Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 02, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | Eastside Distilling, Inc. | ||
Entity Central Index Key | 1,534,708 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 17,001,894 | ||
Entity Common Stock, Shares Outstanding | 5,044,770 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 2,586,315 | $ 1,088,066 |
Trade receivables | 315,321 | 344,955 |
Inventories | 4,051,282 | 780,037 |
Prepaid expenses and current assets | 649,749 | 187,714 |
Total current assets | 7,602,667 | 2,400,772 |
Property and equipment, net | 728,506 | 99,216 |
Intangible assets, net | 325,668 | |
Goodwill, net | 28,182 | |
Other assets | 343,942 | 48,000 |
Total Assets | 9,028,965 | 2,547,988 |
Current liabilities: | ||
Accounts payable | 1,267,189 | 457,034 |
Accrued liabilities | 156,163 | 523,702 |
Deferred revenue | 1,579 | 2,126 |
Current portion of notes payable | 293,726 | 4,537 |
Total current liabilities | 1,718,657 | 987,399 |
Notes payable - less current portion and debt discount | 2,161,760 | 427,756 |
Total liabilities | 3,880,417 | 1,415,155 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity: | ||
Series A convertible preferred stock, $0.0001 par value; 3,000 shares authorized; 0 and 300 shares issued and outstanding at December 31, 2017 and 2016, respectively (liquidation values of $0 and $750,000, respectively) | 245,838 | |
Common stock, $0.0001 par value; 15,000,000 shares authorized; 4,889,745 and 2,542,504 shares issued and outstanding at December 31, 2017 and 2016, respectively | 489 | 254 |
Additional paid-in capital | 23,223,435 | 13,699,785 |
Accumulated deficit | (18,090,961) | (12,813,044) |
Total Eastside Distilling, Inc. Stockholders’ Equity | 5,132,963 | 1,132,833 |
Noncontrolling interests | 15,585 | |
Total Stockholders’ Equity | 5,148,548 | 1,132,833 |
Total Liabilities and Stockholders’ Equity | $ 9,028,965 | $ 2,547,988 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 3,000 | 3,000 |
Preferred stock, shares issued | 0 | 300 |
Preferred stock, shares outstanding | 0 | 300 |
Preferred stock, liquidation value | $ 0 | $ 750,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 4,889,745 | 2,542,504 |
Common stock, shares outstanding | 4,889,745 | 2,542,504 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Sales | $ 3,791,382 | $ 3,042,527 |
Less excise taxes, customer programs and incentives | 1,180,386 | 934,221 |
Net sales | 2,610,996 | 2,108,306 |
Cost of sales | 1,634,069 | 1,280,344 |
Gross profit | 976,927 | 827,962 |
Operating expenses: | ||
Advertising, promotional and selling expenses | 2,219,168 | 1,244,152 |
General and administrative expenses | 3,546,659 | 3,881,771 |
Loss on disposal of property and equipment | 40,975 | |
Total operating expenses | 5,806,802 | 5,125,923 |
Loss from operations | (4,829,875) | (4,297,961) |
Other income (expense), net | ||
Interest expense | (235,053) | (862,468) |
Other income (expense) | (212,989) | (39,190) |
Total other expense, net | (448,042) | (901,658) |
Loss before income taxes | (5,277,917) | (5,199,619) |
Provision for income taxes | ||
Net loss | (5,277,917) | (5,199,619) |
Dividends on convertible preferred stock | (51,674) | |
Income (loss) attributable to noncontrolling interests | 601 | |
Net loss attributable to Eastside Distilling, Inc. common shareholders | $ (5,277,316) | $ (5,251,293) |
Basic and diluted net loss per common share | $ (1.42) | $ (4.21) |
Basic and diluted weighted average common shares outstanding | 3,717,956 | 1,247,281 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholder's (Deficit) Equity - 12 months ended Dec. 31, 2017 - USD ($) | Convertible Series A Preferred Stock [Member] | Common Stock [Member] | Paid-In Capital [Member] | Accumulated Deficit [Member] | Total Stockholders' Equity (Deficit) [Member] | Noncontrolling Interest in Consolidated Entities [Member] | Total |
Balance at Dec. 31, 2016 | $ 245,838 | $ 254 | $ 13,699,785 | $ (12,813,044) | $ 1,132,833 | $ 1,132,833 | |
Balance, shares at Dec. 31, 2016 | 300 | 2,542,504 | |||||
Issuance of common stock | $ 2 | 58,498 | 58,500 | 58,500 | |||
Issuance of common stock, shares | 15,001 | ||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | $ 177 | 6,669,401 | 6,669,578 | 6,669,578 | |||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants, shares | 1,780,019 | ||||||
Issuance of common stock from warrant exercise for cash | $ 4 | 159,246 | 159,250 | 159,250 | |||
Issuance of common stock from warrant exercise for cash, shares | 40,834 | ||||||
Issuance of common stock for services by third parties | $ 11 | 479,903 | 479,914 | 479,914 | |||
Issuance of common stock for services by third parties, shares | 107,340 | ||||||
Issuance of common stock for services by employees | $ 6 | 253,649 | 253,655 | 253,655 | |||
Issuance of common stock for services by employees, shares | 59,538 | ||||||
Stock option exercises | $ 1 | 50,000 | 50,001 | $ 50,001 | |||
Stock option exercises, shares | 9,260 | (9,260) | |||||
Stock-based compensation | 563,356 | 563,356 | $ 563,356 | ||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | $ 9 | 371,411 | 371,420 | 371,420 | |||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580, shares | 86,667 | ||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | $ 3 | 120,455 | 120,458 | 14,984 | 135,442 | ||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400, shares | 28,096 | ||||||
Shares issued for payoff of long-term notes | $ 12 | 561,866 | 561,878 | 561,878 | |||
Shares issued for payoff of long-term notes, shares | 120,154 | ||||||
Cumulative dividend on Series A preferred | $ 5,037 | 5,037 | 5,037 | ||||
Common shares issued for preferred conversion | $ (250,875) | $ 10 | $ 235,865 | $ (15,000) | $ (15,000) | ||
Common shares issued for preferred conversion, shares | (300) | 100,001 | |||||
Adjustment of shares for reverse stock-split | 331 | ||||||
Net profit attributable to noncontrolling interests | $ 601 | $ (601) | |||||
Net loss attributable to common shareholders | (5,277,917) | $ (5,277,917) | (5,277,917) | ||||
Balance at Dec. 31, 2017 | $ 489 | $ 23,223,435 | $ (18,090,961) | $ 5,132,963 | $ 15,585 | $ 5,132,963 | |
Balance, shares at Dec. 31, 2017 | 4,889,745 |
Consolidated Statements of Sto6
Consolidated Statements of Stockholder's (Deficit) Equity (Parenthetical) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Common stock, issuance costs | $ 1,120,323 |
MotherLode Craft Distillery, LLC [Member] | |
Common stock, issuance costs | 5,580 |
Big Bottom Distilling, LLC [Member] | |
Common stock, issuance costs | $ 14,400 |
Percentage of common stock unit | 90.00% |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (5,277,917) | $ (5,199,619) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 92,016 | 21,991 |
Loss on disposal of property and equipment | 40,975 | |
Amortization of debt issuance costs | 92,156 | 116,750 |
Impairment of goodwill and intangible assets | 218,374 | |
Amortization of beneficial conversion feature | 228,550 | |
Issuance of common stock in exchange for services | 642,309 | 265,065 |
Issuance of common stock for payoff of trade debt | 19,212 | |
Stock-based compensation | 563,356 | 374,687 |
Cumulative dividend on preferred stock | 39,200 | |
Changes in operating assets and liabilities: | ||
Trade receivables | 35,858 | (202,749) |
Inventories | (3,037,835) | (96,213) |
Prepaid expenses and other assets | (612,977) | (23,208) |
Accounts payable | 804,976 | (843,498) |
Accrued liabilities | (572,485) | 343,762 |
Deferred revenue | (547) | 1,399 |
Net cash used in operating activities | (7,011,741) | (4,954,671) |
Cash Flows From Investing Activities: | ||
Cash acquired in acquisition | 4,541 | |
Purchases of property and equipment | (657,477) | (9,202) |
Net cash used in investing activities | (652,936) | (9,202) |
Cash Flows From Financing Activities: | ||
Stock issuance cost related to acquisitions | (19,980) | |
Stock issuance cost related to common shares issued for preferred conversion | (9,361) | |
Proceeds from common stock, net of issuance costs of $1,120,323 and $23,762, respectively, with detachable warrants | 6,728,079 | 2,451,238 |
Proceeds from preferred stock, net of issuance costs of $69,528, with detachable warrants | 429,572 | |
Proceeds from warrant exercise - related party | 50,000 | |
Proceeds from warrant exercise | 159,250 | 684,216 |
Payments on conversion of note payable | (90,000) | (141,904) |
Payments of principal on notes payable | (106,902) | |
Proceeds from convertible notes payable, net of issuance costs | 2,501,840 | 185,000 |
Repayment of related party note payable | (12,500) | |
Proceeds from notes payable, warrants issued - related party | 295,000 | |
Proceeds from notes payable, warrants issued | 1,405,000 | |
Proceeds from common stock, with detachable warrants - related party | 565,000 | |
Net cash provided by financing activities | 9,162,926 | 5,910,622 |
Net increase in cash | 1,498,249 | 946,749 |
Cash - beginning of year | 1,088,066 | 141,317 |
Cash - end of year | 2,586,315 | 1,088,066 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid during the year for interest | 103,293 | 91,237 |
Supplemental Disclosure of Non-Cash Financing Activity | ||
Issuance of common stock for the acquisition of MotherLode Craft Distillery, LLC | 377,000 | |
Issuance of common stock for the acquisition of Big Bottom Distilling, LLC | 134,858 | |
Common stock issued in exchange of notes payable | 558,137 | |
Stock issued for payment of trade debt | 19,213 | |
Dividends paid in common stock | 17,759 | |
Stock issued in lieu of accrued compensation | 423,000 | |
Stock issued to retire notes and accrued interest | 246,330 | |
Exchange of warrant exercise used to repay notes payable - related party | 169,999 | |
Exchange of warrant exercise used to repay notes payable | $ 401,148 |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock of issuance costs | $ 1,120,323 | |
Common Stock [Member] | ||
Stock of issuance costs | 1,120,323 | $ 23,762 |
Preferred Stock [Member] | ||
Stock of issuance costs | $ 69,528 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Description of Business | 1. Description of Business 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, gin and rum. Unlike other distillers, we operate several retail tasting rooms in Oregon to market our brands directly to consumers. Our strategy for growth is to build on our local base in the Pacific Northwest and expand selectively to other markets, using major spirits distributors. 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 our company. With the assistance of Sandstrom Partners and using our in-house spirits expertise, during 2017, we created Redneck Riviera Whiskey (“RRW”), in collaboration with Country Music superstar John Rich, of the duo “Big & Rich.” Supported by John Rich’s marketing efforts, we launched RRW in the Southeastern and Gulf States primarily through Republic National Distributing Company (“RNDC”). As a small business in a large, international spirits marketplace populated with massive conglomerates, we seek to turn our small size from a disadvantage into an advantage. As RRW demonstrates, our team can work with Sandstrom Partners to develop and launch new brands exponentially faster than multi-billion dollar conglomerates that typically acquire innovators rather than innovate themselves. We believe that Canadian whiskeys’ dominance of the light whiskey segment is vulnerable to a light whiskey that is 100% American, and we are exploiting that vulnerability with RRW, a product that went from idea, to celebrity collaboration, to design and formulation, to market roll-out in less than nine months. We are innovative in targeting emerging trends with our products, for example, our Coffee Rum with cold brew coffee and low sugar and our gluten-free potato vodka. We seek to be both a leader in creating spirits that offer better value than comparable spirits, for example our value-priced Portland Potato Vodka, and an innovator in creating imaginative spirits that offer a unique taste experience, like our Coffee Rum, Oregon oak aged whiskeys and Marionberry Whiskey. As a Nasdaq-traded company, we have access to public capital markets to support our growth initiatives, including strategic acquisitions. In May 2017, we used our shares to acquire 90% of Big Bottom Distillery (“BBD”), known for its excellent, award winning super- premium gins and whiskeys, including The Ninety One Gin, Navy Strength Gin, Oregon Gin, Delta Rye and American Single Malt Whiskey. BBD’s super-premium spirits give us a presence at the “high end” of the market. In addition, through MotherLode Craft Distillery (“MotherLode”), our wholly-owned subsidiary acquired in March 2017, we also provide contract bottling and packaging services for existing and emerging spirits producers, some of whom contract with us to blend or distill spirits. During 2018, we intend to use our “slim line” canning equipment, newly installed at MotherLode, to profit from an emerging consumer interest in canned wine. We believe our location close to vineyards in Oregon and Washington is a competitive advantage. We currently sell our products in 26 states (Oregon, Washington, California, Florida, Nevada, Texas, Virginia, Indiana, Illinois, New York, New Jersey, Massachusetts, Connecticut, Georgia, Rhode Island, Idaho, Maryland, West Virginia, Wyoming, North Carolina, Louisiana, Tennessee, Mississippi, South Dakota, Kansas and Alaska) as well as Ontario, Canada. The Company also generates revenue from tastings, tasting room tours, private parties, and merchandise sales from its facilities in Oregon. The Company is subject to the Oregon Liquor Control Commission (OLCC) and the Alcohol and Tobacco Tax and Trade Bureau (TTB). |
Liquidity
Liquidity | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | 2. Liquidity Historically, the Company has funded its cash and liquidity needs through convertible notes, extended credit terms, and equity raisings. For the years ended December 31, 2017 and 2016, the Company incurred a net loss of approximately $5.3 million each year and has an accumulated deficit of approximately $18.1 million as of December 31, 2017. The Company has been dependent on raising capital from debt and equity financings to meet its needs for cash flow used in operating activities. For the year ended December 31, 2017, the Company raised approximately $9.2 million in cash flow from financing activities to meet cash flow used in operating activities. At December 31, 2017, the Company has approximately $2.6 million of cash on hand with a positive working capital of $5.7 million. The Company’s ability to meet their ongoing operating cash needs is dependent on generating positive operating cash flow, primarily through increased sales, improved profit growth and controlling expenses. Management has taken actions to improve profitability, reduce certain expenses and increase sales. In addition, through March 31, 2018, the Company raised an additional $1.9 million in cash through a debt offering and the exercise of previously issued warrants (see Note 15, Subsequent Events). Management believes that cash on hand, including the most recent capital raised from a debt offering and warrant exercises will be sufficient to meet their operating activities to meet their near-term cash needs over the next twelve months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements for Eastside Distilling, Inc. and subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of Eastside Distilling, Inc.’s wholly-owned subsidiary MotherLode (beginning as of March 8, 2017), and majority-owned subsidiary BBD (beginning as of May 1, 2017). All intercompany balances and transactions have been eliminated in consolidation. Segment Reporting The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity, marketing and distributing hand-crafted spirits, and operates as one segment. The Company’s chief operating decision makers, its chief executive officer and chief financial officer, review the Company’s operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Net revenue includes product sales, less excise taxes and customer programs and incentives. The Company records revenue when all four of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company recognizes 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), the Company recognizes 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. The Company excludes sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through the Company’s retail location are recognized at the time of sale. Revenue received from online merchants who sell discounted gift certificates for the Company’s 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, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions 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 nature of the expenditure. Amounts paid to customers totaled $182,975 and $136,786 in years 2017 and 2016, respectively. Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotions and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, salary and benefit expenses, travel and entertainment expenses for the sales, brand and sales support workforce and promotional activity expenses. Advertising, promotional and selling costs are expensed as incurred. Advertising, promotional and selling expense totaled $2,219,168 and $1,244,152 in years 2017 and 2016, respectively. Cost of 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. Shipping and Fulfillment Costs Freight costs incurred related to shipment of merchandise from the Company’s distribution facilities to customers are recorded in cost of sales. Cash and Cash Equivalents Cash equivalents are considered to be highly-liquid investments with maturities of three months or less at the time of the purchase. The Company had no cash equivalents at December 31, 2017 and 2016. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At December 31, 2017, two customers represented 79% of trade receivables. At December 31, 2016, three distributors represented 91% of trade receivables. Fair Value Measurements GAAP defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option is elected. At December 31, 2017 and December 31, 2016, management has not elected to report any of the Company’s assets or liabilities at fair value under the “fair value option” provided by GAAP. The hierarchy of fair value valuation techniques under GAAP provides for three levels: Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under GAAP’s fair value measurement requirements are as follows: Level 1: Fair value of the asset or liability is determined using unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Fair value of the asset or liability is determined using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Fair value of the asset or liability is determined using unobservable inputs that are significant to the fair value measurement and reflect management’s own assumptions regarding the applicable asset or liability. None of the Company’s assets or liabilities were measured at fair value at December 31, 2017 and 2016. However, GAAP requires the disclosure of fair value information about financial instruments that are not measured at fair value. Financial instruments consist principally of trade receivables, accounts payable, accrued liabilities, note payable, and convertible note payable. The estimated fair value of trade receivables, accounts payable, and accrued liabilities approximates their carrying value due to the short period of time to their maturities. At December 31, 2017 and 2016, the Company’s note payable and convertible notes payable are at fixed rates and their carrying value approximates fair value. Items Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities acquired in a business acquisition are valued at fair value at the date of acquisition. 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 certain independent distributors on consignment until it is sold to a third party. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. The Company has recorded no write-downs of inventory for the years ended December 31, 2017 and 2016. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Amortization of leasehold improvements is computed using the straight-line method over the life of the lease or the useful lives of the assets, whichever is shorter. The cost and related accumulated depreciation and amortization of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reported as current period income or expense. The costs of repairs and maintenance are expensed as incurred. Intangible Assets / Goodwill The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. At December 31, 2017, an impairment loss of $218,374 was recognized related to its acquisition of Big Bottom Distillery, LLC. Long-lived Assets The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. Income Taxes The provision for income taxes is based on income and expenses as reported for financial statement purposes using the “asset and liability method” for accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. At December 31, 2017 and 2016, the Company established valuation allowances against its net deferred tax assets. Income tax positions that meet the “more-likely-than-not” recognition threshold are measured at the largest amount of income tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with income tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized income tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized income tax benefits would be classified as additional income taxes in the accompanying consolidated statements of operations. There were no unrecognized income tax benefits, nor any interest and penalties associated with unrecognized income tax benefits, accrued or expensed at and for the years ended December 31, 2017 and 2016. The Company files federal income tax returns in the U.S. and various state income tax returns. The Company is no longer subject to examinations by the related tax authorities for the Company’s U.S. federal and state income tax returns for years prior to 2011. Comprehensive Income The Company does not have any reconciling other comprehensive income items for the for the years ended December 31, 2017 and 2016, respectively. Excise Taxes The Company is responsible for compliance with the TTB regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $997,410 and $797,435 in years 2017 and 2016, respectively. Stock-Based Compensation The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized 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 measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. Stock-based compensation was $563,356 and $374,687 in fiscal years 2017 and 2016, respectively. Accounts Receivable Factoring Program During 2017, we terminated our previous receivable factoring program. Under the prior program, we had the option to sell certain customer account receivables in advance of payment for 75% of the amount due. When the customer remitted payment, we would receive 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 remitted payment and we received the remaining 25% of the non-factored amount. We did not factor any new invoices during 2017. At December 31, 2017, we had no factored invoices outstanding, and we incurred fees associated with the factoring program of $63,238 during fiscal year 2017. During the year ended December 31, 2016, we factored invoices totaling $542,083 and received total proceeds of $406,562. At December 31, 2016, we had factored invoices outstanding of $171,150, and we incurred fees associated with the factoring program of $48,601 during 2016. 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. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). - A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and - A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. 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 the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory 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 as of December 31, 2015. Reclassifications Certain prior period amounts have been reclassified to conform to the December 31, 2017 presentation with no changes to net loss or total stockholders’ equity (deficit) previously reported. |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Business Acquisitions | 4. Business Acquisitions During the fiscal year 2017, the Company completed the following acquisitions: MotherLode Craft Distillery, LLC On March 8, 2017, the Company completed the acquisition of MotherLode Craft Distillery, LLC (“MotherLode”), a small Portland, Oregon-based provider of bottling services and production support to craft distilleries. The Company’s condensed consolidated financial statements for fiscal 2017 include MotherLode’s results of operations from the acquisition date of March 8, 2017 through December 31, 2017. The Company’s condensed consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. MotherLode had approximately $375,000 in revenues (unaudited) in 2016. The following allocation of the purchase price is as follows: Consideration given: 86,667 shares of common stock valued at $4.35 per share $ 377,000 Assets and liabilities acquired: Cash 7,062 Inventory 103,488 Property and equipment 46,250 Intangible assets - customer list and license 376,431 Goodwill 28,182 Accounts payable (5,180 ) Customer deposits (179,233 ) $ 377,000 Intangible assets are recorded at estimated fair value, as determined by management based on available information. The fair value assigned to the customer list intangible asset was determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earning methods. The major assumptions used in arriving at the estimated identifiable intangible asset value included management’s estimates of future cash flows, discounted at an appropriate rate of return which is based on the weighted average cost of capital for both the Company and other market participants, projected customer attrition rates, as well as applicable royalty rates for comparable assets. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the tangible assets that are expected to contribute directly or indirectly to future cash flows. The customer relationships estimated useful life is seven years. The fair values assigned to the license intangible asset were determined through the use of the cost approach. The license has an indefinite life and will not be amortized. Big Bottom Distillery, LLC On May 1, 2017, the Company acquired 90% of the ownership of Big Bottom Distillery, LLC (“BBD”), a Hillsboro, Oregon-based distiller of super-premium spirits. The Company’s condensed consolidated financial statements for the fiscal year 2017 include BBD’s results of operations from the acquisition date of May 1, 2017 through December 31, 2017. The Company’s condensed consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. BBD had approximately $201,000 in revenues (unaudited) in 2016. The following allocation of the purchase price is as follows: Consideration given: 28,096 shares of common stock valued at $4.80 per share for 90% $ 134,858 Non-controlling interests 14,984 Total value of acquisition $ 149,842 Assets and liabilities acquired: Cash (overdraft) $ (2,521 ) Accounts receivable 6,224 Inventory 129,922 Property and equipment 22,717 Intangible assets - license 25,000 Goodwill 193,374 Accrued liabilities (52,841 ) Notes payable (172,033 ) Total $ 149,842 Intangible assets are recorded at estimated fair value, as determined by management based on available information. The fair value assigned to the license intangible asset was determined through the use of the cost approach. The license has an indefinite life and will not be amortized. For the year ended December 31, 2017, the Company recognized an impairment of $218,374 for the intangible asset – license and the goodwill originally recorded as part of the purchase price allocation for BBD. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventories consist of the following at December 31: 2017 2016 Raw materials $ 3,755,477 $ 439,739 Finished goods 295,805 340,298 Total inventories $ 4,051,282 $ 780,037 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 6. Property and Equipment Property and equipment consists of the following at December 31: 2017 2016 Furniture and fixtures $ 326,088 $ 70,140 Leasehold improvements 56,410 8,607 Vehicles 49,483 38,831 Construction in progress 372,667 34,603 Total cost 804,648 152,181 Less accumulated depreciation and amortization (76,142 ) (52,965 ) Total property and equipment, net $ 728,506 $ 99,216 Depreciation and amortization expense totaled $41,253 and $21,991 for the years ended December 31, 2017 and 2016, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | 7. Intangible Assets and Goodwill There were no intangible assets or goodwill at December 31, 2016. At December 31, 2017, intangible assets and goodwill consist of the following: December 31, 2017 Life Permits and licenses $ 25,000 - Customer lists 351,432 7 years Goodwill 28,182 - Total intangible assets and goodwill 404,614 Less accumulated amortization (50,764 ) Intangible assets and goodwill - net $ 353,850 Amortization expense totaled $50,764 and nil for the years ended December 31, 2017 and 2016, respectively. |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | 8. Other Assets Other assets consist of the following at December 31: 2017 2016 Product branding $ 285,000 $ - Deposits 53,942 48,000 Other assets $ 343,942 $ 48,000 As of December 31, 2017, the Company had $285,000 of capitalized costs related to services provided for the rebranding of its Burnside product line. This amount will be amortized over a seven year life. Additionally, there was $40,000 in deposits for the branding services related to the future release of other product lines. The remaining deposits of $13,942 represent office and retail space lease deposits. As of December 31, 2016, $48,000 represents office space lease deposits. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | 9. Notes Payable Notes payable consists of the following at December 31, 2017 and December 31, 2016: December 31, 2017 December 31, 2016 Notes payable bearing interest at 7.99%. The note is payable in monthly principal plus interest payments of $472 through December 2020. The note is secured by a vehicle. $ - $ 16,642 Notes payable bearing interest at 8%. The notes have a 2-year maturity, are due either June 30, 2018 or June 30, 2019 and pay interest-only on a monthly basis. 407,500 547,500 Note payable bearing interest at 2.74%. The note is payable in monthly principal plus interest payments of $100 through December 2019. 2,306 - Note payable bearing interest at 4.00%. The note is payable in quarterly principal plus interest payments of $9,614 through March 2019. 56,341 - Convertible notes payable bearing interest at 4.00%. The notes principal plus accrued interest is due in full at various dates between April 3, 2020 – September 30, 2020. The notes have an automatic conversion feature upon the closing (or first in a series of closings) of the next equity financing in which the Company sells 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 note has a voluntary conversion feature where the investor may convert, in whole or in part, at any time at the conversion price of $6.00. 927,192 - Promissory notes payable bearing interest at 8.00%. The notes’ principal is due on June 30, 2019. Interest is paid monthly. 1,101,840 - Total notes payable 2,495,179 564,142 Less current portion (293,726 ) (4,537 ) Less debt discount for detachable warrant (39,693 ) (131,849 ) Long-term portion of notes payable $ 2,161,760 $ 427,756 Maturities on notes payable as of December 31, 2017, are as follows: Year ending December 31: 2018 $ 293,726 2019 1,254,146 2020 947,307 2021 - Thereafter - $ 2,495,179 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes The provision for income taxes results in effective tax rates which are different than the federal income tax statutory rate. The nature of the differences for the year ended December 31 were as follows: 2017 2016 Expected federal income tax benefit $ (1,794,492 ) $ (1,774,361 ) State income taxes after credits (348,343 ) (344,435 ) Change in valuation allowance 2,142,835 2,118,795 Total provision for income taxes $ - $ - The components of the net deferred tax assets and liabilities at December 31 consisted of the following: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 5,489,143 3,557,909 Stock-based compensation 563,356 213,181 Total deferred tax assets 6,052,499 3,771,090 Deferred tax liabilities: Depreciation and amortization (92,016 ) (70,816 ) Total deferred tax liabilities (92,016 ) (70,816 ) Valuation allowance (5,960,483 ) (3,700,274 ) Net deferred tax assets $ - - At December 31, 2017, the Company has a cumulative net operating loss carryforward (NOL) of approximately $14 million, to offset against future income for federal and state tax purposes. These federal and state NOLs can be carried forward for 20 and 15 years, respectively. The federal NOLs begins to expire in 2034, and the state NOLs begins to expire in 2029. The utilization of the net operating loss carryforwards may be subject to substantial annual limitation due to ownership change provisions of the Internal Revenue code of 1986 and similar state provisions. In general, if the Company experiences a greater than 50 percentage aggregate change in ownership of certain significant stockholders over a three-year period (a “Section 382 ownership change”), utilization of its pre-change NOL carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code (and similar state laws). The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforwards before utilization and may be substantial. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the realizability of the deferred tax assets, management has determined a full valuation allowance is appropriate. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Operating Leases The Company leases its corporate office, warehouse, kiosks, and tasting room space under operating lease agreements which expire at various dates through March 2021. Monthly lease payments range from $1,857 to $6,400 over the terms of the leases. For operating leases which contain fixed escalations in rental payments, the Company records the total rent expense on a straight-line basis over the lease term. The difference between the expense computed on a straight-line basis and actual payments for rent represents deferred rent which is included within accrued liabilities on the accompanying consolidated balance sheets. Retail spaces under lease are subject to monthly percentage rent adjustments when gross sales exceed certain minimums. At December 31, 2017, future minimum lease payments required under the operating leases are approximately as follows: For year ending December 31st: 2018 $ 277,289 2019 137,551 2020 3,313 2021 3,313 2022 3,313 Total $ 424,779 Total rent expense was approximately $362,000 and $416,000 for the years ended December 31, 2017 and 2016, respectively. Legal Matters We are not currently subject to any material legal proceedings, however, we could be subject to legal proceedings and claims from time to time in the 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. |
