Eastside Distilling Reports 2016 Financial Results

Company reports 31% revenue growth for 2016; Case sales increase 53% from 10,215 in 2015 to 15,596 in 2016

News provided by

Apr 03, 2017, 08:00 ET

PORTLAND, Ore., April 3, 2017 /PRNewswire/ -- Eastside Distilling, Inc. (OTCQB: ESDI), a producer of award-winning master-crafted spirits, reported 2016 financial results.

For the year ended December 31, 2016, Eastside Distilling reported record gross sales of $3.0 million, an increase of 31%. Total shipments increased from 15,596 cases in 2016 from 10,215 cases in 2015, an increase of 53%.

Grover Wickersham, Executive Chairman of Eastside Distilling, commented, "We are proud of our 2016 accomplishments. My fellow shareholders should be pleased to take note of key operational metrics, including our record 15,596 case shipments and removal of the 'going concern' qualification by our auditors. We exited 2016 with an equity raise that strengthened our balance sheet and we launched strategic initiatives, such as our alliance with Sandstrom Partners, which I think will make 2017 our best year ever."

Recent Highlights and Strategic Initiatives:

Gross sales increased 31% to $3.0 million during 2016, compared to $2.3 million in 2015;
Shipments increased 53% from the previous year's shipments of 10,215 cases to 15,596 cases in 2016;
Executed on our acquisition strategy, we acquired MotherLode Bottling at 1x revenue, cutting our own operational costs and adding a new business in private labeling;
Allied with Sandstrom Partners, a leading spirit branding firm renowned for its successes with Bulleit, St Germain, Aviation Gin and Stillhouse, and now also an investor in Eastside;
Exited 2016 with a reduction of over $1 million in annualized operating and fixed costs, preserving shareholder capital while maintaining growth;
88% growth in case sales of our high margin Portland Potato Vodka and across the board double-digit case sales in every one of our other 13 spirits;
Double Gold Medal at the prestigious 2016 New York Wine & Spirits Competition for Burnside Bourbon Oregon Oak, another kudo for our Master Distiller and EVP, Melissa Heim.

Mr. Wickersham continued, "We are wasting no time in transforming Eastside into a leaner and more competitive company. We have reallocated resources to our core market in the Pacific Northwest and this has been rewarded, but we are also entering new spaces such as internet marketing. Out of eighty-nine distilleries, we have become the third largest spirits producer in Oregon, reaching out nationally and Internationally. As we maintain our focus on growth, we intend to ensure profitable growth, concentrating on higher margin products. We see plentiful opportunities to make strategic and 'bolt on' acquisitions. We will do so, opportunistically, when we can add shareholder value as the only 'pure play' public craft spirits company."

Mr. Wickersham concluded, "I look forward to 2017 being an active year with our team at Eastside being able to report progress in diverse endeavors such as:

New product launchers in the super premium category;
Using our award-winning Oregon Oak (Garryana Oak) barrel finishing to differentiate our bourbons as a unique and premium product;
Potently 'disruptive' ventures in e-commerce;
Targeting high growth segments like bourbon and flavored whisky;
Stoking growth in high margin products like Portland Potato Vodka;
Cost reductions and margin building from economies of scale;
Realization of benefits from our spirit branding experts, Sandstorm Partners; and
Expansion in private labeling under the leadership of Allen Bartheld.

Conference Call
The Company will hold a conference call on Thursday, April 6, 2017, at 11:00 a.m. Eastern time to discuss these results.

Date: Thursday, April 6, 2017
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
Toll-free dial-in number: (877) 317-6789
International dial-in number: (412) 317-6789

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Lytham Partners at (602) 889-9700.

A webcast replay will be available in the Investor Relations section of the Company's website at http://www.eastsidedistilling.com/presentations/.

A telephone replay of the call will be available until April 13, 2017:
Toll-free replay number: (877) 344-7529
International replay number: (412) 317-0088
Replay ID: 10104508

About Eastside Distilling
Eastside Distilling, Inc. (OTCQB: ESDI) is located in Southeast Portland's Distillery Row and has been producing high-quality, master-crafted spirits since 2008. Makers of award winning spirits, the Company is unique in the marketplace and distinguished by its highly decorated product line-up that includes Barrel Hitch American Whiskies, Burnside Bourbon, Below Deck Rums, Portland Potato Vodka and a distinctive line of infused whiskeys. All Eastside spirits are master crafted from natural ingredients for unparalleled quality and taste. The Company is publicly traded under the symbolOTCQB: ESDI. For more information, visit: www.eastsidedistilling.com

Important Cautions Regarding Forward-Looking Statements
Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; the Company's ability to continue as a going concern; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's ability to obtain additional capital, the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission, including the financial statements and related information contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on March 31, 2017. Examples of forward-looking statements in this release may include statements related to our strategic focus, product verticals, anticipated revenue and profitability. Further, such forward looking statements in this press release include but are not limited to: that the Company's growth will continue on its current trajectory; the stage is set for significant growth and improved bottom line performance ahead and beyond; that the second half is traditionally our busiest of the year, when the Company typically generates close to 70% of its annual business. The Company assumes no obligation to update the cautionary information in this release.

