Discontinued Operations

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

4. Discontinued Operations

Discontinued Operations

The Company reports discontinued operations by applying the following criteria in accordance with ASC Topic 205-20, Presentation of Financial Statements – Discontinued Operations: (1) Component of an entity; (2) Held for sale criteria; and (3) Strategic shift.

On December 31, 2019, management made a strategic shift to focus the Company’s sales and marketing efforts on the nationally branded product platform, resulting in the decision to close all four of its retail stores in the Portland, Oregon area. The retail stores were closed or abandoned by March 31, 2020.

On February 2, 2021, Redneck Riviera Whiskey Co, LLC (“RRWC”) entered into a Termination and Inventory Purchase Agreement (the “Termination Agreement”) with Rich Marks, LLC, John D. Rich Tisa Trust and Redneck Spirits Group, LLC (collectively the buyers referred to as “RSG”), pursuant to which, on February 5, 2021, RRWC sold all of its inventory of Redneck Riviera, Granny Rich, and Howdy Dew distilled spirits products, including finished goods, raw materials, and barrel inventory, as well as all assignable certificates of label approval/exemption, branding, permits, and registrations relating thereto, for $4.7 million. In addition, the Company terminated its Amended and Restated License Agreement (the “License Agreement”) dated May 31, 2018 by and among Eastside, RRWC, Rich Marks, LLC, and John D. Rich TISA Trust U/A/D March 27, 2018, Dwight P. Miles, Trustee in exchange for $3.0 million. In connection with the Termination Agreement, the Company entered into a Supplier Agreement dated as of February 2, 2021 with RSG, pursuant to which the Company will produce certain products and perform specified services for RSG for a six (6) month period on the terms and conditions set forth in the Supplier Agreement. The Company did not incur any penalties as a result of the termination of the License Agreement.

As of and for the years ended December 31, 2021 and 2020, the assets, liabilities, revenue, expenses and cash flows from retail operations and the RRWC business have been classified as discontinued operations separately from continuing operations. For comparative purposes, prior period amounts have been reclassified to conform to current period presentation.

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

Income and expense related to discontinued retail operations and the Redneck Riviera Spirits business were as follows for the years ended December 31, 2021 and 2020:

(Dollars in thousands)	2021		2020
Sales	$	283	$	2,195
Less customer programs and excise taxes		30		432
Net sales		253		1,763
Cost of sales		168		1,142
Gross profit		85		621
Operating expenses:
Sales and marketing expenses		22		578
General and administrative expenses		35		180
Loss on disposal of property and equipment		-		76
Total operating expenses		57		834
Income (loss) from operations		28		(213	)
Other income
Other income		980		-
Gain on termination of license agreement		2,850		-
Total other income, net		3,830		-
Net income (loss)	$	3,858	$	(213	)

Assets and liabilities related to discontinued retail operations and the Redneck Riviera Spirits business were as follows:

(Dollars in thousands)	2021		2020
Assets
Current assets:
Inventories	$	-	$	3,833
Total current assets		-		3,833
Right-of-use assets		-		96
Other assets		-		93
Total Assets	$	-	$	4,022
Liabilities
Current liabilities:
Accounts payable	$	-	$	(13	)
Current portion of lease liability		-		31
Total current liabilities		-		18
Lease liability - less current portion		-		71
Total Liabilities	$	-	$	89