Net Loss Per Common Share
Net Loss Per Common Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 12. Net Loss per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, without considering any dilutive items. Diluted net loss per common share is computed by dividing net loss by the sum of the weighted average number of common shares outstanding and the potential number of any dilutive common shares outstanding during the period. Potentially dilutive securities consist of the incremental common stock issuable upon exercise of stock options and convertible notes. Potentially dilutive securities are excluded from the computation if their effective is anti-dilutive. There were no dilutive common shares at December 31, 2017 and 2016. The numerators and denominators used in computing basic and diluted net loss per common share in 2017 and 2016 are as follows: December 31, 2017 2016 Net loss available to common shareholders (numerator) $ (5,277,316 ) $ (5,251,293 ) Weighted average shares (denominator) 3,717,956 1,247,281 Basic and diluted net loss per common share $ (1.42 ) $ (4.21 ) |
Stockholder's Equity
Stockholder's Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholder's Equity | 13. Stockholder’s Equity Convertible Series A Total Non-controlling Preferred Stock Common Stock Paid-in Accumulated Stockholders’ interest in Total Shares Amount Shares Amount Capital Deficit Equity (Deficit) consolidated entities Equity Balance, December 31, 2016 300 $ 245,838 2,542,504 $ 254 $ 13,699,785 $ (12,813,044 ) $ 1,132,833 $ - $ 1,132,833 Issuance of common stock - - 15,001 2 58,498 - 58,500 - 58,500 Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants - - 1,780,019 177 6,669,401 - 6,669,578 - 6,669,578 Issuance of common stock from warrant exercise for cash - - 40,834 4 159,246 - 159,250 - 159,250 Issuance of common stock for services by third parties - - 110,340 11 479,903 - 479,914 - 479,914 Issuance of common stock for services by employees - - 56,538 6 253,649 - 253,655 - 253,655 Stock option exercises - - 9,260 1 50,000 - 50,001 - 50,001 Stock-based compensation - - - - 563,356 - 563,356 - 563,356 Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 - - 86,667 9 371,411 - 371,420 - 371,420 Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 - - 28,096 3 120,455 - 120,458 14,984 135,442 Shares issued for payoff of long-term notes - - 120,154 12 561,866 - 561,878 - 561,878 Cumulative dividend on Series A preferred - 5,037 - - - - 5,037 - 5,037 Common shares issued for preferred conversion (300 ) (250,875 ) 100,001 10 235,865 - (15,000 ) - (15,000 ) Adjustment of shares for reverse stock-split - - 331 - - - - - - Net profit attributable to noncontrolling interests - - - - - - 601 601 Net loss attributable to common shareholders - - - - - (5,277,917 ) (5,277,917 ) - (5,277,917 ) Balance, December 31, 2017 - $ - 4,889,745 $ 489 $ 23,223,435 $ (18,090,961 ) $ 5,132,963 $ 15,585 $ 5,148,548 Reverse Stock Splits All shares related and per share information in these financial statements has been adjusted to give effect to the 20-for-1 reverse stock split of the Company’s common stock effected on October 18, 2016, and the 3-for-1 reverse stock split of the Company’s common stock effected on June 15, 2017. Issuance of Common Stock In December 2017, the Company issued 18,371 shares of common stock to directors and employees for stock-based compensation of $79,351. The shares were valued using the closing share price of our common stock on the date of grant, with the range of $3.78 - $4.33 per share. In December 2017, the Company issued 32,000 shares of common stock to a consultant in exchange for services, which were subject to a claw-back provision tied to specific performance. The shares were valued using the closing share price of our common stock on the date of grant, $4.54 per share. In December 2017, the Company issued 14,384 shares of its common stock upon conversion of 8% convertible promissory notes with an aggregate principal amount converted of $52,500. No gain or loss recorded on the transactions. In September 2017, the Company issued 14,760 shares of common stock to directors and employees for stock-based compensation of $56,221. The shares were valued using the closing share price of our common stock on the date of grant, with the range of $3.78 - $4.38 per share. In August 2017, the Company issued 83,334 shares of its common stock upon conversion of a 6% convertible promissory note with an aggregate principal amount converted of $500,000. No gain or loss recorded on the transactions. In August 2017, the Company issued 5,209 shares of common stock to a third-party consultant in exchange for services rendered. The shares were valued using the closing share price of our common stock on the date of grant, with the range of $3.40 - $3.50 per share. In August 2017, the Company completed an underwritten public offering of 1,200,000 units consisting of 1,200,000 shares of its common stock and warrants to purchase up to an aggregate of 1,200,000 shares of its common stock (each, a “Unit”) at a public offering price of $4.50 per Unit. The warrants have a per share exercise price of $5.40, are exercisable immediately, and will expire five years from the date of issuance. The gross proceeds to the Company from this offering were $5.4 million, before deducting underwriting discounts and commissions and other estimated offering expenses. On August 24, 2017, the underwriters exercised their option to purchase an additional 180,000 Units to cover over-allotments, that resulted in additional gross proceeds to the Company of $810,000, before deducting offering expenses. In June 2017, the Company issued 2,716 shares of common stock to employees for stock-based compensation of $15,943, all of which were fully vested upon issuance. The shares were valued using the closing share price of our common stock on the date of grant, with the range of $4.38 - $6.00 per share. In May 2017, the Company completed the acquisition of a majority stake in BBD. We issued 28,096 shares of common stock to the owners of BBD as consideration for 90% of the BBD LLC units. Based on the closing share price of our common stock of $4.80 on May 1, 2017, the value of the transaction was $134,858. Issuance costs incurred were $14,400. In April 2017, the independent directors, Messrs. Trent Davis and Michael Fleming, respectively, each exercised 4,630 stock options to purchase common stock at $5.40 per share. In April 2017, the Company issued 50,335 shares of common stock to three third-party consultants in exchange for services rendered. The shares were valued using the closing share price of our common stock on the date of grant, with the range of $4.35 - $4.50 per share. In April 2017, the Company approved a restricted stock unit grant of 33,334 shares of common stock to the Company’s Chief Executive Officer, Grover Wickersham. The grant vested on April 5, 2017, of which 10,218 shares were withheld in order to satisfy Mr. Wickersham’s personal tax withholding responsibility. The shares were valued using the $4.80 closing share price of our common stock on the date of grant. In April 2017, the Company issued 16,667 shares of its common stock upon conversion of 50 shares of preferred stock. In March 2017, the Company issued 83,334 shares of its common stock upon conversion of 250 shares of preferred stock. In March 2017, the Company issued 22,436 shares of its common stock upon conversion of 8% convertible promissory notes with an aggregate principal amount converted of $87,500. No gain or loss recorded on the transactions. On March 8, 2017, the Company 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. Issuance costs incurred were $5,580. In March 2017, the Company issued 575 shares of common stock to employees for stock-based compensation of $2,517. The shares were valued using the $4.38 closing share price of our common stock on the date of grant. In March 2017, the Company issued 19,796 shares of common stock to four third-party consultants in exchange for services rendered. The shares were valued using the closing share price of our common stock on the date of grant, with the range of $3.90 - $4.35 per share. From March 31, 2017 to June 2, 2017, the Company issued 400,019 shares of its common stock for aggregate cash proceeds of $1,560,000, including 400,019 warrants for common stock. From January 15, 2017 through February 16, 2017, the Company received warrant exercises and common stock subscriptions for 40,834 shares for aggregate cash proceeds of $159,250. From January 4, 2017 to January 22, 2017, the Company sold 15,001 shares of common stock to accredited investors at a price of $3.90 per share for aggregate cash proceeds of $58,500. In the year ended December 31, 2016, the Company issued 63,499 shares of common stock to employees for stock-based compensation of $153,996. Additionally, the Company had $220,691 of stock-based compensation expense related to stock options granted to employees and vested during the year ended December 31, 2016. In the year ended December 31, 2016, the Company issued 115,184 shares of common stock to eight third-party consultants in exchange for services rendered and trade debt totaling $284,277. In December 2016, the Company issued 800,000 shares of its common stock for $1,040,000, including 800,000 warrants for common stock. In December 2016, the Company issued 564,781 shares of its common stock for warrant exercises totaling $734,216. In December 2016, the Company issued 886,538 shares of its common stock upon conversion of 8% convertible promissory notes with an aggregate principal amount converted of $1,152,499. In December 2016, the Company issued 531,000 shares of its common stock upon conversion of 672 shares of preferred stock. In July 2016, the Company issued 12,802 shares of its common stock in consideration of $17,759 in accrued and unpaid dividends due at June 30, 2016 for its outstanding Series A Preferred. From June 4, 2016 to June 22, 2016, the Company issued 2,000,000 shares of its common stock for $2,000,000, including 2,000,000 warrants for common stock, net of issuance costs of $23,762. From April 20, 2016 to June 3, 2016, the Company issued 343,873 shares of its common stock upon conversion of a 14% convertible promissory note. The aggregate principal amount of this note that was converted was $196,503. Issuance of Convertible Preferred Stock From April 4, 2016 to June 17, 2016, the Company sold 972 shares of its series A convertible preferred stock (“Series A Preferred”) 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 net of issuance costs of $69,528. Each share of Series A Convertible Preferred has a stated value of $1,000, which is convertible into shares of the Company’s common stock (the “Common Stock”) at a fixed conversion price equal to $1.50 per share. The Series A Convertible Preferred accrue dividends at a rate of 8% per annum, cumulative. Dividends are payable quarterly in arrears at the Company’s option either in cash or “in kind” in shares of Common Stock; provided, however that dividends may only be paid in cash following the fiscal year in which the Company has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $500,000, to the extent permitted under applicable law out of funds legally available therefore. For ‘in-kind” dividends, holders will receive that number of shares of Common Stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding a dividend date. In the event of any voluntary or involuntary liquidation, dissolution or winding up, or sale of the Company, each holder of Series A Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to: (i) $1,000 multiplied by (ii) the total number of shares of Series A Preferred Stock issued under the Series A Certificate of Designation multiplied by (iii) 2.5. For all matters submitted to a vote of the Company’s stockholders, the holders of the Series A Preferred as a class shall have an aggregate number of votes equal to the product of (x) the number of shares of Common Stock (rounded to the nearest whole number) into which the total shares of Series A Preferred Stock issued under the Series A Certificate of Designation on such date of determination are convertible multiplied by (y) 2.5 (the “Total Series A Votes”), with each holder of Series A Preferred entitled to vote its pro rata portion of the Total Series A Votes. Holders of Common Stock do not have cumulative voting rights. In addition, the holders of Series A Preferred shall vote separately a class to change any of the rights, preferences and privileges of the Series A Preferred. As of December 31, 2017, the Company has zero shares of preferred stock outstanding. Stock-Based Compensation On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”). The total number of shares available for the grant of either stock options or compensation stock under the 2016 Plan is 166,667 shares, subject to adjustment. On January 1, 2017, the number of shares available for grant under the 2016 Plan reset to 307,139 shares, equal to 8% of the number of outstanding shares of the Company’s capital stock, calculated on an as-converted basis, on December 31 of the preceding calendar year. On October 18, 2017, the Board of Directors (the “Board”) approved amendments to the 2016 Plan to (i) increase the number of shares of the common stock that may be issued under the 2016 Plan (the “Aggregate Limit”) by an additional 192,861 shares of common stock, for a total of 500,000 shares of common stock, (ii) increase the number of shares of common stock that may be granted to any participant pursuant to options to purchase common stock and stock appreciation rights under the 2016 Plan in any one year period (the “Individual Option Limit”) from 8,333 shares to 200,000 shares, (iii) increase the number of shares of common stock that may be granted to any participant pursuant to other awards (the “Individual Award Limit”) under the 2016 Plan in any one year period from 8,333 shares to 200,000 shares and (iv) increase the number of shares of common stock that may be paid to any one participant under the 2016 Plan for a performance period pursuant to performance compensation awards under the 2016 Plan (the “Individual Performance Award Limit”) from 8,333 shares to 200,000 shares, which amendments were adopted and approved at the December 2017 meeting of stockholders. The exercise price per share of each stock option shall not be less than 100 percent of the fair market value of the Company’s common stock on the date of grant. At December 31, 2017, there were 354,422 options and 125,146 restricted stock units (“RSUs”) issued under the 2016 Plan, with vesting schedules varying between immediate and five (5) years from the grant date. On January 29, 2015, the Company adopted the 2015 Stock Incentive Plan (the 2015 Plan). The total number of shares available for the grant of either stock options or compensation stock under the 2015 Plan is 50,000 shares, subject to adjustment. The exercise price per share of each stock option shall not be less than 20 percent of the fair market value of the Company’s common stock on the date of grant. At December 31, 2017, there were 14,584 options issued under the Plan outstanding, which options vest at the rate of at least 25 percent in the first year, starting 6-months after the grant date, and 75% in year two. The Company also issues, from time to time, options which are not registered under a formal option plan. At December 31, 2017, there were no options outstanding that were not issued under the Plans. A summary of all stock option activity at and for the years ended December 31, 2017 and 2016 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2015 36,667 $ 38.59 Options granted 142,500 5.48 Options exercised - - Options canceled (5,417 ) 108.69 Outstanding at December 31, 2016 173,750 $ 9.25 Options granted 243,667 4.34 Options exercised (9,260 ) 5.40 Options canceled (39,151 ) 5.39 Outstanding at December 31, 2017 369,006 $ 6.47 Exercisable at December 31, 2017 151,282 $ 9.47 The aggregate intrinsic value of options outstanding at December 31, 2017 was $28,962. At December 31, 2017, there were 234,375 unvested options with an aggregate grant date fair value of $698,943. The unvested options will vest in accordance with the vesting schedule in each respective option agreement, which varies between immediate and five (5) years from the grant date. The aggregate intrinsic value of unvested options at December 31, 2017 was $23,910. During the year ended December 31, 2017, 100,041 options vested. The Company uses the Black-Scholes valuation model to measure the grant-date fair value of stock options. The grant-date fair value of stock options issued to employees is recognized on a straight-line basis over the requisite service period. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following: ● Exercise price of the option ● Fair value of the Company’s common stock on the date of grant ● Expected term of the option ● Expected volatility over the expected term of the option ● Risk-free interest rate for the expected term of the option The calculation includes several assumptions that require management’s judgment. The expected term of the options is calculated using the simplified method described in GAAP. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility is derived from volatility calculated using historical closing prices of common shares of similar entities whose share prices are publicly available for the expected term of the options. The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the options. The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the year ended December 31, 2017: Risk-free interest rate 1.72 % Expected term (in years) 6.5 Dividend yield - Expected volatility 75 % The weighted-average grant-date fair value per share of stock options granted during the year ended December 31, 2017 was $2.94. The aggregate grant date fair value of the 243,667 options granted during the year ended December 31, 2017 was $566,983. For the twelve months ended December 31, 2017, total stock option expense related to stock options was $445,032. At December 31, 2017, the total compensation cost related to stock options not yet recognized is approximately $796,993, which is expected to be recognized over a weighted-average period of approximately 3.04 years. Warrants During the twelve months ended December 31, 2017, the Company issued an aggregate of 400,019 common stock warrants in connection with the purchase of 400,019 shares of common stock, 1,380,000 common stock warrants in connection with the August 2017 public offering, and 112,000 common stock warrants to six consultants. The Company has determined the warrants should be classified as equity on the condensed consolidated balance sheet as of December 31, 2017. The estimated fair value of the warrants at issuance was $2,009,443, based on a combination of closing market trading price on the date of issuance for the public offering warrants, and the Black-Scholes option-pricing model using the weighted-average assumptions below: Volatility 75 % Risk-free interest rate 1.47 % Expected term (in years) 2.83 Expected dividend yield - Fair value of common stock $ 4.72 A total of 40,834 warrants were exercised during the twelve months ended December 31, 2017 for cash proceeds of $159,250. A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ 0 Twelve months ended December 31, 2017: Granted 1,892,019 4.24 years $ 5.73 $ 54,880 Exercised (40,834 ) 2.00 years $ 3.90 - Forfeited and cancelled (74,873 ) 2.00 years $ 6.00 - Outstanding at December 31, 2017 2,623,077 3.62 years $ 5.96 $ 54,880 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 14. Related Party Transactions The following is a description of transactions since January 1, 2016 as to which the amount involved exceeds the lesser of $120,000 or one percent (1%) of the average of our total assets at year-end for the last two completed fiscal years and in which any related person has or will have a direct or indirect material interest, other than equity, compensation, termination and other arrangements. On April 4, 2016, Steven Earles, our former chief executive officer, purchased 185 units in an offering of units consisting of shares of our series A convertible preferred stock and warrants to purchase common stock (our “Series A Preferred Stock and Warrant Unit Offering”) in consideration of $185,000 in accrued and unpaid salary. Each unit consisted of one share of series A convertible preferred stock and one warrant to purchase 223 shares of common stock at an exercise price of $6.00 per share. Steven Shum, our chief financial officer, purchased 97 units in the Series A Preferred Stock and Warrant Unit Offering in consideration of $97,000 in accrued and unpaid salary. Martin Kunkel, our former chief marketing officer, director and secretary, purchased 58 Units in the Series A Preferred Stock and Warrant Unit Offering in consideration of $58,000 in accrued and unpaid salary. Carrie Earles, our chief branding officer and wife of Steven Earles, purchased 83 units in the Series A Preferred Stock and Warrant Unit Offering in consideration of $83,000 in accrued and unpaid salary. These issuances were unanimously approved by our Board, including all disinterested directors. Effective November 4, 2016, we entered into an agreement with Mr. Earles, the Company’s former chief executive officer, pursuant to which Mr. Earles agreed to convert 185 shares of the Company’s series A convertible preferred stock into 41,111 shares of the Company’s common stock and to cancel his warrant to purchase 41,107 shares of the Company’s common stock. On June 9, 2016, pursuant to a subscription agreement executed by the Grover T. Wickersham Employees’ Profit Sharing Plan (“PSP”) for which Mr. Wickersham serves as trustee, the PSP purchased in a private placement an aggregate of 83,334 units, each unit consisting of one share of common stock and one common stock purchase warrant (collectively with the common stock, the “Common Stock Units”) at a purchase price of $3.00 per Common Stock Unit, for a total purchase price of $250,000. On June 22, 2016, pursuant to a subscription agreement executed by Grover T. Wickersham, Mr. Wickersham directly purchased in a private placement an aggregate of 38,334 Common Stock Units at a purchase price of $3.00 per Common Stock Unit for a total purchase price of $115,000. On December 30, Mr. Wickersham assigned 24,680 of his warrants to a related and un-related party. He also voluntarily canceled 8,334 additional warrants. On June 22, 2016, pursuant to a subscription agreement executed by an education trust established for the benefit of an unrelated minor for which Mr. Wickersham serves as trustee (“Education Trust”), the Education Trust purchased in a private placement 16,667 Common Stock Units at a purchase price of $3.00 per Common Stock Unit, for a total purchase price of $50,000. On June 22, 2016, pursuant to a subscription agreement executed by the Lindsay Anne Wickersham 1999 Irrevocable Trust for which Mr. Wickersham serves as trustee (the “Irrevocable Trust”), the Irrevocable Trust purchased in a private placement 66,667 Common Stock Units at a purchase price of $3.00 per Common Stock Unit, for a total purchase price of $200,000. On June 22, 2016, pursuant to a subscription agreement, Michael Fleming, a current director, directly purchased in a private placement an aggregate of 8,334 Common Stock Units at a purchase price of $3.00 per Common Stock Unit, each Common Stock Unit consisting of one share of common stock and a warrant to purchase one share of common stock at an exercise price of $6.00 per share, for a total purchase price of $25,000. On June 30, 2016, the PSP purchased from us a promissory note bearing interest at the rate of 8% per annum (a “Promissory Note”) for aggregate consideration of $50,000, along with a warrant to acquire 8,334 shares of common stock at a price of $6.00 per share. On July 7, 2016, the PSP purchased an additional Promissory Note for aggregate consideration of $120,000, along with a warrant to acquire 20,000 shares of common stock at an exercise price of $6.00 per share. On December 30, 2016, the PSP exercised 43,590 warrants at a price of $3.90 per share in exchange for eliminating the outstanding note principal. On June 30, 2016, the Grover T. and Jill Z. Wickersham 2000 Charitable Remainder Trust (the “Wickersham Trust”) purchased an additional Promissory Note for aggregate consideration of $50,000, along with a warrant to acquire 8,334 shares of common stock at an exercise price of $6.00 per share. On November 21, 2016, the Wickersham Trust purchased an additional Promissory Note for aggregate consideration of $75,000, along with a warrant to acquire 12,500 shares of common stock at an exercise price of $6.00 per share. On December 31, 2016, the Wickersham Trust exercised its 20,834 warrants along with an additional 11,218 warrants assigned from Mr. Wickersham all at a price of $3.90 in exchange for eliminating the outstanding note principal. During the nine months ended September 30, 2016, the Company’s chief executive officer paid expenses on behalf of the Company on his personal credit card. These related party advances do not bear interest and are payable on demand. At September 30, 2016, the balance due to the chief executive officer was approximately $8,000. The Company also has a note payable due its chief executive officer in the amount of $12,500 at September 30, 2016, that was repaid during fiscal year 2016. On September 19, 2016, an entity for which Lawrence Hirson, a former director, serves as manager purchased $150,000 of promissory notes and received 3-year warrants to purchase 25,000 shares of our common stock at an exercise price of $6.00 per share. On June 2, 2017, Mr. Wickersham purchased 15,189 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 $59,237 in cash. On August 10, 2017, Mr. Wickersham and his affiliates purchased 55,555 units at $4.50 per unit, with each unit consisting of one share of common stock and one Public Warrant, for total proceeds of approximately $250,000 in cash. On August 23, 2017, our Board appointed Jack Peterson to the Board to fill an existing vacancy on the Board effective immediately. Mr. Peterson is also the President of Sandstrom Partners. In late 2016, with the goal of increasing its brand value and accelerating sales, the Company retained Sandstrom and tasked them with reviewing the Company’s current product portfolio, as well as its new ideas, and advising it with respect to marketing, creation of brand awareness and product positioning, locally and nationally. The Company is using Sandstrom’s full range of brand development services, including research, strategy, brand identity, package design, environments, advertising as well as digital design and development. The Company paid $140,000 in cash, issued 33,334 shares of stock valued at $145,000 (at the time of issuance), and issued 42,000 warrants with an exercise price of $3.50 valued at $43,596 (using a black-scholes value at the time of issuance) to Sandstrom Partners in 2017 for services rendered by Sandstrom under its agreement with the Company. We have also issued an additional 10,025 shares valued at $40,000 (at the time of issuance) to Sandstrom in 2018. On December 29, 2017, the Grover T. Wickersham Employees’ Profit Sharing Plan (“PSP”) purchased from us a promissory note bearing interest at the rate of 8% per annum (a “Promissory Note”) for aggregate consideration of $464,750. Interest is paid monthly. The note is due on June 30, 2019 or in the event the Company completes a private or public offering of its equity or debt securities in which the gross amount raised in such financing is at least $2.0 million (a “Future Financing”), all amount due under this Note shall become due and payable within five (5) business days of the final closing of such Future Financing. In lieu of receiving the cash repayment of amounts due under this Note in connection with a Future Financing, at the option of Payee, the principal amount due and payable may be used to purchase the securities offered in the Future Financing. On December 29, 2017, the Grover T. and Jill Z. Wickersham 2000 Charitable Remainder Trust (the “Wickersham Trust”) purchased from us a promissory note bearing interest at the rate of 8% per annum (a “Promissory Note”) for aggregate consideration of $179,300. Interest is paid monthly. The note is due on June 30, 2019 or in the event the Company completes a private or public offering of its equity or debt securities in which the gross amount raised in such financing is at least $2.0 million (a “Future Financing”), all amount due under this Note shall become due and payable within five (5) business days of the final closing of such Future Financing. In lieu of receiving the cash repayment of amounts due under this Note in connection with a Future Financing, at the option of Payee, the principal amount due and payable may be used to purchase the securities offered in the Future Financing. We believe that the foregoing transactions were in our best interests. Consistent with Section 78.140 of the Nevada Revised Statutes, it is our current policy that all transactions between us and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterested directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is authorized, approved or ratified by the board. We will continue to conduct an appropriate review of all related party transactions and potential conflicts of interest on an ongoing basis. Our audit committee has the authority and responsibility to review, approve and oversee any transaction between the Company and any related person and any other potential conflict of interest situation on an ongoing basis, in accordance with Company policies and procedures in effect from time to time. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events On March 15, 2018, the Company completed a private offering of promissory notes and accompanying warrants in which it raised $1,250,000 in gross proceeds. The promissory notes bear interest at 8% per annum, payable monthly on the last day of the month. The entire amount of principal and any accrued and unpaid interest is due and payable on May 1, 2021. For every $100,000 in principal, the Company issued to the investor 10,000 common stock purchase warrants, for a total of 125,000 warrants. The warrants, which are identical to the warrants that were issued in the Company’s public offering that was consummated in August 2017, are exercisable through August 10, 2022, unless earlier redeemed, at an exercise price of $5.40, subject to adjustment for stock splits, reverse splits and other similar recapitalization events. The Company will have the option to redeem all or a part of the outstanding warrants at any time after the closing price of the Company’s common stock exceeds $7.65 for five consecutive trading days. In electing to redeem the warrants, the Company will provide 30 days’ notice of the redemption date, during which time the holders of outstanding warrants will have the opportunity to exercise their warrants at the exercise price then in effect. Any warrants remaining outstanding at the close of business on the 30th day of the notice period will be redeemed at a price of $0.15 per warrant, after which, the warrants will be cancelled. Between March 8, 2018 and March 25, 2018, the Company received an aggregate of $680,400 upon exercise of a total of 126,000 common stock purchase warrants that were sold in the Company’s August 2017 public offering. As of April 2, 2018, there remains outstanding 1,254,000 warrants sold in the public offering, in addition to the 125,000 identical warrants sold in the private placement noted above. During the first quarter of 2018, we issued a total of 29,025 shares, which included 16,500 shares to multiple employees as additional compensation, 10,025 shares to our partner, Sandstrom Partners, as part of their branding work on our products, and 2,500 shares to two different service providers for services rendered. |
Selected Quarterly Consolidated
Selected Quarterly Consolidated Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Consolidated Financial Data (Unaudited) | 16. Selected Quarterly Consolidated Financial Data (unaudited) The following table sets forth the selected unaudited condensed consolidated statements of operations data for each of the four quarters of the years ended December 31, 2017 and 2016. The unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein and, in the Company’s opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair statement of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited consolidated financial statements of the Company’s and the notes thereto included elsewhere herein. Three months ended March 31, June 30, September 30, December 31, 2017 2017 2017 2017 Net sales $ 612,481 $ 605,030 $ 618,337 $ 775,148 Gross profit $ 289,568 $ 210,405 $ 234,072 $ 242,882 Net loss $ (901,818 ) $ (1,289,126 ) $ (1,411,160 ) $ (1,675,813 ) Net loss available per share basic and diluted $ (0.12 ) $ (0.40 ) $ (0.34 ) $ (0.56 ) Three months ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Net sales $ 463,747 $ 504,311 $ 607,847 $ 532,674 Gross profit $ 207,305 $ 236,095 $ 236,993 $ 147,569 Net loss $ (1,014,679 ) $ (1,309,500 ) $ (1,436,449 ) $ (1,438,991 ) Net loss available per share basic and diluted $ (1.31 ) $ (1.38 ) $ (0.90 ) $ (0.86 ) |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying consolidated financial statements for Eastside Distilling, Inc. and subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of Eastside Distilling, Inc.’s wholly-owned subsidiary MotherLode (beginning as of March 8, 2017), and majority-owned subsidiary BBD (beginning as of May 1, 2017). All intercompany balances and transactions have been eliminated in consolidation. |
Segment Reporting | Segment Reporting The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity, marketing and distributing hand-crafted spirits, and operates as one segment. The Company’s chief operating decision makers, its chief executive officer and chief financial officer, review the Company’s operating results on an aggregate basis for purposes of allocating resources and evaluating financial performance. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition Net revenue includes product sales, less excise taxes and customer programs and incentives. The Company records revenue when all four of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured. The Company recognizes 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), the Company recognizes 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. The Company excludes sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through the Company’s retail location are recognized at the time of sale. Revenue received from online merchants who sell discounted gift certificates for the Company’s 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 Customer programs and incentives, which include customer promotional discount programs, customer incentives and other payments, are a common practice in the alcohol beverage industry. The Company makes these payments to customers and incurs these costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions 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 nature of the expenditure. Amounts paid to customers totaled $182,975 and $136,786 in years 2017 and 2016, respectively. |
Advertising, Promotional and Selling Expenses | Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotions and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, salary and benefit expenses, travel and entertainment expenses for the sales, brand and sales support workforce and promotional activity expenses. Advertising, promotional and selling costs are expensed as incurred. Advertising, promotional and selling expense totaled $2,219,168 and $1,244,152 in years 2017 and 2016, respectively. |
Cost of Sales | Cost of 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. |
Shipping and Fulfillment Costs | Shipping and Fulfillment Costs Freight costs incurred related to shipment of merchandise from the Company’s distribution facilities to customers are recorded in cost of sales. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents are considered to be highly-liquid investments with maturities of three months or less at the time of the purchase. The Company had no cash equivalents at December 31, 2017 and 2016. |
Concentrations | Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At December 31, 2017, two customers represented 79% of trade receivables. At December 31, 2016, three distributors represented 91% of trade receivables. |
Fair Value Measurements | Fair Value Measurements GAAP defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option is elected. At December 31, 2017 and December 31, 2016, management has not elected to report any of the Company’s assets or liabilities at fair value under the “fair value option” provided by GAAP. The hierarchy of fair value valuation techniques under GAAP provides for three levels: Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under GAAP’s fair value measurement requirements are as follows: Level 1: Fair value of the asset or liability is determined using unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Fair value of the asset or liability is determined using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Fair value of the asset or liability is determined using unobservable inputs that are significant to the fair value measurement and reflect management’s own assumptions regarding the applicable asset or liability. None of the Company’s assets or liabilities were measured at fair value at December 31, 2017 and 2016. However, GAAP requires the disclosure of fair value information about financial instruments that are not measured at fair value. Financial instruments consist principally of trade receivables, accounts payable, accrued liabilities, note payable, and convertible note payable. The estimated fair value of trade receivables, accounts payable, and accrued liabilities approximates their carrying value due to the short period of time to their maturities. At December 31, 2017 and 2016, the Company’s note payable and convertible notes payable are at fixed rates and their carrying value approximates fair value. Items Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities acquired in a business acquisition are valued at fair value at the date of acquisition. |
Inventories | 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 certain independent distributors on consignment until it is sold to a third party. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the Company’s estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory. The Company has recorded no write-downs of inventory for the years ended December 31, 2017 and 2016. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years. Amortization of leasehold improvements is computed using the straight-line method over the life of the lease or the useful lives of the assets, whichever is shorter. The cost and related accumulated depreciation and amortization of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reported as current period income or expense. The costs of repairs and maintenance are expensed as incurred. |
Intangible Assets / Goodwill | Intangible Assets / Goodwill The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. At December 31, 2017, an impairment loss of $218,374 was recognized related to its acquisition of Big Bottom Distillery, LLC. |
Long-lived Assets | Long-lived Assets The Company accounts for long-lived assets, including property and equipment, at amortized cost. Management reviews long-lived assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value. |
Income Taxes | Income Taxes The provision for income taxes is based on income and expenses as reported for financial statement purposes using the “asset and liability method” for accounting for deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. At December 31, 2017 and 2016, the Company established valuation allowances against its net deferred tax assets. Income tax positions that meet the “more-likely-than-not” recognition threshold are measured at the largest amount of income tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with income tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized income tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized income tax benefits would be classified as additional income taxes in the accompanying consolidated statements of operations. There were no unrecognized income tax benefits, nor any interest and penalties associated with unrecognized income tax benefits, accrued or expensed at and for the years ended December 31, 2017 and 2016. The Company files federal income tax returns in the U.S. and various state income tax returns. The Company is no longer subject to examinations by the related tax authorities for the Company’s U.S. federal and state income tax returns for years prior to 2011. |
Comprehensive Income | Comprehensive Income The Company does not have any reconciling other comprehensive income items for the for the years ended December 31, 2017 and 2016, respectively. |
Excise Taxes | Excise Taxes The Company is responsible for compliance with the TTB regulations, which includes making timely and accurate excise tax payments. The Company is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcohol beverages in varying amounts. The Company calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws. Excise taxes totaled $997,410 and $797,435 in years 2017 and 2016, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized 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 measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. Stock-based compensation was $563,356 and $374,687 in fiscal years 2017 and 2016, respectively. |
Accounts Receivable Factoring Program | Accounts Receivable Factoring Program During 2017, we terminated our previous receivable factoring program. Under the prior program, we had the option to sell certain customer account receivables in advance of payment for 75% of the amount due. When the customer remitted payment, we would receive 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 remitted payment and we received the remaining 25% of the non-factored amount. We did not factor any new invoices during 2017. At December 31, 2017, we had no factored invoices outstanding, and we incurred fees associated with the factoring program of $63,238 during fiscal year 2017. During the year ended December 31, 2016, we factored invoices totaling $542,083 and received total proceeds of $406,562. At December 31, 2016, we had factored invoices outstanding of $171,150, and we incurred fees associated with the factoring program of $48,601 during 2016. |
Recent Accounting Pronouncements | 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. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). - A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and - A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. 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 the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory 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 as of December 31, 2015. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the December 31, 2017 presentation with no changes to net loss or total stockholders’ equity (deficit) previously reported. |
Business Acquisition (Tables)
Business Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
MotherLode Craft Distillery, LLC [Member] | |
Schedule of Business Acquisition Assets and Labilities | The following allocation of the purchase price is as follows: Consideration given: 86,667 shares of common stock valued at $4.35 per share $ 377,000 Assets and liabilities acquired: Cash 7,062 Inventory 103,488 Property and equipment 46,250 Intangible assets - customer list and license 376,431 Goodwill 28,182 Accounts payable (5,180 ) Customer deposits (179,233 ) $ 377,000 |
Big Bottom Distilling, LLC [Member] | |
Schedule of Business Acquisition Assets and Labilities | The following allocation of the purchase price is as follows: Consideration given: 28,096 shares of common stock valued at $4.80 per share for 90% $ 134,858 Non-controlling interests 14,984 Total value of acquisition $ 149,842 Assets and liabilities acquired: Cash (overdraft) $ (2,521 ) Accounts receivable 6,224 Inventory 129,922 Property and equipment 22,717 Intangible assets - license 25,000 Goodwill 193,374 Accrued liabilities (52,841 ) Notes payable (172,033 ) Total $ 149,842 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following at December 31: 2017 2016 Raw materials $ 3,755,477 $ 439,739 Finished goods 295,805 340,298 Total inventories $ 4,051,282 $ 780,037 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment Net | Property and equipment consists of the following at December 31: 2017 2016 Furniture and fixtures $ 326,088 $ 70,140 Leasehold improvements 56,410 8,607 Vehicles 49,483 38,831 Construction in progress 372,667 34,603 Total cost 804,648 152,181 Less accumulated depreciation and amortization (76,142 ) (52,965 ) Total property and equipment, net $ 728,506 $ 99,216 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | There were no intangible assets or goodwill at December 31, 2016. At December 31, 2017, intangible assets and goodwill consist of the following: December 31, 2017 Life Permits and licenses $ 25,000 - Customer lists 351,432 7 years Goodwill 28,182 - Total intangible assets and goodwill 404,614 Less accumulated amortization (50,764 ) Intangible assets and goodwill - net $ 353,850 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | Other assets consist of the following at December 31: 2017 2016 Product branding $ 285,000 $ - Deposits 53,942 48,000 Other assets $ 343,942 $ 48,000 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consists of the following at December 31, 2017 and December 31, 2016: December 31, 2017 December 31, 2016 Notes payable bearing interest at 7.99%. The note is payable in monthly principal plus interest payments of $472 through December 2020. The note is secured by a vehicle. $ - $ 16,642 Notes payable bearing interest at 8%. The notes have a 2-year maturity, are due either June 30, 2018 or June 30, 2019 and pay interest-only on a monthly basis. 407,500 547,500 Note payable bearing interest at 2.74%. The note is payable in monthly principal plus interest payments of $100 through December 2019. 2,306 - Note payable bearing interest at 4.00%. The note is payable in quarterly principal plus interest payments of $9,614 through March 2019. 56,341 - Convertible notes payable bearing interest at 4.00%. The notes principal plus accrued interest is due in full at various dates between April 3, 2020 – September 30, 2020. The notes have an automatic conversion feature upon the closing (or first in a series of closings) of the next equity financing in which the Company sells 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 note has a voluntary conversion feature where the investor may convert, in whole or in part, at any time at the conversion price of $6.00. 927,192 - Promissory notes payable bearing interest at 8.00%. The notes’ principal is due on June 30, 2019. Interest is paid monthly. 1,101,840 - Total notes payable 2,495,179 564,142 Less current portion (293,726 ) (4,537 ) Less debt discount for detachable warrant (39,693 ) (131,849 ) Long-term portion of notes payable $ 2,161,760 $ 427,756 |
Schedule of Maturities on Notes Payable | Maturities on notes payable as of December 31, 2017, are as follows: Year ending December 31: 2018 $ 293,726 2019 1,254,146 2020 947,307 2021 - Thereafter - $ 2,495,179 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Tax Rates Reconciliation | The provision for income taxes results in effective tax rates which are different than the federal income tax statutory rate. The nature of the differences for the year ended December 31 were as follows: 2017 2016 Expected federal income tax benefit $ (1,794,492 ) $ (1,774,361 ) State income taxes after credits (348,343 ) (344,435 ) Change in valuation allowance 2,142,835 2,118,795 Total provision for income taxes $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | The components of the net deferred tax assets and liabilities at December 31 consisted of the following: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 5,489,143 3,557,909 Stock-based compensation 563,356 213,181 Total deferred tax assets 6,052,499 3,771,090 Deferred tax liabilities: Depreciation and amortization (92,016 ) (70,816 ) Total deferred tax liabilities (92,016 ) (70,816 ) Valuation allowance (5,960,483 ) (3,700,274 ) Net deferred tax assets $ - - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments Under Operating Leases | At December 31, 2017, future minimum lease payments required under the operating leases are approximately as follows: For year ending December 31st: 2018 $ 277,289 2019 137,551 2020 3,313 2021 3,313 2022 3,313 Total $ 424,779 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Common Share | The numerators and denominators used in computing basic and diluted net loss per common share in 2017 and 2016 are as follows: December 31, 2017 2016 Net loss available to common shareholders (numerator) $ (5,277,316 ) $ (5,251,293 ) Weighted average shares (denominator) 3,717,956 1,247,281 Basic and diluted net loss per common share $ (1.42 ) $ (4.21 ) |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Schedule of Balance of Stockholder's Equity | Convertible Series A Total Non-controlling Preferred Stock Common Stock Paid-in Accumulated Stockholders’ interest in Total Shares Amount Shares Amount Capital Deficit Equity (Deficit) consolidated entities Equity Balance, December 31, 2016 300 $ 245,838 2,542,504 $ 254 $ 13,699,785 $ (12,813,044 ) $ 1,132,833 $ - $ 1,132,833 Issuance of common stock - - 15,001 2 58,498 - 58,500 - 58,500 Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants - - 1,780,019 177 6,669,401 - 6,669,578 - 6,669,578 Issuance of common stock from warrant exercise for cash - - 40,834 4 159,246 - 159,250 - 159,250 Issuance of common stock for services by third parties - - 110,340 11 479,903 - 479,914 - 479,914 Issuance of common stock for services by employees - - 56,538 6 253,649 - 253,655 - 253,655 Stock option exercises - - 9,260 1 50,000 - 50,001 - 50,001 Stock-based compensation - - - - 563,356 - 563,356 - 563,356 Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 - - 86,667 9 371,411 - 371,420 - 371,420 Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 - - 28,096 3 120,455 - 120,458 14,984 135,442 Shares issued for payoff of long-term notes - - 120,154 12 561,866 - 561,878 - 561,878 Cumulative dividend on Series A preferred - 5,037 - - - - 5,037 - 5,037 Common shares issued for preferred conversion (300 ) (250,875 ) 100,001 10 235,865 - (15,000 ) - (15,000 ) Adjustment of shares for reverse stock-split - - 331 - - - - - - Net profit attributable to noncontrolling interests - - - - - - 601 601 Net loss attributable to common shareholders - - - - - (5,277,917 ) (5,277,917 ) - (5,277,917 ) Balance, December 31, 2017 - $ - 4,889,745 $ 489 $ 23,223,435 $ (18,090,961 ) $ 5,132,963 $ 15,585 $ 5,148,548 |
