Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 12, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Eastside Distilling, Inc. | |
Entity Central Index Key | 0001534708 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,675,028 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 446,983 | $ 10,642,877 |
Trade receivables | 2,126,665 | 1,064,078 |
Inventories | 12,257,883 | 11,017,459 |
Prepaid expenses and current assets | 609,306 | 765,146 |
Total current assets | 15,440,837 | 23,489,560 |
Property and equipment, net | 5,608,920 | 1,758,130 |
Right-of-use assets | 899,483 | |
Intangible assets, net | 14,648,543 | 285,676 |
Goodwill | 28,182 | 28,182 |
Other assets, net | 1,111,900 | 796,260 |
Total Assets | 37,737,865 | 26,357,808 |
Current liabilities: | ||
Accounts payable | 1,872,016 | 1,984,690 |
Accrued liabilities | 801,329 | 386,166 |
Deferred revenue | 968 | 1,728 |
Current portion of notes payable | 624,564 | |
Current portion of lease liability | 558,912 | |
Total current liabilities | 3,857,789 | 2,372,584 |
Lease liability - less current portion | 425,775 | |
Secured trade credit facility, net of debt issuance costs | 2,952,413 | 2,934,106 |
Deferred Consideration for Azunia acquisition (Long Term) | 12,781,092 | |
Notes payable - less current portion and debt discount | 3,924,762 | 2,300,000 |
Total liabilities | 23,941,831 | 7,606,690 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value; 15,000,000 shares authorized; 9,516,581 and 8,764,085 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 951 | 876 |
Additional paid-in capital | 50,557,291 | 45,888,872 |
Accumulated deficit | (36,762,208) | (27,138,630) |
Total Eastside Distilling, Inc. Stockholders' Equity | 13,796,034 | 18,751,118 |
Total Liabilities and Stockholders' Equity | $ 37,737,865 | $ 26,357,808 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 9,516,581 | 8,764,085 |
Common stock, shares outstanding | 9,516,581 | 8,764,085 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Sales | $ 4,746,815 | $ 1,698,848 | $ 12,684,930 | $ 4,787,097 |
Less excise taxes, customer programs and incentives | 311,975 | 209,801 | 858,613 | 553,030 |
Net sales | 4,434,840 | 1,489,047 | 11,826,317 | 4,234,067 |
Cost of sales | 2,668,211 | 886,828 | 7,402,749 | 2,278,119 |
Gross profit | 1,766,629 | 602,219 | 4,423,568 | 1,955,948 |
Operating expenses: | ||||
Advertising, promotional and selling expenses | 1,824,893 | 1,128,593 | 4,394,311 | 2,838,417 |
General and administrative expenses | 3,386,910 | 1,559,833 | 9,141,839 | 4,267,831 |
Gain on disposal of property and equipment | (14,104) | (14,104) | ||
Total operating expenses | 5,197,699 | 2,688,426 | 13,522,046 | 7,106,248 |
Loss from operations | (3,431,070) | (2,086,207) | (9,098,478) | (5,150,300) |
Other income (expense), net | ||||
Interest expense | (113,287) | (540,250) | (338,599) | (703,903) |
Other income (expense) | 58 | 852 | 2,700 | |
Total other expense, net | (113,229) | (540,250) | (337,747) | (701,203) |
Loss before income taxes | (3,544,299) | (2,626,457) | (9,436,225) | (5,581,503) |
Provision for income taxes | ||||
Net loss | (3,544,299) | (2,626,457) | (9,436,225) | (5,851,503) |
Loss attributable to noncontrolling interests | (534) | (637) | ||
Net loss attributable to Eastside Distilling, Inc. common shareholders | $ (3,544,299) | $ (2,626,991) | $ (9,436,225) | $ (5,852,140) |
Basic and diluted net loss per common share | $ (0.38) | $ (0.42) | $ (1.03) | $ (1.07) |
Basic and diluted weighted average common shares outstanding | 9,255,347 | 6,256,459 | 9,155,397 | 5,462,070 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (9,436,225) | $ (5,851,503) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,130,912 | 262,168 |
Lease expense | 405,419 | |
Amortization of debt issuance costs | 18,307 | 388,464 |
Issuance of common stock in exchange for services for related parties | 737,071 | |
Issuance of common stock in exchange for services by third parties | 64,248 | 456,071 |
Stock-based compensation | 510,674 | 986,193 |
Changes in operating assets and liabilities: | ||
Trade receivables | (436,869) | (409,770) |
Inventories | (249,574) | (6,123,749) |
Prepaid expenses and other assets | (144,558) | (107,251) |
Accounts payable | (344,287) | 39,575 |
Accrued liabilities | 340,774 | 5,266 |
Deferred revenue | (52,760) | (599) |
Net lease liabilities | (465,407) | |
Net cash used in operating activities | (7,922,275) | (10,355,135) |
Cash Flows From Investing Activities: | ||
Acquisition of business, net of cash acquired | (1,449,917) | |
Purchases of property and equipment | (2,353,091) | (944,248) |
Net cash used in investing activities | (3,803,008) | (944,248) |
Cash Flows From Financing Activities: | ||
Contributed capital | 14,000 | |
Issuance of common stock | 1,262,497 | 324,000 |
Proceeds from option exercise | 105,944 | |
Proceeds from warrant exercise | 10,245,987 | |
Proceeds from warrant exercise, shares not yet issued | 447,020 | |
Proceeds from notes payable | 550,000 | |
Payments of principal on notes payable | (297,108) | (3,123,494) |
Proceeds from convertible notes payable, net of issuance costs | 3,630,000 | |
Proceeds from secured credit facility, net of issuance costs | 1,940,000 | |
Net cash (used in) provided by financing activities | 1,529,389 | 13,569,457 |
Net decrease in cash | (10,195,594) | 2,270,074 |
Cash - beginning of period | 10,642,877 | 2,586,315 |
Cash - end of period | 446,983 | 4,856,389 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid during the year for interest | 290,331 | 208,613 |
Cash paid for amounts included in measurement of lease liabilities | 493,970 | |
Supplemental Disclosure of Non-Cash Financing Activity | ||
Issuance of debt discount | 351,348 | |
Stock issued for payment of trade debt | 945,374 | |
Deferred consideration for the acquisition of Azunia | 12,781,092 | |
Fixed assets acquired through financing | 300,000 | |
Right-of-use assets obtained in exchange for lease obligations | $ 1,072,018 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2019 | |
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, rum and tequila. We currently sell our products in 46 states as well as Ontario, Canada. We also generate revenue from tastings, tasting room tours, private parties, and merchandise sales from our facilities in Oregon. In addition, we bottle, can and package alcoholic beverages for others. The Company is subject to the Oregon Liquor Control Commission (“OLCC”) and the Alcohol and Tobacco Tax and Trade Bureau (“TTB”). In May 2017, we used our shares to acquire 90% of Big Bottom Distillery, LLC (“BBD”), known for its award-winning, super-premium gins and whiskeys, including The Ninety One Gin, Navy Strength Gin, Oregon Gin, Delta Rye and American Single Malt Whiskey. In December 2018, we acquired the remaining 10% of BBD. In addition, we also provide contract bottling, canning, and packaging services for existing and emerging beer, wine, spirits and non-alcoholic beverage producers through MotherLode Craft Distillery (“MotherLode”), our wholly-owned subsidiary acquired in March 2017, and Craft Canning + Bottling, LLC (formerly known as Craft Canning, LLC prior to the acquisition) (“Craft Canning”) acquired on January 11, 2019. On September 12, 2019, we acquired substantially all of the assets of Intersect Beverage, LLC, an importer and distributor of tequila and related products under the brand name “Azuñia”. |
Liquidity
Liquidity | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | 2. Liquidity Historically, the Company has funded its cash and liquidity needs through the issuance of convertible notes, extended credit terms and the sale of equity. The Company has incurred a net loss of $9.4 million and has an accumulated deficit of $36.8 million as of September 30, 2019. The Company has been dependent on raising capital from debt and equity financings to fund its operating activities. For the nine months ended September 30, 2019, the Company raised approximately $1.5 million in additional capital from a combination of equity and debt financing. At September 30, 2019, the Company had $0.4 million of cash on hand with a positive working capital of $11.5 million. The Company’s ability to meet its ongoing operating cash needs over the next twelve months is dependent on raising additional debt or equity capital, generating positive operating cash flow, primarily through increased sales, improved profit growth and controlling expenses. Management intends to implement additional actions to improve profitability, by managing expenses while continuing to increase sales. Additionally, management seeks to leverage the Company’s large inventory balance and its accounts receivable balance to help satisfy its working capital needs over the next twelve months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying unaudited condensed 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”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements in accordance with GAAP have been condensed or eliminated as permitted under the SEC’s rules and regulations. In our opinion, the unaudited condensed consolidated financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2019, our operating results for the three and nine months ended September 30, 2019 and 2018 and our cash flows for the nine months ended September 30, 2019 and 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Interim results are not necessarily indicative of the results that may be expected for an entire fiscal year. The condensed consolidated financial statements include the accounts of Eastside Distilling, Inc.’s wholly-owned subsidiaries, including, MotherLode, BBD, Craft Canning (beginning as of January 11, 2019) and the Azuñia tequila assets (beginning September 12, 2019). 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, packaging, producing, marketing and distributing alcoholic beverages and operates as one segment. The Company’s chief operating decision makers, its president 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 recognizes revenue by applying the following steps in accordance with Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts with Customers 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 locations 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 alcoholic 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 sales or as advertising, promotional and selling expenses in accordance with ASC 606 - Revenue from Contracts with Customers, Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotional and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, promotional costs of value added packaging, 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 expenses totaled $4,394,311 and $2,838,417 for the nine months ended September 30, 2019 and 2018, 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 September 30, 2019 and December 31, 2018. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At September 30, 2019, two customers represented 33% of trade receivables, and at December 31, 2018, two customers represented 34% of trade receivables. Sales to two customers accounted for approximately 28% of consolidated net sales for the nine months ended September 30, 2019. Sales to two customers accounted for approximately 44% of net sales for the nine months ended September 30, 2018. 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 September 30, 2019 and December 31, 2018, 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 cash or 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 September 30, 2019 and December 31, 2018. 