Raeburn deal reshapes Crimson Wine Group (CWGL) revenue and leverage
Crimson Wine Group, Ltd. reported net sales of $20,473 thousand for the quarter and $38,737 thousand for the first half of 2026, up 20% and 23% year over year, with net losses of $346 thousand and $976 thousand, respectively. Wholesale growth from the Raeburn brand drove revenue gains, while Direct to Consumer sales declined amid weaker consumer spending and mix shifts, compressing gross margin to 42% for the quarter.
The company closed a Raeburn asset acquisition with a $37,533 thousand cost basis, funded by $29,000 thousand of Revolving Credit Facility borrowings and cash, lifting total debt to $36,847 thousand and reducing cash to $11,843 thousand. Operating cash flow was $8,639 thousand, and the company remained in covenant compliance. Management highlighted risk from a key distributor’s July 2026 chapter 11 filing, with $2,300 thousand of receivables and $1,100 thousand of payables outstanding, and a preliminary, insurer-funded settlement of a cybersecurity-related class action awaiting court approval.
Positive
- None.
Negative
- None.
Key Figures
Net sales, quarter: $20,473 thousand
Net sales, six months: $38,737 thousand
Net loss, six months: $976 thousand
+5 more
8 metrics
Net sales, quarter
$20,473 thousand
Three months ended June 30, 2026
Net sales, six months
$38,737 thousand
Six months ended June 30, 2026
Net loss, six months
$976 thousand
Six months ended June 30, 2026
Raeburn asset acquisition cost basis
$37,533 thousand
Total consideration allocated to inventory and brand
Operating cash flow
$8,639 thousand
Net cash provided by operating activities, six months ended June 30, 2026
Total debt
$36,847 thousand
Debt outstanding as of June 30, 2026, including Revolving Credit Facility and term loans
Cash and cash equivalents
$11,843 thousand
Balance as of June 30, 2026
Inventory balance
$88,306 thousand
Inventory as of June 30, 2026, including Raeburn inventory
Key Terms
Revolving Credit Facility, asset acquisition, foreign currency forward contracts, Fire Victim Trust, +2 more
6 terms
Revolving Credit Facility financial
"the Revolving Credit Facility is comprised of a revolving loan facility"
A revolving credit facility is a type of loan that a business can borrow from whenever it needs money, up to a set limit. It’s like having a credit card for companies—allowing them to borrow, pay back, and borrow again as needed, providing flexibility for managing cash flow or funding short-term expenses.
asset acquisition financial
"this transaction should be accounted for as an acquisition of assets"
An asset acquisition is when a company buys specific pieces of another business—such as equipment, buildings, patents, customer lists, or inventory—rather than buying the other company’s stock. For investors, it matters because this lets a buyer add value or cut costs without taking on unwanted liabilities, similar to shopping for and installing only the useful appliances in a house instead of buying the whole property; the move can change future revenue, costs and risk.
foreign currency forward contracts financial
"the Company entered into foreign currency forward contracts to reduce the foreign exchange risk"
A foreign currency forward contract is a private agreement to buy or sell a specific amount of one currency for another at a fixed exchange rate on a set future date. Investors use these contracts to lock in the price they will get when converting foreign cash flows, reducing the risk that currency swings will erode revenue or raise costs; the tradeoff is giving up any benefit if exchange rates move in your favor.
Fire Victim Trust regulatory
"The Fire Victim Trust was formed in connection with PG&E Corporation’s plan of reorganization"
One Big Beautiful Bill Act (OBBBA) regulatory
"In July 2025, the One Big Beautiful Bill Act (OBBBA), was enacted into law"
Adjusted EBITDA targets financial
"performance-based vesting requirements are tied to annual or cumulative “Adjusted EBITDA targets”"
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FAQ
How did Crimson Wine Group (CWGL) perform financially in Q2 2026?
Crimson Wine Group generated Q2 2026 net sales of $20,473 thousand and a net loss of $346 thousand. First-half 2026 net sales reached $38,737 thousand with a net loss of $976 thousand, as wholesale growth offset weaker Direct to Consumer performance and lower gross margins.
What is the impact of the Raeburn asset acquisition on CWGL?
The Raeburn asset acquisition carried a total cost basis of $37,533 thousand, allocated to inventory and an indefinite-lived brand. It was funded with $29,000 thousand drawn on the Revolving Credit Facility plus cash, boosting wholesale revenue but temporarily reducing wholesale gross margins due to inventory step-up.
How have liquidity and debt levels changed for CWGL as of June 30, 2026?
As of June 30, 2026, CWGL held $11,843 thousand in cash and cash equivalents and had total debt of $36,847 thousand, including $22,000 thousand outstanding under its $60,000 thousand Revolving Credit Facility. Operating activities provided $8,639 thousand of cash in the first half of 2026.
What risks did CWGL disclose about a key distributor and how large is the exposure?
CWGL disclosed that a key distributor filed for chapter 11 bankruptcy in July 2026. As of June 30, 2026, CWGL had $2,300 thousand of accounts receivable and $1,100 thousand of payables with this distributor, and changes in collectibility could materially affect its financial position.
What is the status of CWGL’s cybersecurity-related class action lawsuit?
A class action related to CWGL’s June 2024 cybersecurity incident is subject to a preliminary settlement, with the insurer agreeing to fund the anticipated settlement. The settlement awaits final court approval at a hearing scheduled for October 2026 and could change depending on that outcome.
How are CWGL’s Wholesale and Direct to Consumer segments performing?
In Q2 2026, Wholesale net sales rose to $13,567 thousand, up 38% year over year, helped by Raeburn shipments. Direct to Consumer net sales fell 5% to $5,990 thousand due to fewer wine club memberships and lower tasting-room spend, with segment gross margins also modestly lower.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended June 30, 2026
OR
| For the transition period from | to | ||||||||||
Commission File Number 000-54866
(Exact name of registrant as specified in its Charter)
(State or Other Jurisdiction of | (I.R.S. Employer | ||||
| Incorporation or Organization) | Identification Number) | ||||
(Address of Principal Executive Offices) | (Zip Code) | ||||
(800 ) 486-0503
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
______________________
Securities registered pursuant to Section 12(b) of the Act: None
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 | No | |||||||||||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
| X | No | |||||||||||||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | |||||||
Smaller reporting company | ||||||||
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes | No | |||||||||||||||||||
On July 31, 2026 there were 20,586,027 outstanding shares of the registrant’s common stock, par value $0.01 per share.
CRIMSON WINE GROUP, LTD.
TABLE OF CONTENTS
| Page Number | ||||||||
| PART I. FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements (Unaudited) | 1 | ||||||
Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 | 1 | |||||||
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 | 2 | |||||||
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and 2025 | 3 | |||||||
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 | 4 | |||||||
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025 | 5 | |||||||
Notes to Unaudited Interim Condensed Consolidated Financial Statements | 6 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 33 | ||||||
| Item 4. | Controls and Procedures | 33 | ||||||
| PART II. OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 34 | ||||||
| Item 1A. | Risk Factors | 34 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 34 | ||||||
| Item 3. | Defaults Upon Senior Securities | 34 | ||||||
| Item 4. | Mine Safety Disclosures | 34 | ||||||
| Item 5. | Other Information | 34 | ||||||
| Item 6. | Exhibits | 35 | ||||||
Signatures | 36 | |||||||
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CRIMSON WINE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts and par value)
(Unaudited)
| June 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventory | |||||||||||
| Other current assets | |||||||||||
| Assets held for sale | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible and other non-current assets, net | |||||||||||
| Total non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | $ | |||||||||
| Customer deposits | |||||||||||
| Current portion of long-term debt, net of unamortized loan fees | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net of current portion and unamortized loan fees | |||||||||||
| Deferred tax liability, net | |||||||||||
| Other non-current liabilities | |||||||||||
| Total non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Contingencies (Note 13) | |||||||||||
| Stockholders’ Equity | |||||||||||
Common stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to unaudited interim condensed consolidated financial statements.
1
CRIMSON WINE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Net loss on disposal of property and equipment | |||||||||||||||||||||||
| Income (loss) from operations | ( | ( | ( | ||||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Total other (expense) income, net | ( | ( | |||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Basic and fully diluted weighted-average shares outstanding | |||||||||||||||||||||||
| Basic and fully diluted loss per share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See accompanying notes to unaudited interim condensed consolidated financial statements.
2
CRIMSON WINE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net unrealized holding losses on investments arising during the period, net of tax | ( | ||||||||||||||||||||||
| Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See accompanying notes to unaudited interim condensed consolidated financial statements.
