Business Segment Information

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Business Segment Information

5. Business Segment Information

The Company’s internal management financial reporting consists of Eastside spirits and Craft C+P. The spirits brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila and are sold on a wholesale basis to distributors in open states, and brokers in control states. The Company’s principal area of operation is in the U.S. and has two spirits customers that represents 49% of its revenue.

Craft C+P offers digital can printing and co-packing services in Portland, Oregon allowing it to offer end-to-end production capabilities. Craft C+P operates 14 mobile lines in Washington, Oregon and Colorado.

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2022

(Unaudited)

The measure of profitability reviewed is condensed statements of operations, and gross margin. 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+P, which is included in the segments’ financial data below.

Segment information was as follows for the six months ended June 30, 2022 and 2021:

(Dollars in thousands)	2022			2021
Spirits
Sales	$	6,398		$	2,812
Net sales		6,192			2,544
Cost of sales		3,389			2,082
Gross profit		2,803			462
Total operating expenses		2,561			3,013
Net income (loss)		(905	)		2,707
Gross margin		45	%		18	%
Interest revenue	$	-		$	-
Interest expense		1,148			445
Depreciation and amortization		82			158
Income tax expense		-			-
Significant noncash items:
(Gain) loss on disposal of property and equipment		(12	)		61
Forgiveness of debt - PPP		-			(1,052	)
Remeasurement of deferred consideration		-			(750	)
Gain on disposal of offsite inventory		-			(1,047	)
One-time professional fees		-			343
Stock compensation		254			203
Craft C+P
Sales	$	2,505		$	4,049
Net sales		2,405			4,049
Cost of sales		2,809			3,059
Gross profit		(404	)		990
Total operating expenses		2,594			2,131
Net loss		(2,919	)		(767	)
Gross margin		-17	%		24	%
Interest revenue	$	-		$	-
Interest expense		21			26
Depreciation and amortization		604			448
Significant noncash items:
Loss on disposal of property and equipment		113			-
Forgiveness of debt - PPP		-			(396	)
Stock compensation		266			206

Craft C+P’s gross margin decreased primarily due to lower sales of services, a change in product and service mix, and higher raw material costs. In addition, Craft C+P’s digital printer commenced operations in April, but the revenues it generated did not exceed the costs of its start-up during the six months ended June 30, 2022.

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2022

(Unaudited)