 2015 2014 Construction in progress $ 482,284 $ 69,588 Land, improvements and other buildings 5,089,472 3,622,434 Winery buildings and hospitality center 13,756,320 13,566,863 Equipment 9,055,987 8,256,983 28,384,063 25,515,868 Less accumulated depreciation (11,654,901 ) (10,477,209 ) $ 16,729,162 $ 15,038,659 Depreciation expense was $1,194,191 and $994,685 during the years ended December 31, 2015 and 2014, respectively. Capitalized interest was $0 and $40,039 for the years ended December 31, 2015 and 2014, respectively. |
5. LINE OF CREDIT FACILITY
5. LINE OF CREDIT FACILITY | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
NOTE 5. LINE OF CREDIT FACILITY | In December of 2005 the Company entered into a revolving line of credit agreement with Umpqua Bank that allows borrowings of up to $2,000,000 against eligible accounts receivables and inventories as defined in the agreement. The revolving line bears interest at prime, is payable monthly, and is subject to biannual renewal. The Company renewed the credit agreement in June of 2014 for a period of 24 months. The interest rate was 3.5% at December 31, 2015 and 3.25% at December 31, 2014. At December 31, 2015 and 2014 there were no borrowings on this revolving line of credit. The line of 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, 2015, the Company was in compliance with these financial covenants. |
6. NOTE PAYABLE
6. NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
6. NOTE PAYABLE | In April of 2015 the Company purchased approximately 42 acres of farmland in the Walla Walla AVA under terms that included paying one third of the price upon closing and one third in each of the two subsequent years. As of December 31, 2015 the Company had a balance due of $490,834 with $245,417 due on April 1, 2016 and $245,417 due on April 1, 2017. No interest accrues under the terms of this note. |
7. LONG TERM DEBT
7. LONG TERM DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
NOTE 7. LONG TERM DEBT | Long-term debt consists of: December 31, 2015 2014 Northwest Farm Credit Services Loan #1 $ 1,162,073 $ 1,238,256 Northwest Farm Credit Services Loan #2 1,070,991 1,154,945 Northwest Farm Credit Services Loan #3 1,131,912 1,202,799 Northwest Farm Credit Services Loan #4 1,808,042 1,906,294 5,173,018 5,502,294 Current portion (349,003 ) (329,255 ) $ 4,824,015 $ 5,173,039 The Company has four agreements with Northwest Farm Credit Services (“FCS”). Loan #1 requires monthly payments of $12,266, bears interest at a rate of 5.90%, is collateralized by real estate and equipment, and matures in 2026. Loan #2 requires monthly payments of $13,232, bears interest at a rate of 6.70%, is collateralized by real estate and equipment, and matures in 2024. Loan #3 requires monthly payments of $12,004, bears interest at a rate of 6.25%, is collateralized by real estate and equipment, and matures in 2026. Loan #4 requires monthly payments of $15,556, bears interest at a rate of 4.75%, is collateralized by real estate and equipment, and matures in 2028. The loan agreements contain covenants, which require the Company to maintain certain financial ratios and balances. At December 31, 2015, the Company was in compliance with these covenants. In the event of future noncompliance with the Company’s debt covenants, FCS would have the right 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 shall immediately become due and payable. Future minimum principal payments of long-term debt mature as follows for the years ending December 31: 2016 $ 349,003 2017 369,956 2018 392,190 2019 415,783 2020 440,821 Thereafter 3,205,265 $ 5,173,018 The weighted-average interest rates on the aforementioned borrowings for the fiscal years ended December 31, 2015 and 2014 was 5.74% and 5.75% respectively. |
8. SHAREHOLDERS' EQUITY
8. SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
NOTE 8. SHAREHOLDERS' EQUITY | The Company is authorized to issue 10,000,000 shares of its common stock. Each share of common stock is entitled to one vote. At its discretion, the Board of Directors may declare dividends on shares of common stock so long as the Company has paid or set aside funds for all cumulative dividends on its preferred stock. The Board does not anticipate paying dividends on its common stock in the foreseeable future. The Company is authorized to issue 10,000,000 shares of preferred stock. Each share of the CompanyÂ’s currently issued preferred stock is non-voting. The CompanyÂ’s Series A Redeemable Preferred Stock includes an annual dividend of $0.22 per share and is payable annually. Additionally, the Series A Redeemable Preferred Stock contains a liquidation preference over the CompanyÂ’s common stock and is subject to optional redemption after June 1, 2021 at the sole discretion of the CompanyÂ’s Board of Directors. The liquidation preference is calculated at the original issue price of $4.15 per share plus all accrued but unpaid dividends. The optional redemption, if implemented, would be at the original issue price of $4.15 per share plus all accrued but unpaid dividends plus a redemption premium of 3% of the original issue price. The Company is current on its dividend obligations. |
9. STOCK INCENTIVE PLAN
9. STOCK INCENTIVE PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
NOTE 9. STOCK INCENTIVE PLAN | The Company has a stock incentive plan, originally created in 1992, most recently amended in 2001. No additional grants may be made under the plan. All stock options have an exercise price that is equal to the fair market value of the CompanyÂ’s stock on the date the options were granted. Administration of the plan, including determination of the number, term, and type of options granted, resides with the Board of Directors or a duly authorized committee of the Board of Directors. Options were generally granted based on employee performance with vesting periods ranging from date of grant to seven years. At the date of the grant, the maximum term before expiration is ten years. The following table presents information on stock options outstanding for the periods shown: 2015 2014 Weighted Average Exercise Weighted Average Exercise Shares Price Shares Price Outstanding at beginning of period 222,971 $ 3.79 260,200 $ 3.82 Granted - - - - Exercised (155,971 ) 4.04 (37,229 ) 3.99 Forfeited - - - - Outstanding at end of period 67,000 $ 3.22 222,971 $ 3.79 The following table presents information on stock options outstanding for the periods shown: 2015 2014 Intrinsic value of options exercised in the period $ 427,363 $ 64,383 Stock options fully vested and expected to vest 67,000 222,971 Weighted average exercise price $ 3.22 $ 3.79 Aggregate intrinsic value $ 258,678 $ 447,611 Weighted average contractual term of options 1.37 years 1.64 years Stock options vested and currently exercisable 60,000 188,971 Weighted average exercise price $ 3.23 $ 3.90 Aggregate intrinsic value $ 230,748 $ 358,561 Weighted average contractual term of options 0.89 1.28 years Weighted-average options outstanding and exercisable at December 31, 2015 are as follows: Options Outstanding Options Exercisable Weighted Number Average Weighted Number Weighted Outstanding at Remaining Average Exercisable at Average Exercise December 31, Contractual Exercise December 31, Exercise Price 2015 Life Price 2015 Price 3.09 11,000 5.56 3.09 4,000 3.09 3.24 56,000 0.55 3.24 56,000 3.24 $ 3.09 - $ 3.24 67,000 1.37 $ 3.22 60,000 $ 3.23 All share-based compensation is measured at the grant date based on the fair value of the award, and is recognized as an expense in earnings over the requisite service period. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes based stock option valuation model. This model uses the assumptions listed in the table below. Expected volatilities are based on implied volatilities from the CompanyÂ’s stock, historical volatility of the CompanyÂ’s stock, and other factors. Expected dividends are based on the CompanyÂ’s plan not to pay dividends for the foreseeable future. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. There were no stock options granted during the years ended December 31, 2015 and 2014. Stock compensation expense was $17,685 and $21,164 for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015, unrecognized compensation expense related to stock options was $1,483. |
10. INCOME TAXES
10. INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 10. INCOME TAXES | The provision (benefit) for income taxes consists of: Year Ended December 31, 2015 2014 Current tax expense: Federal $ 641,822 $ 663,096 State 202,592 132,903 844,414 795,999 Deferred tax expense (benefit): Federal 376,226 (18,087 ) State 54,774 (1,913 ) 431,000 (20,000 ) Total $ 1,275,414 $ 775,999 The effective income tax rate differs from the federal statutory rate as follows: Year Ended December 31, 2015 2014 Federal statutory rate 34.00 % 34.00 % State taxes, net of federal benefit 4.95 % 3.60 % Permanent differences -1.13 % -1.70 % Tax credits -0.23 % -5.74 % Prior year adjustments 1.35 % -2.42 % Changes in tax rates and other 1.20 % -1.32 % 40.14 % 26.42 % Permanent differences for the periods consist primarily of tax deductions for domestic production activities and federal and state tax credits, as offset in the current year by an increase in the percentage of the Company's income reported in a higher state tax rate jurisdiction. Net deferred tax assets and (liabilities) at December 31 consist of: 2015 2014 Accounts receivable $ - $ 4,000 Deferred gain on sale-leaseback - 58,000 Stock compensation - 21,000 Other - 148,000 Net current deferred tax assets $ - $ 231,000 Deferred gain on sale-leaseback 47,000 - Other 27,000 - Prepaids (49,000 ) (54,000 ) Depreciation (1,463,000 ) (1,273,000 ) Inventory (410,000 ) (321,000 ) Net noncurrent deferred tax liability (1,848,000 ) (1,648,000 ) Net deferred tax liability $ (1,848,000 ) $ (1,417,000 ) |
11. RELATED PARTY TRANSACTIONS
11. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 11. RELATED PARTY TRANSACTIONS | The Company provides living accommodations in a residence on the CompanyÂ’s premises, at its convenience, for the CompanyÂ’s President. The President provides security and lock-up services and is required to live on premises as a condition of his employment. Over the years the Company has recorded annual expenses less than $12,000, exclusive of depreciation, related to the housing provided for its president. In February 2007, the Company entered into a lease agreement for 59 acres of vineyard land at Elton Vineyards. This lease is for a 10-year term with four five-year renewals at the CompanyÂ’s option and a first right of refusal in the event of the vineyardÂ’s sale. For 2015, the annual costs of this lease, including utility reimbursements, were $123,414. For subsequent years there is an escalation provision tied to the CPI not to exceed 2% per annum. Betty M. OÂ’Brien, a Director of the Company, is a principal owner of Elton Vineyards along with her husband Dick OÂ’Brien. |
12. COMMITMENTS AND CONTINGENCI
12. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 12. COMMITMENTS AND CONTINGENCIES | Litigation Operating leases In December 2004, under a sale-leaseback agreement, the Company sold approximately 75 acres of the Tualatin Vineyards property with a net book value of approximately $551,000 for approximately $727,000 cash and entered into a 14-year operating lease agreement for the vineyard portion of the property. Approximately $99,000 of the total gain of $176,000 has been deferred and is being amortized over the life of the lease. This property is referred to as the Meadowview Vineyard, and includes approximately 45 acres of producing vineyards. The amortization of the deferred gain totals approximately $25,000 per year for the 1999 sale-leaseback agreement and $7,000 for the 2004 sale-leaseback agreement, and is recorded as an offset to the related lease expense in selling, general and administrative expenses. In February 2007, the Company entered into a lease agreement for 59 acres of vineyard land at Elton Vineyards. This lease is for a 10-year term with four five-year renewals at the Company’s option and a first right of refusal in the event of the vineyard’s sale. For 2015, the annual costs of this lease were $123,414. For subsequent years there is an escalation provision tied to the CPI not to exceed 2% per annum. Betty M. O’Brien, a Director of the Company, is a principal owner of Elton Vineyards. The terms of the lease currently call for a monthly payment of $10,102, plus utility costs not to exceed $1,500 per year, with the annual adjustment ending January 2017 unless renewed. In July 2008, the Company entered into a 34-year lease agreement with a property owner in the Eola Hills for approximately 109 acres adjacent to the existing Elton Vineyards site. These 109 acres is being developed into vineyards. Terms of this agreement contain rent escalation that rises as the vineyard is developed. The current terms call for monthly payments of $984. In September 2014, the Company entered into a two year lease, with an option to renew for an additional two years, for its McMinnville tasting room. The monthly payment for this lease is $3,000 with potential negotiated escalations not to exceed 5%. Grape Purchases As of December 31, 2015, future minimum lease payments are as follows for the years ending December 31: 2016 $ 393,914 2017 377,626 2018 379,867 2019 342,319 2020 162,771 Thereafter 798,494 Total $ 2,454,991 The Company is also committed to lease payments for various pieces of office equipment. Total rental expense for these operating leases amounted to $8,353 and $8,500 in 2015 and 2014, respectively. In addition, payments for the leased vineyards have been included in inventory or vineyard developments costs and aggregate approximately $363,566 and $346,750 for the years ended December 31, 2015 and 2014, respectively. Vineyard development – |
13. EMPLOYEE BENEFIT PLAN
13. EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
