Willamette Valley Vineyards (WVVI) 10-Q 13 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 13, 2018
Document And Entity Information
Entity Registrant Name	WILLAMETTE VALLEY VINEYARDS INC
Entity Central Index Key	838,875
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		4,964,529
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,018

BALANCE SHEETS (unaudited)

BALANCE SHEETS (unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS
Cash and cash equivalents	$ 10,940,289	$ 13,776,257
Accounts receivable, net	1,568,216	1,760,039
Inventories (Note 2)	15,342,544	14,793,594
Prepaid expenses and other current assets	136,468	108,102
Total current assets	27,987,517	30,437,992
Other assets	34,836	49,153
Vineyard development costs, net	7,007,928	6,006,250
Property and equipment, net (Note 3)	25,498,387	23,201,876
TOTAL ASSETS	60,528,668	59,695,271
CURRENT LIABILITIES
Accounts payable	844,135	993,598
Accrued expenses	1,090,093	871,427
Investor deposits for preferred stock (Note 9)	0	430,305
Current portion of note payable	1,704,216	1,759,652
Current portion of long-term debt	412,186	397,251
Income taxes payable	302,553	125,297
Deferred revenue-distribution agreement	0	95,220
Unearned revenue	244,631	306,564
Grapes payable	401,854	1,455,569
Total current liabilities	4,999,668	6,434,883
Note payable, net of current portion	0	137,667
Long-term debt, net of current portion and debt issuance costs	6,354,502	6,655,384
Deferred rent liability	58,366	82,024
Deferred gain	33,006	57,077
Deferred income taxes	1,587,227	1,587,227
Total liabilities	13,032,769	14,954,262
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Redeemable preferred stock, no par value, 10,000,000 shares authorized, 4,662,518 shares, liquidation preference $20,117,220, issued and outstanding at September 30, 2018 and 4,427,991, liquidation preference $18,375,831 issued and outstanding at December 31, 2017, respectively.	$ 19,086,821	$ 17,339,508
Common stock, no par value, 10,000,000 shares authorized, 4,964,529 shares issued and outstanding at September 30, 2018 and December 31, 2017.	$ 8,512,489	$ 8,512,489
Retained earnings	19,896,589	18,889,012
Total shareholder's equity	47,495,899	44,741,009
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 60,528,668	$ 59,695,271

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
SHAREHOLDERS' EQUITY
Preferred stock, par value	$ 0	$ 0
Preferred stock, authorized shares	10,000,000	10,000,000
Preferred stock, issued shares	4,662,518	4,427,991
Preferred stock, outstanding shares	4,662,518	4,427,991
Preferred stock, liquidation preference	$ 20,117,220	$ 18,375,831
Common stock, par value	$ 0	$ 0
Common stock, authorized shares	10,000,000	10,000,000
Common stock, issued shares	4,964,529	4,964,529
Common stock, outstanding shares	4,964,529	4,964,529

STATEMENTS OF OPERATIONS (unaud

STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
SALES, NET	$ 5,461,039	$ 5,143,588	$ 15,814,950	$ 14,907,917
COST OF SALES	1,918,868	1,762,214	5,660,429	5,594,744
GROSS PROFIT	3,542,171	3,381,374	10,154,521	9,313,173
SELLING GENERAL & ADMINISTRATIVE EXPENSES	2,569,229	2,283,143	7,530,330	6,652,674
INCOME FROM OPERATIONS	972,942	1,098,231	2,624,191	2,660,499
OTHER INCOME (EXPENSE)
Interest income	1,964	6,535	10,968	17,596
Interest expense	(119,270)	(127,431)	(354,272)	(346,997)
Other income, net	25,967	45,886	164,009	180,462
INCOME BEFORE INCOME TAXES	881,603	1,023,221	2,444,896	2,511,560
INCOME TAX PROVISION	(239,966)	(398,638)	(669,549)	(978,346)
NET INCOME	641,637	624,583	1,775,347	1,533,214
Accrued preferred stock dividends	(256,438)	(196,587)	(767,770)	(460,253)
INCOME APPLICABLE TO COMMON SHAREHOLDERS	$ 385,199	$ 427,996	$ 1,007,577	$ 1,072,961
Income per common share after preferred dividends	$ 0.08	$ 0.09	$ 0.2	$ 0.21
Weighted average number of common shares outstanding	4,964,529	4,976,732	4,964,529	4,992,189

