As filed with the U.S. Securities and Exchange Commission on August 3 , 2017.

Registration No. 333-215848

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

AMENDMENT NO. 5 TO

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

EUROCAN HOLDINGS LTD.

EASTSIDE DISTILLING, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or Other Jurisdiction of Incorporation or Organization)

7310

(Primary Standard Industrial Classification Code Number)2150 SE Hanna Harvester Drive

Portland, Oregon 97222

20-3937596(971) 888-4264

(I.R.S. Employer Identification No.)

1 Union Square West, Suite 610

New York, NY 10003

212 419 4924

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)place of business)

Laughlin International

2533 Carson Street

Carson City, Nevada 89706Grover T. Wickersham

775.883.8484Chief Executive Officer

Eastside Distilling, Inc.

2150 SE Hanna Harvester Drive

Portland, Oregon 97222

(971) 888-4264

(Name, address, including zip code and telephone number, including area code, of agent for service)

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, pleaseas amended (the “Securities Act”), check the following box: [X]box. [  ]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Securities Exchange Act. (Check one):Act of 1934 (the “Exchange Act”).

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 pursuant to Section 7(a)(2)(B) of the Securities Act. [  ]

CALCULATION OF REGISTRATION FEE

(1) Based on the price our common stock was most recently sold to the selling stockholders.

(2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act and based upon 5,000,000 shares of common stock to be sold in this offering.

The registrantRegistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrantRegistrant shall file a further amendment whichthat specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, of 1933 or until thisthe registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Preliminary Prospectus

Subject to completion

EUROCAN HOLDINGS LTD.

5,000,000 Shares of Common Stock

This prospectus relates to the resale of up to 5,000,000 shares of the common stock of Eurocan Holdings Ltd., a Nevada corporation, that may be resold by the selling stockholders named in this prospectus.

There is presently no public market for our common stock. We will be making an application for quotation of our common stock on the OTCBB and the OTC Markets Group OTCQB upon effectiveness of the registration statement of which this prospectus forms a part. There is no assurance, however, that our shares will be quoted or, if quoted, that a public market will materialize.

The offered shares of our common stock were issued to the selling stockholders in transactions that were exempt from registration under sections 4(2) of the Securities Act of 1933, and Regulation S promulgated thereunder. The selling stockholders have advised us that they will sell the shares of common stock from time to time in the open market, in privately negotiated transactions or a combination of these methods, at market prices prevailing at the time of sale, at prices related to the prevailing market prices or at negotiated prices. We have not made any arrangements for the sale of common stock by the selling stockholders. We will not receive any proceeds from this offering, although we have received consideration from the sale of shares of common stock that are presently outstanding. We will pay the expenses of registering the offered shares.

Prospective investors should rely only on the information contained in this prospectus and any prospectus supplement or amendment thereto. We have not authorized anyone to provide investors with different information. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus is only accurate on the date of this prospectus, regardless of the time of any sale of securities.

An investment in our stock is extremely speculative and involves several significant risks. Prospective investors are cautioned not to invest unless they can afford to lose their entire investment. We urge all prospective investors to read the “Risk Factors” section of this prospectus beginning on page 4

and the rest of this prospectus before making an investment decision.

We have suffered recurring losses and net cash outflows from operations since inception. When our cash flows from operations have been insufficient, our activities have been financed from the proceeds of share subscriptions and loans from management and non-affiliated third parties. We expect to continue to incur substantial losses to implement our business plan. We have not established any source of equity or debt financing and there can be no assurance that we will be able to obtain sufficient funds to implement our business plan. As a result of the foregoing, our auditors have expressed substantial doubt about our ability to continue as a going concern in our financial statements for the year ended December 31, 2010. If we cannot continue as a going concern, then investors may lose all of their investment.

The information in thispreliminary prospectus is not complete and may be changed. This prospectus is included in aThese securities may not be sold until the registration statement that was filed by Eurocan Holdings Ltd. with the Securities and Exchange Commission. The selling stockholders may not sell these securities until the registration statement becomesCommission is effective. This preliminary prospectus is not an offer to sell these securities and iswe are not soliciting an offer to buy these securities in any statejurisdiction where the offer or sale is not permitted.

Preliminary Prospectus

SUBJECT TO COMPLETION, DATED

August 3, 2017

1,200,000 Units

Each unit consisting of one share of common stock and one warrant to purchase
one-half share of common stock

This is a firm commitment public offering of 1,200,000 units, each unit consisting of one share of our common stock and one warrant, for a total of 1,200,000 shares of our common stock and 1,200,000 warrants to purchase up to an aggregate 600,000 shares of our common stock. Each share of our common stock is being sold together with a warrant to purchase one-half of a share of our common stock. Two warrants together are exercisable to purchase one share of common stock at an exercise price of $ per share (120% of the public offering price of the unit). The warrants will be exercisable at any time from the date of issuance through thefifth anniversary of the date of this prospectus, unless earlier redeemed.Beginning 90 days after the date of this prospectus, the warrants will be redeemable at our option, in whole or in part, at a redemption price equal to$0.15per warrant upon 30 days’ prior written notice, at any time after the date on which the closing price of our common stock has equaled or exceeded $ per share (170% of the public offering price of the units) for at least five consecutive trading days.The shares of our common stock and the warrants are immediately separable and will be issued and tradeable separately, but will be purchased together as a unit in this offering.

Our common stock is currently quoted on the OTC Markets (QB Marketplace Tier) under the symbol “ESDI.” On July 19, 2017, the reported closing sale price of our common stock on the OTC Markets was $6.19 per share. Prior to this offering, there has been no public market for our warrants on the OTC Markets or any other trading market. We have applied to list our common stock and warrants on the NASDAQ Capital Market under the symbols “ESDI” and “ESDIW,” respectively.

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act and will be subject to reduced public company reporting requirements. See “Prospectus Summary – Implications of Being an Emerging Growth Company” on page 5 of this prospectus.

Investing in our common stock involves a high degree of risk. Please read “Risk Factors” beginning on page 8 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We refer you to “Underwriting” beginning on page 74 of this prospectus for additional information regarding total underwriting compensation.

We have granted the underwriters an option to purchase up to an additional 180,000 units at the public offering price less the underwriting discount.

Delivery of the units will be made on or about                , 2017.

Joint Book-Running Managers

The date of this prospectus is               November 10, 2011., 2017.

Table of Contents 

TABLE OF CONTENTS

We have not authorized anyone to provide you with any information or to make any representation, other than those contained in this prospectus or any free writing prospectus we have prepared. We take no responsibility for, and provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby, but only in circumstances and in jurisdictions where it is lawful to so do. The information contained in this prospectus is accurate only as of its date, regardless of the time of delivery of this prospectus or of any sale of our units.

Neither we nor any of the underwriters have done anything that would permit this offering, or possession or distribution of this prospectus, in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourself about, and to observe any restrictions relating to, this offering and the distribution of this prospectus.

This prospectus contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the^®or ™ symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Prospectus Summary

The following summary is not complete and does not contain all of the information that may be important to prospective investors. Each prospective investor is urged to read this prospectus in its entirety before making an investment decision to purchase our common stock.

As used in this prospectus, unless the context otherwise requires, “the Company”, “we”, “us”, “our” or “Eurocan” refers to Eurocan Holdings Ltd. “SEC” refers to the Securities and Exchange Commission. “Securities Act” refers to the Securities Act of 1933, as amended. “Exchange Act” refers to the Securities Exchange Act of 1934, as amended. “NRS” refer to the Nevada Revised Statutes, as amended.

Our Business

Eurocan Holdings, Ltd. is an online marketing and media solutions firm specializing in digital interactive media. Digital interactive media refers to products and services on digital computer-based systems that respond to the user’s actions by presenting content such as text, graphics, animation, video and audio, and includes the internet, social media, mobile communications and digital interactive signage. Our cash flows from operations and our available capital will be sufficient to maintain our current level of operations for the next 12 months, but we will require a minimum of $500,000 to expand and market our business.

There is no assurance that we will be able to obtain financing on terms satisfactory to us, or at all, and we do not have any arrangements in place for any future financing. Our ability to obtain financing may be impaired by such factors as the capital markets, both generally and specifically in the advertising industry, and the fact that we have not generally been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities together with our revenue from operations is not sufficient to satisfy our capital needs, we may be required to curtail, suspend or discontinue some or all of our operations, and investors could lose some or all of their investment.

All of our operations are conducted through our wholly-owned subsidiary, Michael Williams Web Design Inc. We have no employees other than our officers. Our subsidiary has four full-time employees and five full-time subcontractors. We plan to hire more employees through our subsidiary as we implement our business plan and as may be required.

Our principal executive office is located at 1 Union Square West, Suite 610, New York, NY 10003. Our telephone number is (212) 419-4924. Our facsimile number is (866) 602-2458.

Our auditors have expressed substantial doubt about our ability to continue as a going concern. If we cannot continue as a going concern, then our stockholders may lose all of their investment.

Please carefully read both this prospectus and any prospectus supplement together with the additional information described below under the section entitled “Available Information”.

The Offering

This offering relates to the sale of common stock by stockholders of Eurocan (see “Selling Stockholders”).

RISK FACTORS

Any investment

Investing in our companycommon stock involves a high degreenumber of risk. Therisks. You should not invest unless you are able to bear the complete loss of your investment. In addition to the risks and investment considerations discussed elsewhere in this prospectus, the following risk factors should be carefully considered in additionby anyone purchasing the securities offered by this prospectus. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to the other information in this prospectus when evaluating an investment inus or that we currently deem immaterial also may impair our common stock.business operations. If any of the following risks actually occur, our business operating results and financial condition could be seriously harmedharmed. In such case, the trading price of our common stock and our stockholderswarrants could decline, and investors could lose all or a part of their investment. This discussion also identifies important cautionary factors that could causethe money paid to buy our actual results to differ materially from those we currently anticipate.units.

(1)RISKS RELATING TO OUR BUSINESS                Investing in our shares is a highly speculative investment and could result in the entire loss of our stockholders’ investment.

A purchase of the offered shares is highly speculative and involves significant risks. The offered shares should not be purchased by any person who cannot afford the loss of their entire investment. Our business objectives are also speculative and unproven, and it is possible that we could be unable to satisfy them. Our stockholders may be unable to realize a substantial return on their purchase of the offered shares, or any return whatsoever, and may lose their entire investment. For this reason, each prospective purchaser of the offered shares should read this prospectus and all of its exhibits carefully and consult with their attorney, business and/or investment advisor before determining if the offered shares are a suitable investment.

(2)If our brands do not achieve more widespread consumer acceptance, our growth may be limited.

Although our brands have achieved acceptance in the Pacific Northwest, most of our brands are relatively new and have not achieved extensive national brand recognition. Also, brands we may develop and/or acquire in the future are unlikely to establish widespread brand recognition. Accordingly, if consumers do not accept our brands, we will not be able to penetrate our markets and our growth may be limited.

We have incurred significant operating losses every quarter since our inception and anticipate that we will continue to incur significant operating losses in the future.

We believe that we will continue to incur net losses for the foreseeable future as we expect to make continued significant investment in product development and sales and marketing and to incur significant administrative expenses as we seek to grow our brands. We also anticipate that our cash needs will exceed our income from sales for the foreseeable future. Some of our products may never achieve widespread market acceptance and may not generate sales and profits to justify our investment therein. Also, we may find that our expansion plans are more costly than we anticipate and that they do not ultimately result in commensurate increases in our sales, which would further increase our losses. We expect we will continue to experience losses and negative cash flow, some of which could be significant. Results of operations will depend upon numerous factors, some of which are beyond our control, including market acceptance of our products, new product introductions and competition. We also incur substantial operating expenses at the corporate level, including costs directly related to being a reporting company with the U.S. Securities and Exchange Commission (the “SEC”). For the year ended December 31, 2016 and the three months ended March 31, 2017, we reported a net loss of $5.2 million and $0.9 million, respectively. As of March 31, 2017, we had an accumulated deficit since inception of $13.7 million.

We may require additional capital, which we may not be able to obtain on acceptable terms. Our independent auditorsinability to raise such capital, as needed, on beneficial terms or at all could restrict our future growth and severely limit our operations.

We have expressed substantial doubt aboutlimited capital compared to other companies in our industry. This may limit our operations and growth, including our ability to continue as a going concern, which may hinderto develop new and existing brands, service our ability to obtain future financing.

In their audit report with regard to our financial statements asdebt obligations, maintain adequate inventory levels, fund potential acquisitions of December 31, 2010 and for the period from inception through December 31, 2010, our independent registered public accountants have expressed an opinion that substantial doubt exists as to whether we can continue as a going concern. Our ability to continue as a going concern is an issue raised as a result of recurring losses from operations and working capital deficiency. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities. Our continued net operating losses increase the difficulty in meeting such goals and there can be no assurances that such funding methods will prove successful.

(3)                Since we have a limited operating history, we face a high risk of business failure which could result in a loss of your entire investment.

We commenced operations with the acquisition of Michael Williams Web Design Inc. in 2004. As a result, we have only a limited operating history upon which investors can evaluate our business and prospects. We have experienced a decline in revenue in recent periods, which may continue. We will encounter risks and difficulties frequently encountered by early-stage companies in rapidly evolving industries, such as the Internet advertising industry. Some of these risks include the need to:

•new brands, penetrate new markets, attract new advertiser clientscustomers and maintain current advertiser relationships;

•         offer competitive pricing;

•         maintain and expand our network of advertising space through which we deliver online advertising programs;

•         achieve advertising campaign results that meet our clients’ objectives;

•         continue to develop and upgrade the technologies that enable us to provide online marketing services;

•         respond to evolving government regulations relating to the Internet, privacy, direct marketing, and other aspects of our business;

•         identify, attract, retain and motivate qualified personnel;

•         successfully implement our business model;

•         manage our expanding operations; and

•         develop our brand and build trust with our clients.

enter into new distribution relationships. If we do not successfully addressgenerate sufficient cash from operations to finance additional capital needs, we will need to raise additional funds through private or public equity and/or debt financing. We cannot assure you that, if and when needed, additional financing will be available to us on acceptable terms or at all. If additional capital is needed and either unavailable or cost prohibitive, our operations and growth may be limited as we may need to change our business strategy to slow the rate of, or eliminate, our expansion or reduce or curtail our operations. Also, any additional financing we undertake could impose covenants upon us that restrict our operating flexibility, and, if we issue equity securities to raise capital our existing stockholders may experience dilution and the new securities may have rights, preferences and privileges senior to those of our common stock.

We depend on a limited number of suppliers. Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could cause us to lose sales, incur additional costs and lose credibility in the marketplace.

We depend on a limited number of third-party suppliers for the sourcing of the raw materials for all of our products, including our distillate products and other ingredients. These suppliers consist of third-party producers in the U.S. We do not have long-term written agreements with any of our suppliers. The termination of our relationships or an adverse change in the terms of these risks, itarrangements could have a negative impact on our business. If our suppliers increase their prices, we may not be able to secure alternative suppliers, and may not be able to raise the prices of our products to cover all or even a portion of the increased costs. Also, our suppliers’ failure to perform satisfactorily or handle increased orders, delays in shipments of products from suppliers or the loss of our existing suppliers, especially our key suppliers, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues. In turn, this could cause us to lose credibility in the marketplace and damage our relationships with distributors, ultimately leading to a decline in our business and results of operations. If we are not able to renegotiate these contracts on acceptable terms or find suitable alternatives, our business could be negatively impacted.

We depend on our independent wholesale distributors to distribute our products. The failure or inability of even a few of our distributors to adequately distribute our products within their territories could harm our sales and result in a decline in our results of operations.

We are required by law to use state-licensed distributors or, in 18 states known as “control states,” state-owned agencies performing this function, to sell our products to retail outlets, including liquor stores, bars, restaurants and national chains in the U.S. We have established relationships for our brands with a limited number of wholesale distributors; however, failure to maintain those relationships could significantly and adversely affect our business, sales and growth. We currently distribute our products in 22 states – Oregon, Washington, California, Florida, Nevada, Texas, Virginia, Indiana, Illinois, New York, New Jersey, Massachusetts, Connecticut, Minnesota, Georgia, Pennsylvania, Rhode Island, New Hampshire, Maine, Vermont, Idaho and Maryland. Over the past decade there has been increasing consolidation, both intrastate and interstate, among distributors. As a result, many states now have only two or three significant distributors. Also, there are several distributors that now control distribution for several states. If we fail to maintain good relations with a distributor, our products could in some instances be frozen out of one or more markets entirely. The ultimate success of our products also depends in large part on our distributors’ ability and desire to distribute our products to our desired U.S. target markets, as we rely significantly on them for product placement and retail store penetration. In addition, all of our distributors also distribute competitive brands and product lines. We cannot assure you that our U.S. alcohol distributors will continue to purchase our products, commit sufficient time and resources to promote and market our brands and product lines or that they can or will sell them to our desired or targeted markets. If they do not, our sales will be harmed, resulting in a decline in our results of operations.

We rely on a few key distributors, and the loss of any one key distributor would substantially reduce our revenues.

We currently derive a significant amount of our revenues from a few major distributors. A significant decrease in business from or loss of any of our major distributors could harm our financial condition by causing a significant decline in revenues attributable to such distributors. For the years ended December 31, 2016 and 2015, sales to one distributor (Oregon Liquor Control Commission) accounted for 32% and 32% of revenues, respectively. While we believe our relationships with our major distributors are good, we do not have long-term contracts with any of them and purchases generally occur on an order-by-order basis. If we experience a significant decrease in sales to any of our revenuemajor distributors, and are unable to replace such sales volume with orders from other customers, our sales may decrease which would have a material adverse financial effect on our results of operations and financial condition.

The sales of our products could decrease significantly if we cannot secure and maintain listings in the control states.

In the control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products selected for listing in control states must generally reach certain volumes and/or profit levels to maintain their listings. Products in control states are selected for purchase and sale through listing procedures which are generally made available to new products only at periodically scheduled listing interviews. Products not selected for listings can only be purchased by consumers in the applicable control state through special orders, if at all. If, in the future, we are unable to maintain our current listings in the control states, or secure and maintain listings in those states for any additional products we may develop or acquire, sales of our products could decrease significantly which would have a material adverse financial effect on our results of operations and financial condition.

We must maintain a relatively large inventory of our products to support customer delivery requirements, and if this inventory is lost due to theft, fire or other damage or becomes obsolete, our results of operations would be negatively impacted.

We must maintain relatively large inventories of our products to meet customer delivery requirements. We are always at risk of loss of that inventory due to theft, fire or other damage, and any such loss, whether insured against or not, could cause us to fail to meet our orders and harm our sales and operating results. Also, our inventory may become obsolete as we introduce new products, cease to produce old products or modify the design of our products’ packaging, which would increase our operating losses and negatively affectimpact our ability to generate income.results of operations.

(4)If we are unable to obtainidentify and successfully acquire additional financing,brands that are complementary to our business operationsexisting portfolio, our growth will be harmed.limited, and, even if additional brands are acquired, we may not realize anticipated benefits due to integration difficulties or other operating issues.

(4)A component of our growth strategy may be the acquisition of additional brands that are complementary to our existing portfolio through acquisitions of such brands or their corporate owners, directly or through mergers, joint ventures, long-term exclusive distribution arrangements and/or other strategic relationships. For example, in May 2017, we acquired 90% of the ownership of BBD for its excellent, award winning range of super premium gins and whiskeys, and we acquired MotherLode in March 2017, which provides contract bottling and packaging services for existing and emerging spirits producers, some of whom contract with us to blend or distill spirits. If we are unable to identify suitable brand candidates and successfully execute our acquisition strategy, our growth will be limited. Also, even if we are successful in acquiring additional brands, we may not be able to achieve or maintain profitability levels that justify our investment in, or realize operating and economic efficiencies or other planned benefits with respect to, those additional brands. The addition of new products or businesses entails numerous risks with respect to integration and other operating issues, any of which could have a detrimental effect on our results of operations and/or the value of our equity. These risks include:

Our ability to grow through the acquisition of additional brands will also be dependent upon the availability of capital to complete the necessary acquisition arrangements. We intend to finance our brand acquisitions through a combination of our available cash resources, third party financing and, in appropriate circumstances, the further issuance of equity and/or debt securities. Acquiring additional brands could have a significant effect on our financial position, and could cause substantial fluctuations in our quarterly and yearly operating results. Also, acquisitions could result in the recording of significant goodwill and intangible assets on our financial statements, the amortization or impairment of which would reduce reported earnings in subsequent years.

Our failure to protect our trademarks and trade secrets could compromise our competitive position and decrease the value of our brand portfolio.

Our business and prospects depend in part on our ability to develop favorable consumer recognition of our brands and trademarks. Although we apply for registration of our brands and trademarks, they could be imitated in ways that we cannot prevent. Also, we rely on trade secrets and proprietary know-how, concepts and formulas. Our methods of protecting this information may not be adequate. Moreover, we may face claims of misappropriation or infringement of third parties’ rights that could interfere with our use of this information. Defending these claims may be costly and, if unsuccessful, may prevent us from continuing to use this proprietary information in the future and result in a judgment or monetary damages being levied against us. We do not maintain non-competition agreements with all of our key personnel or with some of our key suppliers. If competitors independently develop or otherwise obtain additional financing,access to our trade secrets, proprietary know-how or recipes, the appeal, and thus the value, of our brand portfolio could be reduced, negatively impacting our sales and growth potential.

A failure of one or more of our key information technology systems, networks, processes, associated sites or service providers could have a material adverse impact on our business.