3
CRIMSON WINE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash from operations: | |||||||||||
| Depreciation and amortization of property and equipment | |||||||||||
| Amortization of intangible assets | |||||||||||
| Loss on write-down of inventory | |||||||||||
| Provision for credit losses | |||||||||||
| Net loss on disposal of property and equipment | |||||||||||
| Benefit for deferred income taxes | ( | ( | |||||||||
| Stock-based compensation expense | |||||||||||
| Unrealized foreign exchange losses | |||||||||||
| Net change in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Inventory | ( | ||||||||||
| Other current assets | |||||||||||
| Other non-current assets | |||||||||||
| Accounts payable and accrued liabilities | ( | ( | |||||||||
| Customer deposits and other payables | |||||||||||
| Other non-current liabilities | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Net cash flows from investing activities: | |||||||||||
| Acquisition of Raeburn Assets | ( | ||||||||||
| Purchase of investments available for sale | ( | ||||||||||
| Redemptions of investments available for sale | |||||||||||
| Acquisition of property and equipment | ( | ( | |||||||||
| Proceeds from disposals of property and equipment | |||||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||
| Net cash flows from financing activities: | |||||||||||
| Borrowings under revolving credit facility | |||||||||||
| Payments on revolving credit facility | ( | ||||||||||
| Principal payments on long-term debt | ( | ( | |||||||||
| Repurchase of common stock and related excise tax | ( | ||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents - beginning of period | |||||||||||
| Cash and cash equivalents - end of period | $ | $ | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest, net of capitalized interest | $ | $ | |||||||||
| Income tax payments, net | $ | $ | |||||||||
| Non-cash investing and financing activity: | |||||||||||
| Unrealized holding losses on investments, net of tax | $ | $ | ( | ||||||||
| Acquisition of property and equipment invoiced or accrued but not yet paid | $ | $ | |||||||||
See accompanying notes to unaudited interim condensed consolidated financial statements.
4
CRIMSON WINE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share amounts)
(Unaudited)
| Accumulated | |||||||||||||||||||||||||||||||||||
| Additional | Other | ||||||||||||||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | Deficit | Total | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Excise tax on repurchase of common stock | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Repurchase of common stock and related excise tax | ( | ( | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
See accompanying notes to unaudited interim condensed consolidated financial statements.
5
Table of Contents
CRIMSON WINE GROUP, LTD.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
1.Background and Basis of Presentation
Background
Crimson Wine Group, Ltd. (collectively with its subsidiaries, “Crimson” or the “Company”) is a Delaware corporation that has been conducting business since 1991. Crimson is in the business of producing and selling luxury wines (i.e., wines that retail for over $16 per 750ml bottle). Crimson is headquartered in Napa, California and through its subsidiaries owns seven primary wine estates and brands: Pine Ridge Vineyards, Raeburn Winery, Seghesio Family Vineyards, Archery Summit Winery, Chamisal Vineyards, Seven Hills Winery and Double Canyon Vineyards.
On February 9, 2026, Pine Ridge Winery, LLC (“Pine Ridge”), a wholly-owned subsidiary of the Company, entered into a purchase agreement to acquire certain assets associated with the Raeburn wine brand, including certain inventory, certain intellectual property, including rights, trademarks and trade names, and certain consumer and customer lists (collectively, the “Raeburn Assets”), and assumed certain liabilities in connection with the acquisition of the Raeburn Assets. The acquisition provides a strategic opportunity for Crimson to expand its portfolio, particularly in the Chardonnay and Pinot Noir categories.
Financial Statement Preparation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. The unaudited interim condensed consolidated financial statements, which reflect all adjustments (consisting of normal recurring items or items discussed herein) that management believes necessary to fairly state results of interim operations, should be read in conjunction with the Notes to Consolidated Financial Statements (including the Significant Accounting Policies and recent accounting pronouncements under such Note) included in the Company’s audited consolidated financial statements for the year ended December 31, 2025, as filed with the SEC on Form 10-K (the “2025 Report”) on March 17, 2026. Results of operations for interim periods are not necessarily indicative of annual results of operations. The unaudited condensed consolidated balance sheet as of December 31, 2025 was derived from the audited annual consolidated financial statements included in the 2025 Report and does not include all disclosures required by GAAP for annual financial statements.
Significant Accounting Policies
With the exception of the below addition, there were no changes to the Company’s significant accounting policies during the six months ended June 30, 2026. See Note 2, “Significant Accounting Policies,” of the 2025 Report for a description of the Company’s significant accounting policies.
During the current quarter, the Company entered into foreign currency forward contracts to reduce the foreign exchange risk associated with the Euro to U.S. Dollar conversion rate. The Company does not enter into derivative agreements for trading or speculative purposes. The Company recognizes derivative instruments as assets or liabilities on the unaudited interim condensed consolidated balance sheets and measures these instruments at fair value. The Company has elected not to designate these instruments as cash-flow hedges nor elected hedge accounting under Accounting Standards Codification (“ASC”) 815. As a result, all changes in the fair value of foreign currency forward contracts are recognized in earnings as incurred and recorded in other income, net of the unaudited interim condensed consolidated statements of operations. See Note 6, “Financial Instruments” for additional information.
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses (“ASU 2024-03”). Adoption of ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods, effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. Management is currently assessing the impact from the future adoption of ASU 2024-03 on the Company’s condensed consolidated financial statements and related disclosures.
6
Table of Contents
2.Acquisition of Raeburn Assets
On February 9, 2026, Pine Ridge entered into a purchase agreement to acquire the Raeburn Assets. The acquisition provides a strategic opportunity for Crimson to expand its portfolio, particularly in the Chardonnay and Pinot Noir categories. The acquisition of the Raeburn Assets was funded with the Company’s cash on hand and borrowings under the Company’s existing Revolving Credit Facility (as defined below).
The Company follows the guidance as outlined in ASC 805-50, Asset Acquisitions, and as amended by ASU No. 2017-01. In accordance with ASC 805, the Company determined this transaction should be accounted for as an acquisition of assets rather than as an acquisition of a business. This accounting distinction resulted in the required capitalization of certain transaction costs in arriving at a total cost basis to then allocate to the acquired assets based on their relative fair values. In addition to the $35.2 million purchase price paid to the seller, the Company capitalized approximately $2.3 million of transaction related costs. Therefore, the total consideration was estimated at $37.5 million under the cost accumulation method to serve as the cost basis for allocation to the acquired assets based on their relative fair values. The Company is in the process of finalizing certain transaction related costs and the measurements are subject to change.
The following table summarizes the initial purchase price allocation of the total cost basis to the identified assets at the acquisition date (in thousands):
Cost basis determination:
| Cash transferred at close | $ | ||||
| Purchase price adjustment (capitalized transaction costs) | |||||
| Total cost basis (cost accumulation method) | $ | ||||
Cost basis allocation based on relative fair values:
| Inventory | $ | ||||
Brand (indefinite-lived) | |||||
| Total cost basis (cost accumulation method) | $ | ||||
The Company’s financial results for the six months ended June 30, 2026 include the results from the Raeburn Assets for the period since the date of acquisition.
While this asset acquisition was accounted for under the cost accumulation method rather than the acquisition method (valuation method used for a business acquisition), the relative fair values were utilized to allocate the total cost basis. The market approach and income approach were utilized in the determination of fair values for inventory and the brand, respectively. The fair value measurements were based on inputs including management estimates and assumptions, terminal growth rate of 2.5 %, royalty rate of 5 %, and discount rate of 12 %, which are significant inputs not observable in the market and thus represent level 3 measurements as defined in ASC 820, Fair Value Measurement.
7
Table of Contents
3.Revenue
Revenue Recognition
Revenue is recognized once performance obligations under the terms of the Company’s contracts with its customers have been satisfied; this occurs at a point in time when control of the promised product or service is transferred to customers. Generally, the majority of the Company’s contracts with its customers have a single performance obligation and are short term in nature. Revenue is measured in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. The Company accounts for shipping and handling activities as costs to fulfill its promise to transfer the associated products. Accordingly, the Company records amounts billed for shipping and handling costs as a component of net sales, and classifies such costs as a component of cost of sales. The Company’s products are generally not sold with a right of return unless the product is spoiled or damaged. Historically, returns have not been material to the Company.
Wholesale Segment
The Company sells its wine to wholesale distributors under purchase orders. The Company transfers control and recognizes revenue for these orders upon shipment of the wine from the Company’s third-party warehouse facilities. Payment terms to wholesale distributors typically range from 30 to 120 days. The Company pays depletion allowances to its wholesale distributors based on their sales to their customers. The Company estimates these depletion allowances and records such estimates in the same period the related revenue is recognized, resulting in a reduction of wholesale product revenue and the establishment of a current liability. Subsequently, wholesale distributors will bill the Company for actual depletion allowances, which may be different from the Company’s estimate. Any such differences are recognized in sales when the bill is received. The Company has historically been able to estimate depletion allowances without significant differences between actual and estimated expense.
Direct to Consumer Segment
The Company sells its wine and other merchandise directly to consumers through wine club memberships, at the wineries’ tasting rooms, and through its website, third-party websites, direct phone calls, and other online sales (“Ecommerce”).
Wine club membership sales are made under contracts with customers, which specify the quantity and timing of future wine shipments. Customer credit cards are charged in advance of quarterly wine shipments in accordance with each contract. The Company transfers control and recognizes revenue for these contracts upon shipment of the wine to the customer.
