UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of Earliest Event Reported): July 16,
2020
Willamette Valley Vineyards, Inc.
(Exact name of Company as specified in its charter)
Oregon
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0-21522
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93-0981021
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(State or other
jurisdiction of
incorporation)
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(Commission File No.)
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(I.R.S. Employer
Identification No.)
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8800
Enchanted Way SE
Turner, OR 97392
(Address
of principal executive offices)
(503) 588-9463
Registrant’s
telephone number, including area code
Not
Applicable
(Former name or former address, if changed since last
report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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Written communications
pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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☐
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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
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Trading
Symbol(s)
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Name of
each exchange on which registered
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Common Stock,
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WVVI
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NASDAQ
Capital Market
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Series
A Redeemable Preferred Stock
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WVVIP
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NASDAQ
Capital Market
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR
§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR §240.12b-2). Emerging 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. ☐
1
Item 7.01 Regulation FD Disclosure.
The
Management is filing this 8-K on the day before its Annual Meeting
to report the impact of COVID-19, government shutdowns and changes
in consumer behavior prior to the release of the 10-Q stating
second quarter results. The financial information provided here is
not reviewed or audited by its auditors nor does it provide or
suggest earnings performance.
The
Company will hold its first virtual Annual Stockholder Meeting
on Friday, July 17th at 1 pm Pacific Time. The
public may view and hear this meeting online by
visiting www.virtualshareholdermeeting.com/WVVI2020. Guests
may login at the time of the meeting, during the meeting or as
early as 15 minutes prior to the start time by entering
their name and email address under "Guest
Login."
The
previous 30 Annual Meetings were held at the winery drawing
hundreds of Company stockholders each July with a weekend filled
with updates on developments and events featuring food and wine
pairings. COVID-19 has prevented the festive annual stockholder
gathering this year, but the winery has arranged for special wine
tasting presentations to follow the virtual meeting via
Zoom.
The
long-term impacts of the COVID-19 pandemic to the wine industry and
the Company are unknown. The Company took a cautious approach
to spending cash as the various economic and market impacts of the
pandemic and government actions were not able to be estimated.
All construction and capital purchases were put on hold at the
beginning of the shutdown as the Company’s planned Preferred
Stock Offering was delayed due to the then condition of the capital
market.
The
Company has since reinitiated winemaking and vineyard equipment
purchases to improve efficiencies as well as the widening of
Highway 99W for access to the new winery construction near Dundee,
scheduled to be completed by December 2020. The Company expects
Bernau Estate, the new sparkling wine facility, tasting room and
biodynamically-farmed gardens, to be open to the public early
summer of 2022.
The
Company qualified and obtained a PPP loan for $1.655 million, but
quickly returned the funds after obtaining a $5 million commercial
loan commitment from a private lender as a back-up for liquidity if
the Company was to experience operating losses from sales
disruptions due to COVID-19. The Management and the Board of
Directors returned the federal PPP loan because private financing
was secured, jobs were preserved and the Company felt the money
should be reserved for businesses facing greater market and
financial challenges than the Company.
While
the Company was required to close its five tasting rooms for more
than 66 days and furlough some retail employees not able to
transition to other roles, total employment has grown from
pre-pandemic levels at March 16, 2020 of 229 employees to 261 as of
June 30, 2020. The Company had 206 employees as of December 31,
2019.
As
on-premise restaurants were no longer ordering wine from
distributors, the Company focused on the sales channels still
available. Case sales to distributors in the second
quarter were up slightly at 31,685 compared
to 31,413 during the same time period in 2019. Case
sales to distributors for the first six months of the year
was 71,145 as compared with 59,122 for the
prior year.
These cases included
sales of the charitable project Oregon Solidarity,
which amounted to 448 cases for the second quarter of
2020 as compared with the same period last
year with 1,191 cases. For the first six months of 2020,
the Oregon Solidarity portion was 448 cases as compared
with those of the prior year of 3,118.
Removing
the charitable sales of Oregon Solidarity from both years results
in Company branded wine sales to distributors of 31,237
cases in the second quarter of 2020 as compared with the same
period of 30,222 cases last year and for the first six
months of 2020 of 70,697 cases as compared
to 56,004 cases from last year. During the pandemic
second quarter of 2020, Company branded wine sales were
up 1,015 cases and up 14,693 cases for the
first six months.