We rely on information technology (IT) systems, networks, and services, including internet sites, data hosting and processing facilities and tools, hardware (including laptops and mobile devices), software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist us in the management of our business. The various uses of these IT systems, networks and services include, but are not limited to: hosting our internal network and communication systems; ordering and managing materials from suppliers; supply/demand planning; production; shipping product to customers; hosting our branded websites and marketing products to consumers; collecting and storing customer, consumer, employee, investor, and other data; processing transactions; summarizing and reporting results of operations; hosting, processing, and sharing confidential and proprietary research, business plans, and financial information; complying with regulatory, legal or tax requirements; providing data security; and handling other processes necessary to manage our business.

Increased IT security threats and more sophisticated cyber-crime pose a potential risk to the security of our IT systems, networks, and services, as well as the confidentiality, availability, and integrity of our data. If the IT systems, networks, or service providers we rely upon fail to function properly, or if we suffer a loss or disclosure of business or other sensitive information, due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively address these failures on a timely basis, we may suffer interruptions in our ability to manage operations and reputational, competitive and/or business harm, which may adversely affect our business operations will be harmed.

We anticipate that a minimumand/or financial condition. In addition, such events could result in unauthorized disclosure of $500,000 willmaterial confidential information, and we may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to us or to our partners, our employees, customers, suppliers or consumers. In any of these events, we could also be required to expandspend significant financial and other resources to remedy the breadthdamage caused by a security breach or to repair or replace networks and scope of our business (see “Expansion of Business”) and implement our sales and marketing strategy (see “Marketing Strategy”) over the next twelve months. We plan to obtain the financing needed to expand and market our business from a combination of capital sources and means, including debt and equity financings. It is possible that additional capital will be required to effectively support the operations and to otherwise implement our overall business strategy. There is no assurance that we will be able to obtain needed financing on terms satisfactory to us, or at all, and we do not have any arrangements in place for any future financing. Our ability to obtain financing may be impaired by such factors as the capital markets, both generally and specifically in the advertising industry, and the fact that we have not generally been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities together with our revenue from operations is not sufficient to satisfy our capital needs, we may be required to curtail, suspend or discontinue some or all of our operations, and investors could lose some or all of their investment.

IT systems.

(5)                If we lose the services ofOur failure to attract or retain key executive or employee talent could adversely affect our Chief Executive Officer, our ability to successfully implement our business plan will be substantially impaired.business.

Our success depends onupon the contributionsefforts and abilities of Mr. Michael Williams, our Chief Executive Officer. If we lose his services, or if he is only able to devotesenior management team, other key employees, and a small portion of his time to our operations, we could be delayed in or precluded from achieving our business objectives and implementing our business plan. We do not maintain “key man” insurance on Mr. Williams. The loss of Mr. Williams could impair our ability to successfully execute our business strategy because we substantially rely on his experience and management skills.

(6)                If we are unable to attract and retain additional skilled personnel, our ability to develop our business and attract customers may be significantly impaired.

We believe thathigh-quality employee base, as well as our ability to attract, train, motivate, reward, and retain additional highly skilled technical, managerialthem. In particular, we rely on the skills and sales personnel, particularly inexpertise of our Master Distiller, Melissa Heim, whom we believe is the areasfirst female commercial master distiller and blender west of technology development,the Mississippi River, and her knowledge of our business intelligence, management, service development and build out, integration and technical support, is essentialindustry would be difficult to replace. If Ms. Heim or one of our future success. Our business requires individuals withexecutive officers or significant levels of expertise in business operations, information technology, computer system networking and multi-media. Competition for such personnel is intense, and qualified technical personnel are likely to remain a limited resource for the foreseeable future. Also,employees terminates her or his employment, we have limited cash resources to hire such personnel. Locating candidates with the appropriate qualifications, particularly in the desired geographic location, can be costly and difficult. We may not be able to hirereplace their expertise, fully integrate new personnel or replicate the necessary personnel to implementprior working relationships, and the loss of their services might significantly delay or prevent the achievement of our business strategy, orobjectives. Qualified individuals with the breadth of skills and experience in our industry that we require are in high demand, and we may need to provide higher compensation to such personnel than we currently anticipate. If we failincur significant costs to attract them. We do not maintain and retain sufficient numbersdo not intend to obtain key man insurance on the life of highly skilledany executive or employee. Difficulties in hiring or retaining key executive or employee talent, or the unexpected loss of experienced employees could have an adverse impact our business performance. In addition, we could experience business disruption and/or increased costs related to organizational changes, reductions in workforce, or other cost-cutting measures.

Management turnover may create uncertainties and could harm our business.

We have recently experienced significant changes in our executive leadership. Specifically, Stephen Earles resigned as Chief Executive Officer in November 2016 and resigned as President and from our Board of Directors in January 2017. Changes to strategic or operating goals, which can often times occur with the appointment of new executives, can create uncertainty, may negatively impact our ability to provideexecute quickly and effectively, and may ultimately be unsuccessful. In addition, executive leadership transition periods are often difficult as the necessary technologiesnew executives gain detailed knowledge of our operations, and services may be limited,friction can result from changes in strategy and as a result,management style. Management turnover inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution. Until we integrate new personnel, and unless they are able to succeed in their positions, we may be unable to attract customerssuccessfully manage and grow our business. Our abilitybusiness, and our financial condition and profitability may suffer.

Further, to attract such personnel will also depend onthe extent we experience additional management turnover, competition for top management is high and it may take months to find a candidate that meets our ability to raise additional financing, of which there can be no assurance.requirements. If we are unable to attract and retain qualified management personnel, our business may fail and our investors could lose their investment.suffer.

(7)If we fail to manage growth effectively or prepare for product scalability, it could have an adverse effect on our employee efficiency, product quality, working capital levels and results of operations.

Any significant growth in the market for our products or our entry into new markets may require an expansion of our employee base for managerial, operational, financial, and other purposes. During any period of growth, we may face problems related to our operational and financial systems and controls, including quality control and delivery and service capacities. We would also need to continue to expand, train and manage our employee base. Continued future growth will impose significant added responsibilities upon the members of management to identify, recruit, maintain, integrate, and motivate new employees.

Aside from increased difficulties in the management of human resources, we may also encounter working capital issues, as we will need increased liquidity to finance the marketing of the products we sell, and the hiring of additional employees. For effective growth management, we will be required to continue improving our operations, management, and financial systems and controls. Our failure to manage growth effectively may lead to operational and financial inefficiencies that will have a negative effect on our profitability. We cannot assure investors that we will be able to timely and effectively meet that demand and maintain the quality standards required by our existing and potential customers.

RISKS RELATED TO OUR INDUSTRY

Demand for our products may be adversely affected by many factors, including changes in consumer preferences and trends.

Consumer preferences may shift due to a variety of factors including changes in demographic and social trends, public health initiatives, product innovations, changes in vacation or leisure, dining and beverage consumption patterns and a downturn in economic conditions, which may reduce consumers’ willingness to purchase distilled spirits or cause a shift in consumer preferences toward beer, wine or non-alcoholic beverages. Our success depends in part on fulfilling available opportunities to meet consumer needs and anticipating changes in consumer preferences with successful new products and product innovations.

A limited or general decline in consumption in one or more of our product categories could occur in the future due to a variety of factors, including:

●a general decline in economic or geopolitical conditions;

●concern about the health consequences of consuming beverage alcohol products and about drinking and driving;

●a general decline in the consumption of beverage alcohol products in on-premise establishments, such as may result from smoking bans and stricter laws relating to driving while under the influence of alcohol;

●consumer dietary preferences favoring lighter, lower calorie beverages such as diet soft drinks, sports drinks and water products;

●increased federal, state, provincial and foreign excise or other taxes on beverage alcohol products and possible restrictions on beverage alcohol advertising and marketing;

●increased regulation placing restrictions on the purchase or consumption of beverage alcohol products or increasing prices due to the imposition of duties or excise tax;

●inflation; and

●wars, pandemics, weather and natural or man-made disasters.

In addition, our continued success depends, in part, on our ability to develop new products to meet consumer needs and anticipate changes in consumer preferences. The launch and ongoing success of new products are inherently uncertain especially with regard to their appeal to consumers. The launch of a new product can give rise to a variety of costs and an unsuccessful launch, among other things, can affect consumer perception of existing brands and our reputation. Unsuccessful implementation or short-lived popularity of our product innovations may result in inventory write-offs and other costs.

We face substantial competition in our industry and many factors may prevent us from competing successfully.

We compete on the basis of product taste and quality, brand image, price, service and ability to innovate in response to consumer preferences. The global spirits industry is highly competitive and is dominated by several large, well-funded international companies. Many of our current and potential competitors have longer operating histories and have substantially greater financial, sales, marketing and other resources than we do, as well as larger installed customer bases, greater name recognition and broader product offerings. Some of these competitors can devote greater resources to the development, promotion, sale and support of their products. As a result, it is possible that our competitors may either respond to industry conditions or consumer trends more rapidly or effectively or resort to price competition to sustain market share, which could adversely affect our sales and profitability.

In addition, the legalization of marijuana in any of the jurisdictions in which we sell our products may result in a reduction in sales. Studies have shown that sales of alcohol may decrease modestly in jurisdictions where marijuana has been legalized (Colorado, Washington and Oregon). As a result, marijuana sales may adversely affect our sales and profitability.

Adverse public opinion about alcohol could reduce demand for our products.

Anti-alcohol groups have, in the past, advocated successfully for more stringent labeling requirements, higher taxes and other regulations designed to discourage alcohol consumption. In addition, recent developments in the industry may compel us to identify the source and location of our distillate products, and notify the consumer of whether the product was distilled by us. More restrictive regulations, negative publicity regarding alcohol consumption and/or changes in consumer perceptions of the relative healthfulness or safety of beverage alcohol could decrease sales and consumption of alcohol and thus the demand for our products. This could, in turn, significantly decrease both our revenues and our revenue growth, causing a decline in our results of operations.

Class action or other litigation relating to alcohol abuse or the misuse of alcohol could adversely affect our business.

Our industry faces the possibility of class action or similar litigation alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems, or related to the labelling of our products. It is also possible that governments could assert that the use of alcohol has significantly increased government funded health care costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type.

Also, lawsuits have been brought in a number of states alleging that beverage alcohol manufacturers and marketers have improperly targeted underage consumers in their advertising. Plaintiffs in these cases allege that the defendants’ advertisements, marketing and promotions violate the consumer protection or deceptive trade practices statutes in each of these states and seek repayment of the family funds expended by the underage consumers. While we have not been named in these lawsuits, we could be named in similar lawsuits in the future. Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed significantly.

Regulatory decisions and legal, regulatory and tax changes could limit our business activities, increase our operating costs and reduce our margins.

Our business is subject to extensive government regulation. This may include regulations regarding production, distribution, marketing, advertising and labeling of beverage alcohol products. We are required to comply with these regulations and to maintain various permits and licenses. We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute and sell beverage alcohol products. We cannot assure you that these and other governmental regulations applicable to our industry will not change or become more stringent. Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict when and to what extent liability may arise. Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage drinking, alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions or limits on advertising or other marketing activities promoting beverage alcohol products. Failure to comply with any of the current or future regulations and requirements relating to our industry and products could result in monetary penalties, suspension or even revocation of our licenses and permits. Costs of compliance with changes in regulations could be significant and could harm our business, as we could find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our sales and profit potential.

Also, the distribution of beverage alcohol products is subject to extensive taxation (at both the federal and state government levels), and beverage alcohol products themselves are the subject of national import and excise duties in most countries around the world. An increase in taxation or in import or excise duties could also significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol.

We could face product liability or other related liabilities that increase our costs of operations and harm our reputation.

Although we maintain liability insurance and will attempt to limit contractually our liability for damages arising from our products, these measures may not be sufficient for us to successfully avoid or limit liability. Our product liability insurance coverage is limited to $1 million per occurrence and $5 million in the aggregate and our general liability umbrella policy is capped at $15 million. Further, any contractual indemnification and insurance coverage we have from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers. In any event, extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation.

Contamination of our products and/or counterfeit or confusingly similar products could harm the image and integrity of, or decrease customer support for, our brands and decrease our sales.

The success of our brands depends upon the positive image that consumers have of them. Contamination, whether arising accidentally or through deliberate third-party action, or other events that harm the integrity or consumer support for our brands, could affect the demand for our products. Contaminants in raw materials purchased from third parties and used in the production of our products or defects in the distillation and fermentation processes could lead to low beverage quality as well as illness among, or injury to, consumers of our products and could result in reduced sales of the affected brand or all of our brands. Also, to the extent that third parties sell products that are either counterfeit versions of our brands or brands that look like our brands, consumers of our brands could confuse our products with products that they consider inferior. This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations.

RISKS RELATED TO THE UNITS

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock and the warrants less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Investors may find our common stock less attractive because we rely on these exemptions; which may result in a less active trading market for our common stock and the warrants, making the market prices more volatile.

Our common stock is thinly traded, and investors may be unable to gain any significant market acceptance forsell some or all of their shares at the price they would like, or at all, and sales of large blocks of shares may depress the price of our new media advertising and agency services or establish a significant market presence.common stock.

Our common stock has historically been sporadically or “thinly-traded,” meaning that the number of persons interested in purchasing shares of our common stock at prevailing prices at any given time may be relatively small or nonexistent. As a consequence, there may be periods of several days or more when trading activity in shares of our common stock is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. This could lead to wide fluctuations in our share price. Investors may be unable to sell their common stock at or above their purchase price, which may result in substantial losses. Also, as a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of shares of our common stock in either direction. The price of shares of our common stock could, for example, decline precipitously in the event a large number of share of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price.

There is no established public trading market for the warrants being offered in this offering.

There is no public trading market for the warrants being offered in this offering. We may not be successful in our application to list these securities on the Nasdaq Capital Market or any other exchange. Without an active trading market, the liquidity of the warrants will be limited.

Our failure to meet the continued listing requirements of the NASDAQ Capital Market could result in a delisting of our common stock and warrants. 

If we are successful in having our shares of common stock and warrants listed on the NASDAQ Capital Market, we will be required to satisfy the continued listing requirements. If we fail to satisfy the continued listing requirements of the NASDAQ Capital Market, such as the corporate governance requirements or the minimum closing bid price requirement, NASDAQ may take steps to delist our common stock and warrants. Such a delisting would likely have a negative effect on the price of our common stock and warrants, and would impair your ability to sell or purchase our common stock and warrants when you wish to do so. In the event of a delisting, we would take actions to restore our compliance with NASDAQ’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock and warrants to become listed again, stabilize the market price or improve the liquidity of our common stock and warrants, prevent our common stock and warrants from dropping below the NASDAQ minimum bid price requirement or prevent future non-compliance with NASDAQ’s listing requirements.

If we do not maintain an effective registration statement or comply with applicable state securities laws, our warrantholders may not be able to exercise the warrants. 

For the holders of our warrants to be able to exercise their warrants, the shares of our common stock to be issued upon exercise of those warrants must be covered by an effective and current registration statement or be exempt from registration under applicable federal and state securities laws. We can give no assurance that we will be able to continue to maintain a current registration statement relating to the shares of our common stock underlying the warrants or that an exemption from registration will be available throughout their term. This may have an adverse effect on demand for the warrants and the prices that can be obtained from reselling them.

While the warrants are outstanding, it may be more difficult to raise additional equity capital. 

During the term that the warrants are outstanding, the holders of such warrants will be given the opportunity to profit from a rise in the market price of our common stock. We may find it more difficult to raise additional equity capital while the warrants are outstanding.

The redemption of the warrants issued in this offering may require potential investors to sell or exercise the warrants at a time that may be disadvantageous for them. 

Beginning 90 days after the date of this prospectus, the warrants will be redeemable at our option, in whole or in part, at a redemption price equal to$0.15per warrant upon 30 days’ prior written notice, at any time after the date on which the closing price of our common stock has equaled or exceeded $ per share (170% of the public offering price of the units) for at least five consecutive trading days.In the event we exercise our right to redeem the warrants, those warrants will be exercisable until the close of business growth strategyon the date fixed for redemption in such notice. If any warrant called for redemption is not exercised by such time, it will cease to be exercisable, and the holder thereof will be entitled only to the redemption price of $0.15 per warrant. Notice of redemption of the warrants could force holders to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so or to sell the warrants at the current market price when they might otherwise wish to hold the warrants or accept the redemption price, which is likely to be substantially dependentless than the market value of the warrants at the time of redemption.

Holders of our warrants will have no rights as a common stockholder until they exercise their warrants and acquire our common stock.

Until the holders of warrants acquire shares of our common stock upon exercise of their warrants, they will have no rights with respect to shares of our common stock issuable upon exercise of such warrants. Upon exercise of the warrants, warrantholders will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.

The warrants may not have any value.

Two warrants together are exercisable to purchase one share of common stock at an exercise price of $ per share. The warrants will be exercisable at any time from the date of issuance through thefifth anniversary of the date of this prospectus, unless earlier redeemed. In the event the trading price of our common stock does not exceed the exercise price of the warrants during the period within which the warrants are exercisable, the warrants may not have any value.

In the past our common stock has been, and in the future could be, considered to be a “penny stock” and, as such, the market for our common stock may be further limited by certain SEC rules applicable to penny stocks.

Ifthe price of our common stock falls below $5 per share or we have net tangible assets of $2,000,000 or less, our shares of common stock are likely to be subject to certain “penny stock” rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the purchaser and receive the purchaser’s written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices and disclosure of the compensation to the brokerage firm and disclosure of the sales person working for the brokerage firm. These rules and regulations make it more difficult for brokers to sell our shares of our common stock and limit the liquidity of our securities.

A decline in the price of our common stock could affect our ability to marketraise working capital and adversely impact our services successfullyability to prospective customers. However, our planned services may not achieve significant market acceptance. Such acceptance, if achieved, may not be sustained for any significant period of time. Failurecontinue operations.

A prolonged decline in the price of our servicescommon stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to achieve or sustain market acceptanceraise capital. A decline in the price of our common stock could be especially detrimental to our liquidity and our operations. Such reductions may force us to reallocate funds from other planned uses and may have a material adversesignificant negative effect on our business financial conditionsplans and the results ofoperations, including our operations.

(8)                We may infringe the proprietary and trade secret rights of others.

If any of our services or our employees or agents knowingly or unknowingly violate third party proprietary rights, we may be subject to damages or equitable claims. For example, we may engage employees who, without notifying us, are subject to non-compete and non-solicitation agreements that might limit their ability to compete withindevelop new services and continue our service industrycurrent operations. If our common stock price declines, we can offer no assurance that we will be able to raise additional capital or within a given geographic area; or who may be restrictedgenerate funds from soliciting clients or customers of their former employees; or that may violate trade secret law, for example, by appropriating customer lists, pricing and other financial information, or other proprietary business information of their former employers or others. Accordingly, we may become subjectoperations sufficient to damage awards as a result of infringing the proprietary rights of others, which could cause us to incur additional losses and have an adverse impact onmeet our financial position, or thatobligations. If we are unable to pay, or require usraise sufficient capital in the future, we may not be able to curtail certain ofhave the resources to continue our normal operations.

(9)We do not expect to pay dividends for the foreseeable future.                A controlling percentage

For the foreseeable future, it is anticipated that earnings, if any, that may be generated from our operations will be used to finance our operations and that cash dividends will not be paid to holders of our voting stock is held by ourcommon stock.

Our Chairman and Chief Executive Officer which will allow him to make key decisions and effect transactions without further stockholder approval.

Our Chief Executive Officer beneficially owns in the aggregate, 47%a significant number of shares of our outstanding votingcommon stock, on a fully diluted basis. Accordingly,and as long as he does, he may be able to control the outcome of stockholder votes, including votes concerning the election of directors, the adoption or amendment of provisions in our Articles of Incorporation and our bylaws, and the approval of mergers and other significant corporate transactions. These factors may also have the effect of delaying or preventing a change in our management or our voting control. Our Articles of Incorporation do not provide for cumulative voting.

(10)            Certain provisions

Grover Wickersham, our chairman and chief executive officer, is the beneficial owner of our charter and by-laws may discourage mergers and other transactions.

Certain provisionsapproximately 15.14% of our Articles of Incorporation and By-laws could make it more difficult for someone to acquire control of Eurocan and limit the price that certain investors might be willing to pay foroutstanding shares of our common stock. These provisionsstock as of March 31, 2017. Accordingly, he may make it more difficult for stockholdersbe able to take certain corporate actionscontrol us and could delaydirect our affairs and business, including any determination with respect to a change in control, future issuances of common stock or prevent someone from acquiring our business. The provisions could be beneficial to our managementother securities, declaration of dividends on the common stock and the board of directors in a hostile tender offer, and could have an adverse impact on stockholders who might want to participate in such tender offer, or who might want to replace some or all of the members of the boardelection of directors.

(11)            Acquisitions of other companies or investments in joint ventures with other companies could adversely affect our operating results, dilute our stockholders’ equity, or cause usWe have the ability to incurissue additional debt or assume contingent liabilities.

To increase our business and maintain our competitive position, we may in the future acquire companies or engage in joint ventures. Acquisitions and joint ventures involve a number of risks that could harm our business and result in the acquired business or joint venture not performing as expected, including:

•         insufficient experience with technologies and markets in which the acquired business is involved, which may be necessary to successfully operate and integrate the business;

•         problems integrating the acquired operations, personnel, technologies or products with the existing business and products;

•         diversion of management time and attention from the core business to the acquired business or joint venture;

•         potential failure to retain key technical, management, sales and other personnel of the acquired business or joint venture;

•         difficulties in retaining relationships with suppliers and customers of the acquired business, particularly where such customers or suppliers compete with us;

•         subsequent impairment of the acquired assets, including intangible assets; and

•         assumption of liabilities including, but not limited to, lawsuits, tax examinations, warranty issues, etc.

To the extent that we invest in upstream suppliers or downstream channel capabilities, we may experience competition or channel conflict with certainshares of our existingcommon stock and potential suppliers and customers. Specifically, existing and potential suppliers and customers may perceive that we are competing directly with them by virtueshares of such investments and may decidepreferred stock without asking for stockholder approval, which could cause your investment to reduce or eliminate their supply volume to us or order volume from us.

