10QSB 1 wvv022q10q.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 June 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 June 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 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, INC. Balance Sheet June 30, December 31, 2002 2001 (unaudited) ASSETS. __________ __________ Current Assets: Cash and cash equivalents $ 120,836 $ 504,510 Accounts receivable trade, net 397,814 746,678 Inventories 7,076,381 6,905,865 Prepaid expenses and other current assets 18,894 87,512 Deferred income taxes 146,054 146,054 __________ __________ Total current assets 7,759,979 8,390,619 Vineyard development cost, net 1,685,140 1,697,452 Inventories 584,925 584,925 Property and equipment, net 5,345,290 5,652,067 Notes receivable 68,273 77,378 Debt issuance costs, net 61,334 64,910 Other assets 246,990 205,884 __________ __________ Total assets $15,751,931 $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 723,329 1,002,501 Accrued commissions and payroll 93,403 138,486 Income taxes payable 17,969 17,969 Grapes payable 561,823 1,136,487 __________ __________ Total current liabilities 3,139,173 3,890,592 Long-term debt 3,060,764 3,184,031 Distributor obligation 1,500,000 1,500,000 Deferred rent liability 73,298 60,392 Deferred gain 437,219 449,711 Deferred income taxes 209,968 209,968 __________ __________ Total liabilities 8,420,422 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 June 30, 2002 and December 31, 2001 7,155,163 7,142,647 Retained earnings 176,346 235,894 __________ __________ Total shareholders' equity 7,331,509 7,378,541 __________ __________ Total liabilities and shareholders' equity $15,751,931 $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 June 30, Six months ended June 30, 2002 2001 2002 2001 __________ __________ __________ __________ Net Revenues Case Revenue $ 1,341,378 $ 1,519,404 $ 2,599,018 $ 2,996,682 Bulk Revenue 28,215 - 28,215 210,355 __________ __________ __________ __________ Total Revenue 1,369,593 1,519,404 $ 2,627,233 3,207,037 Cost of Sales Case 580,199 710,638 1,175,985 1,427,884 Bulk 28,405 - 28,405 180,316 __________ __________ __________ __________ Total Cost of Sales 608,604 710,638 1,204,390 1,608,200 Gross Margin 760,989 808,766 1,422,843 1,598,837 Selling, general and administrative expense 675,377 732,151 1,319,354 1,451,110 __________ __________ __________ __________ Net operating income 85,612 76,615 103,489 147,727 Other income (expense) Interest income 1,288 1,130 2,394 2,160 Interest expense (89,350) (127,148) (177,944) (253,384) Other income 6,267 9,863 12,513 16,265 __________ __________ __________ __________ Net income (loss) before income taxes 3,817 (39,810) (59,548) (87,232) Income tax - - - - __________ __________ __________ __________ Net income (loss) 3,817 (39,810) (59,548) (87,232) Retained earnings beginning of period 172,529 129,627 235,894 177,049 __________ __________ __________ __________ Retained earnings end of period $ 176,346 $ 89,817 $ 176,346 89,817 ========== ========== ========== ========== Basic gain (loss) per common share $ .00 $ (.01) $ (.01) $ (.02) Diluted gain (loss) per common share $ .00 $ (.01) $ (.01) $ (.02) Weighted average number of basic common shares outstanding 4,469,444 4,356,981 4,468,110 4,281,981 The accompanying notes are an integral part of this financial statement. WILLAMETTE VALLEY VINEYARDS, INC. Statement of Cash Flows (unaudited) Six months ended June 30, 2002 2001 __________ __________ Cash flows from operating activities: Net loss $ (59,548) $ (87,232) Reconciliation of net loss to net cash (used for) provided by operating activities: Depreciation and amortization 379,265 352,651 Stock issued for compensation 3,941 3,984 Changes in assets and liabilities: Accounts receivable trade 348,864 (90,245) Inventories (170,516) 347,944 Prepaid expenses and other current assets 68,618 (66,566) Notes receivable 9,105 (15,115) Other assets 8,920 (26,259) Accounts payable (279,172) (301,077) Accrued commissions and payroll costs (45,083) (38,575) Grape payables (574,664) (347,395) Deferred rent liability 12,906 14,379 Deferred gain (12,492) (12.792) __________ __________ Net cash used for operating activities (309,856) (265,998) __________ __________ Cash flow from investing activities Additions to property and equipment (34,730) (46,963) Vineyard development expenditures (21,870) (33,089) Investments (50,026) (5,000) __________ __________ Net cash used by investing activities (106,626) (85,052) __________ __________ 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 Proceeds from common stock issued and options exercised, net 8,575 159,000 Repayments of long-term debt (123,267) (110,087) __________ __________ Net cash provided by financing activities 32,808 282,364 __________ __________ Net decrease in cash and cash equivalents (383,674) (68,686) Cash and cash equivalents: Beginning of period 504,510 252,876 __________ __________ End of period $ 120,836 $ 184,190 ========== ========== 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: June 30, December 31, 2002 2001 (unaudited) __________ __________ Winemaking and packaging materials $ 135,086 $ 252,828 Work-in-progress (costs relating to unprocessed and/or bulk wine products) 2,970,262 2,941,755 Finished goods (bottled wines 4,555,958 4,296,207 and related products) __________ __________ $ 7,661,306 $ 7,490,790 Less: amounts designated for distributor (584,925) (584,925) __________ __________ Current inventories $ 7,076,381 $ 6,905,865 ========== ========== 3) PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING: June 30, December 31, 2002 2001 (unaudited) __________ __________ Land and improvements $ 984,954 $ 984,954 Winery building and hospitality center 4,561,118 4,561,118 Equipment 4,634,107 4,599,377 __________ __________ $10,180,179 $10,145,449 Less accumulated depreciation (4,834,889) (4,493,382) __________ __________ $ 5,345,290 $ 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 While the Company produced only a small profit for the Quarter, significant gains were made in fundamental aspects of its operations. Given the slower than expected sales of wines sold to out-of-state distributors and the high inventory balances they held at the end of 2001, management reduced fixed sales costs by eliminating the national sales manager position and his remote office, embarked on extensive distributor sales staff training in the field conducted principally by the CEO, and retained, in selected markets, local, professional wine brokers paid on case depletions made by the distributor to retail accounts. 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. A national sales manager was hired to implement this major distribution change, which increased sales costs for compensation, office expenses, travel and entertainment. At the beginning of 2001, the Company's previous distributors were terminated, older inventories they had held were returned to the winery for refund, and large orders of current vintages were shipped to the new distribution system. Due to a variety of factors, the new distribution houses were delayed in distributing the Company's wine and after beginning distribution were slower than expected in making placements. Management determined the slow response was due in part to the need for Company personnel to increase travel to each new distributor, provide training to their sales staffs and assist them in making product presentations and placements to their retail customers. In 2002 through July, the CEO has traveled to sixteen regional markets and with the assistance of winery staff will cover an additional eleven regional markets this year. Depletions from the Company's distributors to their retail accounts increased 12% for the Second Quarter over the second quarter of last year, and increased 18% for the six months of 2002. The Company expects distributor orders to increase when their current inventories are drawn down by sales to their retail customers. Improvements were also made in retail operations with increases in net contribution of 40% for the quarter, and the Company's In-state Self Distribution System with increases in net contribution of 29% for the quarter. Management is planning to shrink wine inventories and its accompanying credit line requirements by reducing this year's crush, and to focus its production operations by reducing the number of products to those that contribute most to the reputation of its core brand and product, Willamette Valley Vineyards vintage pinot noir and the Company's earnings and sales growth. RESULTS OF OPERATIONS Revenue Winery Operations The Company's revenues from winery operations are summarized as follows: Three months ended June 30, Six months ended June 30, 2002 2001 2002 2001 __________ __________ __________ __________ Tasting Room Sales and Rental Income $ 382,516 $ 314,239 $ 722,579 $ 537,290 On-site and off-site festivals 33,037 48,886 78,863 99,306 In state sales 579,255 595,234 1,119,263 1,209,921 Out of state sales 388,749 597,132 756,626 1,230,487 Bulk wine/ Misc. sales 28,215 13,446 28,215 223,801 __________ __________ __________ __________ Total Revenue $ 1,411,772 $ 1,568,937 $ 2,705,546 $ 