10QSB 1 wvv023q10q.txt SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ___________________________________________________________ FORM 10-QSB ___________________________________________________________ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarter Ended September 30, 2002 Commission File Number 0-21522 WILLAMETTE VALLEY VINEYARDS, INC. (Exact name of registrant as specified in charter) Oregon 93-0981021 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) ___________________________________________________________ 8800 Enchanted Way, S.E., Turner, Oregon 97392 (503)-588-9463 (Address, including Zip code, and telephone number, including area code, of registrant's principal executive offices) ___________________________________________________________ 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. [X] YES [ ] NO Number of shares of common stock outstanding as of September 30, 2002 4,469,444 shares, no par value Transitional Small Business Disclosure [ ] YES [X] NO WILLAMETTE VALLEY VINEYARDS, INC. INDEX TO FORM 10-QSB Part I - Financial Information Item 1--Financial Statements Balance Sheet Statement of Operations Statement of Cash Flows Notes to Consolidated Financial Statements Item 2--Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3--Controls and Procedures Part II - Other Information Item 1--Exhibits and Reports of Form 8-K Item 5--Other Information Signatures PART 1 FINANCIAL INFORMATION ITEM 1 Financial Statements WILLAMETTE VALLEY VINEYARDS Balance Sheet September 30, December 31, 2002 2001 (unaudited) ASSETS. __________ __________ Current Assets: Cash and cash equivalents $ 112,631 $ 504,510 Accounts receivable trade, net 447,144 746,678 Inventories 7,366,984 6,905,865 Prepaid expenses and other current assets 1,451 87,512 Deferred income taxes 146,054 146,054 __________ __________ Total current assets 8,074,264 8,390,619 Vineyard development cost, net 1,646,204 1,697,452 Inventories 584,925 584,925 Property and equipment, net 5,187,151 5,652,067 Notes receivable 69,403 77,378 Debt issuance costs, net 59,546 64,910 Other assets 242,732 205,884 __________ __________ Total assets $15,864,225 $16,673,235 ========== ========== LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities Line of credit $ 1,500,000 $ 1,352,500 Current portion of long term debt 242,649 242,649 Accounts payable 780,416 1,002,501 Accrued commissions and payroll 135,848 138,486 Income taxes payable 17,969 17,969 Grapes payable 553,020 1,136,487 __________ __________ Total current liabilities 3,229,902 3,890,592 Long-term debt 3,000,715 3,184,031 Distributor obligation 1,500,000 1,500,000 Deferred rent liability 79,751 60,392 Deferred gain 430,973 449,711 Deferred income taxes 209,968 209,968 __________ __________ Total liabilities 8,451,309 9,294,694 __________ __________ Shareholders' equity Common stock, no par value - 10,000,000 shares authorized, 4,469,444 and 4,464,981 shares issued and outstanding at September 30, 2002 and December 31, 2001 7,155,163 7,142,647 Retained earnings 257,753 235,894 __________ __________ Total shareholders' equity 7,412,916 7,378,541 __________ __________ Total liabilities and shareholders' equity $15,864,225 $16,673,235 ========== ========== The accompanying notes are an integral part of this financial statement. WILLAMETTE VALLEY VINEYARDS, INC. Statement of Operations (unaudited) Three months ended Nine months ended September 30, September 30, 2002 2001 2002 2001 __________ __________ __________ __________ Net Revenues Case Revenue $ 1,511,502 $ 1,792,161 $ 4,110,832 $ 4,775,397 Bulk Revenue - 121,810 28,215 345,611 __________ __________ __________ __________ Total Revenue 1,511,502 1,913,971 $ 4,139,047 5,121,008 Cost of Sales Case 697,352 898,648 1,873,337 2,326,532 Bulk - 116,783 28,405 297,099 __________ __________ __________ __________ Total Cost of Sales 697,352 1,015,431 1,901,742 2,623,631 Gross Margin 814,150 898,540 2,237,305 2,497,377 Selling, general and administrative expense 651,145 771,544 1,970,811 2,222,655 __________ __________ __________ __________ Net operating income 163,005 126,996 266,494 274,722 Other income (expense) Interest income 1,333 1,304 3,727 3,464 Interest expense (89,177) (98,927) (267,120) (352,311) Other income 6,246 6,632 18,758 22,898 Other expense (23) (23) __________ __________ __________ __________ Net income (loss) before income taxes 81,407 35,982 21,859 (51,250) Income tax - - - - __________ __________ __________ __________ Net income (loss) 81,407 35,982 21,859 (51,250) Retained earnings beginning of period 176,346 89,817 235,894 177,049 __________ __________ __________ __________ Retained earnings end of period $ 257,753 $ 125,799 $ 257,753 125,799 ========== ========== ========== ========== Basic gain (loss) per common share $ .02 $ .01 $ .01 $ (.01) Diluted gain (loss) per common share $ .02 $ .01 $ .01 $ (.01) Weighted average number of basic common shares outstanding 4,469,444 4,516,257 4,468,560 4,323,968 Weighted average number of diluted common shares outstanding 4,469,444 4,623,359 4,473,457 4,323,968 The accompanying