Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 133

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 133
---
 in consulting revenues from TBN-related services as we have signed more tribes to join the TBN program, in 
 which case the upfront consulting fees prior to opening will offset our costs associated with getting such locations up and running;   
 and increases in royalties primarily from the TBN product sales.                                                                       |

<div align='center'>81</div>

Cost of Sales

Cost of sales were approximately $5,820,000 and
$6,097,000 for the years ended December 31, 2023 and 2022, respectively, a decrease of approximately $277,000, or 4.5%, period over period.
The reduction in cost of sales resulted primarily from an approximately $282,000 decrease in products cost of sales, to approximately
$4,963,000 for the year ended December 31, 2023, compared approximately $5,245,000 for the year ended December 31, 2022.

|          | Total Cost of Sales | Years Ended  December 31, 
 (rounded to $000’s)       |      2023 |     |   |      2022 |     |   |   Change |   |
|:---------|:--------------------|:--------------------------|----------:|:----|:--|----------:|:----|:--|---------:|:--|
| Products |                     | $                         | 4,963,000 |     | $ | 5,245,000 |     | $ | (282,000 | ) |
| Services |                     |                           |   857,000 |     |   |   852,000 |     |   |    5,000 |   |
|          |                     | $                         | 5,820,000 |     | $ | 6,097,000 |     | $ | (277,000 | ) |

The approximately $282,000 decrease in net products
cost of sales period over period included: an increase in product cost of approximately $191,000 to approximately $2,751,000 for the year
ended 2023, from approximately $2,560,000 for the year ended 2022 and a decrease in unabsorbed overhead of approximately $473,000 to
approximately $2,212,000 as of December 31, 2023 from approximately $2,685,000 as of December 31, 2022. We began analyzing unabsorbed
overhead as a separate component of