Company: IPST
Filing Date: 2025-04-28
Form Type: 10-K
Source: 0001788230-25-000048
Chunk: 149

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-04-28
Form: 10-K
Item: Item 7
Chunk 149
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 Thinking Tree Spirits ("TTS") in February 2024 (and the resulting increase from sales of TTS products and revenue from the acquired TTS tasting room in Eugene, Oregon),

•a decrease of approximately $1,048,000, or 37.0%, in services sales, to approximately $1,787,000 for the year ended December 31, 2024 compared to approximately $2,835,000 for the year ended December 31, 2023 resulting primarily from the termination of a low-margin third-party contract in January 2024.

We note that total sales for the year ended December 31, 2024 would have been higher than total sales in the year ended December 31, 2023 had we not closed our Ballard, Washington tasting room in March of 2023 in connection with our decision not to renew the lease for that facility, which we believe demonstrates that 2023 was a year of stabilization in anticipation of new product launches and new wholesale markets opening in 2024 to begin our growth.

The approximately $1,479,000 net increase in products sales, period over period, included:

Products SalesYears Ended December 31, (rounded to $000’s) 20242023ChangeWholesale$1,596,000 $1,658,000 $(62,000)Retail3,899,000 3,183,000 716,000 Third Party1,120,000 295,000 825,000  $6,615,000 $5,136,000 $1,479,000 

•The approximately $716,000 increase in retail products sales was primarily a result of the launch of our Special Operations Salute line in November 2023 and is an important part of our strategy as our margins on sales direct to consumers are highest for us. The year over year change also included lesser impacts as a result of: reduced sales following the closure of our Ballard, Washington retail location in late March 2023 (which generated almost a full quarter of retail tasting room revenue in early 2023); offset by increased sales as a result of our 

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acquisition of TTS in February 2024 (and the resulting increase from sales of TTS products and revenue from the acquired TTS tasting room in Eugene, Oregon). 

•The approximately $825,000 increase in third-party products sales was primarily a result of our production of bulk whiskey produced and barreled under contract for third