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, notes payable, and convertible notes 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 September 30, 2019 and December 31, 2018, the Company’s notes are payable 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 nine months ended September 30, 2019 and 2018. 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 and intangible assets, 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, an impairment loss would be recognized to write down the asset to its estimated fair value. The Company performed a qualitative assessment of goodwill at September 30, 2019 and determined that goodwill was not impaired. 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 September 30, 2019 and December 31, 2018, 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 condensed 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 nine months ended September 30, 2019 and 2018. 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 of other comprehensive income items for the nine months ended September 30, 2019 and 2018. 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 alcoholic 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 $504,095 and $360,229 for the nine months ended September 30, 2019 and 2018, 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 at the end of each reporting period and as the underlying stock-based awards vest. Stock-based compensation was $1,247,745 and $986,193 for the nine months ended September 30, 2019 and 2018, respectively. Accounts Receivable Factoring Program The Company entered into an accounts receivable factoring program. Under the program, the Company has the option to sell certain customer account receivables in advance of payment for 75% of the amount due. When the customer remits payment, the Company receives the remaining 25%. Interest is charged on the advanced 75% payment at a rate of 2.4% for the first 30 days plus 1.44% for each additional ten-day period. Under the terms of the agreement, the factoring provider has recourse against the Company should the customer fail to pay the invoice. Thus, factored amounts are recorded as a liability until the customer remits payment and the remaining 25% of the non-factored amount is received. The Company factored $319,226 of invoices and incurred $12,898 in fees associated with the factoring program during the three months ended September 30, 2019. At September 30, 2019, the Company had $56,265 factored invoices outstanding. Recently Adopted Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash In May 2014, the FASB issued ASU 2014-09, which superseded virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. The Company elected to apply ASU 2014-09 with a cumulative effect adjustment to retained earnings. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date 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 will be largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and ASU No. 2014-09, 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). 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. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842). In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting Recent Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment |
Business Acquisitions
Business Acquisitions | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Business Acquisitions | 4. Business Acquisitions During the nine months ended September 30, 2019, the Company completed the following acquisitions: Craft Canning + Bottling On January 11, 2019, the Company completed the acquisition of Craft Canning + Bottling, LLC (“Craft Canning”), a Portland, Oregon-based provider of bottling and canning services. The Company’s condensed consolidated financial statements for the nine months ended September 30, 2019 include Craft Canning’s results of operations. For the nine months ended September 30, 2019, Craft Canning’s results of operations are included from the acquisition date of January 11, 2019 through September 30, 2019. 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. The following allocation of the purchase price is as follows: Consideration given: 338,212 shares of common stock valued at $6.10 per share $ 2,080,004 Cash 2,003,200 Notes payable 761,678 Total value of acquisition $ 4,844,882 Assets and liabilities acquired: Cash $ 553,283 Trade receivables, net 625,717 Inventories, net 154,824 Prepaid expenses and current assets 250 Property and equipment, net 1,839,486 Right-of-use assets 232,884 Intangible assets - customer list 2,895,318 Other assets 26,600 Accounts payable (231,613 ) Accrued liabilities (74,389 ) Deferred revenue (52,000 ) Lease liabilities (256,375 ) Notes payable (869,103 ) Total $ 4,844,882 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 Company incurred Craft Canning-related acquisition costs of $81,811 during the nine months ended September 30, 2019 that have been recorded in general and administrative expenses on the consolidated statements of operations. The results of the Craft Canning acquisition are included in our consolidated financial statements from the date of acquisition through September 30, 2019. The sales and net income (including transaction costs) of Craft Canning operations included in our consolidated statements of operations were $5,866,675 and $517,657, for the period from January 11, 2019 through September 30, 2019. Azuñia Tequila On September 12, 2019, the Company completed the acquisition of the Azuñia Tequila brand, the direct sales team, existing product inventory, supply chain relationships and contractual agreements from Intersect Beverage, LLC, an importer and distributor of tequila and related products. The Company’s condensed consolidated financial statements as of and for the nine months ended September 30, 2019 include the Azuñia Tequila assets and results of operations. For the nine months ended September 30, 2019, the Azuñia Tequila results of operations are included from the acquisition date of September 12, 2019 through September 30, 2019. The acquisition was structured as an all-stock transaction, provided that the Company may, at its election, pay a portion of the consideration in cash or by executing a three-year promissory note if the issuance of stock would require the Company to hold a vote of its stockholders under the applicable Nasdaq rules. Subject to compliance with applicable Nasdaq rules, the initial consideration, not to exceed approximately $14.7 million in aggregate based on future revenue performance, will be payable approximately 18 months following the closing and will consist of 850,000 shares of the Company’s common stock at a stipulated value of $6.00 per share, 350,000 shares of the Company’s common stock based on the Company’s stock price twelve months after the close of the transaction, and additional shares based on the Azuñia business achieving certain revenue targets and the Company’s stock price 18 months after the close of the transaction. The Company has also agreed to issue additional stock consideration (subject to compliance with applicable Nasdaq rules) of up to $1.5 million upon the Azuñia business achieving revenue of at least $9.45 million in the period commencing on the 13th month following the closing and ending on the 24th month following the closing. 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 based upon their estimated fair values on the acquisition date. The Company estimated the purchase price based on weighted probabilities of future results and recorded deferred consideration payable of $12,781,092 on the acquisition date that will be remeasured to fair value at each reporting date until the contingencies are resolved, with the changes in fair value recognized in earnings. The following allocation of the purchase price is as follows: Consideration given: Deferred consideration payable $ 12,781,092 Total value of acquisition $ 12,781,092 Assets acquired: Inventories, net $ 836,026 Intangible assets - brand 11,945,066 Total $ 12,781,092 Intangible assets are recorded at estimated fair value, as determined by management based on available information. The fair value assigned to the brand intangible asset was determined through the use of the market approach. The major assumptions used in arriving at the estimated identifiable intangible asset value included category averages for comparable acquisitions, including multiples of annual sales and dollars per case sold. The Company used an estimated brand useful life of seven years for these accounting purposes. The Company incurred Azuñia Tequila-related acquisition costs of $158,122 during the nine months ended September 30, 2019 that have been recorded in general and administrative expenses on the consolidated statements of operations. The results of the Azuñia Tequila asset acquisition are included in our consolidated financial statements from the date of acquisition through September 30, 2019. The sales and net loss (including transaction costs) of Azuñia Tequila operations included in our consolidated statements of operations were $232,571 and $(56,055), for the period from September 12, 2019 through September 30, 2019. Pro Forma Financial Information The following unaudited pro forma consolidated results of operations for the three and nine months ended September 30, 2019 and 2018 assume that both acquisitions of Craft Canning + Bottling and Azuñia Tequila were completed on January 1, 2018: Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Pro forma sales $ 5,281,545 $ 4,621,008 $ 15,531,930 $ 11,586,447 Pro forma net loss (4,650,560 ) (3,248,754 ) (12,878,314 ) (8,467,598 ) Pro forma basic and diluted net loss per share $ (0.50 ) $ (0.49 ) $ (1.40 ) $ (1.46 ) Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results. The share and per share data have been retroactively reflected for the acquisitions. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventories consisted of the following: September 30, 2019 December 31, 2018 Raw materials $ 10,044,818 $ 10,347,616 Finished goods 2,213,065 669,843 Total inventories $ 12,257,883 $ 11,017,459 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 6. Property and Equipment Property and equipment consisted of the following: September 30, 2019 December 31, 2018 Furniture and fixtures $ 4,415,181 $ 1,148,540 Leasehold improvements 498,000 477,184 Vehicles 1,161,643 49,483 Construction in progress 1,407,726 425,851 Total cost 7,482,550 2,101,058 Less accumulated depreciation (1,873,630 ) (342,928 ) Property and equipment - net $ 5,608,920 $ 1,758,130 Purchases of property and equipment totaled $2,353,091 and $944,248 for the nine months ended September 30, 2019 and 2018, respectively. Depreciation expense totaled $641,787 and $190,441 for the nine months ended September 30, 2019 and 2018, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | 7. Intangible Assets and Goodwill Intangible assets and goodwill at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Permits and licenses $ 25,000 $ 25,000 Azuñia Brand 11,945,066 - Customer lists 3,246,748 351,430 Goodwill 28,182 28,182 Total intangible assets and goodwill 15,244,996 404,612 Less accumulated amortization (568,273 ) (90,754 ) Intangible assets and goodwill - net $ 14,676,723 313,858 Amortization expense totaled $489,125 and $37,655 for the nine months ended September 30, 2019 and 2018, respectively. |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | 8. Other Assets Other assets at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Product branding $ 675,000 $ 525,000 Investments in online company 450,000 300,000 Deposits 56,542 29,297 Total other assets 1,181,542 854,297 Less accumulated amortization (69,642 ) (58,037 ) Other assets - net $ 1,111,900 $ 796,260 As of September 30, 2019, the Company had $675,000 of capitalized costs related to services provided for the rebranding of its existing product line and branding of new product lines. This amount is being amortized over a seven-year life. In December 2018 and January 2019, the Company invested in an online (direct-to-consumer) business and intends to begin selling select products through this platform. The remaining deposits of $56,542 represent office and retail space lease deposits. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | 9. Leases The Company has various lease agreements in place for facilities and equipment. Terms of these leases include, in some instances, scheduled rent increases, renewals, purchase options and maintenance costs, and vary by lease. These lease obligations expire at various dates through 2023. As the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate based on information available at commencement to determine the present value of the lease payments. Based on the present value of the lease payments for the remaining lease term of the Company’s existing leases, the Company recognized right-of-use assets of $920,805, lease liabilities of $1,110,445, and a net adjustment to retained earnings of $187,353 upon adoption on January 1, 2019. Right-of-use assets and lease liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term. As of September 30, 2019, the right-of-use assets and lease liabilities were $899,483 and $1,050,339, respectively. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. Aggregate lease expense for the nine months ended September 30, 2019 was $570,762, consisting of $465,414 in lease expense for lease liabilities recorded on the Company’s balance sheet and $105,348 in short-term lease expense. Maturities of lease liabilities as of September 30, 2019 are as follows: Operating Leases Weighted-Average 2019 $ 182,643 2020 553,832 2021 304,068 2022 41,407 Thereafter 38,564 Total lease payments 1,120,513 Less imputed interest (based on 6.3% weighted- average discount rate (70,174 ) Present value of lease liability $ 1,050,339 2.0 |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | 10. Notes Payable Notes payable as of September 30, 2019 and December 31, 2018 consists of the following: September 30, 2019 December 31, 2018 Notes payable bearing interest at 5.00%. The notes’ principal, plus any accrued and unpaid interest is due May 1, 2021. Interest is paid monthly. 2,300,000 2,300,000 Notes payable bearing interest at 5.00%. The notes’ principal, plus any accrued and unpaid interest is due December 31, 2019. 250,000 - Notes payable bearing interest at 5.00%. Principal and accrued interest is payable in six equal installments on each six-month anniversary of the issuance date of January 11, 2019. The notes are secured by the security interests and subordinated to the Company’s senior indebtedness. 633,584 - Note payable bearing interest at 5.50% is secured by a company-owned vehicle. The note has a 60-month term with maturity in January 2024. Principal and accrued interest are paid in accordance with a monthly amortization schedule. 264,456 - Promissory note payable bearing interest of 5.2%. The note has a 46-month term with maturity in May 2023. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning. 188,018 - Promissory note payable bearing interest of 4.45%. The note has a 34-month term with maturity in May 2022. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning and includes debt covenants requiring a Current Ratio of 1.75 to 1.00 and a Debt Service Coverage Ratio of 1.25 to 1.00. Craft Canning must also provide annual financial statements and tax returns. Craft Canning has maintained compliance with all debt covenants. 290,455 - Promissory note payable under a revolving line of credit bearing variable interest starting at 5.5%. The note has a 12-month term with principal and accrued interest due in lump sum in July 2020. The borrowing limit is $250,000. The note is secured by the assets of Craft Canning. 50,000 - Promissory note payable bearing interest of 4.14%. The note has a 60-month term with maturity in July 2024. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning. 192,184 - Promissory note payable bearing interest of 3.91%. The note has a 60-month term with maturity in August 2024. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning. 295,489 - Promissory notes payable bearing interest between 2.99% - 3.71%. The notes have 60-month terms with maturity dates between July 2019 – June 2020. Principal and accrued interest are paid monthly. The notes are secured by the specific vehicle underlying the loan. 19,488 - Total notes payable 4,483,674 2,300,000 Less current portion 558,912 - Long-term portion of notes payable $ 3,924,762 $ 2,300,000 We paid $131,081 and $143,737 in interest on notes for the nine months ended September 30, 2019 and 2018, respectively. Maturities of notes payable as of September 30, 2019, are as follows: Year ending December 31: 2019 $ 307,088 2020 613,274 2021 2,867,300 Thereafter 696,012 $ 4,483,674 |
Secured Credit Facility
Secured Credit Facility | 9 Months Ended |
Sep. 30, 2019 | |
Line of Credit Facility [Abstract] | |
Secured Credit Facility | 11. Secured Credit Facility On May 10, 2018, the Company entered into a credit and security agreement (the “Credit and Security Agreement”), by and between the Company and The KFK Children’s Trust, Jeffrey Anderson – Trustee (the “Lender”). Pursuant to the Credit and Security Agreement, the Lender will make loans to the Company in an aggregate principal amount not to exceed $3,000,000 (the “Loans”). The Loans are secured by all of the Company’s bulk whiskey, bourbon and rye inventory held in third-party storage facilities (“Specified Inventory”). The Company may borrow 80% of the value of the Specified Inventory it is able to purchase under the Credit and Security Agreement. The proceeds of the Loans are to be used by the Company to purchase the Specified Inventory for use in distilling and producing its spirits products, and for no other purpose. The Loans have an annual interest rate of 7.00%. The Company will pay accrued and unpaid interest on the Loans, for the period commencing on the date each such Loan is made and continuing until each such Loan is paid in full. During the nine months ended September 30, 2019, the Company paid $159,250 in interest on the Loans. The Company must pay the outstanding principal amount of the Loans in a one-time payment on the termination date of the Credit and Security Agreement (June 10, 2021), or earlier pursuant to other provisions thereof. The Company may prepay the Loans or any portion thereof at any time, and from time to time, without premium or penalty. As of September 30, 2019, the Company had borrowed the full $3 million available under the Credit and Security Agreement. The current market value of the Company’s bulk whiskey, bourbon and rye inventories must be at least 120% of the outstanding Loan balance. In addition, the Credit and Security Agreement contains other customary covenants including, among other things, certain restrictions on incurring indebtedness. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies Legal Matters We are party to the material legal proceeding described below. In addition, we could be subject to legal proceedings and claims from time to time in the ordinary course of our business, or legal proceedings we considered immaterial may in the future become material. Regardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and divert management resources. On October 22, 2019, a complaint was filed against the Company in the Circuit Court of Oregon, County of Multnomah by two former employees, Laurie Branch and Justina Thoreson. The complaint also named as defendants certain current and former officers and employees of the Company. The complaint is captioned Branch et al. v. Eastside Distilling, Inc. et al., case number 19-CV-45716 |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 13. 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 effect is anti-dilutive. There were no dilutive common shares at September 30, 2019 and 2018. The numerators and denominators used in computing basic and diluted net loss per common share in 2019 and 2018 are as follows: Three months ended 2019 2018 Net loss attributable to Eastside Distilling, Inc. common shareholders (numerator) $ (3,544,299 ) $ (2,626,991 ) Weighted average shares (denominator) 9,255,347 6,256,459 Basic and diluted net loss per common share $ (0.38 ) $ (0.42 ) Nine months ended 2019 2018 Net loss attributable to Eastside Distilling, Inc. common shareholders (numerator) $ (9,436,225 ) $ (5,852,140 ) Weighted average shares (denominator) 9,155,397 5,462,070 Basic and diluted net loss per common share $ (1.03 ) $ (1.07 ) |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholder's Equity | 14. Stockholder’s Equity Common Stock Paid-in Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance, December 31, 2018 8,764,085 $ 876 $ 45,888,872 $ (27,138,630 ) $ 18,751,118 Issuance of common stock 280,555 28 1,262,469 - 1,262,497 Issuance of common stock in exchange for services by third parties 4,000 - 64,248 - 64,248 Issuance of common stock for services by employees 128,652 13 737,058 - 737,071 Issuance of common stock for purchase Craft Canning + Bottling, LLC 338,212 34 2,079,970 - 2,080,004 Stock option exercises 1,077 - - - - Stock-based compensation - - 510,674 - 510,674 Adjustment to accumulated deficit for adoption of ASC 842 (187,353 ) (187,353 ) Contributed capital - - 14,000 - 14,000 Net loss attributable to common shareholders - - - (9,436,225 ) (9,436,225 ) Balance, September 30, 2019 9,516,581 951 50,557,291 $ (36,762,208 ) $ 13,796,034 Issuance of Common Stock On January 11, 2019, the Company issued 338,212 shares of common stock in connection with the acquisition of Craft Canning for a total consideration of $2,080,004. For the nine months ending September 30, 2019, the Company issued 132,652 shares of common stock to directors, employees and consultants for stock-based compensation of $801,319. The shares were valued using the closing share price of the Company’s common stock on the date of grant, within the range of $3.68 to $6.13 per share. In April 2019, the Company issued 1,077 shares of common stock in connection with existing option exercises at an exercise price of $3.99. In September 2019, the Company issued 280,555 units (the “Units”) in connection with a private offering at a per Unit price of $4.50 per share, resulting in net proceeds of $1,262,497. Each Unit consists of one share of Eastside’s common stock and a three-year warrant to acquire 0.5 shares of common stock at an exercise price of $5.50 per share. Issuance of Convertible Preferred Stock Each share of Series A Preferred has a stated value of $1,000, which is convertible into shares of the Company’s common stock at a fixed conversion price equal to $4.50 per share. The Series A 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 shareholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding the 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 is 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 issued under the Series A Certificate of Designation multiplied by (iii) 2.5. For all matters submitted to a vote of the Company’s shareholders, the holders of the Series A Preferred as a class 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 vote separately a class to change any of the rights, preferences and privileges of the Series A Preferred. As of September 30, 2019, the Company had zero shares of preferred stock outstanding. Stock-Based Compensation On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”). Pursuant to the terms of the plan, on January 1, 2019, the number of shares available for grant under the 2016 Plan reset to 2,030,775 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, and then added to the prior year plan amount. As of September 30, 2019, there were 955,915 options and 371,076 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” and, together with the 2016 Plan, the “Plans”). 