Company: IPST
Filing Date: 2025-08-15
Form Type: 424B3
Source: 0001641172-25-024441
Chunk: 92

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-08-15
Form: 424B3
Chunk 92
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 decrease to $0 in third-party production costs is due to no such activity in the three months ended June 30, 2025.                       |
| ● | Our                                                                                                                                      
 unabsorbed overhead, which is a measure of our capacity relative to our current utilization, increased by approximately $96,000 to       
 approximately $607,000 for the three months ended June 30, 2025 compared to approximately $511,000 for the three months ended June       
 30, 2024. The unabsorbed overhead expense indicates our underutilization of current production capacity as we move away from low-margin, 
 high volume products into higher margin products. Our goal continues to be the reduction of unabsorbed overhead over time as our         
 production volumes increase with increased sales and as we reduce overhead costs associated with excess production capacity, warehouse   
 space and other real estate. The combined efforts of increasing high margin product sales and reducing general overhead costs are        
 geared toward reducing our overhead expenses to have our remaining overhead right-sized to our strategy of focusing on producing         
 and selling high margin super premium items. (See below for our discussion on Gross Margins related to unabsorbed overhead in Non-GAAP   
 Financial Measures).                                                                                                                     |

Gross Profit

Gross profit was approximately $225,000 and $745,000 for the three months ended June 30, 2025 and 2024, respectively, a decrease of approximately $520,000, or 70%, period over period, and included:

| Total Gross Profit |     | Three                                     
 Months Ended June 30, (rounded to $000’s) 
 2025                                      |         |   |     |   |    2024 |     |   | Change   |   |
|:-------------------|:----|:------------------------------------------|--------:|:--|:----|:--|--------:|:----|:--|:---------|:--|
| Products           |     | $                                         | (24,000 | ) |     | $ | 343,000 |     | $ | (367,000 | ) |
| Services           |     |                                           | 249,000 |   |     |   | 402,000 |     |   | (153,000 | ) |
|                    |     | $                                         | 225,000 |   |     | $ | 745,000 |     | $ | (520,000 | ) |

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