Filed 2026-03-24 · Period ending 2025-12-31 · 39,784 words · SEC EDGAR
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# WILLAMETTE VALLEY VINEYARDS INC (WVVI) — 10-K **Filed:** 2026-03-24 **Period ending:** 2025-12-31 **Accession:** 0001199835-26-000061 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/838875/000119983526000061/) **Origin leaf:** 7f350223918cb9166310007bc98890bdb01e5efa466dd3d1a6b5c55d3a7c7b2b **Words:** 39,784 --- ** | UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | | | | | | FORM10-K | | | (Mark One) | | | | | | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | | | | | | For the fiscal year ended December 31, 2025 | | | | | | | | or | | | | | | | o | TRANSITION REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | | | | | | For the transition period from _________________ to _______________________ | | | Commission file number: 000-21522 | | | | | | WILLAMETTE VALLEY VINEYARDS, INC. | | | (Exact name of registrant as specified in its charter) | | | | | | Oregon | 93-0981021 | | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | | | | | | 8800 Enchanted Way, S.E. Turner, OR 97392 | | | (Address of principal executive offices) | | | | | Registrants telephone number, including area code: (503) 588-9463** **Securities registered pursuant to Section 12(b) of the Act:** | Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered | | | Common Stock | | WVVI | | NASDAQ Capital Market | | | Series A Redeemable Preferred Stock | | WVVIP | | NASDAQ Capital Market | | | Securities registered pursuant to Section12(g) of the Act: None (Title of class) | | | | | | Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule405 of the Securities Act: Yes oNo x | | | | | | Indicate by check mark if the registrant is not required to file reports pursuant to Section13 or 15(d) of the Securities Exchange Act: Yes oNo x | | 1 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes xNo o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act: Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company x oEmerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes oNo x The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2025 was approximately $25,228,957. The number of outstanding shares of the registrants common stock as of March 24, 2026 was 4,979,529. | | | | | | | DOCUMENTS INCORPORATED BY REFERENCE | | | | | | None | | 2 **WILLAMETTE VALLEY VINEYARDS, INC.** **FORM10-K** **TABLE OF CONTENTS** | | | PAGE | | | | | | | | | PART I | | | | | | | | | Item 1 | Business | 4 | | | Item 1A | Risk Factors | 12 | | | Item 1B | Unresolved Staff Comments | 17 | | | Item 2 | Properties | 17 | | | Item 3 | Legal Proceedings | 18 | | | Item 4 | Mine Safety Disclosures | 18 | | | | | | | | | PART II | | | | | | | | | Item 5 | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 18 | | | Item 6 | Selected Financial Data | 18 | | | Item 7 | Managements Discussion and Analysis of Financial Condition and Results of Operations | 18 | | | Item 7A | Quantitative and Qualitative Disclosures about Market Risk | 25 | | | Item 8 | Financial Statements and Supplementary Data | 26 | | | Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 45 | | | Item 9A | Controls and Procedures | 45 | | | Item 9B | Other Information | 45 | | | Item 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 45 | | | | | | | | | PART III | | | | | | | | | Item 10 | Directors, Executive Officers and Corporate Governance | 46 | | | Item 11 | Executive Compensation | 48 | | | Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 50 | | | Item 13 | Certain Relationships and Related Transactions, and Director Independence | 51 | | | Item 14 | Principal Accounting Fees and Services | 52 | | | Item 15 | Exhibits, Financial Statement Schedules | 53 | | 3 **WILLAMETTE VALLEY VINEYARDS, INC. FORM 10-K** As used in this Annual Report on Form 10-K, we, us, our WVVI and the Company refer to Willamette Valley Vineyards, Inc. **Cautionary Note on Forward Looking Statements** This Annual Report on Form 10-K, including any information incorporated by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, referred to as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act. These forward-looking statements involve risks and uncertainties that are based on current expectations, estimates and projections about the Companys business, and beliefs and assumptions made by management. Words such as expects, anticipates, intends, plans, believes, seeks, estimates, predicts, potential, should, or will or the negative thereof and variations of such words and similar expressions are intended to identify such forward-looking statements. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including, but not limited to: availability of financing for growth, availability of adequate supply of high quality grapes, successful performance of internal operations, impact of competition, changes in wine broker or distributor relations or performance, impact of possible adverse weather conditions, impact of reduction in grape quality or supply due to disease or smoke from forest fires and changes in consumer spending. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic economic conditions. Many of these risks as well as other risks that may have a material adverse impact on our operations and business, are identified in Item 1A Risk Factors in this Annual Report on Form 10-K. We urge you to carefully review the disclosures we make concerning risks and other factors that may affect our business and operations. The forward-looking statements in this report are made as of the date hereof, and, except as otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements or to update the reasons why the actual results could differ materially from those projected in the forward-looking statements, whether as a result of new information, future events or otherwise. **PART I** **ITEM 1. BUSINESS** **Business** **Introduction **The Company was incorporated in May 1988 to produce and sell premium, super premium and ultra-premium varietals. The Company was originally established as a sole proprietorship by Oregon winegrower Jim Bernau in 1983. The Company is headquartered in Turner, Oregon, which is just south of the state capitol of Salem, Oregon. The Companys wines are made from grapes grown in vineyards owned, leased or contracted by the Company, and from grapes purchased from other vineyards. The grapes are harvested, fermented and made into wine primarily at the Companys winery in Turner, Oregon (the Estate Winery or Winery) and the wines are sold principally under the Companys Willamette Valley Vineyards label, but also under the Domaine Willamette, Griffin Creek, Tualatin Estate, Pambrun, Maison Bleue, Natoma, Metis, Pere Ami and Elton labels. The Company also owns the Tualatin Estate Vineyards and Winery, located near Forest Grove, Oregon (the Tualatin Winery). **Segments** The Company has identified two operating segments: direct sales and distributor sales, based upon their different distribution channels, margins and selling strategies. Direct sales include retail sales in our tasting rooms, wine club sales, online 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. **Products** Under its Willamette Valley Vineyards label, the Company produces and sells the following types of wine in 750 ml bottles: Pinot Noir, the brands flagship and its largest selling varietal, $25 to $120 per bottle; Chardonnay, $25 to $85 per bottle; Pinot Gris, $35 per bottle; Pinot Blanc, $40 per bottle; Sauvignon Blanc, $35 per bottle; Gruner Veltliner, $45 per bottle; Rose, $27 to $34 per bottle;Brut, $80 per bottle; Brut Rose, $80 per bottle; and Riesling, $21 per bottle (all bottle prices included herein are the suggested retail prices). The Companys mission for this brand is to become the premier producer of Pinot Noir in the Pacific Northwest. Under its Domaine Willamette label, the Company produces and sells the following types of wine in 750 ml bottles: Brut, $80 per bottle; Brut Rose, $80 per bottle; and Blanc de Blancs, $90 per bottle. This brands mission is to be the highest quality producer of Sparkling Wines in Oregon. Under its Tualatin Estate Vineyards label, the Company currently produces and sells 750 ml bottles of Semi-Sparkling Muscat, $20 per bottle. 4 Under its Griffin Creek label, the Company produces and sells the following types of wine in 750 ml bottles: Syrah, the brands flagship, $65 per bottle; Merlot, $65 per bottle; Cabernet Sauvignon, $65 per bottle; Grenache, $80 per bottle; Cabernet Franc, $65 per bottle; Tempranillo, $65 per bottle; Malbec, $60 per bottle; The Griffin (a Bordeaux style blend), $75 per bottle; and Viognier, $45 per bottle. This brands mission is to be the highest quality producer of Bordeaux and Rhone varietals in Southern Oregon. Under its Elton label, the Company produces and sells the following types of wine in 750 ml bottles: Pinot Noir, $80 per bottle; and Chardonnay, $80 per bottle. Under its Pambrun label, the Company produces and sells the following types of wine in 750 ml bottles: Chrysologue, $90 per bottle; Merlot, $80 per bottle; Cabernet Sauvignon, $90 per bottle; and Malbec, $75 per bottle. Under its Maison Bleue label, the Company produces and sells the following types of wine in 750 ml bottles: Frontiere Syrah, $80 per bottle; Gravire Syrah, $75 per bottle; Voyageur Syrah, $70 per bottle; Bourgeois Grenache, $70 per bottle; Voltigeur Viognier, $60 per bottle; and Lisette Rose, $45 per bottle. The Company holds U.S. federal and/or Oregon state trademark registrations for the trademarks material to the business, including but not limited to: Willamette, Willamette Valley Vineyards, WVV, Domaine Willamette, Willamette Whiskey, Whole Cluster, Give Your Whole Heart with Willamette Whole Cluster, Daedalus Cellars, Elton, Griffin, Griffin Creek, Ingram Estate, Its Willamette, Dammit!, Jory Claim, Pambrun, Pambrun Cross Logo, SIP. SAVE., Made in Oregon Cellars, Heart Vine, Camp Willamette, Natoma, Salem Hills, Oregon Blossom, Oregons Landmark Winery, Oregons Nog, Club Willamette, Eagles Clutch, Kayak, W Willamette Valley Vineyards, Fuller, Maison Bleue Winery, Mtis, Willamette Wineworks, Tualatin Estate, Tualatin, Natoma, Cte du Bleue and Pre Ami. **Market overview ** According to Silicon Valley Banks (SVB) 2026 annual report, US wine volume reduced by around 2% to 329 million cases and revenue reduced 1.6% to around $74.3 billion in 2025 from 2024. According to this report, US wine volume consumed has reduced over the last five years. Additionally, direct-to-consumer volume declined and tasting room visitation dropped for the fourth consecutive year and consumer demand for the overall wine category continued its decline, with fewer U.S. consumers opting for wine and choosing alternatives such as ready-to-drink beverages, spirits, cannabis, or abstaining altogether. The SVB forecast for 2026 is a continuing decline but at a slower rate, bottoming out in 2027 at around $73.0 billion, and then relatively flat through 2030. According to the SOVOS 2026 Direct-to-Consumer Wine Shipping Report, 2025 had the largest one year drop with volume down 15% year over year to 5.4 million cases and value down 6% to $3.7 billion. A 2023 study conducted by the Wine Market Council of 1,500 U.S. consumers identified a significant downward trend in wine consumption attributed to a general reduction in alcohol consumption, primarily for health reasons. Previously considered a healthy option on the Healthy Eating Pyramid, alcohol consumption is now cautioned against by organizations like the World Health Organization. According to the State of the Wine Industry Report 2023 by Rob McMillan, younger wine consumers are not limited by cost; instead, they seek something enticing to draw them in to learn more about wine, including but not limited to health, sustainability, social values, and transparent labeling, The Companys Board of Directors and management believe the winerys focus on integrity in winemaking, small scale, storied estate vineyards, environmental stewardship, support for community needs and participatory wine experiences are reflective of the values of a number of prospective, developing wine enthusiasts. **The Oregon wine industry **Oregon is a relatively new wine-producing region in comparison to California and France. In 1966, there were only two commercial wineries licensed in Oregon. According to the Oregon Vineyard and Winery Report produced by University of Oregons Institute for Policy Research and Engagement (UOIPRE) in 2024, the most recent year such data is available, the overall number of wineries decreased from 1,143 to 1,076. Planted acres of wine grape vineyards increased by 1,344 acres to 47,343, while harvested acres decreased by 3%. Oregon wine grapes produced a 2024 crop with a total value of $329 million, a decrease of 6% from 2023. Pinot Noir leads all varieties accounting for 60% of planted acreage and 58% of production. According to UOIPRE, Oregon case sales in 2024 were 5.8 million, a 4% decrease from 2023. Because of climate, soil and other growing conditions, we believe the Willamette Valley in western Oregon is ideally suited to growing superior quality Pinot Noir, Chardonnay, Pinot Gris and Riesling wine grapes. Some of Oregons Pinot Noir, Pinot Gris and Chardonnay wines have developed outstanding reputations, winning numerous national and international awards. 5 However, Oregon has certain disadvantages as a wine-producing region. Oregons wines are lesser known to consumers worldwide, and the total wine production of Oregon wineries is small relative to California and French competitors. Greater worldwide label recognition and larger production levels give Oregons competitors certain financial, marketing, distribution, and unit cost advantages. Furthermore, Oregons Willamette Valley has an unpredictable rainfall pattern in early autumn. If significantly above-average rains occur just prior to the autumn grape harvest, the quality of harvested grapes is often materially diminished, thereby affecting that years wine quality. Finally, phylloxera, an aphid-like insect that feeds on the roots of grapevines, has been found in several commercial vineyards in Oregon. Contrary to the California experience, most Oregon phylloxera infestations have expanded very slowly. Nevertheless, phylloxera does constitute a significant risk to Oregon vineyards. Prior to the discovery of phylloxera in Oregon, all vine plantings in the Companys Estate Vineyard, in Turner, Oregon, were with non-resistant rootstock. In 1997, the Company purchased Tualatin Vineyards at the Tualatin Winery, which has phylloxera at its site. All current plantings are with, and all future planting will be with, phylloxera-resistant rootstock at that location. The Company believes it has taken commercially reasonable precautions in an effort to prevent the spread of phylloxera to other vineyards. The Companys Board of Directors and management believe the Winerys focus on integrity in winemaking, small scale, storied estate vineyards, environmental stewardship, support for community needs and participatory wine experiences are reflective of the values of a number of prospective, developing wine enthusiasts. **Company Strategy** The Company, one of the largest wine producers in Oregon by volume, believes its success is dependent upon its ability to: (1) grow and purchase high quality vinifera wine grapes; (2) vinify the grapes into premium, super premium and ultra-premium wine; (3) achieve significant brand recognition for its wines, first in Oregon and then nationally and internationally; (4) effectively distribute and sell its products nationally; and (5) continue to build on its base of direct to consumer sales. The Companys goal is to continue to build on a reputation for producing some of Oregons finest, most sought-after wines. Based upon several highly regarded surveys of the U.S. wine industry, the Company believes that successful wineries exhibit the following four key attributes: (i) focus on production of high-quality premium, super-premium and ultra-premium varietal wines; (ii) achieve brand positioning that supports high bottle prices for its high quality wines; (iii) build brand recognition; and (iv) develop strong marketing advantages (such as a highly visible winery locations, successful support of distribution, and life-long customer service programs). To successfully execute this strategy, the Company has assembled a team of accomplished winemaking professionals and has constructed and equipped the Estate Winery into a 12,784 square foot winery that includes a 12,500 square foot outdoor production area for the harvesting, pressing and fermentation of wine grapes. The Companys marketing and selling strategy is to sell its premium, super premium and ultra-premium wine through a combination of direct sales at the Companys wineries, tasting room and restaurant locations in Oregon, Washington and California and sales through independent distributors and wine brokers who market the Companys wine in specific targeted areas. To remain competitive in the premium, super premium and ultra-premium market, the Company has developed a brand in the Walla Walla American Viticultural Area (AVA) under the names Pambrun, Maison Bleue and Metis. The Company produces small vintages of Cabernet Sauvignon and other Bordeaux-varietals, under the Pambrun brand, and Syrah and other Rhone-varietals, under the Maison Bleue brand, to compete in the ultra-premium wine market. The Company has released wines under the Pambrun label beginning with the 2015 vintage year and under the Maison Bleue label beginning with the 2016 vintage year. Additionally, the Company has developed a single vineyard brand near Hopewell, Oregon adjacent to the current site of Elton Vineyards to produce wine under the Elton label. This brand produces primarily Pinot Noir and Chardonnay, also for sale in the ultra-premium space. The Company has released wines under the Elton label beginning with the 2015 vintage year. In 2020, the Company opened a microwinery featuring wine tasting and a custom blending experience under the name Willamette Wineworks, in historic Folsom, California, and began selling wine under the brand name Natoma. In 2022, the Company opened a sparkling wine facility and tasting room called Domaine Willamette, at Bernau Estate that features the Companys sparkling wines, as well as its other reserve wines, and its biodynamic farming practices. 6 **Vineyards** The Company owns and leases approximately 1,018 acres of land, of which 801 acres are either currently planted as vineyards or are suitable for future vineyard planting. The vineyards the Company owns, and leases are all certified sustainable by LIVE (Low Input Viticulture and Enology) and Salmon Safe. At full production, the Company anticipates these vineyards would enable the Company to grow approximately 69% of the grapes needed to meet the winerys current production capacity of 654,000 gallons (275,000 cases) at its Estate Winery. The following table summarizes the Companys acreage: | | | ACRES | | | TONS | | | | Vineyard Name | | Total | | | Producing | | | Pre- Production | | | Plantable | | | Non- Plantable | | | 2025 | | | 2024 | | | | Owned Vineyards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | WVV Estate | | | 107 | | | | 69 | | | | - | | | | - | | | | 38 | | | | 161 | | | | 272 | | | | Tualatin Estate Vineyard | | | 107 | | | | 44 | | | | - | | | | 17 | | | | 46 | | | | 132 | | | | 204 | | | | Ingram Vineyard | | | 86 | | | | 63 | | | | - | | | | - | | | | 23 | | | | 188 | | | | 228 | | | | Pambrun Vineyard | | | 87 | | | | 20 | | | | - | | | | 30 | | | | 37 | | | | 64 | | | | 44 | | | | Loeza Vineyard | | | 62 | | | | 45 | | | | - | | | | 13 | | | | 4 | | | | 156 | | | | 97 | | | | Louisa Vineyard | | | 53 | | | | - | | | | - | | | | 25 | | | | 28 | | | | - | | | | - | | | | Maison Bleue Vineyard | | | 37 | | | | 15 | | | | - | | | | 19 | | | | 3 | | | | 66 | | | | 31 | | | | Bernau Estate | | | 20 | | | | 13 | | | | - | | | | - | | | | 7 | | | | 27 | | | | 37 | | | | Dayton Vineyard | | | 40 | | | | - | | | | 16 | | | | 18 | | | | 6 | | | | - | | | | - | | | | Lafayette Vineyard | | | 36 | | | | - | | | | - | | | | 36 | | | | - | | | | - | | | | - | | | | Jory Claim Vineyard | | | 69 | | | | - | | | | 23 | | | | 42 | | | | 4 | | | | - | | | | - | | | | Sub-Total | | | 704 | | | | 269 | | | | 39 | | | | 200 | | | | 196 | | | | 794 | | | | 913 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Leased Vineyards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Peter Michael Vineyard | | | 79 | | | | 69 | | | | - | | | | - | | | | 10 | | | | 303 | | | | 328 | | | | Meadowview Vineyard | | | 49 | | | | 49 | | | | - | | | | - | | | | - | | | | 155 | | | | 213 | | | | Elton Vineyard | | | 59 | | | | 40 | | | | - | | | | 16 | | | | 3 | | | | 119 | | | | 187 | | | | Ingram Vineyard | | | 110 | | | | 93 | | | | - | | | | 17 | | | | - | | | | 278 | | | | 387 | | | | Bernau Estate | | | 17 | | | | 9 | | | | - | | | | - | | | | 8 | | | | 19 | | | | 25 | | | | Sub-Total | | | 314 | | | | 260 | | | | - | | | | 33 | | | | 21 | | | | 874 | | | | 1,140 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Contracted Vineyards* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Various | | | 149 | | | | 149 | | | | - | | | | - | | | | - | | | | 594 | | | | 1,353 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 1,167 | | | | 678 | | | | 39 | | | | 233 | | | | 217 | | | | 2,262 | | | | 3,406 | | | | * | Contracted acreage is estimated | | *WVV Estate *Established in 1983, the Companys Estate Vineyard (the Estate Vineyard) is located at the Winery location south of Salem, near Turner, Oregon. The Estate Vineyard uses an elaborate trellis design known as the Geneva Double Curtain. The Company has incurred the additional expense of constructing this trellis because it doubles the number of canes upon which grape clusters grow and spreads these canes for additional solar exposure and air circulation. Research and practical applications of this trellis design indicate that it should improve grape quality through smaller clusters and berries over traditional designs. *Tualatin Estate Vineyard* Established in 1973 at the Tualatin Winery location near Forest Grove, Oregon, the Companys Tualatin Estate Vineyards is one of the oldest vineyards in Oregon. It was purchased by the Company in 1997. A series of sale-leaseback transactions split the property into two additional vineyards, and the Company continues to lease and manage the Peter Michael Vineyard and Meadowview Vineyard, located adjacent to the Tualatin Vineyard. *Ingram Estate and Elton Vineyard* In 2008, the Company purchased 86 acres near Hopewell, Oregon, for vineyard plantings. Adjacent to the purchased land is an additional 110 leased acres, also for vineyard development. The Company believes the site is ideally situated to grow premium Pinot Noir. The Ingram site is also adjacent to Elton Vineyards, where the Company leases 54 acres of established vineyards. 