NOTE 13. EMPLOYEE BENEFIT PLAN | In February 2006, the Company instituted a 401(k) profit sharing plan covering all eligible employees. Employees who participate may elect to make salary deferral contributions to the Plan up to 100% of the employeesÂ’ eligible payroll subject to annual Internal Revenue Code maximum limitations. The Company may make a discretionary contribution to the entire qualified employee pool, in accordance with the Plan. For the years ended December 31, 2015 and 2014 there were $71,609 and $64,664 contributions made by the Company to the 401(k) plan, respectively. |
14. SALE OF PREFERRED STOCK
14. SALE OF PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
14. SALE OF PREFERRED STOCK | In August 2015, the Company commenced a public offering of Series A Redeemable Preferred Stock pursuant to a registration statement filed with the Securities and Exchange Commission. The preferred stock under this issue is non-voting and ranks senior in rights and preferences to the CompanyÂ’s common stock. Shareholders of this issue are entitled to receive dividends, when and as declared by the CompanyÂ’s Board of Directors, at a rate of $0.22 per share. Dividends accrued but not paid will be added to the liquidation preference of the stock until the dividend is declared and paid. The Company registered this transaction with the securities authorities of the States of Oregon and Washington and, in November 2015, obtained listing status on the NASDAQ stock exchange under the trading symbol WVVIP. The initial issue has 1,445,783 shares registered with an aggregate initial offering price not to exceed $6,000,000. Under the terms of the offering, proceeds from the sale of preferred stock for the three months ended December 31, 2015 were held in escrow until the stock was subsequently issued effective January 1, 2016. At December 31, 2015 $1,251,904 in stock sale proceeds were held in escrow and subsequently released to the Company in January 2016. As of December 31, 2015 the Company had on deposit $224,328 in investor stock subscription payments that had not completed processing. Total funds, held by the Company as restricted cash, were $1,476,232 associated with this offering. |
15. SEGMENT REPORTING
15. SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
NOTE 15. 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 includes retail sales in the tasting room and remote sites, Wine Club sales, on-site events, kitchen and catering sales and other sales made directly to the consumer without the use of an intermediary. Distributor Sales include all sales through a third party where prices are given at a wholesale rate. The two segments reflect how the CompanyÂ’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 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 margin, directly attributable selling expenses, and contribution margin of the segments for the twelve month periods ending December 31, 2015 and 2014. Sales figures are net of related excise taxes. Twelve Months Ended December 31, Direct Sales Distributor Sales Total 2015 2014 2015 2014 2015 2014 Sales, net $ 6,948,210 $ 5,197,121 $ 10,990,662 $ 9,959,038 $ 17,938,872 $ 15,156,159 Cost of Sales 2,027,451 1,307,687 5,064,660 4,831,866 7,092,111 6,139,553 Gross Margin 4,920,759 3,889,434 5,926,002 5,127,172 10,846,761 9,016,606 Selling Expenses 3,070,473 2,435,865 1,545,944 1,274,313 4,616,417 3,710,178 Contribution Margin $ 1,850,286 $ 1,453,569 $ 4,380,058 $ 3,852,859 $ 6,230,344 $ 5,306,428 Percent of Sales 38.7% 34.3% 61.3% 65.7% 100.0% 100.0% Direct sales include $777,538 and $247,975 of bulk wine sales in the years ended December 31, 2015 and 2014, respectively. Direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 38.5% and 34.2% of total revenue for 2015 and 2014, respectively. In state sales through distributors represented approximately 18.2% and 16.6% of total revenue for 2015 and 2014, respectively. Out-of-state sales, including foreign sales, represented approximately 43.3% and 49.2% of total revenue for 2015 and 2014, respectively. Foreign sales represent approximately 1% of total revenue. |
16. QUARTERLY FINANCIAL INFORMA
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
NOTE 16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | Following is a summary of unaudited quarterly financial information for fiscal 2015 and 2014: Condensed Consolidated Statements of Income Year ended December 31, 2015 Q1 Q2 Q3 Q4 (in thousands, except per share data) Revenue $ 3,912 $ 4,721 $ 4,245 $ 5,061 Gross profit 2,304 2,760 2,636 3,147 Income from operations 499 845 747 1,178 Net income 314 510 454 624 Basic net income per share $ 0.06 $ 0.10 $ 0.09 $ 0.14 Diluted net income per share $ 0.06 $ 0.10 $ 0.09 $ 0.13 Shares used in calculation of net income per share: Basic 4,884,503 4,908,605 4,956,163 4,965,050 Diluted 4,957,041 4,983,207 5,007,883 5,002,746 Condensed Consolidated Statements of Income Year ended December 31, 2014 Q1 Q2 Q3 Q4 (in thousands, except per share data) Revenue $ 2,972 $ 3,693 $ 4,046 $ 4,445 Gross profit 1,722 2,241 2,500 2,554 Income from operations 249 760 973 824 Net income 175 547 574 865 Basic net income per share $ 0.04 $ 0.11 $ 0.12 $ 0.18 Diluted net income per share $ 0.04 $ 0.11 $ 0.12 $ 0.18 Shares used in calculation of net income per share: Basic 4,839,149 4,847,188 4,847,765 4,863,468 Diluted 4,939,412 4,933,550 4,930,860 4,939,777 |
17. SUBSEQUENT EVENTS
17. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
NOTE 17. SUBSEQUENT EVENTS | Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. The Company recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing the financial statements. The CompanyÂ’s financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are issued. In December 2015, the Company filed a Universal Shelf Offering with the SEC. This offering provides up to $18,000,000 in a combination of debt and equity securities to be determined in subsequent prospectus supplements. Additionally, in February 2016, the Company conducted a proxy vote of preferred shareholders asking to increase the number of authorized Series A Preferred Stock shares and to delegate authority to the Board of Directors to approve future increases in the number of shares. Those actions were approved and vote results were published in an 8-K on March 1, 2016. If and when the Company decides to issue additional shares of Series A Preferred Stock the Company intends to issue a prospectus supplement to register with the SEC the issuance of such shares. In March 2016 the Company switched common stock transfer agent functions from Broadridge Financial Solutions to OTR, Inc. in Portland, Oregon. OTR, Inc. has been the transfer agent for the CompanyÂ’s Series A Redeemable Preferred Stock and now provide this function for all the CompanyÂ’s equity securities. |
1. SUMMARY OF OPERATIONS, BAS24
1. SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Operations Basis Of Presentation And Significant Accounting Policies Policies | |