STATEMENTS OF CASH FLOWS (unaud

STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 1,775,347	$ 1,533,214
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	1,205,565	1,132,635
Loss/(gain) on disposition of property & equipment	805	(1,243)
Non-cash loss from other assets	14,317	10,033
Deferred rent liability	(23,658)	(23,657)
Deferred gain	(24,072)	(24,072)
Change in operating assets and liabilities:
Accounts receivable, net	191,823	(70,974)
Inventories	(548,950)	40,789
Prepaid expenses and other current assets	(28,366)	290,618
Unearned revenue	(61,933)	(10,557)
Deferred revenue-distribution agreement	(95,220)	(107,145)
Grapes payable	(1,053,715)	(430,152)
Accounts payable	(206,797)	12,886
Accrued expenses	218,666	(40,558)
Income taxes payable	177,256	137,346
Net cash from operating activities	1,541,068	2,449,163
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to vineyard development costs	(1,121,992)	(795,456)
Additions to property and equipment	(3,325,232)	(2,289,578)
Proceeds from sale of property and equipment	0	45,000
Net cash from investing activities	(4,447,224)	(3,040,034)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt	0	2,672,659
Proceeds from investor deposits held as restricted cash	0	1,713,210
Payment on installment note for property purchase	(193,103)	(280,496)
Payments on long-term debt	(285,947)	(350,939)
Proceeds from issuance of preferred stock	549,238	4,596,779
Proceeds from exercise of stock options	0	21,630
Repurchase of common stock	0	(479,144)
Net cash from financing activities	70,188	7,893,699
NET CHANGE IN CASH AND CASH EQUIVALENTS	(2,835,968)	7,302,828
CASH AND CASH EQUIVALENTS, beginning of period	13,776,257	5,706,351
CASH AND CASH EQUIVALENTS, end of period	10,940,289	13,009,179
NON-CASH INVESTING AND FINANCING ACTIVITIES
Purchase of property and vineyard development costs with notes payable	0	1,950,333
Purchases of property and equipment and vineyard development costs included in accounts payable	$ 177,338	$ 222,565

1. BASIS OF PRESENTATION

1. BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
NOTE 1. BASIS OF PRESENTATION	The accompanying unaudited interim financial statements as of September 30, 2018 and for the three and nine months ended September 30, 2018 and 2017 have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements. The financial information as of December 31, 2017 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, 2017. 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, 2017, as presented in the Company’s Annual Report on Form 10-K. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2018, or any portion thereof. The Company’s revenues include direct-to-consumer sales and national sales to distributors. These sales channels utilize shared resources for production, selling and distribution. Earnings 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: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Numerator Net income $ 641,637 $ 624,583 $ 1,775,347 $ 1,533,214 Accrued preferred stock dividends (256,438 ) (196,587 ) (767,770 ) (460,253 ) Net income applicable to common shares $ 385,199 $ 427,996 $ 1,007,577 $ 1,072,961 Denominator Weighted average common shares 4,964,529 4,976,732 4,964,529 4,992,189 Income per common share after preferred dividends $ 0.08 $ 0.09 $ 0.20 $ 0.21 Recently issued accounting standards (adopted) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date The new revenue standard was required to be applied retrospectively to each prior reporting period presented or prospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. The Company adopted the standard in the first quarter of 2018 using the modified prospective method. The Company evaluated the effect of the standard and concluded it was not material to the Company’s financial reporting. Additionally, the Company concluded that the application of the standard did not have a material effect that would require a retrospective adjustment. The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied, generally, this occurs 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. Revenue is measured as the amount of consideration expected to be received in exchange for transferring products. 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. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met. As of September 30, 2018 and December 31, 2017, the Company has recorded deferred revenue in the amount of $134,011 and $103,246, respectively, which is included in accrued expenses on the balance sheet. 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 three months ended September 30, 2018 and 2017, the Company recorded incentive program expenses of $195,603 and $214,174, respectively, as a reduction in sales on the Statements of Operations. For the nine months ended September 30, 2018 and 2017, the Company recorded incentive program expenses of $678,742 and $579,827, respectively, as a reduction in sales on the Statement of Operations. As of September 30, 2018 and December 31, 2017, the Company has recorded an incentive program liability in the amount of $45,842 and $49,075, respectively, which is included in accrued expenses on the balance sheet. Estimates are based on historical and projected experience for each type of program or customer and have historically been in line with actual costs incurred. Recently issued accounting standards (not yet adopted) - In February 2016, the FASB issued ASU 2016-02, Leases The Company is currently evaluating the impact of the pending adoption of this new standard on its unaudited interim financial statements and has yet to determine the overall impact this ASU is expected to have. Management currently anticipates recognizing a right-of-use asset and a lease liability associated with its long-term operating leases. The accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.