7 *Pambrun Vineyards* In 2015, the Company purchased 42 acres in the Walla Walla AVA near the town of Milton-Freewater, Oregon. Additionally, the Company purchased an additional 45 adjoining acres in 2017. The Company believes this site is ideal to grow Cabernet Sauvignon and other Bordeaux-varietals. Wines produced from this vineyard are sold under the Pambrun label. *Loeza Vineyard* The Company purchased 62 acres near Gaston, Oregon in 2014, for vineyard plantings, and believes the site is ideally situated to grow premium Pinot Gris and Pinot Noir. The site is close to Tualatin Vineyards which allows the Company to leverage existing crews for vineyard development and operations. *Louisa Vineyard* The Company purchased 53 acres in the Ribbon Ridge sub-AVA in 2016 for vineyard plantings and believes the site is suitable for growing ultra-premium Pinot Noir. *Maison Bleue Vineyard* The Company purchased approximately 37 acres in the new Rocks District of Milton-Freewater appellation near Milton-Freewater, Oregon in 2016. Grapes from this vineyard go to the Maison Bleue label. *Bernau Estate* The Company purchased approximately 17 acres in Dundee, Oregon in January 2017 comprised of 13 acres of producing Pinot Noir. Additionally, the Company added three acres through a lot line adjustment to add to the parcel. The Company leases 17 adjoining acres. *Dayton Vineyard* The Company purchased 40 acres in Dayton, Oregon in December 2016. The Company intends to plant vineyards at this location. *Lafayette Vineyard* The Company purchased 36 acres in Lafayette, Oregon in January 2018. The Company intends to plant vineyards at this location. *Jory Claim Vineyard* The Company purchased 69 acres south of Salem, Oregon in 2019. The Company intends to plant vineyards at this location. **Grape Vines** Beginning in 1997, the Company embarked on a major effort to improve the quality of its flagship varietal by planting Pinot Noir clones that originated directly from the cool climate growing region of Burgundy rather than the previous source of Napa, California, where winemakers believe the variety adapted to the warmer climate over the many years it was grown there. These new French clones are called Dijon clones after the University of Dijon in Burgundy, which assisted in their selection and shipment to a U.S. government authorized quarantine site, and then two years later to Oregon winegrowers. The most desirable of these new Pinot Noir clones are numbered 113, 114, 115, 667, 777 and 943. In addition to certain flavor advantages, these clones ripen up to two weeks earlier, allowing growers to pick before heavy autumn rains. Heavy rains can dilute concentrated fruit flavors and promote bunch rot and spoilage. These Pinot Noir clones were planted at the Tualatin Vineyards with phylloxera-resistant rootstock and the 667 and 777 clones have been grafted onto seven acres of self-rooted, non-phylloxera-resistant vines at the Companys Estate Vineyard. In 2025, crop yields were roughly 13% below the 10-year average and the Companys producing acres yielded approximately 794 tons of grapes a decrease of 13% compared to approximately 913 tons of grapes produced in 2024. The Company fulfills its remaining grape needs by purchasing grapes from other nearby vineyards at competitive prices. In 2025, the Company purchased an additional 594 tons of grapes from other growers. The Company cannot grow enough grapes to meet anticipated production needs, and therefore contracts grape purchases to make up the difference. Contracted grape purchases are considered an important component of the Companys long-term growth and risk-management plan. The Company believes high quality grapes will be available for purchase in sufficient quantity to meet the Companys requirements. Additionally, the Company will continue to evaluate opportunities to plant more acres and purchase properties for future vineyards. Management believes that the grapes grown on the Companys vineyards establish a foundation of quality through the Companys farming practices, upon which the quality of the Companys wines is built. Wine produced from grapes grown in the Companys own vineyards may be labeled as Estate Bottled wines. These wines traditionally sell at a premium over non-estate bottled wines. 8 **Viticultural Conditions** Oregons Willamette Valley is recognized as a premier location for growing certain varieties of high-quality wine grapes, particularly Pinot Noir, Pinot Gris, Chardonnay, and Riesling. The Company believes that the Estate Vineyards growing conditions, including its soil, elevation, slope, rainfall, evening marine breezes and solar orientation are among the most ideal conditions in the United States for growing certain varieties of high-quality wine grapes. The Estate Vineyards grape growing conditions compare favorably to those found in some of the famous Viticultural regions of France. Western Oregons latitude (42o46o North) and relationship to the eastern edge of a major ocean is very similar to certain centuries-old wine grape growing regions of France, such as Burgundy. In the Willamette Valley, permanent vineyard irrigation is generally not required. The average annual rainfall provides sufficient moisture to avoid the need to irrigate. However, if the need should arise, the Companys Estate property contains one water well which can sustain sufficient volume to meet the needs of the Winery and to provide auxiliary water to the WVV Estate Vineyard for new plantings and unusual drought conditions. At the Tualatin Vineyard, the Company has water rights to a year-round spring that feeds an irrigation pond. The Company also has water rights at each of the Pambrun and Maison Bleue Vineyards. *Susceptibility of vineyards to disease *The Tualatin Estate Vineyard and the adjacent leased vineyards are known to be infested with phylloxera, an aphid-like insect, which can destroy vines. It is not possible to estimate any range of loss that may be incurred due to the phylloxera infestation of the Companys vineyards. The phylloxera at Tualatin Vineyard is believed to have been introduced on the roots of the vines first planted on the property in the southern-most section Gewurztraminer in 1971 that the Company partially removed in 2004. The remaining vines, and all others infested, remain productive at low crop levels. The Company is in the process of gradually replacing infested areas with new, phylloxera-resistant vines. **Winery** *Wine production facility *The Companys Estate Winery and production facilities are capable of efficiently producing up to 275,000 cases (654,000 gallons) of wine per year, depending on the type of wine produced. In 2025, the Winery produced approximately 158,707 cases (377,333 gallons) of wine, primarily from its 2023 and 2024 harvests. The Winery is 12,784 square feet in size and contains areas for processing, fermenting, aging and bottling wine, as well as an underground wine cellar and administrative offices. There is a 12,500 square foot outside production area for harvesting, pressing and fermenting wine grapes. The Company also has a 23,000 square foot storage building to store its inventory of bottled product with a capacity of approximately 135,000 cases of wine. The production area is equipped with a settling tank and sprinkler system for disposing of wastewater from the production process in compliance with environmental regulations. In addition to the production capacity discussed above, the Tualatin Winery has 20,000 square feet of production capacity. This adds approximately 28,000 cases (66,000 gallons) of wine production capacity to the Company. The capacity at the Tualatin Winery is available to the Company to meet any anticipated future production needs. The Company also stores and ages product at the Domaine Willamette Winery location in Dundee, Oregon. *Mortgages on properties *The Companys winery facilities at the Estate Winery are subject to four mortgages with an aggregate principal balance of $15,184,395 at December 31, 2025. The first two outstanding loans require monthly principal and interest payments of $62,067 for the life of the loans, at annual fixed interest rates of 4.75% and 5.21%, and with maturity dates of 2028 and 2032, respectively. These loans are collateralized against the property on the main estate in Salem. The third loan requires monthly principal and interest payments of $87,989 at an annual interest rate of 6.66%, and with a maturity date of 2039. The fourth loan allows borrowings up to $4,350,000 against property defined in the agreement. The line of credit bears interest at 6.60% and has a maturity date of April, 2027. The general purposes of these loans were to make capital improvements to the winery and vineyard facilities. These loans are collateralized against the property on the Company estates in Salem and Tualatin. *Wine production *The Company operates on the principle that winemaking is a natural, but highly technical, process requiring the attention and dedication of the winemaking staff. The Companys Winery is equipped with current technical innovations and uses modern equipment and software to monitor the progress of each wine through all stages of the winemaking process. 9 The Companys historical annual grape harvest and wine production from 2015 to 2025 is as follows: | | | Tons of | | | Tons of | | | Total Tons | | | Gallons of | | | | | | | | | Harvest | | Grapes | | | Grapes | | | of Grapes | | | Bulk | | | Production | | Cases | | | | Year | | Grown | | | Purchased | | | Harvested | | | Purchases | | | Year | | Produced | | | | 2015 | | | 1,266 | | | | 1,012 | | | | 2,278 | | | | - | | | 2015 | | | 120,794 | | | | 2016 | | | 921 | | | | 1,052 | | | | 1,973 | | | | 47,780 | | | 2016 | | | 141,416 | | | | 2017 | | | 1,631 | | | | 1,622 | | | | 3,253 | | | | 15,900 | | | 2017 | | | 151,332 | | | | 2018 | | | 1,501 | | | | 1,063 | | | | 2,564 | | | | 800 | | | 2018 | | | 164,590 | | | | 2019 | | | 1,572 | | | | 1,046 | | | | 2,618 | | | | - | | | 2019 | | | 172,869 | | | | 2020 | | | 1,031 | | | | 1,470 | | | | 2,501 | | | | 13,173 | | | 2020 | | | 175,357 | | | | 2021 | | | 1,550 | | | | 1,522 | | | | 3,072 | | | | 6,643 | | | 2021 | | | 206,954 | | | | 2022 | | | 2,509 | | | | 1,307 | | | | 3,816 | | | | 22,000 | | | 2022 | | | 186,792 | | | | 2023 | | | 1,771 | | | | 2,421 | | | | 4,192 | | | | 11,236 | | | 2023 | | | 234,086 | | | | 2024 | | | 2,053 | | | | 1,353 | | | | 3,406 | | | | 21,731 | | | 2024 | | | 253,974 | | | | 2025 | | | 1,668 | | | | 594 | | | | 2,262 | | | | - | | | 2025 | | | 158,707 | | | **Sales and Distribution** *Marketing strategy *The Company markets and sells its wines through a combination of direct sales at the retail locations, directly through mailing lists, and through distributors and wine brokers. The Company uses a variety of marketing channels to generate interest in its wines. The Company has a highly functional website, and maintains social media sites. The Company controls a database of customers for email and direct promotions. The Company continues to submit its wines to competitions and state, regional and national media for editorials and ratings. *Direct sales *The Estate Winery is located on a visible hill adjacent to Oregons major north-south freeway (Interstate 5), approximately 2 miles south of the states second-largest metropolitan area (Salem), and 50 miles in either direction from the states first and third-largest metropolitan areas (Portland and Eugene). We believe the unique location along Interstate 5 has resulted in a greater amount of wines sold at the Estate Winery as compared to the Oregon industry standard. Direct sales from the Winery are a vital sales channel and an effective means of product promotion. The Estate Winerys Tasting Room is open daily and offers wine tasting and education by trained personnel. The Company offers by-appointment private tours offering a behind-the-scenes look at the production process of the wines. The Company has one of the largest wine club memberships in Oregon. In September 2022, the Company opened a new sparkling winery, the Domaine Willamette Winery, located adjacent to Highway 99 in Dundee, Oregon, approximately 30 miles southwest of Portland, the states largest metropolitan area, and 25 miles northwest of Salem, the states second-largest metropolitan area. We believe the location of the Domaine Willamette Winery along Highway 99 in Dundee provides an ideal location for direct wine sales and wine tourism. Domaine Willamette Winerys Tasting Room is open for wine tasting, restaurant service and education by trained personnel. It features mthode traditionelle sparkling wines and a wine club. The Company offers by-appointment private tours, giving a behind-the-scenes look at sparkling wine production. Domaine Willamette Winerys biodynamic garden is another attraction for visitors. In 2014, the Company launched daily food pairings to accompany its wines. The menu highlights Pacific Northwest inspired dishes paired with the Companys wines. The culinary offering has now expanded to include Pairings Wine Dinners, which are community-style wine dinners hosted regularly throughout the year. In December 2021, the Company debuted a Pinot Noir Clonal Blending experience giving guests the ability to be a winemaker for a day by crafting their own custom blends from barrel. The Winery has developed a Winery Ambassador program, which connects its Ambassadors with customers throughout the United States and offers personalized wine recommendations and easy ordering by phone or email. The Company sells its wine through its own e-commerce website. The Company also operates seven additional tasting rooms at the following locations: (i) Tualatin Vineyard, Oregon; (ii) Lake Oswego, Oregon; (iii Happy Valley, Oregon; (iv) Walla Walla, Washington; (v) Vancouver, Washington; (vi) Folsom, California, and (vii) Bend, Oregon. The Company holds various festivals and events at its locations throughout the year. Numerous private events, charitable and political events are also held at Company locations. 10 Direct sales produce a higher profit margin because the Company can sell its wine directly to consumers at retail prices, rather than to distributors at free-on-board prices. Sales made directly to consumers at retail prices result in an increased profit margin equal to the difference between retail prices and distributor prices. For 2025 and 2024, direct sales contributed approximately 54.4% and 53.4% of the Companys net sales, respectively. *Distributors and wine brokers *The Company uses both independent distributors and wine brokers, primarily to market the Companys wines in specific targeted areas. Only those distributors and wine brokers who have demonstrated knowledge of and a proven ability to market premium, super premium, and ultra-premium wines are utilized. The Companys products are distributed in 49 states and the District of Columbia, and there are two non-domestic (export) customers. For 2025 and 2024, sales to distributors and wine brokers contributed approximately 45.6% and 46.6% of the Companys revenue from operations, respectively. *Tourists *Oregon wineries are a popular tourist destination with many bed & breakfasts, motels and fine dining restaurants available. The Willamette Valley, Oregons leading wine region, has approximately 74% of the states wineries and is home to approximately 794 wineries. An additional advantage for Willamette Valley wine tourism is the proximity of the wineries to Portland (Oregons largest city and most popular destination). From Portland, tourists can visit the Willamette Valley winery of their choice in anywhere from a 45 minute to a three-hour drive. The Company believes the locations of the Estate Winery next to Interstate 5, and the Domaine Willamette Winery next to Highway 99W, significantly increase direct sales opportunities to consumers. The Company believes these locations provide high visibility for the Company to passing motorists, enhancing recognition of the Companys products in retail outlets and restaurants. These wineries are each an approximately 45-minute drive from Portland, the states largest metropolitan area. **Dependence on Major Customers** Historically, the Companys revenue has been derived from thousands of customers annually. In 2025, sales to one distributor represented approximately 16.4% of total Company revenue. In 2024, sales to one distributor represented approximately 16.1% of total Company revenue. **** **Competition** The wine industry is highly competitive. In a broad sense, wines may be considered to compete with all alcoholic and nonalcoholic beverages. Within the wine industry, the Company believes that its principal competitors include wineries in Oregon, California, and Washington, which, like the Company, produce premium, super premium, and ultra-premium wines. Wine production in the United States is dominated by large California wineries that have significantly greater financial, production, distribution, and marketing resources than the Company. Currently, no Oregon winery dominates the Oregon wine market. There are several Oregon wineries that are older, better established and have greater label recognition than that of the Company. The Company believes that the principal competitive factors in the premium, super premium, and ultra-premium segment of the wine industry are product quality, price, label recognition, and product supply. The Company believes it competes favorably with respect to each of these factors. The Company has primarily received Excellent to Recommended reviews in tastings of its wines and believes its prices are competitive with other Oregon wineries. Furthermore, the Company believes that its estimated aggregate production capacity of 720,000 gallons (303,000 cases) per year at its Estate and Tualatin locations give it significant competitive advantages over most Oregon wineries in areas such as marketing, distribution arrangements, grape purchasing, and access to financing. The current production level of most Oregon wineries is generally much smaller than the estimated production capacity level of the Companys Wineries. With respect to label recognition, the Company believes that its unique structure as a publicly owned company will give it a significant advantage in gaining market share in Oregon, as well as penetrating other wine markets. **Governmental Regulation of the Wine Industry** The production and sale of wine is subject to extensive regulation by the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (the TTB) and the Oregon Liquor and Cannabis Commission (the OLCC). The Company is licensed by and meets the bonding requirements of each of these governmental agencies. Sale of the Companys wine is subject to federal alcohol tax, payable at the time wine is removed from the bonded area of a winery for shipment to customers or for sale in its tasting room. In December 2017, the federal government passed comprehensive tax legislation which included the Craft Beverage Modernization and Tax Reform Act. This legislation modified federal alcohol tax rates by expanding the lower $1.07 per gallon tax rate to wines up to 16.0% alcohol content with wines containing higher alcohol levels being taxed at $1.57 per gallon. Additionally, the legislation provides for a $1 credit per gallon for the first 30,000 gallons produced; $0.90 for the next 100,000 gallons; and then $0.535 for up to 750,000 gallons. These modifications were effective January 2020 and have since been made permanent. 11 The Company also pays the state of Oregon an excise tax of $0.67 per gallon for wines with alcohol content at or below 14.0% and $0.77 per gallon for wines with alcohol content above 14.0% on all wine sold in Oregon. In addition, most states in which the Companys wines are sold impose varying excise taxes on the sale of alcoholic beverages. As an agricultural processor, the Company is also regulated by the Oregon Department of Agriculture and, as a producer of wastewater, by the Oregon Department of Environmental Quality. The Company has secured all necessary permits to operate its business. Prompted by growing government budget shortfalls and public reaction against alcohol abuse, government entities often consider legislation that could potentially affect the taxation of alcoholic beverages. Excise tax rates being considered are often substantial. The ultimate effects of such legislation, if passed, cannot be assessed accurately. Any increase in the taxes imposed on table wines can be expected to have a potentially adverse impact on overall sales of such products. However, the impact may not be proportionate to that experienced by producers of other alcoholic beverages and may not be the same in every state. **Costs and Effects of Compliance with Local, State and Federal Environmental Laws** The Company management is strongly focused on environmental stewardship and maintains a variety of policies and processes designed to protect the environment, the public and consumers of its wine. Although much of the Companys expenses for protecting the environment are voluntary, the Company is regulated by various local, state and federal agencies regarding environmental laws. However, these regulatory costs and processes are effectively integrated into the Companys regular operations and consequently do not generally cause significant alternative processes or costs. **** **Employees** As of December 31, 2025, the Company had approximately 158 full-time employees and 141 part-time employees. In addition, the Company hires additional employees for seasonal work as required. The Companys employees are not represented by any collective bargaining unit. The Company believes it maintains positive relations with its employees. **Additional Information** The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and proxy statements with the Securities and Exchange Commission (SEC). The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC at www.sec.gov. You may learn more about the Company by visiting the Companys website at www.wvv.com. All of the reports we file with the SEC are available from this website. All websites referred to herein are inactive textual references only, meaning that the information contained in such websites is not incorporated by reference herein. **ITEM 1A. RISK FACTORS** The following disclosures should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K. These disclosures are intended to discuss certain material risks of the Companys business as they appear to management at this time, however, this list is not exhaustive. Other risks may, and likely will, arise from time to time. *Agricultural risks could adversely affect the Company* Winemaking and grape growing are subject to a variety of agricultural risks. Various diseases, pests, fungi, viruses, including Grapevine Red Blotch Disease (GRBV), drought, frost and certain other weather conditions can affect the quantity of grapes available to the Company, decreasing the supply of the Companys products and negatively impacting profitability. In particular, certain of the Companys vines are not resistant to phylloxera; accordingly, those vines are particularly at risk to the effects from an infestation of phylloxera. Phylloxera is a pest that attacks the rootstocks of wine grape plants. Vineyards in the United States, including some in Oregon and some owned by us, have been infested with phylloxera. In particular, Tualatin Estate Vineyards have phylloxera. There can be no assurance that the Companys existing vineyards, or the rootstocks the Company is now using in its planting programs, will not become susceptible to current or new strains of phylloxera or that the phylloxera present at the Tualatin Vineyards will not spread to our other vineyards. Additionally, any future government restrictions created in connection with government attempts to combat phylloxera, GRBV or other pests or viruses may increase vineyard costs and/or reduce production. *Our operations are susceptible to changing weather patterns and other environmental factors* Over the past several years, changing weather patterns and climatic conditions have added to the unpredictability and frequency of natural disasters, such as hailstorms, wildfires and wind, snow and ice storms. Any such extreme weather condition could negatively impact the harvest of grapes at our vineyards and/or the other vineyards that supply us with grapes for our wine. Oregons Willamette Valley has an unpredictable rainfall pattern, particularly in early autumn. If significantly above-average rains occur just prior to the autumn grape harvest, the quality of harvested grapes is often materially diminished, thereby affecting that years wine quality. 