(12)be diluted.            We may issue additional common shares, which would reduce the proportion of ownership of our stockholders and may dilute our share value.

Our Articles of Incorporation authorizeauthorizes the issuanceBoard of 900 millionDirectors to issue up to 15,000,000 shares of common stock par value $0.0001.and up to 100,000,000 shares of preferred stock. The future issuancepower of the Board of Directors to issue shares of common stock, may result in substantial dilution in the proportionpreferred stock or warrants or options to purchase shares of common stock or preferred stock is generally not subject to stockholder approval. Accordingly, any additional issuance of our common stock, held by our then existing stockholders. Weor preferred stock that may value anybe convertible into common stock, issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting your investment, and the valuenew securities may have rights, preferences and privileges senior to those of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

(13)            We may issue shares ofBy issuing preferred stock, with greater rights than our common stock, whichwe may entrench management and result in dilutionbe able to delay, defer, or prevent a change of our stockholders' investment.control.

Our Articles of Incorporation authorizepermits us to issue, without approval from our stockholders, a total of 100,000,000 shares of preferred stock. Our Board of Directors may determine the issuance of uprights, preferences, privileges and restrictions granted to, 100 millionor imposed upon, the shares of preferred stock par value $0.0001 per share. The authorized but unissued preferred stock may be issued by our board of directors from timeand to time on any number of occasions, without stockholder approval, as one or more separate series of shares comprised of any number offix the authorized but unissued shares of preferred stock, designated by resolution of our board of directors stating the name and number of shares of eachconstituting any series and setting forth separately forthe designation of such seriesseries. It is possible that our Board of Directors, in determining the relative rights, preferences and privileges and preferences thereof, including, if any, the: (i) rate of dividends payable thereon; (ii) price, terms and conditions of redemption; (iii) voluntary and involuntary liquidation preferences; (iv) provisions of a sinking fund for redemption or repurchase; (v) terms of conversion to common stock, including conversion price, and (vi) voting rights. Such preferred stock may enable our board of directors to hinder or discourage any attempt to gain control of us by a merger, tender offer at a control premium price, proxy contest or otherwise. Consequently,be granted when the preferred stock is issued, may include provisions that have the effect of delaying, deferring or preventing a change in control, discouraging bids for our common stock at a premium over the market price, or that adversely affect the market price of and the voting and other rights of the holders of our common stock.

We face risks related to compliance with corporate governance laws and financial reporting standard.

The Sarbanes-Oxley Act of 2002, as well as related rules and regulations implemented by the SEC and the Public Company Accounting Oversight Board, require changes in the corporate governance practices and financial reporting standards for public companies. These laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 relating to internal control over financial reporting (“Section 404”), will materially increase the Company’s legal and financial compliance costs and make some activities more time-consuming, burdensome and expensive. Although we currently believe our internal control over financial reporting is effective, the effectiveness of our internal controls in future periods is subject to the risk that our controls may become inadequate or may not operate effectively. Any failure to comply with the requirements of Section 404, our ability to remediate any material weaknesses that we may identify during our compliance program, or difficulties encountered in their implementation, could entrenchharm our management. operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock and we could be subject to regulatory sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we incur significant legal, accounting and other expenses that we would not incur as a private company, including costs associated with public company reporting requirements. We also incur costs associated with the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act and related rules implemented or to be implemented by the SEC. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to continue to increase our legal and financial compliance costs and to make some activities, such as internal control over financial reporting, more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as our executive officers and may divert management’s attention. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Substantial sales of our stock may impact the market price of our common stock could be depressed by the existence of the preferred stock. As of the date of this prospectus, no shares of preferred stock have been issued.

(14)            Since our board

Future sales of directors does not intend to pay dividends onsubstantial amounts of our common stock, inincluding shares that we may issue upon exercise of options and warrants, could adversely affect the foreseeable future, it is likely that investors will only be able to realize a return on their investment by reselling shares purchased through this offering.

We intend to retain our future earnings, if any, to support our operations and to finance the growth and development of our business and do not expect to pay cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will likely depend upon any future appreciation in the valuemarket price of our common stock. There isIn addition, several of our existing stockholders are parties to registration rights agreements with us, and we have agreed to file a registration statement with respect to their shares as soon as possible after the closing of this offering and to use our commercially best efforts to cause the registration statement to be declared effective as soon as possible thereafter. Upon effectiveness of any such registration statement, the registered shares held by such stockholders shall no guarantee that our common stock will appreciate in value or even maintain its current trading price.

(15)            Investors may notlonger be deemed “restricted securities,” and such holders shall be able to resell anyfreely transfer their shares they purchase through this offering because we do not intend to registerwithout the restrictions that are otherwise imposed on privately issued securities. As a result, there may be an increase the number of shares being sold by our shares for sale in any State and there is no public tradingexisting stockholders, which may further adversely impact the market forprice of our common stock.

Our common stock is also not currently listed or quoted upon any established trading system, and there is presently no established public trading market for our securities. We intend to apply for admission to quotation Moreover, if we raise additional funds through the issuance of our securities on the OTCBB and the OTC Markets Group OTCQB after this prospectus is declared effective by the SEC. If for any reason our common stock is not quoted on either the OTCBB or the OTCQB or an active public trading market does not otherwise develop, or if developed, is not sustained, then purchasers of the shares may have difficulty selling their common stock should they desire to do so. No market makers have committed to becoming market makers for our common stock and none may do so. Furthermore, we do not intend to register our common stock with any State. Therefore, investors will not be able to resell their shares in any State unless the resale is exempt under the Blue Sky laws of the State in which the shares are to be sold. As a result, it may be difficult or impossible for investors to sell our common stock or securities convertible into or exercisable for them to sell our common stock, regardless of the resultspercentage ownership of our operations.

(16)            Applicable SEC rules governingstockholders will be reduced and the trading of "penny stocks" limit the liquidityprice of our common stock which could make it difficult for our stockholders to sell their shares.may fall.

As the shares of our common stock are penny stock, many brokers are unwilling to effect transactions in that common stock which can make it difficult for our stockholders to sell their shares of our common stock if a market develops for that common stock. Our common stock is defined as a penny stock pursuant to Rule 3a51-1 pursuant to the Securities Exchange Act of 1934. Penny stock is subject to Rules 15g-1 through 15g-10 of the Securities Exchange Act of 1934. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

•         Deliver to the customer, and obtain a written receipt for, a disclosure document;

•         Disclose certain price information about the penny stock;

•         Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;

•         Send monthly statements to customers with market and price information about the penny stock; and

•         In some circumstances, approve the purchasers account pursuant to certain standards and deliver written statements to the customer with information specified in those rules.

Rather than comply with those rules, many broker-dealers refuse to enter into penny stock transactions which may make it more difficult for investors to sell their shares of our common stock and thereby liquidate their investments.

Forward-Looking Statements

Information in thisThis prospectus contains "forward looking statements" which can be identified by the use of forward-looking words such as "believes", "estimates", "could", "possibly", "probably", "anticipates", "estimates", "projects", "expects", "may", or "should" or other variations or similar words. No assurance can be given that the future results anticipated by thestatements. The forward-looking statements will be achieved.are contained principally in the sections entitled “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements constitute cautionary statements identifying important factors with respectrelate to those forward-looking statements, including certain risks and uncertainties that could cause actual resultsfuture events or to vary materially from theour future results anticipated by those forward-looking statements. Such statements are only predictionsfinancial performance and involve known and unknown risks, uncertainties and other factors includingwhich may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this prospectus in greater detail under the section titled "Risk Factors". Among the keyheading “Risk Factors” and elsewhere in this prospectus. You should not rely upon forward-looking statements as predictions of future events. New risk factors that have a direct bearing on our results of operations are the effects of various governmental regulations, the fluctuation of our direct costs and the costsuncertainties may emerge from time to time, and effectiveness of our operating strategy. Other factors could also cause actual resultsit is not possible for management to vary materially from the future results anticipated by those forward-looking statements.predict all risks and uncertainties.

TheAlthough we believe that the expectations reflected in the forward-looking statements are based upon management’s current views and assumptions regardingreasonable, we cannot guarantee future events and operatingresults, levels of activity, performance andor achievements. Except as required by law, after the date of this prospectus, we are applicable only as of the dates of such statements. We do not have any intention or obligationunder no duty to update publiclyor revise any of the forward-looking statements, whether as a result of new information, future events changes in assumptions, or otherwise.

Use of Proceeds

The shares of common stock offered hereby are being registered for the accountexpected use of the selling stockholders named in this prospectus. We will not receive anynet proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the resalefuture as our plans and business conditions evolve. The amounts and timing of our actual expenditures will depend on numerous factors, including the progress of our product development efforts and market acceptance of our products. As a result, our management will have broad discretion in applying the net proceeds from this offering. Pending the use of proceeds described above, we intend to invest the net proceeds from this offering in interest-bearing, investment-grade securities.

We believe that the net proceeds from this offering, together with our existing cash resources, will be sufficient to enable us to fund our operations for at least 12 months following the completion of this offering. We have based this estimate on assumptions that may prove to be incorrect, and we could use our available capital resources sooner than we currently expect.

If all of the common stock bywarrants offered pursuant to this prospectus are exercised in full, we will receive approximately an additional $5.4 million in cash, which additional net proceeds will be added to working capital. In addition, to the selling stockholders. Weextent the underwriters exercise their option to purchase additional units to cover over-allotments, if any, the additional net proceeds we may receive therefrom will however, incur all costs associated with this registration statement and prospectus.also be added to working capital.

Determination of Offering PriceDIVIDEND POLICY

The price at which

We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the shares may actually be sold will be determined by the market pricegrowth and development of our business. We do not intend to pay cash dividends on our common stock asfor the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of the dateour Board of sale.Directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our Board of Directors may deem relevant.

DilutionCAPITALIZATION

The shares to be sold by the selling stockholders are common stock that is currently issued and outstanding. Accordingly, there will be no dilution to our existing stockholders.

Selling Stockholders

This prospectus relates to the resale by the selling stockholders named below from time to time of up to a total of 5,000,000 shares of our common stock that were issued to the selling stockholders pursuant to transactions exempt from registration under section 4(2) of the Securities Act and Regulation S promulgated thereunder. All of the common stock offered by this prospectus is being offered by the selling stockholders for their own accounts.

The following table sets forth certain information regardingour capitalization at March 31, 2017, as follows:

● on an actual (post-reverse stock split) basis;

● on a pro forma basis to reflect transactions subsequent to March 31, 2017, including the selling stockholdersissuance of 337,331 shares of our common stock in private placements and for consulting services, upon exercise of warrants and stock options, upon conversion of remaining shares of series A convertible preferred stock, and the shares offered by themissuance of $1,400,000 in convertible notes; and

● on a pro forma as adjusted basis to reflect, in addition to the pro forma adjustments noted above, on an as adjusted basis to give effect to the issuance and sale of 1,200,000 units in this prospectus. Beneficial ownership is determined in accordance withoffering at the rulesassumed public offering price of $6.00 per unit, after deducting the underwriting discounts and commissions and estimated offering expenses.

Our capitalization following the closing of this offering will be adjusted based on the actual public offering price and other terms of the SEC. In computing the number of shares beneficially owned by a selling stockholderoffering determined at pricing. You should read this information together with our audited consolidated financial statements and related notes appearing elsewhere in this prospectus and the percentageinformation set forth under the heading “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

DILUTION

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of that selling stockholder, sharesthe difference between the public offering price per share and the pro forma net tangible book value per share of our common stock after this offering.

Our historical net tangible book value (deficit) as of March 31, 2017 was approximately $1,523,125, or $0.51 per share of common stock underlying shareson a post-reverse split basis. Our historical net tangible book value is the amount of convertible preferred stock, options or warrants held by that selling stockholder that are convertible or exercisable, as the case may be, within 60 days are included. Those shares, however,our total tangible assets less our total liabilities, which are not deemed outstanding forincluded within stockholders’ deficit. Historical net tangible book value per share is our historical net tangible book value divided by the purposenumber of computing the percentage ownership of any other selling stockholder. Each selling stockholder’s percentage of ownership in the following table is based upon 12,710,000 shares of common stock outstanding as of November 10, 2011.March 31, 2017.

All information with respect to share ownership has been furnished byPro forma net tangible book value as of March 31, 2017 is our historical net tangible book value, plus the selling stockholders. The shares being offered are being registered to permiteffect of (i) the sale of units in this offering at an assumed public secondary tradingoffering price of $6.00 per unit, after deducting underwriting discounts and commissions and estimated offering expenses and allocating 100% of the shares and each selling stockholder may offer all or part of the shares owned for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. No selling stockholder is a registered broker-dealer or an affiliate of a registered broker-dealer.

Except as noted below, none of the selling stockholders has any family relationships with our officers, directors or controlling stockholders.

The term “selling stockholders” also includes any transferees, pledges, donees, or other successors in interest to the selling stockholders named in the table below. To our knowledge, subject to applicable community property laws, each person named in the table has sole voting and investment power with respectpurchase price to the shares of common stock and $0 to the warrant component of the units. This amount represents an immediate increase in pro forma net tangible book value of $1.39 per share to our existing stockholders, and an immediate dilution of $4.10 per share to new investors purchasing common stock in this offering.

The following table illustrates this dilution on a per share basis to new investors:

A $1.00 increase (decrease) in the assumed offering price of $6.00 per share would increase (decrease) our as adjusted pro forma net tangible book value by $1.1 million, the as adjusted pro forma net tangible book value per share after the offering by $0.76 per share and the dilution per share to the new investors purchasing our shares in this offering by $0.24 per share, assuming that the number of shares offered by us, as set forth opposite such person’s name. We will file a supplement toon the cover page of this prospectus, (orremains the same and after deducting the estimated underwriting discounts, commissions, and estimated offering expenses payable by us.

If the underwriters exercise in full their option to purchase additional units, the pro forma net tangible book value per share, as adjusted to give effect to the offering, would be $2.05 per share, and the dilution in pro forma net tangible book value per share to new investors participating in this offering would be $3.95 per share.

The following table presents, on a post-effective amendment hereto, if necessary)pro forma basis as of March 31, 2017, the differences between the number of common shares purchased from us, the total consideration paid or to name successorsbe paid to any named sellingus, and the average price per share paid or to be paid to us by existing stockholders who are ableand the new investors purchasing common stock in this offering at an assumed public offering price of $6.00 per unit, after deducting underwriting discounts, commissions, and estimated offering expenses payable by us.

If the underwriters exercise in full their option to usepurchase additional shares of our common stock from us, our existing stockholders would own approximately 70.8% and our new investors would own approximately 29.2% of the total number of shares of our common stock outstanding upon completion of this offering. In this event, the total consideration paid by our existing stockholders would be $0, or 0%, and the total consideration paid by our new investors would be $8,280,000, or 100%.

A $1.00 increase (decrease) in the assumed offering price of $6.00 per share would increase (decrease) total consideration by new investors by $1.1 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, to resellremains the securities registered hereby.

(1)It is assumed forsame and after deducting the purposesestimated underwriting discounts and commissions and estimated offering expenses payable by us.

The foregoing tables and calculations as of this table thatMarch 31, 2017 exclude the selling stockholders will sell allfollowing potentially dilutive shares of the shares included in this prospectus, and that none of the selling stockholders will sellcommon stock:

● 309,509 shares of common stock not being included in this prospectus or purchases additionalissuable upon the exercise of stock options outstanding as of July 17, 2017, at a weighted average exercise price of $7.17 per share;

● 1,131,077 shares of common stock.

(2)Based on 12,710,000 sharesstock issuable upon the exercise of outstanding common stock warrants as of November 10, 2011July 17, 2017 at a weighted-average exercise price of $6.88 per share;

● 1,200,000 shares of common stock issuable upon exercise of the warrants sold in this offering;

● 180,000 shares issuable upon the exercise of warrants to be issued to the underwriters as compensation in connection with this offering; and

● 179,724 shares of common stock reserved for future issuance under our 2016 Equity Incentive Plan.

To the extent that any outstanding common stock options and common stock warrants are exercised or there are additional issuances of common stock options, common stock warrants or shares of our common stock in the future, there will be further dilution to investors participating in this offering.

(3)Francesco Bardazzi is the husband of Daniela Anastasio, a director of Eurocan Holdings Ltd.

(4)Green Shoe Investments Ltd. is controlled by Roger Knox.

(5)Jennifer Williams is the wife of Michael Williams, the President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, and a director of Eurocan Holdings Ltd.

(6)Moneris Capital Limited Partnership is controlled by Erik Ihl.

(7)David Williams is the brother of Michael Williams, the President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, and a director of Eurocan Holdings Ltd.

(8)Carla Anastasio is the sister of Daniela Anastasio, a director of Eurocan Holdings Ltd.

(9)Gabriela Anastasio is the sister of Daniela Anastasio, a director of Eurocan Holdings Ltd.

(10)Daniela Anastasio is a director of Eurocan Holdings Ltd.MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market and Other Information

Prior to this offering our common stock traded on the OTC Markets (QB Marketplace Tier) under the symbol “ESDI.” Very limited trading of our common stock has occurred during the past two years; therefore, only limited historical price information is available. The table below sets forth the high and low closing bid prices of our common stock for the last two fiscal years, as reported by OTC Markets Group Inc. and represents inter-dealer quotations, without retail mark-up, mark-down or commission and may not be reflective of actual transactions. We may requireeffected a 1-for-20 reverse stock split on October 18, 2016 and a 1-for-3 reverse stock split on June 15, 2017. All quotations noted in the selling stockholderstable prior to suspendthose dates have been adjusted to reflect the salesimpact of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of statements in these documents in order to make statements in those documents not misleading.reverse stock splits.

Market for Common Equity

We consider our stock to be “thinly traded” and Related Stockholder Mattersany reported sale prices may not be a true market-based valuation of our stock. Some of the bid quotations from the OTC Bulletin Board set forth below may reflect inter-dealer prices, without retail mark-up, mark-down, or commission, and may not represent actual transactions.

No Public

We have applied to list our common stock and warrants on the NASDAQ Capital Market for Common Stockunder the symbols “ESDI” and “ESDIW,” respectively.

There is presently no public market

Our shares of common stock are, and our units and warrants will be, issued in registered form. The registrar and transfer agent for our shares of common stock. We anticipate making an applicationstock and the warrant agent for quotationour warrants is Pacific Stock Transfer Company, 6725 Via Austi Parkway, Suite 300, Las Vegas, NV 89119; telephone: (702) 361-3033; facsimile: (800) 785-7782).

As of July 17, 2017, there were 3,341,137 shares of our common stock outstanding, which were held by approximately 137 record stockholders. On July 19, 2017, the last reported sale price of our common stock on the OTCBB and the OTC Markets Group OTCQB upon effectiveness of the registration statement of which this prospectus forms a part. We can provide no assurance, however, that our shares will be quoted or, if quoted, that a public market will materialize.

Holders

On November 10, 2011, the stockholders’ list of our shares of common stock showed 45 registered holders of our shares of common stock and 12,710,000 shares of common stock outstanding.was $6.19 per share. The number of record holders was determined from the records of our transfer agent.agent and does not include beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers and registered clearing agencies.

SELECTED CONSOLIDATED FINANCIAL DATA

You should read the selected consolidated financial data below in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements, related notes and other financial information included in this prospectus. The selected consolidated financial data in this section are not intended to replace the consolidated financial statements and are qualified in their entirety by the consolidated financial statements and related notes included in this prospectus.

The selected consolidated statements of operations data for the years ended December 31, 2015 and 2016, and the selected consolidated balance sheet data as of December 31, 2015 and 2016, are derived from our audited consolidated financial statements appearing elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future, and our interim results are not necessarily indicative of the results to be expected for the full year.

Selected Consolidated Statements of Operations Data:

Selected Consolidated Balance Sheet Data:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the section entitled “Selected Consolidated Financial Data” and our financial statements and related notes appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this prospectus, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

Corporate Overview

We are an Oregon-based producer and marketer of craft spirits, founded in 2008. Our products span several alcoholic beverage categories, including bourbon, American whiskey, vodka and rum. Unlike many, if not most, distillers, we operate several retail tasting rooms in Oregon to market our brands directly to consumers. Our growth strategy is to build on our local base in the Pacific Northwest and expand selectively to other markets by using major spirits distributors, such as Southern Glazer Wines and Spirits, or regional distributors that focus on craft brands. As a small company in the large, international spirits marketplace filled with massive conglomerates, we are innovative in exploiting new trends with our products, for example, our coffee rum with cold-brew coffee and low sugar, and our gluten-free potato vodka. In December 2016 we retained Sandstrom Partners (an internationally known spirit branding firm that branded St Germain and Bulleit Bourbon) to guide our marketing strategy and branding. Sandstrom Partners subsequently became an investor in us. We seek to bea leader in creating spirits that offer better value than comparable spirits, for example our value priced Burnside Bourbon and Portland Potato Vodka, andan innovator in creating imaginative spirits that offer a unique taste experience, for example our coffee rum, Oregon oak aged whiskeys, Marionberry Whiskey and Peppermint Bark holiday liqueur. In May 2017, we acquired Big Bottom Distillery (“BBD”) for its excellent, award winning range of super premium gins and whiskeys, including Navy Proof Gin, Oregon Gin, Delta Rye and initial production of American Single Malt whiskey. BBD’s super premium spirits will expand our tasting room offerings and give us a presence at the “high end” of the market. In addition, through MotherLode, our wholly-owned subsidiary acquired in March 2017, we also provide contract bottling and packaging services for existing and would be spirits producers, some of whom contract with us to blend or distill spirits. As a publicly-traded craft spirit producers, we have access to the public capital markets to support our long-term growth initiatives, including strategic acquisitions.