2. INVENTORIES

2. INVENTORIES	9 Months Ended
	Sep. 30, 2018
Inventory Disclosure [Abstract]
NOTE 2. INVENTORIES	The Company’s inventories, by major classification, are summarized as follows, as of the dates shown: September 30, 2018 December 31, 2017 Winemaking and packaging materials $ 663,079 $ 849,825 Work-in-process (costs relating to unprocessed and/or unbottled wine products) 6,012,597 8,126,838 Finished goods (bottled wine and related products) 8,666,868 5,816,931 Current inventories $ 15,342,544 $ 14,793,594

3. PROPERTY AND EQUIPMENT

3. PROPERTY AND EQUIPMENT	9 Months Ended
	Sep. 30, 2018
Property, Plant and Equipment [Abstract]
NOTE 3. PROPERTY AND EQUIPMENT	The Company’s property and equipment consists of the following, as of the dates shown: September 30, 2018 December 31, 2017 Construction in progress $ 2,814,220 $ 1,036,615 Land, improvements and other buildings 10,925,953 10,197,388 Winery building and hospitality center 15,286,053 15,055,935 Equipment 11,882,500 11,221,964 40,908,726 37,511,902 Accumulated depreciation (15,410,339 ) (14,310,026 ) Property and equipment, net $ 25,498,387 $ 23,201,876

4. DISTRIBUTION AGREEMENT RECEI

4. DISTRIBUTION AGREEMENT RECEIVABLE AND DEFERRED REVENUE	9 Months Ended
	Sep. 30, 2018
Deferred Revenue Disclosure [Abstract]
NOTE 4. DISTRIBUTION AGREEMENT RECEIVABLE AND DEFERRED REVENUE	Effective September 1, 2011, the Company entered into an agreement with Young’s Market Company for distribution of Company-produced wines in Oregon and Washington. The terms of this contract included exclusive rights to distribute Willamette Valley Vineyard’s wines in Oregon and Washington for seven years and expired September 1, 2018. To facilitate the transition, with as little disruption as possible, Young’s Market Company agreed to compensate Willamette Valley Vineyards for ongoing Oregon sales and branding efforts. As a result, the Company received $250,000 per year starting on September 2011 for each of the next four years for a total of $1,000,000. In October of 2014, the Company received payment of the final $250,000 under this agreement. The total amount of $1,000,000 received by the Company related to this agreement was being recognized as revenue on a straight line basis over the seven year life of the agreement. For the three months ended September 30, 2018 and 2017, the Company recognized revenue related to this agreement in the amount of $23,790 and $35,715, respectively, recorded to other income. For the nine months ended September 30, 2018 and 2017, the Company recognized revenue related to this agreement in the amount of $95,220 and $107,145, respectively, recorded to other income. All deferred revenue, as a result of this agreement, has been recognized as of September 30, 2018.

5. DEBT

5. DEBT	9 Months Ended
	Sep. 30, 2018
Debt Disclosure [Abstract]
NOTE 5. DEBT	Line of Credit Facility – Notes payable In February of 2017 the Company purchased property, including vineyard land, bare land and structures in the Dundee Hills AVA under terms that included a 15 year note payable with quarterly payments of $42,534 at 6%. The note may be called by the owner, up to the outstanding balance, with 180 days written notice. As of September 30, 2018, the Company had a balance of $1,566,550 due on this note. As of December 31, 2017, the Company had a balance of $1,621,986 due on this note. Long Term Debt The Company has an outstanding loan with Toyota Credit Corporation maturing in February 2021, at zero interest, with an outstanding balance of $26,774 and $35,381 as of September 30, 2018 and December 31, 2017, respectively. The purpose of this loan was to purchase a vehicle. As of September 30, 2018, the Company had unamortized debt issuance costs of $175,537. As of December 31, 2017, the Company had unamortized debt issuance costs of $185,472

6. STOCK BASED COMPENSATION

6. STOCK BASED COMPENSATION	9 Months Ended
	Sep. 30, 2018
Equity [Abstract]
NOTE 6. STOCK BASED COMPENSATION	The Company had 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 contained an exercise price that was equal to the fair market value of the Company’s stock on the date the options were granted. All stock options had been exercised as of December 31, 2017.