12 Additionally, long-term changes in weather patterns could adversely affect the Company, especially if such changes impacted the amount or quality of grapes harvested. We cannot anticipate changes in weather patterns/conditions, and we cannot predict their impact on our operations if they were to occur. As weather patterns evolve, the Companys vineyards, and contracted vineyards have become susceptible to potential smoke damage as a result of wildfires within the region. In extreme events, smoke can produce effects on grapes that make them unusable in the production of wine. The Company cannot predict smoke events, or the potential impact if such events were to occur. *We may not be able to economically insure certain risks* The Company maintains insurance policies to cover certain risks. However, not all risks can be insured, or insured economically, and there may be gaps in coverage that could expose the Company to liability should an event occur. Additionally, we cannot be certain that coverage levels are adequate or that all of our insurers will be financially viable if we make a claim. *Loss of key employees could harm the Companys reputation and business* The Companys success depends to some degree upon the continued service of a number of key employees. The loss of the services of one or more of these key employees, including James W. Bernau, our President, John Ferry, our Chief Financial Officer and Mike Osborn, our Chief Executive Officer could harm the Company and its reputation and negatively impact its profitability, particularly if one or more of the Companys key employees resigns to join a competitor or to form a competing company. *The Companys ability to operate requires adequate funding* The Companys cash flow from operations historically has not been sufficient to provide all funds necessary for the Companys operations. The Company has entered into two line of credit agreements to provide such funds and entered into term loan arrangements. There is no assurance that the Company will be able to comply with all conditions under its credit facilities in the future or that the amount available under its line of credit facility or capital raises will be adequate for the Companys future needs. Failure to comply with all conditions of the credit facilities, or to have sufficient funds for operations could adversely affect the Companys results of operations and stockholder value. As of December 31, 2025, the Companys outstanding long-term debt was approximately $15.0 million, with $3.1 million drawn under its short-term line of credit. Additionally, the Company had notes payable to private parties of approximately $0.9 million as of December 31, 2025. *Costs of being a publicly-held company may put the Company at a competitive disadvantage* As a public company, the Company incurs substantial costs that are not incurred by its competitors that are privately-held. These compliance costs may result in the Companys wines being more expensive than those produced by its competitors and/or may reduce profitability compared to such competitors. *The Company faces significant competition which could adversely affect profitability* The wine industry is intensely competitive and highly fragmented. The Companys wines compete in several premium wine market segments with many other premium domestic and foreign wines, with imported wines coming from the Burgundy and Bordeaux regions of France, as well as Italy, Chile, Argentina, South Africa, New Zealand and Australia. The Companys wines also compete with popular generic wines and with other alcoholic and, to a lesser degree, non-alcoholic beverages, for shelf space in retail stores and for marketing focus by the Companys independent distributors, many of which carry extensive brand portfolios. In addition, the wine industry has experienced significant consolidation. Many of the Companys competitors have greater financial, technical, marketing, and public relations resources than the Company does. In particular, wine production in the United States is dominated by large California wineries that have significantly greater resources than the Company. Additionally, greater worldwide label recognition and larger production levels give many of the Companys competitors certain unit cost advantages. Company sales may be harmed to the extent it is not able to compete successfully against such wine or alternative beverage producers costs. There can be no assurance that in the future the Company will be able to successfully compete with its current competitors or that it will not face greater competition from other wineries and beverage manufacturers. 13 *The Willamette Valley AVA value may be eroded by out of state competition who use it inappropriately or as fanciful marketing* Wine grape growing regions in the United States are divided into AVAs by the United States Department of the Treasurys TTB, based on distinguishable geographic features. The Oregon wine industry has historically embraced higher standards for wine production than those established by the federal government and other states. As a result, wines from Oregon AVAs, and specifically the Willamette Valley AVA, have achieved recognition for their quality when compared against other wines in their class. As a result, these Oregon wines are often sold at a higher price point than wines not produced in Oregon. Because of this recognition, out of state competitors have inappropriately used Oregon AVAs on bottles and packaging, claiming its use as fanciful marketing. Such use, inappropriate or otherwise, could have a dilutive effect on the prestige of Oregon AVAs and ultimately the prices that can be charged for wines from Oregon AVAs as a result of reduced competitor quality and/or pricing. *The Company competes for shelf space in retail stores and for marketing focus by its independent distributors, most of whom carry extensive product portfolios* Nationwide, the Company sells its products primarily through independent distributors and brokers for resale to retail outlets, restaurants, hotels, and private clubs across the United States and in some overseas markets. Sales to distributors are expected to continue to represent a substantial portion of the Companys net revenue in the future. A change in the relationship with any of the Companys significant distributors could harm the Companys business and reduce Company sales. The laws and regulations of several states prohibit changes of distributors, except under certain limited circumstances, making it difficult to terminate a distributor for poor performance without reasonable cause, as defined by applicable statutes. Any difficulty or inability to replace distributors, poor performance of the Companys major distributors or the Companys inability to collect accounts receivable from its major distributors could harm the Companys business. There can be no assurance that the distributors and retailers the Company uses will continue to purchase the Companys products or provide Company products with adequate levels of promotional support. Consolidation at the retail tier, among club and chain grocery stores in particular, can be expected to heighten competitive pressure to increase marketing and sales spending or constrain or reduce prices. *Loss of the Willamette Valley Vineyards or Willamette trademarks could adversely affect the Companys distinction within the AVA* The Company has long held the federal trademarks Willamette Valley Vineyards and Willamette, as used in its wine brands. While it is lawful for wine producers meeting the federal and state requirements to list the Willamette Valley AVA source of their wine grapes and wine on their labels, packaging and advertising materials, the Company has enforced its trademarks on any unauthorized use as a wine brand. We consider our trademarks to be of considerable value and importance to our business, and if we fail to protect our trademarks, we may be unable to successfully market our products and compete effectively. *Fluctuations in quantity and quality of grape supply could adversely affect the Company* A shortage in the supply of quality grapes may result from a variety of factors that determine the quality and quantity of the Companys grape supply, including weather conditions, pruning methods, diseases and pests, the ability to buy grapes on long and short term contracts and the number of vines producing grapes. Any shortage in the Companys grape production could cause a reduction in the amount of wine the Company is able to produce, which could reduce sales and adversely impact the Companys results from operations. Factors that reduce the quantity of the Companys grapes may also reduce their quality, which in turn could reduce the quality or amount of wine the Company produces. Deterioration in the quality of the Companys wines could harm its brand name and could reduce sales and adversely impact the Companys results of operations. ** *Contamination of the Companys wines would harm the Companys business* The Company is subject to certain hazards and product liability risks, such as potential contamination, through tampering or otherwise, of ingredients or products. Contamination of any of the Companys wines could cause it to destroy its wine held in inventory and could cause the need for a product recall, which could significantly damage the Companys reputation for product quality. The Company maintains insurance against certain of these kinds of risks, and others, under various insurance policies. However, the insurance may not be adequate or may not continue to be available at a price or on terms that are satisfactory to the Company and this insurance may not be adequate to cover any resulting liability. 14 *A reduction in consumer demand for premium wines could harm the Companys business* There have been periods in the past in which there were substantial declines in the overall per capita consumption of beverage alcohol products in the United States and other markets in which the Company participates. A limited or general decline in consumption in one or more of the Companys product categories could occur in the future due to a variety of factors, including: a general decline in economic conditions; increased concern about the health consequences of consuming alcoholic beverage products and about drinking and driving; a trend toward a healthier diet including lighter, lower calorie beverages such as diet soft drinks, juices and water products; the increased activity of anti-alcohol consumer groups; and increased federal, state or foreign excise and other taxes on beverage alcohol products. The competitive position of the Companys products could also be affected adversely by any failure to achieve consistent, reliable quality in the product or service levels to customers. *Changes in consumer spending could have a negative impact on the Companys financial condition and business results* Wine sales depend upon a number of factors related to the level of consumer spending, including the general state of the economy, federal and state income tax rates, deductibility of business entertainment expenses under federal and state tax laws, and consumer confidence in future economic conditions. Changes in consumer spending can affect both the quantity and the price of wines that customers are willing to purchase at restaurants or through retail outlets. Reduced consumer confidence and spending may result in reduced demand for the Companys products, limitations on the Companys ability to increase prices and increased levels of selling and promotional expenses. This, in turn, may have a considerable negative impact upon the Companys sales and profit margins. *Increased regulation and/or taxation could adversely affect the Company* The wine industry is subject to extensive regulation by the TTB and various foreign agencies, state liquor authorities (such as the OLCC) and local authorities. These regulations and laws dictate such matters as licensing requirements, trade, and pricing practices, permitted distribution channels, permitted and required labeling, and advertising and relations with wholesalers and retailers. Any expansion of the Companys existing facilities or development of new vineyards or wineries may be limited by present and future zoning ordinances, environmental restrictions, and other legal requirements. In addition, new regulations or requirements or increases in excise taxes, income taxes, property and sales taxes or international tariffs, could negatively affect the Companys financial condition or results of operations. Recently, many states have considered proposals to increase, and some of these states have increased, state alcohol excise taxes. Additionally, many states have revised, or are revising, statutes that broaden the definition of nexus to increase tax revenue from out of state businesses. New or revised regulations, or increased licensing fees, requirements or taxes could have a material adverse effect on the Companys financial condition or results of operations. There can be no assurance that new or revised regulations, taxes or increased licensing fees and requirements will not have a material adverse effect on the Companys business and its results of operations and its cash flows. *The Companys common stock is thinly traded, and therefore not as liquid as other investments.* The trading volume of the Companys common stock (the Common Stock) on the NASDAQ Capital Market (NASDAQ) is consistently thin, in that there is not a great deal of trading activity on a daily basis. Because the average active trading volume is thin, there is less opportunity for shareholders to sell their shares of Common Stock on the open market, resulting in the common stock being less liquid than Common Stock in other publicly traded companies. ** *The Company may face liabilities associated with the offer and sale of its Preferred Stock.* In August 2015, the Company commenced a public offering of our Series A Redeemable Preferred Stock (the Preferred Stock) pursuant to a registration statement filed with the SEC. The Company registered this transaction with the securities authorities of the States of Oregon and Washington and, in November 2015, achieved listing status for the Preferred Stock on NASDAQ under the trading symbol WVVIP. Subsequent to this date, the Company completed an additional 11 offerings of Preferred Stock, in each case pursuant to a registration statement, filed with and declared effective by, the SEC. The terms of our Preferred Stock are unusual for a company of our size, and we believe the structure of these securities and of the offering is not commonplace among issuers. Federal and state securities laws impose significant liabilities on issuers of securities if the related offering documents contain material misstatements of fact, or if the documents omit to state facts necessary, in light of the circumstances as a whole, to prevent the documents from being misleading. These liabilities can include rescission liability to the purchasers of the securities, as well as potential enforcement liability that could give rise to civil money penalties. Securities litigation can be extraordinarily expensive and protracted, and if we are accused of misstatements or omissions in our offering documents, we may face economic harms and management distractions regardless of the ultimate outcome of any such litigation. Further, if we ultimately are adjudged to have actually made a material misstatement or omission, the Company may be liable for the repayment of the purchase price of the related securities, plus interest from the date of purchase. Any one or more of these events or circumstances would have a material adverse impact upon our business, financial condition or results of operations, and may make it more difficult or more expensive to undertake capital-raising efforts in the future. 15 *The Company may be unable to pay accumulated dividends on its Preferred Stock.* The Companys Preferred Stock bears a cumulative 5.3% dividend based upon the original issue price, or $0.22 per share per annum. However, prior to the declaration and payment of dividends our board of directors must determine, among other things, that funds are available out of the surplus of the Company and that the payment would not render us insolvent or compromise our ability to pay our obligations as they come due in the ordinary course of business. Additionally, our existing credit facility limits, and future debt obligations in the future may limit, both our legal and our practical ability to declare and pay dividends. As a result, although the Preferred Stock will continue to earn a right to receive dividends, the Companys ability to pay dividends will depend, among other things, upon our ability to generate excess cash. However, although shares of our Preferred Stock will earn cumulative dividends, unpaid dividends will not, themselves, accumulate (as might compounding interest on a debt security, for example). As the Companys sales revenues are dependent in part upon the purchases made by and continued goodwill with its holders of Preferred Stock, any failure to pay dividends timely could adversely effect the Companys sales. Additionally, as the Company focuses its issuance of Preferred Stock to wine enthusiasts likely to purchase the Companys wines, any failure by management to successfully target its stock sales could diminish the opportunity to maximize earnings and offset the administrative, regulatory, and legal costs of this form of capital formation through preferred stockholder wine purchases. *The issuance of additional shares of our Preferred Stock or Common Stock in the future could adversely affect holders of Common Stock.* The market price of our Common Stock may be influenced by any preferred stock we may issue. Our board of directors is authorized to issue additional classes or series of preferred stock without any action on the part of our stockholders. This includes the power to set the terms of any such classes or series of preferred stock that may be issued, including voting rights, dividend rights and preferences over Common Stock with respect to the liquidation, dissolution or winding up of the business and other terms. If we issue preferred stock in the future that has preference over our Common Stock with respect to liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our Common Stock, the rights of holders of the Common Stock or the market price of the Common Stock could be adversely affected. ** *Failures or security breaches of our information technology systems could disrupt our operations and negatively impact our business.* We use information technologies to manage our operations and various business functions. We rely on various technologies to process, store and report on our business and to communicate electronically between our facilities, personnel, customers, and suppliers as well as for administrative functions and many of such technology systems are independent of one another for their functionality. We also use information technologies to process financial information and results of operations for internal reporting purposes and to comply with regulatory, legal and tax requirements. We rely on third party providers for some of these information technologies and support. Our ability to effectively manage our business and coordinate the production, distribution and sale of our products is highly dependent on our technology systems. Despite our security design and controls and other operational safeguards, and those of our third party providers, our information technology systems may be vulnerable to a variety of interruptions, including during the process of upgrading or replacing hardware, software, databases or components thereof, natural disasters, terrorist attacks, telecommunications failures, computer viruses, cyber-attacks, hackers, unauthorized access attempts and other security issues or may be breached due to employee error, malfeasance or other disruptions. Any such interruption or breach could result in operational disruptions or the misappropriation of sensitive data that could subject us to civil and criminal penalties, litigation or have a negative impact on our reputation. There can be no assurance that such disruptions or misappropriations and the resulting repercussions will not negatively impact our cash flows and materially affect our results of operations or financial condition. In addition, many of our information technology systems, such as those we use for administrative functions, including human resources, payroll, accounting, and internal and external communications, as well as the information technology systems of our third-party business partners and service providers, whether cloud-based or hosted in proprietary servers, contain personal, financial or other information that is entrusted to us by our customers and personnel. Many of our information technology systems also contain proprietary and other confidential information related to our business, such as business plans and research and development initiatives. To the extent we or a third party were to experience a material breach of our or such third partys information technology systems that result in the unauthorized access, theft, use, destruction or other compromises of our customers or personnels data or confidential information stored in such systems, including through cyber-attacks or other external or internal methods could result in a violation of applicable privacy and other laws, and subject us to litigation and governmental investigations and proceedings, any of which could result in our exposure to material liability. 16 *The provisions in our articles of incorporation, our by-laws and Oregon law could delay or deter tender offers or takeover attempts that may offer a premium for our common stock.* Certain provisions in our articles of incorporation, our by-laws and Oregon law could make it more difficult for a third party to acquire control of us, even if that transaction could be beneficial to stockholders. These impediments include, but are not limited to; the classification of our board of directors (the Board) into three classes serving staggered three-year terms, which makes it more difficult to quickly replace Board members; the ability of our Board, subject to certain limitations under the NASDAQ rules, to issue shares of Preferred Stock with rights as it deems appropriate without stockholder approval; a provision that special meetings of our Board may be called only by our President or at the request of holders of not less than half of all outstanding shares of our Common Stock; a provision that any member of the Board, or the entire Board, may be removed from office only for cause; and a provision that our stockholders comply with advance-notice provisions to bring director nominations or other matters before meetings of our stockholders. The Board may implement other changes that further limit the potential for tender offers or takeover attempts. **ITEM 1B. UNRESOLVED STAFF COMMENTS** None. **ITEM 1C. CYBERSECURITY** The Company has not adopted any formal cybersecurity risk management program or formal processes for assessing, identifying, and managing material risks from cybersecurity threats. At the management level, our Chief Executive Officer and Chief Financial Officer are responsible for addressing cybersecurity incidents, while our full Board has oversight responsibility for the Companys overall risk management, including cybersecurity risk, and has not delegated oversight authority for cybersecurity risks to any committee. In the event a cybersecurity incident occurs, the Companys Chief Executive Officer and the Chief Financial Officer are expected to inform the Board of the details of such incident as well as the measures taken in response to such incident. In fiscal year 2025, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. **ITEM 2. PROPERTIES** **** *Vineyards* The Company owns or leases 1,018 acres of land, of which 704 acres is owned and 314 acres leased. Of the 1,018 acres of land owned or leased, 529 acres are productive vineyards, 272 acres are pre-productive vineyards or are suitable for future vineyard plantings, and 217 acres are not suitable for vineyard planting or are used or reserved for winery or hospitality purposes. See Item 1 Business - Vineyards, of this Annual Report on Form 10-K for the locations of each of the Companys vineyards (both owned and leased) and other information pertaining to the production capacity, harvest totals and other important characteristics of each such vineyard. *Wine production facility* We believe the Companys Estate Winery and production facilities are capable of efficiently producing up to 275,000 cases (654,000 gallons) of wine per year, depending on the type of wine produced. In 2025, the Winery produced approximately 158,707 cases (377,333 gallons) of wine, mostly from its 2024 and 2023 harvests. The Winery is 12,784 square feet in size and contains areas for processing, fermenting, aging, and bottling wine, as well as an underground wine cellar, meeting rooms, and administrative offices. There is a 12,500 square foot outside production area for harvesting, pressing and fermenting wine grapes. The Company also has a 23,000 square foot storage building to store its inventory of bottled product. The production area is equipped with a settling tank and sprinkler system for disposing of wastewater from the production process in compliance with environmental regulations. The Companys main hospitality center is located at the Companys Estate Winery (the Hospitality Center) and is a large 35,642 square foot tasting and hospitality facility. The Hospitality Center sits above the underground barrel cellar and tunnel that connects with the Winery. The facility includes a basement cellar, tunnel, and barrel room of 11,090 square feet used to store up to 1,800 barrels of wine for aging in the proper environment. The Company-owned Tualatin Estate Winery has 20,000 square feet of production capacity. This adds approximately 28,000 cases (66,000 gallons) of wine production capacity to the Company. The production capacity at the Tualatin Estate Winery is available to the Company to meet future production needs. The storage capacity at the Tualatin Estate Winery is periodically used to store excess bulk wine. Additionally, the Company operates a small retail store and tasting room at the Tualatin Estate Winery. The Company-owned sparkling winery, Domaine Willamette, is located adjacent to Highway 99 in Dundee, Oregon, at Bernau Estate. Bernau Estate also features a tasting room and restaurant, retail bottle shop and residence, in addition to the winery. The Company carries property and liability insurance coverage in amounts deemed adequate by management. For additional discussion of vineyard and wine production facilities, see Item 1. Business. 