Financial Data and Key Metrics Changes - Revenue for Q1 2020 was $3.7 million, an 8% increase compared to the same period last year [37] - Gross margins decreased to 26% from 34% in Q1 2019, impacted by a shift in sales mix and negative adjustments totaling $300,000 [37] - EBITDA loss improved by $267,000 to a loss of $1.865 million compared to Q1 2019 [38] - Cash position improved to $1.3 million from $342,000 at the end of 2019 due to closing a credit line [39] Business Line Data and Key Metrics Changes - The on-premise business was heavily affected by COVID-19, leading to a significant decline in sales [11] - Redneck Riviera whiskey saw a 54% growth in depletions compared to Q1 2019, although shipments did not match this growth [33] - Craft Canning experienced strong demand, with expectations for continued growth in Q2 [20][21] Market Data and Key Metrics Changes - The shift to off-premise sales resulted in a loss of approximately $1 million in top-line revenue due to the pandemic [12] - Consumers shifted to larger bottle sizes, negatively impacting sales of smaller bottles where the company primarily competes [11] Company Strategy and Development Direction - The company aims to become a leading mid-tier craft spirits company, focusing on acquiring and developing premium brands [24] - Initiatives to improve sales include promotional discounts and reallocating sales resources to support off-premise sales [13][14] - The company is working on outsourcing production to improve margins and reduce costs [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 but expressed optimism about operational improvements and revenue growth in Q2 [22] - The company is adapting to new market conditions and focusing on execution initiatives to drive growth [35] - There is a commitment to managing expenses and improving cash flow while preparing for business normalization [41] Other Important Information - The company has completed the shutdown of unprofitable retail operations, which will positively impact future financial results [15] - A new board member with extensive experience in consumer products has been appointed to help guide the company's transformation [43] Q&A Session Summary Question: Can you provide insights on outsourcing and its impact on margins? - Management indicated that phase 1 of outsourcing will improve manufacturing overhead and reduce freight costs, with more details to come after negotiations [46][48] Question: Will the company de-emphasize on-premise sales in the near term? - The company plans to pivot back to on-premise sales as conditions allow, while currently focusing on off-premise opportunities [50][51] Question: Is there a case volume target for Redneck Riviera in 2020? - Management has not provided specific case volume targets due to the uncertainty of the COVID environment but will reassess after Q2 [56]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Common Stock, $0.0001 par value EAST The Nasdaq Stock Market LLC (Title of Each Class) (Trading Symbol) (Name of Each Exchange on Which Registered) FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to __ ...

Eastside Distilling, Inc. (NASDAQ:EAST) Q4 2019 Earnings Conference Call March 30, 2020 5:00 PM ET Company Participants Robert Blum - Lytham Partners Lawrence Firestone - CEO Robert Manfredonia - President Conference Call Participants David Bain - ROTH Capital Jim McIlree - Bradley Woods Harold Weber - Aegis Capital Operator Good afternoon, and welcome to the Eastside Distilling Reports Fourth Quarter and Fiscal Year 2019 Financial Results Conference Call. All participants will be in a listen-only mode. [Op ...

Market Overview - The global spirits market generates total revenues exceeding $400 billion annually, growing at an estimated rate of 2-4%[22] - Distilled spirits sales in the U.S. increased by 5.3% in 2019, reaching a record $29 billion, with American whiskey sales up 10.8% to $4 billion[23] - The spirits industry gained market share over beer and wine sales, with revenues growing by 0.5% to 37.8% of the total beverage alcohol market in 2019[23] - The U.S. spirits industry has consolidated significantly, with eight major companies dominating the market, making it challenging for smaller companies to gain distributor recognition[50] Company Growth and Acquisitions - The company acquired 90% of Big Bottom Distilling in May 2017 and the remaining 10% in December 2018, enhancing its presence in the ultra-premium segment[20] - The Azuñia tequila brand was acquired in September 2019, complementing the company's portfolio in the high-growth tequila category[20] - The company aims to become a "house of brands" by acquiring and developing nascent brands for national distribution, targeting tier 1 producers for future sales[26] - The sales of premium brands have increased over 1,000% since 2010, reflecting the company's growth in the craft spirits market[35] Distribution and Sales Strategy - The company has developed a national distribution network with relationships in 49 U.S. states since the introduction of Redneck Riviera Whiskey in 2018[48] - The company has established relationships with wholesale distributors in 49 states, relying on them for sales and product placement[54] - The company aims to expand its distribution territories and register trademarks in additional markets as it grows[66] Product Focus and Market Position - The company focuses on premium and super-premium segments, which typically yield higher prices per case and gross profit margins[72] - The high-end and super-premium spirit products saw revenue increases of 7.6% and 7.9% respectively in 2019[24] Operational Changes - The company closed its four retail stores in the Portland area effective March 23, 2020, to streamline operations[55] - As of March 30, 2020, the company employed 89 full-time employees, with 23 in sales and marketing, 58 in production, and 8 in administration[79] Regulatory Environment - The company is subject to extensive federal and state regulations regarding the production, distribution, and marketing of alcoholic beverages[73] Supplier Relationships - The company utilizes a limited number of suppliers for sourcing spirit products, including a 20-year exclusive agreement with Agaveros Unidos de Amatitan for tequila[46][47] - The company utilizes Park Street Imports for back-office administrative and logistical services, enhancing cash flow through factoring services[59] Brand Development - The company has engaged Sandstrom Partners for brand development, resulting in the rebranding of key products and the launch of new brands like Hue Hue and Granny Rich[62]

Eastside Distilling, Inc. (NASDAQ:EAST) Q3 2019 Earnings Conference Call November 14, 2019 5:00 PM ET Company Participants Joe Dorame – Lytham Partners Lawrence Firestone – Chief Executive Officer Steve Shum – Chief Financial Officer Robert Manfredonia – President Conference Call Participants Ian Gilson – Zacks Investment Research Ross Taylor – ARS Investment Partners Harold Weber – Aegis Capital Chris Leshock – Ballast Equity Operator Good day, and welcome to the Eastside Distilling Reports Third Quarter F ...