notes are an integral part of this financial statement. WILLAMETTE VALLEY VINEYARDS, INC. Statement of Cash Flows (unaudited) Nine months ended September 30, 2002 2001 __________ __________ Cash flows from operating activities: Net income (loss) $ 21,859 $ (51,250) Reconciliation of net loss to net cash (used for) provided by operating activities: Depreciation and amortization 572,045 549,310 Stock issued for compensation 3,941 3,984 Changes in assets and liabilities: Accounts receivable trade 299,534 (333,217) Inventories (461,119) 316,114 Prepaid expenses and other current assets 86,061 (60,997) Notes receivable 7,975 (15,262) Other assets 13,380 (20,888) Accounts payable (222,085) (53,604) Accrued commissions and payroll costs (2,638) 11,359 Grape payables (583,467) (373,501) Deferred rent liability 19,359 21,569 Deferred gain (18,738) (18.738) __________ __________ Net cash used for operating activities (263,893) (25,121) __________ __________ Cash flow from investing activities Additions to property and equipment (50,517) (243,385) Vineyard development expenditures - (34,424) Investments (50,228) (5,000) __________ __________ Net cash used by investing activities (100,745) (282,809) __________ __________ Cash flows from financing activities: Net increase (decrease) in line of credit balance 147,500 (1,266,549) Proceeds from distributor obligation - 1,500,000 Debt issuance costs (16,637) Proceeds from common stock issued and options exercised, net 8,575 318,000 Repayments of long-term debt (183,316) (132,402) __________ __________ Net cash (used) provided by financing activities (27,241) 402,412 __________ __________ Net (decrease) increase in cash and cash equivalents (391,879) 94,482 Cash and cash equivalents: Beginning of period 504,510 252,876 __________ __________ End of period $ 112,631 $ 347,358 ========== ========== The accompanying notes are an integral part of this financial statement. NOTES TO CONSOLIDATED FINANCIAL STATEMENT 1) BASIS OF PRESENTATION The interim financial statements have been prepared by the Company, without audit and subject to year-end adjustment, in accordance with generally accepted accounting principles, except that certain information and footnote disclosure made in the latest annual report have been condensed or omitted for the interim statements. Certain costs are estimated for the full year and are allocated to interim periods based on estimates of operating time expired, benefit received, or activity associated with the interim period. The financial statements reflect all adjustments, which are, in the opinion of management, necessary for fair presentation. 2) INVENTORIES BY MAJOR CLASSIFICATION ARE SUMMARIZED AS FOLLOWS: September 30, December 31, 2002 2001 (unaudited) __________ __________ Winemaking and packaging materials $ 19,579 $ 252,828 Work-in-progress (costs relating to unprocessed and/or bulk wine products) 2,044,302 2,941,755 Finished goods (bottled wines 5,888,028 4,296,207 and related products) __________ __________ $ 7,951,909 $ 7,490,790 Less: amounts designated for distributor (584,925) (584,925) __________ __________ Current inventories $ 7,366,984 $ 6,905,865 ========== ========== 3) PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING: September 30, December 31, 2002 2001 (unaudited) __________ __________ Land and improvements $ 984,954 $ 984,954 Winery building and hospitality center 4,567,076 4,561,118 Equipment 4,643,936 4,599,377 __________ __________ $10,195,966 $10,145,449 Less accumulated depreciation (5,008,815) (4,493,382) __________ __________ $ 5,187,151 $ 5,652,067 ========== ========== 4) SUBSEQUENT EVENTS: None. ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Statement: This Management's Discussion and Analysis of Financial Condition and Results of Operation and other sections of this Form 10-QSB contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that are based on Management's current expectations, estimates and projections about the Company's business, and on beliefs and assumptions. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and variations of such words and similar expressions are intended in part to help identify such forward-looking statements. 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: our ability to avoid a declaration of a default on our loan agreements, availability of additional 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, impact of governmental regulatory decisions, and other risks detailed below as well as those discussed elsewhere in this Form 10-QSB and from time to time in the Company's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic economic conditions. Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL The Company produced its second consecutive profitable quarter, following negative First Quarter results and a profitable 2001 calendar year. The Third Quarter gains were sufficient to erase the losses incurred in the First Quarter, which has traditionally been the weakest financial period for the Company and wine industry as a whole. The 2002 Third Quarter produced stronger net profits, rising one hundred twenty six percent as compared to the previous year, even though sales to the Company's largest out-of-state distribution network were down significantly. These positive results came from the sale of higher margin products resulting in the gross margin rising from 47 percent to 54 percent, and a 16 percent reduction in selling, general, and administrative expenses as compared with the Third Quarter of the previous year. These higher product margins are the result of fixed production costs being spread over the larger than expected 2001 harvest. The largest single factor in lower sales revenues was decreased out-of-state sales to distributors, with the second being no bulk wine sales were made in the Third Quarter. Due to high inventories of bulk wine in the industry generally, the Company has to date been unsuccessful marketing bulk wines as it had in the Third Quarter of the previous year. In 2001, the Company entered into a national distribution agreement with one of the nation's largest wine distributors, the Charmer Sunbelt Group, with the expectation of achieving significantly more product placements and resulting sales. Large amounts of wine inventory were sold into this distribution network in 2001, much of which is still being sold into the retail trade. Due to the slower than expected implementation of distribution and slower than expected sales, the management does not expect sales to rise to the Charmer Sunbelt network until their inventories have been sold down. Our CEO and staff have traveled to out-of-state markets twenty nine times this year making account sales calls and presentations to distributor sales forces to increase distributor sales to their customers. Depletions from the Company's distributors to their retail accounts increased sixteen percent for the Third Quarter over the previous year, same period and twelve percent for the nine-month period. Management reduced the 2002 crush to 1,091 tons down from the record 1,856 tons the previous year, in order to reduce inventories and the need for additional borrowing to finance new inventory. RESULTS OF OPERATIONS Revenue Winery Operations The Company's revenues from winery operations are summarized as follows: Three months ended Nine months ended September 30, September 30, 2002 2001 2002 2001 __________ __________ __________ __________ Tasting Room Sales and Rental Income $ 410,659 $ 406,326 $ 1,133,550 $ 943,616 On-site and off-site festivals 46,161 50,868 125,023 150,174 In state sales 617,156 645,963 1,736,419 1,855,883 Out of state sales 490,438 741,703 1,247,064 1,972,191 Bulk wine/ Misc. sales - 121,810 28,215 345,611 __________ __________ __________ __________ Total Revenue $ 1,564,414 $ 1,966,670 $ 4,270,271 $ 5,267,475 Less Excise Taxes 52,912 52,699 131,224 146,467 __________ __________ __________ __________ Net Revenue $ 1,511,502 $ 1,913,971 $ 4,139,047 $ 5,121,008 ========== ========== ========== ========== Tasting room sales, and rental income for the three months ending September 30, increased 1% to $410,659 in 2002 from $406,326 for the same period in 2001. For the first nine months of 2002, sales increased 20% over the same period in 2001. Retail sales increased during the third quarter of 2002 due in part to the continued success of management's focus on higher margin retail sales. On-site and off-site festival sales for the third quarter of 2002 decreased 10% to $46,161 from $50,868 over the third quarter of 2001. During the first nine months of 2002, sales in this category decreased 17% over the same period in 2001. This decrease is due primarily to the continuing focus away from on-site and off-site events, in favor of telephone, mail order and retail sales. Sales in Oregon, through the Company's independent sales force, decreased 8% to $529,330 in the third quarter of 2002 from $577,957 in the third quarter of 2001. The Company's direct instate sales to our largest customer increased 29% to $87,826 from $68,006 in 2001. The Company is continuing to work with this customer in an attempt to regain historical higher sales volumes. Out-of-state sales in the third quarter of 2002 decreased 34% to $490,438 from $741,703 in the third quarter of 2001. As a continuing result of slower than expected sales during 2001, the Company's distributors continued to work through their excess inventories, producing slow sales from the winery. The Company has refocused sales efforts during the first nine months of 2002 by engaging local professional wine brokers, who are paid on performance, to assist distributors with account placements, local sales programs, and continued increased depletions. Also, the Company has been facilitating and attending brand sales kickoff events at the distributors and working with local sales forces to improve brand knowledge and recognition. Excise taxes The Company's excise taxes increased slightly in the third quarter of 2002 to $52,912 from $52,699 in the same period in 2001. For the nine months of 2002, excise taxes decreased to $131,224 from $146,467 for the same period