Dividend Policy

We have not declared or paid any cash dividends on our common stock. Our board of directors plans for Eurocan to retain future earnings, if any, to financewere incorporated in Nevada in February 2004 under the expansion of our business and does not intend to pay any cash dividends in the foreseeable future.

Description of Business

Overview

name Eurocan Holdings, Ltd. isUntil October 2014, Eurocan Holdings operated solely as an online marketing and media solutions firm specializing in digital interactive media. Digital interactive media, refers to products and services on digital computer-based systems that respond to the user’s actions by presenting content such as text, graphics, animation, video and audio, and includes the internet, social media, mobile communications and digital interactive signage.

We use digital interactive media to carry out highly targeted advertising and marketing campaigns with, what our management believes to be, greater efficiency and more quantifiable results than traditional marketing strategies. Traditional marketing refers to marketing campaigns carried out in the form of outdoor (i.e. billboards and posters), TV commercials, radio commercials, trade show presence, and direct mail advertising. Digital campaigns eliminate the costs related to campaign setup, execution, and measurement regardless of how many channels are included in a campaign. By reducing the cost of print advertising material (i.e. brochures and flyers) and media space buys (i.e. print ads), our marketing campaigns are typically less expensive than traditional methods, without sacrificing effectiveness and thereby provide greater value to our clients. Furthermore, digital campaigns provide results that are more determinate in that the amount of clicks, opens, page views, coupon redemption can be observed instantaneously. Our management believes that the effectiveness of digital campaigns provides a more immediate measure of ROI than traditional media.

Corporate History

Eurocanwhich business was incorporated in the State of Nevada on February 11, 2004, for the purpose of engaging in internet marketing and promotion. On August 31, 2006, we acquired all the issued and outstanding shares ofconducted through Eurocan’s wholly-owned subsidiary, Michael Williams Web Design Inc. of New York, NY (“MWW”). At the time of the acquisition, MWW had been providing web development and internet services to various clients in New York City for a period of seven years. The acquisition of MWW resulted in a change in control of Eurocan Holdings, Ltd., with Michael Williams, the sole stockholder of MWW acquiring seven million shares of our common stock and majority control of Eurocan. MWW is our only subsidiary.

All

Our sales during the first quarter of 2017 increased 33% over the prior year, primarily due to three factors: 1) increased wholesale sales traction within the Pacific Northwest; 2) the acquisition of MotherLode and the expansion of our marketing productsprivate label business; and services are currently provided through MWW, which is also3) the addition of a new retail location in February 2017. The Oregon market continues to experience strong year-over-year growth. During the first quarter of 2017, Oregon represented approximately 78% of sales, compared to 2016 where Oregon represented approximately 58% of sales. National distribution sales were flat quarter-over-quarter, but we anticipate making strong sales progress in new markets and for such markets to represent a larger percentage of our sole source of revenue. MWW’s website is located on the internet at http://mwonlinemarketing.com. The information contained on MWW’s website is not incorporated in, and does not form a part of, this prospectus.overall sales.

The address forWe have also invested heavily in our head office is 1 Union Square West, Suite 610, New York, NY 10003. Our telephone number is (212) 419-4924. Our facsimile number is (866) 602-2458.infrastructure (facilities, people, and marketing programs) in order to support our planned expansion and believe we are well positioned to experience further improved performance throughout the balance of 2017.

Components of our Statements of Operations

Sales, Excise Taxes and Cost of Sales

Our common stock is not presently traded on any exchange or quoted on any quotation system. We intend to seek quotationsales consist primarily of sales of our common stock on the OTCBB14 branded products to wine and the OTC Markets Group OTCQB once the registration statementspirits wholesale distributors. We also sell directly to consumers at our retail locations and kiosks, all of which this prospectus formsare currently located in the Portland, Oregon area, in our tasting rooms, at our facilities, and through online sales. In addition, we periodically hold special events, such as tastings and private functions, where we may also sell merchandise and bottle sales directly to consumers. Sales to distributors will continue to account for a part, is declared effective.

Descriptionmajority of Our Services

Eurocan develops digital interactive media and advertising campaigns designed to increaseour sales and reinforce market presence for our clients. Our management believes that targeted digital interactive media can deliver more measurable results for our clients than traditional media, at a lower cost to us due to more focused targeted offerings to consumers and, often, due to less competition from traditional advertisers. The use of highly targeted media also enables us to use market research to more efficiently capitalize on consumer preferences.the foreseeable future.

We strategically utilizeare required to pay excise taxes imposed by the most effective combination of platforms such as, email, websites, social media, audioUnited States Alcohol and video to achieve measureable results. We use a “360 degree” approach to our campaigns by zeroing in on a target group likely to be receptive to a messageTobacco Tax and surrounding it from every angle, using a variety of media to touch customers at different points along the decision-to-buy pathway.

Typically, we begin any campaign with defining the client and brand message. Next, we determine how to best adopt cross-platform methods to maximize impact and impressions. We then implement our advertising campaigns through a combination of digital and traditional advertising platforms such as, online banner ads, pay-per-click advertising, video, and advertising through online social marketing (Facebook, Twitter, etc). Finally, we conduct a post-campaign analysis of the campaign’s effectiveness. We track the impressions of all digital mediaTrade Bureau (the “TTB”) as well as identifyexcise taxes of the resultsindividual states into which we sell our products, the amount of which varies from traditional advertising,state to state. Net sales is calculated by reducing total sales by excise taxes, and generate a marketing effectiveness report detailing the projected return on investmentcustomer programs and next steps for the client. This enables us to make further adjustments as required.incentives expenses.

Our digital interactive media services currently include e-mail blasts to targeted databases, advertising on specialized web sitesCost of sales consists of the costs of ingredients used in the production of spirits, manufacturing labor and key internet web pages combined with social mediaoverhead, warehousing rent, packaging and the development of innovative audio and video products. A comprehensive mix of digital media advertising for one of our campaigns would typically include:in-bound freight charges.

•         online advertisements;

•         blog creation and management;

•         mobile distribution, such as mobile messaging, text messages and short messaging service;

•         online publication outreach, such as articles placed on targeted industry websites

•         new media press portals;

•         podcasts;

•         social network and media content creation and management, such as Facebook and Twitter;

•         viral marketing campaigns, such as YouTube;

•         webcasts; and

•         website development and optimization.Expenses

While our core marketing solutions involve the developmentAdvertising, promotion and rollout of digital interactive media campaigns, our comprehensive approach includes the incorporation of traditional advertising methods into the digital mix, where appropriate, to fully engage the target markets. This may include print materials (e.g. print ads, brochures, direct mail), printed media advertising placement (also known as “media buys”) and television and radio broadcast ads. Our traditional advertising and marketing methods typically include:selling expenses

•         campaign designAdvertising costs are expensed as incurred and creation;

•         direct responseare included in advertising, promotional and marketing, suchselling expenses in the accompanying statements of operations. Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. We make these payments to customers and incur these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as direct mail, DirecTV;

•         traditional media buying activities for promotion, suchreductions to net sales or as television, radioadvertising, promotional and newspapers;

•         promotional programs, such as coupons;selling expenses in accordance with the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) Topic 605-50,Revenue Recognition- Customer Payments and

•         events outreach, such as sponsorships and participation at events with attendees from Incentives, based on the target market.nature of the expenditure.

While we perform strategic planning functions similar to our more traditional competitors, we implement processes, protocolsGeneral and delivery systems that our management believes to be far more robust and effective. For example, the traditional delivery outlets that advertising and marketing firms have employed have remained largely the same for decades and our management believes that in recent years these methods have become less effective, extremely expensive, and slow to implement. We are leveraging state-of-the-art digital interactive media technology, such as the internet, mobile communications, and digital interactive signage, to develop more targeted, effective, quantifiable, cost-effective and comprehensive campaigns that our management believes can be delivered to local and regional markets more efficiently than by traditional means.Administrative Expenses

We are concentrating our efforts on certain vertical market segments

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in order to specialize in solutions that are designed to meet a specific industry's advertising needs. Our management believes that by targeting such vertical markets sharing common needs, we will be able to position Eurocan in a market niche that will foster growth, improve stabilityexecutive, finance and secure market share. We are initially focusing on information-intensive vertical market segments that are looking to change their approach to advertising from traditional methodsadministrative functions. General and into measurable digital media.

Income Streams

Our revenue is derived from fees for services rendered to our clients based upon the hourly billing rates of our employees or agents. These hourly billing rates differ depending on the service provided. All projects are estimated in full based on hourly billing ratesadministrative expenses also include direct and the number of hours estimated to complete the project, start to finish. Clients are required to authorize all estimates before projects commence.

We bill on a monthly basis and require our customers to pay their invoices within 30 days of receipt. Customers are required to pay a 50 percent deposit upon acceptance of the project estimate and before project initiation.

We also bill on a fixed fee basis for certain projects. We book revenue net of sales, use and value added taxes. A portion of our revenue is derived from performance-based commissions and other performance incentives tied to the quality of our services and the success of our media and advertising campaigns. Commissions must be agreed upon by our clients before work commences.

Expansion of Business

We plan to expand the breadth and scope of our business by developing and implementing the following services that our management believes would complement our suite of digital interactive media marketing solutions:

Hosted Software Solutions

Software as a service (“SaaS”) sometimes referred to as "software on demand” is software that is deployed over the internet or is deployed to run behind a firewall on a local area network or personal computer. With SaaS, a provider licenses an application to customers as a service on demand, through a subscription, in a "pay-as-you-go" model. As a result, SaaS enables businesses to avoid making a significant investment in software.

Initially, SaaS was widely deployed for sales force automation and customer relationship management. More recently, it has become a tool for many business tasks, including computerized billing, invoicing, human resource management, financials, content management, collaboration, document management, and service desk management. By developing and offering SaaS, we will be able to further leverage advertising buys (purchase of space to place a web-based ad) to clients with advertising placement on SaaS applications. Our clients will be able to offer a SaaS application, such as Gmail, online at no charge and brand it with their unique marketing message. Revenue would be generated from banner ads and pay per click ads that are placed on the SaaS applicationallocated facility-related costs as well as the hosting fee for the application.

By offering SaaS, we will also be able to provide our clients with a lower-cost method by which to use software on an as needed basis rather than licensing all devices with all applications. Through well-designed implementation and properly priced licenses, our on-demand SaaS can provide license benefits without associated complexity and without the cost of equipping devices with unneeded applications.

As a SaaS provider, we will be able to price applications on a per-user basis and/or per business basis, sometimes with a relatively small minimum number of users and often with additionalprofessional fees for extra bandwidthlegal, consulting, accounting, and storage. We anticipate that our SaaS revenue streams will initially be lower initially than traditional software license fees, but recurring and therefore more predictable, much like maintenance fees for licensed software. We expect SaaS fees to be a source of continuous revenue stream for Eurocan.

Our management believes that SaaS will provide us with a two-fold opportunity for revenue growth through both licensing and advertising. Our development of SaaS, and the related licensing and advertising opportunities they bring, are expected to net out to approximately a 40 percent increase in our revenue.

We plan a staged implementation of our SaaS product. We will initially focus on new markets like small business in our target vertical by creating a lower entry price point and a pay-as-you-go model. We will develop an infrastructure flexible enough to allow channel partners to resell and re-brand our SaaS services, which will be simplified to better serve limited information technology resources. Simplifying the product and restricting the functionality will prevent overlap with existing and future licensed products. Next, we will manage the implementation process and own the move-add-change requirements not handled by the customer. Finally we will allow partners to build value-added services on top of our solution by bundling their own services or by adding business process/vertical experts.

We expect SaaS implementation to occur within approximately 24-30 months. We plan to hire 2-3 consultants to develop SaaS over the next 24 months, with sales/marketing to commence in the following nine months. The estimated projected costs associated with development and implementation are of SaaS are $300,000.

Other Income Streams from Emerging Digital Interactive Media Applications

Eurocan intends to leverage the success of digital interactive media products such as iPhone, iPad, Android and other smart phones and mobile communication devices as well as the extensive array of mobile applications that go with them by developing customized media products for clients for office and business use, shopping, travel, music, communications and more. These devices and applications create accessibility for the consumer and new market opportunities for our clients. As new mobile technologies expand the concept of “office” or “home,” our clients’ customers could receive product or service messages anywhere in the world.

Through the use of digital interactive campaigns that employ mobile devices and applications we will be able to deliver greater visibility, higher brand awareness and high impact creative for our clients. Utilizing mobile applications and Smartphone technology as part of our clients’ marketing campaign strategy will also enable us to better reach client prospects and consumers in a more targeted and effective way. Each of these campaigns will be individualized to our clients’ needs and goals.

Because of rapidly changing technology, there will be a learning curve associated with familiarizing clients with what is available in mobile communications, in the applications that can be used and how they are used. Even the technology is itself an obstacle due to the rapid pace with which it changes. To address this, we plan to engage two mobile communications experts in the coming year who will be strictly devoted to mobile communications marketing. Our first hire will be engaged as the team expert consultant and a recognized industry expert. This hire is projected to be completed in the coming 4-6 months The consultant will assess the opportunities within the competitive landscape as they relate to current clients. The second expert to be brought on as an employee with in-depth technical knowledge will be hired to work closely with the consultant to fully carry out the project management and development of the technology.

Our emerging digital interactive media applications business is planned to be fully staffed and operational in 12-18 months, at an estimated annual cost of $160,000.audit services. We expect that the development of campaigns deployed through mobile applicationsour general and devices and the related advertising opportunities they bringadministrative expenses will increase in future periods as we continue our net revenue by 40 percent.

Mission Critical Application Hosting

For many businesses, the hosting of applications and web sites as well as back-up maintenance has become a top priority. When websites are inaccessible, or perform poorly, those businesses with an online presence are at risk of losing valuable corporate documents and files in addition to revenue and customer loyalty. To enable our clients to maximize their internet exposure, we intend to develop a managed hosting service. Managed hosting incorporates web-based applications in a high performance, centralized environment that can be accessed from anywhere, anytime. As a managed hosting service provider we would provide a dedicated team of engineers to proactively manage a client’s infrastructure so the client is no longer required to monitor servers, create backups, or update patches. Additionally, clients outsourcing their managed hosting services from us would be able to save on information technology costs related to internal maintenance.

In addition to providing our clients with a reliable hosting environment, our managed hosting service will also provide us with a low cost hosting solution for our SaaS applications. It will furthermore provide a platform for the distribution of banner ads across web sites, applications, and mobile technologies. We believe that these services will facilitate more diverse advertising opportunities and enable higher returns on advertising investments for our clients, with increased sales, successful branding, and ultimately more profits. We plan to implement managed hosting over the next 24 months by leasing a dedicated server from an outside vendor. We estimate the cost of leasing this server to be under $700 per month. We expect our managed hosting service to generate $500 per month in gross revenue per client, resulting in as much as a 20 per cent increase in our net revenue.

We plan to hire an expert with intimate knowledge of managed hosting to oversee the migration of our clients’ data to ensure critical data is migrated smoothly to a new hosting environment. This expert will also serve as an on-site client consultant when the migration commences. By offering the additional on-site consulting services at an hourly rate to clients, we estimate additional revenue of $1,000-$5,000 for each new client during the initial hosting period, which would vary depending on the amount of data and level of complexity. Hiring of that individual is expected to take place within the coming 12-16 months. Once this professional is in place, the hosting service is expected to be operational within 8-12 weeks.

Marketing

We currently market our services through a marketing staff using both telemarketing and direct sales. We advertise our products and services through several media sources including trade journals and online advertising. Over the next 12 months we intend to implement a sales and marketing strategy that will employ a number of promotional tools to reach prospective clients and establish our brand. These tools will include the following:

Core Partners: We will develop relationships with strategic core partners that complement our digital interactive media services.

Broadcast Marketing: We intend to establish arrangements with select local media, such as television and radio networks, to produce high-impact commercials to promote our services and drive prospective clients to our website.

E-Marketing: We will compile a comprehensive e-mail marketing list of businesses in North America with an initial focus on client-rich, major metropolitan areas on the East Coast (e.g. New York, Philadelphia), before expanding to other regions for a nationwide footprint. We plan to distribute advertising and marketing strategy briefs to businesses such as, Fortune 500 corporations, retailers of consumer and business goods, financial institutions, pharmaceutical companies, educational institutions, software developers, high tech companies and many others. E-mails may contain blogging strategy, viral video examples, benefits of search engine optimization, etc.

PR Campaigns: We will issue multiple press releases each month describing new business developments. The releases will be distributed via PR Newswire, both with traditional distribution and on-line, and posted to our web-site.

Viral Video Marketing: We plan to produce videos demonstrating our capabilities and include comments on strategies and the implementation of such strategies to prospective clients. The videos will also include client testimonials.

Print: We will develop and distribute a marketing kit for delivery to our prospective customers, outlining our service offerings.

Web Site: We will update and upgrade our web site for a more complete description of our Company and our services. Our web site will be search engine optimized to maximize traffic and attention.

Blogs: We intend to create a blog site that is search engine optimized and can be viewed on our home page. We will routinely comment on news, stories, and events regarding digital interactive media or new media, and provide strategic and tactical methods of leveraging these trends. Blogs will include video and the latest techniques in the blogosphere.

Competition

The advertising and marketing business is highly competitive and fragmented, and we do not hold a significant competitive position within it. Our competitors include several integrated marketing communications conglomerates such as, Omnicom, WPP, Publicis and Interpublic, and numerous small and mid-sized agencies that operate independently. Many of our competitors are large, well established companies with substantially larger operating staffs and greater capital resources than we have and which have been engaged in advertising and marketing for a much longer time than we have.

As the global advertising market continuesefforts to expand we expect there to be significant competition from companies similar to ours, as well as from larger and more established companies. Since there are no substantial barriers to entry in this market, our management believes that our ability to compete depends upon many factors within and beyond our control, including:

•         timing and market acceptance of new products and services developed by the company and its competitors;

•         customer service and support;

•         sales and marketing efforts; and

•         the ease of use, performance, price and reliability of the company's products and services.

Our management believes that the principal competitive factors in attracting customers will include our brand recognition, customer service, innovative technology and creativity, our ability to deliver targeted audiences and the overall cost-effectiveness of our services. Our management believes that the number of companies relying on revenue from their investment in digital advertising will increase substantially in the future. Additionally we believe that planned services, including software as a service, managed hosting and digital interactive media applications, will further complement our current suite of digital media capabilities.

Intellectual Property

We expect to rely on a combination of common law trademark, service mark, copyright and trade secret law and contractual restrictions to establish and protect our proprietary rights and promote our reputation and the growth of our business. We do not own any patents. We expect that, in the future, we will require our employees, consultants and independent contractors to enter into agreements containing non-disclosure, non-competition and non-solicitation restrictions and covenants, and we expect to include in our agreements with some of our customers and suppliers provisions prohibiting or restricting the disclosure of proprietary information; however, we can give no assurance that these contractual arrangements or the other steps taken by us to protect our proprietary rights will prove sufficient protection to prevent misappropriation of our proprietary rights or to deter independent, third-party development of similar proprietary assets.

Regulatory Matters

We are unaware of and do not anticipate having to expend significant resources to comply with any governmental regulations of the advertising industry. We are subject to the laws and regulations of those jurisdictions in which we plan to sell our services, which are generally applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, the development and operation of our business is not subject to special regulatory or supervisory requirements. We do not believe we are currently subject to any environmental or similar laws.

Environmental

We are not aware of any environmental laws that are applicable to our business, or which could result in any material compliance costs to us or effects on our business.

Employees

As of the date of this prospectus, we have no permanent staff, other than Mr. Michael Williams, who is our President, CEO, and treasurer. Our operating subsidiary has three full-time employees, in addition to Mr. Williams, and five full-time subcontractors. We intend to hire more employees through our operating subsidiary as we implement our business plan and as may be required.

We do not have employment agreements with any of our employees.

We do not presently have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to our officers or directors. See “Executive Compensation”.

Property

We currently lease 400 square feet of office space at 1 Union Square West, Suite 610, New York, NY 10003 as our corporate offices at an annual cost of $18,600. The space is leased from an independent third party. Our management believes that such facilities will be sufficient for our use for the foreseeable future and until we have begun to fully implement our business plan and require additional employees.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our plan of operation should be read in conjunction with the financial statements and the related notes. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors," "Description of Business" and elsewhere in this prospectus.

Our Plan of Operation

We are an online marketing and media solutions firm specializing in digital interactive media. We utilize state-of-the-art digital interactive media technology to develop what our management believes to be more targeted, effective, quantifiable, less expensive, and more comprehensive advertising and marketing campaigns than traditional methods. By utilizing digital interactive media such as the internet, mobile communications, and digital interactive signage, our management believes that we can implement highly targeted campaigns to a local and global market quickly and cost effectively. Accordingly, our management believes that we are able to provide a greater, tangible, value-added service to our clients, versus our competition.

Our cash flows from operations and our available capital will be sufficient to maintain our current level of operations for the next 12 months, but will not be sufficient to execute our business and marketing plan for the next 12 months. We anticipate that a minimum of $500,000 will be required to expand the breadth and scope of our business (see “Expansion of Business”) and implement our sales and marketing strategy (see “Marketing Strategy”). We plan to obtain the financing needed to expand and market our business from a combination of capital sources and means, including debt and equity financings. Any future financing through equity investments will likely be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other derivative securities, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.

There is no assurance that we will be able to obtain needed financing on terms satisfactory to us, or at all, and we do not have any arrangements in place for any future financing. Our ability to obtain financing may be impaired by such factors as the capital markets, both generally and specifically in the advertising industry, and the fact that we have not generally been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities together with our revenue from operations is not sufficient to satisfy our capital needs, we may be required to curtail, suspend or discontinue some or all of our operations, and investors could lose some or all of their investment. In addition to the above factors, investors should carefully review the risks related to our business set forth under “Risk Factors,” on page 4, above. We have no plans, arrangements or contingencies in place in the event that we suspend or discontinue operations.