PART I [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited Q3 2019 financials show significant asset and liability growth from acquisitions, increased net losses, and a sharp cash decline [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities surged due to acquisitions, while cash and equity sharply declined by September 30, 2019 Condensed Consolidated Balance Sheet Highlights (as of Sep 30, 2019 vs. Dec 31, 2018) | Balance Sheet Item | Sep 30, 2019 | Dec 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Cash | $446,983 | $10,642,877 | -95.8% | | Inventories | $12,257,883 | $11,017,459 | +11.3% | | Intangible assets, net | $14,648,543 | $285,676 | +5027.7% | | **Total Assets** | **$37,737,865** | **$26,357,808** | **+43.2%** | | Total current liabilities | $3,857,789 | $2,372,584 | +62.6% | | Deferred Consideration (Azuñia) | $12,781,092 | $0 | N/A | | **Total Liabilities** | **$23,941,831** | **$7,606,690** | **+214.7%** | | **Total Stockholders' Equity** | **$13,796,034** | **$18,751,118** | **-26.4%** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales significantly increased for Q3 and nine-month periods, but higher operating expenses led to a wider net loss Consolidated Statements of Operations Summary | Metric | Q3 2019 | Q3 2018 | YoY Change | 9 Months 2019 | 9 Months 2018 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $4,434,840 | $1,489,047 | +197.8% | $11,826,317 | $4,234,067 | +179.3% | | Gross Profit | $1,766,629 | $602,219 | +193.3% | $4,423,568 | $1,955,948 | +126.2% | | Loss from Operations | ($3,431,070) | ($2,086,207) | +64.5% | ($9,098,478) | ($5,150,300) | +76.7% | | Net Loss | ($3,544,299) | ($2,626,457) | +35.0% | ($9,436,225) | ($5,851,503) | +61.3% | | Basic & Diluted EPS | ($0.38) | ($0.42) | N/A | ($1.03) | ($1.07) | N/A | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash use improved, but increased investing and reduced financing led to a $10.2 million net cash decrease Consolidated Statements of Cash Flows Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($7,922,275) | ($10,355,135) | | Net cash used in investing activities | ($3,803,008) | ($944,248) | | Net cash provided by financing activities | $1,529,389 | $13,569,457 | | **Net decrease in cash** | **($10,195,594)** | **$2,270,074** | | Cash - end of period | $446,983 | $4,856,389 | [Notes to the Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business, accounting policies, and recent activities, highlighting financing dependence, recurring losses, and 2019 acquisitions - The company has incurred a net loss of **$9.4 million** for the nine months ended September 30, 2019, and has an accumulated deficit of **$36.8 million**, highlighting its historical dependence on debt and equity financing to fund operations[20](index=20&type=chunk) - On January 11, 2019, the company acquired Craft Canning + Bottling for a total consideration of **$4.84 million**, paid in stock, cash, and notes payable[72](index=72&type=chunk)[73](index=73&type=chunk) - On September 12, 2019, the company acquired the Azuñia Tequila brand for deferred consideration estimated at **$12.78 million**, payable primarily in stock and contingent on future revenue performance[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - A legal complaint was filed against the company on October 22, 2019, by two former employees alleging sex discrimination and harassment, seeking monetary damages of up to **$560,000**[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses sales growth from acquisitions, declining gross margins, rising expenses, and critical liquidity concerns requiring additional capital [Business Overview](index=28&type=section&id=Business%20Overview) The company, a craft spirits producer, expands through market growth, strategic acquisitions, and leveraging key brands like Redneck Riviera and Azuñia - The company's strategy is to build on its local base, expand selectively, and use its public company status to support growth through strategic acquisitions[157](index=157&type=chunk)[159](index=159&type=chunk) - Key brands and services driving growth include Redneck Riviera Whiskey (RRW), the newly acquired Azuñia tequila, and contract bottling/canning services via its MotherLode and Craft Canning subsidiaries[157](index=157&type=chunk)[159](index=159&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Sales surged due to acquisitions, but gross margin declined, and significantly higher operating expenses resulted in a wider net loss Sales Breakdown by Channel (Three Months Ended Sep 30) | Channel | 2019 | % of Total | 2018 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $2,120,253 | 45% | $1,018,635 | 60% | | Private Label (Co-packing) | $2,389,269 | 50% | $455,155 | 27% | | Retail / Special Events | $237,293 | 5% | $225,058 | 13% | | **Total** | **$4,746,815** | **100%** | **$1,698,848** | **100%** | Gross Profit and Margin Comparison | Period | Gross Profit 2019 | Gross Margin 2019 | Gross Profit 2018 | Gross Margin 2018 | | :--- | :--- | :--- | :--- | :--- | | Three Months | $1,766,629 | 40% | $602,219 | 40% | | Nine Months | $4,423,568 | 37% | $1,955,948 | 46% | - The increase in General & Administrative expenses was primarily due to increased headcount from acquisitions, higher depreciation and amortization, and one-time costs related to bonuses, legal, and acquisition expenses[168](index=168&type=chunk)[178](index=178&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces precarious liquidity with limited cash, relying on additional capital or positive cash flow to meet future operating needs - The company had only **$0.4 million** of cash on hand as of September 30, 2019[183](index=183&type=chunk) - The company's ability to meet its operating cash needs for the next 12 months is dependent on raising additional debt or equity capital and generating positive operating cash flow[183](index=183&type=chunk) - Management