XML 48 R21.htm IDEA: XBRL DOCUMENT
v3.22.1

Stockholders’ Equity | 3 Months Ended
--- | ---
Mar. 31, 2022
Equity [Abstract] |
Stockholders’ Equity | 16. Stockholders’ Equity Schedule of Stockholders’ Equity
|  | Series B Preferred Stock |  |  | Common Stock |  |  | Paid-in |  |  | Accumulated |  |  | Total Stockholders’ |
(Shares and dollars in thousands) |  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Equity |
Balance, December 31, 2021 |  |  | 2,500 |  |  | $ | - |  |  |  | 14,791 |  |  | $ | 1 |  |  | $ | 72,003 |  |  | $ | (58,605 | ) |  | $ | 13,399 |
Beginning balance |  |  | 2,500 |  |  | $ | - |  |  |  | 14,791 |  |  | $ | 1 |  |  | $ | 72,003 |  |  | $ | (58,605 | ) |  | $ | 13,399 |
Stock-based compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | - |  |  |  | 2 |
Issuance of common stock for services by third parties |  |  | - |  |  |  | - |  |  |  | 125 |  |  |  | - |  |  |  | 119 |  |  |  | - |  |  |  | 119 |
Issuance of common stock for services by employees |  |  | - |  |  |  | - |  |  |  | 170 |  |  |  | 1 |  |  |  | 206 |  |  |  | - |  |  |  | 207 |
Issuance of detachable warrants on notes payable |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 948 |  |  |  | - |  |  |  | 948 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,074 | ) |  |  | (2,074 | )
Balance, March 31, 2022 |  |  | 2,500 |  |  | $ | - |  |  |  | 15,086 |  |  | $ | 2 |  |  | $ | 73,278 |  |  | $ | (60,679 | ) |  | $ | 12,601 |
Ending balance |  |  | 2,500 |  |  | $ | - |  |  |  | 15,086 |  |  | $ | 2 |  |  | $ | 73,278 |  |  | $ | (60,679 | ) |  | $ | 12,601 |
Eastside Distilling, Inc. and Subsidiaries Notes to Consolidated Financial Statements March 31, 2022 (Unaudited) Issuance of Common Stock During the three months ended March 31, 2022, the Company issued 294,375 shares of common stock to directors and employees for stock-based compensation of $0.3 million. The shares were valued using the closing share price of the Company’s common stock on the date of grant, within the range of $0.96 to $1.21 per share. Of these shares, 170,000 were to the Company’s former Chief Executive Officer pursuant to his separation agreement. During 2021, the Company issued 313,442 shares of common stock to directors and employees for stock-based compensation of $0.6 million. The shares were valued using the closing share price of the Company’s common stock on the date of grant, within the range of $1.28 to $2.98 per share. On February 10, 2021 and April 19, 2021, the Company issued 1.2 million shares and 682,669 shares, respectively, of its common stock (the “Shares”) to certain affiliates of Intersect pursuant to an Asset Purchase Agreement dated September 12, 2019 by and between the Company and Intersect in respect of the Azuñia Tequila acquisition at a weighted-average of $4.67 per share and $1.82 per share, respectively. The Shares constitute the “Fixed Shares” due to Intersect pursuant to the Asset Purchase Agreement. On July 30, 2021, the Company entered into Inducement Letters with the holders of the Existing Warrants to exercise their Existing Warrants and purchased 900,000 shares of common stock for gross proceeds of $2.4 million. During 2021, the Company sold 1,297,653 shares of common stock for net proceeds of $3.6 million in at-the-market public placements. In addition, the Company issued 5,000 shares of its common stock upon the exercise of stock options at $1.23 per share. Issuance of Series B Preferred Stock On October 19, 2021, Company entered into a securities purchase agreement (“Purchase Agreement”) with an accredited investor (“Subscriber”) for its purchase of 2.5 million shares (“Preferred Shares”) of Series B Convertible Preferred Stock (“Series B Preferred Stock”) at a purchase price of $1.00 per Preferred Share, which Preferred Shares are convertible into shares of the Company’s common stock pursuant to the terms and conditions set forth in a Certificate of Designation Establishing Series B Preferred Stock of the Company with an initial conversion price of $3.10 per share and 850,000 shares of common stock were reserved. The Series B Preferred Stock accrues dividends at a rate of 6% per annum, payable annually on the last day of December of each year. Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends are payable at the Company’s option either in cash or “in kind” in shares of common stock; provided, however that dividends may only be paid in cash following the fiscal year in which the Company has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $0.5 million. For “in-kind” dividends, holders will receive that number of shares of common stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) the volume weighted average price of the common stock for the 90 trading days immediately preceding a dividend date (“VWAP”). For the year ended December 31, 2021, the Company issued as dividends 10,670 shares of common stock at a VWAP of $2.57 per share. For the three months ended March 31, 2022, the Company accrued $37,500 of preferred dividends. Stock-Based Compensation On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”). Pursuant to the terms of the plan, on January 1, 2022, the number of shares available for grant under the 2016 Plan reset to 5,225,141 shares, equal to 8% of the number of outstanding shares of the Company’s capital stock, calculated on an as-converted basis, on March 31 of the preceding calendar year, and then added to the prior year plan amount. As of March 31, 2022, there were 57,586 options and 1,657,251 restricted stock units (“RSUs”) outstanding under the 2016 Plan, with vesting schedules varying between immediate or three (3) years from the grant date. The Company also issues, from time to time, options that are not registered under a formal option plan. As of March 31, 2022, there were no options outstanding that were not issued under the Plans. Eastside Distilling, Inc. and Subsidiaries Notes to Consolidated Financial Statements March 31, 2022 (Unaudited) A summary of all stock option activity as of and for the three months ended March 31, 2022 is presented below: Summary of Stock Option Activity