7. INTEREST AND TAXES PAID

7. INTEREST AND TAXES PAID	9 Months Ended
	Sep. 30, 2018
Other Income and Expenses [Abstract]
NOTE 7. INTEREST AND TAXES PAID	Income taxes Interest

8. SEGMENT REPORTING

8. SEGMENT REPORTING	9 Months Ended
	Sep. 30, 2018
Segment Reporting [Abstract]
NOTE 8. 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, 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 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 three and nine month periods ending September 30, 2018 and 2017. Sales figures are net of related excise taxes. Three Months Ended September 30, Direct Sales Distributor Sales Total 2018 2017 2018 2017 2018 2017 Sales, net $ 2,333,721 $ 2,263,453 $ 3,127,318 $ 2,880,135 $ 5,461,039 $ 5,143,588 Cost of Sales 542,154 555,817 1,376,714 1,206,397 1,918,868 1,762,214 Gross Margin 1,791,567 1,707,636 1,750,604 1,783,501 3,542,171 3,381,374 Selling Expenses 1,073,089 1,022,807 554,408 423,433 1,627,497 1,446,240 Contribution Margin $ 718,478 $ 684,829 $ 1,196,196 $ 1,331,200 $ 1,914,674 $ 1,935,134 Percent of Sales 42.7 % 44.0 % 57.3 % 56.0 % 100.0 % 100.0 % Nine Months Ended September 30, Direct Sales Distributor Sales Total 2018 2017 2018 2017 2018 2017 Sales, net $ 6,237,364 $ 5,747,579 $ 9,577,586 $ 9,160,338 $ 15,814,950 $ 14,907,917 Cost of Sales 1,580,697 1,510,003 4,079,732 4,084,741 5,660,429 5,594,744 Gross Margin 4,656,667 4,237,576 5,497,854 5,075,597 10,154,521 9,313,173 Selling Expenses 3,089,948 2,742,294 1,550,114 1,351,216 4,640,062 4,093,510 Contribution Margin $ 1,566,719 $ 1,495,282 $ 3,947,740 $ 3,724,381 $ 5,514,459 $ 5,219,663 Percent of Sales 39.4 % 38.6 % 60.6 % 61.4 % 100.0 % 100.0 % Direct sales include $66,420 and $30,624 of bulk wine sales in the three months ended September 30, 2018 and 2017, respectively. Direct sales include $201,390 and $194,412 of bulk wine sales in the nine months ended September 30, 2018 and 2017, respectively.

9. SALE OF PREFERRED STOCK

9. SALE OF PREFERRED STOCK	9 Months Ended
	Sep. 30, 2018
Sale Of Preferred Stock
NOTE 9. SALE OF PREFERRED STOCK	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. The preferred stock under this issue is non-voting and ranks senior in rights and preferences to the Company’s common stock. Shareholders of this issue are entitled to receive dividends, when and as declared by the Company’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. At any time after June 1, 2021, the Company has the option, but not the obligation, to redeem all of the outstanding preferred stock in an amount equal to the original issue price of $4.15 per share plus accrued but unpaid dividends and a redemption premium equal to 3% of the original issue price of $4.15 per share. The Company registered this transaction with the securities authorities of the States of Oregon and Washington and subsequently obtained a listing on the NASDAQ under the trading symbol WVVIP. This issue had an aggregate initial offering price not to exceed $6,000,000 and was fully subscribed as of December 31, 2015. On December 23, 2015 the Company filed a Registration Statement on Form S-3 with the SEC pertaining to the potential future issuance of one or more classes or series of debt, equity or derivative securities. On February 28, 2016 shareholders of the Series A Redeemable Preferred Stock approved an increase in shares designated as Series A Redeemable Preferred Stock, from 1,445,783 to 2,857,548 shares, and amended the certificate of designation for those shares to allow the Company’s Board of Directors to make future increases. On March 10, 2016 the Company filed a Prospectus Supplement to the December 2015 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to 970,588 additional shares of Series A Redeemable Preferred stock having proceeds not to exceed $4,125,000. This stock was established to be sold in four offering periods beginning with an offering price of $4.25 per share and concluding at $4.55 per share. The Company sold all preferred stock available under this offering. On May 3, 2017, the Company filed with the SEC a Prospectus Supplement to the December 2015 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to 2,298,851 additional shares of Series A Redeemable Preferred stock having proceeds not to exceed $10,000,000. This stock was established to be sold in four offering periods beginning with an offering price of $4.35 per share and concluding at $4.65 per share. The Company sold all preferred stock available under this offering.