is seeking to leverage the company's large inventory and accounts receivable balances to help satisfy working capital needs[183](index=183&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from market risk disclosures as it qualifies as a smaller reporting company - The company is exempt from this disclosure requirement as it qualifies as a "smaller reporting company"[193](index=193&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[195](index=195&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter ended September 30, 2019[196](index=196&type=chunk) PART II [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a legal complaint from former employees alleging discrimination and harassment, seeking up to $560,000 in damages - A complaint was filed against the company by two former employees alleging sex discrimination and sexual harassment, seeking damages up to **$560,000**. The company's insurer has accepted initial defense with a reservation of rights[108](index=108&type=chunk)[199](index=199&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including critical capital needs, brand dependence, executive turnover, supply chain reliance, industry competition, and stock-related issues [Risks Relating to Our Business](index=34&type=section&id=Risks%20Relating%20to%20Our%20Business) Key business risks include the urgent need for capital, ongoing operating losses, dependence on the Redneck Riviera brand, executive turnover, and reliance on limited suppliers - The company requires additional capital to continue operations, and failure to obtain it could severely limit growth and operations[201](index=201&type=chunk)[202](index=202&type=chunk) - The company has incurred significant operating losses, reporting a net loss of **$3.5 million** for Q3 2019 and an accumulated deficit of **$36.8 million**, and expects losses to continue[205](index=205&type=chunk) - Recent significant changes to the executive leadership team, including the resignations of the CEO and CFO, have the potential to disrupt operations[216](index=216&type=chunk) - The regulatory landscape for CBD products is uncertain and evolving, which could adversely affect the company's new 'Outlandish' beverage line[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) [Risks Related to Our Industry](index=42&type=section&id=Risks%20Related%20to%20Our%20Industry) Industry risks include intense competition, changing consumer preferences, potential impact from marijuana legalization, extensive government regulation, and product liability concerns - The global spirits industry is highly competitive and dominated by large international companies with substantially greater financial and marketing resources[258](index=258&type=chunk) - Demand may be adversely affected by changing consumer trends, economic downturns, and health concerns. The legalization of marijuana in key states could also reduce alcohol sales[253](index=253&type=chunk)[256](index=256&type=chunk) - The business is subject to extensive government regulation and taxation. The favorable federal excise tax rate under the Craft Modernization and Tax Reform Act of 2017 is not guaranteed to remain in effect after its initial two-year period[262](index=262&type=chunk)[263](index=263&type=chunk) [Risks Related to Our Common Stock](index=44&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Common stock risks include thin trading, potential Nasdaq delisting due to non-compliance, limited authorized shares for future financing, and significant stockholder influence - The company's common stock is thinly traded, which may lead to price volatility and make it difficult for investors to sell their shares[272](index=272&type=chunk)[273](index=273&type=chunk) - The company faces a risk of delisting from Nasdaq. As of November 12, 2019, it was not in compliance with the majority independent Board and independent audit committee requirements[276](index=276&type=chunk) - The company's ability to raise capital is constrained by its limited number of authorized shares of common stock (**15 million** authorized vs. over **11 million** outstanding or subject to conversion)[289](index=289&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In September 2019, the company raised $1.26 million in net proceeds from a private offering of units, each comprising common stock and a warrant - In September 2019, the company raised **$1,262,497** in net proceeds from a private offering of **280,555** units at **$4.50** per unit[293](index=293&type=chunk) - Each unit included one common share and a three-year warrant to purchase **0.5** shares at an exercise price of **$5.50**[293](index=293&type=chunk)

Eastside Distilling Inc. (NASDAQ:EAST) Q2 2019 Results Conference Call August 14, 2019 5:00 PM ET Company Participants Robert Blum - Investor Relations Steve Shum - Interim Chief Executive Officer and Chief Financial Officer Robert Manfredonia - President John Rich - Founder, Redneck Riviera Conference Call Participants David Bain - ROTH Capital Ross Taylor - ARS Investment Partners Operator Good day, and welcome to the Eastside Distilling Reports Second Quarter Fiscal Year 2019 Financial Results. All parti ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _________________ Commission File No.: 001-38182 EASTSIDE DISTILLING, INC. (Exact name of registrant as specified in its charter) Nevada 20-3937596 (St ...

Eastside Distilling, Inc. (NASDAQ:EAST) Q1 2019 Results Earnings Conference Call May 13, 2019 11:30 AM ET Company Participants Robert Blum - Lytham Partners Grover Wickersham - Executive Chairman Robert Manfredonia - President Steve Shum - CFO Conference Call Participants David Bain - ROTH Capital Ian Gilson - Zacks Investment Research Harold Weber - Aegis Capital Geoffrey Gwin - Quad Group Shawn Willard - Orca Investment Operator Good morning, and welcome to the Eastside Distilling reports First Quarter ...

