Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 125

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 125
---
)      |      2023 |     |   |      2022 |     |   | Change   |   |
|:---------|:------------|:-------------------------|----------:|:----|:--|----------:|:----|:--|:---------|:--|
| Products |             | $                        | 5,136,000 |     | $ | 5,229,000 |     | $ | (93,000  | ) |
| Services |             |                          | 2,835,000 |     |   | 3,081,000 |     |   | (246,000 | ) |
|          |             | $                        | 7,971,000 |     | $ | 8,310,000 |     | $ | (339,000 | ) |

| ● | Gross margin was approximately 27.0% and 26.6% for the years                                                                                   
 ended December 31, 2023, and 2022, respectively, based upon total net sales of approximately $7,971,000 and $8,310,000, respectively.          
 As we add more Salute Series sales via online channels, we expect to see our overall gross margin increase. Likewise, as we add                
 more states into our wholesale distribution channel focused solely on higher margin items, and not including any low margin well vodka         
 in those states, we expect to see additional margin increases. Also, as we add more cases of production through our system, we expect          
 the unabsorbed overhead costs will be reduced as each additive case of new sales volume begins to carry incremental overhead costs as          
 part of the normal manufacturing cost accounting. Finally, the third-party production contracts are very low margin for us, which is           
 why management made the decisions to end those contracts at the end of January 2024. Moving forward, higher margin activities are management’s 
 focus, and we expect overall margins to increase.                                                                                              |

83 Sales and Marketing Expenses Sales and marketing expenses were approximately $5,938,000 for the year ended December 31, 2023 compared to approximately $6,441,000 for the year ended December 31, 2022. This approximately $503,000 decrease included:

| Sales and Marketing Expense  |     | Years Ended December 31, 
 (rounded to $000’s)      
 2023                     |           |     | 2022 |           |     | Change |          |   |
|