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 will not be less than 20 percent of the fair market value of the Company’s common stock on the date of grant. At September 30, 2019, there were 44,584 options issued under the Plan outstanding, which options vest at the rate of at least 25 percent in the first year, starting six months after the grant date, and 75% in year two. The Company also issues, from time to time, options that are not registered under a formal option plan. At September 30, 2019, there were no options outstanding that were not issued under the Plans. A summary of all stock option activity at and for the nine months ended September 30, 2019 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2018 895,858 $ 5.62 Options granted 79,000 $ Options exercised (3,167 ) $ Options canceled (32,334 ) $ Outstanding at September 30, 2019 939,357 $ 5.61 Exercisable at September 30, 2019 595,286 $ 5.62 The aggregate intrinsic value of options outstanding at September 30, 2019 was $404,882. At September 30, 2019, there were 344,071 unvested options outstanding with an aggregate grant date fair value of $864,676. 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 September 30, 2019 was $115,113. During the nine months ended September 30, 2019, 188,822 options vested and became exercisable. 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 nine months ended September 30, 2019: Risk-free interest rate 2.22 % Expected term (in years) 6.5 Dividend yield - Expected volatility 31 % The weighted-average grant-date fair value per share of stock options granted during the nine months ended September 30, 2019 was $1.80. The aggregate grant date fair value of the 79,000 options granted during the nine months ended September 30, 2019 was $142,189. For the nine months ended September 30, 2019 and 2018, total stock compensation expense related to stock options was $596,852 and $586,016 respectively. At September 30, 2019, the total compensation cost related to stock options not yet recognized was approximately $935,755, which is expected to be recognized over a weighted-average period of approximately 2.11 years. Warrants During the nine months ended September 30, 2019, the Company issued an aggregate of 286,540 common stock warrants, consisting of 146,262 in connection with the acquisition of Craft Canning on January 11, 2019, and 140,278 in connection with the private equity offering in September 2019. The Craft Canning warrants are subject to the continuation of a consulting agreement and were not part of the purchase price of the acquisition. The Company has determined the outstanding warrants should be classified as equity on the condensed consolidated balance sheet as of September 30, 2019. The aggregate estimated fair value of the outstanding warrants at issuance was $270,027, 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 31 % Risk-free interest rate 2.11 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 5.55 No warrants were exercised during the nine months ended September 30, 2019. A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Outstanding at December 31, 2018 1,083,435 1.04 years $ 6.83 $ - Nine months ended September 30, 2019: Granted 286,540 3.00 years $ 6.67 $ - Exercised - - $ - $ - Forfeited and cancelled (366,736 ) - $ 6.00 $ - Outstanding at September 30, 2019 1,003,239 1.17 years $ 7.09 $ - |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 15. Related Party Transactions The following is a description of transactions since January 1, 2018 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 which was $176,934 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 August 9, 2018, Grover Wickersham, the former Executive Chairperson of our Board through August 9, 2019 and his affiliates exercised 55,555 warrants acquired in connection with the Company’s 2017 unit offering at an exercise price of $5.40 per share, for total proceeds of approximately $300,000. On August 23, 2017, our Board of Directors (the “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 Partners 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 Partner’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 August 11, 2018, we issued 42,000 shares of common stock to Sandstrom in connection with the exercise of their 42,000 warrants in exchange for services rendered. During the first nine months of 2019, we paid $200,000 in cash to Sandstrom for work performed. 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 Promissory 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 amounts due under the Promissory Note will 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 PSP, the principal amount due and payable may be used to purchase the securities offered in the Future Financing. PSP used a balance of $379,750 to purchase the Company’s new private offering of notes with warrants. The remaining principal balance of $85,000 was paid in April 2018. The new 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. In conjunction with this new offering, PSP was issued 37,975 warrants, exercisable at $5.40 per share. On August 9, 2018, PSP exercised the 37,975 warrants at $5.40 per share in exchange for a reduction in outstanding note principal due. $174,685 remained outstanding on the note. 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 Promissory 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 amounts due under the Promissory Note will 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 the Promissory Note in connection with a Future Financing, at the option of Wickersham Trust, the principal amount due and payable may be used to purchase the securities offered in the Future Financing. During the first quarter of 2018, Wickersham Trust used the balance to purchase the Company’s new private offering of notes with warrants. The new 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. In conjunction with this new offering, the Wickersham Trust was issued 17,930 warrants, exercisable at $5.40 per share. On August 9, 2018, the Wickersham Trust exercised the 17,930 warrants at $5.40 per share in exchange for a reduction in outstanding note principal due. $82,478 remained outstanding on the note. On June 11, 2019, our Board appointed Owen Lingley to the Board to fill an existing vacancy on the Board effective immediately. Owen Lingley is the founder of Craft Canning, LLC, which was acquired by the Company on January 11, 2019 and subsequently changed its name to Craft Canning + Bottling LLC. In connection with the acquisition of Craft Canning, Mr. Lingley received $1,843,200 in cash, 338,212 shares of common stock of the Company and a promissory note in the aggregate principal amount of $731,211, which bears interest at a rate of 5% per annum and matures on January 11, 2022. The shares acquired by Mr. Lingley in connection with the acquisition of Craft Canning are subject to a one-year lock-up restriction and have “piggyback” registration rights effective after the one-year lock-up. In addition, the Company also issued to Mr. Lingley a warrant to purchase 146,262 shares of common stock of the Company at $7.80 per share and an exercise period of three years. The shares of common stock issuable upon exercise of the warrant will be subject to the same “piggyback” registration rights as the shares received in connection with the acquisition of Craft Canning, described above. Following the acquisition of Craft Canning, Mr. Lingley became non-executive Chairman of Craft Canning and is party to a consulting agreement with the Company. Under his consulting agreement with the Company, Mr. Lingley receives annual cash compensation of $75,000 per year. On March 29, 2018, June 22, 2018 and July 10, 2018, Paul F. Shoen, who was elected to the Board in August 2019, purchased from us promissory notes having an aggregate principal amount of $363,930, $500,000 and $197,020, respectively. The promissory notes bear interest at a rate of 5% per annum, payable monthly on the last day of the month. In August 2018, we repaid a total of $572,912 of the principal balance outstanding under the notes. In September 2018, Mr. Shoen sold an additional $300,000 of the outstanding principal amount. The entire amount of the remaining principal and any accrued and unpaid interest is due and payable on May 1, 2021. $188,037 currently remains outstanding on the notes. On October 24, 2019, our Board appointed Stephanie Kilkenny to the Board to fill an existing vacancy on the Board effective immediately. Stephanie Kilkenny was the former managing director of Azuñia Tequila, and together with her spouse, owns and controls TQLA, LLC (“TQLA”), the majority owner of Intersect Beverage, LLC. In connection with the acquisition of Azuñia Tequila from Intersect Beverage, LLC, TQLA is entitled to receive up to 93.88% of the aggregate consideration payable under the asset purchase agreement. Subject to compliance with applicable Nasdaq rules, aggregate the initial consideration, not to exceed approximately $14.7 million in aggregate based on future revenue performance, will be payable approximately 18 months following the closing and will consist of 850,000 shares of Company common stock at a stipulated value of $6.00 per share, 350,000 shares of Company common stock based on the Company’s stock price twelve months after the close of the transaction, and additional shares based on the Azuñia business achieving certain revenue targets and the Company’s stock price 18 months after the close of the transaction. The Company has also agreed to issue additional stock consideration (subject to compliance with applicable Nasdaq rules) of up to $1.5 million upon the Azuñia business achieving revenue of at least $9.45 million in the period commencing on the 13th month following the closing and ending on the 24th month following the closing. In addition, on September 16, 2019, the Company entered into a Subscription Agreement with Stephanie Kilkenny’s spouse, Patrick J. Kilkenny as Trustee For Patrick J. Kilkenny Revocable Trust (the “Kilkenny Trust”), in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder, pursuant to which the Company agreed to issue and sell to the Kilkenny Trust an aggregate of 55,555 units at a per unit price of $4.50. Each unit consists of one share of the Company’s common stock and a three-year warrant to acquire 0.5 shares of common stock at an exercise price of $5.50 per share. 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 | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events Between October 1, 2019 and October 25, 2019, the Company issued 158,447 shares of common stock under the 2016 Plan to directors, employees and consultants for stock-based compensation of $731,899. The shares were valued using the closing share price of the Company’s common stock on the date of the grant, with the range of $3.76 to $5.00 per share. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying unaudited condensed 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”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements in accordance with GAAP have been condensed or eliminated as permitted under the SEC’s rules and regulations. In our opinion, the unaudited condensed consolidated financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly our financial position as of September 30, 2019, our operating results for the three and nine months ended September 30, 2019 and 2018 and our cash flows for the nine months ended September 30, 2019 and 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Interim results are not necessarily indicative of the results that may be expected for an entire fiscal year. The condensed consolidated financial statements include the accounts of Eastside Distilling, Inc.’s wholly-owned subsidiaries, including, MotherLode, BBD, Craft Canning (beginning as of January 11, 2019) and the Azuñia tequila assets (beginning September 12, 2019). 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, packaging, producing, marketing and distributing alcoholic beverages and operates as one segment. The Company’s chief operating decision makers, its president 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 recognizes revenue by applying the following steps in accordance with Accounting Standards Codification (“ASC”) Topic 606 – Revenue from Contracts with Customers 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 locations 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 alcoholic 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 sales or as advertising, promotional and selling expenses in accordance with ASC 606 - Revenue from Contracts with Customers, |
Advertising, Promotional and Selling Expenses | Advertising, Promotional and Selling Expenses The following expenses are included in advertising, promotional and selling expenses in the accompanying consolidated statements of operations: media advertising costs, special event costs, tasting room costs, sales and marketing expenses, promotional costs of value added packaging, 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 expenses totaled $4,394,311 and $2,838,417 for the nine months ended September 30, 2019 and 2018, 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 September 30, 2019 and December 31, 2018. |
Concentrations | Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of trade receivables. At September 30, 2019, two customers represented 33% of trade receivables, and at December 31, 2018, two customers represented 34% of trade receivables. Sales to two customers accounted for approximately 28% of consolidated net sales for the nine months ended September 30, 2019. Sales to two customers accounted for approximately 44% of net sales for the nine months ended September 30, 2018. |
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 September 30, 2019 and December 31, 2018, 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 cash or 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 September 30, 2019 and December 31, 2018. 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, notes payable, and convertible notes 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 September 30, 2019 and December 31, 2018, the Company’s notes are payable at fixed rates and their carrying value approximates fair value. |
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 nine months ended September 30, 2019 and 2018. |
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 and intangible assets, 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, an impairment loss would be recognized to write down the asset to its estimated fair value. The Company performed a qualitative assessment of goodwill at September 30, 2019 and determined that goodwill was not impaired. |
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 September 30, 2019 and December 31, 2018, 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 condensed 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 nine months ended September 30, 2019 and 2018. 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 of other comprehensive income items for the nine months ended September 30, 2019 and 2018. |
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 alcoholic 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 $504,095 and $360,229 for the nine months ended September 30, 2019 and 2018, 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 at the end of each reporting period and as the underlying stock-based awards vest. Stock-based compensation was $1,247,745 and $986,193 for the nine months ended September 30, 2019 and 2018, respectively. |
Accounts Receivable Factoring Program | Accounts Receivable Factoring Program The Company entered into an accounts receivable factoring program. Under the program, the Company has the option to sell certain customer account receivables in advance of payment for 75% of the amount due. When the customer remits payment, the Company receives the remaining 25%. Interest is charged on the advanced 75% payment at a rate of 2.4% for the first 30 days plus 1.44% for each additional ten-day period. Under the terms of the agreement, the factoring provider has recourse against the Company should the customer fail to pay the invoice. Thus, factored amounts are recorded as a liability until the customer remits payment and the remaining 25% of the non-factored amount is received. The Company factored $319,226 of invoices and incurred $12,898 in fees associated with the factoring program during the three months ended September 30, 2019. At September 30, 2019, the Company had $56,265 factored invoices outstanding. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash In May 2014, the FASB issued ASU 2014-09, which superseded virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. The Company elected to apply ASU 2014-09 with a cumulative effect adjustment to retained earnings. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date 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 will be largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and ASU No. 2014-09, 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). 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. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842). In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment |
Business Acquisition (Tables)
Business Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisition Assets and Liabilities | The following allocation of the purchase price is as follows: Consideration given: 338,212 shares of common stock valued at $6.10 per share $ 2,080,004 Cash 2,003,200 Notes payable 761,678 Total value of acquisition $ 4,844,882 Assets and liabilities acquired: Cash $ 553,283 Trade receivables, net 625,717 Inventories, net 154,824 Prepaid expenses and current assets 250 Property and equipment, net 1,839,486 Right-of-use assets 232,884 Intangible assets - customer list 2,895,318 Other assets 26,600 Accounts payable (231,613 ) Accrued liabilities (74,389 ) Deferred revenue (52,000 ) Lease liabilities (256,375 ) Notes payable (869,103 ) Total $ 4,844,882 |
Schedule of Allocation of Purchase Price | The following allocation of the purchase price is as follows: Consideration given: Deferred consideration payable $ 12,781,092 Total value of acquisition $ 12,781,092 Assets acquired: Inventories, net $ 836,026 Intangible assets - brand 11,945,066 Total $ 12,781,092 |
Schedule of Pro Forma Financial Information | The following unaudited pro forma consolidated results of operations for the three and nine months ended September 30, 2019 and 2018 assume that both acquisitions of Craft Canning + Bottling and Azuñia Tequila were completed on January 1, 2018: Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Pro forma sales $ 5,281,545 $ 4,621,008 $ 15,531,930 $ 11,586,447 Pro forma net loss (4,650,560 ) (3,248,754 ) (12,878,314 ) (8,467,598 ) Pro forma basic and diluted net loss per share $ (0.50 ) $ (0.49 ) $ (1.40 ) $ (1.46 ) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following: September 30, 2019 December 31, 2018 Raw materials $ 10,044,818 $ 10,347,616 Finished goods 2,213,065 669,843 Total inventories $ 12,257,883 $ 11,017,459 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment Net | Property and equipment consisted of the following: September 30, 2019 December 31, 2018 Furniture and fixtures $ 4,415,181 $ 1,148,540 Leasehold improvements 498,000 477,184 Vehicles 1,161,643 49,483 Construction in progress 1,407,726 425,851 Total cost 7,482,550 2,101,058 Less accumulated depreciation (1,873,630 ) (342,928 ) Property and equipment - net $ 5,608,920 $ 1,758,130 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Intangible assets and goodwill at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Permits and licenses $ 25,000 $ 25,000 Azuñia Brand 11,945,066 - Customer lists 3,246,748 351,430 Goodwill 28,182 28,182 Total intangible assets and goodwill 15,244,996 404,612 Less accumulated amortization (568,273 ) (90,754 ) Intangible assets and goodwill - net $ 14,676,723 313,858 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | Other assets at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Product branding $ 675,000 $ 525,000 Investments in online company 450,000 300,000 Deposits 56,542 29,297 Total other assets 1,181,542 854,297 Less accumulated amortization (69,642 ) (58,037 ) Other assets - net $ 1,111,900 $ 796,260 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Maturities of Operating Lease Liabilities | Maturities of lease liabilities as of September 30, 2019 are as follows: Operating Leases Weighted-Average 2019 $ 182,643 2020 553,832 2021 304,068 2022 41,407 Thereafter 38,564 Total lease payments 1,120,513 Less imputed interest (based on 6.3% weighted- average discount rate (70,174 ) Present value of lease liability $ 1,050,339 2.0 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable as of September 30, 2019 and December 31, 2018 consists of the following: September 30, 2019 December 31, 2018 Notes payable bearing interest at 5.00%. The notes’ principal, plus any accrued and unpaid interest is due May 1, 2021. Interest is paid monthly. 2,300,000 2,300,000 Notes payable bearing interest at 5.00%. The notes’ principal, plus any accrued and unpaid interest is due December 31, 2019. 250,000 - Notes payable bearing interest at 5.00%. Principal and accrued interest is payable in six equal installments on each six-month anniversary of the issuance date of January 11, 2019. The notes are secured by the security interests and subordinated to the Company’s senior indebtedness. 633,584 - Note payable bearing interest at 5.50% is secured by a company-owned vehicle. The note has a 60-month term with maturity in January 2024. Principal and accrued interest are paid in accordance with a monthly amortization schedule. 264,456 - Promissory note payable bearing interest of 5.2%. The note has a 46-month term with maturity in May 2023. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning. 188,018 - Promissory note payable bearing interest of 4.45%. The note has a 34-month term with maturity in May 2022. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning and includes debt covenants requiring a Current Ratio of 1.75 to 1.00 and a Debt Service Coverage Ratio of 1.25 to 1.00. Craft Canning must also provide annual financial statements and tax returns. Craft Canning has maintained compliance with all debt covenants. 290,455 - Promissory note payable under a revolving line of credit bearing variable interest starting at 5.5%. The note has a 12-month term with principal and accrued interest due in lump sum in July 2020. The borrowing limit is $250,000. The note is secured by the assets of Craft Canning. 50,000 - Promissory note payable bearing interest of 4.14%. The note has a 60-month term with maturity in July 2024. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning. 192,184 - Promissory note payable bearing interest of 3.91%. The note has a 60-month term with maturity in August 2024. Principal and accrued interest are paid in accordance with a monthly amortization schedule. The note is secured by the assets of Craft Canning. 295,489 - Promissory notes payable bearing interest between 2.99% - 3.71%. The notes have 60-month terms with maturity dates between July 2019 – June 2020. Principal and accrued interest are paid monthly. The notes are secured by the specific vehicle underlying the loan. 19,488 - Total notes payable 4,483,674 2,300,000 Less current portion 558,912 - Long-term portion of notes payable $ 3,924,762 $ 2,300,000 |