3,300,805 Less Excise Taxes 42,179 49,533 78,313 93,768 __________ __________ __________ __________ Net Revenue $ 1,369,593 $ 1,519,404 $ 2,627,233 $ 3,207,037 ========== ========== ========== ========== Tasting room sales, and rental income for the three months ending June 30, increased 22% to $382,516 in 2002 from $314,239 for the same period in 2001. For the first six months of 2002, sales increased 35% over the same period in 2001. Retail sales increased during the second quarter of 2002 due in part to the continued success of over-the-phone sales of the Preferred Customer Representatives who are solely responsible to contact and promote sale of wine to valued customers who have made significant purchases in the past, and in part to management's focus on higher margin retail sales. On-site and off-site festival sales for the second quarter of 2002 decreased 32% to $33,037 from $48,886 over the second quarter of 2001. During the first half of 2002, sales in this category decreased 21% 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 less than 1% to $517,726 in the second quarter of 2002 from $518,903 in the second quarter of 2001. The Company's direct instate sales to our largest customer decreased 19% to $61,529 from $76,331 in 2001. This decline was primarily a continued result of a price increase for Riesling in 2001, and the decline in sales to one large customer. The Company is continuing to work with this customer in an attempt to regain higher sales volumes. Out-of-state sales in the second quarter of 2002 decreased 35% to $388,749 from $597,132 in the second 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 six 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 decreased in the second quarter of 2002 to $42,179 from $49,533 the same period in 2001. For the first half 2002, excise taxes decreased to $78,313 from $93,768 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 half of 2002, decreasing overall sales volumes and taxes paid by volume. Gross Profit As a percentage of revenue, gross profit for the winery operations increased to 56% in the second quarter of 2002 as compared to 53% in the second 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. 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 8% to $675,377 in the second quarter of 2002 from $732,151 in the second quarter of 2001. For the first half of 2002, selling, general and administrative expenses decreased 9% to $1,319,354 from $1,451,110 in the first half 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 49% in the second quarter of 2002 from 48% in the second quarter of 2001. Interest Income, Other Income and Expense Interest income increased to $1,288 for the second quarter of 2002 from $1,130 for the second quarter of 2001. Interest expense decreased to $89,350 in the second quarter of 2002 from $127,148 in 2001. Interest costs were lower because the Company paid lower interest rates on its line of credit, and because the company paid down half of its line of credit during 2001. Other income decreased to $6,267 for the second quarter of 2002 from $9,863 for the second quarter of 2001. Income Taxes The Company experienced a net loss for the first six months in 2001. No income tax benefit has been recorded. Liquidity and Capital Resources At June 30, 2002, the Company had a working capital balance of $4.6 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 $120,836 at June 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 June 30, 2002, the line of credit balance was $1,500,000. On July 26, 2002, the Company obtained an extension of its line of credit from Farm Credit Services. This extended the maturity date of the line of credit from June 1, 2002 to September 1, 2002. The Company is currently negotiating an agreement with another financial institution and management expects a final agreement to be in place in the near future. Management expects 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 expects 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 June 30, 2002, the Company had a total long-term debt balance of $3,303,413 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 June 30, 2001, the Company owed $561,823 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 a material impact on its financial position or results of operations. 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: By /s/ James W. Bernau James W. Bernau President Date: 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 June 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 June 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: Controller