Summary of Stock Option Activity | A summary of all stock option activity at and for the years ended December 31, 2017 and 2016 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2015 36,667 $ 38.59 Options granted 142,500 5.48 Options exercised - - Options canceled (5,417 ) 108.69 Outstanding at December 31, 2016 173,750 $ 9.25 Options granted 243,667 4.34 Options exercised (9,260 ) 5.40 Options canceled (39,151 ) 5.39 Outstanding at December 31, 2017 369,006 $ 6.47 Exercisable at December 31, 2017 151,282 $ 9.47 |
Schedule of Weighted-average Assumptions used in Black-Scholes Valuation Method | The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the year ended December 31, 2017: Risk-free interest rate 1.72 % Expected term (in years) 6.5 Dividend yield - Expected volatility 75 % |
Warrant [Member] | |
Schedule of Weighted-average Assumptions used in Black-Scholes Valuation Method | The estimated fair value of the warrants at issuance was $2,009,443, based on a combination of closing market trading price on the date of issuance for the public offering warrants, and the Black-Scholes option-pricing model using the weighted-average assumptions below: Volatility 75 % Risk-free interest rate 1.47 % Expected term (in years) 2.83 Expected dividend yield - Fair value of common stock $ 4.72 |
Summary of Warrant Activity | A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding at December 31, 2016 846,765 2.77 years $ 6.48 $ 0 Twelve months ended December 31, 2017: Granted 1,892,019 4.24 years $ 5.73 $ 54,880 Exercised (40,834 ) 2.00 years $ 3.90 - Forfeited and cancelled (74,873 ) 2.00 years $ 6.00 - Outstanding at December 31, 2017 2,623,077 3.62 years $ 5.96 $ 54,880 |
Selected Quarterly Consolidat36
Selected Quarterly Consolidated Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Condensed Consolidated Statements of Operations Data | The operating results for any quarter are not necessarily indicative of results for any future period and should be read in conjunction with the audited consolidated financial statements of the Company’s and the notes thereto included elsewhere herein. Three months ended March 31, June 30, September 30, December 31, 2017 2017 2017 2017 Net sales $ 612,481 $ 605,030 $ 618,337 $ 775,148 Gross profit $ 289,568 $ 210,405 $ 234,072 $ 242,882 Net loss $ (901,818 ) $ (1,289,126 ) $ (1,411,160 ) $ (1,675,813 ) Net loss available per share basic and diluted $ (0.12 ) $ (0.40 ) $ (0.34 ) $ (0.56 ) Three months ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Net sales $ 463,747 $ 504,311 $ 607,847 $ 532,674 Gross profit $ 207,305 $ 236,095 $ 236,993 $ 147,569 Net loss $ (1,014,679 ) $ (1,309,500 ) $ (1,436,449 ) $ (1,438,991 ) Net loss available per share basic and diluted $ (1.31 ) $ (1.38 ) $ (0.90 ) $ (0.86 ) |
Description of Business (Detail
Description of Business (Details Narrative) | May 31, 2017 | May 01, 2017 |
Ownership percentage | 90.00% | |
Big Bottom Distilling, LLC [Member] | ||
Ownership percentage | 90.00% |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||
Net loss | $ 1,675,813 | $ 1,411,160 | $ 1,289,126 | $ 901,818 | $ 1,438,991 | $ 1,436,449 | $ 1,309,500 | $ 1,014,679 | $ 5,277,917 | $ 5,199,619 | |
Accumulated deficit | 18,090,961 | 12,813,044 | 18,090,961 | 12,813,044 | |||||||
Net cash provided by financing activities | 9,162,926 | 5,910,622 | |||||||||
Cash on hand | $ 2,586,315 | $ 1,088,066 | 2,586,315 | $ 1,088,066 | $ 141,317 | ||||||
Working capital surplus | $ 5,700,000 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017USD ($)Number | Dec. 31, 2016USD ($) | |
Number of operating segments | Number | 1 | |
Customer programs and incentives paid | $ 182,975 | $ 136,786 |
Advertising expense | 2,219,168 | 1,244,152 |
Cash equivalents | ||
Unrecognized income tax benefit, interest and penalties | ||
Excise taxes | 997,410 | 797,435 |
Stock-based compensation | $ 563,356 | 374,687 |
Percentage of factored and non-factored amount description | Under the prior program, we had the option to sell certain customer account receivables in advance of payment for 75% of the amount due. When the customer remitted payment, we would receive 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 remitted payment and we received the remaining 25% of the non-factored amount. | |
Accounts receivable factored program | $ 63,238 | 48,601 |
Amount of factored invoice | 542,083 | |
Proceeds from accounts receivable invoice | 406,562 | |
Accounts receivable factored invoices | $ 171,150 | |
Minimum [Member] | ||
Property and equipment estimated useful lives | 3 years | |
Maximum [Member] | ||
Property and equipment estimated useful lives | 7 years | |
Trade Receivables [Member] | Two Customers [Member] | ||
Concentration of credit risk percentage | 79.00% | |
Trade Receivables [Member] | Three Distributors [Member] | ||
Concentration of credit risk percentage | 91.00% |
Business Acquisition (Details N
Business Acquisition (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | May 31, 2017 | May 01, 2017 | |
Business acquisition revenue | $ 375,000 | ||
Ownership percentage | 90.00% | ||
Big Bottom Distilling, LLC [Member] | |||
Business acquisition revenue | $ 201,000 | ||
Ownership percentage | 90.00% |
Business Acquisition - Schedule
Business Acquisition - Schedule of Business Acquisition Assets and Labilities (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
MotherLode Craft Distillery, LLC [Member] | |
Consideration given | $ 377,000 |
Cash | 7,062 |
Inventory | 103,488 |
Property and equipment | 46,250 |
Intangible assets - customer list and license | 376,431 |
Goodwill | 28,182 |
Accounts payable | (5,180) |
Customer deposits | (179,233) |
Total assets and liabilities assumed | 377,000 |
Big Bottom Distilling, LLC [Member] | |
Consideration given | 134,858 |
Non-controlling interests | 14,984 |
Total value of acquisition | 149,842 |
Cash | (2,521) |
Accounts receivable | 6,224 |
Inventory | 129,922 |
Property and equipment | 22,717 |
Intangible assets - customer list and license | 25,000 |
Goodwill | 193,374 |
Accrued liabilities | (52,841) |
Notes payable | (172,033) |
Total assets and liabilities assumed | $ 149,842 |
Business Acquisition - Schedu42
Business Acquisition - Schedule of Business Acquisition Assets and Labilities (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
MotherLode Craft Distillery, LLC [Member] | |
Business consideration shares of common stock | shares | 86,667 |
Common stock valued per share | $ / shares | $ 4.35 |
Big Bottom Distilling, LLC [Member] | |
Business consideration shares of common stock | shares | 28,096 |
Common stock valued per share | $ / shares | $ 4.80 |
Business acquisition, percentage | 90.00% |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,755,477 | $ 439,739 |
Finished goods | 295,805 | 340,298 |
Total inventories | $ 4,051,282 | $ 780,037 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 92,016 | $ 21,991 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total cost | $ 804,648 | $ 152,181 |
Less accumulated depreciation | (76,142) | (52,965) |
Total property and equipment, net | 728,506 | 99,216 |
Furniture and Fixtures [Member] | ||
Total cost | 326,088 | 70,140 |
Leasehold Improvements [Member] | ||
Total cost | 56,410 | 8,607 |
Vehicles [Member] | ||
Total cost | 49,483 | 38,831 |
Construction in progress [Member] | ||
Total cost | $ 372,667 | $ 34,603 |
Intangible Assets and Goodwil46
Intangible Assets and Goodwill (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 50,764 |
Intangible Assets and Goodwil47
Intangible Assets and Goodwill - Schedule of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Total intangible assets and goodwill | $ 404,614 | |
Less accumulated amortization | (50,764) | |
Intangible assets and goodwill - net | 353,850 | |
Permits and Licenses [Member] | ||
Total intangible assets and goodwill | $ 25,000 | |
Intangible assets and goodwill, useful life | 0 years | |
Customer Lists [Member] | ||
Total intangible assets and goodwill | $ 351,432 | |
Intangible assets and goodwill, useful life | 7 years | |
Goodwill [Member] | ||
Total intangible assets and goodwill | $ 28,182 | |
Intangible assets and goodwill, useful life | 0 years |
Other Assets (Details Narrative
Other Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Capitalized costs of rebranding product line | $ 285,000 | |
Capitalized costs amortization period | 7 years | |
Deposits | $ 40,000 | $ 48,000 |
Office and Retail Space Lease [Member] | ||
Deposits | $ 13,942 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Other assets | $ 343,942 | $ 48,000 |
Product Branding [Member] | ||
Other assets | 285,000 | |
Deposits [Member] | ||
Other assets | $ 53,942 | $ 48,000 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total notes payable | $ 2,495,179 | $ 564,142 |
Less current portion | (293,726) | (4,537) |
Less debt discount for detachable warrant | (39,693) | (131,849) |
Long-term portion of notes payable | 2,161,760 | 427,756 |
Notes Payable [Member] | ||
Total notes payable | 16,642 | |
Note Payable 1 [Member] | ||
Total notes payable | 407,500 | 547,500 |
Note Payable 2 [Member] | ||
Total notes payable | 2,306 | |
Note Payable 3 [Member] | ||
Total notes payable | 56,341 | |
Note Payable 4 [Member] | ||
Total notes payable | 927,192 | |
Note Payable 5 [Member] | ||
Total notes payable | $ 1,101,840 |
Notes Payable - Schedule of N51
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) | 12 Months Ended | |
Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016USD ($)$ / shares | |
Notes Payable [Member] | ||
Debt instrument interest rate | 7.99% | |
Debt instrument principal and interest | $ 472 | |
Debt instrument maturity date description | through December, 2020. | |
Note Payable 1 [Member] | ||
Debt instrument interest rate | 8.00% | 8.00% |
Debt instrument maturity date description | Either June 30, 2018 or June 30, 2019 | Either June 30, 2018 or June 30, 2019 |
Note Payable 2 [Member] | ||
Debt instrument interest rate | 2.74% | 2.74% |
Debt instrument principal and interest | $ 100 | $ 100 |
Debt instrument maturity date description | through December, 2019. | through December, 2019. |
Note Payable 3 [Member] | ||
Debt instrument interest rate | 4.00% | 4.00% |
Debt instrument principal and interest | $ 9,614 | $ 9,614 |
Debt instrument maturity date description | through March, 2019. | through March, 2019. |
Note Payable 4 [Member] | ||
Debt instrument interest rate | 4.00% | 4.00% |
Debt instrument maturity date description | various dates between April 3, 2020 September 30, 2020. | various dates between April 3, 2020 September 30, 2020. |
Debt instrument aggregated Principle | $ 4,000,000 | $ 4,000,000 |
Debt instrument purchase price | $ / shares | $ 7.50 | $ 7.50 |
Debt instrument convertible conversion ratio | 0.80 | 0.80 |
Debt instrument convertible conversion share price | $ / shares | $ 6 | $ 6 |
Note Payable 5 [Member] | ||
Debt instrument interest rate | 8.00% | 8.00% |
Debt instrument maturity date description | due on June 30, 2019 | due on June 30, 2019 |
Notes Payable - Schedule of Mat
Notes Payable - Schedule of Maturities on Notes Payable (Details) | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 293,726 |
2,019 | 1,254,146 |
2,020 | 947,307 |
2,021 | |
Thereafter | |
Total | $ 2,495,179 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Net operating loss carryforward | $ 14,000,000 |
Federal [Member] | |
Net operating loss carryforward year | 20 years |
Net operating loss expiration year | 2,034 |
State [Member] | |
Net operating loss carryforward year | 15 years |
Net operating loss expiration year | 2,029 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Tax Rates Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Expected federal income tax benefit | $ (1,794,492) | $ (1,774,361) |
State income taxes after credits | (348,343) | (344,435) |
Change in valuation allowance | 2,142,835 | 2,118,795 |
Total provision for income taxes |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 5,489,143 | $ 3,557,909 |
Stock-based compensation | 563,356 | 213,181 |
Total deferred tax assets | 6,052,499 | 3,771,090 |
Depreciation and amortization | (92,016) | (70,816) |
Total deferred tax liabilities | (92,016) | (70,816) |
Valuation allowance | (5,960,483) | (3,700,274) |
Net deferred tax assets |
Commitments and Contingencies56
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operation lease expiration | expire at various dates through March 2021 | |
Rent expense | $ 362,000 | $ 416,000 |
Minimum [Member] | ||
Monthly lease payments | 1,857 | |
Maximum [Member] | ||
Monthly lease payments | $ 6,400 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Operating leases (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 277,289 |
2,019 | 137,551 |
2,020 | 3,313 |
2,021 | 3,313 |
2,022 | 3,313 |
Total | $ 424,779 |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net loss available to common shareholders (numerator) | $ (5,277,316) | $ (5,251,293) |
Weighted average shares (denominator) | 3,717,956 | 1,247,281 |
Basic and diluted net loss per common share | $ (1.42) | $ (4.21) |
Stockholder's Equity (Details N
Stockholder's Equity (Details Narrative) - USD ($) | Oct. 18, 2017 | Sep. 08, 2017 | Aug. 24, 2017 | Jun. 15, 2017 | May 01, 2017 | Apr. 05, 2017 | Mar. 08, 2017 | Jan. 02, 2017 | Oct. 18, 2016 | Jan. 29, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2017 | Apr. 30, 2017 | Mar. 31, 2017 | Feb. 16, 2017 | Jan. 22, 2017 | Dec. 31, 2016 | Jul. 31, 2016 | Jun. 22, 2016 | Jun. 03, 2016 | Jun. 02, 2017 | Jun. 17, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 08, 2016 |
Reverse stock splits | 3-for-1 reverse stock split | 20-for-1 reverse stock split | ||||||||||||||||||||||||||
Number of shares issued employees | 18,371 | 14,760 | ||||||||||||||||||||||||||
Value of shares issued to employees | $ 79,351 | $ 56,221 | $ 563,356 | |||||||||||||||||||||||||
Debt converion into shares, value | $ 561,878 | |||||||||||||||||||||||||||
Number of common stock shares sold | 1,200,000 | |||||||||||||||||||||||||||
Number of common stock shares issued | 1,200,000 | 800,000 | 2,000,000 | 400,019 | ||||||||||||||||||||||||
Number of warrant shares of common stock | 1,200,000 | 40,834 | 800,000 | 2,000,000 | 400,019 | 800,000 | ||||||||||||||||||||||
Sale of stock price per share | $ 4.50 | |||||||||||||||||||||||||||
Warrants exercise price per share | $ 5.40 | |||||||||||||||||||||||||||
Warrants term | 5 years | |||||||||||||||||||||||||||
Proceeds from issuance of public offering | $ 5,400,000 | |||||||||||||||||||||||||||
Option granted | 243,667 | 142,500 | ||||||||||||||||||||||||||
Number of common stock shares issued value | $ 1,040,000 | $ 2,000,000 | $ 58,500 | |||||||||||||||||||||||||
Stock option exercises, shares | (9,260) | |||||||||||||||||||||||||||
Proceeds from issuance of common stock | $ 1,560,000 | $ 6,728,079 | $ 2,451,238 | |||||||||||||||||||||||||
Proceeds from issuance of warrant exercises | $ 159,250 | 159,250 | $ 684,216 | |||||||||||||||||||||||||
Stock issued during period for services, value | $ 479,914 | |||||||||||||||||||||||||||
Debt issuance cost | $ 23,762 | |||||||||||||||||||||||||||
Preferred stock, shares outstanding | 0 | 300 | 0 | 300 | ||||||||||||||||||||||||
Vesting period of option | 5 years | |||||||||||||||||||||||||||
Aggregate intrinsic value of options outstanding | $ 28,962 | $ 28,962 | ||||||||||||||||||||||||||
Number of unvested options | 234,375 | 234,375 | ||||||||||||||||||||||||||
Aggregate grant date fair value unvested options | $ 698,943 | |||||||||||||||||||||||||||
Aggregate intrinsic value of unvested options | $ 23,910 | $ 23,910 | ||||||||||||||||||||||||||
Number of vested options | 100,041 | |||||||||||||||||||||||||||
Weighted-average grant-date fair value of stock options granted | $ 2.94 | |||||||||||||||||||||||||||
Stock option expenses | $ 445,032 | |||||||||||||||||||||||||||