Organization and operations | Willamette Valley Vineyards, Inc. (the “Company”) owns and operates vineyards and a winery located in the state of Oregon, and produces and distributes premium, super premium, and ultra-premium wines, primarily Pinot Noir, Pinot Gris, Chardonnay, and Riesling. The Company has direct-to-consumer sales and national sales to distributors. These sales channels offer comparable products to customers and utilize similar processes and share resources for production, selling and distribution. Direct-to-consumer sales generate a higher gross profit margin than national sales to distributors due to differentiated pricing between these segments. Direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 38.5% and 34.1% of total revenue for 2015 and 2014, respectively. In state sales through distributors represented approximately 18.2% and 16.6% of total revenue for 2015 and 2014, respectively. Out-of-state sales, including foreign sales, represented approximately 43.3% and 49.2% of total revenue for 2015 and 2014, respectively. Foreign sales represent approximately 1% of total revenue. |
Basis of presentation | The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances at the time. Actual results could differ from those estimates under different assumptions or conditions. |
Financial instruments and concentrations of risk | The Company has the following financial instruments: cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, grapes payable and long-term debt. Cash and cash equivalents are maintained at four financial institutions. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with a financial institution of reputable credit and therefore bear minimal credit risk. In 2015, sales to one distributor represented approximately 18.2% of total Company revenue. In 2014, sales to one distributor represented approximately 16.6% of total Company revenue. |
Other comprehensive income | The nature of the CompanyÂ’s business and related transactions do not give rise to other comprehensive income. |
Cash and cash equivalents | Cash and cash equivalents include money market funds. |
Restricted cash | In August 2015, the Company commenced a public offering of our Series A Redeemable Preferred Stock pursuant to a registration statement filed with the Securities and Exchange Commission. Under the terms of this agreement, the Company remits cash received for stock subscriptions to the transfer agent who holds those funds in escrow until released in accordance with the registration statement. As of December 31, 2015, the Company held restricted cash of $224,328 associated with funds for subscription agreements that had not yet been processed through the transfer agent. Additionally, the Company held restricted cash of $1,251,904 in escrow with the transfer agent for a total restricted cash of $1,476,232. The Company established a corresponding liability for this preferred stock funding. |
Accounts receivable | The Company performs ongoing credit evaluations of its customers and does not require collateral. A reserve is maintained for potential credit losses. The allowance for doubtful accounts is based on an assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customerÂ’s ability to pay. The Company has credit risk associated with uncollateralized trade accounts receivable from all operations totaling $1,684,502 and $1,612,124 as of December 31, 2015 and 2014 exclusive of the allowance for doubtful accounts. The allowance for doubtful accounts is further discussed in Note 2. |
Inventories | For Company produced wines, after a portion of the vineyard becomes commercially productive, the annual crop and production costs relating to such portion are recognized as work-in-process inventories. Such costs are accumulated with related direct and indirect harvest costs, wine processing and production costs, and are transferred to finished goods inventories when the wine is produced, bottled, and ready for sale. The cost of finished goods is recognized as cost of sales when the wine product is sold. Inventories are stated at the lower of first-in, first-out (“FIFO”) cost or market by variety. In accordance with general practices in the wine industry, wine inventories are generally included in current assets in the accompanying balance sheets, although a portion of such inventories may be aged for more than one year (Note 3). |
Vineyard development costs | Vineyard development costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. The costs are capitalized until the vineyard becomes commercially productive, at which time annual amortization is recognized using the straight-line method over the estimated economic useful life of the vineyard, which is estimated to be 30 years. Accumulated amortization of vineyard development costs aggregated $1,109,406 and $1,033,737 at December 31, 2015 and 2014, respectively. Amortization of vineyard development costs are included in capitalized crop costs that in turn are included in inventory costs and ultimately become a component of cost of goods sold. For the years ending December 31, 2015 and 2014, approximately $75,669 and $75,670, respectively, was amortized into inventory costs. |
Property and equipment | Property and equipment are stated at cost and are depreciated on the straight-line basis over their estimated useful lives. Land improvements are depreciated over 15 years. Winery buildings are depreciated over 30 years. Equipment is depreciated over 3 to 10 years, depending on the classification of the asset. Depreciation is discussed further in Note 4. Expenditures for repairs and maintenance are charged to operating expense as incurred. Expenditures for additions and betterments are capitalized. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in operations. |
Review of long-lived assets for impairment | The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Long-lived assets consist primarily of property and equipment. Circumstances that might cause the Company to evaluate its long-lived assets for impairment could include a significant decline in the prices the Company or the industry can charge for its products, which could be caused by general economic or other factors, changes in laws or regulations that make it difficult or more costly for the Company to distribute its products to its markets at prices which generate adequate returns, natural disasters, significant decrease in demand for the CompanyÂ’s products or significant increase in the costs to manufacture the CompanyÂ’s products. Recoverability of assets is measured by a comparison of the carrying amount of an asset group to future net undiscounted cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company groups its long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (or asset group). This would typically be at the winery level. The Company did not recognize any impairment charges associated with long-lived assets during the years ended December 31, 2015 and 2014. |
Debt issuance costs | Debt issuance costs are amortized on the straight-line basis, which approximates the effective interest method, over the life of the debt. For the years ended December 31, 2015 and 2014, amortization of debt issuance costs was approximately $4,383 and $4,383 respectively. Debt issuance amortization costs are scheduled at $4,383 for each of the next four years, and $32,689 thereafter. |