17 **ITEM 3. LEGAL PROCEEDINGS** Although the Company from time to time may be involved with disputes, claims and litigation related to the conduct of its business, there are no material legal proceedings pending to which the Company is a party or to which any of its property is subject, and the Companys management does not know of any such action being contemplated. **ITEM 4. MINE SAFETY DISCLOSURES** Not applicable. **PART II** **ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES** **Market Information** The Companys Common Stock is traded on the NASDAQ Capital Market under the symbol WVVI. **Holders** As of March 24, 2026, the Company had approximately 3,280 Common Stock stockholders of record. As some of our shares of Common Stock are held in street name by brokers on behalf of stockholders, we are unable to estimate the total number of beneficial holders of our Common Stock represented by these record holders. **Dividends** The Company has paid dividends on the Preferred Stock. The Company has not paid any dividends on its Common Stock, and the Company does not anticipate paying any dividends on Common Stock in the foreseeable future. The Company intends to use its earnings to expand its vineyards, winemaking, and customer service facilities. **Equity Compensation Plans** See Equity Compensation Plan Information under Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters for information on our equity compensation plans. **** **Recent Sales of Unregistered Securities** None. **Issuer Purchases of Equity Securities** None. **ITEM 6. [RESERVED]** **ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** The following Managements Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Companys financial statements and related notes. Some statements and information contained in this Managements Discussion and Analysis of Financial Condition and Results of Operations are not historical facts but are forward-looking statements. For a discussion of these forward-looking statements, and of important factors that could cause results to differ materially from the forward-looking statements contained in this report, see Cautionary Note on Forward-Looking Statements. 18 **Critical Accounting Policies and Estimates** Managements Discussion and Analysis of Financial Condition and Results of Operations discusses Willamette Valley Vineyards financial statements, which have been prepared in accordance with generally accepted accounting principles. As such, management is required to make certain estimates, judgments and assumptions that are believed to be reasonable based upon the information available. On an on-going basis, management evaluates its estimates and judgments, including those related to product returns, bad debts, inventories, leases, investments, income taxes, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in Note 1 to our financial statements, we believe the following accounting policies are those most critical to the judgements and estimates used in the preparation of our financial statements. **Revenue** The Companys principal sources of revenue are derived from direct sales and sales through distributors of wine. Distributor sales are recognized from wine sales at the time of shipment and passage of title. The Companys payment arrangements with wholesalers provide primarily 30-day terms and, to a limited extent, 45-day, 60-day, or longer terms for some international wholesalers. Direct sales through the Companys tasting rooms are recognized at the point of sales. Sales through the internet and wine club sales are recognized when the product has shipped to the customer or is ready for the scheduled pickup. The Company pays depletion allowances to the Companys distributors based on their sales to their customers. The Company sets these allowances on a monthly basis and the Companys distributors bill them back on a monthly basis. All depletion expenses associated with a given month are recognized in that month as a reduction of revenues. The Company also reimburses for samples used by distributors up to 1.5% of product sold to the distributors. Sample expenses are recognized at the time the Company is billed by the distributor as a selling, general and administrative expense. Amounts paid by customers to the Company for shipping and handling expenses are included in the net revenue. Expenses incurred for outbound shipping and handling charges are included in selling, general and administrative expense. **Inventory** The Company values inventories at the lower of actual cost to produce the inventory or net realizable value. The Company regularly reviews inventory quantities on hand and adjusts its production requirements for the next twelve months based on estimated forecasts of product demand. A significant decrease in demand could result in an increase in the amount of excess inventory quantities on hand. In the future, if the Companys inventory cost is determined to be greater than the net realizable value of the inventory upon sale, the Company would be required to recognize such excess costs in its cost of goods sold at the time of such determination. Therefore, although the Company makes every effort to ensure the accuracy of its forecasts of future product demand, any significant unanticipated changes in demand could have a significant impact on the ultimate selling price and cases sold and, therefore, the carrying value of the Companys inventory and its reported operating results. Additionally, the Company regularly evaluates inventory for obsolescence and marketability and if it determines that the inventory is obsolete, or no longer suitable for use or marketable, the cost of that inventory is recognized in cost of sales at the time of such determination. **Other Accounting Policies and Estimates** **Vineyard Development** The Company capitalizes internal vineyard development costs prior to the vineyard land becoming fully productive. These costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. Amortization of such costs as annual crop costs is done on a straight-line basis for the estimated economic useful life of the vineyard, which is estimated to be 30 years. The Company regularly evaluates the recoverability of capitalized 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. **Income Taxes** The Company accounts for income taxes using the asset and liability approach. This requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and the tax basis of assets and liabilities at the applicable tax rates. The Company evaluates deferred tax assets, and records a valuation allowance against those assets, if available evidence suggests that some of those assets will not be realized. The effect of uncertain tax positions would be recorded in the financial statements only after determining a more likely than not probability that the uncertain tax positions would withstand an examination by tax authorities based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As facts and circumstances change, management reassesses these probabilities and would record any changes in the financial statements as appropriate. 19 **Overview** The Company generates revenue from the sales of wine to wholesalers and direct to consumers. The Company is experiencing increased levels of competition in traditional wholesale to retail grocery distribution from large California based wineries that are acquiring, producing, and marketing Oregon branded wines. Direct to consumer sales primarily include sales through the Companys tasting rooms and wine club. Direct to consumer sales provide a higher gross profit to the Company due to prices received being closer to retail than those prices paid by wholesalers. The Company continues to emphasize growth in direct-to-consumer sales through use of the Hospitality Center, opening tasting rooms and growth in wine club membership. The Company had 10,481 wine club memberships as at December 31, 2025, a net decrease of 702 when compared to December 31,2024. Additionally, the Companys Preferred Stock sales since August 2015 have resulted in approximately 14,811 preferred stockholders, many of which the Company believes are wine enthusiasts. When considering joint ownership, we believe these new shareholders represent approximately 22,216 potential customers of the Company. The Company also has approximately 3,280 shareholders of Common Stock which we believe represent an estimated 4,920 potential customers when considering joint ownership. Additionally, the Company has made a significant investment in developing alternative wine brands, products, direct sales methods, and locations. Periodically, the Company will sell grapes or bulk wine, which primarily consist of inventory that does not meet Company standards or is in excess of production targets. However, this activity is not a significant part of the Companys activities. The Company sold approximately 173,014 and 186,419 cases of produced wine during the years ended December 31, 2025 and 2024, respectively, a decrease of 13,405 cases, or 7.2% in the current year over the prior year. The decrease in case sales was primarily the result of both lower direct sales and lower sales to wholesalers in 2025 when compared to 2024. Cost of sales includes grape costs, whether purchased or grown at Company vineyards, crush costs, winemaking and processing costs, bottling, packaging, warehousing, and shipping and handling costs associated with purchased production materials. For grapes grown at Company vineyards, costs include farming expenditures and amortization of vineyard development costs. At December 31, 2025, wine inventory included 188,527 cases of bottled wine and 697,725 gallons of bulk wine in various stages of the aging process. Cased wine is expected to be sold over the next 12 to 24 months (and generally before the release date of the next vintage). The Winery bottled 158,707 cases during the year ended December 31, 2025. **Results of Operations** **2025 compared to 2024** Net loss was $917,685 and $117,894, for the years ended December 31, 2025 and 2024, respectively, an increase in net loss of $799,791, for the year ended December 31, 2025 over the prior year period. The primary reason for this increase was a lower gross profit from reduced sales revenue in the current year, being partially offset by higher other income in 2025 compared to the previous year as the result of a legal settlement received by the Company attributable to historical wildfires. Net loss applicable to common shareholders was $3,170,626 and $2,370,835, for the years ended December 31, 2025 and 2024, respectively, an increase of $799,791, or 33.7%, for the year ended December 31, 2025 over the prior year period. This increase was driven by a higher net loss. The Company had net sales revenues of $37,197,122 and $39,782,442 for the years December 31, 2025 and 2024, respectively, a decrease of $2,585,320, or 6.5%, for the year ended December 31, 2025 over the prior year period primarily as a result of a decrease in revenue from direct sales, net of excise taxes, of $1,013,762, or 4.8% in 2025 compared to 2024, and a decrease in revenue from sales to distributors of $1,571,558 or 8.5% in 2025 compared to 2024. The Company has three primary sales channels: direct-to-consumer retail sales, in-state sales to distributors, and out-of-state sales to distributors. During 2025, revenues from retail sales decreased 4.7%, revenues from in-state sales decreased 4.8%, and revenues from out-of-state sales decreased 10.2%, compared to 2024. Direct sales included $0 of bulk wine and grape sales in the years ended December 31, 2025 and 2024, and represented approximately 54.4% and 53.4% of the Companys total revenue for 2025 and 2024, respectively, while the Companys remaining revenues came from sales through distributors. 20 The following table sets forth certain information regarding the Companys revenue, excluding excise taxes, from the Winerys operations for the twelve months ended December 31, 2025 and 2024: | | | Year ended December 31, | | | | | | 2025 | | | 2024 | | | | Retail sales | | $ | 20,458,007 | | | $ | 21,465,475 | | | | In-state sales | | | 6,158,602 | | | | 6,470,363 | | | | Out-of-state sales | | | 11,008,004 | | | | 12,251,996 | | | | Bulk wine/miscellaneous sales | | | - | | | | - | | | | | | | | | | | | | | | Total revenue | | | 37,624,613 | | | | 40,187,834 | | | | | | | | | | | | | | | Less excise taxes | | | (427,491 | ) | | | (405,392 | ) | | | | | | | | | | | | | | Sales, net | | $ | 37,197,122 | | | $ | 39,782,442 | | | Retail sales revenues for the years ended December 31, 2025 and 2024 were $20,458,007 and $21,465,475 respectively, a decrease of $1,007,468, or 4.7%, for the year ended December 31, 2025 over the prior year period. The decrease in retail sales revenues in 2025 compared to 2024 was mostly a result of decreased revenues from internet, tasting room and telephone sales in 2025. In-state sales revenues for the years ended December 31, 2025 and 2024 were $6,158,602 and $6,470,363, respectively, a decrease of $311,761, or 4.8%, for the year ended December 31, 2025 over the prior year period. Out-of-state sales revenues for the years ended December 31, 2025 and 2024 were $11,008,004 and $12,251,996, respectively, a decrease of $1,243,992, or 10.2%. The Company pays alcohol excise taxes to both the OLCC and to the TTB. These taxes are based on product sales volumes. The Company is liable for the taxes upon the removal of product from the Companys warehouse on a per gallon basis. The Company also pays taxes on its grape harvest on a per ton basis to the OLCC for the Oregon Wine Board. The Companys excise related taxes for the years ended December 31, 2025 and 2024 were $427,491 and $405,392, respectively, an increase of $22,099, for the year ended December 31, 2025 over the prior year period. This decrease was due primarily to the timing of removals in 2025. Cost of Sales was $14,704,602 and $15,586,986 for the years ended December 31, 2025 and 2024, respectively, a decrease of $882,384, or 5.7%, for the year ended December 31, 2025, over the prior year period. This change was primarily the result of a reduction in the volume of product sold when compared to the prior year. Gross profit was $22,492,520 and $24,195,456 for the years ended December 31, 2025 and 2024, respectively, a decrease of $1,702,936 or 7.0%, for the year ended December 31, 2025 over the prior year period. This decrease was primarily the result of lower sales revenues in 2025 compared to the prior year. The gross margin percentage was 60.5% and 60.8% for the years ended December 31, 2025 and 2024, respectively, a decrease of 0.3 percentage points, for the year ended December 31, 2025 over the prior year period. The decrease in the gross profit percentage was primarily the result of higher discounts in 2025. Selling, general and administrative expenses were $23,928,692 and $23,623,598 for the years ended December 31, 2025 and 2024, respectively, an increase of $305,094, or 1.3%, for the year ended December 31, 2025 over the prior year period. This increase was primarily as a result of higher selling costs in 2025. Income(loss) from operations was $(1,436,172) and $571,878 for the years ended December 31, 2025 and 2024, respectively, a decrease of $2,008,030, for the year ended December 31, 2025 compared to the prior year period. This decrease was primarily the result of lower sales and higher selling expenses in 2025. Interest expense, net was $1,167,722 and $1,016,180 for the years ended December 31, 2025 and 2024, respectively, an increase of $151,542, or 14.9%, for the year ended December 31, 2025 over the prior year period. The increase in interest expense was mainly due to the increase in average loan balances in 2025 compared to the previous year. 21 Other income, net, was $1,394,628 and $99,629 for the years ended December 31, 2025 and 2024, respectively, an increase of $1,294,999, for the year ended December 31, 2025 over the prior year period. The increase in other income was primarily due to the settlement of a legal dispute in 2025 related to historical wildfires. Provision for income tax benefit was $291,581 and $226,799 for the years ended December 31, 2025 and 2024, respectively, an increase of $64,782, or 28.6%, for the year ended December 31, 2025 over the prior year period. This increase in income tax benefit in 2025 compared to 2024 was primarily the result of lower income from operations in 2025 compared to 2024, being partially offset by higher other income in 2025. Loss per common share after preferred dividends was $0.64 and $0.48 for the years ended December 31, 2025 and 2024, respectively, an increase of $0.16, or 33.3%, for the year ended December 31, 2025 over the prior year period. The reason for this increase was a higher net loss in 2025 compared to 2024. The Company had cash balances of $410,886 at December 31, 2025, and $320,883 at December 31, 2024. The Company had an outstanding line of credit balance of $3,140,140 at December 31, 2025, and $2,405,815 at December 31, 2024. The Company had no bank overdraft at December 31, 2025, and a bank overdraft of $473,016 at December 31, 2024. **EBITDA** In 2025, the Companys earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased 19.7% to $3,209,021 from $3,995,135 in 2024, primarily as a result of a higher net loss in 2025. EBITDA does not reflect the impact of a number of items that affect our net income (loss), including financing costs. EBITDA is not a measure of financial performance under the accounting principles generally accepted in the United States of America, referred to as GAAP, and should not be considered as an alternative to net income (loss) or income (loss) from operations as a measure of performance, nor as an alternative to net cash from operating activities as a measure of liquidity. We use EBITDA as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider it to be a meaningful supplement to operating income (loss) as a performance measure primarily because depreciation and amortization expense are not actual cash costs, and depreciation expense varies widely from company to company in a manner that we consider largely independent of the underlying cost efficiency of our operating facilities. EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our GAAP results as reported. Because of these limitations, EBITDA should only be considered as a supplemental performance measure and should not be considered as a measure of liquidity or cash available to us to invest in the growth of our business. See the Statement of Cash Flows set out in our financial statements included herein. The following table provides a reconciliation of net loss (the most comparable GAAP measure) to EBITDA for the periods indicated: | | | Year Ended December 31, | | | | | | 2025 | | | 2024 | | | | Net loss | | $ | (917,685 | ) | | $ | (117,894 | ) | | | Depreciation and amortization expense | | | 3,249,411 | | | | 3,323,613 | | | | Interest expense | | | 1,168,876 | | | | 1,016,215 | | | | Income tax benefit | | | (291,581 | ) | | | (226,799 | ) | | | EBITDA | | $ | 3,209,021 | | | $ | 3,995,135 | | | 22 **Sales** Wine case sales for the years ended December 31, 2025 and 2024 and ending inventory amounts for the year ended December 31, 2025, are shown in the following table: | | | Cases Sold | | | Cases Sold | | | Cases On-Hand | | | | Varietal/Product | | 2025 | | | 2024 | | | December 31, 2025 | | | | Pinot Noir/Estate | | | 16,600 | | | | 16,176 | | | | 18,127 | | | | Pinot Noir/Barrel Select | | | 15,573 | | | | 17,774 | | | | 9,337 | | | | Pinot Noir/Founders Reserve | | | 3,785 | | | | 4,031 | | | | 7,065 | | | | Pinot Noir/Special Designates | | | 14,494 | | | | 14,371 | | | | 28,125 | | | | Pinot Noir/Whole Cluster | | | 45,368 | | | | 58,367 | | | | 19,348 | | | | Pinot Gris | | | 25,168 | | | | 30,162 | | | | 29,293 | | | | Riesling | | | 11,528 | | | | 13,237 | | | | 14,358 | | | | Chardonnay | | | 7,353 | | | | 4,708 | | | | 18,087 | | | | Other | | | 33,145 | | | | 27,593 | | | | 44,787 | | | | | | | | | | | | | | | | | | | Total | | | 173,014 | | | | 186,419 | | | | 188,527 | | | Approximately 55% of the Companys case sales during 2025 were of the Companys flagship varietal, Pinot Noir. Case sales of Pinot Gris and Riesling follow with approximately 15% and 7% of case sales, respectively. The Company sold approximately 173,014 and 186,419 cases of Company-produced wine during the years ended December 31, 2025 and 2024, respectively. This represents a decrease of approximately 13,405 cases, or 7.2%, in 2025 compared to 2024. The decrease in case sales in 2025 compared to 2024 was primarily the result of a decrease in sales to distributors. The Company has three primary sales channels: 1) direct-to-consumer sales; 2) in-state sales to distributors; and 3) out-of-state sales to distributors. These three sales channels represent 54.4%, 16.4% and 29.3%, of total revenue for the year ended December 31, 2025, respectively. This compares to 53.4%, 16.1% and 30.5% of total revenue for the year ended December 31, 2024, respectively. Miscellaneous and grape sales are included in direct-to-consumer sales. The Companys direct-to-consumer sales and national sales to distributors 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. **Wine Inventory** The Company had 188,527 cases of bottled wine on-hand at the end of 2025. Management believes sufficient bulk wine inventory is on-hand to bottle approximately 293,464 cases of wine in 2025, and that sufficient stock is on hand to meet current demand levels until the 2025 vintage becomes available. **Production Capacity** Current production volumes are within the current production capacity constraints of the Winery, when including storage capacity at the Tualatin Winery and utilization of temporary storage when appropriate. In 2025, 158,707 cases were produced. We have the capacity to store and process about 275,000 cases of wine per year at the Estate Winery but can expand that capacity by utilizing storage at the Tualatin Winery and temporary storage. Management continues to invest in new production technologies intended to increase the efficiency and quality of wine production. The Tualatin Winery has capacity to produce approximately 28,000 cases of wine. Management intends to fully utilize the production capacity at the Estate Winery before expanding into the Tualatin Winery. **Grape Supply** For the 2025 and 2024 vintages, the Company grew approximately 74% and 60% of all grapes harvested, respectively. The remaining grapes harvested were purchased from other growers. In 2025 and 2024, 9% and 11% of grapes harvested were purchased under short-term contracts, and 17% and 29% of grapes harvested were purchased under long-term contracts, respectively. The Company considers short-term contracts to be for single vintage years and long-term contracts to cover multiple vintage years. 