Company Contact:	Investor Relations Contact:
Eastside Distilling	Robert Blum, Joe Diaz or Joe Dorame
(971) 888-4264	Lytham Partners, LLC
[email protected]	(602) 889-9700
	[email protected]

Use of Non-GAAP Measures
Eastside Distilling's management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of adjusted EBITDA. Management believes this non-GAAP measure provides useful information about the Company's operating results.

The Company defines adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, stock based compensation and gain on spin-off. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

			Three Months Ended		Fiscal Year Ended
			Dec 31		Sept 30
			2016	2015	2016	2015

Net Loss			$ (1,490,664)	$ (669,376)	$ (5,251,293)	$ (3,601,066)
	Add:
		Interest Expense	754,045	95,792	901,658	59,548
		Stock-based compensation	231,117	115,156	658,964	955,277
		Depreciation and amortization	5,413	22,100	367,291	36,027

Adjusted EBITDA			$ (500,089)	$ (436,328)	$ (3,323,380)	$ (2,550,214)

Year End 2016 Financial Summary Tables
The following financial information should be read in conjunction with the audited financial statements and accompanying notes filed by the Company with the Securities and Exchange Commission on March 31, 2017 in its Annual Report on Form 10-K for the period ended December 31, 2016, and which can be viewed at www.sec.gov and in the investor relations section of the company's website at www.eastsidedistilling.com.

Eastside Distilling, Inc. and Subsidiary
Consolidated Statements of Operations
Years ended December 31, 2016 and 2015


	2016	2015
Sales	$ 3,042,527	$ 2,326,664
Less excise taxes, customer programs and incentives	934,221	624,046
Net sales	2,108,306	1,702,618
Cost of sales	1,280,344	870,390
Gross profit	827,962	832,228
Operating expenses:
Advertising, promotional and selling expenses	1,244,152	923,310
General and administrative expenses	3,881,771	3,450,436
Loss from operations	(4,297,961)	(3,541,518)
Other income (expense), net
Interest expense	(862,468)	(112,458)
Gain on spin-off of subsidiary	-	52,890
Other income (expense)	(39,190)	20
Total other income (expense), net	(901,658)	(59,548)
Loss before income taxes	(5,199,619)	(3,601,066)
Provision for income taxes	-	-
Net loss	(5,199,619)	(3,601,066)

Dividends on convertible preferred stock	(51,674)	-

Net loss available to common shareholders	$ (5,251,293)	$ (3,601,066)

Basic and diluted net loss per common share	$ (1.40)	$ (1.57)

Basic and diluted weighted average common shares outstanding	3,741,842	2,287,518

Eastside Distilling, Inc. and Subsidiary
Consolidated Balance Sheets
December 31, 2016 and 2015

	2016	2015
Assets
Current assets:
Cash	$ 1,088,066	$ 141,317
Trade receivables	344,955	142,206
Inventories	780,037	683,824
Prepaid expenses and current assets	187,714	163,506
Total current assets	2,400,772	1,130,853
Property and equipment, net	99,216	112,005
Deposits	48,000	49,000
Total Assets	$ 2,547,988	$1,291,858

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$ 457,034	$1,300,532
Accrued liabilities	523,702	563,814
Deferred revenue	2,126	727
Current portion of notes payable	4,537	4,098
Related party note payable	-	12,500
Convertible notes payable - net of debt discount	-	455,958
Total current liabilities	987,399	2,337,629
Notes payable - less current portion and debt discount	427,756	17,842
Total liabilities	1,415,155	2,355,471

Stockholders' equity (deficit):
Series A convertible preferred stock, $0.0001 par value; 3,000 shares authorized; 300 and 0 shares issued and outstanding at December 31, 2016 and 2015, respectively (liquidation value of $750,000 at December 31, 2016)	245,838	-
Common stock, $0.0001 par value; 45,000,000 shares authorized; 7,627,512 and 2,309,750 shares issued and outstanding at December 31, 2016 and 2015, respectively	764	231
Additional paid-in capital	13,699,275	6,497,907
Accumulated deficit	(12,813,044)	(7,561,751)
Total stockholders' equity (deficit)	1,132,833	(1,063,613)
Total Liabilities and Stockholders' Equity (Deficit)	$ 2,547,988	$1,291,858