Distribution agreement receivable | Effective September 1, 2011, the Company entered into an agreement with YoungÂ’s Market Company for distribution of Company-produced wines in Oregon and Washington. The terms of this contract include exclusive rights to distribute Willamette Valley VineyardÂ’s wines in Oregon and Washington for seven years. In an effort to facilitate the transition, with as little disruption as possible, YoungÂ’s Market Company agreed to compensate Willamette Valley Vineyards for ongoing Oregon sales and branding efforts. As a result, the Company was due to receive $250,000 per year starting on September 2011 for each of the next four years for a total of $1,000,000. As of December 31, 2015 and 2014, the Company has no distribution agreement receivable with the final payment having been made in 2014. The total amount of $1,000,000 received by the Company related to this agreement is being recognized as revenue on a straight line basis over the seven year life of the agreement. For the years ended December 31, 2015 and 2014, the Company has recognized revenue related to this agreement in the amount of $142,860 and $142,860, respectively, recorded to other income. |
Income taxes | Income taxes are recognized using enacted tax rates, and are composed of taxes on financial accounting income that is adjusted for requirements of current tax law, and deferred taxes. Deferred taxes are estimated using the asset and liability approach whereby deferred income taxes are calculated for the expected future tax consequences of temporary differences between the book basis and tax basis of the Company’s assets and liabilities. The Company had no unrecognized tax benefits as of December 31, 2015 or 2014. The Company recognizes interest assessed by taxing authorities as a component of tax expense. The Company recognizes any penalties assessed by taxing authorities as a component of tax expense. Interest and penalties for the years ended December 31, 2015 and 2014 were not material. The Company files U.S. federal income tax returns with the Internal Revenue Service (“IRS”) as well as income tax returns in Oregon, California and Connecticut. The Company may be subject to examination by the IRS for tax years 2012 through 2015. Additionally, the Company may be subject to examinations by state taxing jurisdictions for tax years 2011 through 2015. The Company is not aware of any current examinations by the IRS or the state taxing authorities. |
Deferred rent liability | The Company leases land under a sale-leaseback agreement. The long-term operating lease has minimum lease payments that escalate every year. For accounting purposes, rent expense is recognized on the straight-line basis by dividing the total minimum rents due during the lease by the number of months in the lease. In the early years of a lease with escalation clauses, this treatment results in rental expense recognition in excess of rents paid, and the creation of a long-term deferred rent liability. As the lease matures, the deferred rent liability will decrease and the rental expense recognized will be less than the rents actually paid. For the years ended December 31, 2015 and 2014, rent costs paid in excess of amounts recognized totaled $22,940 and $18,794, respectively. |
Revenue recognition | The Company recognizes revenue when the product is shipped and title passes to the customer. The Company’s standard terms are ‘FOB’ shipping point, with no customer acceptance provisions. The cost of price promotions and rebates are treated as reductions of revenue. No products are sold on consignment. Credit sales are recorded as trade accounts receivable and no collateral is required. Revenue from items sold through the Company’s retail locations is recognized at the time of sale. Net revenue reported herein is shown net of sales allowances and excise taxes. The Company has price incentive programs with its distributors to encourage product placement and depletions. When recording a sale to the customer, an incentive program liability is recorded to accrued liabilities and sales are reported net of incentive program expenses. Incentive program payments are made when completed incentive program payment requests are received from the customers. Incentive payments to a customer reduce the incentive program accrued liability. For the years ended December 31, 2015 and 2014, the Company recorded incentive program expenses of $449,930 and $325,509, respectively, as a reduction in sales on the income statement. As of December 31, 2015 and 2014, the Company has recorded an incentive program liability in the amount of $42,456 and $48,000, respectively, which is included in accrued expenses on the balance sheet. |
Cost of goods sold | Costs of goods sold include costs associated with grape growing, external grape costs, packaging materials, winemaking and production costs, vineyard and production administrative support and overhead costs, purchasing and receiving costs and warehousing costs. Administrative support, purchasing, receiving and most other fixed overhead costs are expensed as selling, general and administrative expenses without regard to inventory units. Warehouse and winery production and facilities costs, which make up approximately 12% of total costs, are allocated to inventory units on a per gallon basis during the production of wine, prior to bottling the final product. No further costs are allocated to inventory units after bottling. |
Selling, general and administrative expenses | Selling, general and administrative expenses consist primarily of non-manufacturing administrative and overhead costs, advertising and other marketing promotions. Advertising costs are expensed as incurred or the first time the advertising takes place. For the years ended December 31, 2015 and 2014, advertising costs incurred were approximately $152,867 and $99,915 respectively. The Company provides an allowance to distributors for providing sample of products to potential customers. For the years ended December 31, 2015 and 2014, these costs, which are included in selling, general and administrative expenses, totaled approximately $153,299 and $129,918, respectively. |
Shipping and handling costs | Amounts paid by customers to the Company for shipping and handling costs are included in the net revenue. Costs incurred for shipping and handling charges are included in selling, general and administrative expense. For the years ended December 31, 2015 and 2014, such costs totaled approximately $421,617 and $384,836, respectively. The CompanyÂ’s gross margins may not be comparable to other companies in the same industry as other companies may include shipping and handling costs as a cost of goods sold. |
Excise taxes | The Company pays alcohol excise taxes based on product sales to both the Oregon Liquor Control Commission and to the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau. The Company is liable for the taxes upon the removal of product from the CompanyÂ’s warehouse on a per gallon basis. The federal tax rate is affected by a small winery tax credit provision which declines based upon the number of gallons of wine production in a year rather than the quantity sold. The Company also pays taxes on the grape harvest on a per ton basis to the Oregon Liquor Control Commission for the Oregon Wine Advisory. For the years ended December 31, 2015 and 2014, excise taxes incurred were approximately $420,729 and $345,726 respectively. |
