SEGMENT REPORTING

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

SEGMENT REPORTING

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 rooms, 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 (loss) 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 profit, directly attributable selling expenses, and contribution margin of the segments for the three and nine month periods ending September 30, 2022 and 2021. Sales figures are net of related excise taxes.

	Three Months Ended September 30,
	Direct Sales						Distributor Sales						Unallocated				Total
	2022			2021			2022			2021			2022		2021		2022			2021
Sales, net	$	3,442,482		$	3,347,446		$	4,160,396		$	4,293,782		$	-	$	-	$	7,602,878		$	7,641,228
Cost of sales		1,229,312			883,237			2,479,383			2,296,353			-		-		3,708,695			3,179,590
Gross profit		2,213,170			2,464,209			1,681,013			1,997,429			-		-		3,894,183			4,461,638
Selling expenses		3,018,532			1,692,392			500,653			471,668			255,310		171,563		3,774,495			2,335,623
Contribution margin (loss)	$	(805,362	)	$	771,817		$	1,180,360		$	1,525,761
Percent of total sales		45.3	%		43.8	%		54.7	%		56.2	%
General and administration expenses														1,345,723		1,433,142		1,345,723			1,433,142
Income (loss) from operations																	$	(1,226,035	)	$	692,873
	Nine Months Ended September 30,
	Direct Sales						Distributor Sales						Unallocated				Total
	2022			2021			2022			2021			2022		2021		2022			2021
Sales, net	$	10,229,985		$	8,803,254		$	12,316,072		$	13,553,263		$	-	$	-	$	22,546,057		$	22,356,517
Cost of sales		3,058,239			2,271,918			7,046,349			6,989,671			-		-		10,104,588			9,261,589
Gross profit		7,171,746			6,531,336			5,269,723			6,563,592			-		-		12,441,469			13,094,928
Selling expenses		7,119,093			4,774,775			1,463,604			1,396,393			689,138		516,244		9,271,835			6,687,412
Contribution margin	$	52,653		$	1,756,561		$	3,806,119		$	5,167,199
Percent of total sales		45.4	%		39.4	%		54.6	%		60.6	%
General and administration expenses														4,087,458		4,001,040		4,087,458			4,001,040
Income (loss) from operations																	$	(917,824	)	$	2,406,476

Direct sales include zero bulk wine sales for the three months ended September 30, 2022 and September 30, 2021. Direct sales include $10,500 for bulk wine sales for the nine months ended September 30, 2022 and zero bulk wine sales for the nine months ended September 30, 2021.