Tasting room and Ecommerce wine sales are paid for at the time of sale. The Company transfers control and recognizes revenue for wine sales when the product is either received by the customer (on-site tasting room sales) or upon shipment to the customer (“Ecommerce sales”).
Other
From time to time, the Company sells grapes or bulk wine because the grapes or wine do not meet the quality standards for the Company’s products, market conditions have changed resulting in reduced demand for certain products, or because the Company may have purchased or produced more of a particular varietal than it can use. Grape and bulk sales are made under contracts with customers, which include product specification requirements, pricing, and payment terms. Payment terms under grape contracts are generally structured around the timing of the harvest of the grapes and are generally due 30 days from the time the grapes are delivered. Payment terms under bulk wine contracts are generally 30 days from the date of shipment and may include an upfront payment upon signing of the sales agreement. The Company transfers control and recognizes revenue for grape sales when product specification has been met and title to the grapes has transferred, which is generally on the date the grapes are harvested, weighed and shipped. The Company transfers control and recognizes revenue for bulk wine contracts upon shipment.
The Company provides custom winemaking services at Chamisal Vineyards’ and Pine Ridge Vineyards’ winemaking facilities. Custom winemaking services are made under contracts with customers, which include specific protocols, pricing, and payment terms and generally have a duration of less than one year. The customer retains title and control of the wine during the winemaking process. The Company recognizes revenue for winemaking services when contract specific performance obligations are met.
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Estates hold various public and private events for customers and their wine club members. Upfront consideration received from the sale of tickets or under private event contracts for future events is recorded as deferred revenue. The balance of payments is due on the date of the event. The Company recognizes event revenue on the date the event is held.
Other revenue also includes tasting fees and retail merchandise sales, which are paid for and received or consumed at the time of sale. The Company transfers control and recognizes revenue for tasting fees and retail merchandise sales at the time of sale.
Refer to Note 12, “Business Segment Information,” for revenue by sales channel amounts for the three and six months ended June 30, 2026 and 2025.
Contract Balances
When the Company receives payments from customers prior to completing its performance obligations for goods or services under the terms of a contract, the Company records deferred revenue, which it classifies as customer deposits on its unaudited condensed consolidated balance sheets and represents a contract liability. Customer deposits are liquidated when revenue is recognized. Revenue that was included in the contract liability balance at the beginning of each of the 2026 and 2025 years consisted primarily of wine club revenue, grape and bulk sales, and event fees. Changes in the contract liability balance during the six-month periods ended June 30, 2026 and 2025 were not materially impacted by any other factors.
The outstanding contract liability balance was $0.5 0.3
Accounts Receivable, Net
The Company’s beginning and ending balances for accounts receivable, net for each of the six-month periods ended June 30, 2026 and 2025 are as follows (in thousands):
| Accounts receivable, net | 2026 | 2025 | |||||||||
| Balance as of January 1, | $ | $ | |||||||||
| June 30, | $ | $ | |||||||||
Accounts receivable are reported net of an allowance for credit losses. Credit is extended based upon an evaluation of the customer’s financial condition. In estimating an allowance for credit losses that is representative of the lifetime expected credit losses on its trade receivables, the Company utilizes historical loss data adjusted for current conditions (current balance and aging categories) and estimates of future defaults. The Company does not have any contract assets associated with the future right to invoice its customers.
The following table reflects changes in the allowance for credit losses balance during each of the six-month periods ended June 30, 2026 and 2025 (in thousands):
| Allowance for credit losses | 2026 | 2025 | |||||||||
| Balance as of January 1, | $ | $ | |||||||||
| Current period provision | ( | ||||||||||
| Write-offs charged against the allowance | ( | ||||||||||
| Balance as of June 30, | $ | $ | |||||||||
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4.Inventory
A summary of inventory as of June 30, 2026 and December 31, 2025 is as follows (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Finished goods | $ | $ | |||||||||
| In-process goods | |||||||||||
| Packaging and bottling supplies | |||||||||||
| Total inventory | $ | $ | |||||||||
The Company’s inventory balances are presented at the lower of cost or net realizable value. The Company reduces the carrying value of inventories that are obsolete or in excess of estimated usage to estimated net realizable value. The Company’s estimates of net realizable value are based on analyses and assumptions including, but not limited to, historical usage, projected future demand, and market requirements. Reductions to the carrying value of inventories are recorded in cost of sales. If future demand and/or profitability for the Company’s products are less than previously estimated, then the carrying value of the inventories may be required to be reduced, resulting in additional expense and reduced profitability. The Company’s inventory write-downs may consist of reductions to bottled or bulk wine inventory.
Inventory write-downs of $0.5 1.2 million and $1.3 million were recorded during the six-month periods ended June 30, 2026 and 2025, respectively. Inventory write-downs reflect inventory expected to be sold at a loss due to current market conditions.
The increase in inventory as of June 30, 2026 from December 31, 2025 is primarily driven by the acquisition of Raeburn Assets. The inventory balances as of June 30, 2026 include the initial valuation noted in Note 2, “Acquisition of Raeburn Assets”, adjusted for sales and production-related activities since the date of acquisition.
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5.Property and Equipment and Assets Held for Sale
Property and Equipment
A summary of property and equipment as of June 30, 2026 and December 31, 2025, and depreciation and amortization for the three and six months ended June 30, 2026 and 2025, is as follows (in thousands):
| Depreciable Lives | |||||||||||||||||
| (in years) | June 30, 2026 | December 31, 2025 | |||||||||||||||
| Land and improvements | N/A | $ | $ | ||||||||||||||
| Buildings and improvements | |||||||||||||||||
| Winery and vineyard equipment | |||||||||||||||||
| Vineyards and improvements | |||||||||||||||||
| Caves | |||||||||||||||||
| Vineyards under development | N/A | ||||||||||||||||
| Construction in progress | N/A | ||||||||||||||||
| Total | |||||||||||||||||
| Accumulated depreciation and amortization | ( | ( | |||||||||||||||
| Total property and equipment, net | $ | $ | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| Depreciation and amortization: | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Capitalized into inventory | $ | $ | $ | $ | ||||||||||||||||||||||
| Expensed to general and administrative | ||||||||||||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | ||||||||||||||||||||||
Assets Held for Sale
In the fourth quarter of 2025, the Company began actively marketing its Double Canyon property located in West Richland, Washington for sale. In accordance with ASC 205, the Company reclassified approximately $7.7 million from property and equipment to assets held for sale as of December 31, 2025 and depreciation was ceased as of the same date. In addition to meeting certain assets held for sale classification criteria, the Company has an active program to locate a buyer and expects to complete the sale within twelve months from the reclassification date of December 31, 2025. No impairment charges have been recognized as the fair value less estimated cost to sell is above the carrying value of the property and equipment as of June 30, 2026.
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6.Financial Instruments
The Company’s material financial instruments include cash and cash equivalents, investments classified as available for sale, derivatives, and short-term and long-term debt. Investments classified as available for sale, money market mutual funds, and derivatives are the only assets or liabilities that are measured at fair value on a recurring basis.
Investments available for sale
The Company did not have any investments classified as available for sale as of June 30, 2026 and December 31, 2025 as funds liquidity was required leading up to and following the acquisition of the Raeburn Assets.
Cash and cash equivalents
Money market mutual funds are highly liquid investments that are valued using quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. Money market mutual funds are included in cash and cash equivalents within the condensed consolidated balance sheets. The Company had money market mutual funds of approximately $4.0 million and $15.3 million as of June 30, 2026 and December 31, 2025, respectively.
For cash and cash equivalents, the carrying amounts approximate their fair values due to the short-term nature of such financial instruments.
Derivatives
A portion of the Company’s wine barrel purchases are paid in Euros. Beginning in the second quarter 2026, in order to reduce the foreign exchange risk associated with the Euro to U.S. Dollar conversion rate, the Company entered into foreign currency forward contracts, generally aligning settlement dates with expected barrel deliveries and the anticipated timing of payments to various coopers. The Company utilizes foreign currency forward contracts to economically manage exposures arising from fluctuations in foreign exchange rates. The Company does not enter into foreign currency forward contracts for trading or speculative purposes. The Company has elected not to designate these instruments as cash-flow hedges nor elected hedge accounting under ASC 815. As a result, all changes in the fair value of foreign currency forward contracts are recognized in earnings as incurred.