Compensation cost related to stock options not yet recognized | $ 796,993 | $ 796,993 | ||||||||||||||||||||||||||
Period of compensation cost related to stock options not yet recognized | 3 years 15 days | |||||||||||||||||||||||||||
2016 Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 192,861 | |||||||||||||||||||||||||||
Option granted | 354,422 | |||||||||||||||||||||||||||
Number of rsu's issued | 125,146 | |||||||||||||||||||||||||||
Number of shares available for grant | 307,139 | 166,667 | ||||||||||||||||||||||||||
Outstanding capital stock shares percentage | 8.00% | |||||||||||||||||||||||||||
Number of common stock shares reserved for future issuance | 500,000 | |||||||||||||||||||||||||||
Stock option exercise price percentage description | The exercise price per share of each stock option shall not be less than 100 percent of the fair market value of the Companys common stock on the date of grant. | |||||||||||||||||||||||||||
Vesting period of option | 5 years | |||||||||||||||||||||||||||
2015 Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||
Number of shares available for grant | 50,000 | |||||||||||||||||||||||||||
Stock option exercise price percentage description | The exercise price per share of each stock option shall not be less than 20 percent of the fair market value of the Companys common stock on the date of grant. | |||||||||||||||||||||||||||
Number of options issued | 14,584 | |||||||||||||||||||||||||||
Description of vesting percentage | vest at the rate of at least 25 percent in the first year, starting 6-months after the grant date, and 75% in year two. | |||||||||||||||||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||||||||||||||||
Stock issued during period consideration | 12,802 | |||||||||||||||||||||||||||
Stock issued during period consideration, value | $ 17,759 | |||||||||||||||||||||||||||
Warrant [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 564,781 | 400,019 | ||||||||||||||||||||||||||
Number of warrant shares of common stock | 400,019 | 400,019 | ||||||||||||||||||||||||||
Proceeds from issuance of warrant exercises | $ 734,216 | |||||||||||||||||||||||||||
Fair value of warrants | $ 2,009,443 | |||||||||||||||||||||||||||
Series A Preferred Stock [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 972 | 499 | ||||||||||||||||||||||||||
Number of common stock shares issued value | $ 972,000 | $ 499,000 | ||||||||||||||||||||||||||
Debt issuance cost | $ 69,528 | |||||||||||||||||||||||||||
Number of units issued for cancellation outstanding indebt | 50 | |||||||||||||||||||||||||||
Number of units issued for cancellation outstanding indebt, value | $ 50,000 | |||||||||||||||||||||||||||
Preferred stock stated value | $ 1,000 | |||||||||||||||||||||||||||
Fixed conversion price per share | $ 1.50 | |||||||||||||||||||||||||||
Preferred stock accrued dividend rate | 8.00% | |||||||||||||||||||||||||||
Description of participation rights | Dividends are payable quarterly in arrears at the Companys option either in cash or in kind in shares of Common Stock; provided, however that dividends may only be paid in cash following the fiscal year in which the Company has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $500,000, to the extent permitted under applicable law out of funds legally available therefore. For in-kind dividends, holders will receive that number of shares of Common Stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding a dividend date. | |||||||||||||||||||||||||||
Description of liquidation rights | In the event of any voluntary or involuntary liquidation, dissolution or winding up, or sale of the Company, each holder of Series A Preferred shall be entitled to receive its pro rata portion of an aggregate payment equal to: (i) $1,000 multiplied by (ii) the total number of shares of Series A Preferred Stock issued under the Series A Certificate of Designation multiplied by (iii) 2.5. | |||||||||||||||||||||||||||
Warrant One [Member] | ||||||||||||||||||||||||||||
Number of warrant shares of common stock | 40,834 | 40,834 | ||||||||||||||||||||||||||
Proceeds from issuance of warrant exercises | $ 159,250 | |||||||||||||||||||||||||||
Big Bottom Distilling, LLC [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.80 | |||||||||||||||||||||||||||
Number of common stock shares issued | 28,096 | |||||||||||||||||||||||||||
Percentage of common stock unit | 90.00% | |||||||||||||||||||||||||||
Number of common stock shares issued value | $ 134,858 | |||||||||||||||||||||||||||
Issuance of common stock for acquisition costs | $ 14,400 | |||||||||||||||||||||||||||
MotherLode Craft Distillery, LLC [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.35 | |||||||||||||||||||||||||||
Number of common stock shares issued | 86,667 | |||||||||||||||||||||||||||
Number of common stock shares issued value | $ 377,000 | |||||||||||||||||||||||||||
Issuance of common stock for acquisition costs | $ 5,580 | |||||||||||||||||||||||||||
Conversion Shares [Member] | ||||||||||||||||||||||||||||
Debt converion into shares | 16,667 | 83,334 | 531,000 | |||||||||||||||||||||||||
Number of preferred stock shares issued upon conversion | 50 | 250 | 672 | 672 | ||||||||||||||||||||||||
Employees [Member] | ||||||||||||||||||||||||||||
Number of shares issued employees | 2,716 | 575 | ||||||||||||||||||||||||||
Value of shares issued to employees | $ 15,943 | $ 2,517 | ||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.38 | |||||||||||||||||||||||||||
Three Third-party Consultants [Member ] | ||||||||||||||||||||||||||||
Stock issued during period for services, shares | 50,335 | |||||||||||||||||||||||||||
Four Third-party Consultants [Member ] | ||||||||||||||||||||||||||||
Stock issued during period for services, shares | 19,796 | |||||||||||||||||||||||||||
Accredited Investors [Member] | ||||||||||||||||||||||||||||
Number of common stock shares sold | 15,001 | |||||||||||||||||||||||||||
Sale of stock price per share | $ 3.90 | |||||||||||||||||||||||||||
Proceeds from issuance of common stock | $ 58,500 | |||||||||||||||||||||||||||
Over-Allotment [Member] | ||||||||||||||||||||||||||||
Option granted | 180,000 | |||||||||||||||||||||||||||
Gross proceeds before deducting offering expenses | $ 810,000 | |||||||||||||||||||||||||||
August 2017 Public Offering [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 1,380,000 | |||||||||||||||||||||||||||
8% Convertible Promissory Notes [Member] | ||||||||||||||||||||||||||||
Debt converion into shares | 14,384 | 22,436 | 886,538 | |||||||||||||||||||||||||
Debt converion into shares, value | $ 52,500 | $ 87,500 | $ 1,152,499 | |||||||||||||||||||||||||
Percentage of convertible promissory notes | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||||||||||||||||||||
6% Convertible Promissory Notes [Member] | ||||||||||||||||||||||||||||
Debt converion into shares | 83,334 | |||||||||||||||||||||||||||
Debt converion into shares, value | $ 500,000 | |||||||||||||||||||||||||||
14% Convertible Promissory Notes [Member] | ||||||||||||||||||||||||||||
Debt converion into shares | 343,873 | |||||||||||||||||||||||||||
Debt converion into shares, value | $ 196,503 | |||||||||||||||||||||||||||
Percentage of convertible promissory notes | 14.00% | |||||||||||||||||||||||||||
Consultant [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.54 | $ 4.54 | ||||||||||||||||||||||||||
Stock issued during period for services, shares | 32,000 | |||||||||||||||||||||||||||
Third Party Consultant [Member] | ||||||||||||||||||||||||||||
Stock issued during period for services, shares | 5,209 | |||||||||||||||||||||||||||
Independent Directors [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 5.40 | |||||||||||||||||||||||||||
Stock option exercises, shares | 4,630 | |||||||||||||||||||||||||||
Chief Executive Officer [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.80 | |||||||||||||||||||||||||||
Debt converion into shares | 10,218 | |||||||||||||||||||||||||||
Number of rsu's issued | 33,334 | |||||||||||||||||||||||||||
Employee [Member] | ||||||||||||||||||||||||||||
Number of shares issued employees | 63,499 | |||||||||||||||||||||||||||
Value of shares issued to employees | $ 153,996 | |||||||||||||||||||||||||||
Share based compensation granted to employees | $ 220,691 | |||||||||||||||||||||||||||
Eight Third Party Consultant [Member] | ||||||||||||||||||||||||||||
Stock issued during period for services, shares | 115,184 | |||||||||||||||||||||||||||
Stock issued during period for services, value | $ 284,277 | |||||||||||||||||||||||||||
Officer [Member] | ||||||||||||||||||||||||||||
Stock issued during period for services, shares | 423 | |||||||||||||||||||||||||||
Stock issued during period for services, value | $ 423,000 | |||||||||||||||||||||||||||
Six Consultants [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 112,000 | |||||||||||||||||||||||||||
Minimum [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 3.78 | $ 3.78 | $ 3.78 | |||||||||||||||||||||||||
Minimum [Member] | Individual Option Limit [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 8,333 | |||||||||||||||||||||||||||
Minimum [Member] | Individual Award Limit [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 8,333 | |||||||||||||||||||||||||||
Minimum [Member] | Individual Performance Award Limit [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 8,333 | |||||||||||||||||||||||||||
Minimum [Member] | Employees [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.38 | |||||||||||||||||||||||||||
Minimum [Member] | Three Third-party Consultants [Member ] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.35 | |||||||||||||||||||||||||||
Minimum [Member] | Four Third-party Consultants [Member ] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 3.90 | |||||||||||||||||||||||||||
Minimum [Member] | Third Party Consultant [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 3.40 | |||||||||||||||||||||||||||
Maximum [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.33 | $ 4.38 | $ 4.33 | |||||||||||||||||||||||||
Maximum [Member] | Individual Option Limit [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 200,000 | |||||||||||||||||||||||||||
Maximum [Member] | Individual Award Limit [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 200,000 | |||||||||||||||||||||||||||
Maximum [Member] | Individual Performance Award Limit [Member] | ||||||||||||||||||||||||||||
Number of common stock shares issued | 200,000 | |||||||||||||||||||||||||||
Maximum [Member] | Employees [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 6 | |||||||||||||||||||||||||||
Maximum [Member] | Three Third-party Consultants [Member ] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.50 | |||||||||||||||||||||||||||
Maximum [Member] | Four Third-party Consultants [Member ] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 4.35 | |||||||||||||||||||||||||||
Maximum [Member] | Third Party Consultant [Member] | ||||||||||||||||||||||||||||
Common stock closing share price per share | $ 3.50 |
Stockholder's Equity - Schedule
Stockholder's Equity - Schedule of Balance of Stockholder's Equity (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
Aug. 31, 2017 | Dec. 31, 2016 | Jun. 22, 2016 | Jun. 02, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Balance | $ 1,132,833 | $ 1,132,833 | ||||||||||||
Issuance of common stock | $ 1,040,000 | $ 2,000,000 | 58,500 | |||||||||||
Issuance of common stock, shares | 1,200,000 | 800,000 | 2,000,000 | 400,019 | ||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | 6,669,578 | |||||||||||||
Issuance of common stock from warrant exercise for cash | 159,250 | |||||||||||||
Issuance of common stock for services by third parties | 479,914 | |||||||||||||
Issuance of common stock for services by employees | 253,655 | |||||||||||||
Stock options exercises | $ 50,001 | |||||||||||||
Stock options exercises, shares | (9,260) | |||||||||||||
Stock-based compensation | $ 563,356 | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | 371,420 | |||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | 135,442 | |||||||||||||
Shares Issued for payoff of long-term notes | 505,637 | |||||||||||||
Cumulative dividend on Series A preferred | 5,037 | |||||||||||||
Common shares issued for preferred conversion | $ (15,000) | |||||||||||||
Adjustment of shares for reverse stock-split, shares | ||||||||||||||
Net profit attributable to noncontrolling interests | $ (601) | |||||||||||||
Net loss attributable to common shareholders | $ (1,675,813) | $ (1,411,160) | $ (1,289,126) | (901,818) | $ (1,438,991) | $ (1,436,449) | $ (1,309,500) | $ (1,014,679) | (5,277,917) | (5,199,619) | ||||
Balance | $ 1,132,833 | 5,148,548 | 1,132,833 | 5,148,548 | 1,132,833 | |||||||||
Convertible Series A Preferred Stock [Member] | ||||||||||||||
Balance | $ 245,838 | $ 245,838 | ||||||||||||
Balance, shares | 300 | 300 | ||||||||||||
Issuance of common stock | ||||||||||||||
Issuance of common stock, shares | ||||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | ||||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants, shares | ||||||||||||||
Issuance of common stock from warrant exercise for cash | ||||||||||||||
Issuance of common stock from warrant exercise for cash, shares | ||||||||||||||
Issuance of common stock for services by third parties | ||||||||||||||
Issuance of common stock for services by third parties, shares | ||||||||||||||
Issuance of common stock for services by employees | ||||||||||||||
Issuance of common stock for services by employees, shares | ||||||||||||||
Stock options exercises | ||||||||||||||
Stock options exercises, shares | ||||||||||||||
Stock-based compensation | ||||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | ||||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580, shares | ||||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | ||||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400, shares | ||||||||||||||
Shares Issued for payoff of long-term notes | ||||||||||||||
Shares Issued for payoff of long-term notes, shares | ||||||||||||||
Cumulative dividend on Series A preferred | $ 5,037 | |||||||||||||
Common shares issued for preferred conversion | $ (250,875) | |||||||||||||
Common shares issued for preferred conversion, shares | (300) | |||||||||||||
Adjustment of shares for reverse stock-split, shares | ||||||||||||||
Net profit attributable to noncontrolling interests | ||||||||||||||
Net loss attributable to common shareholders | ||||||||||||||
Balance | $ 245,838 | $ 245,838 | $ 245,838 | |||||||||||
Balance, shares | 300 | 300 | 300 | |||||||||||
Common Stock [Member] | ||||||||||||||
Balance | $ 254 | $ 254 | ||||||||||||
Balance, shares | 2,542,504 | 2,542,504 | ||||||||||||
Issuance of common stock | $ 2 | |||||||||||||
Issuance of common stock, shares | 15,001 | |||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | $ 177 | |||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants, shares | 1,780,019 | |||||||||||||
Issuance of common stock from warrant exercise for cash | $ 4 | |||||||||||||
Issuance of common stock from warrant exercise for cash, shares | 40,834 | |||||||||||||
Issuance of common stock for services by third parties | $ 11 | |||||||||||||
Issuance of common stock for services by third parties, shares | 107,340 | |||||||||||||
Issuance of common stock for services by employees | $ 6 | |||||||||||||
Issuance of common stock for services by employees, shares | 59,538 | |||||||||||||
Stock options exercises | $ 1 | |||||||||||||
Stock options exercises, shares | 9,260 | |||||||||||||
Stock-based compensation | ||||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | $ 9 | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580, shares | 86,667 | |||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | $ 3 | |||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400, shares | 28,096 | |||||||||||||
Shares Issued for payoff of long-term notes | $ 12 | |||||||||||||
Shares Issued for payoff of long-term notes, shares | 120,154 | |||||||||||||
Cumulative dividend on Series A preferred | ||||||||||||||
Common shares issued for preferred conversion | $ 10 | |||||||||||||
Common shares issued for preferred conversion, shares | 100,001 | |||||||||||||
Adjustment of shares for reverse stock-split, shares | 331 | |||||||||||||
Net profit attributable to noncontrolling interests | ||||||||||||||
Net loss attributable to common shareholders | ||||||||||||||
Balance | $ 254 | $ 489 | $ 254 | $ 489 | $ 254 | |||||||||
Balance, shares | 2,542,504 | 4,889,745 | 2,542,504 | 4,889,745 | 2,542,504 | |||||||||
Paid-in Capital [Member] | ||||||||||||||
Balance | $ 13,699,785 | $ 13,699,785 | ||||||||||||
Issuance of common stock | 58,498 | |||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | 6,669,401 | |||||||||||||
Issuance of common stock from warrant exercise for cash | 159,246 | |||||||||||||
Issuance of common stock for services by third parties | 479,903 | |||||||||||||
Issuance of common stock for services by employees | 253,649 | |||||||||||||
