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SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2023
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 ended September 30, 2023 and 2022. Sales figures are net of related excise taxes.

 

   Three Months Ended September 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2023   2022   2023   2022   2023   2022   2023   2022 
                                 
Sales, net  $4,774,942   $3,442,482   $4,573,124   $4,160,396   $-   $-   $9,348,066   $7,602,878 
Cost of sales   1,498,980    1,229,312    2,164,508    2,479,383    -    -    3,663,488    3,708,695 
Gross profit   3,275,962    2,213,170    2,408,616    1,681,013    -    -    5,684,578    3,894,183 
Selling expenses   3,531,564    3,018,532    586,765    500,653   $233,550   $255,310    4,351,879    3,774,495 
Contribution margin (deficit)  $(255,602)  $(805,362)  $1,821,851   $1,180,360                     
Percent of total sales   51.1%   45.3%   48.9%   54.7%                    
General and administration expenses                      $1,615,467   $1,345,723    1,615,467    1,345,723 
Loss from operations                                $(282,768)  $(1,226,035)
                                         
   Nine Months Ended September 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2023   2022   2023   2022   2023   2022   2023   2022 
                                 
Sales, net  $14,364,588   $10,229,985   $14,018,661   $12,316,072   $-   $-   $28,383,249   $22,546,057 
Cost of sales   4,376,747    3,058,239    7,592,883    7,046,349    -    -    11,969,630    10,104,588 
Gross profit   9,987,841    7,171,746    6,425,778    5,269,723    -    -    16,413,619    12,441,469 
Selling expenses   10,309,836    7,119,093    1,657,268    1,463,604   $718,398   $689,138    12,685,502    9,271,835 
Contribution margin (deficit)  $(321,995)  $52,653   $4,768,510   $3,806,119                     
Percent of total sales   50.6%   45.4%   49.4%   54.6%                    
General and administration expenses                      $4,676,996   $4,087,458    4,676,996    4,087,458 
Loss from operations                                $(948,879)  $(917,824)

 

Direct sales include zero bulk wine sales for the three months ended September 30, 2023 and September 30, 2022. Direct sales include $10,000 bulk wine sales for the nine months ended September 30, 2023 and $10,500 bulk wine sales for the nine months ended September 30, 2022.