10. COMMITMENTS AND CONTINGENCI

10. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2018
Commitments And Contingencies
NOTE 10. COMMITMENTS AND CONTINGENCIES	Litigation Grape Purchases Lease

1. BASIS OF PRESENTATION (Table

1. BASIS OF PRESENTATION (Tables)	9 Months Ended
	Sep. 30, 2018
Basis Of Presentation
Earnings Per Share	Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Numerator Net income $ 641,637 $ 624,583 $ 1,775,347 $ 1,533,214 Accrued preferred stock dividends (256,438 ) (196,587 ) (767,770 ) (460,253 ) Net income applicable to common shares $ 385,199 $ 427,996 $ 1,007,577 $ 1,072,961 Denominator Weighted average common shares 4,964,529 4,976,732 4,964,529 4,992,189 Income per common share after preferred dividends $ 0.08 $ 0.09 $ 0.20 $ 0.21

2. INVENTORIES (Tables)

2. INVENTORIES (Tables)	9 Months Ended
	Sep. 30, 2018
Inventories
Inventories	September 30, 2018 December 31, 2017 Winemaking and packaging materials $ 663,079 $ 849,825 Work-in-process (costs relating to unprocessed and/or unbottled wine products) 6,012,597 8,126,838 Finished goods (bottled wine and related products) 8,666,868 5,816,931 Current inventories $ 15,342,544 $ 14,793,594

3. PROPERTY AND EQUIPMENT (Tabl

3. PROPERTY AND EQUIPMENT (Tables)	9 Months Ended
	Sep. 30, 2018
Property And Equipment
Property and Equipment	September 30, 2018 December 31, 2017 Construction in progress $ 2,814,220 $ 1,036,615 Land, improvements and other buildings 10,925,953 10,197,388 Winery building and hospitality center 15,286,053 15,055,935 Equipment 11,882,500 11,221,964 40,908,726 37,511,902 Accumulated depreciation (15,410,339 ) (14,310,026 ) Property and equipment, net $ 25,498,387 $ 23,201,876

8. SEGMENT REPORTING (Tables)

8. SEGMENT REPORTING (Tables)	9 Months Ended
	Sep. 30, 2018
Segment Reporting
SEGMENT REPORTING	Three Months Ended September 30, Direct Sales Distributor Sales Total 2018 2017 2018 2017 2018 2017 Sales, net $ 2,333,721 $ 2,263,453 $ 3,127,318 $ 2,880,135 $ 5,461,039 $ 5,143,588 Cost of Sales 542,154 555,817 1,376,714 1,206,397 1,918,868 1,762,214 Gross Margin 1,791,567 1,707,636 1,750,604 1,783,501 3,542,171 3,381,374 Selling Expenses 1,073,089 1,022,807 554,408 423,433 1,627,497 1,446,240 Contribution Margin $ 718,478 $ 684,829 $ 1,196,196 $ 1,331,200 $ 1,914,674 $ 1,935,134 Percent of Sales 42.7 % 44.0 % 57.3 % 56.0 % 100.0 % 100.0 % Nine Months Ended September 30, Direct Sales Distributor Sales Total 2018 2017 2018 2017 2018 2017 Sales, net $ 6,237,364 $ 5,747,579 $ 9,577,586 $ 9,160,338 $ 15,814,950 $ 14,907,917 Cost of Sales 1,580,697 1,510,003 4,079,732 4,084,741 5,660,429 5,594,744 Gross Margin 4,656,667 4,237,576 5,497,854 5,075,597 10,154,521 9,313,173 Selling Expenses 3,089,948 2,742,294 1,550,114 1,351,216 4,640,062 4,093,510 Contribution Margin $ 1,566,719 $ 1,495,282 $ 3,947,740 $ 3,724,381 $ 5,514,459 $ 5,219,663 Percent of Sales 39.4 % 38.6 % 60.6 % 61.4 % 100.0 % 100.0 %

