WILLAMETTE VALLEY VINEYARDS INC Revenue Disclosure

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 Company’s contractual obligations to customers generally have a single point of obligation and are short term in nature.

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 Company’s retail locations is recognized at the time of sale. Net revenue reported herein is shown net of sales allowances and excise taxes. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met. As of December 31, 2024, the Company has recorded deferred revenue in the amount of $616,143, which is included in unearned revenue on the balance sheet. As of December 31, 2023, and December 31, 2022, the Company has recorded deferred revenue in the amount of $490,523 and $335,431, 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 $1,853,982 as of December 31, 2024. Dividend gift cards that have been issued but not used are also treated as unearned revenue and were $1,480,138 and $1,106,970 as of December 31, 2023 and 2022, 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 Company’s standard terms are ‘FOB’ shipping point, with no customer acceptance provisions. The cost of price promotions and rebates are treated as reductions of revenue. 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, 2024 and 2023, the Company recorded incentive program expenses of $1,807,559 and $1,057,198, respectively, as a reduction in sales on the Statements of Operations. As of December 31, 2024, and 2023, the Company has recorded an incentive program liability in the amount of $293,366 and $54,003, 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 customer’s 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. As of December 31, 2024, the Company has recorded a liability for unused club points in the amount of $263,327, which is included in unearned revenue on the balance sheet.

The Company periodically sells bulk wine or grapes that either do not meet the Company’s 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.