in 2001. This was due in part to the decreased overall sales, and the continued increased sales of high margin products and decreased case depletions of lower margin products in the first nine months of 2002, decreasing overall sales volumes and taxes which are paid based on volume. Gross Profit As a percentage of revenue, gross profit for the winery operations increased to 54% in the third quarter of 2002 as compared to 47% in the third quarter of 2001. This increase is a result of the higher sales of higher margin products like Pinot Noirs, and the lower costs of goods attributed to the very successful crush of 2001, as well as the lack of low margin bulk sales in 2002. The Company expects the gross margins in 2002 to be higher than in 2001 due to the Company's focus on, and improved distribution of, higher margin products, as well as the continued movement of the lower cost products of the 2001 vintage. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased 16% to $651,145 in the third quarter of 2002 from $771,544 in the third quarter of 2001. For the first nine months of 2002, selling, general and administrative expenses decreased 11% to $1,970,811 from $2,222,655 in the first nine months of 2001. The decrease was due in part to the elimination of the national sales manager position, as well as strong cost control efforts. As a percentage of revenue from winery operations, selling, general and administrative expenses increased to 43% in the third quarter of 2002 from 40% in the third quarter of 2001. Interest Income, Other Income and Expense Interest income increased to $1,333 for the third quarter of 2002 from $1,304 for the third quarter of 2001. Interest expense decreased to $89,177 in the third quarter of 2002 from $98,927 in 2001. Interest costs were lower because the Company paid lower interest rates on its line of credit. Other income decreased to $6,246 for the third quarter of 2002 from $6,632 for the third quarter of 2001. Income Taxes No income tax expense has been recorded due to the utilization of net operating loss carry forwards. Liquidity and Capital Resources At September 30, 2002, the Company had a working capital balance of $4.8 million and a current ratio of 2.5:1. At December 31, 2001, the Company had a working capital balance of $4.5 million and a current ratio of 2.2:1. The Company had a cash balance of $112,631 at September 30, 2002 compared with $504,510 at December 31,2001. This decrease is due primarily to the pay down of accounts payable and grape payables. At September 30, 2002, the line of credit balance was $1,500,000. On October 31, 2002, the Company obtained an extension of the maturity date of its line of credit from Northwest Farm Credit Services from September 1, 2002 to December 1, 2002. The Company is currently negotiating an agreement with another financial institution and management anticipates a final agreement to be in place in the near future. Management anticipates the financing agreement to provide for maximum borrowings of $2,700,000 with an interest rate of the bank's prime plus .8 percent. Management also anticipates the agreement to include, among other things, certain restrictive financial covenants with respect to total equity, debt-to-equity and debt coverage. If the Company is unable to refinance the debt with another institution, the Company may be unable to continue its normal operations, except to the extent permitted by Northwest Farm Credit Services. As of September 30, 2002, the Company had a total long-term debt balance of $3,243,364 owed to Farm Credit Services. This debt was used to finance the Hospitality Center, invest in winery equipment to increase the Company's winemaking capacity, complete the storage facility, and purchase Tualatin Vineyards. At December 31, 2001, the Company was in violation of one of five of its debt coverage covenants. Farm Credit Services has signed a waiver letter to the Company for these covenants through December 31, 2002. At September 30, 2002, the Company owed $553,020 on grape contracts. A large portion is owed to a single grape grower, which will be paid as the wine made from those grapes is sold. Critical Accounting Policies: The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, collection of accounts receivable, valuation of inventories, and amortization of vineyard development costs. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. A description of our critical accounting policies and related judgments and estimates that affect the preparation of our financial statements is set forth in our Annual Report on Form 10-K for the year ended December 31, 2001. Recent Accounting Pronouncements In July 2002, the FASB issued SFAS 146, "Accounting For Costs Associated with Exit or Disposal Activities." This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under Issue 94-3, a liability for an exit cost as defined in Issue 94-3 was recognized at the date of an entity's commitment to an exit plan. This Statement also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company does not expect the adoption of SFAS 146 to have a material effect on its financial position or results of operations. In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements 4, 44 and 64, Amendment of FASB Statement 13, and Technical Corrections". SFAS 145 rescinds the provisions of SFAS 4 that requires companies to classify certain gains and losses from debt extinguishments as extraordinary items, eliminates the provisions of SFAS 44 regarding transition to the Motor Carrier Act of 1980 and amends the provisions of SFAS 13 to require that certain lease modifications be treated as sale leaseback transactions. The provisions of SFAS 145 related to classification of debt extinguishment are effective for fiscal years beginning after May 15, 2002. The provisions of SFAS 145 related to lease modification are effective for transactions occurring after May 15, 2002. The Company does not expect the provisions of SFAS 145 to have a material impact on its financial position or results of operations. In August 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations." This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company does not expect the provisions of SFAS 143 to have a material impact on its financial position or results of operations. In August 2001, the FASB issued SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144 supersedes SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30 (APB 30), "Reporting Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transaction." SFAS 144 develops one accounting model for long-lived assets that are to be disposed of by sale. SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years, with early application encouraged. The Statement did not have an impact because the impairment assessment under SFAS 144 is largely unchanged from SFAS 121. In June 2001, the FASB issued SFAS 141, "Business Combinations" and 142, "Goodwill and Other Intangible Assets". SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually or more frequently if impairment indicators arise for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives, but with no maximum life. The amortization provisions of SFAS 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company adopted SFAS 142 effective January 1, 2001. SFAS 142 requires companies to review annually or more frequently if impairment indicators arise. The Company does not expect the provisions of SFAS 141 and SFAS 142 to have an impact on its financial position or results of operations. ITEM 3 Controls and Procedures a) Within the 90-day period prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of the Company's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in our Exchange Act filings. b) There have been no significant changes in our internal controls or in other factors which could significantly affect internal controls subsequent to the date we carried out our evaluation. PART II. OTHER INFORMATION ITEM 1 Exhibits and Reports on Form 8-K. (a) No Exhibits ITEM 5 Other Information Non-Audit Fees: The Audit Committee of the Board Of Directors has approved the following non-audit services, which are being performed by PricewaterhouseCoopers, our independent accountants, during the calendar year ending December 31, 2002: - Income tax advisory services related to: income tax returns; acquisitions; and formation and liquidation of foreign subsidiaries SIGNATURES Pursuant to the requirements of the Security Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WILLAMETTE VALLEY VINEYARDS, INC. Date: November 14, 2002 By /s/ James W. Bernau James W. Bernau President Date: November 14, 2002 By /s/ Sean M. Cary Sean M. Cary Controller CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, James W. Bernau, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Willamette Valley Vineyards Inc. on Form 10-QSB for the quarterly period ended September 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such 10-Q fairly presents in all material respects the financial condition and results of operations of Willamette Valley Vineyards Inc. By: /s/ James W. Bernau Name: James W. Bernau Title: Chief Executive Officer I, Sean M. Cary, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Willamette Valley Vineyards Inc. on Form 10-QSB for the quarterly period ended September 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such 10-Q fairly presents in all material respects the financial condition and results of operations of Willamette Valley Vineyards Inc. By: /s/ Sean M. Cary Name: Sean M. Cary Title: Chief Financial Officer CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER AS ADOPTED PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002 I, James W. Bernau, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Willamette Valley Vineyards Incorporated. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ James W. Bernau James W. Bernau Chief Executive Officer I, Sean M. Cary, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Willamette Valley Vineyards Incorporated. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ Sean M. Cary Sean M. Cary Chief Financial Officer