As of June 30, 2026, the aggregate notional amount of outstanding foreign currency forward contracts totaled $0.7 million with maturity dates during the third quarter 2026. The fair value of these instruments was a net liability of $29 thousand, which is included in accounts payable and accrued liabilities of the unaudited interim condensed consolidated balance sheet as of June 30, 2026. These instruments are measured and recorded at fair value on a recurring basis based on Level 2 inputs with the assistance of a third-party, using inputs that can be corroborated by observable market data. Losses recognized in earnings during the three and six months ended June 30, 2026 totaled $41
Debt
For short-term debt, the carrying amounts of such financial instruments approximate their fair values. The fair value of the Company’s borrowings under its Revolving Credit Facility approximates carrying value because such borrowings are subject to a variable market rate. As of June 30, 2026, the Company has estimated the fair value of its outstanding senior secured term loans to be approximately $12.4 million compared to its carrying value of $14.9 million, based upon discounted cash flows with Level 3 inputs, such as the terms that management believes would currently be available to the Company for similar issues of debt, taking into account the current credit risk of the Company and other factors. Level 3 inputs include market rates obtained from American AgCredit, FLCA (“American AgCredit”) as of June 30, 2026 of 7.41 % and 7.28 % for the 2015 Term Loan (as defined below) and 2017 Term Loan (as defined below), respectively, as further discussed in Note 9, “Debt.”
Other
As of June 30, 2026, other than relative fair values utilized within the purchase price allocation of the Raeburn Assets (see Note 2, “Acquisition of Raeburn Assets”), the Company did not have any financial assets or liabilities measured at fair value on a
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nonrecurring basis. As of December 31, 2025, the Company did not have any financial assets or liabilities measured at fair value on a nonrecurring basis.
7.Intangible and Other Non-Current Assets
A summary of intangible and other non-current assets as of June 30, 2026 and December 31, 2025, and amortization expense for the three and six months ended June 30, 2026 and 2025, is as follows (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Amortizable lives (in years) | Gross carrying amount | Accumulated amortization | Net book value | Gross carrying amount | Accumulated amortization | Net book value | |||||||||||||||||||||||||||||||||||
Brand (indefinite-lived) | N/A | $ | N/A | $ | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Brand | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Distributor relationships | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Legacy permits | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Trademark | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Deferred tax asset (1) | |||||||||||||||||||||||||||||||||||||||||
| Other non-current assets | |||||||||||||||||||||||||||||||||||||||||
| Total intangible and other non-current assets, net | $ | $ | |||||||||||||||||||||||||||||||||||||||
(1) Deferred tax asset is presented separate from deferred tax liability within the Company’s condensed consolidated balance sheets as offsets between different tax jurisdictions are not allowed pursuant to ASC 740-10-45-6. | |||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||
| Total amortization expense | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
The estimated aggregate future amortization of intangible assets as of June 30, 2026 is identified below (in thousands):
| Amortization | |||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
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8.Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||
| Accounts payable and accrued grape liabilities | $ | $ | |||||||||
| Accrued compensation related expenses | |||||||||||
| Sales and marketing | |||||||||||
| Acquisition of property and equipment | |||||||||||
| Accrued interest | |||||||||||
| Depletion allowance | |||||||||||
| Production and farming | |||||||||||
| Other accrued expenses | |||||||||||
| Total accounts payable and accrued liabilities | $ | $ | |||||||||
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9.Debt
A summary of debt as of June 30, 2026 and December 31, 2025 is as follows (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
Revolving Credit Facility (1) | $ | $ | ||||||||||||
Senior Secured Term Loan Agreement due 2040, with an interest rate of | ||||||||||||||
Senior Secured Term Loan Agreement due 2037, with an interest rate of | ||||||||||||||
| Unamortized loan fees | ( | ( | ||||||||||||
| Total debt | ||||||||||||||
| Less current portion of long-term debt | ||||||||||||||
| Long-term debt due after one year, net | $ | $ | ||||||||||||
______________________________________
(1) The revolving credit facility, a $60.0 million revolving credit facility between the Company and American AgCredit, as agent for the lenders thereunder (the “Revolving Credit Facility”), is comprised of a revolving loan facility (the “Revolving Loan”) and a term revolving loan facility (the “Term Revolving Loan”), which together are secured by substantially all of Crimson’s assets. The Revolving Loan provides up to $10.0 million of availability in the aggregate for a five year term, and the Term Revolving Loan provides up to $50.0 million in the aggregate for a fifteen year term. In addition to unused line fees ranging from 0.125 % to 0.225 %, rates for the borrowings are priced based on a performance grid tied to certain financial ratios and the Term Secured Overnight Financing Rate. In connection with the asset acquisition on February 9, 2026 as described in Note 2, “Acquisition of Raeburn Assets”, the Company borrowed an aggregate of $29.0 million under the Revolving Credit Facility. Since then, the Company has paid down a total of $7.0 million through June 30, 2026. The available borrowing capacity under the Revolving Credit Facility is $38.0 million as of June 30, 2026. The termination date of the Revolving Credit Facility is May 31, 2028.
(2) Pine Ridge, a wholly-owned subsidiary of Crimson, is party to a senior secured term loan agreement due on October 1, 2040 (the “2015 Term Loan”). Principal and interest are payable in quarterly installments.
(3) Double Canyon Vineyards, LLC, a wholly-owned subsidiary of Crimson, is party to a senior secured term loan agreement due on July 1, 2037 (the “2017 Term Loan”). Principal and interest are payable in quarterly installments.
Debt covenants include the maintenance of specified debt and equity ratios, a specified fixed charge coverage ratio, and certain customary affirmative and negative covenants, including limitations on the incurrence of additional indebtedness, limitations on dividends and other distributions to stockholders and restrictions on certain investments, certain mergers, consolidations and sales of assets. The Company was in compliance with all existing debt covenants as of June 30, 2026.
A summary of debt maturities as of June 30, 2026 is as follows (in thousands):
| Principal due the remainder of 2026 | $ | ||||
| Principal due in 2027 | |||||
Principal due in 2028 (4) | |||||
| Principal due in 2029 | |||||
| Principal due in 2030 | |||||
| Principal due thereafter | |||||
| Total | $ | ||||
(4) Principal amounts due in 2028 include the maturity on May 31, 2028 of the $22.0 million borrowings under the Revolving Credit Facility.
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10.Stockholders’ Equity and Stock-Based Compensation
Share Repurchase
In March 2023, the Company commenced a share repurchase program (the “2023 Repurchase Program”) that provided for the repurchase of up to 2,000,000 shares of outstanding common stock. Under the 2023 Repurchase Program, any repurchased shares are constructively retired. Effective March 21, 2025, upon approval of the Board of Directors, the Company suspended the 2023 Repurchase Program. Due to the suspension of the 2023 Repurchase Program, there were no repurchases of shares during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company repurchased 58,252 shares of its common stock at an average purchase price of $5.92 per share for an aggregate purchase price of $0.3 million. The Company’s repurchase was funded through cash on hand, and the shares were retired.
From the date of commencement through the suspension (March 2023 to March 2025) of the 2023 Repurchase Program, the Company repurchased a total of 862,185 shares of its common stock at an average purchase price of $6.12 per share for an aggregate purchase price of $5.3 million. The 2023 Repurchase Program is set to expire on December 31, 2026.
Stock-Based Compensation
In February 2013, the Company adopted the 2013 Omnibus Incentive Plan (the “2013 Plan”), which provides for the granting of up to 1,000,000 stock options or other common stock-based awards. In July 2022, upon the approval of the Board of Directors and the Company’s stockholders, the Company adopted the 2022 Omnibus Incentive Plan (the “2022 Plan”) to supersede and replace the 2013 Plan. The 2022 Plan provides for the granting of up to 678,000 stock options or other common stock-based awards. The terms of awards that may be granted, including vesting and performance criteria, if any, will be determined by the Board of Directors.
In December 2019, stock option awards for 89,000 shares were granted to the Company’s Chief Executive Officer under the 2013 Plan. The options vest annually over five years and expire seven years from the date of grant. In July 2021, stock option awards for 233,000 shares were granted to certain members of management. The options vest annually over four years and expire seven years from the date of grant. In March 2022, stock option awards for 500,000 shares were granted to the Company’s Chief Executive Officer. Such options are divided into four tranches, are subject to both performance-based vesting requirements and time-based vesting requirements, and expire ten years from the date of grant. In March 2023 and March 2024, stock option awards for 500,000 and 115,000 shares, respectively, were granted to certain officers and employees of the Company. Such options are divided into five ten years
As of June 30, 2026, the Company determined the achievement of certain targets for the aforementioned performance-based option awards were not probable based on the Company’s financial projections and assumptions regarding industry conditions. The Company has recorded the related stock-based compensation expense for the three and six months ended June 30, 2026 for options that have either vested or are probable of vesting.
Estimates of stock-based compensation expense require the application of judgment, including the selection of an option pricing model and determining appropriate inputs and assumptions that impact fair value calculations. The Company determined the grant date fair value of the awards using the Black-Scholes-Merton option-pricing valuation model.
As of June 30, 2026, stock options in respect of 1,113,500 shares remained outstanding net of stock option expirations of 29,900 shares during the six months ended June 30, 2026. There were no 17 thousand and $34 thousand were recognized as stock-based compensation expense for the three and six months ended June 30, 2026, respectively. $26 thousand and $54 thousand were recognized as stock-based compensation expense for the three and six months ended June 30, 2025, respectively. Stock-based compensation expense is reflected as a component under general and administrative expense in the unaudited interim condensed consolidated statements of operations.