Stock options exercises | 50,000 | |||||||||||||
Stock-based compensation | 563,356 | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | 371,411 | |||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | 120,455 | |||||||||||||
Shares Issued for payoff of long-term notes | 561,866 | |||||||||||||
Cumulative dividend on Series A preferred | ||||||||||||||
Common shares issued for preferred conversion | $ 235,865 | |||||||||||||
Adjustment of shares for reverse stock-split, shares | ||||||||||||||
Net profit attributable to noncontrolling interests | ||||||||||||||
Net loss attributable to common shareholders | ||||||||||||||
Balance | $ 13,699,785 | $ 23,223,435 | $ 13,699,785 | 23,223,435 | $ 13,699,785 | |||||||||
Accumulated Deficit [Member] | ||||||||||||||
Balance | (12,813,044) | (12,813,044) | ||||||||||||
Issuance of common stock | ||||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | ||||||||||||||
Issuance of common stock from warrant exercise for cash | ||||||||||||||
Issuance of common stock for services by third parties | ||||||||||||||
Issuance of common stock for services by employees | ||||||||||||||
Stock options exercises | ||||||||||||||
Stock-based compensation | ||||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | ||||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | ||||||||||||||
Shares Issued for payoff of long-term notes | ||||||||||||||
Cumulative dividend on Series A preferred | ||||||||||||||
Common shares issued for preferred conversion | ||||||||||||||
Adjustment of shares for reverse stock-split, shares | ||||||||||||||
Net profit attributable to noncontrolling interests | ||||||||||||||
Net loss attributable to common shareholders | (5,277,917) | |||||||||||||
Balance | (12,813,044) | (17,872,587) | (12,813,044) | (17,872,587) | (12,813,044) | |||||||||
Total Eastside Distilling, Inc. Stockholders' Equity [Member] | ||||||||||||||
Balance | 1,132,833 | 1,132,833 | ||||||||||||
Issuance of common stock | 58,500 | |||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | 6,669,578 | |||||||||||||
Issuance of common stock from warrant exercise for cash | 159,250 | |||||||||||||
Issuance of common stock for services by third parties | 479,914 | |||||||||||||
Issuance of common stock for services by employees | 253,655 | |||||||||||||
Stock options exercises | 50,001 | |||||||||||||
Stock-based compensation | 563,356 | |||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | 371,420 | |||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | 120,458 | |||||||||||||
Shares Issued for payoff of long-term notes | 561,878 | |||||||||||||
Cumulative dividend on Series A preferred | 5,037 | |||||||||||||
Common shares issued for preferred conversion | $ (15,000) | |||||||||||||
Adjustment of shares for reverse stock-split, shares | ||||||||||||||
Net profit attributable to noncontrolling interests | ||||||||||||||
Net loss attributable to common shareholders | (5,059,543) | |||||||||||||
Balance | 1,132,833 | 5,132,963 | 1,132,833 | 5,132,963 | 1,132,833 | |||||||||
Non-controlling interests [Member] | ||||||||||||||
Balance | ||||||||||||||
Issuance of common stock | ||||||||||||||
Issuance of common stock, net of issuance costs of $1,120,323, with detachable warrants | ||||||||||||||
Issuance of common stock from warrant exercise for cash | ||||||||||||||
Issuance of common stock for services by third parties | ||||||||||||||
Issuance of common stock for services by employees | ||||||||||||||
Stock options exercises | ||||||||||||||
Stock-based compensation | ||||||||||||||
Issuance of common stock for acquisition of MotherLode, net of issuance costs of $5,580 | ||||||||||||||
Issuance of common stock for 90% acquisition of Big Bottom Distilling, net of issuance costs of $14,400 | 14,984 | |||||||||||||
Shares Issued for payoff of long-term notes | ||||||||||||||
Cumulative dividend on Series A preferred | ||||||||||||||
Common shares issued for preferred conversion | ||||||||||||||
Adjustment of shares for reverse stock-split, shares | ||||||||||||||
Net profit attributable to noncontrolling interests | $ 601 | |||||||||||||
Net loss attributable to common shareholders | ||||||||||||||
Balance | $ 15,585 | $ 15,585 |
Stockholder's Equity - Schedu61
Stockholder's Equity - Schedule of Balance of Stockholder's Equity (Details) (Parenthetical) - USD ($) | May 01, 2017 | Dec. 31, 2017 |
Common stock, net of issuance costs | $ 1,120,323 | |
MotherLode [Member] | ||
Issuance of common stock for acquisition costs | 5,580 | |
Big Bottom Distilling, LLC [Member] | ||
Common stock, net of issuance costs | $ 14,400 | |
Issuance of common stock for acquisition costs | $ 14,400 | |
Percentage of common stock unit | 90.00% |
Stockholder's Equity - Summary
Stockholder's Equity - Summary of Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | ||
Number of Options Outstanding, Beginning Balance | 173,750 | 36,667 |
Number of Options Outstanding, Granted | 243,667 | 142,500 |
Number of Options Outstanding, Exercised | (9,260) | |
Number of Options Outstanding, Canceled | (39,151) | (5,417) |
Number of Options Outstanding, Ending Balance | 369,006 | 173,750 |
Number of Options Exercisable, Ending Balance | 151,282 | |
Weighted- Average Exercise Price Options Outstanding, Beginning Balance | $ 9.25 | $ 38.59 |
Weighted- Average Exercise Price Options Outstanding, Granted | 4.34 | 5.48 |
Weighted- Average Exercise Price Options Outstanding, Exercised | 5.40 | |
Weighted- Average Exercise Price Options Outstanding, Canceled | 5.39 | 108.69 |
Weighted- Average Exercise Price Options Outstanding, Ending Balance | 6.47 | 9.25 |
Weighted- Average Exercise Price Options Exercisable, Ending Balance | $ 9.47 |
Stockholder's Equity - Schedu63
Stockholder's Equity - Schedule of Weighted-average Assumptions used in Black-Scholes Valuation Method (Details) | 12 Months Ended |
Dec. 31, 2017$ / shares | |
Risk-free interest rate | 1.72% |
Expected term (in years) | 6 years 6 months |
Expected dividend yield | |
Expected volatility | 75.00% |
Warrant [Member] | |
Risk-free interest rate | 1.47% |
Expected term (in years) | 2 years 9 months 29 days |
Expected dividend yield | |
Expected volatility | 75.00% |
Fair value of common stock | $ 4.72 |
Stockholder's Equity - Summar64
Stockholder's Equity - Summary of Warrant Activity (Details) | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Equity [Abstract] | |
Warrants Outstanding, Beginning Balance | shares | 846,765 |
Warrants Outstanding, Granted | shares | 1,892,019 |
Warrants Outstanding, Exercised | shares | (40,834) |
Warrants Outstanding, Forfeited and Cancelled | shares | (74,873) |
Warrants Outstanding, Ending Balance | shares | 2,623,077 |
Warrants Outstanding Weighted Average Remaining Life, Beginning Balance | 2 years 9 months 7 days |
Warrants Outstanding Weighted Average Remaining Life, Granted | 4 years 2 months 27 days |
Warrants Outstanding Weighted Average Remaining Life, Exercised | 2 years |
Warrants Outstanding Weighted Average Remaining Life, Forfeited and Cancelled | 2 years |
Warrants Outstanding Weighted Average Remaining Life, Ending Balance | 3 years 7 months 13 days |
Warrants Outstanding Weighted Average Exercise Price, Beginning Balance | $ 6.48 |
Warrants Outstanding Weighted Average Exercise Price, Granted | 5.73 |
Warrants Outstanding Weighted Average Exercise Price, Exercised | 3.90 |
Warrants Outstanding Weighted Average Exercise Price, Forfeited and Cancelled | 6 |
Warrants Outstanding Weighted Average Exercise Price, Ending Balance | $ 5.96 |
Warrants Outstanding Aggregate Intrinsic Value, Beginning Balance | $ | $ 0 |
Warrants Outstanding Aggregate Intrinsic Value, Granted | $ 54,880 |
Warrants Outstanding Aggregate Intrinsic Value, Ending Balance | $ | $ 54,880 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Dec. 29, 2017 | Aug. 23, 2017 | Aug. 10, 2017 | Jun. 02, 2017 | Dec. 30, 2016 | Nov. 21, 2016 | Nov. 04, 2016 | Sep. 19, 2016 | Jul. 07, 2016 | Jun. 30, 2016 | Jun. 22, 2016 | Jun. 09, 2016 | Apr. 04, 2016 | Aug. 31, 2017 | Feb. 16, 2017 | Dec. 31, 2016 | Jun. 22, 2016 | Jun. 02, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Sep. 30, 2016 |
Assets from related party transaction | $ 120,000 | |||||||||||||||||||||
Percentage of average of assets net | 1.00% | |||||||||||||||||||||
Warrant exercise price | $ 5.40 | |||||||||||||||||||||
Number of units purchased | 1,200,000 | |||||||||||||||||||||
Purchase price | $ 4.50 | |||||||||||||||||||||
Note payable | $ 4,537 | $ 293,726 | $ 4,537 | $ 293,726 | ||||||||||||||||||
Proceeds from issuance of warrant exercises | $ 159,250 | 159,250 | $ 684,216 | |||||||||||||||||||
Number of common stock shares issued | 1,200,000 | 800,000 | 2,000,000 | 400,019 | ||||||||||||||||||
Number of common stock shares issued value | $ 1,040,000 | $ 2,000,000 | $ 58,500 | |||||||||||||||||||
Promissory Note [Member] | ||||||||||||||||||||||
Number of warrant to purchase of common stock | 43,590 | |||||||||||||||||||||
Warrant exercise price | $ 3.90 | $ 6 | $ 6 | |||||||||||||||||||
Debt interest rate | 8.00% | |||||||||||||||||||||
Proceeds from related party debt | $ 120,000 | $ 50,000 | ||||||||||||||||||||
Number of warrant acquire | 20,000 | 8,334 | ||||||||||||||||||||
Grover T. Wickersham [Member] | ||||||||||||||||||||||
Number of warrant to purchase of common stock | 11,218 | 11,218 | ||||||||||||||||||||
Warrant exercise price | $ 7.50 | $ 7.50 | ||||||||||||||||||||
Number of units purchased | 15,189 | 83,334 | ||||||||||||||||||||
Purchase price | $ 3.90 | $ 3 | $ 3.90 | |||||||||||||||||||
Total purchase price | $ 250,000 | |||||||||||||||||||||
Proceeds from issuance of warrant exercises | $ 59,237 | |||||||||||||||||||||
Grover T. Wickersham [Member] | Private Placement [Member] | ||||||||||||||||||||||
Cancelation of warrant | 8,334 | |||||||||||||||||||||
Number of units purchased | 38,334 | |||||||||||||||||||||
Purchase price | $ 3 | $ 3 | ||||||||||||||||||||
Total purchase price | $ 115,000 | |||||||||||||||||||||
Number of warrant assigned | 24,680 | |||||||||||||||||||||
Education Trust [Member] | ||||||||||||||||||||||
Number of units purchased | 16,667 | |||||||||||||||||||||
Purchase price | $ 3 | 3 | ||||||||||||||||||||
Total purchase price | $ 50,000 | |||||||||||||||||||||
Irrevocable Trust [Member] | ||||||||||||||||||||||
Number of units purchased | 66,667 | |||||||||||||||||||||
Purchase price | $ 3 | 3 | ||||||||||||||||||||
Total purchase price | $ 200,000 | |||||||||||||||||||||
Michael Fleming [Member] | ||||||||||||||||||||||
Warrant exercise price | $ 6 | 6 | ||||||||||||||||||||
Number of units purchased | 8,334 | |||||||||||||||||||||
Purchase price | $ 3 | $ 3 | ||||||||||||||||||||
Total purchase price | $ 25,000 | |||||||||||||||||||||
Wickersham Trust [Member] | ||||||||||||||||||||||
Number of warrant to purchase of common stock | 20,834 | 20,834 | ||||||||||||||||||||
Warrant exercise price | $ 6 | $ 6 | $ 3.90 | $ 3.90 | ||||||||||||||||||
Proceeds from related party debt | $ 75,000 | $ 50,000 | ||||||||||||||||||||
Number of warrant acquire | 12,500 | 8,334 | ||||||||||||||||||||
Lawrence Hirson [Member] | ||||||||||||||||||||||
Number of warrant to purchase of common stock | 25,000 | |||||||||||||||||||||
Warrant exercise price | $ 6 | |||||||||||||||||||||
Principal amount | $ 150,000 | |||||||||||||||||||||
Warrant term | 3 years | |||||||||||||||||||||
Wickersham and Affiliates [Member] | ||||||||||||||||||||||
Purchase price | $ 4.50 | |||||||||||||||||||||
Number of common stock shares issued | 55,555 | |||||||||||||||||||||
Number of common stock shares issued value | $ 250,000 | |||||||||||||||||||||
Sandstrom Partners [Member] | ||||||||||||||||||||||
Warrant exercise price | $ 3.50 | |||||||||||||||||||||
Proceeds from issuance of warrant exercises | $ 43,596 | |||||||||||||||||||||
Number of common stock shares issued | 33,334 | |||||||||||||||||||||
Number of common stock shares issued value | $ 145,000 | |||||||||||||||||||||
Cash paid | $ 80,000 | |||||||||||||||||||||
Warrants issued | 42,000 | |||||||||||||||||||||
Sandstrom Partners [Member] | 2018 [Member] | ||||||||||||||||||||||
Number of common stock shares issued | 10,025 | |||||||||||||||||||||
Number of common stock shares issued value | $ 40,000 | |||||||||||||||||||||
Grover T.Wickersham Employees [Member] | Profit Sharing Plan [Member] | ||||||||||||||||||||||
Debt interest rate | 8.00% | |||||||||||||||||||||
Principal amount | $ 464,750 | |||||||||||||||||||||
Debt instrument maturity date | Jun. 30, 2019 | |||||||||||||||||||||
Equity and debt securities, gross | $ 2,000,000 | |||||||||||||||||||||
Grover T.and Jill Z. Wickersham [Member] | ||||||||||||||||||||||
Debt interest rate | 8.00% | |||||||||||||||||||||
Principal amount | $ 179,300 | |||||||||||||||||||||
Debt instrument maturity date | Jun. 30, 2019 | |||||||||||||||||||||
Equity and debt securities, gross | $ 2,000,000 | |||||||||||||||||||||
Steven Earles [Member] | ||||||||||||||||||||||
Number of units issued for services | 185 | |||||||||||||||||||||
Value of units issued for services | $ 185,000 | |||||||||||||||||||||
Number of warrant to purchase of common stock | 223 | |||||||||||||||||||||
Warrant exercise price | $ 6 | |||||||||||||||||||||
Steven Shum [Member] | ||||||||||||||||||||||
Number of units issued for services | 97 | |||||||||||||||||||||
Value of units issued for services | $ 97,000 | |||||||||||||||||||||
Martin Kunkel [Member] | ||||||||||||||||||||||
Number of units issued for services | 58 | |||||||||||||||||||||
Value of units issued for services | $ 58,000 | |||||||||||||||||||||
Carrie Earles [Member] | ||||||||||||||||||||||
Number of units issued for services | 83 | |||||||||||||||||||||
Value of units issued for services | $ 83,000 | |||||||||||||||||||||
Number of shares converted | 185 | |||||||||||||||||||||
Conversion of stock shares issued | 41,111 | |||||||||||||||||||||
Cancelation of warrant | 41,107 | |||||||||||||||||||||
Chief Executive Officer [Member] | ||||||||||||||||||||||
Due to related parties | $ 8,000 | |||||||||||||||||||||
Note payable | $ 12,500 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | ||||||
Mar. 31, 2018 | Mar. 31, 2018 | Mar. 25, 2018 | Aug. 31, 2017 | Dec. 31, 2016 | Jun. 22, 2016 | Jun. 02, 2017 | Mar. 31, 2018 | Apr. 02, 2018 | |
Number of common stock shares issued | 1,200,000 | 800,000 | 2,000,000 | 400,019 | |||||
Warrant exercise price | $ 5.40 | ||||||||
Subsequent Event [Member] | |||||||||
Gross proceeds from warrant | $ 1,250,000 | $ 680,400 | |||||||
Debt interest rate | 8.00% | 8.00% | 8.00% | ||||||
Debt instrument maturity date | May 1, 2021 | ||||||||
Debt Principal amount | $ 100,000 | $ 100,000 | $ 100,000 | ||||||
Number of common stock shares issued | 29,025 | ||||||||
Number of warrant to purchase of common stock | 125,000 | 125,000 | 125,000 | ||||||
Warrant exercisable due | Aug. 10, 2022 | ||||||||
Warrant exercise price | $ 5.40 | $ 5.40 | $ 5.40 | ||||||
Sale of stock price per share | $ 7.65 | $ 7.65 | $ 7.65 | ||||||
Warrant description | In electing to redeem the warrants, the Company will provide 30 days notice of the redemption date, during which time the holders of outstanding warrants will have the opportunity to exercise their warrants at the exercise price then in effect. Any warrants remaining outstanding at the close of business on the 30th day of the notice period will be redeemed at a price of $0.15 per warrant, after which, the warrants will be cancelled. | ||||||||
Number of shares issued for services provided | 2,500 | ||||||||
Subsequent Event [Member] | Public Offering [Member] | |||||||||
Warrants outstanding, shares | 1,254,000 | ||||||||
Subsequent Event [Member] | Private Placement [Member] | |||||||||
Warrants outstanding, shares | 125,000 | ||||||||
Subsequent Event [Member] | August 2017 Public Offering [Member] | |||||||||
Number of warrant to purchase of common stock | |||||||||
Warrants outstanding, shares | 126,000 | ||||||||
Subsequent Event [Member] | Investor [Member] | |||||||||
Number of common stock shares issued | 10,000 | ||||||||
Subsequent Event [Member] | Employees [Member] | |||||||||
Number of shares issued for compensation | 16,500 | ||||||||
Subsequent Event [Member] | Sandstrom Partners [Member] | |||||||||
Number of shares issued for compensation | 10,025 |
Selected Quarterly Consolidat67
Selected Quarterly Consolidated Financial Data (Unaudited) - Schedule of Condensed Consolidated Statements of Operations Data (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Net sales | $ 775,148 | $ 618,337 | $ 605,030 | $ 612,481 | $ 532,674 | $ 607,847 | $ 504,311 | $ 463,747 | $ 3,791,382 | $ 3,042,527 |
Gross profit | 242,882 | 234,072 | 210,405 | 289,568 | 147,569 | 236,993 | 236,095 | 207,305 | 976,927 | 827,962 |
Net loss | $ (1,675,813) | $ (1,411,160) | $ (1,289,126) | $ (901,818) | $ (1,438,991) | $ (1,436,449) | $ (1,309,500) | $ (1,014,679) | $ (5,277,917) | $ (5,199,619) |
Net loss available per common share, basic and diluted | $ (0.56) | $ (0.34) | $ (0.40) | $ (0.12) | $ (0.86) | $ (0.90) | $ (1.38) | $ (1.31) |