PART I—FINANCIAL INFORMATION This section provides the unaudited financial information for Eastside Distilling, Inc., including detailed financial statements, management's discussion and analysis, market risk disclosures, and control procedures [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Eastside Distilling, Inc. and its subsidiaries as of March 31, 2019, and for the three months ended March 31, 2019 and 2018 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202019%20and%20December%2031%2C%202018) The company's total assets increased by approximately $2.78 million from December 31, 2018, to March 31, 2019, primarily driven by increases in property and equipment, right-of-use assets, and intangible assets Balance Sheet Summary | Metric | March 31, 2019 | December 31, 2018 | Change (vs. Dec 31, 2018) | |:---|:---|:---|:---| | **Assets** | | | | | Cash | $4,180,799 | $10,642,877 | -$6,462,078 | | Trade receivables | $1,867,871 | $1,064,078 | +$803,793 | | Inventories | $11,565,655 | $11,017,459 | +$548,196 | | Property and equipment, net | $4,804,585 | $1,758,130 | +$3,046,455 | | Right-of-use assets | $1,180,632 | - | +$1,180,632 | | Intangible assets, net | $3,065,039 | $285,676 | +$2,779,363 | | Total Assets | $29,139,327 | $26,357,808 | +$2,781,519 | | **Liabilities** | | | | | Total current liabilities | $3,910,201 | $2,372,584 | +$1,537,617 | | Total liabilities | $11,179,221 | $7,606,690 | +$3,572,531 | | **Stockholders' Equity** | | | | | Total Stockholders' Equity | $17,960,106 | $18,751,118 | -$791,012 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20three%20months%20ended%20March%2031%2C%202019%20and%202018) For the three months ended March 31, 2019, the company experienced significant sales growth, with net sales increasing by 186.5% year-over-year, though cost of sales and operating expenses grew at an even faster rate, leading to a substantial increase in net loss attributable to common shareholders Statements of Operations Summary | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | YoY Change (%) | |:---|:---|:---|:---| | Sales | $3,685,700 | $1,413,182 | 160.8% | | Net sales | $3,496,299 | $1,220,333 | 186.5% | | Cost of sales | $2,321,298 | $627,523 | 270.0% | | Gross profit | $1,175,001 | $592,810 | 98.2% | | Gross margin | 34% | 49% | -15 percentage points | | Total operating expenses | $4,011,030 | $1,855,489 | 116.2% | | Loss from operations | $(2,836,029) | $(1,262,679) | 124.6% | | Net loss attributable to Eastside Distilling, Inc. common shareholders | $(2,943,439) | $(1,318,524) | 123.2% | | Basic and diluted net loss per common share | $(0.32) | $(0.27) | 18.5% | | Basic and diluted weighted average common shares outstanding | 9,099,382 | 4,920,534 | 84.9% | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202019%20and%202018) The company experienced a significant net decrease in cash for the three months ended March 31, 2019, primarily due to increased cash usage in operating and investing activities, with financing activities providing minimal cash compared to the prior year Statements of Cash Flows Summary | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | YoY Change | |:---|:---|:---|:---| | Net cash used in operating activities | $(3,877,064) | $(2,547,057) | $(1,330,007) | | Net cash used in investing activities | $(2,555,944) | $(343,722) | $(2,212,222) | | Net cash provided by financing activities | $(29,070) | $1,858,583 | $(1,887,653) | | Net decrease in cash | $(6,462,078) | $(1,032,196) | $(5,439,882) | | Cash - end of period | $4,180,799 | $1,554,119 | +$2,626,680 | - Acquisition of business, net of cash acquired, was a significant use of cash in investing activities, totaling **$(1,449,917)** in Q1 2019, compared to **$0** in Q1 2018[15](index=15&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's business, financial position, and performance, including significant accounting policies, recent acquisitions, liquidity management, debt obligations, equity changes, and related party transactions [1. Description of Business](index=6&type=section&id=1.%20Description%20of%20Business) Eastside Distilling, Inc. is an Oregon-based craft spirits producer and marketer, selling products in 46 states and Ontario, Canada, also providing contract bottling, canning, and packaging services through its subsidiaries - The company produces and markets craft spirits (bourbon, American whiskey, vodka, gin, rum) and sells them in **46 states** and Ontario, Canada[16](index=16&type=chunk) - Through subsidiaries MotherLode Craft Distillery and Craft Canning + Bottling (acquired January 11, 2019), the company provides contract bottling, canning, and packaging services[17](index=17&type=chunk) [2. Liquidity](index=6&type=section&id=2.%20Liquidity) The company has historically relied on debt and equity financings to fund operations, incurring a net loss of $2.9 million and an accumulated deficit of $30 million as of March 31, 2019 - Incurred a net loss of **$2.9 million** and had an accumulated deficit of **$30 million** as of March 31, 2019[18](index=18&type=chunk) - Had **$4.2 million** cash on hand and **$15.2 million** positive working capital at March 31, 2019[19](index=19&type=chunk) - Management believes current cash, receivables, inventory, and expected revenue will be sufficient for the next twelve months, focusing on increased sales, profit growth, and expense control[19](index=19&type=chunk) [3. Summary of Significant Accounting Policies](index=6&type=section&id=3.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with GAAP for interim information, with key policies including consolidation of subsidiaries, single segment reporting, revenue recognition upon shipment, and expensing advertising costs - Consolidated financial statements include Eastside Distilling, Inc.'s wholly-owned subsidiaries: MotherLode, BBD, and Craft Canning (from January 11, 2019)[23](index=23&type=chunk) - Recognizes revenue when merchandise is shipped from a warehouse to wholesale customers, or upon consignee's shipment for consignment sales[27](index=27&type=chunk) - Adopted ASU 2016-02 (Leases) on January 1, 2019, recognizing right-of-use assets of **$920,805** and lease liabilities of **$1,110,445**, with an immaterial net adjustment to retained earnings[64](index=64&type=chunk) - Adopted ASU 2018-07 (Compensation – Stock Compensation) on January 1, 2019, aligning accounting for employee and nonemployee share-based awards, with no material impact[65](index=65&type=chunk) [4. Business Acquisitions](index=13&type=section&id=4.%20Business%20Acquisitions) On January 11, 2019, the company acquired Craft Canning + Bottling, LLC for a total value of $4,844,882, paid through common stock, cash, and notes payable, significantly expanding its bottling and canning services Acquisition Consideration | Consideration Given | | |:---|:---| | 338,212 shares of common stock | $2,080,004 | | Cash | $2,003,200 | | Notes payable | $761,678 | | **Total value of acquisition** | **$4,844,882** | - Acquired Craft Canning + Bottling, LLC on January 11, 2019, a provider of bottling and canning services[69](index=69&type=chunk) - Craft Canning contributed **$1,476,999** in revenue and **$121,149** in net income to the consolidated statements of operations from January 11, 2019, through March 31, 2019[73](index=73&type=chunk) [5. Inventories](index=14&type=section&id=5.%20Inventories) Inventories, primarily bulk and bottled liquor and merchandise, increased to $11,565,655 as of March 31, 2019, from $11,017,459 at December 31, 2018, with raw materials constituting the largest portion Inventory Composition | Inventory Category | March 31, 2019 | December 31, 2018 | |:---|:---|:---| | Raw materials | $10,571,725 | $10,347,616 | | Finished goods | $993,930 | $669,843 | | **Total inventories** | **$11,565,655** | **$11,017,459** | [6. Property and Equipment](index=14&type=section&id=6.%20Property%20and%20Equipment) Net property and equipment significantly increased to $4,804,585 at March 31, 2019, from $1,758,130 at December 31, 2018, primarily due to substantial purchases totaling $1,406,026 in Q1 2019 Property and Equipment Details | Category | March 31, 2019 | December 31, 2018 | |:---|:---|:---| | Total cost | $6,249,179 | $2,101,058 | | Less accumulated depreciation | $(1,444,594) | $(342,928) | | **Property and equipment - net** | **$4,804,585** | **$1,758,130** | - Purchases of property and equipment totaled **$1,406,026** for the three months ended March 31, 2019, a significant increase from **$343,722** in the prior year period[76](index=76&type=chunk) [7. Intangible Assets and Goodwill](index=14&type=section&id=7.%20Intangible%20Assets%20and%20Goodwill) Net intangible assets and goodwill increased substantially to $3,093,221 at March 31, 2019, from $313,858 at December 31, 2018, primarily driven by a significant increase in customer lists due to the Craft Canning acquisition Intangible Assets and Goodwill Details | Category | March 31, 2019 | December 31, 2018 | |:---|:---|:---| | Customer lists | $3,246,748 | $351,430 | | Goodwill | $28,182 | $28,182 | | **Intangible assets and goodwill - net** | **$3,093,221** | **$313,858** | - Amortization expense for intangible assets increased significantly to **$130,776** for the three months ended March 31, 2019, from **$2,370** in the prior year period[78](index=78&type=chunk) [8. Other Assets](index=16&type=section&id=8.%20Other%20Assets) Net other assets increased to $985,685 at March 31, 2019, from $796,260 at December 31, 2018, primarily due to capitalized costs for product rebranding and investments in an online direct-to-consumer business Other Assets Details | Category | March 31, 2019 | December 31, 2018 | |:---|:---|:---| | Product branding | $555,000 | $525,000 | | Investments in online company | $450,000 | $300,000 | | **Other assets - net** | **$985,685** | **$796,260** | - The company invested in an online (direct-to-consumer) business in December 2018 and January 2019, intending to sell select products through this platform[81](index=81&type=chunk) [9. Leases](index=16&type=section&id=9.%20Leases) Upon adopting the new lease accounting standard (ASU 2016-02) on January 1, 2019, the company recognized right-of-use assets of $920,805 and lease liabilities of $1,110,445, with these balances increasing by March 31, 2019 - Recognized right-of-use assets of **$920,805** and lease liabilities of **$1,110,445** upon adoption of ASU 2016-02 on January 1, 2019[82](index=82&type=chunk) - As of March 31, 2019, right-of-use assets were **$1,180,632** and lease liabilities were **$1,375,443**[82](index=82&type=chunk) - Aggregate lease expense for the three months ended March 31, 2019, was **$151,111**[82](index=82&type=chunk) [10. Notes Payable](index=17&type=section&id=10.%20Notes%20Payable) Total notes payable significantly increased to $4,195,953 at March 31, 2019, from $2,300,000 at December 31, 2018, reflecting new debt instruments, including those related to the Craft Canning acquisition Notes Payable Summary | Category | March 31, 2019 | December 31, 2018 | |:---|:---|:---| | Total notes payable | $4,195,953 | $2,300,000 | | Less current portion | $580,647 | - | | Long-term portion of notes payable | $3,615,306 | $2,300,000 | - Paid **$30,035** in interest on notes for the three months ended March 31, 2019, compared to **$8,917** in the prior year period[85](index=85&type=chunk) Notes Payable Maturities | Year Ending December 31 | Maturities on Notes Payable | |:---|:---| | 2019 | $389,948 | | 2020 | $505,968 | | 2021 | $2,808,570 | | Thereafter | $491,467 | | **Total** | **$4,195,953** | [11. Secured Credit Facility](index=18&type=section&id=11.%20Secured%20Credit%20Facility) The company has a $3,000,000 secured credit facility with The KFK Children's Trust, bearing an annual interest rate of 7.00%, secured by bulk whiskey, bourbon, and rye inventory - Entered into a **$3,000,000** secured credit facility on May 10, 2018, with The KFK Children's Trust, secured by bulk whiskey, bourbon, and rye inventory[89](index=89&type=chunk) - The loans have an annual interest rate of **7.00%** and mature on June 10, 2021[91](index=91&type=chunk) - As of March 31, 2019, the company had borrowed the full **$3 million** available, and paid **$45,889** in interest during the quarter[91](index=91&type=chunk) [12. Commitments and Contingencies](index=18&type=section&id=12.%20Commitments%20and%20Contingencies) The company is not currently subject to any material legal proceedings, though it may face claims in the ordinary course of business, which could be time-consuming and expensive - The company is not currently subject to any material legal proceedings[93](index=93&type=chunk) [13. Net Loss per Common Share](index=19&type=section&id=13.%20Net%20Loss%20per%20Common%20Share) Basic and diluted net loss per common share for the three months ended March 31, 2019, was $(0.32), an increase from $(0.27) in the prior year, reflecting a higher net loss and an increased weighted average number of common shares outstanding Net Loss per Common Share Calculation | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | |:---|:---|:---| | Net loss attributable to common shareholders | $(2,943,439) | $(1,318,524) | | Weighted average shares | 9,099,382 | 4,920,534 | | Basic and diluted net loss per common share | $(0.32) | $(0.27) | [14. Stockholder's Equity](index=19&type=section&id=14.%20Stockholder's%20Equity) Total stockholders' equity decreased to $17,960,106 at March 31, 2019, from $18,751,118 at December 31, 2018, primarily due to the net loss and an adjustment for the adoption of ASC 842 Stockholders' Equity Changes | Equity Component | December 31, 2018 | March 31, 2019 | |:---|:---|:---| | Common Shares | 8,764,085 | 9,110,635 | | Common Stock Amount | $876 | $911 | | Additional Paid-in Capital | $45,888,872 | $48,228,617 | | Accumulated Deficit | $(27,138,630) | $(30,269,422) | | **Total Stockholders' Equity** | **$18,751,118** | **$17,960,106** | - Issued **338,212 shares** of common stock for **$2,080,004** in connection with the Craft Canning acquisition on January 11, 2019[100](index=100&type=chunk) - Issued **8,338 shares** of common stock to directors and employees for stock-based compensation of **$48,444** in March 2019[100](index=100&type=chunk) - Granted **146,262 common stock warrants** in connection with the Craft Canning acquisition, with an estimated fair value of **$133,537** at issuance[116](index=116&type=chunk) [15. Related Party Transactions](index=22&type=section&id=15.%20Related%20Party%20Transactions) The company engaged in various transactions with related parties, including its Executive Chairperson, Grover Wickersham, and Sandstrom Partners, involving purchases of units, warrant exercises, and payments for services - Grover Wickersham (Executive Chairperson) and his affiliates purchased units and exercised warrants in 2017 and 2018, totaling approximately **$250,000** in proceeds from unit sales and **$300,000** from warrant exercises[119](index=119&type=chunk)[120](index=120&type=chunk) - Paid Sandstrom Partners **$80,000** in cash during Q1 2019 for brand development services; previous transactions included cash, stock, and warrants[123](index=123&type=chunk) - The Grover T. Wickersham Employees' Profit Sharing Plan (PSP) and the Wickersham Trust purchased promissory notes from the company in 2017, with subsequent warrant exercises reducing outstanding principal[124](index=124&type=chunk)[125](index=125&type=chunk) [16. Subsequent Events](index=24&type=section&id=16.%20Subsequent%20Events) Between April 3, 2019, and May 10, 2019, the company issued 24,101 shares of common stock to employees for stock-based compensation valued at $160,000, and 1,077 shares for an employee option exercise - Issued **24,101 shares** of common stock to employees for stock-based compensation of **$160,000** between April 3, 2019, and May 10, 2019[129](index=129&type=chunk) - Issued **1,077 shares** on April 5, 2019, in connection with an employee option exercise[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results for the three months ended March 31, 2019, highlighting sales growth, increased investments, and a higher net loss [Business Overview](index=26&type=section&id=Business%20Overview) Eastside Distilling is a craft spirits producer focused on expanding its Pacific Northwest base and selectively entering new markets, driven by key brands and strategic acquisitions that enhance premium offerings and contract services - Company is an Oregon-based producer and marketer of craft spirits, founded in 2008, with products including bourbon, American whiskey, vodka, gin, and rum[134](index=134&type=chunk) - Growth strategy involves building on the Pacific Northwest base and expanding selectively to other markets using major spirits distributors[134](index=134&type=chunk) - Key brands include Redneck Riviera Whiskey (RRW), developed in collaboration with John Rich, which generated strong commercial progress in 2018[134](index=134&type=chunk) - Acquired **90%** of Big Bottom Distillery (BBD) in May 2017 (remaining **10%** in Dec 2018) for super-premium gins and whiskeys, and Craft Canning + Bottling in January 2019 to expand contract bottling, canning, and packaging services[136](index=136&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) The first quarter of 2019 saw a 161% increase in gross sales, driven by Redneck Riviera Whiskey, the Craft Canning acquisition, and increased Pacific Northwest wholesale sales, though a higher growth rate in expenses led to a $2.94 million net loss Sales Breakdown by Category | Sales Category | Q1 2019 Sales | Q1 2019 % of Total | Q1 2018 Sales | Q1 2018 % of Total | |:---|:---|:---|:---|:---| | Wholesale | $1,467,189 | 40% | $755,714 | 53% | | Private Label (Co-packing) | $1,993,591 | 54% | $351,658 | 24% | | Retail / Special Events | $224,921 | 6% | $305,810 | 23% | | **Total Sales** | **$3,685,700** | **100%** | **$1,413,182** | **100%** | - Gross sales increased by **161%** in Q1 2019 over Q1 2018, primarily due to Redneck Riviera Whiskey sales momentum, the Craft Canning acquisition, and increased Pacific Northwest wholesale sales[137](index=137&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - Gross margin decreased from **49%** in Q1 2018 to **34%** in Q1 2019, mainly due to changes in product and business mix, higher raw material costs, and increased facilities costs[145](index=145&type=chunk) - Net loss attributable to common shareholders increased to **$2,943,439** in Q1 2019 from **$1,319,117** in Q1 2018, driven by higher general and administrative expenses (up **121%**) and advertising, promotional, and selling expenses (up **107.4%**)[147](index=147&type=chunk)[150](index=150&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company's capital requirements primarily fund inventories, operating activities, and acquisitions, historically relying on debt and equity financings rather than operations - Primary capital requirements are for financing inventories, operating activities, and acquisitions[151](index=151&type=chunk) - Incurred a net loss of **$2.9 million** and had an accumulated deficit of **$30 million** as of March 31, 2019[152](index=152&type=chunk) - Had **$4.2 million** cash on hand and **$15.2 million** positive working capital at March 31, 2019[153](index=153&type=chunk) - Management believes current cash, receivables, inventory, and expected revenue will be sufficient for the next twelve months[153](index=153&type=chunk) [Operating Activities](index=28&type=section&id=Operating%20Activities) Cash used in operating activities increased to approximately $3.9 million for the three months ended March 31, 2019, from $2.5 million in the prior year, primarily due to a larger net loss and increases in inventory and trade receivables - Net cash used in operating activities was approximately **$3.9 million** in Q1 2019, up from **$2.5 million** in Q1 2018[154](index=154&type=chunk) - The increase in cash usage was attributed to a larger net loss, a **$0.4 million** increase in inventory, a **$0.2 million** increase in trade receivables, and a **$0.1 million** reduction in accounts payable and accrued liabilities in 2019[154](index=154&type=chunk) [Investing Activities](index=28&type=section&id=Investing%20Activities) Cash used in investing activities significantly increased to $2,555,944 for the three months ended March 31, 2019, from $343,722 in the prior year, largely due to the Craft Canning acquisition in January 2019 - Cash used in investing activities increased to **$2,555,944** in Q1 2019 from **$343,722** in Q1 2018[155](index=155&type=chunk) - The increase was primarily due to the Craft Canning acquisition in January 2019[155](index=155&type=chunk) [Financing Activities](index=29&type=section&id=Financing%20Activities) Net cash used in financing activities was $29,070 for the three months ended March 31, 2019, a significant decrease from $1,858,583 provided in the prior year, as operating losses were primarily funded by existing cash on hand - Net cash used in financing activities was **$(29,070)** in Q1 2019, compared to **$1,858,583** provided in Q1 2018[158](index=158&type=chunk) - Operating losses and working capital needs in Q1 2019 were primarily funded by existing cash on hand, with no additional capital raised from financing activities[158](index=158&type=chunk)[152](index=152&type=chunk) [Critical Accounting Policies](index=29&type=section&id=Critical%20Accounting%20Policies) The company's financial statements rely on significant estimates and judgments, with no material changes to critical accounting policies and estimates other than the adoption of new lease and share-based payment accounting standards - Financial statements require significant estimates and judgments, which are monitored for changes in facts and circumstances[159](index=159&type=chunk) - No significant changes to critical accounting policies and estimates, except for the adoption of Topic 842 (Leases) and Topic 718 (Improvements to Nonemployee Share-Based Payment Accounting)[160](index=160&type=chunk) [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no significant off-balance sheet arrangements that materially affect its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources - The company has no significant off-balance sheet arrangements[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Eastside Distilling, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a 'smaller reporting company,' the registrant is not required to provide information on quantitative and qualitative disclosures about market risk[162](index=162&type=chunk) [Item 4. Control and Procedures](index=29&type=section&id=Item%204.%20Control%20and%20Procedures) The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2019, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and concluded to be effective as of March 31, 2019[164](index=164&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended March 31, 2019[165](index=165&type=chunk) PART II—OTHER INFORMATION This section covers other information not included in the financial statements, such as legal proceedings, risk factors, equity sales, and subsequent events [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings, though it acknowledges the potential for ordinary course claims that could be time-consuming and expensive - The company is not currently subject to any material legal proceedings[168](index=168&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could materially affect the company's business, financial condition, results of operations, or cash flows, spanning business operations, industry-specific challenges, and factors related to the company's common stock [RISKS RELATING TO OUR BUSINESS](index=30&type=section&id=RISKS%20RELATING%20TO%20OUR%20BUSINESS) The company faces risks related to achieving widespread consumer acceptance for its brands, continued operating losses, and the need for additional capital, alongside challenges in supply chain, regulatory changes, and integrating acquisitions - Risk that brands may not achieve widespread consumer acceptance, limiting sales, growth, and profitability[170](index=170&type=chunk)[171](index=171&type=chunk) - Company has incurred significant operating losses since inception and anticipates continued losses due to investments in product development, sales, marketing, and administrative expenses[172](index=172&type=chunk)[173](index=173&type=chunk) - Dependence on a limited number of third-party suppliers for raw materials and independent wholesale distributors for product distribution, with potential negative impacts from performance failures or loss of relationships[177](index=177&type=chunk)[179](index=179&type=chunk) - Uncertain and evolving federal and state regulatory landscape regarding CBD products, posing risks to business operations and compliance costs[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Risks associated with expansion into non-alcoholic CBD beverages, including diversion of management attention, unanticipated liabilities, and the need for additional capital[191](index=191&type=chunk)[192](index=192&type=chunk) - Challenges in identifying and successfully acquiring additional brands, and potential difficulties in integrating acquired operations or realizing anticipated benefits[193](index=193&type=chunk)[195](index=195&type=chunk) - Success of the Redneck Riviera brand is dependent on the relationship with and popularity of John Rich; adverse publicity or loss of his services could negatively impact revenues and brand reputation[199](index=199&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Reliance on IT systems and networks, with risks of