Business Segment Information

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Business Segment Information

5. Business Segment Information

The Company’s internal management financial reporting consists of Eastside spirits and Craft C+B. The spirits brands span several alcoholic beverage categories, including whiskey, vodka, gin, rum, tequila and Ready-to-Drink (“RTD”) and are sold on a wholesale basis to distributors in open states, and brokers in control states. Craft C+B primarily services the craft beer and craft cider business. Craft C+B operates 14 mobile lines in Seattle, Washington; Portland, Oregon; and Denver, Colorado.

The measure of profitability reviewed is a condensed statement of operations, including earnings before interest, taxes, and depreciation and amortization (“EBITDA”), and gross margin. Management considers the non-GAAP measure of EBITDA as a supplement to GAAP results. Management believes this non-GAAP measure provides useful information about the Company’s operating results and assists investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance. These business segments reflect how operations are managed, operating performance is evaluated and the structure of internal financial reporting. Total asset information by segment is not provided to, or reviewed by, the chief operating decision maker (“CODM”) as it is not used to make strategic decisions, allocate resources or assess performance. The accounting policies of the segments are the same as those described for the Company in the Summary of Significant Accounting Policies in Note 3. Spirits allocates 50% of certain general and administrative expenses to Craft C+B, which is included in the segments’ financial data below.

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

The Company’s principal area of operation is in the U.S. and has one spirit’s customer that represents 20% of its revenue. Segment information is as follows:

(Dollars in thousands)	2021			2020
Spirits
Sales	$	5,672		$	6,046
Net sales		5,176			5,274
Cost of sales		3,743			4,339
Gross profit		1,433			935
Total operating expenses		5,634			8,063
Net income (loss)		155			(8,719	)
EBITDA		1,698			(6,309	)
Gross margin		28	%		18	%
Interest revenue	$	-		$	34
Interest expense		1,203			1,003
Depreciation and amortization		340			1,407
Income tax expense		-			-
Significant noncash items:
Loss on disposal of property and equipment		298			54
Forgiveness of debt - Paycheck Protection Program (“PPP”)		(1,052	)		-
Remeasurement of deferred consideration		(750	)		-
Gain on disposal of offsite inventory		(1,047	)		-
Stock compensation		311			770
Craft C+B
Sales	$	7,218		$	8,736
Net sales		7,218			8,734
Cost of sales		5,741			6,046
Gross profit		1,477			2,688
Total operating expenses		4,176			3,746
Net loss		(2,351	)		(1,141	)
EBITDA		(1,403	)		(176	)
Gross margin		20	%		31	%
Interest revenue	$	-		$	-
Interest expense		50			86
Depreciation and amortization		898			879
Income tax expense		-			-
Significant noncash items:
(Gain) loss on disposal of property and equipment		121			(420	)
Forgiveness of debt - PPP		(396	)		-
Stock compensation		311			770

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020