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11.Income Taxes
The consolidated income taxes for the three and six months ended June 30, 2026 and 2025, were determined based upon the Company’s estimated consolidated effective income tax rates calculated without discrete items for the years ending December 31, 2026 and 2025, respectively, and then adjusting for any discrete items.
The Company’s effective tax rates for the three months ended June 30, 2026 and 2025 were 24.9 % and 45.3 %, respectively. The decrease in the Company’s effective tax rate is primarily attributable to an immaterial change in the estimated 2025 annual effective income tax rate having an outsized adjusting impact on the prior year quarter. The Company’s effective tax rates for the six months ended June 30, 2026 and 2025 were 26.3 % and 30.3 %, respectively.
The difference between the consolidated effective income tax rate and the U.S. federal statutory rate for the three and six months ended June 30, 2026 is primarily attributable to state income taxes and other permanent items.
In July 2025, the One Big Beautiful Bill Act (OBBBA), was enacted into law in the United States. The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions. The Company has assessed the effects of the OBBBA and concluded there is no material impact on the tax rate for the three and six months ended June 30, 2026.
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12.Business Segment Information
The Company has identified two operating segments, Wholesale and Direct to Consumer, which are reportable segments for financial statement reporting purposes, based upon their different distribution channels, margins, and selling strategies. Wholesale reflects sales through a third party where prices are given at a wholesale rate, whereas Direct to Consumer reflects retail sales in the Company’s tasting rooms, wine club sales, direct phone sales, Ecommerce sales, and other sales made directly to the consumer.
The two
The Company’s CODM is its Chief Executive Officer, the individual responsible for allocating resources and assessing company performance. The CODM uses both net sales and gross profit financial metrics in assessing each segment’s performance and determining how to allocate resources among segments. The CODM uses gross profit to evaluate segment margin profitability because it provides insights into product pricing and costs. Additionally, sales and marketing expenses are deducted from gross profit to arrive at income from operations. This enables the CODM to evaluate profitability and performance on a consistent and comparable basis when determining resource allocation. The Company reconciles gross profit (loss) and income (loss) from operations for each segment and other non-allocable to the consolidated amounts included in the Company’s condensed consolidated interim financial statements.
The following tables outline the net sales, cost of sales, gross profit, directly attributable selling expenses, and income from operations for the Company’s reportable segments for the three and six months ended June 30, 2026 and 2025, and also includes a reconciliation to consolidated loss from operations. Other/Non-Allocable net sales and gross loss include bulk wine and grape sales, event fees, tasting fees, and non-wine retail sales. Sales figures are net of related excise taxes. Other/Non-Allocable expenses include centralized corporate expenses not specific to an identified reporting segment.
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| Wholesale | Direct to Consumer | Other/Non-Allocable | Total | ||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit (loss) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss on disposal of property and equipment | |||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
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| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| Wholesale | Direct to Consumer | Other/Non-Allocable | Total | ||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit (loss) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss on disposal of property and equipment | |||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||
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13.Contingencies
2017 Wildfires
In October 2017, significant wildfires impacted the Company’s operations and damaged its inventory. The Company has pursued recoveries through both applicable insurance policies and the Fire Victim Trust (the “Fire Victim Trust”). The Fire Victim Trust was formed in connection with PG&E Corporation’s and Pacific Gas and Electric Company’s (together, “PG&E”) joint plan of reorganization under Chapter 11 to, among other things, review and resolve eligible claims arising from certain wildfires.
The Company has settled insurance claims totaling $1.3 million related to such wildfires through August 2020. In September 2025, the Company received an additional settlement with its insurance underwriters for $2.5 million, which the Company has recorded in other income, net. Of these insurance settlements, no
In September 2023, the Company accepted and received a settlement payout from the Fire Victim Trust. To date, the settlement payouts from the Fire Victim Trust to the Company have totaled $2.2 million, which the Company has recorded in other income, net across various periods. Of the total payouts received from the Fire Victim Trust, no 36-month period from October 2017 to September 2020. As the Fire Victim Trust seeks to wind down the claims program, the Company may be receiving an additional payout from this settlement; however, the amount, if any, and timing are not guaranteed and could vary contingent on additional funding from PG&E towards the Fire Victim Trust for all fire victims. Settlement gains are recognized when realized or realizable.
2020 Wildfires
In August and September 2020, a series of major wildfires broke out in regions across the Western United States, including Napa and Sonoma counties in California, as well as Umatilla and Yamhill Counties in Oregon. The wildfires and ensuing smoke caused damage to grapes at the vineyard properties and traffic reduction at the Company’s tasting rooms. Some of the inventory losses and smoke damage to grapes were partially covered under existing crop insurance policies, which were settled during 2021. In November 2025, the Company accepted and received an additional $1.6 million settlement from a utility company, which the Company has recorded in other income, net. Of these settlements, no
Cybersecurity
As previously disclosed in the Company’s Current Reports on Form 8-K as filed with the SEC on July 5, 2024 and July 25, 2024, the Company detected a cybersecurity incident in which an unauthorized third party gained access to certain information systems of the Company on June 30, 2024. Upon detection, the Company promptly initiated response protocols and began taking steps to contain, assess and remediate the cybersecurity incident, including launching an investigation with external cybersecurity experts. Although the Company believes that the cybersecurity incident has not had a material impact on its overall financial condition or results of operations, its evaluation and response to this incident are ongoing and the Company may discover other impacts or new events related to this incident may occur that could affect the Company’s financial condition or results of operations. As of June 30, 2026, incurred cybersecurity expenses limited to the Company’s insurance deductibles have been recorded and reflected within the Company’s unaudited condensed consolidated financial statements and such amounts are not material.
Litigation
The Company and its subsidiaries may become parties to legal proceedings that are considered to be either ordinary, routine litigation incidental to their business or not material to the Company’s consolidated financial position or liquidity. Other than the class action lawsuit relating to the cybersecurity matter discussed below, the Company is not aware of any pending litigation that could have a material adverse impact on its consolidated financial position, liquidity or results of operations.
On December 23, 2024, a class action lawsuit was filed against the Company in the United States District Court for the Northern District of California relating to the aforementioned cybersecurity incident. The complaint asserts claims for negligence, negligence per se, breach of contract, breach of implied contract, violation of the Illinois Consumer Fraud and Deceptive Practices Act, invasion of privacy, unjust enrichment and declaratory judgment, and seeks, among other things,
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damages. The Company has reached a preliminary settlement with the plaintiff, and its insurer has agreed to fund the anticipated settlement directly to the settlement administrator. The settlement is not expected to receive the court’s final approval until the scheduled hearing in October 2026. It is at least reasonably possible that the estimate could change in the future and the effect of the change could also be material based on the outcome of the final hearing.
14.Loss Per Share
The following table reconciles the weighted-average common shares outstanding used in the calculations of the Company’s basic and diluted loss per share:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ and shares in thousands, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Common shares: | |||||||||||||||||||||||
| Weighted-average number of common shares outstanding - basic | |||||||||||||||||||||||
| Dilutive effect of stock options outstanding | |||||||||||||||||||||||
| Weighted-average number of common shares outstanding - diluted | |||||||||||||||||||||||
| Loss per share: | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Antidilutive stock options (1) | |||||||||||||||||||||||
(1) Amounts represent stock options that are excluded from the diluted loss per share calculations because the options are antidilutive.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Statements included in this Quarterly Report on Form 10-Q (this “Report”) may contain forward-looking statements. See “Cautionary Statement for Forward-Looking Information” below. The following should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC (the “2025 Report”) on March 17, 2026.
Quantities or results referred to as “current quarter” and “current three and six-month period” refer to the three and six months ended June 30, 2026.
Cautionary Statement for Forward-Looking Information
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited interim condensed consolidated financial statements, which include results of Crimson Wine Group, Ltd. and all of its subsidiaries, collectively known as “we”, “Crimson”, “our”, “us”, or “the Company”, have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the general instruction for quarterly reports filed on Form 10-Q and Article 8 of Regulation S-X. All statements, other than statements of historical fact constitute “forward-looking statements” and represent current expectations, estimates, assumptions, and projections of future events. The words “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “potential,” or “continue” and similar types of expressions identify such statements, although not all forward-looking statements contain these identifying words. Forward-looking statements include, but are not limited to, those relating to the Company’s future results of operations, financial condition and performance; plans; objectives; strategy; business; operations and facilities; seasonality; opportunities; and trends relating to the Company’s industry. Forward-looking statements also include expectations about the future benefits of the Company’s acquisitions, such as the expectation that the acquisition of the Raeburn Assets provide the Company with a strategic opportunity to expand its portfolio. These statements are based upon information that is currently available to the Company and its management’s current expectations speak only as of the date hereof and are subject to risks and uncertainties. The Company expressly disclaims any obligation, except as required by federal securities laws, or undertaking to update or revise any forward-looking statements contained herein to reflect any change or expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statements are based, in whole or in part. The Company’s actual results may differ materially from the results discussed in or implied by such forward-looking statements.