Stock based compensation | The Company expenses stock options on a straight line basis over the optionsÂ’ related vesting term. For the years ended December 31, 2015 and 2014, the Company recognized pretax compensation expense related to stock options of $17,685 and $21,164, respectively. |
Basic and diluted net income per share | Basic income per share is computed based on the weighted-average number of common shares outstanding each year. Diluted income per share is computed using the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding during the year. Potentially dilutive shares from stock options and other common stock equivalents are excluded from the computation when their effect is anti-dilutive. Options to purchase 67,000 shares of common stock were outstanding at December 31, 2015 and diluted weighted-average shares outstanding at December 31, 2015 include the effect of 35,287 stock options. Options to purchase 222,971 shares of common stock were outstanding at December 31, 2014 and diluted weighted-average shares outstanding at December 31, 2014 include the effect of 80,800 stock options. There were no potentially dilutive shares from stock options included in the computation of dilutive income per share for 2015 and 2014 as their impact would have been anti-dilutive. Year ended December 31, 2015 2014 Numerator Net income $ 1,901,832 $ 2,161,340 Preferred stock dividends (57,611 ) - Net income applicable to common shares $ 1,844,221 $ 2,161,340 Denominator Basic weighted average common shares 4,928,712 4,849,614 Dilutive stock options 35,287 80,880 4,963,999 4,930,494 Basic income per common share after preferred dividends $ 0.37 $ 0.45 Diluted income per common share after preferred dividends $ 0.37 $ 0.44 |
Statement of cash flows | Supplemental disclosure of cash flow information: 2015 2014 Income tax paid $ 719,550 $ 975,650 Interest paid (net of capitalized interest) $ 308,437 $ 282,490 Supplemental schedule of noncash investing and financing activities: Purchases of property, plant, and equipment included in accounts payable $ 16,088 $ 92,119 |
Recently issued accounting standards | In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes |
1. SUMMARY OF OPERATIONS, BAS25
1. SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Operations Basis Of Presentation And Significant Accounting Policies Tables | |
Basic and diluted net income per share | Year ended December 31, 2015 2014 Numerator Net income $ 1,901,832 $ 2,161,340 Preferred stock dividends (57,611 ) - Net income applicable to common shares $ 1,844,221 $ 2,161,340 Denominator Basic weighted average common shares 4,928,712 4,849,614 Dilutive stock options 35,287 80,880 4,963,999 4,930,494 Basic income per common share after preferred dividends $ 0.37 $ 0.45 Diluted income per common share after preferred dividends $ 0.37 $ 0.44 |
Supplemental disclosure of cash flow information | 2015 2014 Income tax paid $ 719,550 $ 975,650 Interest paid (net of capitalized interest) $ 308,437 $ 282,490 Supplemental schedule of noncash investing and financing activities: Purchases of property, plant, and equipment included in accounts payable $ 16,088 $ 92,119 |
2. ACCOUNTS RECEIVABLE (Tables)
2. ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounts Receivable Tables | |
Changes in the allowance for doubtful accounts | Year ended December 31, 2015 2014 Balance at Beginning of Period $ 11,944 $ 14,740 Charged to costs and expenses - - Charged to other accounts - - Write-offs, net of recoveries - (2,796 ) Balance at End of Period $ 11,944 $ 11,944 |
3. INVENTORIES (Tables)
3. INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventories Tables | |
Inventories | December 31, December 31, 2015 2014 Winemaking and packaging materials $ 690,292 $ 629,841 Work-in-process (costs relating to unprocessed and/or unbottled wine products) 6,058,701 4,796,223 Finished goods (bottled wine and related products) 3,883,469 4,484,506 Current inventories $ 10,632,462 $ 9,910,570 |
4. PROPERTY AND EQUIPMENT (Tabl
4. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property And Equipment Tables | |
Property and Equipment | December 31, December 31, 2015 2014 Construction in progress $ 482,284 $ 69,588 Land, improvements and other buildings 5,089,472 3,622,434 Winery buildings and hospitality center 13,756,320 13,566,863 Equipment 9,055,987 8,256,983 28,384,063 25,515,868 Less accumulated depreciation (11,654,901 ) (10,477,209 ) $ 16,729,162 $ 15,038,659 |
7. LONG TERM DEBT (Tables)
7. LONG TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Long Term Debt Tables | |
Long-term debt | December 31, 2015 2014 Northwest Farm Credit Services Loan #1 $ 1,162,073 $ 1,238,256 Northwest Farm Credit Services Loan #2 1,070,991 1,154,945 Northwest Farm Credit Services Loan #3 1,131,912 1,202,799 Northwest Farm Credit Services Loan #4 1,808,042 1,906,294 5,173,018 5,502,294 Current portion (349,003 ) (329,255 ) $ 4,824,015 $ 5,173,039 |
Future minimum principal payments of long-term debt mature | 2016 $ 349,003 2017 369,956 2018 392,190 2019 415,783 2020 440,821 Thereafter 3,205,265 $ 5,173,018 |
9. STOCK INCENTIVE PLAN (Tables
9. STOCK INCENTIVE PLAN (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock Incentive Plan Tables | |
Stock options outstanding | 2015 2014 Weighted Average Exercise Weighted Average Exercise Shares Price Shares Price Outstanding at beginning of period 222,971 $ 3.79 260,200 $ 3.82 Granted - - - - Exercised (155,971 ) 4.04 (37,229 ) 3.99 Forfeited - - - - Outstanding at end of period 67,000 $ 3.22 222,971 $ 3.79 |
Stock options outstanding vested and expected to vest | 2015 2014 Intrinsic value of options exercised in the period $ 427,363 $ 64,383 Stock options fully vested and expected to vest 67,000 222,971 Weighted average exercise price $ 3.22 $ 3.79 Aggregate intrinsic value $ 258,678 $ 447,611 Weighted average contractual term of options 1.37 years 1.64 years Stock options vested and currently exercisable 60,000 188,971 Weighted average exercise price $ 3.23 $ 3.90 Aggregate intrinsic value $ 230,748 $ 358,561 Weighted average contractual term of options 0.89 1.28 years |
Weighted-average options outstanding and exercisable | Options Outstanding Options Exercisable Weighted Number Average Weighted Number Weighted Outstanding at Remaining Average Exercisable at Average Exercise December 31, Contractual Exercise December 31, Exercise Price 2015 Life Price 2015 Price 3.09 11,000 5.56 3.09 4,000 3.09 3.24 56,000 0.55 3.24 56,000 3.24 $ 3.09 - $ 3.24 67,000 1.37 $ 3.22 60,000 $ 3.23 |
10. INCOME TAXES (Tables)
10. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes Tables | |
Provision for income taxes | Year Ended December 31, 2015 2014 Current tax expense: Federal $ 641,822 $ 663,096 State 202,592 132,903 844,414 795,999 Deferred tax expense (benefit): Federal 376,226 (18,087 ) State 54,774 (1,913 ) 431,000 (20,000 ) Total $ 1,275,414 $ 775,999 |