1. BASIS OF PRESENTATION (Detai

1. BASIS OF PRESENTATION (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Numerator
Net income	$ 641,637	$ 624,583	$ 1,775,347	$ 1,533,214
Accrued preferred stock dividends	(256,438)	(196,587)	(767,770)	(460,253)
Net income applicable to common shares	$ 385,199	$ 427,996	$ 1,007,577	$ 1,072,961
Denominator
Weighted average number of common shares outstanding	4,964,529	4,976,732	4,964,529	4,992,189
Income per common share after preferred dividends	$ 0.08	$ 0.09	$ 0.2	$ 0.21

2. INVENTORIES (Details)

2. INVENTORIES (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Winemaking and packaging materials	$ 663,079	$ 849,825
Work-in-progress (costs relating to unprocessed and/or unbottled wine products)	6,012,597	8,126,838
Finished goods (bottled wine and related products)	8,666,868	5,816,931
Current inventories	$ 15,342,544	$ 14,793,594

3. PROPERTY AND EQUIPMENT (Deta

3. PROPERTY AND EQUIPMENT (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Abstract]
Construction in progress	$ 2,814,220	$ 1,036,615
Land, improvements and other buildings	10,925,953	10,197,388
Winery building and hospitality center	15,286,053	15,055,935
Equipment	11,882,500	11,221,964
Gross Property and Equipment	40,908,726	37,511,902
Accumulated depreciation	(15,410,339)	(14,310,026)
Net Property and Equipment	$ 25,498,387	$ 23,201,876

4. DISTRIBUTION AGREEMENT REC_2

4. DISTRIBUTION AGREEMENT RECEIVABLE AND DEFERRED REVENUE (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Distribution Agreement Receivable And Deferred Revenue
Distribution agreement receivable, revenue recognized during period	$ 23,790	$ 35,715	$ 95,220	$ 107,145

5. DEBT (Details Narrative)

5. DEBT (Details Narrative) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Unamortized debt issuance costs	$ 175,537	$ 185,472
Walla Walla
Debt Instrument [Line Items]
Aggregate Outstanding Balance	137,666	275,333
Dundee Hills
Debt Instrument [Line Items]
Aggregate Outstanding Balance	1,566,550	1,621,986
Farm Credit Services
Debt Instrument [Line Items]
Aggregate Outstanding Balance	6,915,451	7,202,727
Toyota Credit Corporation
Debt Instrument [Line Items]
Aggregate Outstanding Balance	$ 26,774	$ 35,381

7. INTEREST AND TAXES PAID (Det

7. INTEREST AND TAXES PAID (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Interest And Taxes Paid
Income taxes paid	$ 158,000	$ 331,000	$ 492,250	$ 841,000
Interest paid	$ 113,889	$ 119,615	$ 343,726	$ 311,077

8. SEGMENT REPORTING (Details)

8. SEGMENT REPORTING (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Sales, net	$ 5,461,039	$ 5,143,588	$ 15,814,950	$ 14,907,917
Cost of Sales	1,918,868	1,762,214	5,660,429	5,594,744
Gross Margin	3,542,171	3,381,374	10,154,521	9,313,173
Selling Expenses	1,627,497	1,446,240	4,640,062	4,093,510
Contribution Margin	$ 1,914,674	$ 1,935,134	$ 5,514,459	$ 5,219,663
Percent of Sales	100.00%	100.00%	100.00%	100.00%
Direct Sales
Sales, net	$ 2,333,721	$ 2,263,453	$ 6,237,364	$ 5,747,579
Cost of Sales	542,154	555,817	1,580,697	1,510,003
Gross Margin	1,791,567	1,707,636	4,656,667	4,237,576
Selling Expenses	1,073,089	1,022,807	3,089,948	2,742,294
Contribution Margin	$ 718,478	$ 684,829	$ 1,566,719	$ 1,495,282
Percent of Sales	42.70%	44.00%	39.40%	38.60%
Distributor Sales
Sales, net	$ 3,127,318	$ 2,880,135	$ 9,577,586	$ 9,160,338
Cost of Sales	1,376,714	1,206,397	4,079,732	4,084,741
Gross Margin	1,750,604	1,783,501	5,497,854	5,075,597
Selling Expenses	554,408	423,433	1,550,114	1,351,216
Contribution Margin	$ 1,196,196	$ 1,331,200	$ 3,947,740	$ 3,724,381
Percent of Sales	57.30%	56.00%	60.60%	61.40%