Case
depletions from distributors to their accounts during the second
quarter of 2020 is estimated to be 32,492 cases, up
1,965 cases or 6.4% from the same time period in the
prior year. The six month 2020 depletions are estimated to be
61,165 cases, up 5,316 cases or 9.5% over the first six
months of 2019.
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Direct
sales volumes also increased during the second quarter of this year
to 6,687 cases compared to the same quarter last year of 6,528
cases as the closing of the Company’s five tasting rooms,
hospitality and kitchen were made up by increases in sales from
their Winery Ambassador program and internet orders. As Wine Club
membership is derived from guest visitations, membership declined
in April and May, but increased in June when limited visitations
were allowed under the physical distancing
requirements.
The
Preferred Stock Offering, scheduled for mid-March, was delayed
until mid-June, and first announced to current stockholders and
waiting list contacts where $1,635,304
in subscription agreements have been received as of July 16,
2020. The official announcement of the Preferred Stock
Offering was made on July 8, 2020. The Management believes the
Preferred Stock Offering strategy has demonstrated success in
increasing Direct Sales with Preferred stockholders now accounting
for approximately 25% of all Direct Sales purchases, approximately
$2 million in sales in 2019. The current stock offering proceeds
are intended for completing the Bernau Estate winery construction
in the Dundee Hills and other uses. Previous stock offerings have
financed vineyard land acquisition and planting in key
American Viticultural Areas to support anticipated winegrape and
brand needs. The 12 vineyard land parcels the Company now owns
total approximately 706 acres.
To meet
the government restrictions, the Company’s tasting room
operations were limited to pick-up and delivery options only. The
Management transitioned much of the guest-facing staff to
other roles within the winery and focused on remaining sales
channels and new marketing initiatives, including pick-up food and
wine orders, curbside pick-up; local direct delivery; virtual wine
tastings; outbound phone sales; e-commerce sales; email and social
media communications and promotions.
The
Willamette Wineworks located in Historic Folsom opened to the
public in mid-February before the first shut down in mid-March. The
California Governor has ordered all indoor tasting room spaces be
closed as of July 2, 2020 for a minimum of three weeks. The
location offers an outdoor deck seating for 28 guests where service
is continuing 3-days a week by appointment.
Prior
to reopening of the tasting rooms, safety measures were implemented
for the well-being of the Company’s employees, Owners, Wine
Club Members and guests including transitioning winery experiences
to tableside service, adding a reservation management system, using
recyclable single-use materials, offering contactless payment
options, requiring all staff to wear face masks, continue
meticulous hand hygiene and regularly cleaning all high-traffic
locations and surfaces. Far exceeding the required Oregon Healthy
Authority protocols, a new state-of-the-art UV light filtration has
been installed in the Company’s HVAC system to reduce harmful
viruses in the air at its tasting room locations and staff offices.
The innovative ActivePure Technology used by NASA is distributed by
Aerus Enterprise Solutions.
Where
possible, the Company’s administrative, sales and marketing
positions transitioned to working from home and when working from
the winery are staggering the use of office spaces.
As
non-profit organizations were no longer able to raise funds through
hosting in-person events, the winery staff created a new Golden
Coin program offering wine enthusiasts a charitable wine adventure.
The Company hid 200 numbered Golden Coins inside the capsule of
Willamette Valley Vineyards wines and placed them in retailers
throughout Oregon and Washington. The Golden Coins were inspired by
the Golden Tickets in the 1971 fantasy film Willy Wonka & The Chocolate
Factory. When the lucky winners find a Golden Coin, the
winery will donate $50 to their local food bank and $50 to the
charity of their choice to support the community during this time
of need and recovery. With this program, the winery is committing
to donate $20,000 through December 31,
2020.
The
Company also committed $1 for every bottle sold directly through
the winery in June to Self Enhancement, Inc. Self Enhancement, Inc.
is a local non-profit resource for underserved youth and families,
primarily African Americans and others living in poverty or seeking
culturally responsive services. It is also one of the
region’s leading multi-service organizations, providing
thousands of youth, families and adults with a wide array of
education and social services. The winery has accumulated a
donation of $23,852.
The
winery kitchen staff prepared meals for first responders during the
shutdown and winery staff delivered gifts of wine to local hospital
staff.
3
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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WILLAMETTE
VALLEY VINEYARDS, INC.
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Date:
July 16, 2020
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By:
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/s/ JAMES
W. BERNAU
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James
W. Bernau
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President
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