6. SEGMENT REPORTING

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

NOTE 6. 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 room and remote sites, 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 two segments reflect how the Company’s 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. 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 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 following table outlines the sales, cost of sales, gross margin, directly attributable selling expenses, and contribution margin of the segments for the three month periods ending March 31, 2021 and 2020. Sales figures are net of related excise taxes.

	Three Months Ended March 31,
	Direct Sales						Distributor Sales						Unallocated				Total
	2021			2020			2021			2020			2021		2020		2021		2020
Sales, net	$	2,306,184		$	1,952,312		$	3,459,154		$	4,569,583		$	-	$	-	$	5,765,338	$	6,521,895
Cost of Sales		537,732			477,632			1,734,039			2,132,221			-		-		2,271,771		2,609,853
Gross Margin		1,768,452			1,474,680			1,725,115			2,437,362			-		-		3,493,567		3,912,042
Selling Expenses		1,490,743			1,130,547			470,481			486,396			155,441		131,097		2,116,665		1,748,040
Contribution Margin	$	277,709		$	344,133		$	1,254,634		$	1,950,966
Percent of Sales		40.0	%		29.9	%		60.0	%		70.1	%
General and Administration														1,200,893		1,081,464		1,200,893		1,081,464
Income from Operations																	$	176,009	$	1,082,538

Direct sales include no bulk wine sales in the three months ended March 31, 2021 compared to $28,734 in bulk wine sales in the three months ended March 31, 2020.