cyber-security breaches or failures impacting operations and data confidentiality[207](index=207&type=chunk)[208](index=208&type=chunk) - Dependence on key executive and employee talent, with risks from leadership changes (e.g., CEO transition) and difficulties in attracting or retaining qualified personnel[209](index=209&type=chunk)[210](index=210&type=chunk) [RISKS RELATED TO OUR INDUSTRY](index=36&type=section&id=RISKS%20RELATED%20TO%20OUR%20INDUSTRY) The company operates in a highly competitive global spirits industry, facing risks from shifting consumer preferences, potential declines in alcohol consumption, and the impact of marijuana legalization, alongside extensive government regulation and taxation - Demand for products may be adversely affected by changes in consumer preferences, demographic and social trends, public health initiatives, and economic conditions[215](index=215&type=chunk)[216](index=216&type=chunk) - Legalization of marijuana in jurisdictions where products are sold may lead to a reduction in alcohol sales and negatively affect profitability[219](index=219&type=chunk) - Faces substantial competition from large, well-funded international companies with greater resources and brand recognition[221](index=221&type=chunk) - Risk of class action or other litigation related to alcohol abuse, misuse, or advertising practices, which could be costly and harm the business[222](index=222&type=chunk)[223](index=223&type=chunk) - Subject to extensive government regulation and taxation (federal and state excise taxes); changes or increased stringency could limit business activities, increase costs, and reduce margins[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) - Potential for product liability claims, contamination of products, or counterfeit products, which could increase costs, harm reputation, and decrease sales[228](index=228&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Adverse public opinion about alcohol consumption could reduce demand for products[233](index=233&type=chunk) [RISKS RELATED TO OUR COMMON STOCK](index=38&type=section&id=RISKS%20RELATED%20TO%20OUR%20COMMON%20STOCK) Risks related to the company's common stock include its thinly traded nature, potential delisting from Nasdaq, the dilutive effect of outstanding warrants, and the influence of significant shareholder ownership - Common stock is thinly traded, leading to potential wide fluctuations in share price and difficulty for investors to sell shares[235](index=235&type=chunk)[236](index=236&type=chunk) - Failure to meet Nasdaq Capital Market's continued listing requirements could result in delisting, negatively affecting stock price and liquidity[238](index=238&type=chunk)[239](index=239&type=chunk) - Outstanding warrants (**1,229,697 shares**) may make it more difficult to raise additional equity capital[240](index=240&type=chunk) - A decline in common stock price could affect the ability to raise working capital and impact operations[241](index=241&type=chunk)[242](index=242&type=chunk) - No dividends are expected to be paid for the foreseeable future, as earnings will be used to finance operations[243](index=243&type=chunk) - Executive Chairperson Grover T. Wickersham owns approximately **5.1%** of outstanding common stock, potentially controlling stockholder voting outcomes[244](index=244&type=chunk) - Ability to issue additional common or preferred stock without stockholder approval could dilute existing investments and grant new securities senior rights[246](index=246&type=chunk)[247](index=247&type=chunk) - Compliance with Sarbanes-Oxley and related financial reporting standards increases costs and poses risks if internal controls become inadequate or fail to operate effectively[249](index=249&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2019, the company issued 338,212 shares of common stock and a warrant to purchase 146,262 shares as consideration for the acquisition of Craft Canning, with these securities offered and sold to accredited investors under registration exemptions - Issued **338,212 shares** of common stock as consideration for the acquisition of Craft Canning on January 11, 2019[251](index=251&type=chunk) - Issued a warrant to purchase **146,262 shares** of common stock at **$7.80 per share** with a three-year exercise period, subject to a consulting agreement[251](index=251&type=chunk) - Securities were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) or Rule 506(b) of Regulation D to 'accredited investors'[252](index=252&type=chunk)[254](index=254&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities[255](index=255&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[256](index=256&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) Effective May 10, 2019, Grover Wickersham transitioned from CEO to Executive Chairperson, and Steven Shum, the CFO, was appointed Interim CEO, with Mr. Wickersham providing business development, product development, and finance strategy services - Grover Wickersham transitioned from Chief Executive Officer to Executive Chairperson, effective May 10, 2019[257](index=257&type=chunk) - Steven Shum, Chief Financial Officer, was appointed Interim Chief Executive Officer[258](index=258&type=chunk) - As Executive Chairperson, Mr. Wickersham will provide business development, product development, and finance strategies, receiving an annual Board fee of **$185,000**[257](index=257&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, merger agreements, and certifications - Includes Amended and Restated Articles of Incorporation, Articles of Merger, Certificate of Designation – Series A Preferred Stock, and various amendments[260](index=260&type=chunk) - Lists the Agreement and Plan of Merger for Craft Canning LLC and the Executive Chairperson Agreement for Grover Wickersham[260](index=260&type=chunk) - Includes Certifications of Interim Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350[260](index=260&type=chunk) SIGNATURES The report is duly signed on behalf of Eastside Distilling, Inc. by Steve Shum, Chief Financial Officer, who also serves as Interim Principal Executive Officer and Principal Financial and Accounting Officer, as of May 13, 2019 - The report is signed by Steve Shum, Chief Financial Officer, Interim Principal Executive Officer, and Principal Financial and Accounting Officer[266](index=266&type=chunk) - Signature date: May 13, 2019[266](index=266&type=chunk)