Risks that could cause actual results to differ materially from any results projected, forecasted, estimated, or budgeted or that may materially and adversely affect the Company’s actual results include, but are not limited to, those discussed in Part I, “Item 1A. Risk Factors” of the 2025 Report and in Part II, “Item 1A. Risk Factors” of this Report. Readers should carefully review the risk factors described in the 2025 Report and this Report, and in other documents that the Company files from time to time with the SEC.
Overview of Business
The Company generates revenues from sales of wine to wholesalers and direct to consumers, sales of bulk wine and grapes, custom winemaking services, special event fees, tasting fees and other non-wine retail sales such as merchandise.
The Company’s wines are primarily sold to wholesale distributors, who then sell to retailers and restaurants. The Company sells wine (through distributors and directly) to restaurants, bars, and other hospitality locations (“On-Premise”). The Company also sells wine (through distributors and directly) to supermarkets, grocery stores, liquor stores, and other chains, third-party Ecommerce and independent stores (“Off-Premise”). As permitted under federal, state and local regulations, the Company has increased its emphasis on generating revenue from direct sales to consumers, which occur through wine clubs, at the wineries’ tasting rooms, and through the Ecommerce channel. Direct sales to consumers are more profitable for the Company as it is able to sell its products at a price closer to retail prices rather than the wholesale price sold to distributors. From time to time, the Company may sell grapes or bulk wine because the grapes or wine do not meet the quality standards for its products, market condition changes resulting in reduced demand for certain products, or because the Company may have produced more of a particular varietal than it can use. When these sales occur, they may result in a loss.
Cost of sales includes grape and bulk wine costs, whether purchased or produced from the Company’s controlled vineyards, crush costs, winemaking and processing costs, bottling, packaging, warehousing, and shipping and handling costs. For the Company’s produced grapes, grape costs include annual farming costs, harvest costs, and depreciation of vineyard assets. For
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wines that age longer than one year, winemaking and processing costs continue to be incurred and capitalized to the cost of wine, which can range from three to 36 months. Reductions to the carrying value of inventories are also included in cost of sales.
As of June 30, 2026, wine inventory included approximately 1.0 million cases of bottled wine and bulk wine, both in various stages of the aging process. Cased wine is expected to be sold over the next 12 to 36 months and generally before the release date of the next vintage.
Seasonality
As discussed in Part I, “Item 1. Business” of the 2025 Report, the wine industry in general historically experiences seasonal fluctuations in revenues and net income. The Company typically has lower sales and net income during the first quarter and higher sales and net income during the fourth quarter due to seasonal holiday buying as well as wine club shipment timing. The Company anticipates similar trends in the future but will monitor and provide updates if the acquisition of the Raeburn Assets significantly impacts these trends for the remainder of 2026 and beyond.
Shipments versus Depletions
Within the wholesale segment, shipments represent the quantity of wine sold to the distribution channel (such as wholesale distributors and retailers). The Company recognizes revenue for wholesale orders upon shipment of the wine from the Company’s third-party warehouse facilities. See Note 3, “Revenue,” of this Report for additional information on the Company’s revenue recognition policy. Within the industry, depletions is a measurement used to capture the quantity of wine sold from distributors to retailers. Shipments can vary from depletions depending on the timing and inventory management decisions by the distributors and retailers.
Climate Conditions and Extreme Weather Events
Winemaking and grape growing are subject to a variety of agricultural risks. Various diseases, pests, natural disasters, and certain climate conditions can materially and adversely affect the quality and quantity of grapes available to Crimson thereby materially and adversely affecting the supply of Crimson’s products and its profitability. Given the risks presented by climate conditions and extreme weather, Crimson regularly evaluates impacts of climate conditions and weather on its business to disclose any material impacts on the business. Along with various insurance policies currently in place, Crimson has made investments to improve its climate resilience and strives to effectively manage grape sourcing to help mitigate the impact of climate change and unforeseen natural disasters. Crimson continues to complete upgrades to its facilities to improve water and energy resiliency and fire mitigation measures with plans to advance these initiatives over the next several years. However, we cannot guarantee that such efforts will successfully mitigate any damage from a catastrophic event. See “We may not be fully insured against risk of catastrophic loss to wineries, production facilities or distribution systems as a result of earthquakes, fires, floods or other events, some of which may be exacerbated by climate change, which may cause us to experience a material financial loss” under Part I, “Item 1A. Risk Factors” of the 2025 Report.
Inflation, Tariffs and Market Conditions
The Company expects profit margins to remain steady or increase if it is able to effectively manage cost of sales and operating expenses, subject to any volatility in the bulk wine markets, increased labor costs, increased commodity costs, including dry goods and packaging materials, and increased transportation costs. The Company continues to monitor the impact of inflation and tariffs in an attempt to minimize its effects through pricing strategies and cost reductions. If, however, the Company’s operations are impacted by significant inflationary pressures and/or tariffs, it may not be able to completely offset increased costs through price increases on its products, negotiations with suppliers, cost reductions, or production improvements.
Due to trade tensions between the U.S. and Canada, shipments of the Company’s wines were suspended to Canada from the end of the first quarter throughout the second quarter of 2025. While export wine sales began to slowly resume in certain Canadian markets during the second half of 2025, the Company cannot predict when trade tensions will be reduced or whether demand will return to levels observed prior to 2025. See “We are subject to risks from changes to the trade policies, regulations, and tariffs of the U.S. and foreign governments” under Part I, “Item 1A. Risk Factors” of the 2025 Report.
The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments. As of the date of this Report, the Company was aware that one of its key distributors was engaged in ongoing negotiations to explore divestiture options in key markets in which the Company operates. In July 2026, the same
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distributor filed for voluntary chapter 11 bankruptcy to pursue potential sale transactions and implement an orderly wind down of its remaining operations. Certain joint ventures affiliated with this distributor in key markets are not included in the chapter 11 filing. As of June 30, 2026, amounts due from this distributor totaled approximately $2.3 million of net accounts receivable, while amounts owed by the Company to the distributor totaled $1.1 million in accounts payable and accrued liabilities. Based on the Company’s reserve policy, no reserve has been recognized with respect to these amounts. The Company cannot predict the outcome of the negotiations with the distributor and any bankruptcy proceedings. Consequently, changes in the accounts receivable deemed collectible or the net financial exposure from this distributor could have a material impact on the Company’s consolidated financial position, liquidity or results of operations.
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Results of Operations
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Net Sales
| Three Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Increase (Decrease) | % change | |||||||||||||||||||
| Wholesale | $ | 13,567 | $ | 9,800 | $ | 3,767 | 38% | ||||||||||||||||
| Direct to Consumer | 5,990 | 6,305 | (315) | (5)% | |||||||||||||||||||
| Other | 916 | 896 | 20 | 2% | |||||||||||||||||||
| Total net sales | $ | 20,473 | $ | 17,001 | $ | 3,472 | 20% | ||||||||||||||||
Wholesale net sales increased $3.8 million, or 38%, in the current quarter as compared to the same quarter in 2025, with domestic wine sales primarily driving this increase as export wine sales were comparable to the prior year quarter. The increase in domestic wine sales was due primarily to shipments of Raeburn wines in the current quarter as the Company acquired the Raeburn Assets on February 9, 2026. Partially offsetting the overall increase in domestic wine sales was a net decrease in shipments of other brands in the current quarter versus the prior year quarter, related to timing of distributor orders and transitions.
Direct to Consumer net sales decreased $0.3 million, or 5%, in the current quarter as compared to the same quarter in 2025. The overall decrease was driven by reduced memberships within the wine clubs and lower average spend per guest through the tasting rooms. Performance within these channels remained challenged amid weakening market conditions and continued pressure on discretionary consumer spending.
Other net sales, which include bulk wine and grape sales, custom winemaking services, event fees, tasting fees and non-wine retail sales in the current quarter were comparable to the same quarter in 2025.
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Gross Profit
| Three Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Increase (Decrease) | % change | |||||||||||||||||||
| Wholesale | $ | 4,906 | $ | 3,713 | $ | 1,193 | 32% | ||||||||||||||||
| Wholesale gross margin percentage | 36 | % | 38 | % | |||||||||||||||||||
| Direct to Consumer | 3,780 | 4,202 | (422) | (10)% | |||||||||||||||||||
| Direct to Consumer gross margin percentage | 63 | % | 67 | % | |||||||||||||||||||
| Other | (65) | (164) | 99 | 60% | |||||||||||||||||||
| Total gross profit | $ | 8,621 | $ | 7,751 | $ | 870 | 11% | ||||||||||||||||
| Total gross margin percentage | 42 | % | 46 | % | |||||||||||||||||||
Wholesale gross profit increased $1.2 million, or 32%, in the current quarter as compared to the same quarter in 2025 driven by an increase in overall shipments. Wholesale gross margin percentage, which is defined as wholesale gross profit as a percentage of wholesale net sales, decreased 173 basis points in the current quarter as compared to the same quarter in 2025 primarily driven by the step-up in cost basis for the acquired Raeburn inventory. During the current quarter, the step-up in cost basis recognized through cost of sales on the sales of acquired Raeburn inventory reduced total wholesale margins by 631 basis points. The increase in cost basis was a result of the purchase price allocation performed at acquisition and will continue to have a negative impact on wholesale margins until the Company sells through the acquired inventory. See Note 2, “Acquisition of Raeburn Assets,” included in Part I, Item 1 of this Report for additional information.
