Company: IPST
Filing Date: 2025-06-04
Form Type: POS AM
Source: 0001641172-25-013501
Chunk: 108

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-06-04
Form: POS AM
Chunk 108
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4 and phase out producing barrels of whiskey for third       
 parties under contract in late 2024. Moving forward, management will focus on higher-margin     
 activities, which we expect will increase our overall margins.                                  |

| ● | Gross                                                                                            
 margin for Products of 2.8% (57.9% excluding unabsorbed overhead) for the three months ended     
 March 31, 2025 compared to 1.5% (55.3% excluding unabsorbed overhead) for the three              
 months ended March 31, 2024 are inclusive of low margin production contracts we ended            
 in 2024, the significant amount of unabsorbed overhead we booked (which drags down gross         
 margin based on the amount of unused capacity in our system), and approximately $2,000 in        
 product inventory write downs in the three months ended March 31, 2025 compared to approximately 
 $79,000 in product inventory write downs and adjustments in the three months ended March         
 31, 2024. As we work to shed some of our excess capacity and overhead, and as we increase        
 our sales of higher margin items, we expect this Products gross margin to increase significantly 
 (See also below our comments related to this in more detail in Non-GAAP Financial Measures).     |

Sales and Marketing Expenses

Sales and marketing expenses were approximately $1,315,000 for the three months ended March 31, 2025 compared to approximately $1,190,000 for the three months ended March 31, 2024. This approximately $125,000 increase included:

| Sales and Marketing                        
 Expense                                    |     | Three               
 Months Ended  March 
 31,  (rounded       
 to $000’s)          
 2025                |           |     | 2024 |           |     | Change |         |   |
|:-------------------------------------------|:----|:--------------------|----------:|:----|:-----|----------:|:----|:-------|--------:|:--|
| Personnel - Cash Wages and Related Expense |     | $                   |   729,000 |     | $    |   645,000 |     | $      |  84,000 |   |
| Tasting Room                               |     |                     |    22,000 |     |      |    34,000 |     |        | (12,000 | ) |
| Leases and Rentals                         |     |                     |