Effective income tax rate differs from the federal statutory rate | Year Ended December 31, 2015 2014 Federal statutory rate 34.00 % 34.00 % State taxes, net of federal benefit 4.95 % 3.60 % Permanent differences -1.13 % -1.70 % Tax credits -0.23 % -5.74 % Prior year adjustments 1.35 % -2.42 % Changes in tax rates and other 1.20 % -1.32 % 40.14 % 26.42 % |
Deferred tax assets and (liabilities) | 2015 2014 Accounts receivable $ - $ 4,000 Deferred gain on sale-leaseback - 58,000 Stock compensation - 21,000 Other - 148,000 Net current deferred tax assets $ - $ 231,000 Deferred gain on sale-leaseback 47,000 - Other 27,000 - Prepaids (49,000 ) (54,000 ) Depreciation (1,463,000 ) (1,273,000 ) Inventory (410,000 ) (321,000 ) Net noncurrent deferred tax liability (1,848,000 ) (1,648,000 ) Net deferred tax liability $ (1,848,000 ) $ (1,417,000 ) |
12. COMMITMENTS AND CONTINGEN32
12. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments And Contingencies Tables | |
Future minimum lease payments | 2016 $ 393,914 2017 377,626 2018 379,867 2019 342,319 2020 162,771 Thereafter 798,494 Total $ 2,454,991 |
15. SEGMENT REPORTING (Tables)
15. SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting Tables | |
Segment reporting | Twelve Months Ended December 31, Direct Sales Distributor Sales Total 2015 2014 2015 2014 2015 2014 Sales, net $ 6,948,210 $ 5,197,121 $ 10,990,662 $ 9,959,038 $ 17,938,872 $ 15,156,159 Cost of Sales 2,027,451 1,307,687 5,064,660 4,831,866 7,092,111 6,139,553 Gross Margin 4,920,759 3,889,434 5,926,002 5,127,172 10,846,761 9,016,606 Selling Expenses 3,070,473 2,435,865 1,545,944 1,274,313 4,616,417 3,710,178 Contribution Margin $ 1,850,286 $ 1,453,569 $ 4,380,058 $ 3,852,859 $ 6,230,344 $ 5,306,428 Percent of Sales 38.7% 34.3% 61.3% 65.7% 100.0% 100.0% |
16. QUARTERLY FINANCIAL INFOR34
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Tables | |
Summary of unaudited quarterly financial information | Condensed Consolidated Statements of Income Year ended December 31, 2015 Q1 Q2 Q3 Q4 (in thousands, except per share data) Revenue $ 3,912 $ 4,721 $ 4,245 $ 5,061 Gross profit 2,304 2,760 2,636 3,147 Income from operations 499 845 747 1,178 Net income 314 510 454 624 Basic net income per share $ 0.06 $ 0.10 $ 0.09 $ 0.14 Diluted net income per share $ 0.06 $ 0.10 $ 0.09 $ 0.13 Shares used in calculation of net income per share: Basic 4,884,503 4,908,605 4,956,163 4,965,050 Diluted 4,957,041 4,983,207 5,007,883 5,002,746 Condensed Consolidated Statements of Income Year ended December 31, 2014 Q1 Q2 Q3 Q4 (in thousands, except per share data) Revenue $ 2,972 $ 3,693 $ 4,046 $ 4,445 Gross profit 1,722 2,241 2,500 2,554 Income from operations 249 760 973 824 Net income 175 547 574 865 Basic net income per share $ 0.04 $ 0.11 $ 0.12 $ 0.18 Diluted net income per share $ 0.04 $ 0.11 $ 0.12 $ 0.18 Shares used in calculation of net income per share: Basic 4,839,149 4,847,188 4,847,765 4,863,468 Diluted 4,939,412 4,933,550 4,930,860 4,939,777 |
1. SUMMARY OF OPERATIONS, BAS35
1. SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary Of Operations Basis Of Presentation And Significant Accounting Policies Details | ||||||||||
Net income | $ 624,000 | $ 454,000 | $ 510,000 | $ 314,000 | $ 865,000 | $ 574,000 | $ 547,000 | $ 175,000 | $ 1,901,832 | $ 2,161,340 |
Preferred stock dividends | (57,611) | 0 | ||||||||
Net income applicable to common shares | $ 1,844,221 | $ 2,161,340 | ||||||||
Basic weighted average common shares | 4,965,050 | 4,956,163 | 4,908,605 | 4,884,503 | 4,863,468 | 4,847,765 | 4,847,188 | 4,839,149 | 4,928,712 | 4,849,614 |
Dilutive stock options | 35,287 | 80,880 | ||||||||
Weighted Average Shares Outstanding, Diluted | 5,002,746 | 5,007,883 | 4,983,207 | 4,957,041 | 4,939,777 | 4,930,860 | 4,933,550 | 4,939,412 | 4,963,999 | 4,930,494 |
Basic income per common share after preferred dividends | $ 0.14 | $ 0.09 | $ 0.1 | $ 0.06 | $ 0.18 | $ 0.12 | $ 0.11 | $ 0.04 | $ 0.37 | $ 0.45 |
Diluted income per common share after preferred dividends | $ 0.13 | $ 0.09 | $ 0.1 | $ 0.06 | $ 0.18 | $ 0.12 | $ 0.11 | $ 0.04 | $ 0.37 | $ 0.44 |
1. SUMMARY OF OPERATIONS, BAS36
1. SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary Of Operations Basis Of Presentation And Significant Accounting Policies Details 1 | ||
Income tax paid | $ 719,550 | $ 975,650 |
Interest paid (net of capitalized interest) | 308,437 | 282,490 |
Supplemental schedule of noncash investing and financing activities: | ||
Purchases of property, plant, and equipment included in accounts payable | $ 16,088 | $ 92,119 |
1. SUMMARY OF OPERATIONS, BAS37
1. SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary Of Operations Basis Of Presentation And Significant Accounting Policies Details Narrative | ||
Dilutive Securities included in computation of earnings per share | 35,287 | 80,880 |
2. ACCOUNTS RECEIVABLE (Details
2. ACCOUNTS RECEIVABLE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts Receivable Tables | ||
Balance at Beginning of Period | $ 11,944 | $ 14,740 |
Charged to costs and expenses | 0 | 0 |
Charged to other accounts | 0 | 0 |
Write-offs, net of recoveries | 0 | (2,796) |
Balance at End of Period | $ 11,944 | $ 11,944 |
3. INVENTORIES (Details)
3. INVENTORIES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Winemaking and packaging materials | $ 690,292 | $ 629,841 |
Work-in-progress (costs relating to unprocessed and/or unbottled wine products) | 6,058,701 | 4,796,223 |
Finished goods (bottled wine and related products) | 3,883,469 | 4,484,506 |
Current inventories | $ 10,632,462 | $ 9,910,570 |
4. PROPERTY AND EQUIPMENT (Deta
4. PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Construction in progress | $ 482,284 | $ 69,588 |
Land, improvements and other buildings | 5,089,472 | 3,622,434 |
Winery building and hospitality center | 13,756,320 | 13,566,863 |
Equipment | 9,055,987 | 8,256,983 |
Total Property and Equipment | 28,384,063 | 25,515,868 |
Less accumulated depreciation | (11,654,901) | (10,477,209) |
Net Property and Equipment | $ 16,729,162 | $ 15,038,659 |
5. LINE OF CREDIT FACILITY (Det
5. LINE OF CREDIT FACILITY (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Line Of Credit Facility Details Narrative | ||
Interest rate | 3.50% | 3.25% |
Borrowings on revolving line of credit | $ 0 | $ 0 |
7. LONG TERM DEBT (Details)
7. LONG TERM DEBT (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Long term debt | $ 5,173,018 | $ 5,502,294 |
Current portion | (349,003) | (329,255) |
Long term debt net | 4,824,015 | 5,173,039 |
Northwest Farm Credit Services Loan 1 [Member] | ||
Long term debt | 1,162,073 | 1,238,256 |
Northwest Farm Credit Services Loan 2 [Member] | ||
Long term debt | 1,070,991 | 1,154,945 |
Northwest Farm Credit Services Loan 3 [Member] | ||
Long term debt | 1,131,912 | 1,202,799 |
Northwest Farm Credit Services Loan 4 [Member] | ||
Long term debt | $ 1,808,042 | $ 1,906,294 |
7. LONG TERM DEBT (Details 1)
7. LONG TERM DEBT (Details 1) | Dec. 31, 2015USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 349,003 |
