Company: IPST
Filing Date: 2025-08-26
Form Type: S-1
Source: 0001213900-25-080839
Chunk: 156

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-08-26
Form: S-1
Chunk 156
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2,215,000 as of December 31, 2023. We made the choice to move our sales focus onto higher margin products and away from low margin well -basedproducts, resulting in fewer cases sold in 2024 relative to 2023. Fewer cases of production carrying the same amount of overhead increases the unabsorbed overhead, and the associated cost per case, using standard cost accounting methodologies. Assuming all other factors remain steady in the business, as we work to grow our Salute Seriesvolume sales, which is our highest margin item, we will begin to see reductions in our unabsorbed overhead overall and per case, leading to higher gross margins. This is purely a function of how much excess capacity we have in our production system at the time while we transition from low margin, but high volume production to higher margin products. Services cost of sales decreased by approximately $754,000 from 2023 to 2024 primarily resulting from us ending a low -marginthird party production contract for another brand and the wind down of barrel production for third parties.

| Components of Products Cost of Sales 
 2024                                 |     | Years Ended December 31, 
 (rounded to $000’s)      |      2023 |     |   |    Change |     |   |           |
|:-------------------------------------|:----|:-------------------------|----------:|:----|:--|----------:|:----|:--|----------:|
| Product Cost (from inventory)        |     | $                        | 3,623,000 |     | $ | 2,748,000 |     | $ |   875,000 |
| Overhead – Unabsorbed                |     |                          | 2,550,000 |     |   | 2,215,000 |     |   |   335,000 |
|                                      |     | $                        | 6,173,000 |     | $ | 4,963,000 |     | $ | 1,210,000 |

93

| Components of Products Cost of Sales |     |  Years Ended 
 December 31, |      |     |       |        |     |      |    |
| 2024                                 |     |              | 2023 |     |       | Change |     |      |    |
| Product Cost (from inventory)        |     |         58.7 |    % |     |  55.4 | %