Business Context and Reporting Period
This Form 8-K is filed by Eastside Distilling, Inc. (formerly Eurocan Holdings, Ltd.) on December 16, 2014. The report discloses a change in the company's independent registered public accounting firm. The registrant is incorporated in Nevada and operates from Portland, Oregon.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, or debt figures for the current period. However, it references historical financial conditions reported by the former accountant, MaloneBailey, LLP, for the fiscal years ended December 31, 2012 and 2013:
- Operating Performance: The company suffered losses from operations.
- Liquidity: The company had a working capital deficit.
- Going Concern: The aforementioned conditions raised substantial doubt about the company's ability to continue as a going concern.
Material Changes
The primary material change reported is the dismissal of MaloneBailey, LLP as the independent accountant and the engagement of Burr Pilger Mayer, Inc. on December 16, 2014. The filing explicitly states there were no disagreements with the former accountant regarding accounting principles, practices, or audit scope. The change was approved by the Board of Directors.
Outlook, Risks, and Contingencies
The filing highlights significant risks and internal control deficiencies identified in prior years:
- Going Concern Risk: Substantial doubt exists regarding the company's ability to continue as a going concern due to operating losses and working capital deficits.
- Internal Control Weaknesses: Management identified material weaknesses in internal control over financial reporting for 2012 and 2013. These included:
- Weaknesses in procedures for control evaluation.
- Lack of an audit committee.
- Insufficient documentation of review procedures.
- Insufficient information technology procedures.
- Disclosure Controls: Disclosure controls and procedures were reported as ineffective for the fiscal years ended December 31, 2012 and 2013.
Investor Verification Checklist
- Verify the letter from MaloneBailey, LLP (Exhibit 16.1) to confirm no undisclosed disagreements regarding accounting or auditing matters.
- Review the most recent Form 10-K to assess the current status of the working capital deficit and going concern qualification.
- Confirm whether the material weaknesses in internal controls (lack of audit committee, IT procedures) have been remediated since 2013.
- Check for any subsequent filings regarding the company's liquidity position and ability to fund ongoing operations.