Eastside Distilling, Inc. (NASDAQ:EAST) Q2 2020 Earnings Conference Call August 14, 2020 4:30 PM ET Company Participants Robert Blum - Lytham Partners Paul Block - Chief Executive Officer Geoffrey Gwin - Chief Financial Officer Conference Call Participants David Bain - ROTH Capital Harold Weber - Aegis Capital Operator Good afternoon, and welcome to the Eastside Distilling Reports Second Quarter Fiscal Year 2020 Financial Results Conference Call. [Operator Instructions] Please note this event is being recor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 EASTSIDE DISTILLING, INC. (Exact name of registrant as specified in its charter) 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 June 30, 2020 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SEC ...

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 ...