Business Segment Information

12 Months Ended

Dec. 31, 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 Western U.S. and has two spirits customers that represents 40% 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 13 mobile lines in Washington, Oregon and Colorado.

Our CEO reviews certain financial information on a segmented basis, including internal profit and loss statements and internal analysis of 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.

Eastside Distilling, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2022

Segment information was as follows for the years ended December 31, 2022 and 2021:

(Dollars in thousands)	2022			2021
Spirits
Sales	$	8,701		$	5,672
Net sales		8,357			5,176
Cost of sales		5,101			3,743
Gross profit		3,256			1,433
Total operating expenses		4,496			5,634
Net income (loss)		(10,917	)		155
Gross margin		39	%		28	%
Interest expense	$	3,131		$	(1,203	)
Depreciation and amortization		161			339
Significant noncash items:
(Gain) loss on disposal of property and equipment		(7	)		298
Impairment loss		7,453			-
Forgiveness of debt - PPP		-			(1,052	)
Remeasurement of deferred consideration		-			(750	)
Gain on disposal of offsite inventory		-			(1,047	)
Stock compensation		140			311
Craft C+P
Sales	$	5,626		$	7,218
Net sales		5,526			7,218
Cost of sales		6,341			5,741
Gross profit		(815	)		1,477
Total operating expenses		4,594			4,176
Net loss		(5,349	)		(2,351	)
Gross margin		-15	%		20	%
Interest expense	$	44		$	(50	)
Depreciation and amortization		1,359			898
Significant noncash items:
Gain on disposal of property and equipment		65			121
Forgiveness of debt - PPP		-			(396	)
Stock compensation		12			311

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 2022 and Craft C+P now bears the operating costs. Although printing revenues significantly increased through the quarter, the printer is not yet operating at full capacity.