PORTLAND, OR--(Marketwired - May 16, 2016) - Eastside Distilling, Inc. (OTCQB: ESDI) ("Eastside" or the "Company"), a producer of award-winning master-crafted spirits, reported financial results for the first quarter ended March 31, 2016.

First Quarter 2016 Financial Highlights vs. Year-Ago Quarter

  • Revenues up 46% to $621,882

  • Gross profit up 93% to $207,305

  • Net loss totaled $1,014,679 versus a loss of $831,018 in Q1 2015

  • Adjusted EBITDA totaled a loss of $631,941 in Q1 2016 compared to a loss of $845,629 in Q1 2015

First and Second Quarter 2016 Operational Highlights

  • Total case shipments increased 79% to 3,148 cases in Q1 2016 from 1,754 cases in Q1 2015. Initial case shipments in Q2 2016 are off to a very strong start.

  • Barrel Hitch American Whiskey and its companion Barrel Hitch American "Oak Whiskey" introduced in July of 2015 are now 3rd in combined sales behind Burnside Bourbon and Portland Potato Vodka, in a spirits portfolio comprised of 11 brands including Below Deck Rums, and a distinctive line of infused whiskeys.

  • Extended national product rollout with Blackheath Beverage Group, which has a track record of helping independent brands like Eastside establish a nationwide presence.

  • Expanded national roll out distribution network to 16 states (and further expanded to 20 states in Q2 2016) with other states in the development stage.

  • Expanded marketing relationship with Comcast SportsNet Northwest, the home of the Trail Blazers, for new broadcast marketing campaign.

  • Showcased the Company's award-winning spirits at the 27th Annual ROTH Conference, which was attended by more 6,000 members of the financial community.

  • In April 2016, the Company completed two separate financings, including initial closings on its Series A preferred offering and a convertible note bridge financing, totaling net cash proceeds of $642,000 to provide working capital, purchase inventory and support growth.

First Quarter 2016 Financial Results

Revenues in Q1 2016 increased 46% to $621,882 compared to $424,910 in Q1 2015. The increase in revenue is primarily attributable to expanded sales into new states along with continued strong growth in the Oregon market.

Gross margins in Q1 2016 increased to 33% from 25.2% in Q1 2015. The increased gross margin is primarily attributable to the sales mix as well as much better spreading of the fixed facility costs due to the higher sales volumes.

Net loss in Q1 2016 totaled $1,014,679 or ($0.02) per diluted share, compared to net loss of $831,018 or ($0.02) per diluted share in Q1 2015. The wider net loss is primarily due to increases in marketing and professional fees.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and change in fair value of derivative liabilities) for Q1 2016 totaled a loss of $631,941 versus a loss of $845,629 in the year-ago period (see discussion about the Company's presentation of adjusted EBITDA, a non-GAAP term, and its reconciliation to the nearest GAAP metric, below).

Cash at March 31, 2016, decreased to $12,000 compared to $368,000 at March 31, 2015, with the decrease resulting from cash used for operations. In April 2016, the Company conducting closings on two separate financings, raising net cash proceeds of $642,000.

Further details about the Company's results in fiscal first quarter 2016 are available in its quarterly report on Form 10-Q, which is available for download from the investor relations section of the Company's website at www.eastsidedistilling.com.

Management Commentary
"While the first quarter is typically our slowest quarter of the year, we generated 46% sales growth over the same year-ago period as we continued to build upon the momentum of our record holiday sales both at our Portland based retail locations but also across our expanding national distribution network," said the Company's CEO, Steven Earles.

"We are more convinced than ever that we are in the right market at the right time. Sales of distilled spirits in the U.S. climbed 14% over a five-year period to a record 210 million cases sold in 2014. According to The Distilled Spirits Council, whiskey sales have been the number one fastest growing category in the distilled spirits segment in the United States, rising 4 percent in 2014 to $23.1 billion from the year earlier. This increase was driven by strong growth in 'brown' spirits particularly, Bourbon and Tennessee whiskey, where volumes rose by 7.4 percent. Furthermore, sales of 'craft' American whiskey and Bourbon brands, grew 41.6% in 2014, versus a 2.8% overall growth for the big distillers.

"As the research confirms, whiskey is the fastest growing segment of the spirits market and we see significant opportunity to grow our sales within this expanding category. Additionally, as a craft producer we believe we are particularly well positioned to leverage the momentum and appeal in this category, as evidenced by our consistent quarter over quarter double digit growth, to further drive sales as we expand nationally.

As reported in Q3 last year, we launched our newest brand, Barrel Hitch American Whiskey and its companion Barrel Hitch 'Oregon Oak' American Whiskey to capitalize on these strong trends. Barrel Hitch was carefully created to compliment our already highly regarded Burnside Bourbon and Burnside 'Oregon Oaked' Bourbon as well as our line-up of award winning flavored whiskies, Marionberry and Cherry Bomb. A lighter whiskey bottled at 80 proof, Barrel Hitch was designed to be a smooth and approachable spirit at an affordable price that would have appeal to a wide cross section of whiskey enthusiasts.

We are pleased to report that since the launch of these two award winning spirits they've combined to become our number 3 top seller after our Burnside Bourbon and Portland Potato Vodka and the demand momentum for these brands continues to grow.