Schedule of Maturities on Notes Payable | Maturities of notes payable as of September 30, 2019, are as follows: Year ending December 31: 2019 $ 307,088 2020 613,274 2021 2,867,300 Thereafter 696,012 $ 4,483,674 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 2019 and 2018 are as follows: Three months ended 2019 2018 Net loss attributable to Eastside Distilling, Inc. common shareholders (numerator) $ (3,544,299 ) $ (2,626,991 ) Weighted average shares (denominator) 9,255,347 6,256,459 Basic and diluted net loss per common share $ (0.38 ) $ (0.42 ) Nine months ended 2019 2018 Net loss attributable to Eastside Distilling, Inc. common shareholders (numerator) $ (9,436,225 ) $ (5,852,140 ) Weighted average shares (denominator) 9,155,397 5,462,070 Basic and diluted net loss per common share $ (1.03 ) $ (1.07 ) |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Shareholder's Equity | Common Stock Paid-in Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance, December 31, 2018 8,764,085 $ 876 $ 45,888,872 $ (27,138,630 ) $ 18,751,118 Issuance of common stock 280,555 28 1,262,469 - 1,262,497 Issuance of common stock in exchange for services by third parties 4,000 - 64,248 - 64,248 Issuance of common stock for services by employees 128,652 13 737,058 - 737,071 Issuance of common stock for purchase Craft Canning + Bottling, LLC 338,212 34 2,079,970 - 2,080,004 Stock option exercises 1,077 - - - - Stock-based compensation - - 510,674 - 510,674 Adjustment to accumulated deficit for adoption of ASC 842 (187,353 ) (187,353 ) Contributed capital - - 14,000 - 14,000 Net loss attributable to common shareholders - - - (9,436,225 ) (9,436,225 ) Balance, September 30, 2019 9,516,581 951 50,557,291 $ (36,762,208 ) $ 13,796,034 |
Summary of Stock Option Activity | A summary of all stock option activity at and for the nine months ended September 30, 2019 is presented below: # of Options Weighted- Average Exercise Price Outstanding at December 31, 2018 895,858 $ 5.62 Options granted 79,000 $ Options exercised (3,167 ) $ Options canceled (32,334 ) $ Outstanding at September 30, 2019 939,357 $ 5.61 Exercisable at September 30, 2019 595,286 $ 5.62 |
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 nine months ended September 30, 2019: Risk-free interest rate 2.22 % Expected term (in years) 6.5 Dividend yield - Expected volatility 31 % |
Summary of Warrant Activity | A summary of activity in warrants is as follows: Warrants Weighted Average Remaining Life Weighted Average Exercise Price Aggregate Outstanding at December 31, 2018 1,083,435 1.04 years $ 6.83 $ - Nine months ended September 30, 2019: Granted 286,540 3.00 years $ 6.67 $ - Exercised - - $ - $ - Forfeited and cancelled (366,736 ) - $ 6.00 $ - Outstanding at September 30, 2019 1,003,239 1.17 years $ 7.09 $ - |
Warrant [Member] | |
Schedule of Weighted-average Assumptions Used in Black-scholes Valuation Method | Volatility 31 % Risk-free interest rate 2.11 % Expected term (in years) 3.0 Expected dividend yield - Fair value of common stock $ 5.55 |
Description of Business (Detail
Description of Business (Details Narrative) | Dec. 31, 2018 | May 31, 2017 |
Big Bottom Distillery, LLC [Member] | ||
Acquire ownership percentage | 10.00% | 90.00% |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net loss | $ (3,544,299) | $ (2,626,457) | $ (9,436,225) | $ (5,851,503) | |
Accumulated deficit | (36,762,208) | (36,762,208) | $ (27,138,630) | ||
Cash from combination of equity and debt | 1,529,389 | $ 13,569,457 | |||
Cash on hand | 446,983 | 446,983 | $ 10,642,877 | ||
Working capital | $ 11,500,000 | $ 11,500,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) | Jan. 02, 2019USD ($) | Sep. 30, 2019USD ($)Number | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Number of operating segments | Number | 1 | |||
Customer programs and incentives paid | $ 354,519 | $ 192,801 | ||
Advertising, promotional and selling expenses | 4,394,311 | 2,838,417 | ||
Cash equivalents | ||||
Inventory write-downs | ||||
Impairment loss | ||||
Unrecognized income tax benefit, interest and penalties | ||||
Excise taxes | 504,095 | 360,229 | ||
Stock-based compensation | $ 510,674 | 986,193 | ||
Payment of account receivables in advance percenntage | 75.00% | |||
Remaining percentage of account receivables in advance | 25.00% | |||
Concentration risk percentage description | Interest is charged on the advanced 75% payment at a rate of 2.4% for the first 30 days plus 1.44% for each additional ten-day period. | |||
Interest charged on advance payment | 2.40% | |||
Remaining non-factored payment percenatge | 25.00% | |||
Factored invoices | $ 319,226 | |||
Factoring fee amount | 12,898 | |||
Outstanding factored invoices | 56,265 | |||
Right-of-use assets | 899,483 | |||
Lease liabilities | 1,050,339 | |||
ASU 2016-02 [Member] | ||||
Right-of-use assets | $ 920,805 | |||
Lease liabilities | 1,110,445 | |||
Net adjustment to retained earnings | $ 187,353 | |||
Employees [Member] | ||||
Stock-based compensation | $ 1,247,745 | $ 986,193 | ||
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 | 33.00% | 34.00% | ||
Sales Revenue, Net [Member] | Two Customers [Member] | ||||
Concentration of credit risk percentage | 28.00% | 44.00% |
Business Acquisitions (Details
Business Acquisitions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Sales | $ 4,434,840 | $ 1,489,047 | $ 11,826,317 | $ 4,234,067 | |||
Net income | (3,544,299) | $ (2,626,457) | (9,436,225) | $ (5,851,503) | |||
Deferred Consideration payable | $ 12,781,092 | $ 12,781,092 | $ 12,781,092 | 12,781,092 | |||
Craft Canning and Big Bottom Distillery, LLC [Member] | |||||||
Acquisitions costs | $ 81,811 | ||||||
Sales | 5,866,675 | ||||||
Net income | $ 517,657 | ||||||
Stock issued during period, shares, acquisitions | 338,212 | ||||||
Acquisition price per share | $ 6.10 | $ 6.10 | $ 6.10 | $ 6.10 | |||
Azunia Tequila [Member] | |||||||
Acquisitions costs | $ 158,122 | ||||||
Sales | $ 232,571 | ||||||
Net income | $ (56,055) | ||||||
Debt instrument term | 3 years | ||||||
Aggregate future revenue performance on acquisition | $ 14,700,000 | ||||||
Stock issued during period, shares, acquisitions | 850,000 | ||||||
Acquisition price per share | $ 6 | $ 6 | $ 6 | $ 6 | |||
Additional common stock of shares acquired during acquisition | 350,000 | ||||||
Deferred Consideration payable | $ 12,781,092 | $ 12,781,092 | $ 12,781,092 | $ 12,781,092 | |||
Intangible asset estimated useful life | 7 years | ||||||
Azunia Tequila [Member] | Maximum [Member] | |||||||
Aggregate future revenue performance on acquisition | $ 1,500,000 | ||||||
Azunia Tequila [Member] | Minimum [Member] | |||||||
Aggregate future revenue performance on acquisition | $ 9,450,000 |
Business Acquisitions - Schedul
Business Acquisitions - Schedule of Business Acquisition Assets and Liabilities (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Inventories, net | $ 836,026 |
Intangible assets - customer list | 11,945,066 |
Craft Canning and Big Bottom Distillery, LLC [Member] | |
Consideration given | 2,080,004 |
Cash | 2,003,200 |
Notes payable | 761,678 |
Total value of acquisition | 4,844,882 |
Cash | 553,283 |
Trade receivables, net | 625,717 |
Inventories, net | 154,824 |
Prepaid expenses and current assets | 250 |
Property and equipment, net | 1,839,486 |
Right-of-use assets | 232,884 |
Intangible assets - customer list | 2,895,318 |
Other assets | 26,600 |
Accounts payable | (231,613) |
Accrued liabilities | (74,389) |
Deferred revenue | (52,000) |
Lease liabilities | (256,375) |
Notes payable | (869,103) |
Total assets and liabilities assumed | $ 4,844,882 |
Business Acquisitions - Sched_2
Business Acquisitions - Schedule of Business Acquisition Assets and Liabilities (Details) (Parenthetical) - Craft Canning and Big Bottom Distillery, LLC [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Stock issued during period, shares, acquisitions | shares | 338,212 |
Common stock valued per share | $ / shares | $ 6.10 |
Business Acquisitions - Sched_3
Business Acquisitions - Schedule of Allocation of Purchase Price (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Business Combinations [Abstract] | ||
Deferred consideration payable | $ 12,781,092 | |
Total value of acquisition | 12,781,092 | |
Inventories, net | 836,026 | |
Intangible assets - brand | 11,945,066 | |
Total assets acquired | $ 12,781,092 |
Business Acquisitions - Sched_4
Business Acquisitions - Schedule of Pro Forma Financial Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Business Combinations [Abstract] | ||||
Pro forma sales | $ 5,281,545 | $ 4,621,008 | $ 15,531,930 | $ 11,586,447 |
Pro forma net loss | $ (4,650,560) | $ (3,248,754) | $ (12,878,314) | $ (8,467,598) |
Pro forma basic and diluted net loss per share | $ (0.50) | $ (0.49) | $ (1.40) | $ (1.46) |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 10,044,818 | $ 10,347,616 |
Finished goods | 2,213,065 | 669,843 |
Total inventories | $ 12,257,883 | $ 11,017,459 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Purchases of property and equipment | $ 2,353,091 | $ 944,248 |
Depreciation expense | $ 641,787 | $ 190,441 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment Net (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total cost | $ 7,482,550 | $ 2,101,058 |
Less accumulated depreciation | (1,873,630) | (342,928) |
Total property and equipment, net | 5,608,920 | 1,758,130 |
Furniture and Fixtures [Member] | ||
Total cost | 4,415,181 | 1,148,540 |
Leasehold Improvements [Member] | ||
Total cost | 498,000 | 477,184 |
Vehicles [Member] | ||
Total cost | 1,161,643 | 49,483 |
Construction in progress [Member] | ||
Total cost | $ 1,407,726 | $ 425,851 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 489,125 | $ 37,655 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Schedule of Intangible Assets and Goodwill (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total intangible assets and goodwill | $ 15,244,996 | $ 404,612 |
Less accumulated amortization | (568,273) | (90,754) |
Intangible assets and goodwill - net | 14,676,723 | 313,858 |
Permits and Licenses [Member] | ||
Total intangible assets and goodwill | 25,000 | 25,000 |
Azunia Brand [Member] | ||
Total intangible assets and goodwill | 11,945,066 | |
Customer Lists [Member] | ||
Total intangible assets and goodwill | 3,246,748 | 351,430 |
Goodwill [Member] | ||
Total intangible assets and goodwill | $ 28,182 | $ 28,182 |
Other Assets (Details Narrative
Other Assets (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Capitalized costs of rebranding product line | $ 675,000 |
Capitalized costs amortization period | 7 years |
Office and Retail Space Lease [Member] | |
Deposits | $ 56,542 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total other assets | $ 1,181,542 | $ 854,297 |
Less accumulated amortization | (69,642) | (58,037) |
Other assets - net | 1,111,900 | 796,260 |
Product Branding [Member] | ||
Total other assets | 675,000 | 525,000 |
Investment in Online Company [Member] | ||
Total other assets | 450,000 | 300,000 |
Deposits [Member] | ||
Total other assets | $ 56,542 | $ 29,297 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | Jan. 02, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Lease obligations expire, description | These lease obligations expire at various dates through 2023. | ||
Right-of-use assets | $ 899,483 | ||
Lease liabilities | 1,050,339 | ||
Aggregate lease expense | 570,762 | ||
Lease expense | 465,414 | ||
Short-term lease expense | $ 105,348 | ||
ASU 2016-02 [Member] | |||
Right-of-use assets | $ 920,805 | ||
Lease liabilities | 1,110,445 | ||
Net adjustment to retained earnings | $ 187,353 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 182,643 |
2020 | 553,832 |
2021 | 304,068 |
2022 | 41,407 |
Thereafter | 38,564 |
Total lease payments | 1,120,513 |
Less imputed interest (based on 6.3% weighted-average discount rate | (70,174) |
Present value of lease liability | $ 1,050,339 |
Weighted-Average Remaining Term in Years | 2 years |
Leases - Schedule of Maturiti_2
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) (Parenthetical) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted average discount rate | 6.30% |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Debt Disclosure [Abstract] | ||
Interest on notes | $ 131,081 | $ 143,737 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Total notes payable | $ 4,483,674 | $ 2,300,000 |
Less current portion | 624,564 | |
Long-term portion of notes payable | 3,924,762 | 2,300,000 |
Note Payable 1 [Member] | ||
Total notes payable | 2,300,000 | 2,300,000 |
Note Payable 2 [Member] | ||
Total notes payable | 250,000 | |
Note Payable 3 [Member] | ||
Total notes payable | 633,584 | |
Note Payable 4 [Member] | ||
Total notes payable | 264,456 | |
Note Payable 5 [Member] | ||
Total notes payable | 188,018 | |
Note Payable 6 [Member] | ||
Total notes payable | 290,455 | |
Note Payable 7 [Member] | ||
Total notes payable | 50,000 | |
Note Payable 8 [Member] | ||
Total notes payable | 192,184 | |
Note Payable 9 [Member] | ||
Total notes payable | 295,489 | |
Note Payable 10 [Member] | ||
Total notes payable | $ 19,488 |
Notes Payable - Schedule of N_2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Note Payable 1 [Member] | ||
Debt instrument interest rate | 5.00% | 5.00% |
Debt instrument maturity date description | Due May 1, 2021 | Due May 1, 2021 |
Note Payable 2 [Member] | ||
Debt instrument interest rate | 5.00% | 5.00% |
Debt instrument maturity date description | Due December 31, 2019 | Due December 31, 2019 |
Note Payable 3 [Member] | ||
Debt instrument interest rate | 5.00% | 5.00% |
Note Payable 4 [Member] | ||
Debt instrument interest rate | 5.50% | 5.50% |
Debt instrument maturity date description | The note has a 60-month term with maturity in January 2024. | The note has a 60-month term with maturity in January 2024. |
Note Payable 5 [Member] | ||
Debt instrument interest rate | 5.20% | 5.20% |
Debt instrument maturity date description | The note has a 46-month term with maturity in May 2023 | The note has a 46-month term with maturity in May 2023 |
Note Payable 6 [Member] | ||
Debt instrument interest rate | 4.45% | 4.45% |
Debt instrument maturity date description | The note has a 34-month term with maturity in May 2022 | The note has a 34-month term with maturity in May 2022 |
Debt instrument, covenants | The note is secured by the assets of Craft Canning and includes debt covenants requiring a Current Ratio of 1.75 to 1.00 and a Debt Service Coverage Ratio of 1.25 to 1.00. | The note is secured by the assets of Craft Canning and includes debt covenants requiring a Current Ratio of 1.75 to 1.00 and a Debt Service Coverage Ratio of 1.25 to 1.00. |
Debt service coverage | Debt Service Coverage Ratio of 1.25 to 1.00 | Debt Service Coverage Ratio of 1.25 to 1.00 |
Note Payable 7 [Member] | ||
Debt instrument interest rate | 5.50% | 5.50% |
Debt instrument maturity date description | The note has a 12-month term with principal and accrued interest due in lump sum in July 2020. | The note has a 12-month term with principal and accrued interest due in lump sum in July 2020. |
Debt maturity term | 12 months | 12 months |
Revolving line of credit borrowing limit | $ 250,000 | $ 250,000 |
Note Payable 8 [Member] | ||
Debt instrument interest rate | 4.14% | 4.14% |
Debt instrument maturity date description | The note has a 60-month term with maturity in July 2024. | The note has a 60-month term with maturity in July 2024. |
Note Payable 9 [Member] | ||
Debt instrument interest rate | 3.91% | 3.91% |
Debt instrument maturity date description | The note has a 60-month term with maturity in August 2024. | The note has a 60-month term with maturity in August 2024. |
Note Payable 10 [Member] | ||
Debt instrument maturity date description | Maturity dates between July 2019 - June 2020. | Maturity dates between July 2019 - June 2020. |
Debt maturity term | 60 months | 60 months |
Note Payable 10 [Member] | Minimum [Member] | ||
Debt instrument interest rate | 2.99% | 2.99% |
Note Payable 10 [Member] | Maximum [Member] | ||
Debt instrument interest rate | 3.71% | 3.71% |
Notes Payable - Schedule of Mat
Notes Payable - Schedule of Maturities on Notes Payable (Details) | Sep. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 307,088 |
2020 | 613,274 |
2021 | 2,867,300 |
Thereafter | 696,012 |
Total | $ 4,483,674 |
Secured Credit Facility (Detail
Secured Credit Facility (Details Narrative) - Credit and Security Agreement [Member] - USD ($) | May 10, 2018 | Sep. 30, 2019 |
Line of credit maximum borrowing | $ 3,000,000 | |
Line of credit facility, borrowing capacity, description | The Company may borrow 80% of the value of the Specified Inventory it is able to purchase under the Credit and Security Agreement. | |
Line of credit annual interest | 7.00% | |
Line of credit, interest on loans | $ 159,250 | |
Percentage of outstanding loan balance | 120.00% | |
Loan [Member] | ||
Line of credit maximum borrowing | $ 3,000,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Oct. 22, 2019USD ($) |
Laurie Branch and Justina Thoreson [Member] | Maximum [Member] | |
Loss Contingencies [Line Items] | |
Litigation damages | $ 560,000 |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net loss attributable to Eastside Distilling, Inc. common shareholders (numerator) | $ (3,544,299) | $ (2,626,991) | $ (9,436,225) | $ (5,852,140) |
Weighted average shares (denominator) | 9,255,347 | 6,256,459 | 9,155,397 | 5,462,070 |
Basic and diluted net loss per common share | $ (0.38) | $ (0.42) | $ (1.03) | $ (1.07) |
Stockholder's Equity (Details N
Stockholder's Equity (Details Narrative) - USD ($) | Sep. 30, 2019 | Jan. 11, 2019 | Jan. 11, 2019 | Jan. 02, 2019 | Apr. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Jan. 29, 2015 |
Stock issued during period, value, issued for services | $ 737,071 | |||||||
Preferred stock shares outstanding | 0 | 0 | ||||||
Option granted | 79,000 | |||||||
Aggregate intrinsic value of options outstanding | $ 404,882 | $ 404,882 | ||||||
Number of unvested options | 344,071 | 344,071 | ||||||
Aggregate grant date fair value unvested options | $ 864,676 | |||||||
Aggregate intrinsic value of unvested options | $ 115,113 | $ 115,113 | ||||||
Number of options vested and exercisable | 188,822 | 188,822 | ||||||
Stock compensation expenses | $ 596,852 | $ 586,016 | ||||||
Compensation cost related to stock options not yet recognized | $ 935,755 | $ 935,755 | ||||||
Period of compensation cost related to stock options not yet recognized | 2 years 1 month 9 days | |||||||
Warrants issued | 286,540 | |||||||
Fair value of warrants | $ 270,027 | |||||||
Craft Canning [Member] | ||||||||
Acquisition costs | $ 146,262 | |||||||
2016 Equity Incentive Plan [Member] | ||||||||
Number of shares available for grant | 2,030,775 | |||||||
Outstanding capital stock shares percentage | 8.00% | |||||||
Option granted | 955,915 | |||||||
Number of RSU's issued | 371,076 | |||||||
Vesting period of option | 5 years | |||||||
2015 Equity Incentive Plan [Member] | ||||||||
Number of shares available for grant | 50,000 | |||||||
Option granted | 0 | |||||||
Vesting period of option | 5 years | |||||||
Number of options issued | 44,584 | |||||||
Description of vesting percentage | Options vest at the rate of at least 25 percent in the first year, starting six months after the grant date, and 75% in year two. | |||||||
Stock Option [Member] | ||||||||
Option exercise price | $ 1.80 | |||||||
Option granted | 79,000 | |||||||
Aggregate intrinsic value of options outstanding | 140,278 | $ 140,278 | ||||||
Fair value of aggregate options granted | 142,189 | |||||||
Series A Preferred Stock [Member] | ||||||||
Preferred stock stated value | $ 1,000 | $ 1,000 | ||||||
Fixed conversion price per share | $ 4.50 | $ 4.50 | ||||||
Preferred stock accrued dividend rate | 8.00% | |||||||
Description of participation rights | 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 shareholder divided by (ii) 90% of the average of the per share market values during the twenty (20) trading days immediately preceding the 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 is 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 issued under the Series A Certificate of Designation multiplied by (iii) 2.5. | |||||||
Private Offeirng [Member] | ||||||||
Number of units issued | 280,555 | |||||||
Net proceeds from private offering | $ 1,262,497 | |||||||
Units, description | Each Unit consists of one share of Eastside's common stock and a three-year warrant to acquire 0.5 shares of common stock at an exercise price of $5.50 per share. | |||||||
Acquisition costs | $ 140,278 | |||||||
Private Unit Offeirng [Member] | ||||||||
Unit price | $ 4.50 | $ 4.50 | ||||||
Warrants term | 3 years | 3 years | ||||||
Warrants, exercise price | $ 5.50 | $ 5.50 | ||||||
Common Stock [Member] | ||||||||
Stock issued during period, shares, acquisitions | 338,212 | |||||||
Stock issued during period, shares, issued for services | 128,652 | |||||||
Stock issued during period, value, issued for services | $ 13 | |||||||
Number of shares issued existing option | 1,077 | |||||||
Option exercise price | $ 3.99 | |||||||
Number of units issued | 280,555 | |||||||
Directors, Employees and Consultants [Member] | ||||||||
Stock issued during period, shares, issued for services | 132,652 | |||||||
Stock issued during period, value, issued for services | $ 801,319 | |||||||
Directors and Employees [Member] | Minimum [Member] | ||||||||
Stock issued during period for services, price per share | 3.68 | $ 3.68 | ||||||
Directors and Employees [Member] | Maximum [Member] | ||||||||
Stock issued during period for services, price per share | $ 6.13 | $ 6.13 | ||||||
Craft Canning [Member] | ||||||||
Stock issued during period, shares, acquisitions | 338,212 | |||||||
Business combination, consideration transferred | $ 2,080,004 |
Stockholder's Equity - Schedule
Stockholder's Equity - Schedule of Shareholder's Equity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Balance | $ 18,751,118 | |||
Issuance of common stock | 1,262,497 | |||
Issuance of common stock in exchange for services by third parties | 64,248 | |||
Issuance of common stock for services by employees | 737,071 | |||
Issuance of common stock for purchase Craft Canning + Bottling, LLC | 2,080,004 | |||
Stock option exercises | ||||
Stock option exercises, shares | 3,167 | |||
Stock-based compensation | $ 510,674 | |||
Adjustment to accumulated deficit for adoption of ASC 842 | (187,353) | |||
Contributed capital | 14,000 | |||
Net loss attributable to common shareholders | $ (3,544,299) | $ (2,626,457) | (9,436,225) | $ (5,851,503) |
Balance | 13,796,034 | 13,796,034 | ||
Common Stock [Member] | ||||
Balance | $ 876 | |||
Balance, shares | 8,764,085 | |||
Issuance of common stock | $ 28 | |||
Issuance of common stock, shares | 280,555 | |||
Issuance of common stock in exchange for services by third parties | ||||
Issuance of common stock in exchange for services by third parties, shares | 4,000 | |||
Issuance of common stock for services by employees | $ 13 | |||
Issuance of common stock for services by employees, shares | 128,652 | |||
Issuance of common stock for purchase Craft Canning + Bottling, LLC | $ 34 | |||
Issuance of common stock for purchase Craft Canning + Bottling, LLC, shares | 338,212 | |||
Stock option exercises | ||||
Stock option exercises, shares | 1,077 | |||
Stock-based compensation | ||||
Adjustment to accumulated deficit for adoption of ASC 842 | ||||
Contributed capital | ||||
Net loss attributable to common shareholders | ||||
Balance | $ 951 | $ 951 | ||
Balance, shares | 9,516,581 | 9,516,581 | ||
Paid-In Capital [Member] | ||||
Balance | $ 45,888,872 | |||
Issuance of common stock | 1,262,469 | |||
Issuance of common stock in exchange for services by third parties | 64,248 | |||
Issuance of common stock for services by employees | 737,058 | |||
Issuance of common stock for purchase Craft Canning + Bottling, LLC | 2,079,970 | |||
Stock option exercises | ||||
Stock-based compensation | 510,674 | |||
Adjustment to accumulated deficit for adoption of ASC 842 | ||||
Contributed capital | 14,000 | |||
Net loss attributable to common shareholders | ||||
Balance | $ 50,557,291 | 50,557,291 | ||
Accumulated Deficit [Member] | ||||
Balance | (27,138,630) | |||
Issuance of common stock | ||||
Issuance of common stock in exchange for services by third parties | ||||
Issuance of common stock for services by employees | ||||
Issuance of common stock for purchase Craft Canning + Bottling, LLC | ||||
Stock option exercises | ||||
Stock-based compensation | ||||
Adjustment to accumulated deficit for adoption of ASC 842 | (187,353) | |||
Contributed capital | ||||
Net loss attributable to common shareholders | (9,436,225) | |||
Balance | $ (36,762,208) | $ (36,762,208) |
Stockholder's Equity - Summary
Stockholder's Equity - Summary of Stock Option Activity (Details) | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Equity [Abstract] | |
Number of Options Outstanding, Beginning Balance | 895,858 |
Number of Options Outstanding, Granted | 79,000 |
Number of Options Outstanding, Exercised | (3,167) |
Number of Options Outstanding, Canceled | (32,334) |
Number of Options Outstanding, Ending Balance | 939,357 |
Number of Options Exercisable, Ending Balance | 595,286 |
Weighted- Average Exercise Price Options Outstanding, Beginning Balance | $ / shares | $ 5.62 |
Weighted- Average Exercise Price Options Outstanding, Ending Balance | $ / shares | 5.61 |
Weighted- Average Exercise Price Options Exercisable, Ending Balance | $ / shares | $ 5.62 |
Stockholder's Equity - Schedu_2
Stockholder's Equity - Schedule of Weighted-average Assumptions Used in Black-scholes Valuation Method (Details) | 9 Months Ended |
Sep. 30, 2019$ / shares | |
Warrant [Member] | |
Risk-free interest rate | 2.11% |
Expected term (in years) | 3 years |
Expected dividend yield | 0.00% |
Expected volatility | 31.00% |
Fair value of common stock | $ 5.55 |
Stock Option [Member] | |
Risk-free interest rate | 2.22% |
Expected term (in years) | 6 years 6 months |
Expected dividend yield | 0.00% |
Expected volatility | 31.00% |
Stockholder's Equity - Summar_2
Stockholder's Equity - Summary of Warrant Activity (Details) | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Equity [Abstract] | |
Warrants Outstanding, Beginning Balance | shares | 1,083,435 |
Warrants Outstanding, Granted | shares | 286,540 |
Warrants Outstanding, Exercised | shares | |
Warrants Outstanding, Forfeited and Cancelled | shares | (366,736) |
Warrants Outstanding, Ending Balance | shares | 1,003,239 |
Warrants Outstanding Weighted Average Remaining Life, Beginning Balance | 1 year 15 days |
Warrants Outstanding Weighted Average Remaining Life, Granted | 3 years |
Warrants Outstanding Weighted Average Remaining Life, Ending Balance | 1 year 2 months 1 day |
Warrants Outstanding Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 6.83 |
Warrants Outstanding Weighted Average Exercise Price, Granted | $ / shares | 6.67 |
Warrants Outstanding Weighted Average Exercise Price, Exercised | $ / shares | |
Warrants Outstanding Weighted Average Exercise Price, Forfeited and Cancelled | $ / shares | 6 |
Warrants Outstanding Weighted Average Exercise Price, Ending Balance | $ / shares | $ 7.09 |
Warrants Outstanding Aggregate Intrinsic Value, Beginning Balance | $ | |
Warrants Outstanding Aggregate Intrinsic Value, Granted | $ | |
Warrants Outstanding Aggregate Intrinsic Value, Ending Balance | $ |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Oct. 24, 2019 | Sep. 30, 2019 | Sep. 16, 2019 | Jun. 11, 2019 | Aug. 11, 2018 | Aug. 09, 2018 | Dec. 29, 2017 | Aug. 23, 2017 | Sep. 30, 2018 | Aug. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jul. 10, 2018 | Jun. 22, 2018 | Mar. 28, 2018 |
Related Party Transaction [Line Items] | |||||||||||||||
Assets from related party transaction | $ 120,000 | ||||||||||||||
Percentage of average of assets net | 1.00% | ||||||||||||||
Due to related party | $ 176,934 | $ 176,934 | |||||||||||||
Proceeds from warrant exercise | $ 10,245,987 | ||||||||||||||
Cash paid | 140,000 | ||||||||||||||
Number of common stock shares issued value | 1,262,497 | ||||||||||||||
Repayments of notes payable | 297,108 | $ 3,123,494 | |||||||||||||
Subscription Agreement [Member] | Kilkenny Trust [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Warrant exercise price | $ 5.50 | ||||||||||||||
Number of common stock shares issued | 55,555 | ||||||||||||||
Unit price | $ 4.50 | ||||||||||||||
Units, description | Each unit consists of one share of the Company's common stock and a three-year warrant to acquire 0.5 shares of common stock at an exercise price of $5.50 per share. | ||||||||||||||
Warrants term | 3 years | ||||||||||||||
Private Offeirng [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Number of common stock shares issued | 280,555 | ||||||||||||||
Units, description | Each Unit consists of one share of Eastside's common stock and a three-year warrant to acquire 0.5 shares of common stock at an exercise price of $5.50 per share. | ||||||||||||||
Profit Sharing Plan [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Debt instrument maturity date | May 1, 2021 | ||||||||||||||
Grover Wickersham and Affiliates [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Number of warrants exercised | 55,555 | ||||||||||||||
Warrant exercise price | $ 5.40 | ||||||||||||||
Proceeds from warrant exercise | $ 300,000 | ||||||||||||||
Sandstrom Partners [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Warrant exercise price | $ 3.50 | ||||||||||||||
Proceeds from warrant exercise | $ 43,596 | ||||||||||||||
Cash paid | $ 200,000 | ||||||||||||||
Number of common stock shares issued | 33,334 | ||||||||||||||
Number of common stock shares issued value | $ 145,000 | ||||||||||||||
Warrants issued | 42,000 | ||||||||||||||
Sandstrom Partners [Member] | 2018 [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Number of warrants exercised | 42,000 | ||||||||||||||
Number of common stock shares issued | 10,025 | ||||||||||||||
Number of common stock shares issued value | $ 40,000 | ||||||||||||||
Stock issued during period for services, shares | 42,000 | ||||||||||||||
Grover T.Wickersham Employees [Member] | Private Offeirng [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Warrant exercise price | $ 5.40 | ||||||||||||||
Warrants issued | 37,975 | ||||||||||||||
Debt interest rate | 8.00% | ||||||||||||||
Principal amount | $ 379,750 | ||||||||||||||
Grover T.Wickersham Employees [Member] | Profit Sharing Plan [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
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.Wickersham Employees [Member] | April 2018 [Member] | Private Offeirng [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Number of warrants exercised | 37,975 | ||||||||||||||
Warrant exercise price | $ 5.40 | ||||||||||||||
Proceeds from warrant exercise | $ 174,685 | ||||||||||||||
Principal amount | $ 85,000 | ||||||||||||||
Grover T.and Jill Z. Wickersham [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Number of warrants exercised | 17,930 | ||||||||||||||
Warrant exercise price | $ 5.40 | $ 5.40 | $ 5.40 | ||||||||||||
Proceeds from warrant exercise | $ 82,478 | ||||||||||||||
Warrants issued | 17,930 | 17,930 | |||||||||||||
Debt interest rate | 8.00% | 8.00% | 8.00% | ||||||||||||
Principal amount | $ 179,300 | ||||||||||||||
Debt instrument maturity date | Jun. 30, 2019 | May 1, 2021 | |||||||||||||
Equity and debt securities, gross | $ 2,000,000 | ||||||||||||||
Owen Lingley [Member] | Craft Canning [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Warrant exercise price | $ 7.80 | ||||||||||||||
Number of common stock shares issued value | $ 338,212 | ||||||||||||||
Debt interest rate | 5.00% | ||||||||||||||
Principal amount | $ 731,211 | ||||||||||||||
Debt instrument maturity date | Jan. 11, 2022 | ||||||||||||||
Proceeds from acquisition | $ 1,843,200 | ||||||||||||||
Warrants to purchase shares of common stock | 146,262 | ||||||||||||||
Annual cash compensation | $ 75,000 | ||||||||||||||
Paul F. Shoen [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Principal amount | $ 188,037 | $ 300,000 | $ 188,037 | $ 300,000 | |||||||||||
Debt instrument maturity date | May 1, 2021 | ||||||||||||||
Paul F. Shoen [Member] | Craft Canning [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Debt interest rate | 5.00% | 5.00% | 5.00% | ||||||||||||
Principal amount | $ 197,020 | $ 500,000 | $ 363,930 | ||||||||||||
Repayments of notes payable | $ 572,912 | ||||||||||||||
TQLA, LLC [Member] | Azunia Tequila [Member] | Subsequent Event [Member] | Maximum [Member] | |||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||
Percentage of aggregate consideration entitle to receive | 93.88% | ||||||||||||||
Existing vacancy, terms | Subject to compliance with applicable Nasdaq rules, aggregate the initial consideration, not to exceed approximately $14.7 million in aggregate based on future revenue performance, will be payable approximately 18 months following the closing and will consist of 850,000 shares of Company common stock at a stipulated value of $6.00 per share, 350,000 shares of Company common stock based on the Company's stock price twelve months after the close of the transaction, and additional shares based on the Azunia business achieving certain revenue targets and the Company's stock price 18 months after the close of the transaction. The Company has also agreed to issue additional stock consideration (subject to compliance with applicable Nasdaq rules) of up to $1.5 million upon the Azunia business achieving revenue of at least $9.45 million in the period commencing on the 13th month following the closing and ending on the 24th month following the closing. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended |
Oct. 25, 2019 | Sep. 30, 2019 | |
Stock issued during period, value, issued for services | $ 737,071 | |
Subsequent Event [Member] | Directors and Consultants [Member] | 2016 Equity Incentive Plan [Member] | ||
Stock issued during period, shares, issued for services | 158,447 | |
Stock issued during period, value, issued for services | $ 731,899 | |
Subsequent Event [Member] | Directors and Consultants [Member] | 2016 Equity Incentive Plan [Member] | Minimum [Member] | ||
Shares issued price per share | $ 3.76 | |
Subsequent Event [Member] | Directors and Consultants [Member] | 2016 Equity Incentive Plan [Member] | Maximum [Member] | ||
Shares issued price per share | $ 5 |