Direct to Consumer gross profit decreased $0.4 million, or 10%, in the current quarter as compared to the same quarter in 2025 driven by a decrease in overall case volume. Direct to Consumer gross margin percentage decreased 354 basis points due to an unfavorable sales mix for wine club shipments in the current quarter as compared to the same quarter in 2025.
“Other” includes gross profit (loss) on bulk wine and grape sales, custom winemaking services, event fees, tasting fees, non-wine retail sales, and inventory write-downs. Losses decreased $0.1 million, or 60%, in the current quarter as compared to the same quarter in 2025 driven by improved profitability on sales of bulk wine.
Operating Expenses
| Three Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Increase (Decrease) | % change | |||||||||||||||||||
| Sales and marketing | $ | 4,413 | $ | 4,484 | $ | (71) | (2)% | ||||||||||||||||
| General and administrative | 4,113 | 3,672 | 441 | 12% | |||||||||||||||||||
| Total operating expenses | $ | 8,526 | $ | 8,156 | $ | 370 | 5% | ||||||||||||||||
Sales and marketing expenses decreased $0.1 million, or 2%, in the current quarter as compared to the same quarter in 2025 primarily driven by a decrease in accrued compensation.
General and administrative expenses increased $0.4 million, or 12%, in the current quarter as compared to the same quarter in 2025 due primarily to expenses relating to the integration of the Raeburn Assets into the Company’s operations.
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Other Income (Expense), Net
| Three Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Change | % change | |||||||||||||||||||
| Interest expense, net | $ | (546) | $ | (62) | $ | (484) | (781)% | ||||||||||||||||
| Other income, net | 49 | 266 | (217) | (82)% | |||||||||||||||||||
| Total other (expense) income, net | $ | (497) | $ | 204 | $ | (701) | (344)% | ||||||||||||||||
Interest expense, net in the current quarter increased in comparison to the same quarter in 2025 due to additional interest incurred on the borrowings against the Revolving Credit Facility in connection with the acquisition of the Raeburn Assets. See Note 9, “Debt,” included in Part I, Item 1 of this Report for additional information.
Other income, net, decreased $0.2 million, or 82%, in the current quarter compared to the same quarter in 2025 primarily driven by a decrease of interest income earned in line with lower balances of money market mutual funds and other investments following the acquisition of the Raeburn Assets.
Income Tax Benefit
The Company’s effective tax rates for the three months ended June 30, 2026 and 2025 were 24.9% and 45.3%, respectively. The decrease in the Company’s effective tax rate is primarily attributable to an immaterial change in the estimated 2025 annual effective income tax rate having an outsized adjusting impact on the prior year quarter.
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Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Net Sales
| Six Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Increase (Decrease) | % change | |||||||||||||||||||
| Wholesale | $ | 25,827 | $ | 17,699 | $ | 8,128 | 46% | ||||||||||||||||
| Direct to Consumer | 11,545 | 12,282 | (737) | (6)% | |||||||||||||||||||
| Other | 1,365 | 1,480 | (115) | (8)% | |||||||||||||||||||
| Total net sales | $ | 38,737 | $ | 31,461 | $ | 7,276 | 23% | ||||||||||||||||
Wholesale net sales increased $8.1 million, or 46%, in the current six-month period as compared to the same period in 2025, with domestic wine sales primarily driving the increase as export wine sales were comparable to the prior year period. The increase in domestic wine sales was due primarily to the shipments of Raeburn wines in the current six-month period as the Company acquired the Raeburn Assets on February 9, 2026. Wine sales of other brands were comparable between the current six-month period and the prior year period.
Direct to Consumer net sales decreased $0.7 million, or 6%, in the current six-month period as compared to the same period in 2025. The overall decrease was driven by reduced memberships within the wine clubs and lower average spend per guest through the tasting rooms. Performance within these channels remained challenged amid weakening market conditions and continued pressure on discretionary consumer spending.
Other net sales, which include bulk wine and grape sales, custom winemaking services, event fees, tasting fees and non-wine retail sales, decreased $0.1 million, or 8%, in the current six-month period as compared to the same period in 2025. The decrease was primarily driven by lower revenue generated from custom winemaking services in the current six-month period as compared to the same period in 2025.
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Gross Profit
| Six Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Increase (Decrease) | % change | |||||||||||||||||||
| Wholesale | $ | 9,706 | $ | 7,067 | $ | 2,639 | 37% | ||||||||||||||||
| Wholesale gross margin percentage | 38 | % | 40 | % | |||||||||||||||||||
| Direct to Consumer | 7,470 | 8,124 | (654) | (8)% | |||||||||||||||||||
| Direct to Consumer gross margin percentage | 65 | % | 66 | % | |||||||||||||||||||
| Other | (642) | (792) | 150 | 19% | |||||||||||||||||||
| Total gross profit | $ | 16,534 | $ | 14,399 | $ | 2,135 | 15% | ||||||||||||||||
| Total gross margin percentage | 43 | % | 46 | % | |||||||||||||||||||
Wholesale gross profit increased $2.6 million, or 37%, in the current six-month period as compared to the same period in 2025 driven by an increase in overall shipments. Wholesale gross margin percentage, which is defined as wholesale gross profit as a percentage of wholesale net sales, decreased 235 basis points in the current six-month period as compared to the same period in 2025 primarily driven by the step-up in cost basis for the acquired Raeburn inventory. During the current six-month period, the step-up in cost basis recognized through cost of sales on the sales of acquired Raeburn inventory reduced total wholesale margins by 564 basis points. The increase in cost basis was a result of the purchase price allocation performed at acquisition and will continue to have a negative impact on wholesale margins until the Company sells through the acquired inventory. See Note 2, “Acquisition of Raeburn Assets,” included in Part I, Item 1 of this Report for additional information.
Direct to Consumer gross profit decreased $0.7 million, or 8%, in the current six-month period as compared to the same period in 2025 driven by a decrease in overall case volume. Direct to Consumer gross margin percentage decreased 144 basis points due to an unfavorable sales mix for wine club shipments in the current six-month period as compared to the same period in 2025.
“Other” includes gross profit (loss) on bulk wine and grape sales, custom winemaking services, event fees, tasting fees, non-wine retail sales, and inventory write-downs. Losses decreased $0.2 million, or 19%, in the current six-month period as compared to the same period in 2025 driven by improved profitability on sales of bulk wine.
Operating Expenses
| Six Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Increase (Decrease) | % change | |||||||||||||||||||
| Sales and marketing | $ | 8,498 | $ | 8,710 | $ | (212) | (2)% | ||||||||||||||||
| General and administrative | 8,529 | 7,640 | 889 | 12% | |||||||||||||||||||
| Total operating expenses | $ | 17,027 | $ | 16,350 | $ | 677 | 4% | ||||||||||||||||
Sales and marketing expenses decreased $0.2 million, or 2%, in the current six-month period as compared to the same period in 2025 primarily driven by a decrease in accrued compensation.
General and administrative expenses increased $0.9 million, or 12%, in the current six-month period as compared to the same period in 2025 due primarily to expenses relating to the integration of the Raeburn Assets into the Company’s operations.
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Other Income (Expense), Net
| Six Months Ended June 30, | |||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | Change | % change | |||||||||||||||||||
| Interest expense, net | $ | (1,002) | $ | (289) | $ | (713) | (247)% | ||||||||||||||||
| Other income, net | 220 | 741 | (521) | (70)% | |||||||||||||||||||
| Total other (expense) income, net | $ | (782) | $ | 452 | $ | (1,234) | (273)% | ||||||||||||||||
Interest expense, net, increased $0.7 million, or 247%, in the current six month period in comparison to the same period in 2025 due to additional interest incurred on the borrowings against the Revolving Credit Facility in connection with the acquisition of the Raeburn Assets. See Note 9, “Debt,” included in Part I, Item 1 of this Report for additional information.
Other income, net, decreased $0.5 million, or 70%, in the current six-month period compared to the same period in 2025 primarily driven by a decrease of interest income earned in line with lower balances of money market mutual funds and other investments following the acquisition of the Raeburn Assets.
Income Tax Benefit
The Company’s effective tax rates for the six months ended June 30, 2026 and 2025 were 26.3% and 30.3%, respectively. The difference between the effective income tax rates was primarily attributable to state income taxes and other permanent items.
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Liquidity and Capital Resources
General
The Company’s principal sources of liquidity are its available cash and cash equivalents, investments in available for sale securities, funds generated from operations and bank borrowings. The Company’s primary cash needs are to fund working capital requirements and capital expenditures.
The Company believes that cash flows generated from operations and its cash, cash equivalents, and marketable securities balances, as well as its borrowing arrangements, will be sufficient to meet its presently anticipated cash requirements for capital expenditures, working capital, debt obligations and other commitments during the next twelve months.