"A key aspect of our national roll-out campaign is to insure production efficiency and quality control remains intact as demand increases. That said, we are pleased to report that our operations led by Master Distiller, Mel Heim continues to earn high marks for production quality and efficiency and we believe we are well structured to meet increased demand as it develops.

"Our relationship with Blackheath Beverage Group, has been instrumental in assisting us in implementing a comprehensive national sales and distribution strategy. It is a strategy we remain committed to as we believe strong national distribution is essential to creating both short and long term sales success.

"We are also committed to expanding our 'digital presence' through various social media channels including, Facebook, Twitter, Instagram and Pinterest. These channels support building engagement with a younger demographic, as well as being a cost efficient way to reach a broad audience supporting sales as well as establishing a broader brand presence nationally.

"There is tremendous momentum in the spirits category and we believe we are well positioned to continue to drive sales growth. We see opportunities to expand sales in the markets we are now in as well as to further develop our presence both nationally and internationally. We are also pleased to have completed the recent financings to help support our continued growth and drive toward bringing the company profitable," concluded Mr. Earles.

2016 Q2 Preview

Management is pleased to report that case sales volume for the month of April has been very strong, further reflecting sales traction in existing markets and additional sales from the introduction of our products to a number of new states. As reported in April 2016, the Company is now selling in 20 states up from 16 states in Q1.

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 symbol OTCQB: ESDI. For more information visit: www.eastsidedistilling.com

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 ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission on April 13, 2016. Examples of forward-looking statements in this release may include statements related to our strategic focus, product verticals, anticipated revenue and profitability. The Company assumes no obligation to update the cautionary information in this release.

Fiscal First Quarter 2016 Financial Summary Tables
 The following financial information should be read in conjunction with the unaudited financial statements and accompanying notes filed by the company with the Securities and Exchange Commission on May 12, 2016 in its Annual Report on Form 10-Q for the period ended March 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.

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 net income (loss), plus interest expense, provision for income taxes, depreciation and amortization, loss from discontinued operations (goodwill impairment), and stock-based compensation. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

       
   Three Months Ended
March 31,		  
   2016    2015  
Net (loss) income   $ (1,014,679 )   $ (831,018 )
  Add:                
    Interest expense     22,981       2,900  
    Gain on Spin-off             (52,890 )
    Provision for income taxes                
    Depreciation and amortization     164,818       4,379  
Adjusted EBITDA   $ (826,880 )   $ (876,629 )
  Stock-based compensation     105,839       31,000  
  Stock issued for services     89,100          
EBITDA less stock-based expense  $(631,941)  $(845,629)
                 
                 
   
Eastside Distilling, Inc. and Subsidiary  
Condensed Consolidated Balance Sheets  
March 31, 2016 and December 31, 2015  
             
   March 31,
2016
(unaudited)		    December 31,
2015
(1)		  
Assets                
Current assets:                
  Cash   $ 12,800     $ 141,317  
  Trade receivables     183,180       142,206  
  Inventories     622,468       683,824  
  Prepaid expenses     99,755       163,506  
Total current assets     918,203       1,130,853  
Property and equipment - net     113,382       112,005  
Other assets     48,000       49,000  
Total Assets   $ 1,079,585     $ 1,291,858  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
  Accounts payable   $ 1,292,720     $ 1,300,532  
  Accrued liabilities     868,553       563,814  
  Deferred revenue     2,108       727  
  Current portion of note payable     4,204       4,098  
  Related party note payable     12,500       12,500  
  Convertible notes payable - net of debt discount     467,125       455,958  
Total current liabilities     2,647,210       2,337,629  
Preferred stock deposit     151,200       -  
Note payable - less current portion     16,450       17,842  
Total liabilities     2,814,860       2,355,471  
Commitments and contingencies (Note 10)                
Stockholders' equity:                
  Preferred stock, $0.0001 par value; 100,000,000 shares authorized; no shares issued and outstanding at March 31, 2016 and December 31, 2015                
  Common stock, $0.0001 par value; 900,000,000 shares authorized; 46,726,000 and 46,195,000 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively                
               
    4,673       4,620  
  Additional paid-in capital     6,836,482       6,493,518  
  Accumulated deficit     (8,576,430 )     (7,561,751 )
Total stockholders' equity     (1,735,275 )     (1,063,613 )
Total Liabilities and Stockholders' Equity   $ 1,079,585     $ 1,291,858  
(1) Derived from the Company's December 31, 2015 audited financial statements                
                 
                 
   
Eastside Distilling, Inc. and Subsidiary  
Condensed Consolidated Statements of Operations  
For the three months ended March 31, 2016 and 2015  
(unaudited)  
             
   Three Months Ended  
   March 30,
2016		    March 30,
2015		  
Sales   $ 621,882     $ 424,910  
Less excise taxes     158,408       99,840  
  Net sales     463,474       325,070  
Cost of sales     256,169       217,862  
  Gross profit     207,305       107,208  
Selling, general, and administrative expenses     1,050,926       987,163  
Income (loss) from operations     (843,621 )     (879,955 )
Other income (expense) - net     (171,058 )     48,937  
Income (loss) before income taxes     (1,014,679 )     (831,018 )
Provision for income taxes     -       -  
Net income (loss)   $ (1,014,679 )   $ (831,018 )
                 
                 
Basic and diluted net income (loss) per common share   $ (0.02 )   $ (0.02 )
                 
Basic and diluted weighted average common shares outstanding     46,568,451       45,512,500  
                 

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