Our business plan calls for the hiring of one full-time mobile communications expert who will be strictly devoted to mobile communications marketing, and one full-time managed hosting specialist to oversee our managed hosting service. We do not otherwise expect any significant increase in the number of our employees. We intend to engage independent contractors on an “as needed” basis for the remainder of our personnel requirements, including sales and marketing, media content production and technical consulting. Except for certain capital lease purchases of equipment and systems for our managed hosting service, our management does not anticipate engaging in any research or development or purchasing any significant amount of equipment. Our ability to engage such personnel or to purchase any such equipment will be dependent upon our ability to raise additional financing as discussed above, of which there can be no assurance.Other Expense

Other expense varies from period to period and can include such items as amortization of a beneficial conversion feature on convertible notes payable, amortization of debt issuance costs and interest expense.

Results of Operations

We have suffered recurring losses and net cash outflows from operations since inception. When our cash flows from operations have been insufficient, our activities have been financed from the proceeds of share subscriptions and loans from management and non-affiliated third parties. We expect to continue to incur substantial losses to implement our business plan. We have not established any source of equity or debt financing and there can be no assurance that we will be able to obtain sufficient funds to implement our business plan. As a result of the foregoing, our auditors have expressed substantial doubt about our ability to continue as a going concern in our financial statements for the year ended December 31, 2010. If we cannot continue as a going concern, then investors may lose all of their investment.

SixThree Months Ended June 30, 2011March 31, 2017 Compared to the SixThree Months Ended June 30, 2010March 31, 2016

Our sales for the three months ended March 31, 2017 increased to $829,669, or approximately 33%, from $621,882 for the three months ended March 31, 2016. The following table compares our sales in the three months ended March 31, 2017 and 2016:

The increase in sales in the three months ended March 31, 2017 is primarily attributable to three factors: 1) increased wholesale sales traction within the Pacific Northwest; 2) the acquisition of Motherlode in March 2017, and the expansion of our private label business; and 3) the addition of a new retail location in February 2017.

RevenueExcise taxes, customer programs and incentives for the sixthree months ended June 30, 2011, decreasedMarch 31, 2017 increased to $41,969$217,188, or approximately 30%, from $100,767$167,120 for the sixcomparable 2016 period. The increase is attributable to the increase in liquor sales due to our increased distribution and sales traction during the period.

During the three months ended June 30, 2010.March 31, 2017, cost of sales increased to $322,913, or approximately 26%, from $256,169 for the three months ended March 31, 2016. The decrease in revenue can be directly attributedincrease is primarily attributable to the recent downturncosts associated with our increased liquor sales in the economy which has made clients less willingperiod. We believe that the costs of sales reported in both 2017 and 2016 are not typical of our expected future results because the product costs in both periods are based on smaller production lots, and do not reflect the economies of scale that we anticipate as we move into our new production facility later in 2017 and continue to make capital expenditures.scale our operations.

OperatingGross profit is calculated by subtracting the cost of sales from net sales. Cost of sales consists of the costs of ingredients utilized in the production of spirits, manufacturing labor and overhead, warehousing rent, packaging, and in-bound freight charges. Ingredients account for the largest portion of the cost of sales, followed by packaging and production costs. Gross margin is gross profits stated as a percentage of net sales.

The following table compares our gross profit and gross margin in the three months ended March 31, 2017 and 2016:

Our gross margin of 47% in the three months ended March 31, 2017 increased from our gross margin of 44% for the three months ended March 31, 2016 primarily due to product mix, as the private label products typically have a higher gross margin.

Advertising, promotional and selling expenses for the sixthree months ended June 30, 2011March 31, 2017 increased to $386,132 or approximately 147%, from $156,203 for the three months ended March 31, 2016. This increase is primarily due to our efforts to expand our product sales both regionally, in the Pacific Northwest, and in target national markets.

General and administrative expenses for the three months ended March 31, 2017 decreased to 51,825 compared to $66,788$726,396, or approximately 18%, from $886,011 for the sixthree months ended June 30, 2010.March 31, 2016. This decrease is primarily due to a decrease in rentdecreased management headcount and wages expensestighter expense controls, offset by an increase of $52,819 in professional feesstock-based compensation expense in 2017.

In the three months ended March 31, 2017, we had a $35,534 loss on disposal of property and subcontractor costs. As a resultequipment, primarily related to the write-off of construction-in-process on our primary facility due to the early lease termination agreement we were able to execute in February 2017.

Net total other expenses were $43,324 for the three months ended March 31, 2017, compared to $171,058 for the three months ended March 31, 2016. This decrease of 75% was primarily due to lower interest expense resulting from the conversion of outstanding debt into common stock in revenue exceeding the decrease in expenses, we experienced a netDecember 2016.

Net loss attributable to common stockholders during the sixthree months ended June 30, 2011,March 31, 2017 was $906,855 as compared to net incomea loss of $8,788$1,014,679 for the sixthree months ended June 30, 2010.March 31, 2016. The reduction in our net loss was primarily attributable to our increased sales and gross margin, as well as decreased general and administrative expenses and interest expense during 2017, which amounts were offset by higher advertising, promotional and selling expenses and a one-time loss on the disposal of property and equipment.

Year Ended December 31, 20102016 Compared to the Year Ended December 31, 20092015

RevenueOur sales for the year ended December 31, 2010, decreased2016 increased to $147,166$3,042,527, or approximately 31%, from $218,131$2,326,664 for the year ended December 31, 2009. 2015, as follows:

The decreaseincrease in revenue can be directly attributedsales in the year ended 2016 is primarily attributable to our increased national distribution, as well as further wholesale sales traction within the Pacific Northwest. Retail/special events sales declined during the year primarily due to the recent downturn infact that one of our three stores was closed during part of the economy which has made clients less willing to make capital expenditures.year (March through November 2016).

Operating expensesExcise taxes, customer programs, and incentives for the year ended December 31, 2010 decreased2016 increased to $111,752 compared to $222,865$934,221, or approximately 50%, from $624,046 for the year ended December 31, 2009. This is due to decreases in general and administrative expenses, management fees, rent, and wages, offset by an increase in professional fees. As a result, the Company generated a net loss of $11,181 during the year ended December 31, 2010 compared to a net loss of $35,474 for the year ended December 31, 2009.

General and administrative expenses decreased to $44,725 for the year ended December 31, 2010 (2009 - $115,357). The decrease in general and administrative expense was a result of a decrease in utilities, travel, entertainment and office expenses.

Management fees decreased to $25,740 for the year ended December 31, 2010 (2009 - $32,683). The decrease in management fees was a result of lower revenue.

Rent expense decreased to $26,810 for the year ended December 31, 2009 (2008 - $36,502). The decrease in rent was a result of renegotiating our lease with the building management.

Wages expense decreased to $4,300 for the year ended December 31, 2010 (2009 - $38,281). The decrease was a result of a reduction in job flow due the recent economic downturn.

Professional fees increased to $18,263 for the year ended December 31, 2010 (2009 - $8,470).2015. The increase was a result of legal and accounting services related to the public offering.

Liquidity and Capital Resources

As of June 30, 2011, the company had cash of $14,702 and a working capital deficit of $126,939, compared to cash of $36,258 and a working capital deficit of $107,323 as of June 30, 2010. The company’s decrease in cash and liquidity is attributable to cash usedthe increase in operating activities.liquor sales, due to our increased distribution and sales traction during the year. In addition, customer programs and incentives increased due to our increased national distribution.

During the year ended December 31, 2010, the Company issued 390,000 shares2016, cost of common stock at $0.01 per sharesales increased to $1,280,344, or approximately 47%, from $870,390 for total gross proceeds of $3,900 by way of private placement.

During the year ended December 31, 2010,2015. The increase is primarily attributable to the Company issued 120,000 common shares at a fair valuecosts associated with our increased liquor sales in the year. We believe that the cost of $1,200sales we reported for both 2016 and 2015, however, are not typical of our expected future results, because the product costs in both years are based on smaller production lots, and do not reflect the economies of scale that we anticipate as we move into our new production facility in mid-2017 and continue to a non-related party for software planning, design and development services.scale our operations.

DuringGross profit is calculated by subtracting the cost of sales from net sales. Cost of sales consists of the costs of ingredients utilized in the production of spirits, manufacturing labor and overhead, warehousing rent, packaging, and in-bound freight charges. Ingredients account for the largest portion of the cost of sales, followed by packaging and production costs. Gross margin is gross profits stated as a percentage of net sales.

The following table compares our gross profit and gross margin in the years ended December 31, 2016 and 2015:

Our gross margin of 39% of net sales in the year ended December 31, 2010, the Company used $13,2922016 declined from our gross margin of cash49% for operating activities compared to $34,982 for the year ended June 30, 2008.

During the year ended December 31, 20102015, primarily due to higher customer programs and incentives from the Company used $17,537 of cashnational product expansion, higher raw material costs experienced during the year and to a lesser extent product mix.

Advertising, promotional and selling expenses for operating activitiesthe year ended December 31, 2016 increased to $1,244,152, or approximately 35%, from $923,310 for the year ended December 31, 2015. This increase is primarily due to our efforts to expand our product sales nationally. Advertising expense was approximately $297,000 and $389,000 for the years ended December 31, 2016 and 2015, respectively. Amounts paid to customers in connection with customer programs and incentives totaled $136,786 and $3,184 in 2016 and 2015, respectively.

General and administrative expenses for the year ended December 31, 2016 increased to $3,881,771, or approximately 13%, from $3,450,436 for the year ended December 31, 2015. This increase is primarily due to increased legal, accounting, and professional costs related to our various financing efforts in 2016, and higher stock-based compensation expense in 2016.

Other expense was $901,658 for the year ended December 31, 2016, compared to $13,292$59,548 for the year ended December 31, 2015, an increase of 1414%. This increase was primarily due to an increase in interest expense and amortization of debt discounts of $512,479 pertaining to our 2016 debt financings.

Net loss available to common stockholders during the year ended December 31, 2009. The company has raised $3,900 through the issuance2016 was $5,251,293 as compared to a loss of shares during$3,601,066 for the year ended December 31, 2010.2015. Our net loss was primarily attributable to our increased selling, general and administrative expenses relating to increased national sales distribution expenses, as well as increased legal, accounting and professional costs during 2016.

Liquidity and Capital Resources

As of June 30, 2011, the Company has funded its initial operations through the issuance of 12,710,000 shares ofOur primary capital stock, loans from third parties and a loan from the President of the Company.

Currently the company has sufficient funds to meet its requirements are for the coming year. It will continue to improve itsfinancing of inventories and cash positions by focusing on increasing sales, improving profitabilityused in operating activities. Funds for such purposes have historically not been generated from operations but rather from short-term credit in the form of extended payment terms from suppliers, and from convertible debt and equity financings.

For the three months ended March 31, 2017 and 2016, we incurred a net loss of approximately $0.9 and $1.0 million, respectively, and had an accumulated deficit of approximately $13.7 million as of March 31, 2017. For the years ended December 31, 2016 and 2015, we incurred a net loss of approximately $5.3 and $3.6 million, respectively, and had an accumulated deficit of approximately $12.8 million as of December 31, 2016. For the three months ended March 31, 2017, we raised approximately $1.0 million from convertible debt and equity financings. For the year ended December 31, 2016, we raised approximately $5.9 million from convertible debt and equity financings.

At March 31, 2017, we had approximately $0.9 million of cash on hand with positive working capital of $1.7 million. In the long term, our ability to meet our ongoing operating cash needs will be dependent on generating positive operating cash flow, primarily through increased sales, improved profit growth and controlling expenses. During the fourth quarter 2016 and in the first half of 2017, we have taken actions to improve profitability, reduce headcount, reduce rent, reduce professional fees and increase sales. Through July 17, 2017, we raised an additional $2,210,000 in cash through equity and debt financings. In addition, in March 2017, we acquired for equity a small distillery bottling and production support business that we expect will improve operating results. Management believes that cash on hand and proceeds from the most recent equity financing will be sufficient to meet our cash needs over the next twelve months.

The following table summarizes our sources and uses of cash for each of the periods presented:

Operating Activities

In the three months ended March 31, 2017, net loss plus non-cash adjustments used were approximately $0.6 million compared to $0.7 million used in 2016. The decrease in cash usage can be primarily attributed to the lower net loss incurred in 2017 as compared to 2016. Non-cash adjustments in the aggregate were approximately $33,000 lower in 2017. In addition, there was a $0.1 million increase in inventory and a $0.5 million reduction in accrued liabilities in 2017.

In 2016, net loss plus non-cash adjustments used in operating activities were approximately $4.2 million compared to $2.7 million used in 2015. The increase can be primarily attributed to the increased net loss incurred in 2016 as compared to 2015. Non-cash adjustments in the aggregate were about $0.1 million higher in 2016. In addition, inventory increased by $0.1 million, accounts receivable increased by $0.2 million, and accrued liabilities increased by $0.4 million in 2016, offset by a $0.8 million decrease in accounts payable.

In 2015, inventory increased by $0.3 million offset by increases in accounts payable of $1.1 million and accrued liabilities of $0.5 million, and a reduction of prepaid expenses and other assets of $0.2 million.

Investing Activities

Cash used in investing activities consists primarily of purchases of property and equipment. Capital expenditures of $39,631 and $6,954 were incurred in the three months ended March 31, 2017 and 2016, respectively. Capital expenditures of $9,202 and $50,076 were incurred in 2016 and 2015, respectively.

Financing Activities

During the three months ended March 31, 2017, operating losses and working capital needs discussed above were met by raising equity financing from the issuances of common stock with proceeds of $0.8 million and from the exercise of warrants with proceeds of $0.2 million. Net cash flows provided by financing activities in the three months ended March 31, 2016 primarily consisted of $0.2 million in deposits in connection with our preferred stock offering.

During 2016, operating losses and working capital needs were met by raising debt and equity financing from the issuances of preferred stock with proceeds of $0.4 million, common stock with proceeds of $3.0 million, and convertible notes payable with proceeds of $1.7 million, and from the exercise of warrants with proceeds of $0.7 million, offset by payments on convertible notes payable of $0.1 million.

Accounts Receivable Factoring Program

Prior to May 2017, we used an accounts receivable factoring program with certain customer accounts. Under this program, we had the option to sell those customer receivables in advance of payment for 75% of the amount due. When the customer remits payment, we then received the remaining 25%. We were charged interest on the advanced 75% payment at a rate of 1.5% per month. Under the terms of the agreement with the factoring provider, any factored invoices had recourse should the customer fail to pay the invoice. Thus, we recorded factored amounts as a liability until the customer remits payment and we received the remaining 25% of the non-factored amount. We did not factor any invoices during the period ended March 31, 2017. At March 31, 2017, we had factored invoices outstanding of $59,547, and we incurred fees associated with the factoring program of $2,582 during the three months ended March 31, 2017. During the three months ended March 31, 2016, we factored invoices totaling $117,933 and received total proceeds of $88,450. At March 31, 2016, we had factored invoices outstanding of $79,120, and we incurred fees associated with the factoring program of $4,269 during the three months ended March 31, 2016. As of May 10, 2017, we terminated our factoring program.

2017 Financing Activities

We recently concluded an equity financing of 400,000 units at $3.90 per unit, with each unit consisting of one share of common stock and one three-year common stock purchase warrant exercisable at $7.50 per share (subject to adjustment), for total proceeds of $1,560,000 in cash. The financing closed in several phases: (1) on March 31, 2017, on which date we issued 192,308 shares of our common stock for $750,000 in cash and warrants to purchase 192,308 shares of common stock, (2) on several dates between April 3, 2017 and May 4, 2017, during which period we issued 85,594 shares of our common stock for $333,815 in cash and warrants to purchase 85,594 shares of common stock, and (3) on several dates between May 5, 2017 and June 4, 2017, during which period we issued 122,098 shares of our common stock for $476,185 in cash and warrants to purchase 122,098 shares of common stock.

On several dates between April 21, 2017 and June 30, 2017, we issued an aggregate of $1,400,000 convertible promissory notes to accredited investors. The notes have a maturity date of three years from the date of issuance, and bear interest at the rate of five percent (5%) per annum. The notes have an automatic conversion feature upon the closing (or first in a series of closings) of the next equity financing in which we sell shares of its equity securities for an aggregate consideration of at least $4,000,000 at a purchase price of at least $7.50. The outstanding principal and unpaid accrued interest on the notes shall be automatically converted into equity securities at a price equal to 80% of the price paid per share by the investors in the next equity financing or $6.00, whichever is lower, provided, however, that in no event shall the conversion price be less than $6.00. The notes have a voluntary conversion feature where the investor may convert, in whole or in part, at any time at the conversion rate of $6.00.

In March 2017, we issued 19,795 shares of common stock to four third-party consultants in exchange for services rendered.

In March 2017, we issued 575 shares of common stock to employees for stock-based compensation of $2,517.

On March 8, 2017, we completed the acquisition of MotherLode. We issued 86,667 shares of common stock to the owners of MotherLode as consideration for the acquisition. Based on the closing share price of our common stock of $4.35 on March 8, 2017, the value of the transaction was $377,000.

In March 2017, we issued 22,436 shares of common stock upon conversion of 8% convertible promissory notes with an aggregate principal amount converted of $87,500.

In March 2017, we issued 83,334 shares of common stock upon conversion of 250 shares of preferred stock.

From January 15, 2017 through February 16, 2017, we received warrant exercises and subscription documents totaling $159,250 for 40,834 shares issued.

From January 4, 2017 to January 22, 2017, we sold 15,000 shares of common stock to accredited investors at a price of $3.90 per share for aggregate cash proceeds of $58,500.

2016 Note and Warrant Financing

On June 30, 2016, we issued $200,000 of principal amount of 8% promissory notes and warrants to purchase shares of our common stock to three accredited investors. The aggregate gross proceeds from the sale of the notes and warrants were $200,000. The notes have a 2-year maturity dates and bear interest at eight percent (8%) per annum. The notes were issued with warrants to purchase up to 33,334 shares of our common stock at an exercise price of $6.00 per share. The number of warrant shares underlying each warrant are equal to the principal amount of the promissory note subscribed for by the investor multiplied by one-half (0.5). The warrants will be exercisable for three (3) years after the closing date. The proceeds were used for working capital and general corporate purposes.

From July 1, 2016 to September 30, 2016, we issued $1,050,000 of principal amount of 8% promissory notes and warrants to purchase shares of our common stock to six accredited investors. The aggregate gross proceeds from the sale of the notes and warrants were $1,050,000. The notes have a 2-year maturity date and bear interest at eight percent (8%) per annum. The notes were issued with warrants to purchase up to 175,000 shares of our common stock at an exercise price of $6.00 per share. The number of warrant shares underlying each warrant are equal to the principal amount of the promissory note subscribed for by the investor multiplied by one-half (0.5). The warrants will be exercisable for three (3) years after the closing date. The proceeds were used for working capital and general corporate purposes.

From October 19, 2016 to November 21, 2016, we issued $450,000 of principal amount of 8% promissory notes and warrants to purchase shares of our common stock to accredited investors. The aggregate gross proceeds from the sale of the notes and warrants were $450,000. The notes have a 2-year maturity date and bear interest at the eight percent (8%) per annum. The notes were issued with warrants to purchase up to 75,000 shares of our common stock at an exercise price of $6.00 per share. The number of warrant shares underlying each warrant are equal to the principal amount of the promissory note subscribed for by the investor multiplied by one-half (0.5). The warrants will be exercisable for three (3) years after the closing date. The proceeds were used for working capital and general corporate purposes.

2016 Common Stock and Warrant Unit Financing

From June 4, 2016 to June 22, 2016, we conducted closings for the sale of 666,667 units (“Common Units”) to accredited investors at a price of $3.00 per Common Unit for an aggregate cash purchase price of $2,000,000. Each Common Unit consists of (i) one share of our common stock and (ii) one warrant, exercisable for 3-years, to purchase one (1) share of common stock at an exercise price of $6.00 per whole share.

We used approximately $100,000 of the proceeds received to prepay in full a 14% Secured Convertible Promissory Note dated May 13, 2016 in the original principal amount of $219,200. The prepayment amount for this note was reduced as a result of the note holder’s conversion of principal under this note into shares of our common stock following receipt of the prepayment notice, as permitted under the terms of such note. We used approximately $307,986 to prepay in full that certain 14% Secured Convertible Promissory Note dated May 13, 2016 in the original principal amount of $302,647 and approximately $130,552 to repay in full the remaining amounts due under that certain 5% Convertible Promissory Note in the original principal amount of $150,000. The remaining proceeds were used for inventory purchases and for working capital and general corporate purposes.

2016 Series A Convertible Preferred Stock and Warrant Financing

From April 4, 2016 to June 17, 2016, we conducted closings for 972 units (“Units”) to 15 accredited investors and one unaccredited investor at a price of $1,000 per Unit for an aggregate purchase price of $972,000, of which (i) 499 Units were purchased for $499,000 in cash (ii) 423 Units were purchased by certain of our officers in consideration of $423,000 accrued and unpaid salary and (iii) 50 Units were purchased in consideration of cancellation of $50,000 of outstanding indebtedness. Each Unit consists of (i) one share of our series A convertible preferred stock convertible into shares of our common stock. at a rate of $4.50 per share and (ii) one warrant, exercisable for 3-years, to purchase six hundred sixty-seven (667) shares of our common stock at an exercise price of $6.00 per whole share. We received gross proceeds of $499,000 from the sale of the 499 Units for cash. We used $35,920 of these proceeds as payment for non-exclusive placement agent fees to FINRA registered broker-dealers. In addition, approximately $20,000 was used to repay outstanding indebtedness under 5% promissory notes. The remaining proceeds were used for working capital and general corporate purposes and to fund growth opportunities.

Convertible Notes

On September 10, 2015, we issued and sold a convertible promissory note bearing interest at 14% per annum in the principal amount of $275,000 to WWOD Holdings, LLC, an accredited investor (“WWOD”). This note initially had a maturity date of May 10, 2016 and an original issue discount of $33,500. We received gross proceeds of $241,500, and, after paying the investors expenses, we received net proceeds of $239,000, which proceeds were used for working capital and general corporate purposes. The conversion price for this note was equal to the lesser of (i) the fixed conversion price (currently $9.00) or (ii) 65% of the lowest trading price of our common stock during the 5-trading days prior to conversion. This note contained certain covenants and restrictions including, among others, that for so long as this note is outstanding we will not incur indebtedness, permit liens, pay dividends or dispose of certain assets. Events of default under the note include, among others, failure to pay principal or interest on the note or comply with certain covenants under the note. The note is secured by all of our assets.

On April 14, 2016, we entered into an amendment agreement with WWOD and a new investor, MR Group I, LLC (“Investor”), pursuant to which we issued and sold to Investor a convertible promissory note dated April 18, 2016, bearing interest at 14% per annum in the principal amount of $300,000 (the “Additional Note”). The Additional Note had a maturity date of January 18, 2017 and an original issue discount of $100,000. We received gross proceeds from the Investor of $200,000. After paying $15,000 of the Investor’s expenses, we received net proceeds of $185,000, which were used for working capital and general corporate purposes. Concurrent with the Investor’s purchase of the Additional Note, WWOD contributed the WWOD Note to Investor (the WWOD Note and the Additional Note, the “Notes”). Following issuance of the Additional Note, the aggregate principal amount of Notes was $575,000, both of which are now held by the Investor. We agreed to repay the Additional Note in six installments (“Amortization Payments”) at set forth in the Amortization Schedule attached to the Additional Note beginning 30th day after issuance and each 30-days thereafter. However, failure to make any Amortization Payment will not be deemed an event of default under the Additional Note. In addition, the Additional Note can be prepaid at any time until the date immediately preceding the maturity date. The Additional Note is convertible into common stock at a conversion price is equal to the lesser of (i) the fixed conversion price (currently $24.00) or (ii) 65% of the lowest trading price of our common stock during the 5-trading days prior to conversion. The Additional Note contains certain covenants and restrictions including, restrictions on our ability to incur indebtedness, permit liens, pay dividends or dispose of certain assets. Events of default under the Additional Note include, among others, failure to pay principal or interest on the note or comply with certain covenants under the Additional Note.

On May 13, 2016, we entered into Exchange Agreement (the “Exchange Agreement”) with the Investor pursuant to which we: (i) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $219,200 with an August 31, 2016 maturity date (the “May Note”) in exchange for the WWOD Note and (ii) issued Investor a 14% secured convertible promissory note dated May 13, 2016 in the aggregate principal amount of $302,647 with an April 30, 2017 maturity date (the “Second Note,” together with the May Note, the “Exchange Notes”) in exchange for the Initial Note. In the event that we consummate the additional proposed $2 million financing with Investor for which we have executed a non-binding term sheet (the “Subsequent Placement”), $200,000 of aggregate principal of the Second Note, together with any accrued, and unpaid, interest then outstanding or any additional amounts due and payable as a result of an event of default under the Second Note, shall be applied, on a dollar-for-dollar basis, to reduce the purchase price of the Investor in such Subsequent Placement and upon the closing of such Subsequent Placement and such application, the remainder of the Second Note then outstanding shall be deemed cancelled for no additional consideration.

In connection with the issuance of the Exchange Notes, we entered into a Security and Pledge Agreement dated May 13, 2016 pursuant to which the Exchange Notes were secured by all of our assets. The Exchange Notes can be prepaid at any time until the date immediately preceding their respective maturity dates. The Exchange Notes are convertible into common stock at a conversion price equal to the lesser of (i) the Fixed Conversion Price (currently $9.00 for the May Note and $24.00 for the Second Note); or (ii) 65% of the lowest trading price of our common stock during the (i) 5-trading days prior to conversion (for conversions on or before May 22, 2016, or (ii) 10-trading days prior to conversion (for conversions after May 22, 2016). The Exchange Note contains certain covenants and restrictions including, restrictions on our ability to incur indebtedness, permit liens, pay dividends or dispose of certain assets. Events of default under the Exchange Notes include, among others, failure to pay principal or interest on the note or comply with certain covenants under the note. We will be required to repay the Exchange Notes at 133% upon an event of default. We prepaid each of the Exchange Notes in June 2016.

On June 13, 2014, we issued Crystal Falls Investments, LLC a demand promissory note in the amount of approximately $150,000, which note was amended on September 19, 2014 to a 5% convertible promissory note. The amended note bore interest at 5% per annum and had a maturity date of June 13, 2015. This note was repaid in full on July 1, 2016.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon its consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. The more judgmental estimates are summarized below. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from the Company’s estimates if past experience or other assumptions do not turn out to be substantially accurate.

Revenue Recognition

Revenue consistsNet sales includes product sales, less excise taxes, customer programs and incentives. we record revenue when all four of web designing, web hosting, and maintenancethe following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services and is recognized only whenhas occurred; (iii) the selling price is fixed or determinable, persuasive evidence of an arrangement exists, the service is delivered,determinable; and (iv) collectability is reasonably assured. The Company regularly reviews accounts receivable for any bad debts. Allowances for doubtful accounts are based on an estimate of losses on customer receivable balances.

Deferred RevenueWe recognize sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission (OLCC), we recognize sales upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return. We exclude sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through our retail location are recognized at the time of sale.

The Company typically receivesSales received from online merchants who sell discounted gift certificates for our merchandise and tastings is deferred until the customer has redeemed the discounted gift certificate or the gift certificate has expired, whichever occurs earlier.

Customer Programs and Incentives

Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, as certain milestones are completed on individual contracts. These advancea common practice in the alcohol beverage industry. We make these payments to customers and incur these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as deferredreductions to net revenue or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50,Revenue Recognition- Customer Payments and Incentives, based on the balance sheetnature of the expenditure. Amounts paid to customers totaled $40,772 and reclassified$8,712 for the three months ended March 31, 2017 and 2016, respectively.

Shipping and Fulfillment Costs

Freight costs incurred related to shipment of merchandise from our distribution facilities to customers are recorded in cost of sales.

Concentrations

Financial instruments that potentially subject us to concentrations of credit risk consist principally of trade receivables. At March 31, 2017, three distributors represented 79% of trade receivables. At December 31, 2016, three distributors represented 91% of trade receivables. Sales to three customers accounted for approximately 57% of consolidated sales for the three months ended March 31, 2017. Sales to one distributor, the OLCC, accounted for approximately 32% of consolidated sales for the three months ended March 31, 2017.

Inventories

Inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out (FIFO) method. A portion of inventory is held by the OLCC on consignment until it is sold to a third party. We regularly monitor inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on our estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. We have recorded no write-downs of inventory for the three months ended March 31, 2017 and 2016.

Advertising

Advertising costs are expensed as revenueincurred and are included in advertising, promotional and selling expenses in the accompanying statements of operations. Advertising expenses were $386,132 and $156,203 for the three months ended March 31, 2017 and 2016, respectively.

Excise Taxes

We are responsible for compliance with the TTB regulations which includes making timely and accurate excise tax payments. We are subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. We calculate our excise tax expense based upon units produced and on our understanding of the applicable excise tax laws. Excise taxes totaled $176,416 and $158,408 in the three months ended March 31, 2017 and 2016, respectively.

Stock-Based Compensation

We recognize as compensation expense all stock-based awards issued to employees in accordance with the fair value recognition provisions of Accounting Standards Codification Topic 718,Compensation - Stock Compensation. The compensation cost is measured based on the statementgrant-date fair value of operations only after the contractrelated stock-based awards and is considered completedrecognized over the service period of stock-based awards, which is generally the same as the vesting period. The fair value of stock options is determined using the Black-Scholes valuation model, which estimates the fair value of each award on the date of grant based on a variety of assumptions including expected stock price volatility, expected terms of the awards, risk-free interest rate, and dividend rates, if applicable. Stock-based awards issued to nonemployees are recorded at fair value on the revenue has been earned.measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. Stock-based compensation was $374,687 and $140,370 in 2016 and 2015, respectively, and $158,658 and $105,839 in the three months ended March 31, 2017 and 2016, respectively.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material.

Legal ProceedingsRelated Party Transactions

No director, person nominated to become a director,

We had no related party transactions during the three months ended March 31, 2017. During the three months ended March 31, 2016, our chief executive officer promoterpaid expenses on behalf of us with his personal credit card. These related party advances do not bear interest and are payable on demand. At March 31, 2016, the balance due to the chief executive officer was approximately $95,000, and is included in accounts payable on the accompanying condensed consolidated balance sheets.

Subsequent Events

On May 1, 2017, we announced the acquisition of a majority stake in BBD. Pursuant to the agreement governing the acquisition of BBD, we agreed to exchange 28,096 shares of our common stock for 90% of the outstanding limited liability company units of BBD. Following the acquisition of BBD, we will maintain the independence of BBD as a separate entity underneath our operational umbrella. We and BBD will benefit from brand synergies because of the limited overlap with our products. We will devote sales, marketing, financial capital and production resources to expanding BBD’s business, which in 2016 had total revenues of approximately $201,000.

On April 24, 2017, we issued 16,667 shares of its common stock upon conversion of 50 shares of preferred stock. As of April 24, 2017, we have no shares of preferred stock outstanding.

On April 21, 2017, we completed a $500,000 convertible note purchase agreement with an accredited investor. The note has a maturity date of April 3, 2020, and bears interest at the rate of five percent (5%) per annum. The note has an automatic conversion feature upon the closing (or first in a series of closings) of the next equity financing, in which we sell shares of its equity securities for an aggregate consideration of at least $4,000,000 at a purchase price of at least $7.50. The outstanding principal and unpaid accrued interest on the note shall be automatically converted into equity securities at a price equal to 80% of the price paid per share by the investors in the next equity financing or $6.00, whichever is lower, provided, however, that in no event shall the conversion price be less than $6.00. The note has a voluntary conversion feature where the investor may convert, in whole or in part, at any time at the conversion rate of $6.00.

On April 5, 2017, our board approved an incentive option grant to Mr. Grover Wickersham totaling 33,334 shares with an exercise price of $4.80 per share. In addition, the board approved a restricted stock unit grant of 33,334 shares of common stock that vested on April 5, 2017, of which 10,217 shares were not issued in order to satisfy Mr. Wickersham’s personal tax withholding responsibility.

On April 3, 2017, we issued 8,334 shares of common stock to a third-party consultant in exchange for services rendered.

From April 3, 2017 to May 4, 2017, we issued 85,594 shares of common stock for $333,815 in cash, including warrants to purchase 85,594 shares of common stock.

On April 2, 2017 and April 18, 2017, the independent directors, Messrs. Trent Davis and Michael Fleming, respectively, each exercised 4,630 stock options to purchase common stock at an exercise price of $5.40 per share.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standard Boards (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2016-09,Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years and we have adopted ASU 2016-09 as of March 31, 2017.

In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606,Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Early application is permitted for all public business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact ASU 2016-02 will have on our condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers (Topic 606). ASU 2014-09 will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. We will elect to apply the impact (if any) of applying ASU 2014-09 to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. In August 2015, the FASB issued ASU No. 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU 2015-14 defers the effective date of ASU 2014-09 for one year, making it effective for the year beginning December 31, 2017, with early adoption permitted as of January 1, 2017. We currently expect to adopt ASU 2014-09 in the first quarter of 2018. We do not expect adoption of ASU 2014-09 to have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15,Presentation of Financial Statements - Going Concern. The new guidance explicitly requires that management assess an entity’s ability to continue as a going concern and may require additional detailed disclosures. ASU 2014-15 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. We have adopted it as of December 31, 2016.

In July 2015, the FASB issued ASU No. 2015-11,Inventory (Topic 330), Simplifying the Measurement of Inventory. ASU 2015-11 is part of the FASB’s initiative to simplify accounting standards. The guidance requires an entity to recognize inventory within scope of the standard at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. ASU 2015-11 will be effective prospectively for the year beginning January 1, 2017. We have adopted it as of March 31, 2017.

In April 2015, the FASB issued ASU 2015-03, simplifying the presentation of debt issuance costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for annual and interim periods beginning after December 15, 2015 and early application is permitted. We have early adopted it as of December 31, 2015.

BUSINESS

Overview

We are an Oregon-based producer and marketer of craft spirits, founded in 2008. Our products span several alcoholic beverage categories, including bourbon, gin, American whiskey, rye, vodka, and rum. Unlike many, if not most distillers, we operate several retail tasting rooms in Oregon to market our brands directly to consumers. Our growth strategy is to build on our local base in the Pacific Northwest and expand selectively to other markets by using major spirits distributors, such as Southern Glazer Wines and Spirits, or regional distributors that focus on craft brands.

As a small business in the large, international spirits marketplace populated with massive conglomerates, we rely heavily on creativity to create innovative products. In December 2016 we retained Sandstrom Partners, the internationally known sprits branding firm that branded St Germain and Bulleit Bourbon, to assist us in our mission, and it became an investor in our Company. We seek to bea leader in creating spirits that offer better value than comparable spirits, for example our value priced Burnside Bourbon and Portland Potato Vodka, andan innovator in creating imaginative spirits that offer a unique taste experience, for example our cold-brewed coffee rum, Oregon oak aged whiskeys, Marionberry Whiskey and Peppermint Bark holiday liqueur. On May 1, 2017, we acquired Big Bottom Distillery for its excellent, award winning range of super premium gins and whiskeys, including Navy Proof Gin, Oregon Gin, Delta Rye and initial production of American Single Malt whiskey. BBD’s super premium spirits will expand our tasting room offerings and give us a presence at the “high end” of the market. Also, through MotherLode, our wholly-owned subsidiary acquired on March 8, 2017, we also provide contract bottling and packaging services for existing and would be spirits producers, some of whom might also contract with us to blend or distill spirits.

We also intend to capitalize on our uniqueness as a publicly-traded craft spirit producer, with access to the public markets, to support our growth, including by making strategic acquisitions.

Recent Events

MotherLode Acquisition

On March 8, 2017, we acquired MotherLode, a Portland, Oregon-based provider of bottling services and production support to craft distilleries. Since its founding in 2014, the mission of MotherLode has been to enable craft distillers to increase their production and extend their product lines, reducing cost and increasing efficiency, thereby freeing them to focus on their craft. The typical MotherLode customer is a distillery of small batch, hand-crafted spirits, or a premium craft spirit sold as a private label.

We recently relocated much of our own operations to MotherLode’s facility and plan to expand our manufacturing resources. Plans are in place for a pneumatic bottling line, which we anticipate could result in a five-time increase in bottling rate and provide us with an opportunity for large-volume spirit handling capability.

In addition to bottling services for distillers and other producers of spirits, MotherLode bottles “private label” craft spirits for customers who have on-premise or off-premise licenses, including retail and liquor stores, bars, restaurants, events, and businesses that want to take advantage of the benefits that come from having their brand clearly printed on a label. MotherLode’s craft spirits can also be private labeled for corporate gifts, wedding, birthdays and other personal events.

Finally, MotherLode intends to begin canning wine and Ready to Drink (“RTD”) alcoholic drinks for its Pacific Northwest customers. The custom built canning line is designed to produce Ball Corporation’s popular “slim can” in 187ml, 200ml and 250ml sizes, with 250ml being equal to approximately 8.45 ounces. The new line will be able to can wine and RTD beverages containing up to 20% alcohol by volume.

Big Bottom Distilling Acquisition

On May 1, 2017 we acquired 90% of the ownership of Big Bottom Distilling (“BBD”), a Hillsboro, Oregon-based distiller and producer of super premium gins, whiskeys, brandies, rum, and vodka. The extensive BBD product portfolio includes several craft spirits that we believe are highly complementary to our product line, including The Ninety One Gin, Navy Strength Gin (114 proof), and Delta Rye (111 proof) rye whiskey, among others. Inspired by the craft spirits movement in Oregon, BBD’s small-batch, hand-crafted spirits provide consumers with unique takes on traditional spirits. The spirits portfolio created by Ted Pappas and lead distiller Travis Schoney, formerly of High West Distilling of Park City, Utah, has won awards for such specialty finished whiskeys as the Barlow Trail Port Cask Finished Whiskey. BBD craft spirits are primarily distributed in Oregon, California and Illinois. We intend to distribute BBD products using our own distribution base and sales team, on a selective basis, in the U.S. and Canada. We intend to collaborate with BBD on expanding the production of BBD’s super-premium American Single Malt Whiskey, made with malted Pacific Northwest barley, fermented and distilled entirely on premises (i.e., in bond).

Retention of Sandstrom Partners

In late 2016, with the goal of increasing our brand value and accelerating sales, we retained Sandstrom Partners, a Portland-based firm specializing in spirits branding, and tasked them with reviewing our current product portfolio, as well as our new ideas, and advising us on marketing, creation of brand awareness and product positioning, locally and nationally. We intend to use Sandstrom’s full range of brand development services, including research, strategy, brand identity, package design, environments, advertising as well as digital design and development. Sandstrom Partners is recognized as preeminent in spirits brand development and their work appears in most national and international design competitions. Some of Sandstrom Partners current and past spirit branding clients include St-Germain, Brown-Forman, Brown Forman/Chambord, Old Forester, Stillhouse Distilling, Aviation Gin, Diageo, Bulleit Bourbon, Miller Brewing, Pernod Ricard, Bacardi Oakheart. Sandstrom’s approach to spirits marketing typically involves telling a compelling story whose plot is transmitted in every consumer communication: from the name, to the package, point-of-sale, web, and advertising. We anticipate that Sandstrom will begin to impact our packaging design in the second half of 2017.

Market Opportunity

Large and Growing Global and Domestic Markets

The global spirits market generated total revenues of $316 billion in 2013, representing a compound average growth rate (CAGR) of 3.4% between 2009 and 2013, according to MarketLine. The performance of the market is forecasted to accelerate with an anticipated CAGR of 4.2% for the five-year period 2013-2018, which is expected to increase revenues generated by this market to approximately $388 billion by the end of 2018.

The U.S. spirits market had total revenues of $24.1 billion in 2015, representing a 25% increase since 2010, according to the Distilled Spirits Council of the United States (DISCUS). The domestic market share of spirits compared to beer and wine was at a record 35.4% in 2015 according to DISCUS, representing more than a 2% gain over beer and wine in terms of market share since 2010.

Key Growth Trends That We Target

Craft– The market share of “craft” distillers (defined as any producer that bottles less than 100,000 cases annually) has doubled over the last two years, and is projected to reach 8% by 2020, according to BNP Paribas.

Women– The United States Alcohol and Tobacco Tax and Trade Bureau (“TTB”), Park Street Imports, LLC (“Park Street”) and the US Census Bureau estimate that 37% of all U.S. whiskey drinkers are women.

Millennials– Generally, millennials (individuals born between the early 1980s and the mid-1990s) value “authenticity” and are inspired by travel, like to try new products and seek new experiences, according to a survey by BeverageDaily.com. Millennials tend to drink a broader range of spirit types (vodka, rum, tequila, whiskey, gin) than prior generations and consume more expensive spirits than their predecessors. These individuals are often attracted to vintage spirits and cocktails with nostalgic followings, such as throwbacks to the 1950’s like rye whiskey, bourbon, and the Manhattan cocktail. According to Barclays Research, millennials increasingly prefer spirits over beer and wine, and flavored spirits in particular. In addition, according to DISCUS, millennials are more willing than prior generations to purchase premium spirits.

Flavored– According to DISCUS, flavored spirits sales continue to grow faster than the overall spirits market, and flavored whiskey, which is especially appealing to younger drinkers and women, is the fastest growing flavored spirit category.

International– The demand for U.S.-produced spirits abroad is increasing significantly. U.S. spirit exports nearly doubled over the past decade to $1.56 billion in 2015, and whiskey exports were up approximately 5.4% in 2015 compared to 2014. The largest export markets for U.S. spirits include the United Kingdom, Canada, Germany, Australia, and Japan.

Our Strategy

Our objective is to build Eastside Distilling into a profitable spirits company, with a distinctive portfolio of premium and high-end spirits brands that have national, and even international, consumer appeal and following. To help achieve this, we expect to:

●     Target Industry Growth Trends. Demand for U.S.-produced premium and high-end craft spirits, particularly whiskeys, has been increasing among millennials and women. We endeavor to capitalize on these trends by developing products that appeal to changing demographics, as typified by our Master Distiller, Melissa Heim, whom we believe is the first female commercial master distiller and blender west of the Mississippi River.

●     Be Experimental. We are not afraid to take chances with innovative product offerings that we believe the larger and more bureaucratic companies that populate the industry cannot easily launch.We want to produce and deliver quality products that offer consumers “something different,” such as value or uniqueness, and we want to convey that message with new packaging developed by our spirits branding firm, Sandstrom Partners.

●     Be Local. Be true to our Oregon and Pacific Northwest “roots” by shunning artificial additives, using locally sourced ingredients such as our high-quality water and Oregon oak, and relying on skilled local artisans. During 2016, we experienced a 45% increase in wholesale sales and were the third largest spirits producer in that state. In addition, we recently extended our Pacific Northwest focus with our first shipments to Alaska during the first quarter of 2017.

●     Expand Geographically and Online. We are building brand awareness and driving sales in multiple geographic markets with the use of social media (Twitter, Facebook, and YouTube). We are partnering with retailers that market heavily online and investing resources into e-commerce and digital marketing.

●     Provide Value. We target the high-growth premium ($12-20 per bottle) and high-end ($20-30 per bottle) market segments with premium quality at attractive pricing. In the super premium category (above $50 per bottle), we intend to have limited production offerings that we believe also deliver exceptional value.

●     Use Sales Networks of Major U.S. Spirits Distributors. We have established and will continue to build relationships with the major wine and spirit wholesalers to distribute our products into the largest spirits markets in the United States.

●    Increase Production. We expect our production of cases to increase each year for the next three years. We believe our increased production capacity will make us more attractive to distribution partners and will also facilitate additional revenues, cost savings and profits.

●    Leverage Access to Public Company Markets. The public capital markets facilitate funding access for our long-term growth initiatives, including continuing to make strategic acquisitions.

Our Strengths

We believe the following competitive strengths will help enable the implementation of our growth strategies:

●     Award Winning Diverse Product Line. We have a diverse product line currently offering of more than a dozen premium craft spirits, many of which have won awards for taste and/or product design. According to a study by the American Craft Spirits Association, the U.S. craft spirits volume of cases sold experienced a compound annual growth rate of 27.4% between 2010 and 2015, and saw an increase in market share from 0.8% to 2.2% during that period. Our sales of premium brands have increased over 1,000% since 2011. We believe our diverse, recognized product line in this growing market will enable us to establish a presence in new geographic markets and enable us to procure additional distributors for our products.

●     Key Relationships. We have distribution arrangements with several of the largest wine and spirits distributors in the United States, such as Southern Glazer. We have also engaged Park Street, a provider of back-office administrative and logistical services for alcohol and beverage distributors. We believe these relationships will help accomplish our goal of having our premium spirits sold and distributed nationwide.

●Experienced Master Distiller. Our master distiller, Melissa “Mel” Heim, whom we believe is the first female commercial master distiller and blender west of the Mississippi River, is an important factor in distinguishing our brands. We believe that Ms. Heim’s highly regarded “palate” is important to us maintaining a high quality artisanal character to our products as well as adding to our consumer appeal.

Our Product Approach

Our approach to our craft spirits involves five important aspects:

●Commitment to Quality. We create and deliver high-quality, innovative products targeted at growing markets.

●Authentic yet Scalable. We believe our approach to production allows us to produce our products at scale while keeping flavor profiles consistent.

●Unique Talent and Experience. Every spirit reflects the creativity of our entire team;

●Extensive Spirit Portfolio. Many craft distillers have only one to three products; we have over a dozen, which we believe affords us the opportunity to target a broader range of consumers with our brands.

●Generate Customer Loyalty. These factors attract loyal and enthusiastic customers and major distributors for our products.

Our Brands

We develop, produce and market the premium brands listed below.

Burnside Bourbon. We develop, market and produce two premium, barrel–aged bourbons: Burnside Bourbon and Oregon Oak Burnside Bourbon. Our Burnside Bourbon is aged in oak barrels, is 96 proof and won a Gold Medal in the MicroLiquor Spirit Awards in 2014, and another from Beverage Tasting Institute. Our Oregon Oak Burnside Bourbon is produced in limited quantities and aged for an additional 90 days in heavily charred Oregon oak barrels and we consider it an “ultra-premium” brand. Our Burnside Bourbon brands accounted for approximately 40%, 35% and 40% of our revenues for years 2016, 2015 and 2014, respectively. Case volume of our Burnside Bourbon increased by 163% from 2014 to 2016, compared to a 12% increase for the bourbon industry in general during the same period.

Barrel Hitch American Whiskey. We develop, market and produce two premium whiskeys: Barrel Hitch American Whiskey and Barrel Hitch Oregon Oaked Whiskey. Our Barrel Hitch American Whiskey is 80 proof and won a triple-Gold Medal and best of show in the MicroLiquor Spirit Awards in 2015. Our Oregon Oak version is produced in limited quantities and aged for an additional 90 days in heavily charred Oregon oak barrels, and we consider it an “ultra-premium” brand. Our whiskey brands were introduced in July 2015 and accounted for approximately 17% and 7% of our revenues for 2016 and 2015, respectively.

Premium Vodka. We develop, market and produce a premium potato vodka under the brand name Portland Potato Vodka which is distilled from potatoes rather than grain and as such is gluten-free. Our Portland Potato Vodka was awarded a silver medal from the American Wine Society and a gold medal from the Beverage Tasting Institute, which also gave it a “Best Buy” rating. Our Portland Potato Vodka accounted for approximately 13%, 14% and 30% of our revenues for years 2016, 2015 and 2014, respectively. Case volume of our Portland Potato Vodka increased by 185% from 2014 to 2016, compared to a 4% increase for the vodka industry in general during the same period.

Distinctive Specialty Whiskeys. We develop, market and produce two distinctive specialty whiskeys: Cherry Bomb Whiskey and Marionberry Whiskey. Our Cherry Bomb Whiskey combines handcrafted small batch whiskey with a blast of real Oregon cherries. Our Cherry Bomb Whiskey won a gold medal from the American Wine Society and was also awarded a gold medal for taste and a silver medal for package design in the MircroLiquor Spirit Awards. Our Marionberry whiskey combines Oregon marionberries (a hybrid blackberry) with premium aged whiskey and was awarded two silver medals in the MicroLiquor Spirit Awards for taste and package design. Our specialty whiskeys accounted for approximately 12%, 15% and 10% of our revenues for years 2016, 2015 and 2014, respectively.

Below Deck Rums. We develop, market and produce four rums under the Below Deck brand name: Below Deck Silver Rum, Below Deck Spiced Rum, Below Deck Coffee Rum and Below Deck Ginger Rum. Below Deck’s Silver Rum is our original rum. Below Deck Spiced Rum is double-distilled from molasses and infused with exotic spices and won a triple gold medal for taste and a bronze medal for package design in the MicroLiquor Spirit Awards. Our Below Deck Coffee Rum is double-distilled and infused with coffee flavors from Arabica bean and won a silver medal at the San Francisco World Spirits Competition. Below Deck Ginger Rum is infused with natural ginger. Our Below Deck Rums accounted for approximately 10%, 12% and 10% of our revenues for years 2016, 2015 and 2014, respectively.

Seasonal/Limited Edition Spirits. In addition to our premium bourbons, whiskeys, rum and vodka, we create seasonal and limited-edition handmade products such as Advocaat (eggnog) Liqueur, Peppermint Bark Liqueur, Bier Schnapps and Holiday Spiced Liqueur. Our Seasonal/Limited Edition Spirits accounted for approximately 6%, 10% and 10% of our revenues for years 2016, 2015 and 2014 respectively.

Brands Acquired as part of the Acquisition of Big Bottom Distilling. As a result of our acquisition of BBD in May 2017, we acquired the following additional brands:

Barlow Trail American Blended Whiskey is a proprietary blend of three well-aged whiskeys. It exhibits subtle floral notes with hints of salted caramel and vanilla along with just the right amount of oak and spice. This whiskey received the following awards:Gold Medal Winner at 2014 Great American Distiller’s Festival; Silver Medal Winner at 2015 Great American Spirits Festival and 2014 Washington Cup Spirits Competition.

Barlow Trail, Port Cask Finish is a proprietary American blended whiskey finished in 10-year tawny port barrels for about six months. It presents a bright, sweet berry and citrus nose. On the palate it showcases a fresh, ripe berry followed by a small hint of peppery spice that gives way to a very smooth, rich and malty quality from the port casks. The product has received the following awards:Gold Medal Winner at 2015 Great American Spirits Festival; First Place Winner at 2015 Best of the NW: SIP NW Spirits Competition “Best Whiskey”; Silver Medal Winner at 2015 American Craft Spirits Association (ACSA) Awards.

Delta Ryeis a harmonious blend of spicy Indiana distilled straight rye whiskey with a slightly sweeter Canadian distilled three year old rye whiskey. This rye blend exhibits intense spice with hints of citrus and mint while it finishes with some vanilla and bold oak. Proofed at 111, the full flavors of these two rye whiskeys create a perfect balance for the most discerning palate.

The Ninety One Gincontains 16 botanicals that offer a complex bouquet of floral qualities complementing the juniper. A slightly sweet gin with non-traditional gin characteristics, the Ninety One Gin has received the following awards:Gold Medal at 2015 American Craft Spirits (ACSA) Awards; Gold Medal at 2015 Great American Spirits Festival; 92 Score by Wine Enthusiast in 2015; Bronze Medal at 2015 San Francisco World Spirits Competition;andThird Place at 2015 Best of the NW: SIP NW Spirits Competition “Best Gin.”

Big Bottom Navy Strength Gin is a 114 proof gin containing the same 16 botanicals as the Ninety One Gin. It presents a slightly heavier juniper bouquet than the Ninety One Gin with a delicate hint of lemongrass and citrus. This Navy Strength Gin offers a balanced spice throughout the palate followed by a mild head and crisp finish, and received aBronze Medal at the 2015 Washington Cup Spirits Competition.

Starkais traditional aged vodka based on a recipe dating back to the 15th century in Eastern Europe. Aged for 12 months in Zinfandel casks that also contained bourbon. The result is a remarkable Starka offering a fresh old twist to the world of vodka.

Barrel Aged Gin undergoes a solera process with the use of 3 different woods in our whiskey barrels – Oregon oak, Hungarian oak and North American white oak, and received aSilver Medal at the 2016 Berlin International Spirits Competition.

Brandies.The 2015 Oregon Apple Brandy is a blend of 5 Oregon apple varietals giving it a more complex fruit quality. This brandy exhibits crisp red apples with autumn spices and the essence of vanilla. A special blend of in-house yeast strains gives way to darker fruit esters allowing for a creamy spiced caramelized apple finish. The 2015 Oregon Apple Brandy received aGold Medal at the 2015 Great American Spirits Festival.

The 2015 Oregon Pear Brandy is made from a blend of Asian pears that were grown and hand harvested from the Willamette Valley, and received the following awards:Gold Medal at the 2015 Great American Spirits Festival and a Bronze Medal at the 2015 Washington Cup Spirits Competition.

Calhoun Brothers Aged Rum is a 4-year old rum, further aged in Big Bottom bourbon barrels creating a perfect balance of sweetness and complex spice. The initial aroma of caramelized sugar, bourbon and molasses is followed by warm spices of cinnamon, cloves, nutmeg and allspice resulting in a smooth, rich and full finish. Awards:Gold Medal Winner at 2015 Great American Spirits Festival.

Other Sources of Revenue

Special Events

We also generate revenues from participating in special events (such as farmer’s markets, trade shows, hosting private tastings, etc.). We offer tastings as well as sell merchandise and bottle sales and have generated as much as $95,000 in revenues from these special events in a single month during the winter holiday season. In addition to the revenues these events generate, we value the immediate customer feedback during these activities which is instrumental in creating better products and testing new flavors.

Retail Stores and Kiosks

We have three retail stores in shopping centers in the Portland, Oregon area that provide us with additional revenue from sales of our products. In December 2014, we opened a 1,200 square foot retail store in Clackamas Town Center (Happy Valley Town Center) and in January 2015, entered into a lease for 3,100 square feet of retail space in the Washington Square Center in Portland. We also had two additional holiday season retail locations within high-traffic shopping malls in the Portland metro region during 2015. For the 2016 holiday season, we replaced the Washington Square Mall storefront with a kiosk location. We intend to maintain these retail stores and kiosks to build local brand awareness and direct-to-consumer retail sales. Some of these stores will contain in-store tastings, which we believe will lead to additional product purchases.

Production and Supply

There are several steps in the production and supply process for beverage alcohol products. First, all spirits products are produced through a multi-stage distillation process that converts basic ingredients, such as grain, sugar cane or agave, into alcohol, which is the “distillate.” Many of our products, including those produced by BBD, contain distillates sourced from other distillers. In fact, with the exception of our American malt whiskey, which is distilled by us, our bourbon and whiskey products typically originate with distilleries in Tennessee, Kentucky or Indiana and in some cases Canada. We currently source both full strength distillates and barrel strength distillates (barrel strength has a lower alcohol by volume (ABV) due to evaporation). The sourcing of spirits is commonplace in the spirits industry.

Next, the alcohol is processed and/or aged by us in various ways depending on the requirements of the specific brand. For our vodka, this processing is designed to remove all other chemicals, so that the resulting liquid will be odorless and colorless, and have a smooth quality with minimal harshness. Achieving a high level of purity involves a series of distillations and filtration processes. For our

spirits brands, rather than removing flavor, we utilize one or more of the following techniques to achieve various complex flavor profiles: infusion of fruit, addition of various flavoring substances, and, in the case of rums and whiskeys, aging of the brands in various types of casks for extended periods of time, and/or blending several rums or whiskeys to achieve a unique flavor profile for each brand.

After the distillation, purification and flavoring processes are completed, the resulting beverage alcohol products are bottled by us. This involves several important stages, including bottle and label design and procurement, filling of the bottles and packaging the bottles in various configurations for shipment. 

We rely on a limited number of suppliers for the sourcing of our spirit distillates and other raw materials. We believe that we have consistent and reliable third party sources for spirit distillates. 

Distribution Network

We believe that the distribution network that we have developed with our sales team and our independent distributors and brokers is one of our key strengths. We currently have distribution and brokerage relationships with third-party distributors in 22 U.S. states.

U.S. Distribution

Producers of beverage alcohol products in the U.S., such as us, must sell their products through a three-tier distribution system, specifically, producers of alcohol must first sell it to a network of distributors, or wholesalers, covering the U.S., in either “open” states or “control” states. In the 33 open states, the distributors are generally large, privately-held companies. In the 18 control person of Eurocanstates, the states themselves function as the distributor, and regulate producers such as us. The distributors and wholesalers in turn sell to individual retailers, such as liquor stores, restaurants, bars, supermarkets and other outlets licensed to sell beverage alcohol. In larger states, such as New York, more than one distributor may handle a brand in separate geographical areas. In control states, importers sell their products directly to state liquor authorities, which distribute the products and either operate retail outlets or license the retail sales function to private companies, while maintaining strict control over pricing and profit.

The U.S. spirits industry has duringconsolidated dramatically over the last ten years: (i) been convictedyears due to merger and acquisition activity. There are currently eight major spirits companies, each of which own and operate their own importing businesses. All companies, including these large companies, are required by law to sell their products through wholesale distributors in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdictionthe U.S. The major companies are exerting increasing influence over the regional distributors and as a result, it has become more difficult for smaller companies to get their products recognized by the distributors.

Importation

We hold the federal importer and wholesaler license required by the Alcohol and Tobacco Tax and Trade Bureau of such proceeding wasthe U.S. Treasury Department, and the requisite state licenses within the states we conduct business.

Our inventory is maintained in our warehouse and shipped nationally by our network of licensed and bonded carriers.

Wholesalers and Distributors

As noted above, in the U.S., we are required by law to use state-licensed distributors or, in the control states, state-owned agencies performing this function, to sell our brands to retail outlets. As a result, we depend on distributors for sales, for product placement and for retail store penetration. We have no distribution agreements or minimum sales requirements with any of our U.S. alcohol distributors, and they are under no obligation to place our products or market our brands. All of the distributors also distribute our competitors’ products and brands. As a result, we must foster and maintain our relationships with our distributors. Through our internal sales team, we have established relationships for our brands with wholesale distributors in the 22 states we sell our products, and our products are sold in the U.S. by seven wholesale distributors, as well as by various state beverage alcohol control agencies.

Significant Customers

Sales to one distributor, the Oregon Liquor Control Commission, accounted for approximately 32% our consolidated sales for each of fiscal years 2016 and 2015.

Sales Team

Our sales force has an average of over ten years of industry experience with premium beverage alcohol brands. Our sales personnel are engaged in the day-to-day management of our distributors, which includes setting quotas, coordinating promotional plans for our brands, maintaining adequate levels of stock, brand education and training and sales calls with distributor personnel. Our sales team also maintains relationships with key retail customers through independent sales calls. They also schedule promotional events, create local brand promotion plans, host in-store tastings, where permitted, and provide wait staff and bartender training and education for our brands.

In addition, we have also engaged Park Street Imports, a provider of back-office administrative and logistical services for alcohol and beverage distributors, which services include state compliance, logistics planning, order processing, distributor chargeback and bill-support management and certain accounting and reporting services.

Advertising, Marketing and Promotion

To build our brands, we must effectively communicate with three distinct audiences: our distributors, the retail trade and the end consumer. Advertising, marketing and promotional activities help to establish and reinforce the image of our brands in our efforts to build substantial brand value. We intend to stay true to our roots as a local Portland-based craft spirit company, while identifying and capitalizing on trends within the booming craft spirits industry.

As mentioned above, in late 2016 we retained Sandstrom Partners, a Portland-based firm specializing in spirits branding, to review our current product portfolio, as well as our new ideas, and advise us on marketing, creation of brand awareness and product positioning, locally and nationally.

We use a range of marketing strategies and tactics to build brand equity and increase sales, including consumer and trade advertising, price promotions, point-of-sale materials, event sponsorship, in-store and on-premise promotions and public relations, as well as a variety of other traditional and non-traditional marketing techniques, including social media marketing, to support our brands.

Besides traditional advertising, we also employ other marketing methods to support our brands: public relations, event sponsorships and tastings. Our U.S. public relations efforts have helped gain editorial coverage for our brands, which increases brand awareness. Event sponsorship is an economical way for us to have influential consumers taste our brands. We actively contribute product to trend-setting events where our brand has exclusivity in the brand category. We also conduct hundreds of in-store and on-premise promotions each year.

Intellectual Property

Trademarks are an important aspect of our business. We sell our products under a number of trademarks, which we own or use under license. Our brands are protected by trademark registrations or are the subject of pending applications for trademark registration in the U.S where we distribute, or plan to distribute, our brands. The trademarks may be registered in the names of our subsidiaries. In the U.S., trademark registrations need to be renewed every ten years. We expect to register our trademarks in additional markets as we expand our distribution territories.

Seasonality

Our industry is subject to seasonality with peak retail sales generally occurring in the fourth calendar quarter, primarily due to seasonal holiday buying. Historically, this holiday demand typically resulted in higher sales for us in our second and/or third fiscal quarters.

Competition

The beverage alcohol industry is highly competitive. We believe that we compete on the basis of quality, price, brand recognition and distribution strength. Our premium brands compete with other alcoholic and nonalcoholic beverages for consumer purchases, retail shelf space, restaurant presence and wholesaler attention. We compete with numerous multinational producers and distributors of beverage alcohol products. Many of our current and potential competitors have longer operating histories and have substantially greater financial, sales, marketing and other resources than we do, as well as larger installed customer bases, greater name recognition and broader product offerings. Some of these competitors can devote greater resources to the development, promotion, sale and support of their products. As a judgment, decreeresult, it is possible that our competitors may either respond to industry conditions or final order enjoining future violationsconsumer trends more rapidly or effectively or resort to price competition to sustain market share, which could adversely affect our sales and profitability.

Over the past ten years, the U.S. wine and spirits industry has undergone dramatic consolidation and realignment of brands and brand ownership. The number of major importers in the U.S. has declined significantly. Today there are eight major importers: Diageo PLC, Pernod Ricard S.A., Bacardi Limited, Brown-Forman Corporation, Beam Suntory Inc., Davide Campari Milano-S.p.A., and Remy Cointreau S.A.

By focusing on the premium and super-premium segments of the market, which typically have higher margins, and having an established, experienced sales force, we believe we are able to gain relatively significant attention from our distributors for a company of our size. Also, the continued consolidation among the major companies is expected to create an opportunity for small to mid-size wine and spirits companies, such as ourselves, as the major companies contract their portfolios to focus on fewer brands.

Government Regulation

We are subject to the jurisdiction of the Federal Alcohol Administration Act, U.S. Customs Laws, Internal Revenue Code of 1986 and the Alcoholic Beverage Control laws of all fifty states.

The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau regulates the production, blending, bottling, sales and advertising and transportation of alcohol products. Also, each state regulates the advertising, promotion, transportation, sale and distribution of alcohol products within its jurisdiction. We are also required to conduct business in the U.S. only with holders of licenses to import, warehouse, transport, distribute and sell spirits.

We are subject to U.S. regulations on the advertising, marketing and sale of beverage alcohol products. In addition, recent developments in the industry may compel us to identify the source and location of our distillate products, and notify the consumer of whether the product was distilled by us and where the product was distilled. These regulations range from a complete prohibition of the marketing of alcohol in some states to restrictions on the advertising style, media and messages used.

Labeling of spirits is also regulated in many markets, varying from health warning labels to importer identification, alcohol strength and other consumer information. All beverage alcohol products sold in the U.S. must include warning statements related to risks of drinking beverage alcohol products.

In the U.S. control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products are selected for purchase and sale through listing procedures which are generally made available to new products only at periodically scheduled listing interviews. Consumers may purchase products not selected for listings only through special orders, if at all.

The distribution of alcohol-based beverages is also subject to extensive federal and state taxation in the U.S. and internationally. Most foreign countries impose excise duties on wines and distilled spirits, although the form of such taxation varies from a simple application on units of alcohol by volume to intricate systems based on the imported or prohibiting or mandating activitieswholesale value of the product. Several countries impose additional import duty on distilled spirits, often discriminating between categories in the rate of such tariffs. Once we begin distributing our products internationally, import and excise duties could have a significant effect on our sales, both through reducing the consumption of alcohol and through encouraging consumer switching into lower-taxed categories of alcohol.

We believe that we are in material compliance with applicable federal, state and other regulations. However, we operate in a highly regulated industry which may be subject to more stringent interpretations of existing regulations. Future compliance costs due to regulatory changes could be significant.

Employees

As of May 1, 2017, we had 20 full-time employees, 10 of whom were in sales and marketing, three of whom were in management and seven of whom are in administration and production.

Geographic Information

We operate in one business segment – premium beverage alcohol products. Our product categories are rum, whiskey, vodka and specialty liquors, with an intent to sell gin and private label tequila in the future. We currently sell our products in 22 states (Oregon, California, Washington, Florida, Nevada, Texas, Virginia, Indiana, Illinois, New York, New Jersey, Massachusetts, Connecticut, Minnesota, Georgia, Pennsylvania, Rhode Island, New Hampshire, Maine, Idaho, Vermont and Maryland) and are authorized to distribute our products in Ontario, Canada as well.