2,017 | 369,956 |
2,018 | 392,190 |
2,019 | 415,783 |
2,020 | 440,821 |
Thereafter | 3,205,265 |
Future minimum principal payments of long-term debt total | $ 5,173,018 |
7. LONG TERM DEBT (Details Narr
7. LONG TERM DEBT (Details Narrative) | Dec. 31, 2015 | Dec. 31, 2014 |
Long Term Debt Details Narrative | ||
Weighted-average interest rates | 5.74% | 5.75% |
9. STOCK INCENTIVE PLAN (Detail
9. STOCK INCENTIVE PLAN (Details) - Options - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of options | ||
Outstanding at beginning of period | 222,971 | 260,200 |
Granted | 0 | 0 |
Exercised | (155,971) | (37,229) |
Forfeited | 0 | 0 |
Outstanding at end of period | 67,000 | 222,971 |
Weighted average Price | ||
Outstanding at beginning of period | $ 3.79 | $ 3.82 |
Granted | 0 | 0 |
Exercised | 4.04 | 3.99 |
Forfeited | 0 | 0 |
Outstanding at end of period | $ 3.22 | $ 3.79 |
9. STOCK INCENTIVE PLAN (Deta46
9. STOCK INCENTIVE PLAN (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Incentive Plan Details 1 | ||
Intrinsic value of options exercised in the period | $ 427,363 | $ 64,383 |
Stock options fully vested and expected to vest | 67,000 | 222,971 |
Weighted average exercise price | $ 3.22 | $ 3.79 |
Aggregate intrinsic value | $ 258,678 | $ 447,611 |
Weighted average contractual term of options | 1 year 4 months 13 days | 1 year 7 months 20 days |
Stock options vested and currently exercisable | 60,000 | 188,971 |
Weighted average exercise price | $ 3.23 | $ 3.90 |
Aggregate intrinsic value | $ 230,748 | $ 358,561 |
Weighted average contractual term of options | 10 months 20 days | 1 year 3 months 11 days |
9. STOCK INCENTIVE PLAN (Deta47
9. STOCK INCENTIVE PLAN (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number Exercisable | 60,000 | 188,971 |
Weighted average exercise price | $ 3.23 | $ 3.90 |
3.09 | ||
Number Outstanding | 11,000 | |
Weighted average remaining contractual life | 5 years 6 months 22 days | |
Weighted average exercise price | $ 3.09 | |
Number Exercisable | 4,000 | |
Weighted average exercise price | $ 3.09 | |
3.24 | ||
Number Outstanding | 56,000 | |
Weighted average remaining contractual life | 6 months 18 days | |
Weighted average exercise price | $ 3.24 | |
Number Exercisable | 56,000 | |
Weighted average exercise price | $ 3.24 | |
$ 3.09 - $ 3.24 | ||
Number Outstanding | 67,000 | |
Weighted average remaining contractual life | 1 year 4 months 13 days | |
Weighted average exercise price | $ 3.22 | |
Number Exercisable | 60,000 | |
Weighted average exercise price | $ 3.23 |
10. INCOME TAXES (Details)
10. INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current tax expense | ||
Federal | $ 641,822 | $ 663,096 |
State | 202,592 | 132,903 |
Total current tax expense | 844,414 | 795,999 |
Deferred tax expense (benefit) | ||
Federal | 376,226 | (18,087) |
State | 54,774 | (1,913) |
Total deferred tax expense (benefit) | 431,000 | (20,000) |
Total | $ 1,275,416 | $ 775,999 |
10. INCOME TAXES (Details 1)
10. INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details 1 | ||
Federal statutory rate | 34.00% | 34.00% |
State taxes, net of federal benefit | 4.95% | 3.60% |
Permanent differences | (1.13%) | (1.70%) |
Tax credits | (0.23%) | (5.74%) |
Prior period adjustment | 1.35% | (2.42%) |
Changes in tax rates and other | 1.20% | (1.32%) |
Total | 40.14% | 26.42% |
10. INCOME TAXES (Details 2)
10. INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Taxes Details 2 | ||
Accounts receivable | $ 0 | $ 4,000 |
Deferred gain on sale-leaseback | 0 | 58,000 |
Stock compensation | 0 | 21,000 |
Other | 0 | 148,000 |
Net current deferred tax assets | 0 | 231,000 |
Deferred gain on sale-leaseback | 47,000 | 0 |
Other | 27,000 | 0 |
Prepaids | (49,000) | (54,000) |
Depreciation | (1,463,000) | (1,273,000) |
Inventory | (410,000) | (321,000) |
Net noncurrent deferred tax liability | (1,848,000) | (1,648,000) |
Net deferred tax liability | $ (1,848,000) | $ (1,417,000) |
12. COMMITMENTS AND CONTINGEN51
12. COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2015USD ($) |
Commitments And Contingencies Details | |
2,016 | $ 393,914 |
2,017 | 377,626 |
2,018 | 379,867 |
2,019 | 342,319 |
2,020 | 162,771 |
Thereafter | 798,494 |
Total | $ 2,454,991 |
12. COMMITMENTS AND CONTINGEN52
12. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments And Contingencies Details Narrative | ||
Rental expense | $ 8,353 | $ 8,500 |
Vineyard developments costs | $ 363,566 | $ 346,750 |
13. EMPLOYEE BENEFIT PLAN (Deta
13. EMPLOYEE BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Benefit Plan Details Narrative | ||
Employer contribution | $ 71,609 | $ 64,664 |
15. SEGMENT REPORTING (Details)
15. SEGMENT REPORTING (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Sales, net | $ 5,061,000 | $ 4,245,000 | $ 4,721,000 | $ 3,912,000 | $ 4,445,000 | $ 4,046,000 | $ 3,693,000 | $ 2,972,000 | $ 17,938,872 | $ 15,156,159 |
Cost of Sales | 7,092,111 | 6,139,553 | ||||||||
Gross Margin | $ 3,147,000 | $ 2,636,000 | $ 2,760,000 | $ 2,304,000 | $ 2,554,000 | $ 2,500,000 | $ 2,241,000 | $ 1,722,000 | 10,846,761 | 9,016,606 |
Selling Expenses | 4,616,417 | 3,710,178 | ||||||||
Contribution Margin | $ 6,230,344 | $ 5,306,428 | ||||||||
Percent of Sales | 100.00% | 100.00% | ||||||||
Direct Sales | ||||||||||
Sales, net | $ 6,948,210 | $ 5,197,121 | ||||||||
Cost of Sales | 2,027,451 | 1,307,687 | ||||||||
Gross Margin | 4,920,759 | 3,889,434 | ||||||||
Selling Expenses | 3,070,473 | 2,435,865 | ||||||||
Contribution Margin | $ 1,850,286 | $ 1,453,569 | ||||||||
Percent of Sales | 38.70% | 34.30% | ||||||||
Distributor Sales | ||||||||||
Sales, net | $ 10,990,662 | $ 9,959,038 | ||||||||
Cost of Sales | 5,064,660 | 4,831,866 | ||||||||
Gross Margin | 5,926,002 | 5,127,172 | ||||||||
Selling Expenses | 1,545,944 | 1,274,313 | ||||||||
Contribution Margin | $ 4,380,058 | $ 3,852,859 | ||||||||
Percent of Sales | 61.30% | 65.70% |
16. QUARTERLY FINANCIAL INFOR55
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Details | ||||||||||
Revenue | $ 5,061,000 | $ 4,245,000 | $ 4,721,000 | $ 3,912,000 | $ 4,445,000 | $ 4,046,000 | $ 3,693,000 | $ 2,972,000 | $ 17,938,872 | $ 15,156,159 |
Gross profit | 3,147,000 | 2,636,000 | 2,760,000 | 2,304,000 | 2,554,000 | 2,500,000 | 2,241,000 | 1,722,000 | 10,846,761 | 9,016,606 |
Income from operations | 1,178,000 | 747,000 | 845,000 | 499,000 | 824,000 | 973,000 | 760,000 | 249,000 | 3,268,577 | 2,806,222 |
Net income | $ 624,000 | $ 454,000 | $ 510,000 | $ 314,000 | $ 865,000 | $ 574,000 | $ 547,000 | $ 175,000 | $ 1,901,832 | $ 2,161,340 |
Basic net income per share | $ 0.14 | $ 0.09 | $ 0.1 | $ 0.06 | $ 0.18 | $ 0.12 | $ 0.11 | $ 0.04 | $ 0.37 | $ 0.45 |
Diluted net income per share | $ 0.13 | $ 0.09 | $ 0.1 | $ 0.06 | $ 0.18 | $ 0.12 | $ 0.11 | $ 0.04 | $ 0.37 | $ 0.44 |
Shares used in calculation of net income per share: | ||||||||||
Basic | 4,965,050 | 4,956,163 | 4,908,605 | 4,884,503 | 4,863,468 | 4,847,765 | 4,847,188 | 4,839,149 | 4,928,712 | 4,849,614 |
Diluted | 5,002,746 | 5,007,883 | 4,983,207 | 4,957,041 | 4,939,777 | 4,930,860 | 4,933,550 | 4,939,412 | 4,963,999 | 4,930,494 |