23 Grapes are typically harvested and received in September and October of the vintage year. Upon receipt, the grapes are weighed, and a quality analysis is performed to ensure the grapes meet the standards set forth in the purchase contract. Based on the quantity of qualifying grapes received, the full amount payable to the grower is recorded to the Grapes payable liability account. Approximately 50% of the grapes payable amount is due in November of the vintage year. The remaining amount is due in March of the following year. The grapes are processed into wine, which is typically bottled and available for sale between five months and two years from the date of harvest. The Company received $1,071,099 and $2,275,162 worth of grapes from long-term contracts during the years ended December 31, 2025 and 2024, respectively. The Company received $251,778 and $681,705 worth of grapes from short-term contracts during the years ended December 31, 2025 and 2024, respectively. Total grapes payable was $654,832 and $1,519,087 as of December 31, 2025 and 2024, respectively. Total grapes payable includes $538,461 and $1,023,171 of grapes payable from long-term contracts as of December 31, 2025 and 2024, respectively. The Company plans to address long-term grape supply needs by developing new vineyards on properties currently owned or secured by lease. The Company has approximately 39 acres of vineyards that have been planted but are in the pre-productive stage. We anticipate that these vineyards will begin producing grapes within the next one to three years. The Company has approximately 233 acres of land that is suitable for future vineyard development. The Company intends to seek out opportunities to acquire land for future grape plantings in order to continue to increase available quantities, maintain control over farming practices, more effectively manage grape costs and mitigate uncertainty associated with long-term contracts. **Wine Quality** Continued awareness of the Willamette Valley Vineyards brand and the quality of its wines was enhanced by national and regional media coverage throughout 2025 including the accolades below. The tasting room at the CompanysEstate Winery in the Salem Hills, Oregonwas awarded theBest WineTasting Roomin the country byUSAToday in their10 Best Readers Choice Awards for the second consecutive year. The Company was also awarded the#2 BestWine Clubin the nation by USA Today for the second consecutive year. Wine Enthusiast Magazine rated the 2022 Pre Ami Red Blend 93 points, 2022 Mtis Red Blend 94points, Willamette Valley Vineyards 2023 Founders Reserve Pinot Noir and 2023 Dijon Clone Chardonnay 92 points, and the 2022 Bernau Estate Pinot Noir 93 points. James Suckling rated the 2023 Founders Reserve Pinot Noir and Chardonnay 93 points. National Sales 2023 White Pinot Noir received 91 points and the 2023 Whole Cluster Pinot Noir 92 points. Owen Bargreen rated the 2023 Bernau Block Pinot Noir 93 points, 2023 Whole Cluster Pinot Noir 92 points, and National Sales 2023 White Pinot Noir received 91 points. International Wine Report scored the 2021 Domaine Willamette Blanc de Blancs and Brut Ros 92 points. National Sales 2024 Pinot Gris received 91 points and the 2023 Whole Cluster Ros of Pinot Noir 90 points. USA Wine Ratings Competition awarded the Companys 2023 Estate Pinot Noir 94 points, 2023 Whole Cluster Pinot Noir 93 points, National Sales 2023 Pinot Gris and 2023 White Pinot Noir 92 points, the 2023 Dijon Clone Pinot Noir rated 92 points. **Seasonality** The Company has historically experienced and expects to continue to experience seasonal fluctuations in its revenue and net income. Typically, first quarter sales are the lowest of any given year, and sales volumes increase progressively through the fourth quarter, mostly because of consumer buying habits. **Liquidity and Capital Resources** At December 31, 2025, the Company had a working capital balance of $24.6 million and a current ratio of 2.70:1. The Company had cash balances of $410,886, at December 31, 2025. Total cash used in operating activities for the year ended December 31, 2025 was $1,790,239, which resulted primarily from a net loss in 2025 as well as increased accounts receivable and lower grapes payable. This was partially offset by depreciation. Total cash used in investing activities for the year ended December 31, 2025 was $502,887, which primarily consisted of cash used on purchase of production equipment and vineyard development costs. 24 Total cash provided from financing activities for the year ended December 31, 2025 was $2,383,129, which primarily consisted of proceeds from long term debt and investor deposits, being partially offset by the payment of a preferred stock dividend and payments on long term debt. In December of 2005, the Company entered into a revolving line of credit agreement with Columbia Bank (the Credit Agreement) that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories, as defined in the Credit Agreement. The revolving line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal. In November 2022, the Company increased the borrowing line up to $5,000,000. In July 2025, the Company renewed the Credit Agreement until July 31, 2026. The Company had an outstanding line of credit balance of $3,140,140 at December 31, 2025, at an interest rate of 7.0%, and an outstanding line of credit balance of $2,405,815 at December 31, 2024, at an interest rate of 7.0%. The Credit Agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment. As of December 31, 2025, the Company was out of compliance with a debt covenant. The Company has received a waiver from Columbia Bank waiving this violation until the next measurement date of December 31, 2026. As of December 31, 2025, the Company had a total long-term debt balance of $15,184,395 owed to AgWest Farm Credit, including the portion due in the next year, exclusive of debt issuance costs of $158,837. As of December 31, 2024, the Company had a total long-term debt balance of $14,042,910, exclusive of debt issuance costs of $178,908. The debt with AgWest was used to finance the Estate Hospitality Center and subsequent remodels, invest in winery equipment to increase the Companys winemaking capacity, acquire new vineyard land for future development and finance new tasting room locations. As of December 31, 2025, the Company had an installment note payable of $884,221, due in quarterly payments of $42,534 through February 2032, associated with the purchase of property in the Dundee Hills AVA. The Company believes that cash flow from operations and funds available under its existing credit facilities and preferred stock program will be sufficient to meet the Companys foreseeable short and long-term operating needs. **Inflation** The Companys management does not believe inflation has had a material impact on the Companys revenues or loss during 2025 or 2024. **ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** Not required. 25 **ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA** | INDEX TO FINANCIAL STATEMENTS | | | | PAGE | | | | | | | Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP, Portland, Oregon, PCAOB ID No. 23) | 27 | | | Financial Statements | | | | Balance Sheets | 28 | | | Statements of Operations | 29 | | | Statements of Shareholders Equity | 30 | | | Statements of Cash Flows | 31 | | | Notes to Financial Statements | 32-44 | | 26 **Report of Independent Registered Public Accounting Firm** To the Shareholders and the Board of Directors of Willamette Valley Vineyards, Inc. **Opinion on the Financial Statements** We have audited the accompanying balance sheets of Willamette Valley Vineyards, Inc. (the Company) as of December31, 2025, and 2024, the related statements of operations, shareholders equity and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December31, 2025, and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. **Basis for Opinion** These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. **Critical Audit Matters** Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Baker Tilly US, LLP Portland, Oregon March 24, 2026 We have served as the Companys auditor since 2004. 27 | WILLAMETTE VALLEY VINEYARDS, INC. | | | BALANCE SHEETS | | | ASSETS | | | | | | | | | | | | | | | | | | | | | | December 31, | | | December 31, | | | | | | 2025 | | | 2024 | | | | CURRENT ASSETS | | | | | | | | | | | Cash and cash equivalents | | $ | 410,886 | | | $ | 320,883 | | | | Accounts receivable, net | | | 4,511,460 | | | | 3,151,810 | | | | Inventories | | | 33,380,079 | | | | 32,907,489 | | | | Prepaid expenses and other current assets | | | 659,033 | | | | 519,608 | | | | Income tax receivable | | | 44,117 | | | | 19,267 | | | | Total current assets | | | 39,005,575 | | | | 36,919,057 | | | | | | | | | | | | | | | Other assets | | | 13,824 | | | | 13,824 | | | | Vineyard development costs, net | | | 8,626,391 | | | | 8,769,542 | | | | Property and equipment, net | | | 49,404,999 | | | | 52,012,151 | | | | Operating lease right of use assets | | | 10,684,810 | | | | 11,302,566 | | | | | | | | | | | | | | | TOTAL ASSETS | | $ | 107,735,599 | | | $ | 109,017,140 | | | | | | | | | | | | | | | LIABILITIES AND SHAREHOLDERS EQUITY | | | | | | | | | | | | | | CURRENT LIABILITIES | | | | | | | | | | | Accounts payable | | $ | 1,546,997 | | | $ | 1,584,466 | | | | Accrued expenses | | | 1,909,084 | | | | 2,097,736 | | | | Investor deposits for preferred stock | | | 2,057,265 | | | | - | | | | Bank overdraft | | | - | | | | 473,016 | | | | Line of credit | | | 3,140,140 | | | | 2,405,815 | | | | Note payable | | | 884,221 | | | | 995,968 | | | | Current portion of long-term debt | | | 1,008,215 | | | | 952,171 | | | | Current portion of lease liabilities | | | 490,247 | | | | 481,801 | | | | Unearned revenue | | | 2,776,919 | | | | 2,470,125 | | | | Grapes payable | | | 654,832 | | | | 1,519,087 | | | | Total current liabilities | | | 14,467,920 | | | | 12,980,185 | | | | | | | | | | | | | | | Long-term debt, net of current portion and debt issuance costs | | | 14,017,343 | | | | 12,911,831 | | | | Lease liabilities, net of current portion | | | 10,881,501 | | | | 11,354,746 | | | | Deferred income taxes | | | 2,180,660 | | | | 2,536,648 | | | | Total liabilities | | | 41,547,424 | | | | 39,783,410 | | | | | | | | | | | | | | | COMMITMENTS AND CONTINGENCIES (Note 12) | | | | | | | | | | | | | | | | | | | | | | SHAREHOLDERS EQUITY | | | | | | | | | | | Redeemable preferred stock, no par value, 100,000,000 shares authorized, 10,239,573 shares issued and outstanding, liquidation preference $42,494,228 at December 31, 2025 and December 31, 2024, respectively. | | | 43,357,396 | | | | 43,357,396 | | | | Common stock, no par value, 10,000,000 shares authorized, 4,979,529 shares issued and outstanding at December 31, 2025 and 4,964,529 shares issued and outstanding at December 31, 2024 | | | 8,637,560 | | | | 8,512,489 | | | | Retained earnings | | | 14,193,219 | | | | 17,363,845 | | | | Total shareholders equity | | | 66,188,175 | | | | 69,233,730 | | | | | | | | | | | | | | | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY | | $ | 107,735,599 | | | $ | 109,017,140 | | | The accompanying notes are an integral part of the financial statements. 28 | WILLAMETTE VALLEY VINEYARDS, INC. | | | STATEMENTS OF OPERATIONS | | | | | | | | | | | Year ended | | | | | | December 31, | | | | | | 2025 | | | 2024 | | | | SALES, NET | | $ | 37,197,122 | | | $ | 39,782,442 | | | | COST OF SALES | | | 14,704,602 | | | | 15,586,986 | | | | | | | | | | | | | | | GROSS PROFIT | | | 22,492,520 | | | | 24,195,456 | | | | | | | | | | | | | | | OPERATING EXPENSES: | | | | | | | | | | | Sales and marketing | | | 17,435,201 | | | | 17,119,837 | | | | General and administrative | | | 6,493,491 | | | | 6,503,761 | | | | Total operating expenses | | | 23,928,692 | | | | 23,623,598 | | | | | | | | | | | | | | | INCOME (LOSS) FROM OPERATIONS | | | (1,436,172 | ) | | | 571,858 | | | | | | | | | | | | | | | OTHER INCOME (EXPENSE) | | | | | | | | | | | Interest expense, net | | | (1,167,722 | ) | | | (1,016,180 | ) | | | Other income, net | | | 1,394,628 | | | | 99,629 | | | | | | | | | | | | | | | LOSS BEFORE INCOME TAXES | | | (1,209,266 | ) | | | (344,693 | ) | | | | | | | | | | | | | | INCOME TAX BENEFIT | | | 291,581 | | | | 226,799 | | | | | | | | | | | | | | | NET LOSS | | | (917,685 | ) | | | (117,894 | ) | | | | | | | | | | | | | | Preferred stock dividends | | | (2,252,941 | ) | | | (2,252,941 | ) | | | | | | | | | | | | | | LOSS APPLICABLE TO COMMON SHAREHOLDERS | | $ | (3,170,626 | ) | | $ | (2,370,835 | ) | | | | | | | | | | | | | | Loss per common share after preferred dividends, basic and diluted | | $ | (0.64 | ) | | $ | (0.48 | ) | | | | | | | | | | | | | | Weighted-average number of common shares outstanding, basic and diluted | | | 4,970,118 | | | | 4,964,529 | | | The accompanying notes are an integral part of the financial statements. 29 | WILLAMETTE VALLEY VINEYARDS, INC. | | | STATEMENTS OF SHAREHOLDERS EQUITY | | | | | | | | | | Redeemable | | | | | | | | | | | | | | | | | | Preferred Stock | | | Common Stock | | | Retained | | | | | | | | | Shares | | | Dollars | | | Shares | | | Dollars | | | Earnings | | | Total | | | | Balance at December 31, 2023 | | | 10,046,833 | | | $ | 42,388,036 | | | | 4,964,529 | | | $ | 8,512,489 | | | $ | 19,734,680 | | | $ | 70,635,205 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of preferred stock, net | | | 192,740 | | | | 969,360 | | | | - | | | | - | | | | - | | | | 969,360 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Preferred stock dividends declared | | | - | | | | - | | | | - | | | | - | | | | (2,252,941 | ) | | | (2,252,941 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | (117,894 | ) | | | (117,894 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at December 31, 2024 | | | 10,239,573 | | | | 43,357,396 | | | | 4,964,529 | | | | 8,512,489 | | | | 17,363,845 | | | | 69,233,730 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock based compensation | | | - | | | | - | | | | 15,000 | | | | 125,071 | | | | - | | | | 125,071 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Preferred stock dividends declared | | | - | | | | - | | | | - | | | | - | | | | (2,252,941 | ) | | | (2,252,941 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | (917,685 | ) | | | (917,685 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at December 31, 2025 | | | 10,239,573 | | | $ | 43,357,396 | | | | 4,979,529 | | | $ | 8,637,560 | | | $ | 14,193,219 | | | $ | 66,188,175 | | | The accompanying notes are an integral part of the financial statements. 30 | WILLAMETTE VALLEY VINEYARDS, INC. | | | STATEMENTS OF CASH FLOWS | | | | | | | | | | Year ended December 31, | | | | | | 2025 | | | 2024 | | | | CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | Net loss | | $ | (917,685 | ) | | $ | (117,894 | ) | | | Adjustments to reconcile net loss to net cash from operating activities: | | | | | | | | | | | Depreciation and amortization | | | 3,249,411 | | | | 3,323,613 | | | | Loss on disposition of property & equipment | | | 21,212 | | | | - | | | | Common stock compensation expense | | | 125,071 | | | | - | | | | Non-cash lease expense | | | 640,119 | | | | 563,439 | | | | Debt issuance costs | | | 20,071 | | | | 13,247 | | | | Deferred income taxes | | | (355,988 | ) | | | (374,970 | ) | | | Change in operating assets and liabilities: | | | | | | | | | | | Accounts receivable | | | (1,359,650 | ) | | | (156,981 | ) | | | Inventories | | | (472,590 | ) | | | (4,592,710 | ) | | | Prepaid expenses and other current assets | | | (139,425 | ) | | | 3,246 | | | | Income tax receivable | | | (24,850 | ) | | | 102,692 | | | | Unearned revenue | | | (980,964 | ) | | | (851,072 | ) | | | Lease liabilities | | | (487,162 | ) | | | (455,191 | ) | | | Grapes payable | | | (864,255 | ) | | | (927,146 | ) | | | Accounts payable | | | (54,902 | ) | | | (383,498 | ) | | | Accrued expenses | | | (188,652 | ) | | | 615,482 | | | | Net cash from operating activities | | | (1,790,239 | ) | | | (3,237,743 | ) | | | | | | | | | | | | | | CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | Additions to vineyard development costs | | | (58,720 | ) | | | (237,437 | ) | | | Additions to property and equipment | | | (444,167 | ) | | | (1,852,268 | ) | | | Net cash from investing activities | | | (502,887 | ) | | | (2,089,705 | ) | | | | | | | | | | | | | | CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | Proceeds from investor deposits held as liability | | | 2,057,265 | | | | - | | | | Payment on installment note for property purchase | | | (111,747 | ) | | | (104,767 | ) | | | Proceeds from (payments on) bank overdraft | | | (473,016 | ) | | | 79,600 | | | | Proceeds from (payments on) line of credit | | | 734,325 | | | | (279,167 | ) | | | Payment of loan fees | | | - | | | | (86,166 | ) | | | Payment on long-term debt | | | (1,870,212 | ) | | | (3,547,749 | ) | | | Proceeds from long-term debt | | | 3,011,697 | | | | 10,000,000 | | | | Proceeds from issuance of preferred stock | | | - | | | | 250,503 | | | | Payment of preferred stock dividend | | | (965,183 | ) | | | (902,405 | ) | | | Net cash from financing activities | | | 2,383,129 | | | | 5,409,849 | | | | | | | | | | | | | | | NET CHANGE IN CASH AND CASH EQUIVALENTS | | | 90,003 | | | | 82,401 | | | | | | | | | | | | | | | CASH AND CASH EQUIVALENTS, beginning of year | | | 320,883 | | | | 238,482 | | | | | | | | | | | | | | | CASH AND CASH EQUIVALENTS, end of year | | $ | 410,886 | | | $ | 320,883 | | | | | | | | | | | | | | | NON-CASH INVESTING AND FINANCING ACTIVITIES | | | | | | | | | | | Purchases of property and equipment and vineyard development costs included in accounts payable | | $ | 27,900 | | | $ | 10,467 | | | | Reduction in investor deposits for preferred stock | | $ | - | | | $ | 718,857 | | | | Gift cards given in lieu of cash dividends | | $ | 1,287,758 | | | $ | 1,350,536 | | | | Right of use assets obtained in exchange for operating lease liabilities | | $ | 22,363 | | | $ | 438,572 | | | | | | | | | | | | | | | Supplemental disclosure of cash flow information: | | | | | | | | | | | Cash paid during the year for: | | | | | | | | | | | Interest paid | | $ | 1,125,841 | | | $ | 1,018,970 | | | | Income tax paid | | $ | 92,484 | | | $ | 45,992 | | | The accompanying notes are an integral part of the financial statements. 31 **NOTE 1 SUMMARY OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES** **Organization and operations** Willamette Valley Vineyards, Inc. (the Company) owns and operates vineyards, wineries and tasting rooms, and produces and distributes premium, super premium, and ultra-premium wines, primarily Pinot Noir, Pinot Gris, Chardonnay, Riesling and Sparkling wine. 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. **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 short and long-term debt. Cash and cash equivalents are maintained at five 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 2025, sales to one distributor represented approximately 16.4% of total Company revenue. In 2024, sales to one distributor represented approximately 16.1% of total Company revenue. At December 31, 2025, one customer accounted for approximately 45% of accounts receivable. At December 31, 2024, one customer accounted for approximately 31% of accounts receivable. **Other comprehensive income** The nature of the Companys business and related transactions do not give rise to other comprehensive income. **Cash and cash equivalents** Cash and cash equivalents include money market funds. **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 credit losses 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 customers ability to pay. The Company had credit risk associated with uncollateralized trade accounts receivable from all operations totaling $4,411,116 and $2,994,829 as of December 31, 2025 and 2024, net of the allowance for credit losses. The allowance for credit losses 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. Finished goods and work-in-process inventories are stated at the lower of first-in, first-out cost or net realizable value by variety. Winemaking and packaging materials are stated at the lower of average cost or net realizable value. Net realizable value is the value of an asset that can be realized upon the sale of the asset, less a reasonable estimate of the costs associated with either the eventual sale or the disposal of the asset in question. 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 $2,892,702 and $2,690,832 at December 31, 2025 and 2024, respectively. 32 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, 2025 and 2024, $201,871 and $172,247, respectively, was capitalized 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 to 30 years. Winery buildings are depreciated over 30 years. Equipment is depreciated over 3 to 15 years, depending on the classification of the asset. Leasehold improvements are depreciated over the shorter of the term of the lease or useful life. 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, vineyard development costs, and operating lease right of use assets. 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 Companys products or significant increase in the costs to manufacture the Companys 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, 2025 and 2024. **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 Companys assets and liabilities. The Company had no unrecognized tax benefits as of December 31, 2025 or 2024. 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, 2025 and 2024 were not material. A valuation allowance is provided when it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company evaluates the potential realization of its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization included the Companys forecast of future taxable income or loss and available tax planning strategies that could be implemented to realize the net deferred tax assets. Certain intangible assets and liabilities will be deductible for tax purposes and may result in deferred tax assets and liabilities as the benefits are recognized in the Companys tax returns. The Company files U.S. federal income tax returns with the Internal Revenue Service (IRS) as well as income tax returns in Oregon and California. The Company may be subject to examination by the IRS for tax years 2022 through 2025. Additionally, the Company may be subject to examinations by state taxing jurisdictions for tax years 2021 through 2025. The Company is not aware of any current examinations by the IRS or the state taxing authorities. **Revenue recognition** ** The Company recognizes revenue once its performance obligation to the customer is completed, and control of the product or service is transferred to the customer. Revenue reflects the total amount the Company receives, or expects to receive, from the customer and includes shipping costs that are billed and included in the consideration. Excise taxes that are accrued and paid, as a result of a transaction, are accounted for as an offset to sales in the net sales calculation. The Companys contractual obligations to customers generally have a single point of obligation and are short term in nature. 33 The cost of price promotions and rebates are treated as reductions of revenue. Credit sales are recorded as trade accounts receivable, and no collateral is required. Revenue from items sold through the Companys 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 December 31, 2025, the Company has recorded deferred revenue in the amount of $745,542, which is included in unearned revenue on the balance sheet. As of December 31, 2024, and December 31, 2023, the Company has recorded deferred revenue in the amount of $616,143 and $490,523, respectively, which is included in unearned revenue on the balance sheet. Dividend gift cards that have been issued but not used are also treated as unearned revenue and were $2,031,377 as of December 31, 2025. Dividend gift cards that have been issued but not used are also treated as unearned revenue and were $1,853,982 and $1,480,138 as of December 31, 2024 and 2023, respectively. *Distributor Sales Segment *Wholesale wine sales are through distributors and the Company recognizes revenue when the product is shipped, and title passes to the distributor. The Companys standard terms are FOB shipping point, with no customer acceptance provisions. The cost of price promotions and rebates are treated as reductions of revenue. Credit sales are recorded as trade accounts receivable, and no collateral is required. The Company has price incentive programs with its distributors to encourage product placement and depletions. Sales are reported net of incentive program expenses. Incentive program payments are made when completed incentive program payment requests are received from the customers. For the year ended December 31, 2025 and 2024, the Company recorded incentive program expenses of $1,931,827 and $1,807,559, respectively, as a reduction in sales on the Statements of Operations. As of December 31, 2025, and 2024, the Company has recorded an incentive program liability in the amount of $108,415 and $293,366, respectively, which is included in accrued expenses on the balance sheets. 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. *Direct Sales Segment* The Company sells wine directly to customers through its tasting rooms, web site and wine club. Additionally, the Company sells merchandise, food, and hospitality related services through its tasting rooms. Tasting room sales are recognized as revenue at the point of sale and internet sales are recognized at time of shipment. Hospitality sales, that are paid in advance of the event, are accrued as unearned revenue, and are subsequently recognized as revenue in the period of the event. Wine club sales are made under an agreement with the customer, which specifies the quantity and timing of the wine club shipment. Wine club charges are billed to the customers credit card, at the time of shipment, and revenue is then recognized. For Club Willamette the customer is charged a monthly subscription and 45% of the monthly fee is recognized by the Company in the month billed. For the years ended December 31, 2025 and 2024, the Company has recorded a liability for unused club points in the amount of $371,971, and $263,327, respectively, which is included in unearned revenue on the balance sheet. The Company periodically sells bulk wine or grapes that either do not meet the Companys quality standards or are in excess of production requirements. These sales are recognized when ownership transfers to the buyer which occurs at the point of shipment. **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 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, 2025 and 2024, advertising costs incurred were $373,741 and $290,195, respectively. The Company provides an allowance to distributors for providing sample of products to potential customers. For the years ended December 31, 2025 and 2024, these costs, which are included in selling, general and administrative expenses were, $129,156 and $118,483, respectively. **Shipping and handling costs** Amounts paid by customers to the Company for shipping and handling costs are included in net sales. Costs incurred for shipping and handling charges are included in selling, general and administrative expense. For the years ended December 31, 2025 and 2024, shipping and handling costs incurred were $614,712 and $688,823 respectively. 34 **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 Companys 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, 2025 and 2024, excise taxes incurred were $427,491 and $405,392 respectively. **** **Loss per common share after preferred dividends **loss per share is computed based on the weighted-average number of common shares outstanding each year. Diluted loss per share is calculated by dividing net income (loss) by the weighted-average shares of common stock and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares included in this calculation consist of dilutive shares issuable upon the assumed vesting of outstanding restricted stock units and restricted stock awards, the assumed issuance of awards for contingently issuable performance-based awards, as computed using the treasury stock method. Restricted stock units and restricted stock awards are included in the number of shares used to calculate diluted earnings per share after evaluating the applicable performance criteria as of period end and under the assumption the end of the reporting period was the end of the contingency period, and the effect is dilutive. As of December 31, 2025, 200,000 performance restricted stock units (PRSU) have been excluded from the diluted weighted average share count, as their performance and/or market conditions have not been achieved and 70,000 restricted stock units have been excluded as their effect would be anti-dilutive. **Leases** We determine if an arrangement is a lease at inception. On our balance sheets, our operating leases are included in Operating lease right of use (ROU) assets, Current portion of lease liabilities and Lease liabilities, net of current portion. The Company does not currently have any finance leases. Leases that have a term of twelve months or less upon commencement date are considered short-term in nature. Accordingly, short-term leases are not included on the balance sheets and are expensed on a straight-line basis over the lease term, which commences on the date we have the right to control the property. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For leases that do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Significant judgment may be required when determining whether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and non-lease components, and the determination of the discount rate included in our leases. We review the underlying objective of each contract, the terms of the contract, and consider our current and future business conditions when making these judgments. **Recently adopted accounting pronouncements** In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid. The expanded annual disclosures are effective for our year ending December 31, 2025 and were applied retrospectively to all prior periods presented. **Recently issued accounting pronouncements** In November 2024, the FASB issued ASU 2024-03, Income StatementReporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). ASU 2024-03 requires additional disclosures about the nature of expenses included in the income statement, such as purchases of inventory, employee compensation, and depreciation. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026, and interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2024-03 on its financial statements and related disclosures. 35 **NOTE 2 ACCOUNTS RECEIVABLE, NET** The Companys accounts receivable balance is net of an allowance for credit losses of $10,000 at December 31, 2025 and 2024. Changes in the allowance for credit losses are as follows: | | | | | Year ended December 31, | | | | | | 2025 | | | 2024 | | | | Beginning of year | | $ | 10,000 | | | $ | 10,000 | | | | Charged to costs and expenses | | | - | | | | - | | | | Write-offs, net of recoveries | | | - | | | | - | | | | | | | | | | | | | | | End of year | | $ | 10,000 | | | $ | 10,000 | | | **NOTE 3 INVENTORIES** Inventory consists of the following at December 31, 2025 and 2024: Schedule of Inventories | | | December 31, | | | December 31, | | | | | | 2025 | | | 2024 | | | | Winemaking and packaging materials | | $ | 1,173,281 | | | $ | 1,303,152 | | | | Work-in-process (costs relating to unprocessed and/or unbottled wine products) | | | 16,337,096 | | | | 14,990,375 | | | | Finished goods (bottled wine and related products) | | | 15,869,702 | | | | 16,613,962 | | | | | | | | | | | | | | | Total inventories | | $ | 33,380,079 | | | $ | 32,907,489 | | | **NOTE 4 PROPERTY AND EQUIPMENT, NET** Property and equipment consists of the following at December 31, 2025 and 2024: Schedule of Property and Equipment, Net | | | December 31, | | | December 31, | | | | | | 2025 | | | 2024 | | | | Construction in progress | | $ | 645,675 | | | $ | 633,179 | | | | Land, improvements and other buildings | | | 15,342,674 | | | | 15,342,674 | | | | Winery buildings and tasting rooms | | | 44,123,730 | | | | 44,146,543 | | | | Equipment | | | 21,185,084 | | | | 20,835,506 | | | | | | | | | | | | | | | Property and equipment, gross | | | 81,297,163 | | | | 80,957,902 | | | | | | | | | | | | | | | Accumulated depreciation | | | (31,892,164 | ) | | | (28,945,751 | ) | | | | | | | | | | | | | | Property and equipment, net | | $ | 49,404,999 | | | $ | 52,012,151 | | | Depreciation expense was $3,047,540 and $3,151,366 during the years ended December 31, 2025, and 2024, respectively. 36 **NOTE 5 LINE OF CREDIT FACILITY** In December of 2005, the Company entered into a revolving line of credit agreement with Columbia Bank (the Credit Agreement) that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories, as defined in the Credit Agreement. The revolving line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal. In November 2022, the Company increased the borrowing line up to $5,000,000. In July 2025, the Company renewed the Credit Agreement until July 31, 2026. The Company had an outstanding line of credit balance of $3,140,140 at December 31, 2025, at an interest rate of 7.0%, and an outstanding line of credit balance of $2,405,815 at December 31, 2024, at an interest rate of 7.0%. The Credit Agreement includes various covenants, which among other things, requires the Company to maintain minimum amounts of tangible net worth, debt-to-equity, and debt service coverage, as defined, and limits the level of acquisitions of property and equipment. As of December 31, 2025, the Company was out of compliance with a debt covenant. The Company has received a waiver from Columbia Bank waiving this violation until the next measurement date of December 31, 2026. **NOTE 6 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 December 31, 2025 and 2024, the Company had a balance of $884,221 and $995,968, respectively, due on this note. **NOTE 7 LONG-TERM DEBT** Long-term debt consists of the following at December 31, 2025 and 2024: Schedule of Long-term Debt | | | | | December 31, | | | | | | 2025 | | | 2024 | | | | AgWest Loan #1 | | $ | 521,004 | | | $ | 678,851 | | | | AgWest Loan #2 | | | 2,971,877 | | | | 3,364,059 | | | | AgWest 15 year Note Loan #3 | | | 9,597,800 | | | | 10,000,000 | | | | AgWest loan #4 | | | 2,093,714 | | | | - | | | | Long-Term Debt, Gross | | | 15,184,395 | | | | 14,042,910 | | | | Debt issuance costs | | | (158,837 | ) | | | (178,908 | ) | | | Current portion of long-term debt | | | (1,008,215 | ) | | | (952,171 | ) | | | | | | | | | | | | | | Long-Term Debt | | $ | 14,017,343 | | | $ | 12,911,831 | | | The Company has four long term debt agreements with AgWest with an aggregate outstanding balance of $15,184,395 and $14,042,910 as of December 31, 2025 and December 31, 2024, respectively. The first two outstanding loans require monthly principal and interest payments of $62,067 for the life of the loans, at annual fixed interest rates of 4.75% and 5.21%, and with maturity dates of 2028 and 2032, respectively. These loans are collateralized against the property on the main estate in Salem. The third loan requires monthly principal and interest payments of $87,989 at an annual interest rate of 6.66%, and with a maturity date of 2039. The fourth loan allows borrowings up to $4,350,000 against property defined in the agreement. The fourth loan bears interest at 6.60% and has a maturity date of April 2027. The general purposes of these loans were to make capital improvements to the winery and vineyard facilities. These loans are collateralized against the property on the Company estates in Salem and Tualatin. The agreement includes a current ratio financial covenant. As of December 31, 2025, the Company was in compliance with the financial covenant. Future minimum principal payments of long-term debt are as follows for the years ending December 31: Schedule of Future Minimum Principal Payment for Long-Term Debt Maturities | | | 2026 | | $ | 1,008,215 | | | | 2027 | | | 3,161,508 | | | | 2028 | | | 1,130,789 | | | | 2029 | | | 1,007,284 | | | | 2030 | | | 1,068,928 | | | | Thereafter | | | 7,807,671 | | | | | | | | | | | Total | | $ | 15,184,395 | | | The weighted-average interest rates on the aforementioned borrowings for the years ended December 31, 2025 and 2024, was 6.30% and 6.22% respectively. 37 **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 100,000,000 shares of redeemable preferred stock. Each share of the Companys currently issued preferred stock is non-voting. The Companys 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 Companys common stock and is subject to optional redemption after June 1, 2021 at the sole discretion of the Companys 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. In November 2025 and November 2024, the Company declared a dividend on its Series A Redeemable Preferred stock and paid the dividend on December 31, 2025 and December 31, 2024 respectively. The Company is current on its dividend obligations. **NOTE 9 STOCK INCENTIVE PLAN** The Willamette Valley Vineyards Inc, 2025 Omnibus Equity IncentivePlan (2025 Plan) was adopted by the Companys board of directors on September 9, 2025. The 2025 Plan provides for the grant of Options, Share Appreciation Rights, Restricted Share Units (RSU), Other Share-based Awards or any combination of the foregoing to selected employees, directors and independentcontractors of the Company. The Company filed the registration statement to register the shares related to the 2025 Plan on November 12, 2025 During the twelve months ended December 31, 2025, the Company granted 285,000 restricted shares and share units under the 2025 Plan to a member of senior management. 15,000 shares that vested have been issued during the twelve month period ended December 31, 2025. Of the restricted shares and share units granted, 85,000 of the options vest based on achieving length of service requirements and 200,000 of the options vest in increments subject to achieving four share price hurdles ranging from $12 to $25 per share, measured over a ten year performance period which expire on the tenth anniversary of the employment start date. A Monte Carlo simulation model incorporating 500,000 scenarios over a weighted average contractual period remaining of 4.9 years was used to calculate the value of $470,412. The valuation model utilized the following assumptions: Schedule of Valuation Model Assumption | Risk-free interest rate | | | 4.42 | % | | | | | | | | | | Expected volatility rates | | | 30.00 | % | | | | | | | | | | Weighted-average grant date fair value of options | | $ | 2.35 | | | A summary of RSUs (performance and time-based) outstanding as of December 31, 2025, and activity during the year then ended, is presented below: Schedule of Restricted Stock Units Outstanding | Restricted Stock Unit Awards | | Shares (In thousands) | | | Weighted-Average Grant Date Fair Value Per Share | | | | Outstanding at December 31, 2024 | | | 0 | | | $ | 0 | | | | Granted | | | 285,000 | | | | 3.23 | | | | Vested | | | (15,000 | ) | | | 5.30 | | | | Forfeited | | | 0 | | | | 0 | | | | Outstanding at December 31, 2025 | | | 270,000 | | | $ | 3.12 | | | The Company recognized $125,071 in stock-based compensation expense during the twelve months ended December 31, 2025 related to the 2025 Plan.The unrecognized compensation cost of $795,841 will be recognized ratably over the next 9.5 years. 38 **NOTE 10 INCOME TAXES** The provision for income taxes consists of: Schedule of Income Tax Provision | | | | | Year Ended December 31, | | | | | | 2025 | | | 2024 | | | | Current tax expense (benefit): | | | | | | | | | | | Federal | | $ | (36,249 | ) | | $ | 3,122 | | | | State | | | 98,410 | | | | 145,049 | | | | | | | | | | | | | | | Current tax expense | | | 62,161 | | | | 148,171 | | | | | | | | | | | | | | | Deferred tax benefit: | | | | | | | | | | | Federal | | | (278,589 | ) | | | (333,093 | ) | | | State | | | (75,153 | ) | | | (41,877 | ) | | | | | | | | | | | | | | Deferred tax benefit | | | (353,742 | ) | | | (374,970 | ) | | | | | | | | | | | | | | Total | | $ | (291,581 | ) | | $ | (226,799 | ) | | The effective income tax rate differs from the federal statutory rate as follows: Schedule of Effective Income Tax Rate | | | Year Ended December 31, | | | Year Ended December 31, | | | | | | 2025 | | | 2025 | | | 2024 | | | 2024 | | | | Federal statutory rate | | $ | (246,203 | ) | | | 21.00 | % | | $ | (72,390 | ) | | | 21.00 | % | | | State & local taxes net of federal income tax effect (1) | | | 42,245 | | | | (3.60) | % | | | 75,020 | | | | (21.76 | )% | | | Tax Credits: | | | | | | | | | | | | | | | | | | | Tips Credit | | | (108,080 | ) | | | 9.22 | % | | | (293,567 | ) | | | 85.16 | % | | | Nontaxable or nondeductible items: | | | | | | | | | | | | | | | | | | | Other | | | 31,850 | | | | (2.72 | )% | | | 20,352 | | | | (5.90 | )% | | | Prior Year Adjustments | | | (8,407 | ) | | | 0.72 | % | | | 22,544 | | | | (6.54 | )% | | | Other adjustments | | | (2,987 | ) | | | 0.25 | % | | | 21,242 | | | | (6.16 | )% | | | | | | (291,581 | ) | | | 24.87 | % | | | (226,799 | ) | | | 65.80 | % | | | (1) | The tax effect in this category primarily reflects state taxes in Oregon, California and Texas. | | Changes in the tax rate are detailed in the table above. Permanent differences for the periods consist primarily of changes in non-deductible gifts, meals and entertainment as well as political contributions. Changes in tax rate are detailed above. 39 Net deferred tax assets and (liabilities) at December 31 consist of: Schedule of Net Deferred Tax Assets and Liabilities | | | | | December 31, | | | | | | 2025 | | | 2024 | | | | Deferred tax assets: | | | | | | | | | | | Net Operating Losses | | $ | 846,584 | | | $ | 1,042,956 | | | | Other | | | 106,534 | | | | 77,557 | | | | Gift Card Payable | | | 336,830 | | | | 209,410 | | | | ROU Lease Liability | | | 177,849 | | | | 138,248 | | | | General Business Credits | | | 390,896 | | | | 303,733 | | | | Interest Expense Limitation Carryforward | | | 212,597 | | | | 277,033 | | | | Total deferred tax assets | | | 2,071,290 | | | | 2,048,937 | | | | Valuation allowance | | | - | | | | - | | | | Total deferred tax assets net of valuation allowance | | | 2,071,290 | | | | 2,048,937 | | | | Deferred tax liabilities | | | | | | | | | | | Prepaids | | | (128,980 | ) | | | (134,527 | ) | | | Depreciation | | | (3,482,532 | ) | | | (3,804,348 | ) | | | Inventory | | | (640,438 | ) | | | (646,710 | ) | | | Total deferred tax liabilities | | | (4,251,950 | ) | | | (4,585,585 | ) | | | | | | | | | | | | | | Net deferred tax assets (liabilities) | | | (2,180,660 | ) | | | (2,536,648 | ) | | The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax matters are recognized in income tax expense. The Company recognized no uncertain tax positions, or any accrued interest and penalties associated with uncertain tax positions as of December 31, 2025 and 2024. FASB ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is more likely than not. Realization of the future tax benefits is dependent on the Companys ability to generate sufficient taxable income within the carryforward period. Management believes that the Company will generate sufficient taxable income in the timeframe required to utilize existing net operating losses and therefore no valuation allowance has been recognized. As of December 31, 2025, the Company has federal net operating loss carryforward of $3,389,846 that do not expire, state net operating loss carryforwards of $2,447,627 which will start expiring in 2033. Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU2023-09 Schedule of Cash Paid for Income Taxes | | | | | December 31, | | | | | | 2025 | | | 2024 | | | | Federal | | | (19,498 | ) | | | 26,488 | | | | State - Oregon | | | 81,976 | | | | 18,992 | | | | State - Texas | | | 29,866 | | | | - | | | | State - Other | | | 140 | | | | 512 | | | | | | | | | | | | | | | Total Cash Taxes Paid (Net) | | | 92,484 | | | | 45,992 | | | **NOTE 11 RELATED PARTY TRANSACTIONS** The Company provides living accommodations in a residence on the Companys premises, at its convenience, for the Companys President (the 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. The Company engages James Ellis a Board member for consulting services. The amount of this compensation was $9,628 in 2025 and $9,865 in 2024. The Willamette Wineworks lease discussed in Note 12 is with a related party. The Company paid $130,045 and $136,863 related to this lease for the years ended December 31, 2025 and 2024, respectively. 40 **NOTE 12 COMMITMENTS AND CONTINGENCIES** **Litigation** From time to time, in the normal course of business, the Company is a party to legal proceedings. Management believes that these matters will not have a material adverse effect on the Companys financial position, results of operations or cash flows, but, due to the nature of litigation, the ultimate outcome of any potential actions cannot presently be determined. **Operating leases Vineyard** - In December 1999, under a sale-leaseback agreement, the Company sold approximately 79 acres of the Tualatin Vineyards property with a net book value of approximately $1,000,000 for approximately $1,500,000 cash and entered into a 20 year operating lease agreement, with three five-year extension options, and contains an escalation provision of 2.5% per year. The Company extended the lease in January 2019 until January 2025. The Company extended the lease in July 2024 until January 2030. This property is referred to as the Peter Michael Vineyard and includes approximately 69 acres of producing vineyards. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through January 2035. 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 15 year operating lease agreement, with three five-year extension options, for the vineyard portion of the property. The first two five year extensions have been exercised. The lease contains a formula-based escalation provision with a maximum increase of 4% every three years. This property is referred to as the Meadowview Vineyard and includes approximately 49 acres of producing vineyards. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through November 2033. In February 2007, the Company entered into a lease agreement for 59 acres of vineyard land at Elton Vineyard. In June 2021 the Company entered into a new 11 year lease for this property. The lease contains an escalation provision tied to the CPI not to exceed 2% per annum. This property includes 54 acres of producing vineyards and 2 additional plantable acres. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through December 2031. In July 2008, the Company entered into a 34 year lease agreement with a property owner in the Eola Hills for approximately 110 acres adjacent to the existing Elton Vineyards site. These 110 acres are being developed into vineyards. Terms of this agreement contain rent increases, that rise as the vineyard is developed, and contains an escalation provision of CPI plus 0.5% per year capped at 4%. This property is referred to as part of Ingram Vineyard and includes 93 acres of producing vineyards and 17 additional plantable acres. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through December 2053. In March 2017, the Company entered into a 25-year lease for approximately 17 acres of agricultural land in Dundee, Oregon. This lease contains an annual payment that remains constant throughout the term of the lease. This property is referred to as part of Bernau Estate Vineyard and includes 9 acres of producing vineyards. **Operating Leases Non-Vineyard** In September 2018, the Company renewed an existing lease for three years, with two one-year renewal options, for its McMinnville tasting room. In May 2022 the Company amended the lease to extend the lease to August 2025 with one three year renewal option and defined payments over the term of the lease. For right of use asset and liability calculations the Company has not included the renewal option. In January 2018, the Company assumed a lease, through December 2022, for its Maison Bleue tasting room in Walla Walla, Washington. In January 2023, the Company entered into a new lease to December 2027 with one five year renewal option, and defined payments over the term of the lease. For right of use asset and liability calculations the Company has not included the renewal option. In February 2020, the Company entered into a lease for 5 years, with three five-year renewal options for a retail wine facility in Folsom, California, referred to as Willamette Wineworks. The lease contains an escalation provision tied to the CPI not to exceed 3% per annum with increases not allowed in any year being carried forward to the following years. In January 2025 the Company amended the renewal options and extended the lease until February 2026. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through February 2040. In March 2021, the Company entered into a lease for 10 years, with two five-year renewal options for a retail wine facility in Vancouver, Washington. The lease defines the payments over the term of the lease and option periods. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through August 2041. 41 In February 2022, the Company entered into a lease for 10 years, with three five-year renewal options for a retail wine facility in Lake Oswego, Oregon. The lease defines the payments over the term of the lease and option periods. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through January 2042. In May 2022, the Company entered into a lease for 10 years, with two five-year renewal options for a retail wine facility in Happy Valley, Oregon. The lease defines the payments over the term of the lease and option periods. For right of use asset and liability calculations the Company has concluded it is reasonably certain to extend available options through May 2042. In January 2023, the Company entered into a lease for 10 years, with three five-year renewal options for a retail wine facility in Bend, Oregon. The lease defines the payments over the term of the lease. For right of use asset and liability calculations the Company has not included the renewal option. The following tables provide lease cost and other lease information: Schedule of Lease Cost and Other Lease Information | | | | | Year Ended December 31, | | | | | | 2025 | | | 2024 | | | | Lease Cost | | | | | | | | | | | Operating Lease cost - Vineyards | | $ | 500,725 | | | $ | 459,128 | | | | Operating Lease cost - Other | | | 967,904 | | | | 989,662 | | | | Short-term lease cost | | | 40,616 | | | | 36,767 | | | | Total Lease Cost | | $ | 1,509,245 | | | $ | 1,485,557 | | | | | | | | | | | | | | | Other information | | | | | | | | | | | Cash paid for amounts included in the measurement of lease liabilities, | | | | | | | | | | | Operating cash flows from operating leases - Vineyard | | | 468,859 | | | | 462,360 | | | | Operating cash flows from operating leases - Other | | | 864,364 | | | | 878,183 | | | | Weighted-average remaining lease term - Operating leases (in years) | | | 14.04 | | | | 14.82 | | | | Weighted-average discount rate - Operating leases | | | 7.68 | % | | | 7.64 | % | | Right-of-use assets obtained in exchange for new operating lease obligations were $22,363 and $438,572 for the years ended December 31 2025 and 2024, respectively. As of December 31, 2025, maturities of lease liabilities were as follows: Schedule of Maturities of Lease Liabilities | | | Operating | | | | Years Ended December 31, | | Leases | | | | 2026 | | $ | 1,315,508 | | | | 2027 | | | 1,376,460 | | | | 2028 | | | 1,369,170 | | | | 2029 | | | 1,379,314 | | | | 2030 | | | 1,389,760 | | | | Thereafter | | | 12,499,288 | | | | Total minimal lease payments | | | 19,329,500 | | | | Less present value adjustment | | | (7,957,752 | ) | | | Operating lease liabilities | | | 11,371,748 | | | | Less current lease liabilities | | | (490,247 | ) | | | Lease liabilities, net of current portion | | $ | 10,881,501 | | | **Grape Purchases** The Company has entered into long-term grape purchase agreements with a number of Willamette Valley wine grape growers. With these agreements the Company purchases an annually agreed upon quantity of fruit, at pre-determined prices, within strict quality standards and crop loads. The Company cannot calculate the minimum or maximum payment as such a calculation is dependent in large part on unknowns such as the quantity of fruit needed by the Company and the availability of grapes produced that meet the strict quality standards in any given year. If no grapes are produced that meet the contractual quality levels, the grapes may be refused, and no payment would be due. The Company purchased grapes amounting to $1,322,877 and $2,956,866 during the years ended December 31, 2025 and 2024, respectively. The Company had an outstanding balance due on grape purchase agreements of $654,832 and $1,519,087 as of December 31, 2025 and 2024, respectively. 42 **NOTE 13 EMPLOYEE BENEFIT PLAN** In February 2006, the Company instituted a 401(k) profit sharing plan (the Plan) covering all eligible employees. Employees who participate may elect to make salary deferral contributions to the Plan up to 100% of the employees 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, 2025, and 2024, there were $215,394 and $196,418 of contributions made by the Company to the Plan, respectively. **NOTE 14 SALE OF PREFERRED STOCK** On July 1, 2022, the Company filed a shelf Registration Statement on Form S-3 (the July 2022 Form S-3) with the United States Securities and Exchange Commission (the SEC) pertaining to the potential future issuance of one or more classes or series of debt, equity, or derivative securities. The maximum aggregate offering amount of securities sold pursuant to the June 2022 Form S-3 is not to exceed $20,000,000. From August 1, 2022 to November 1, 2022 the Company filed with the SEC four Prospectus Supplements to the July 2022 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to an aggregate of 1,076,578 shares of Series A Redeemable Preferred Stock having proceeds not to exceed an aggregate of $5,636,714. Each of these Prospectus Supplements established that our shares of preferred stock were to be sold in one to three offering periods offering prices including $5.15 per share, $5.25 per share and $5.35 per share. Net proceeds of $3,558,807 have been received under these offerings as of December 31, 2025 for the issuance of Preferred Stock. On June 30, 2023, the Company filed with the SEC a Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to 727,835 shares of Series A Redeemable Preferred Stock having proceeds not to exceed $3,530,000. This Prospectus Supplement established that our shares of preferred stock were to be sold in two offering periods with two separate offering prices beginning with an offering price of $4.85 per share and concluding with an offering of $5.35 per share. On October 27, 2023, the Company filed with the SEC a Prospectus Supplement to the July 2022 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to 288,659 shares of Series A Redeemable Preferred Stock having proceeds not to exceed $1,400,000. This Prospectus Supplement established that our shares of preferred stock were to be sold in one offering period with an offering price of $4.85 per share. Net proceeds of $3,938,066 have been received under these offerings as of December 31, 2025 for the issuance of Preferred Stock. On June 17, 2025, the Company filed a shelf Registration Statement on Form S-3 (the June 2025 Form S-3) with the SEC pertaining to the potential future issuance of one or more classes or series of debt, equity, or derivative securities. The maximum aggregate offering amount of securities sold pursuant to the June 2025 Form S-3 is not to exceed $20,000,000. On July 3, 2025, the Company filed with the SEC a Prospectus Supplement to the June 2025 Form S-3, pursuant to which the Company proposed to offer and sell, on a delayed or continuous basis, up to 1,343,284 shares of Series A Redeemable Preferred Stock having proceeds not to exceed $4,500,000. Net proceeds of $2,057,265 have been received under these offerings as of December 31, 2025 for the issuance of Preferred Stock. Shareholders have the option to receive dividends as cash or as a gift card for purchasing Company products. The amount of unused dividend gift cards at December 31, 2025 and December 31, 2024 was $2,031,377 and $1,853,982, respectively, and is recorded as unearned revenue on the balance sheets. Revenue from gift cards is recognized when the gift card is redeemed by a customer. When the likelihood of a gift card being redeemed by a customer is determined to be remote and the Company expects to be entitled to the breakage, then the value of the unredeemed gift card is recognized as revenue. We determine the gift card breakage rate based upon Company-specific historical redemption patterns. To date we have determined that no breakage should be recognized related to our gift cards. Dividends accrued but not paid will be added to the liquidation preference of the stock until the dividend is declared and paid. At any time after June 1, 2021, the Company has the option, but not the obligation, to redeem all of the outstanding preferred stock in an amount equal to the original issue price plus accrued but unpaid dividends and a redemption premium equal to 3% of the original issue price. **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 include retail sales in the tasting rooms, wine club sales, internet sales, on-site events, kitchen and catering sales and other sales made directly to the consumer without the use of an intermediary, including sales of bulk wine or grapes. Distributor Sales include all sales through a third party where prices are given at a wholesale rate. The accounting policies of the two segments are the same as those described in the summary of significant accounting policies. The Company does not have intra-entity sales or transfers. 43 The two segments reflect how the Companys 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. All expense categories on the statements of operations are significant and there are no other significant segment expenses that would require disclosure. Selling expenses that can be directly attributable to the segment, including depreciation of segment specific assets, are included, however, centralized selling expenses and general and administrative expenses are not allocated between operating segments. Therefore, net income (loss) information for the respective segments is not available. Discrete financial information related to segment assets, other than segment specific depreciation associated with selling, is not available and that information continues to be aggregated. The Companys President uses results from operations to assess operating performance as compared to prior results, the annual operating plan and our competitors. The President uses this information to allocate future operating and capital expenditures. The following table outlines the sales, cost of sales, gross margin, directly attributable selling expenses, and contribution margin of the segments for the years ended December 31, 2025 and 2024. Sales figures are net of related excise taxes. Schedule of Segment reporting | | | | | Twelve Months Ended December 31, | | | | | | Direct Sales | | | Distributor Sales | | | Unallocated | | | Total | | | | | | 2025 | | | 2024 | | | 2025 | | | 2024 | | | 2025 | | | 2024 | | | 2025 | | | 2024 | | | | Sales, net | | $ | 20,241,167 | | | $ | 21,254,929 | | | $ | 16,955,955 | | | $ | 18,527,513 | | | $ | - | | | $ | - | | | $ | 37,197,122 | | | $ | 39,782,442 | | | | Cost of sales | | | 5,616,950 | | | | 6,125,321 | | | | 9,087,652 | | | | 9,461,665 | | | | - | | | | - | | | | 14,704,602 | | | | 15,586,986 | | | | Gross margin | | | 14,624,217 | | | | 15,129,608 | | | | 7,868,303 | | | | 9,065,848 | | | | - | | | | - | | | | 22,492,520 | | | | 24,195,456 | | | | Selling expenses | | | 13,361,157 | | | | 14,069,163 | | | | 2,984,883 | | | | 2,072,378 | | | | 1,089,161 | | | | 978,296 | | | | 17,435,201 | | | | 17,119,837 | | | | Contribution margin | | $ | 1,263,060 | | | $ | 1,060,445 | | | $ | 4,883,420 | | | $ | 6,993,470 | | | | | | | | | | | | | | | | | | | | Percent of sales | | | 54.4 | % | | | 53.4 | % | | | 45.6 | % | | | 46.6 | % | | | | | | | | | | | | | | | | | | | General and administrative expenses | | | | | | | | | | | | | | | | | | | 6,493,491 | | | | 6,503,761 | | | | 6,493,491 | | | | 6,503,761 | | | | Income (loss) from operations | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (1,436,172 | ) | | $ | 571,858 | | | Direct sales include $0 of bulk wine and grape sales in the years ended December 31, 2025 and 2024. Net direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 54.4% and 53.4% of total net sales for 2025 and 2024, respectively. Net sales through distributors represented approximately 45.6% and 46.6% of total net sales for 2025 and 2024, respectively. **NOTE 16 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 Companys 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. 44 **ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE** None **ITEM 9A. CONTROLS AND PROCEDURES** **Disclosure Controls and Procedures** We carried out an evaluation as of the end of the period covered by this Annual Report on Form 10-K, under the supervision and with the participation of our management, including our President and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-5(e) under the Exchange Act) pursuant to paragraph (b) of Rules 13a-15 and 15d-5 under the Exchange Act. Based on that review, our President and our Chief Financial Officer have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act: (1) is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms; and (2) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals. **Internal Control over Financial Reporting** *Managements Report on Internal Control over Financial Reporting* The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting. The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of the Companys financial reporting and the preparation of the Companys financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act and includes those policies and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Companys assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Companys receipts and expenditures are being made only in accordance with authorizations of the Companys management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the Companys financial statements. All internal controls, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The Companys management assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in *Internal Control Integrated Framework (2013)*. Based on this assessment, management has concluded that, as of December 31, 2025, our internal control over financial reporting was effective. *Changes in Internal Control over Financial Reporting* There have not been any changes in the Companys internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the Companys fourth fiscal quarter that our certifying officers concluded materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. **ITEM 9B. OTHER INFORMATION** During the quarter ended December 31, 2025, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements, as defined in Item 408 of Regulation S-K. **ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS** None. 45 **PART III** **ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE** The following table sets forth certain information regarding the Companys directors and executive officers: | | | | | | | Group | | Term | | | Name | | Position(s) with the Company | | Age | | Number | | Ends | | | James W. Bernau (3) | | Chairperson of the Board, | | 72 | | I | | 2026 | | | | | President and Director | | | | | | | | | Craig Smith (2)(3)(4) | | Secretary and Director | | 79 | | II | | 2027 | | | John Ferry | | Chief Financial Officer | | 60 | | NA | | NA | | | Mike Osborn | | Chief Executive Officer | | 56 | | NA | | NA | | | James L. Ellis (3) | | Director | | 81 | | III | | 2028 | | | Sean M. Cary (2) | | Director | | 52 | | I | | 2026 | | | Stan G. Turel (1)(2)(3)(4) | | Director | | 77 | | II | | 2027 | | | Sarah Rose (1) | | Director | | 40 | | II | | 2027 | | | (1) | Member of the Compensation Committee | | | (2) | Member of the Audit Committee | | | (3) | Member of the Executive Committee | | | (4) | Member of the Capital Development Committee | | All directors hold office until the end of their terms respective annual meeting of shareholders or until their successors have been elected and qualified. Executive officers are appointed by the Board and serve at the pleasure of the Board. The Board is divided into three groups (I, II, and III). Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected. There are no family relationships among any of our current directors or executive officers. Set forth below is additional information about each director and executive officer of the Company. *James W. Bernau* Mr. Bernau has been President of the Company and Chairperson of the Board of Directors of the Company since its inception in May 1988. Mr. Bernau, an Oregon winegrower, originally established Willamette Valley Vineyards as a sole proprietorship in 1983, and he co-founded the Company in 1988 with Salem grape grower, Donald Voorhies. From 1981 to September 1989, Mr. Bernau was Director of the Oregon Chapter of the National Federation of Independent Businesses (NFIB), an association of 15,000 independent businesses in Oregon. Mr. Bernau has served as the President of the Oregon Winegrowers Association and the Treasurer of the associations Political Action Committee (PAC) and Chair of the Promotions Committee of the Oregon Wine Advisory Board, the State of Oregons agency dedicated to the development of the industry. In March 2005, Mr. Bernau received the industrys Founders Award for his service. Mr. Bernaus qualifications to serve on the Companys Board of Directors include his more than 35 years of leadership of the Company and his industry experience and contacts. *Craig Smith*, MBA, JD Mr. Smith has served as a director since October 2007 and as Secretary since 2009. For over 20 years Mr. Smith served as the Vice President/Chief Financial Officer of Chemeketa Community College in Salem, Oregon. He was an Adjunct Professor at the Atkinson Graduate School of Management at Willamette University, as well as Managing Partner of Faler, Grove, Mueller & Smith, a large local CPA firm. He has served on many State of Oregon commissions and as the Board Chairperson for many of the local non-profit and educational institutions including the Salem Keizer School Board, Chemeketa Community College Board of Education, Oregon State Fair Council, Oregon Fair Dismissal Appeals Board, Mid-Willamette Valley Council of Governments, Oregon School Boards Association and the United Way. Now retired Mr. Smith was a member of the Oregon State Bar as well as a Certified public accountant. Mr. Smiths qualifications to serve on the Companys Board of Directors include his financial and accounting experience. *John Ferry* Mr. Ferry has served as Chief Financial Officer of the Company since September 2019, and served as President of Contact Industries, a wood products-based OEM supplier, from November 2014 until July 2019. He served as CFO of Lifeport Inc., a division of Sikorsky Aircraft, from April 2012 to November 2014. Further, he has served in senior financial leadership positions in various Aerospace-related industries dating back to 1996. Mr. Ferry has earned an Executive MBA from Bath University, in England, and a MA Hons degree in Accounts/Economics from Dundee University in Scotland. 46 *James L. Ellis* Mr. Ellis has served as a director since July 1991. Mr. Ellis retired from full time duties with the Company in July of 2009. He currently serves as the Companys ombudsman and works part-time on selected projects. Mr. Ellis previously served as the Companys Director of Human Resources from 1993 to 2009. He was the Companys Secretary from 1997 to 2009, and Vice President /Corporate from 1998 to 2009. From 1990 to 1992, Mr. Ellis was a partner in Kenneth L. Fisher, Ph.D. & Associates, a management-consulting firm. From 1980 to 1990, Mr. Ellis was Vice President and General Manager of R.A. Kevane & Associates, a Pacific Northwest personnel-consulting firm. From 1962 to 1979, Mr. Ellis was a member of and administrator for the Christian Brothers of California, owner of Mont La Salle Vineyards and producer of Christian Brothers wines and brandy. Mr. Ellis qualifications to serve on the Companys Board of Directors include his prior experience as a member of the Companys senior management, as well as more than 40 years of business experience. *Sean M. Cary* Mr. Cary has served as a director since July 2007. Mr. Cary is the Chief Financial Officer of Pacific Excavation, Inc., a Eugene, Oregon based heavy and civil engineering contractor. Previously, Mr. Cary served as the CFO of CBT Nuggets, LLC, the Corporate Controller of National Warranty Corporation, the CFO of Cascade Structural Laminators and prior to that as Controller of Willamette Valley Vineyards. Mr. Cary served in the U.S. Air Force as a Financial Officer. Mr. Cary holds a Master of Business Administration degree from the University of Oregon and a Bachelor of Science Degree in Management from the U.S. Air Force Academy. Mr. Carys qualifications to serve on the Companys Board of Directors include his financial and accounting expertise. *Stan G. Turel* Mr. Turel has served as a director since November 1994. Mr. Turel is President of Turel Enterprises, a real estate management company managing his own properties in Oregon, Washington and Idaho and is President of Columbia Pacific Tax in Bend, Oregon. Prior to his current activities, Mr. Turel was the Principal and CEO of Columbia Turel, (formerly Columbia Bookkeeping, Inc.) a position which he held from 1974 to 2001. Prior to the sale of the company to Fiducial, one of Europes largest accounting firms, Columbia had approximately 26,000 annual tax clients including approximately 4,000 small business clients. Additionally, Mr. Turel successfully operated as majority owner of two cable TV companies during the 80s and 90s which were eventually sold to several public corporations. Mr. Turel is a pilot, author, was a former delegate to the White House Conference on Small Business and held positions on several state and local Government committees. Mr. Turels qualifications to serve on the Companys Board of Directors include his more than 20 years of accounting and business management experience. *Sarah Rose *Ms. Rose joined the Board on July 16, 2022. Ms. Rose started her career at WVV as a marketing intern and worked in the tasting room during her time at Willamette University where she received a Bachelor of Arts in Anthropology. Ms. Rose has 15+ years of experience innovating and implementing marketing and event campaigns including seven years (from 2015 2022) for Compass Group at Microsoft, where she was responsible for the customer experience including storytelling, events, and communications for 40,000+ Microsoft employees on the expansive Puget Sound campus. While shealso spent some time working for a start-up (2023-2023), she has rejoined the food and hospitality industry once again at Compass Group at Amazon in 2023, responsible for the events, marketing and storytelling across theenterprise atAmazon. Ms. Rose is also on her local schools PTA board inCommunications. Ms. Roses qualifications to serve on the Board include her marketing, event, and hospitality expertise. **Delinquent Section 16(a) Reports** Section 16(a) of the Exchange Act requires the Companys officers, directors and persons who own more than 10% of a registered class of the Companys equity securities to file certain reports with the SEC regarding ownership of, and transactions in, the Companys securities. These officers, directors and stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) reports that are filed with the SEC. Based solely on a review of copies of such forms received by the Company and written representations received by the Company from certain reporting persons, the Company believes that except for one Form 3 and three Form 4s that was filed late by Michael Osborn, all Section 16(a) reports required to be filed by the Companys executive officers, directors and 10% stockholders were filed on a timely basis for the year ended December 31, 2025. **Code of Ethics** The Company has adopted a code of ethics applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, which is a code of ethics as defined by applicable SEC rules. A copy of the Companys Code of Business Conduct and Ethics is posted on the Companys web site, www.wvv.com. Amendments to the Companys Code of Business Conduct and Ethics or any grant of a waiver from a provision of the Companys Code of Business Conduct and Ethics requiring disclosure under applicable SEC rules, if any, will be disclosed on the Company website. Any person may request a copy of the Companys Code of Business Conduct and Ethics, at no cost, by writing to the Company at the following address: Willamette Valley Vineyards, Inc. Attention: Corporate Secretary 8800 Enchanted Way SE Turner, OR 97392 47 **Audit Committee** The Company has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee are Craig Smith, Sean Cary and Stan G. Turel. All members of the Audit Committee are independent as defined under the applicable rules and regulations of the SEC and the director independence standards of NASDAQ, as currently in effect. Sean Cary serves as chair of the committee. **Audit Committee Financial Expert** Craig Smith serves as the Audit Committees financial expert as defined in applicable SEC rules and NASDAQ listing standards. Mr. Smith is independent as defined under the applicable rules and regulations of the SEC and the director independence standards of NASDAQ, as currently in effect. **Insider Trading Policy** The Company has adopted insider trading policies and procedures governing the purchase, sale and/or other dispositions of its securities by directors, officers and employees (or the Company itself) that are reasonably designed to promote compliance with insider trading laws, rules and regulations and any applicable listing standards. **ITEM 11. EXECUTIVE COMPENSATION** **Summary Compensation Table** The following table sets forth certain information concerning compensation paid or accrued by the Company, to or on behalf of the Companys President, James W. Bernau, Chief Executive officer, Mike Osborn and Chief Financial Officer, John Ferry for the fiscal years ended December 31, 2025 and December 31, 2024. No other executive officer of the Company received total compensation in 2025 in excess of $100,000, and thus disclosure is not required for any other person. Summary compensation information is as follows: | Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | Nonqualified | | | | | | | | | | | | | | | | | | | | | | | | | | Non-equity | | | Deferred | | | All | | | | | | | Name, | | | | | | | | | | Stock | | | Option | | | Incentive Plan | | | Comp. | | | Other | | | | | | | Principal Position | | Year | | Salary | | | Bonus | | | Awards | | | Awards | | | Compensation | | | Earnings | | | Comp.