Facilities

Our corporate headquarters are currently located in Portland, Oregon, where we lease and occupy approximately 10,000 square feet of office and industrial space that was originally MotherLode’s facility. On February 17, 2017, the Company entered into a Commercial Sublease Agreement with MotherLode, LLC which we subsequently acquired. In June 2017 we consolidated our production operations into the MotherLode facility. The Company anticipates relocating to new corporate offices that will be sufficient to maintain its current operations. We also lease and occupy approximately 2,500 square feet of industrial space in Hillsboro, Oregon as part of our BBD operations.

Legal Proceedings

We are not currently subject to any federal or state securities or banking or commodities laws including, without limitation,material legal proceedings, however we could be subject to legal proceedings and claims from time to time in any way limiting involvementthe ordinary course of our business. Regardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and divert management resources.

Corporate History

We were incorporated in anyNevada in February 2004 under the name Eurocan Holdings, Ltd. Until the closing of the Eastside Distilling, LLC acquisition (described below), Eurocan operated solely as an online marketing and media solutions firm specializing in digital interactive media, which business activity, or finding any violationwas conducted through Eurocan’s wholly-owned subsidiary, Michael Williams Web Design Inc. of New York, New York (“MWW”).

The Acquisition of Eastside Distilling, LLC

In October 2014, Eurocan Holdings Ltd. consummated the acquisition (the “Acquisition”) of Eastside Distilling, LLC (“Eastside”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Eurocan, Eastside and Eastside Distilling, Inc., our wholly-owned subsidiary. Pursuant to the Merger Agreement, Eastside merged with respect to such law, nor (iii) any bankruptcy petition been filedand into Eastside Distilling, Inc. The merger consideration for the Acquisition consisted of 533,334 shares (the “Shares”) of our common stock. In addition, certain of our stockholders cancelled an aggregate of 415,167 shares of our common stock held by or againstthem. As a result, upon consummation of the Merger Agreement on October 31, 2014, we had 666,667 shares of our common stock issued and outstanding, of which 533,334 shares were held by the former members of Eastside.

Following the Acquisition, we conduct the business of which such personEastside as our primary business.

Spin-Off of MWW

Following consummation of the Acquisition, our new management conducted an evaluation of the MWW business and an analysis of the business going forward. Management determined that due to MWW’s operating and net losses in each of the two fiscal years preceding the Acquisition, its working capital deficit as of the end of the latest fiscal year and as of the latest fiscal quarter preceding the Acquisition, and its accumulated deficit, it was an executivenot in our best interest to continue the operation of MWW going forward. Accordingly, in February 2015, we transferred all of the outstanding shares of MWW held by us, along with all assets and liabilities related to MWW, to Michael Williams in consideration of MWW’s and Mr. Williams’ full release of all claims and liabilities related to MWW and the MWW business. Mr. Williams was the sole officer, or a general partner, whetherdirector and employee of MWW at the time of the bankruptcy ortransaction. The spinoff of MWW resulted in the impairment of goodwill related to the Acquisition of approximately $3.2 million in December 2014. Additionally, as a result of the spin-off, we recorded a net gain of approximately $52,890 on February 3, 2015. This gain is primarily the result of the transfer of net liabilities to Mr. Williams, which is reflected in our consolidated financial statements for the two years prior thereto.year ending on December 31, 2015.

Directors, MotherLode Acquisition Agreement

On March 8, 2017, we acquired all of the outstanding membership interests of MotherLode in exchange for 86,667 shares of the Company’s common stock (the “MotherLode Acquisition”). In connection with the MotherLode Acquisition, we entered into a three-year employment agreement with the founder of Motherlode, Allen Barteld, as described in the “Management” section below under the heading “Employment Agreements.”

Big Bottom Distilling Acquisition Agreement

On May 1, 2017 we acquired 90% of the ownership of Big Bottom Distilling (“BBD”), a Hillsboro, Oregon-based distiller and producer of super premium gins, whiskeys, brandies, rum, and vodka. Pursuant to the agreement governing the acquisition of BBD, we agreed to exchange 28,096 shares of our common stock for 90% of the outstanding limited liability company units of BBD. Following the acquisition of BBD, we will maintain the independence of BBD as a separate entity underneath our operational umbrella.

MANAGEMENT

Executive Officers Promoters and Control PersonsDirectors

The following sets forthis a brief description of the principal occupation and recent business experience of each of our directors, executive officers promoters and control persons,directors and their ages and all offices and positions held. Directors are elected for a periodas of one year and thereafter serve until their successor is duly elected by the stockholders. Officers and other employees serve at the will of the Board of Directors.July 28, 2017:

Michael Williams

(1) Member of the audit committee.

(2) Member of the compensation committee.

(3) Member of the nominating and corporate governance committee.

(4) Ms. Saunders will be appointed as a director to fill an existing vacancy on the board of directors, and will serve on the audit committee, effective upon completion of this offering and listing on the NASDAQ Capital Market.

Our Board of Directors currently consists of three members. All directors hold office until their successors have been elected and qualified or until their earlier death, resignation, disqualification, or removal. Board vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority vote of the directors then in office, even if less than a quorum, or by a sole remaining director. Our board may establish the authorized number of directors from time to time by resolution.

Our executive officers are each appointed by the board and serve at the board’s discretion.

There are no family relationships among our officers or directors.

Executive Officers

Grover Wickersham was appointed to our Board of Directors and as our chairman in July 2016, and as our chief executive officer in November 2016. Mr. Wickersham currently serves on the boards of directors of S&W Seed Company (NASDAQ: SANW), an agricultural products company; Verseon Corporation, a London AIM-listed pharmaceutical development company; and SenesTech, Inc. (NASDAQ: SNES), an animal health company that has developed proprietary technology for managing animal pest populations through fertility control. Mr. Wickersham has been the President, CEO, Chief Financial Officer and a director and portfolio advisor of Eurocan since 2006. In additionGlenbrook Capital Management, the general partner of a partnership that invests primarily in the securities of public companies, from 1996 to being our controlling stockholder,the present. From 1996 until its voluntary liquidation and dissolution in 2016, Mr. Williams has valuable experience in online marketingWickersham served as the chairman of the board of trustees of The Purisima Funds, a trust that is expected to benefit the developmentoperated two series of our business. Since 2003,mutual funds advised by Fisher Investments of Woodside, California. Between 1976 and 1981, Mr. Williams has also been the President, CEO and a director of Michael Wiliams Web Design, Inc., an online marketing firm based in New York City that he founded, and which was acquired by Eurocan in 2006Wickersham served as a wholly owned subsidiary. From September 2000 to February 2002, Mr. Williams worked instaff attorney, and then as a branch chief, of the North American Corporate Communications Division of BNP Paribas managing all its online national marketing initiatives. Prior to that he worked for the State of New Mexico spear-heading all statewide educational outreach efforts for the Museum of New Mexico.U.S. Securities and Exchange Commission (the “SEC”). He receivedholds a Bachelor of Arts degree with an emphasis on social science and human behavior, obtainedB.A. from the University of California at Davis in 1993.Berkeley, an M.B.A. from Harvard Business School and a J.D. from University of California, Hastings College of Law. We believe that Mr. Wickersham is qualified to serve as a member of our Board of Directors because of his experience and knowledge of corporate finance and legal matters, his experience and knowledge of operational matters gained as a past and present director of other public and private companies, and his knowledge of our company.

Daniela Anastasio

Steven Shum has been aserved as our chief financial officer since October 2015. Prior to joining us, Mr. Shum served as an officer and director of EurocanXZERES Corp, a publicly-traded global renewable energy company, from October 2008 until April 2015 in various officer roles, including chief operating officer from September 2014 until April 2015, chief financial officer, principal accounting officer and secretary from April 2010 until September 2014 (under former name, Cascade Wind Corp) and chief executive officer and president from October 2008 to August 2010. Mr. Shum also serves as the managing principal of Core Fund Management, LP and the Fund Manager of Core Fund, LP. He was a founder of Revere Data LLC (now part of Factset Research Systems, Inc.) and served as its executive vice president for four years, heading up the product development efforts and contributing to operations, business development, and sales. He spent six years as an investment research analyst and portfolio manager of D.N.B. Capital Management, Inc. His previous employers include Red Chip Review and Laughlin Group of Companies. He earned a B.S. in Finance and a B.S. in General Management from Portland State University in 1992.

Jarrett Catalanihas served as our Senior Vice President Sales since 2010. Ms. Anastasio has valuableJuly 2017. Mr. Catalani brings 27 years of experience in brand development that is expectedthe alcoholic beverage industry. Prior to benefit the developmentjoining us, from May 2016 to September 2016, Mr. Catalani served as Senior Vice President Sales for Fishbowl Spirits, a premium spirits company, owned by singer songwriter Kenny Chesney. From October 2010 to April 2016, Mr. Catalani worked at ROUST (Russian Standard Vodka), in various officer roles, including Western Divisional Vice President from October 2010 until November 2012, and Senior Vice President of Sales from November 2012 until April 2016. From 2003 to 2010, Mr. Catalani worked in various roles at DIAGEO, his last position being Reserve Brand Director, California. Mr. Catalani’s other employers include Pilsner Urquell USA, Pete's Brewing Company, Jim Taylor Corporation and Wilhelmi Beverage. Mr. Catalani holds a B.S. in Business Management from Southern Illinois University – Carbondale.

Melissa Heim has served as our business. She has been in charge of brand building and creative direction for Michael Williams Web Design, Inc., our sole subsidiary,master distiller since 2010. From 2008 through 2009,June 2012. In November 2016, she was appointed our Executive Vice President Operations. We believe Ms. Heim is the first female commercial master distiller and blender west of the Mississippi River. Prior to joining our company, she apprenticed at and then served as head distiller at Rogue Distillery and Public House in Portland’s Pearl District, holding the position of head distiller from 2008 to 2010. Also, Ms. Heim co-founded and served as president of the Clear Boots Society, an organization that supports women’s leadership in the spirits industry. Ms. Heim studied Liberal Arts with emphasis on English at the University of Oregon.

Allen Barteld has served as President and Chief Executive Officer of MotherLode, our wholly-owned subsidiary acquired in March 2017, since June 2014. Prior to forming MotherLode in 2013, Mr. Barteld served as CEO of LawWerx, a Vice-President - Designsoftware company, from 2009 to 2012. Mr. Barteld earned a Juris Doctor and Accessories for Liz ClaiborneMasters of Business Administration from Willamette University in 1997.

Non-Employee Directors

Trent Davis was appointed to our Board of Directors in August 2016. Mr. Davis is currently President and chief operating officer of Whitestone Investment Network, Inc., leadingwhich specializes in providing executive advisory services to small entrepreneurial companies, as well as restructuring, recapitalizing, and making strategic investments in small to midsize companies. Mr. Davis is also currently Lead Director, Chairman of the Nominating and Governance and Special Investments Committees and is a teamMember of 15 designers developthe Audit and implement rebranding initiatives.Compensation Committees of Dataram Corporation (NASDAQ: DRAM), which develops, manufactures, and markets memory products primarily used in enterprise servers and workstations worldwide. Previously, from December 2014 to July 2015, Mr. Davis was Chairman of the Board for Majesco Entertainment Company (NASDAQ: COOL), which is an innovative developer, marketer, publisher, and distributor of interactive entertainment for consumers around the world. From November 2013 until July 2014, Mr. Davis served as the President and a Director of Paulson Capital Corp. (NASDAQ: PLCC) until he successfully completed the reverse merger of Paulson with VBI Vaccines, (NASDAQ: VBIV). He went on to serve as a Member of its Board of Directors and Audit Committee until May 2016. Mr. Davis was also the Chief Executive Officer of Paulson Investment Company. Inc., a subsidiary of Paulson Capital Corp, from July 2005 until October 2014, where he supervised all operations and over 200 investment representatives overseeing $1.5 billion in client assets. Prior to that, commencing in 1996, Mr. Davis served as Senior Vice President of Syndicate and National Sales of Paulson Investment Company, Inc. He has extensive experience in capital markets and brokerage operations and is credited with overseeing the syndication of approximately $600 million for over 50 client companies in both public and private transactions. In 2003, throughMr. Davis served as a Chairman of the Board of the National Investment Banking Association. Mr. Davis holds a B.S. in Business and Economics from Linfield College and an M.B.A. from the University of Portland and held the following FINRA Licenses: Series 7, 24, 63, 66, and 79. We believe Mr. Davis is qualified to 2007, she serve on the Board because of his deep knowledge of finance and public company issues, capital market, advisory and entrepreneurial experiences, and extensive expertise in operational and executive management.

Michael (Mick) Flemingwas appointed to our Board of Directors in August 2016. Mr. Fleming is currently an attorney with the law firm Ryan, Swanson & Cleveland, PLLC specializing in real estate, dispute resolution, securities and environmental matters, a design directorposition he has held since 2013. Mr. Fleming previously was an attorney with the law firm of Isaac MizrahiLane Powell PC from 2000 to 2013. Mr. Fleming is the Chairman of the Board of Directors of Jones Soda Co. (OTC: JSDA), a premium beverage company. Mr. Fleming has served on the Board of Directors of Big Brothers and Big Sisters of Puget Sound since 2002 and was Chairman of the Board of Directors for Target, managing2008/2009. He has also been the President and owner of Kidcentre, Inc., a staffcompany in the business of designers. Ms. Anastasio receivedproviding child care services in downtown Seattle, Washington, since 1988. Since 1985, he has also been the President and owner of Fleming Investment Co., an investment company. Mr. Fleming holds a Bachelor of ArtArts degree from University of Washington and a law degree from the University of California, Hastings College of the Law. We believe Mr. Fleming is qualified to serve on our Board of Directors because of his experience serving on public company boards, as president and owner of two businesses as well as his legal expertise in fashion designmatters of business and journalism from Marymount University in 1999.securities law.

The mailing address for all our officers and directors is 1 Union Square West, Suite 610, New York, NY 10003.

Involvement in Certain Legal Proceedings

During the past ten years none of our directors, executive officers, promoters or control persons have:

(1) had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years priorShelly Saundershas been nominated to that time;

(2) been convicted in a criminal proceeding or subject to a pending criminal proceeding;

(3) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

(4) been found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Committees of the Board

All proceedings of the board of directors for the fiscal year ended December 31, 2009 were conducted by resolutions consented to in writing by our board of directors and filed with the minutes of the proceedings of our board of directors. Eurocan does not have nominating, compensation or audit committees or committees performing similar functions nor does our company havewill be appointed as a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessarydirector to have such committees because it believes that the functions of such committees can be adequately performed by the board of directors.

Eurocan does not have any defined policy or procedure requirements for stockholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees tofill an existing vacancy on the board of directors, and will serve on the audit committee, effective upon completion of this offering and listing on the NASDAQ Capital Market. Since March 2015, Ms. Saunders is a consultant for Resources Global Professionals, a consulting firm serving global corporations. From June 2013 to January 2015, Ms. Saunders served as Vice President Finance and Country CFO for Campari Canada, a wholly-owned subsidiary of Davide Campari-Milano. From July 2009 to May 2013, Ms. Saunders served as Vice President Finance for Campari America/SKYY Spirits, a wholly-owned subsidiary of Davide Campari-Milano. Prior to joining Campari America, Ms. Saunders was a consultant for Resources Global Professionals, a Director Finance for Mervyns, and a Vice President Finance and Treasurer for Organic, Inc., among other positions. Ms. Saunders received a B.A. in Economics from Stanford University and an MBA from University of California, Berkeley. Because of her prior service as a finance professional for one of the largest global spirits companies and her extensive experience and knowledge of, and contacts within, the spirits industry, we do not have any specific process or procedure for evaluating such nominees. The boardbelieve Ms. Saunders will be a valuable member of directors will assess all candidates, whether submitted by management or stockholders, and make recommendations for election or appointment.

A stockholder who wishes to communicate with our board of directors and is well qualified to serve on our board and our audit committee.

Board Composition

Our Board of Directors currently consists of three members, which were last elected at our annual meeting in December 2016. All directors hold office until their successors have been elected and qualified or until their earlier death, resignation, disqualification, or removal. Board vacancies and newly created directorships resulting from any increase in the authorized number of directors may do sobe filled by directinga majority vote of the directors then in office, even if less than a quorum, or by a sole remaining director. Our board may establish the authorized number of directors from time to time by resolution.

Director Independence

Generally, under the listing requirements and rules of NASDAQ, independent directors must comprise a majority of a listed company’s Board of Directors within one year of the closing of this offering. Our Board of Directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Our Board of Directors has determined that each of Messrs. Davis and Fleming and Ms. Saunders are independent within the meaning of NASDAQ listing standards. Accordingly, a majority of our directors is independent, as required under applicable NASDAQ rules. In making this determination, the Board of Directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director and all transactions set forth herein under the heading “Certain Relationships and Related Transactions.”

Board Committees

Our Board of Directors has established the following three standing committees: an audit committee, a compensation committee and a corporate governance and nominating committee, all of which are comprised solely of independent board members. The Board of Directors determined that establishing standing audit, compensation, and nominating and corporate governance committees is an important element of sound corporate governance.

Audit Committee

Our audit committee oversees the engagement of our independent public accounts, reviews our audited financial statements, meets with our independent public accounts to review internal controls and reviews our financial plans. Our audit committee currently consists of Michael Fleming, who is the chair of the committee, and Trent Davis. Shelly A. Saunders will serve on the audit committee effective upon completion of this offering and listing on the NASDAQ Capital Market. Each of Messrs. Davis and Fleming and Ms. Saunders has been determined by our Board of Directors to be independent in accordance with NASDAQ and SEC standards. Our Board of Directors has also designated each of Mr. Fleming and Ms. Saunders as an “audit committee financial expert” as the term is defined under SEC regulations and has determined that each of Mr. Fleming and Ms. Saunders possesses the requisite “financial sophistication” under applicable NASDAQ rules. The audit committee operates under a written request addressedcharter which is available on the Company’s website. Both our independent registered accounting firm and internal financial personnel will regularly meet with our audit committee and have unrestricted access to the audit committee. Each member of the audit committee is able to read and understand fundamental financial statements, including our consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows. Further, no member of the audit committee has participated in the preparation of our consolidated financial statements, or those of any of our current subsidiaries, at any time during the past three years.

Compensation Committee

Our compensation committee reviews and recommends policies, practices and procedures relating to compensation for our directors, officers and other employees and advising and consulting with our officers regarding managerial personnel and development. Our compensation committee currently consists of Trent Davis, who is the chair of the committee and Michael Fleming, each of whom has been determined by our Board of Directors to be independent in accordance with NASDAQ standards. Each member of our compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended. The compensation committee operates under a written charter which is available on the Company’s website. The compensation committee has not yet established processes and procedures for the consideration and determination of executive and director compensation, except as set forth in the compensation committee charter.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee evaluates the composition, size and governance of our Board of Directors and its committees, evaluating and recommending candidates for election to our President,Board of Directors, establishing a policy for considering stockholder nominees and reviewing our corporate governance principles and providing recommendations to the Board of Directors. Our nominating and corporate governance committee currently consists of Michael Williams, atFleming, who is the address appearingchair of the committee, and Trent Davis, each of whom has been determined by our Board of Directors to be independent in accordance with NASDAQ standards. The nominating and corporate governance committee operates under a written charter which is available on the first pageCompany’s website.

Risk Oversight

One of the key functions of our Board of Directors is informed oversight of our risk management process. Our Board of Directors will not have a standing risk management committee, but rather intends to administer this oversight function directly through our Board of Directors as a whole, as well as through our other various standing committees. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and discusses with management our major risk exposures, their potential impact on us and the steps we take to manage them. While our Board is ultimately responsible for risk oversight, our Board committees assist the Board of Directors in fulfilling its oversight responsibilities in certain areas of risk. In particular, our audit committee focuses on financial, accounting and investment risks. Our nominating and corporate governance committee focuses on the management of risks associated with Board organization, membership, structure and corporate governance. In addition, our compensation committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs and related to succession planning for our executive officers.

Compensation Committee Interlocks and Insider Participation

None of the members of the compensation committee is or has ever been one of our officers or employees. None of our executive officers serves, or in the past has served, as a member of the compensation committee or on the Board of Directors of any entity that has one or more executive officers serving on our Board of Directors or compensation committee.

Code of Conduct and Ethics

We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors. We will provide to any person without charge, upon request, a copy of our code of business conduct and ethics. Requests may be directed to our principal executive offices at 2150 SE Hanna Harvester Drive, Portland, OR 97222. Also, a copy of our code of business conduct and ethics is available on our website. We will disclose, on our website, any amendment to, or a waiver from, a provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the Code of Business Conduct and Ethics enumerated in applicable rules of the SEC. 

Director Compensation

On October 13, 2016, the Company’s Board of Directors approved the grant of non-qualified stock options under the 2016 Plan (as defined below) to purchase up to 11,667 shares of common stock at an exercise price of $5.40 per share (each on a post-reverse split basis) to each of our non-employee directors as of that date, Messrs. Davis, Fleming, Hirson and Wickersham. All directors will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with attending Board of Director and any committee meetings, provided that we have the resources to pay these expenses. Currently, directors receive no other compensation for their services on our Board. The following table sets forth information regarding compensation earned by or paid to our non-employee directors during the year ended December 31, 2016.

Following the closing of this registration statement.offering, we intend to implement a formal policy pursuant to which our non-employee directors will be eligible to receive compensation for service on our Board of Directors and committees of our Board of Directors.

EXECUTIVE COMPENSATION

Audit Committee Financial ExpertSummary Compensation Table