Revolving Credit Facility
In March 2013, Crimson and its subsidiaries entered into a $60.0 million revolving credit facility (the “Revolving Credit Facility”) with American AgCredit, FLCA (“American AgCredit”), as agent for the lenders. The Revolving Credit Facility is comprised of a revolving loan facility (the “Revolving Loan”) and a term revolving loan facility (the “Term Revolving Loan”), which together are secured by substantially all of Crimson’s assets. On June 15, 2023, the Company executed a fifth amendment to the Revolving Credit Facility with American AgCredit, which extended the termination date of the Revolving Loan and the Term Revolving Loan to May 31, 2028 along with updates to other terms of the Revolving Credit Facility. The Revolving Loan is for up to $10.0 million of availability in the aggregate for a five year term, and the Term Revolving Loan is for up to $50.0 million in the aggregate for a fifteen year term. In addition to unused line fees ranging from 0.125% to 0.225%, rates for the borrowings are priced based on a performance grid tied to certain financial ratios and the Term Secured Overnight Financing Rate. The Revolving Credit Facility can be used to fund acquisitions, capital projects, and other general corporate purposes. Covenants include the maintenance of specified debt and equity ratios, limitations on the incurrence of additional indebtedness, limitations on dividends and other distributions to stockholders and restrictions on certain mergers, consolidations, and sales of assets. In connection with the acquisition of the Raeburn Assets in February 2026, the Company borrowed an aggregate of $29.0 million under the Revolving Credit Facility. Since then, the Company has paid down a total of $7.0 million through June 30, 2026. As of June 30, 2026, $22.0 million in borrowings remained outstanding under the Revolving Credit Facility. The available borrowing capacity under the Revolving Credit Facility is $38.0 million as of June 30, 2026. The Company was in compliance with all existing debt covenants under the Revolving Credit Facility as of June 30, 2026.
Term Loans
The Company’s term loans consist of the following:
(i) On November 10, 2015, Pine Ridge Winery, LLC (“PRW Borrower”), a wholly-owned subsidiary of Crimson, entered into a senior secured term loan agreement (the “2015 Term Loan”) with American AgCredit for an aggregate principal amount of $16.0 million. Amounts outstanding under the 2015 Term Loan bear a fixed interest rate of 5.24% per annum. Principal and interest are payable in quarterly installments. The 2015 Term Loan will mature on October 1, 2040. The 2015 Term Loan can be used to fund acquisitions, capital projects, and other general corporate purposes. As of June 30, 2026, $9.3 million in principal was outstanding on the 2015 Term Loan, and unamortized loan fees were less than $0.1 million.
(ii) On June 29, 2017, Double Canyon Vineyards, LLC (collectively with the PRW Borrower, the “Borrowers”), a wholly-owned subsidiary of Crimson, entered into a senior secured term loan agreement (the “2017 Term Loan”) with American AgCredit for an aggregate principal amount of $10.0 million. Amounts outstanding under the 2017 Term Loan bear a fixed interest rate of 5.39% per annum. Principal and interest are payable in quarterly installments. The 2017 Term Loan will mature on July 1, 2037. The 2017 Term Loan can be used to fund acquisitions, capital projects, and other general corporate purposes. As of June 30, 2026, $5.6 million in principal was outstanding on the 2017 Term Loan, and unamortized loan fees were less than $0.1 million.
Borrowers’ obligations under the 2015 Term Loan and 2017 Term Loan are guaranteed by the Company. All obligations of the Borrowers under the 2015 Term Loan and 2017 Term Loan are collateralized by certain real property of the Company. Borrowers’ covenants include the maintenance of a specified fixed charge coverage ratio and certain customary affirmative and negative covenants, including limitations on the incurrence of additional indebtedness, limitations on distributions to stockholders, and restrictions on certain investments, the sale of assets, and merging or consolidating with other entities. The Company was in compliance with all debt covenants under the 2015 Term Loan and the 2017 Term Loan as of June 30, 2026.
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Consolidated Statements of Cash Flows
The following table summarizes the Company’s cash flow activities for the six months ended June 30, 2026 and 2025 (in thousands):
| Net cash provided by (used in): | 2026 | 2025 | |||||||||
| Operating activities | $ | 8,639 | $ | 653 | |||||||
| Investing activities | (38,821) | 1,460 | |||||||||
| Financing activities | 21,430 | (940) | |||||||||
Cash provided by operating activities
Net cash provided by operating activities was $8.6 million for the six months ended June 30, 2026, consisting primarily of $1.0 million of net loss adjusted for $4.7 million of non-cash items and $4.9 million net cash inflow related to changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of depreciation, amortization, loss on the write-down of inventory, and other offsetting items. The change in operating assets and liabilities was primarily due to a decrease in inventory (excluding inventory acquired in the Raeburn acquisition) and other current assets, partially offset by a decrease in accounts payable and accrued liabilities and an increase in accounts receivable.
Net cash provided by operating activities was $0.7 million for the six months ended June 30, 2025, consisting primarily of $1.1 million of net loss adjusted for $5.1 million of non-cash items and $3.4 million net cash outflow related to changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of depreciation, amortization, loss on the write-down of inventory, and other offsetting items. The change in operating assets and liabilities was primarily due to a decrease in accounts payable and accrued liabilities and an increase in inventory, partially offset by a decrease in accounts receivable and other current assets.
Cash (used in) provided by investing activities
Net cash used in investing activities was $38.8 million for the six months ended June 30, 2026, consisting primarily of the cash used to fund the acquisition of Raeburn Assets totaling $37.5 million and capital expenditures of $1.3 million.
Net cash provided by investing activities was $1.5 million for the six months ended June 30, 2025, consisting primarily of the net redemptions of available for sale investments of $3.0 million, partially offset by capital expenditures of $1.6 million.
Cash provided by (used in) financing activities
Net cash provided by financing activities was $21.4 million for the six months ended June 30, 2026, consisting of $29.0 million in proceeds drawn from the Revolving Credit Facility to fund a portion of the acquisition of Raeburn Assets, partially offset by $7.0 million in aggregate payments on the Revolving Credit Facility and scheduled principal payments on the 2015 Term Loan and 2017 Term Loan of $0.6 million in the aggregate.
Net cash used in financing activities was $0.9 million for the six months ended June 30, 2025, consisting of scheduled principal payments on the 2015 Term Loan and 2017 Term Loan of $0.6 million in the aggregate and the repurchase of shares of the Company’s common stock at an aggregate purchase price of $0.4 million.
Share Repurchases
In March 2023, the Company commenced the 2023 Repurchase Program that provided for the repurchase of up to 2,000,000 shares of outstanding common stock. Under the 2023 Repurchase Program, any repurchased shares are constructively retired. Effective March 21, 2025, upon approval of the Board of Directors, the Company suspended the 2023 Repurchase Program. Due to the suspension of the 2023 Repurchase Program, there were no repurchases of shares during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company repurchased 58,252 shares of its common stock at an average purchase price of $5.92 per share for an aggregate purchase price of $0.3 million. The Company’s repurchase was funded through cash on hand, and the shares were retired. The 2023 Repurchase Program is set to expire on December 31, 2026.
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Off-Balance Sheet Financing Arrangements
None.
Critical Accounting Policies and Estimates
There have been no material changes to the critical accounting policies and estimates previously disclosed in the 2025 Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
The Company’s management evaluated, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026. Based on their evaluation, the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026.
There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
The information set forth under “Litigation” in Note 13, “Contingencies,” to the Company’s condensed consolidated interim financial statements included in Part I, “Item 1. Financial Statements (Unaudited)” of this Report is incorporated herein by reference.
Item 1A. Risk Factors.
In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” of the 2025 Report, which could materially affect the Company’s business, results of operations or financial condition. The risks described in the 2025 Report are not the only risks it faces. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may eventually prove to materially and adversely affect its business, results of operations or financial condition.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the three months ended June 30, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted terminated
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Item 6. Exhibits.
| 2.1# | Asset Purchase Agreement, dated February 9, 2026, by and between Pine Ridge Winery, LLC, and Purple Wine Company, LLC. (incorporated by reference to Exhibit 2.1 to Form 8-K filed on February 9, 2026). | |||||||
| 3.1 | Amended and Restated Certificate of Incorporation of Crimson Wine Group, Ltd. (incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 25, 2013). | |||||||
| 3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on February 25, 2013). | |||||||
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.1** | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.2** | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS* | Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | |||||||
| * Filed herewith. | ||||||||
| ** Furnished herewith. | ||||||||
| # The schedules and exhibits to the Asset Purchase Agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted schedules and exhibits to the SEC upon request. | ||||||||
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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 thereunto duly authorized.
| CRIMSON WINE GROUP, LTD. | ||||||||||||||
| (Registrant) | ||||||||||||||
| Date: | August 6, 2026 | By: | /s/ Adam D. Howell | |||||||||||
| Adam D. Howell | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
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