* | | | Total | | | | James W. Bernau | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | President | | 2025 | | $ | 340,195 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 91,107 | | | $ | 431,302 | | | | President, Chief Executive | | 2024 | | $ | 330,607 | | | $ | 30,097 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 90,515 | | | $ | 451,219 | | | | John Ferry | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Financial Officer | | 2025 | | $ | 211,371 | | | $ | - | | | $ | - | | | $ | - | | | $ | 24,000 | | | $ | - | | | $ | 9,415 | | | $ | 244,786 | | | | Chief Financial Officer | | 2024 | | $ | 204,711 | | | $ | - | | | $ | - | | | $ | - | | | $ | 24,000 | | | $ | - | | | $ | 9,148 | | | $ | 237,859 | | | | Michael Osborn | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Executive Officer | | 2025 | | $ | 272,163 | | | $ | - | | | $ | 79,500 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 351,663 | | | | * | All other compensation includes Company payments for medical insurance, value of lodging, Board of Director stipends (Mr. Bernau), life insurance payments and Company 401(k) matching contributions. | | **Bernau Employment Agreement **The Company and Mr. Bernau are parties to an employment agreement dated August 3, 1988, as amended on February 20, 1997, in January of 1998, in November 2010, and again on November 8, 2012 (the Bernau Employment Agreement). Under the Bernau Employment Agreement, Mr. Bernau is paid an annual salary with annual increases tied to increases in the consumer price index. Mr. Bernaus 2025 bonus is calculated as a percentage of Company net income before taxes: 5% on the first $1.75 million of pre-tax income, and 7.5% on pre-tax net income over $1.75 million, not to exceed his current yearly base salary. Additionally, Mr. Bernau participates in the Companys employer-sponsored 401(k) plan. Pursuant to the Bernau Employment Agreement, the Company provides Mr. Bernau with housing on the Companys property. Mr. Bernau resides in the estate house, free of rent, which is also used to accommodate overnight stays for Company guests. Mr. Bernau resides in the residence for the convenience of the Company and must continue to reside there for the duration of his employment in order to provide additional security and lock-up services for late evening events at the Estate Winery. The Bernau Employment Agreement provides that Mr. Bernaus employment may be terminated only for cause, which is defined as non-performance of his duties or conviction of a crime. 48 **Ferry Employment Agreement** The Company and Mr. Ferry are parties to an employment agreement dated September 11, 2019 (the Ferry Employment Agreement). Under the Ferry Employment Agreement, Mr. Ferry is paid an annual salary that is both reviewed and subject to adjustment annually. Mr. Ferry is also eligible to receive an annual performance-based incentive payment that is reviewed and subject to adjustment. Mr. Ferry is also due a retention payment of $150,000 if he is with the Company through April 30, 2026. **Osborn Employment Agreement** The Company and Mr. Osborn are parties to an employment agreement dated May 12, 2025 (the Osborn Employment Agreement), pursuant to which Mr. Osborn is entitled to an annualized base salary of $425,000 (the Osborn Base Salary) through December 31, 2026. Beginning January 1, 2027, the Osborn Base Salary shall be adjusted upward tied to the year-over-year percentage change in the consumer price index for urban wage earners (CPI-W) published by the United States Bureau of Labor Statistics. From such date onward, the Base Salary also may be increased by the Company in its sole discretion. The terms of the Osborn Employment Agreement also provide that Mr. Osborn is eligible for an annual discretionary (nonguaranteed) target incentive bonus ( the Osborn TIB) conditioned upon the Company achieving certain financial performance goals for each fiscal year. The Osborn TIB target is equal to five percent (5%) of the Companys pre-tax income above $3,500,000.00 for the applicable fiscal year (as determined by the Companys Board of Directors in its reasonable discretion based on audited year-end financials), capped at 25% of the Osborn Base Salary. Further, subject to both the approval of the Companys Board of Directors and Mr. Osborns continued employment as the Companys Chief Executive Officer, Mr. Osborn is entitled to receive the following equity incentive awards: (i) 15,000 shares of the Companys common stock no later than 90 days after May 19, 2025 (the Osborn Start Date), (ii) 7,000 performance restricted stock units (the PSUs) on the one year anniversary of the Osborn Start Date and on each successive annual anniversary of the Osborn Start Date for a period of ten years, with each such Osborn PSU vesting into a share of the Companys common stock one year from the date of grant, (iii) 200,000 PSUs, which become eligible for vesting in the period commencing on the date that is fifth anniversary of the Osborn Start Date and ending on the date that is five years after such anniversary date (the Osbron Long Term Incentive Period), will vest upon the occurrence of the following events during the Osborn Long Term Incentive Period: (A) 50,000 PSUs shall vest if the trading price of the Companys shares of common stock on Nasdaq is at least $12 per share on average for a period of three months during any one year period; (B) an additional 50,000 PSUs shall vest if the trading price of the Companys shares of common stock on Nasdaq is at least $15 per share on average for a period of three months during any one year period; (C) an additional 50,000 PSUs shall vest if the trading price of the Companys shares of common stock on Nasdaq is at least $20 per share on average for a period of three months during any one year period; and (D) the final 50,000 PSUs shall vest if the trading price of the Companys shares of common stock on Nasdaq is at least $25 per share on average for a period of three months during any one year period. **Potential Payments Upon Termination or Change In Control** In the event of a change in control of the Company, Mr. Ferry would be entitled to receive one years salary. In the event that Mr. Osborn is terminated by the Company without Cause (as defined in the Osborn Employment Agreement) or Mr. Osborn resigns for Good Reason (as defined in the Osborn Agreement), the Company is required to promptly pay Mr. Osborn (i) all accrued but unused vacation time, and (ii) all unreimbursed expenses properly incurred by you on behalf of the Company (iii) if the termination date is prior to the one (1) year anniversary of the Osborn Start Date, Mr. Osborn is entitled to cash severance equal to four (4) months of the Osborn Base Salary, or if termination date is on or after the (1) year anniversary of the Osborn Start Date, then Mr. Osborn is entitled to cash severance equal to 12 months of the Osborn Base Salary and (iv) continuation coverage for Mr. Osborn (and, if they are covered on his termination date, Mr. Osborns eligible dependents) under the Companys group health plan pursuant to Section 4980B of the Code (**COBRA**) for a period ranging from 4 to 12 months from Mr. Osborns termination date, depending on the duration of his employment with the Company. 49 **Director Compensation** The following table sets forth information concerning compensation of the Companys directors other than Mr. Bernau for the fiscal year ended December 31, 2025: | | | | | | | | | | | | | | | Change | | | | | | | | | | | | | | | | | | | | | | | | in Pension | | | | | | | | | | | | | | | | | | | | | | | | Value and | | | | | | | | | | | | | | | | | | | | | | | | Nonqualified | | | | | | | | | | | | Fees Earned | | | | | | | | | Non-equity | | | Deferred | | | | | | | | | | | | or | | | Stock | | | Option | | | Incentive Plan | | | Compensation | | | All Other | | | | | | | Name | | Paid in Cash | | | Awards | | | Awards | | | Compensation | | | Earnings | | | Compensation | | | Total | | | | James L. Ellis | | $ | 5,400 | | | | - | | | | - | | | | - | | | | - | | | $ | 9,628 | | | $ | 15,028 | | | | Sean M. Cary | | | 6,464 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6,464 | | | | Craig Smith | | | 5,500 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,500 | | | | Stan G. Turel | | | 5,850 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 5,850 | | | | Sarah Rose | | | 8,063 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 8,063 | | | | Cara Pepper Day* | | | 4,500 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,500 | | | | * | Ms. Pepper Day decided not to stand for re- election to the board at the 2025 annual meeting of the Companys Stockholders. | | Other compensation for James L. Ellis includes a monthly stipend for ongoing consultation services as well as serving as administrator of any potential employee complaint that might rise to the Boards level. The members of the Board received cash compensation for their service on the Board in 2025 and are reimbursed for out-of-pocket and travel expenses incurred in attending Board meetings. In January 2009, the Board, upon the recommendation of the Compensation Committee, who had sought outside counsel regarding revision of the Companys Board compensation plan, adopted the final version of the revised WVV Board Member Compensation Plan (the Board Compensation Plan). The Board Compensation Plan was updated at the Board meeting in February 2024 (the Revised Plan). Under the terms of the Revised Plan, any Board member may elect not to receive any or all of the compensation components. The Board also reserved the right to suspend this plan at any time based on prevailing economic conditions and their impact on the Company. The Revised Plan stipulates that each director receive: (i) a $1,000 yearly stipend for service on the Board; (ii) $500 per Board meeting; and (iii) $200 per committee meeting. **ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS** **Equity Compensation Plan Information** The Willamette Valley Vineyards Inc, 2025 Omnibus Equity IncentivePlan (2025 Plan) was adopted by the Companys board of directors on September 9, 2025. During the twelve months ended December 31, 2025, the Company granted 285,000 restricted share units under the 2025 Plan, of which 15,000 restricted share units vested during the year. The following table gives information as of December 31, 2025, the end of the most recently completed fiscal year, about shares of the Companys common stock that may be issued pursuant to the 2025 Plan. | Plan Category | | (a) No. of Shares to be Issued Upon Exercise or Vesting of Outstanding Stock Options, RSUs | | | (b) Weighted Average Exercise Price of Outstanding Stock Options, Warrants and Rights | | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities (a) ) | | | | Equity Compensation Plans Approved by Shareholders | | | 270,000 | | | $ | N/A | | | | 956,132 | | | | Equity Compensation Plans Not Approved by Shareholders | | | N/A | | | | N/A | | | | N/A | | | | TOTAL | | | 270,000 | | | $ | N/A | | | | 956,132 | | | 50 **Security Ownership of Certain Beneficial Owners and Management** The following table sets forth certain information with respect to beneficial ownership of the Companys Common Stock as of March 24, 2026 by: (i) each person who beneficially owns more than 5% of the Companys Common Stock; (ii) each Director of the Company; (iii) each of the Companys named executive officers; and (iv) all directors and executive officers as a group. Except as indicated in the footnotes to this table, each person has sole voting and investment power with respect to all shares attributable to such person. Information concerning persons who beneficially own more than 5% of the Companys common stock who are not otherwise affiliated with the Company is based solely upon statements made in filings with the SEC or other information we believe to be reliable. Unless otherwise noted, the address of each beneficial owner listed in the table is 8800 Enchanted Way SE Turner, OR 97392. | | | | | | Percent of | | | | | | | | | Number of | | | Shares | | | Beneficial | | | | | | Shares Outstanding | | | Beneficially | | | Ownership | | | | | | Stock | | | Owned (1) | | | Denominator | | | | James W. Bernau, President/CEO, Chair of the Board | | | 374,501 | | | | 7.5 | % | | | 4,979,529 | | | | | | | | | | | | | | | | | | | John Ferry, CFO | | | - | | | | ** | | | | 4,979,529 | | | | | | | | | | | | | | | | | | | Mike Osborn, CEO | | | 20,000 | | | | ** | | | | 4,979,529 | | | | | | | | | | | | | | | | | | | James L. Ellis, Director | | | 19,865 | | | | ** | | | | 4,979,529 | | | | | | | | | | | | | | | | | | | Sean M. Cary, Director | | | 5,200 | | | | ** | | | | 4,979,529 | | | | | | | | | | | | | | | | | | | Stan G. Turel, Director | | | 20,427 | | | | ** | | | | 4,979,529 | | | | | | | | | | | | | | | | | | | Craig Smith, Director | | | 1,500 | | | | ** | | | | 4,979,529 | | | | | | | | | | | | | | | | | | | Sarah Rose, Director | | | 5,000 | | | | ** | | | | 4,979,529 | | | | | | | | | | | | | | | | | | | Christopher Riccardi | | | 385,485 | (2) | | | 7.7 | % | | | 4,979,529 | | | | 100 Tall Pine Ln., Apt 2102, Naples, FL 34105 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Directors and Executive Officers as a group (9 persons) | | | 446,493 | | | | 9.0 | % | | | 4,979,529 | | | | ** | Less than one percent | | | (1) | The percentage of outstanding shares of common stock is calculated based on 4,979,529 shares of Common Stock outstanding as of March 24, 2026. Shares owned do not include ownership of preferred stock shares. | | | (2) | Based on a Form 4 filed by Mr. Riccardi with the SEC on December 29, 2015. | | **ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE** The Company did not participate in any transactions with related persons for the year ended December 31, 2025 or 2024 that had a direct or indirect material interest in an amount exceeding $120,000 and there are no currently proposed transactions with related persons that exceed $120,000. All proposed transactions between the Company and its officers, directors, and principal shareholders are required be approved by a disinterested majority of the members of the Board and will be on terms no less favorable to the Company than could be obtained from unaffiliated third parties. The Board has determined that each of our directors, except Mr. Bernau and Mr. Ellis is independent within the meaning of the applicable rules and regulations of the SEC and the director independence standards of NASDAQ, as currently in effect. Furthermore, the Board has determined that, with the exception of the Executive Committee, each of the members of each of the committees of the Board is independent under the applicable rules and regulations of the SEC and the director independence standards of NASDAQ, as currently in effect. 51 **ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES** Baker Tilly US LLP (formerly Moss Adams LLP) served as the Companys independent registered public accounting firm for the years ended December 31, 2025 and 2024. Fees for professional services provided by our independent registered public accounting firm in each of the last two fiscal years, in each of the following categories are: | | | Years Ended December 31, | | | | | | 2025 | | | 2024 | | | | Audit fees (1) | | | 361,487 | | | $ | 327,862 | | | | Tax fees (2) | | | 60,565 | | | | 60,800 | | | | | | | | | | | | | | | | | $ | 422,052 | | | $ | 388,662 | | | | (1) | Audit fees represent fees for services rendered for the audit of the Companys annual financial statements and other audit related, 401k plan audit, review of prospectus supplement and review of the Companys quarterly financial statements. | | | (2) | Tax fees represent fees for services rendered for tax compliance, tax advice and tax planning. | | **Pre-approval policies and procedures** It is the policy of the Company not to enter into any agreement for Baker Tilly US LLP to provide any non-audit services to the Company unless (a) the agreement is approved in advance by the Audit Committee or (b) (i) the aggregate amount of all such non-audit services constitutes no more than 5% of the total amount the Company pays to Baker Tilly US LLP during the fiscal year in which such services are rendered, (ii) such services were not recognized by the Company as constituting non-audit services at the time of the engagement of the non-audit services and (iii) such services are promptly brought to the attention of the Audit Committee and prior to the completion of the audit were approved by the Audit Committee or by one or more members of the Audit Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Audit Committee. The Audit Committee will not approve any agreement in advance for non-audit services unless (1) the procedures and policies are detailed in advance as to such services, (2) the Audit Committee is informed of such services prior to commencement and (3) such policies and procedures do not constitute delegation of the Audit Committees responsibilities to management under the Exchange Act. In the fiscal years ended December 31, 2025 and 2024 all of the services performed by Baker Tilly US LLP were pre-approved by the audit committee. 52 **ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES** | (a) | The following documents are filed as part of this report: | | | (1) | Financial Statements | | See Index to Financial Statements in Item 8 of this Annual Report on Form 10-K. | (2) | Financial Statement Schedules | | All financial statement schedules are omitted either because they are not required, not applicable or the required information is included in the financial statements or notes thereto. | (3) | Exhibits | | | Exhibit Number | | Description | | | 3.1 | | Articles of Incorporation of Willamette Valley Vineyards, Inc. (incorporated by reference to Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, filed on May 13, 2025, File No. 001-37610). | | | | | | | | 3.2 | | Articles of Amendment, dated August 22, 2000 (incorporated herein by reference to Exhibit 3.4 to the Companys Form 10-Q for the quarterly period ended June 30, 2008, filed on August 14, 2008, File No. 000-21522). | | | | | | | | 3.3 | | Articles of Correction to the Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated June 22, 2015 (incorporated by reference to Exhibit 3.3 to the Companys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, filed on May 13, 2025, File No. 001-37610). | | | | | | | | 3.4 | | Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated June 22, 2015, as corrected on July 22, 2015 (incorporated by reference to Exhibit 3.4 to the Companys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, filed on May 13, 2025, File No. 001-37610). | | | | | | | | 3.5 | | Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated March 16, 2016 (incorporated by reference to Exhibit 3.5 to the Companys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, filed on May 13, 2025, File No. 001-37610). | | | | | | | | 3.6 | | Articles of Amendment to the Articles of Incorporation of Willamette Valley Vineyards, Inc., dated August 9, 2022. (incorporated by reference to Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, filed on May 13, 2025, File No. 001-37610). | | | | | | | | 3.7 | | Amended and Restated Bylaws of Willamette Valley Vineyards, Inc. (incorporated by reference from the Companys Current Reports on Form 8-K filed on November 20, 2015, File No. 001-37610) | | | | | | | | 4.1 | | Amended and Restated Certificate of Designation regarding the Series A Redeemable Preferred Stock (incorporated by reference from the Companys Current Report on Form 8-K filed with the SEC on March 16, 2016 [File No. 001-37610]) | | | | | | | | 4.2 | | Description of Common Stock (incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 11, 2020 [File No. 001-37610]) | | | | | | | | 10.1 | | Employment Agreement between Willamette Valley Vineyards, Inc. and James W. Bernau dated August 3, 1988 (incorporated by reference from the Companys Regulation A Offering Statement on Form 1-A [File No. 24S-2996]) | | | | | | | | 10.2 | | Employment Agreement between Willamette Valley Vineyards, Inc. and John Ferry dated September 11, 2019 (incorporated by reference from the Companys Current Report on Form 8-K filed with the SEC on September 16, 2019 [File No. 001-37610]) | | | | | | | | 10.3 | | Employment Agreement between Willamette Valley Vineyards, Inc. and Michael Osborn dated May 12, 2025 (incorporated by reference from the Companys Current Report on Form 8-K filed with the SEC on May 15, 2025 [File No. 001-37610]) | | | | | | | | 10.4 | | Revolving Note and Loan Agreement dated May 28, 1992 by and between Northwest Farm Credit Services, Willamette Valley Vineyards, Inc. and James W. and Cathy Bernau (incorporated by reference from the Companys Regulation A Offering Statement on Form 1-A [File No. 24S-2996]) | | 53 | 10.5 | | 2025 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 from the Companys Registration Statement on Form S-8 filed with the SEC on November 12, 2025 [File No. 333-291478]) | | | | | | | | 14.1 | | Code of Ethics (incorporated by reference from the Companys Proxy Statement on Schedule 14A, filed on June 30, 2004) | | | | | | | | 23.1 | | Consent of Baker Tilly US LLP, Independent Registered Public Accounting Firm (Filed herewith) | | | | | | | | 31.1 | | Certification of Principal Executive Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934 (Filed herewith) | | | | | | | | 31.2 | | Certification of Chief Financial Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934 (Filed herewith) | | | | | | | | 32.1 | | Certification of James W. Bernau pursuant to 18U.S.C. Section1350 as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002 (Furnished, not filed, herewith) | | | | | | | | 32.2 | | Certification of John Ferry pursuant to 18U.S.C. Section1350 as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002 (Furnished, not filed, herewith) | | | | | | | | 97.1 | | Clawback Policy (incorporated by reference from the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 26, 2024 [File No. 001-37610]) | | | | | | | | 101 | | The following financial information from the Corporations Annual Report on Form 10-K for the year ended December 31, 2025, furnished electronically herewith, and formatted in iXBRL (Inline Extensible Business Reporting Language); (i) Balance Sheets; (ii) Statements of Operations; (iii) Statements of Shareholders Equity; (iv) Statements of Cash Flows; and (v) Notes to Financial Statements. (Filed herewith) | | | | | | | | 104 | | The cover page from the Companys Annual Report on Form 10-K for the year ended December 31, 2025 has been formatted in Inline XBRL | | | (1) | The exhibits listed under Item15(a)(3) hereof are filed as part of this Form 10-K, other than Exhibits 32.1 and 32.2, which shall be deemed furnished. | | | (2) | All financial statement schedules are omitted either because: (i) they are not required; (ii) they are not applicable; or (iii) the required information is included in the financial statements or notes thereto. | | 54 **SIGNATURES** Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. **WILLAMETTE VALLEY VINEYARDS, INC.** (Registrant) | By: | /s/ James W. Bernau | | | | James W. Bernau, | | | Chairperson of the Board, President | | | | | | Date: March 24, 2026 | | Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: | Signature | | Title | | Date | | | | | | | | | | /s/ James W. Bernau | | Chairperson of the Board, | | March 24, 2026 | | | James W. Bernau | | President | | | | | | | (Principal Executive Officer) | | | | | | | | | | | | /s/ John Ferry | | Chief Financial Officer | | March 24, 2026 | | | John Ferry | | (Principal Financial | | | | | | | and Accounting Officer) | | | | | | | | | | | | /s/ James L. Ellis | | Director | | March 24, 2026 | | | James L. Ellis | | | | | | | | | | | | | | /s/ Craig Smith | | Director | | March 24, 2026 | | | Craig Smith | | | | | | | | | | | | | | /s/ Stan G. Turel | | Director | | March 24, 2026 | | | Stan G. Turel | | | | | | | | | | | | | | /s/ Sean M. Cary | | Director | | March 24, 2026 | | | Sean M. Cary | | | | | | | | | | | | | | /s/ Sarah Rose | | Director | | March 24, 2026 | | | Sarah Rose | | | | | | 55