Company: IPST
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001788230-25-000175
Chunk: 293

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Part II, Item 8
Chunk 293
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 $000’s)Cost of Sales - Crypto and Related20252024ChangeCrypto and Related expenses $53,000 $— $53,000 $53,000 $— $53,000 

Gross Profit - Spirits Business

Gross profit was approximately $476,000 and $1,786,000 for the nine months ended September 30, 2025 and 2024, respectively, a decrease of approximately $1,310,000, or 73.3%, period over period, and included:

Total Gross Profit - Spirits BusinessNine Months Ended September 30,(rounded to $000’s)Change20252024Products$(257,000)$622,000 $(879,000)Services733,000 1,164,000 (431,000) $476,000 $1,786,000 $(1,310,000)

Total Gross Margin - Spirits BusinessNine Months Ended September 30,Change20252024Products(9.5)%15.4 %(24.8)%Services94.0 %92.5 %1.5 % 13.6 %33.6 %(20.0)%

It is important to note that the approximately $(257,000) in Products Gross Profits, and the resulting low Gross Margin of (9.5)%, is after layering in the approximately $1,796,000 in unabsorbed overhead costs. As we move to third party production in 2026 and we move into 2026 with a significantly reduced headcount, we expect unabsorbed overhead to be greatly reduced on a full year basis in 2026.

Gross Profit - Analysis of Exclusion of Unabsorbed Overhead - Whiskey Business

To provide a more detailed view to our performance for products and services based purely on the direct input costs we remove unabsorbed overhead expenses for the following analysis. Gross profit excluding unabsorbed overhead was 

72

approximately $1,539,000 and $2,276,000 for the nine months ended September 30, 2025 and 2024, respectively, a decrease of approximately $737,000, or 32.4%, period over period, and included:

Nine Months Ended September 30,(rounded to $000’s)Total Gross Profit - Excluding Unabsorbed Overhead - Spirits Business20252024ChangeProducts$(257,000)$622,000 $(