Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

16. Subsequent Events

On April 15, 2020, Eastside Distilling, Inc. (the “Company”) entered into a loan agreement with Live Oak Banking Company (the “Eastside Loan”) under the Paycheck Protection Program (“PPP”), and on April 13, 2020 Craft Canning + Bottling, LLC (“Craft Canning”), a subsidiary of the Company, entered into a loan agreement with Live Oak Banking Company under the PPP (the “Craft Canning Loan,” and together with the Eastside Loan, the “PPP Loans”). The Paycheck Protection Program was established under the recently congressionally-approved Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The Eastside Loan is evidenced by a promissory note in the amount of $1,044,500 and matures on April 15, 2022. The Craft Canning Loan is evidenced by a promissory note in the amount of $393,600 and matures on April 13, 2022. Each of the PPP Loans has a 1.00% interest rate and is subject to customary events of default including, among other things, payment defaults. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent and utility costs.

On April 6, 2020, the Company issued 216,363 shares of common stock under the 2016 Plan to directors, employees and consultants for stock-based compensation of $238,800. The shares were valued using the closing share price of the Company’s common stock on the date of the grant, $1.10 per share.

On May 13, 2020, Live Oak Banking Company (the “Lender”) notified the Company that it was in default under certain covenants in a loan agreement, dated January 15, 2020, between the Company, Motherlode LLC, Big Bottom Distilling, LLC, Craft Canning + Bottling LLC, Redneck Riviera Whiskey Co., LLC, Outlandish Beverages LLC, and Live Oak Bank (the “Loan Agreement”). Those defaults included the failure to timely deliver information and its belief that we owe certain taxes, and did not relate to any failure to pay amounts owing under the Loan Agreement. However, the Lender did not declare an event of default as of the filing date of this Form 10-Q. The Loan Agreement provides that upon an event of default, the Lender may, at its option, declare the entire loan to be immediately due and payable. Further, a default interest rate may apply on all obligations during the existence of an event of default at a per annum rate equal to 2.00% above the applicable interest rate. The Company is currently working with the Lender for resolution.