|  | # of Options |  |  | Weighted-Average Exercise Price |
Outstanding as of December 31, 2021 |  |  | 57,586 |  |  | $ | 3.29 |
Outstanding as of March 31, 2022 |  |  | 57,586 |  |  | $ | 3.29 |
Exercisable as of March 31, 2022 |  |  | 57,419 |  |  | $ | 3.28 |
On December 7, 2021, the Company issued 5,000 shares of common stock at $1.23 per share upon the exercise of stock options for proceeds of $6,150. The aggregate intrinsic value of options outstanding as of March 31, 2022 was $0. As of March 31, 2022, there were 167 unvested options with an aggregate grant date fair value of $0. The unvested options will vest in accordance with the vesting schedule in each respective option agreement, which varies between immediate and three years from the grant date. The aggregate intrinsic value of unvested options as of March 31, 2022 was $0. During the three months ended March 31, 2022, 4,875 options vested. The Company uses the Black-Scholes valuation model to measure the grant-date fair value of stock options. The grant-date fair value of stock options issued to employees is recognized on a straight-line basis over the requisite service period. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest. To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following:
| ● | Exercise price of the option
| ● | Fair value of the Company’s common stock on the date of grant
| ● | Expected term of the option
| ● | Expected volatility over the expected term of the option
| ● | Risk-free interest rate for the expected term of the option
The calculation includes several assumptions that require management’s judgment. The expected term of the options is calculated using the simplified method described in GAAP. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility is derived from volatility calculated using historical closing prices of common shares of similar entities whose share prices are publicly available for the expected term of the options. The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the options. The Company did not issue any additional options during the three months ended March 31, 2022. For the three months ended March 31, 2022 and 2021, net compensation expense related to stock options was $1,614 and $0.1 million, respectively. As of March 31, 2022, the total compensation expense related to stock options not yet recognized was approximately $0.1 million, which is expected to be recognized over a weighted-average period of approximately 0.6 years. Warrants On March 21, 2022, the Company entered into a promissory note with TQLA to accept a one year loan of $2.0 million with a conditional additional loan of $1.0 million and a conditional term extension of six months. The loan bears interest at 9.25% and carries a commitment fee of 2.5%. In addition, the Company will issue a common stock purchase warrant to TQLA covering the loan amount with a common stock value of $1.20 per share. As of March 31, 2022, the Company drew down $2.0 million of the note payable and issued 1.7 million warrants. The estimated fair value of the warrants of $0.9 million was recorded as debt issuance cost and is being amortized to interest expense over the maturity period of the promissory note, with $22,944 recorded during the three months ended March 31, 2022. The estimated fair value of the new warrants issued was based on a combination of closing market trading price on the date of issuance for the public offering warrants, and the Black-Scholes option-pricing model, using the assumptions below: Schedule of Weighted-average Assumptions for New Warrants
Volatility |  |  | 75 | %
Risk-free interest rate |  |  | 2.3 | %
Expected term (in years) |  |  | 5.0 |
Expected dividend yield |  |  | - |
Fair value of common stock |  | $ | 0.57 |
Eastside Distilling, Inc. and Subsidiaries Notes to Consolidated Financial Statements March 31, 2022 (Unaudited) From April 19, 2021 through May 12, 2021, the Company issued in a private placement, Existing Warrants to purchase up to 900,000 shares of common stock at an exercise price of $2.60 per Warrant Share. The estimated fair value of the warrants of $0.7 million was recorded as debt issuance cost and is being amortized to interest expense over the maturity period of the secured credit facility, with $0.1 million recorded during the three months ended March 31, 2022. On July 30, 2021, the Company entered into Inducement Letters with the holders of the Existing Warrants whereby such holders agreed to exercise for cash their Existing Warrants to purchase the 900,000 Warrant Shares in exchange for the Company’s agreement to issue new warrants (the “New Warrants”) to purchase up to 900,000 shares of common stock (the “New Warrant Shares”). The New Warrants have substantially the same terms as the Existing Warrants, except that the New Warrants have an exercise price of $3.00 per share and are exercisable until August 19, 2026. The Company received gross proceeds of $2.4 million on the exercise of the outstanding warrants, and recognized a deemed dividend of $2.3 million based on the Black Scholes valuation as a result of the higher strike price on the July 2021 issued warrants, which is included in additional paid-in capital in the consolidated balance sheets. A summary of all warrant activity as of and for the three months ended March 31, 2022 is presented below: Summary of Warrants Activity
|  | Warrants |  |  | Weighted-Average Remaining Life (Years) |  |  | Weighted-Average Exercise Price |  |  | Aggregate Intrinsic Value |
Outstanding as of December 31, 2021 |  |  | 1,256,944 |  |  |  | 4.0 |  |  | $ | 3.42 |  |  | $ | - |
Granted |  |  | 1,666,667 |  |  |  | 5.0 |  |  |  | 0.95 |  |  |  | - |
Outstanding as of March 31, 2022 |  |  | 2,923,611 |  |  |  | 4.3 |  |  | $ | 2.05 |  |  | $ | - |

X
- References No definition available. + Details
Name: | us-gaap_EquityAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 16 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 6 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008 + Details
Name: | us-gaap_StockholdersEquityNoteDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration