Company: IPST
Filing Date: 2025-05-07
Form Type: POS AM
Source: 0001641172-25-009076
Chunk: 112

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-05-07
Form: POS AM
Chunk 112
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 our internal annual operating budget, and (iii) to evaluate the performance and effectiveness of operational strategies.

EBITDA and Adjusted EBITDA:EBITDA represents GAAP net loss adjusted for (i) depreciation of property and equipment; (ii) interest expense; (iii) share-based compensation; and (iv) provision for income taxes. Adjusted EBITDA represents EBITDA adjusted for the recognition of share-based compensation, non recurring gains and losses; and other one-time items. We believe that EBITDA and adjusted EBITDA help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we include in GAAP operating loss. These non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of this non-GAAP financial measure compared to the closest comparable GAAP measure. Some of these limitations are that:

| ● | Adjusted                                                                                      
 Gross Profit, EBITDA and adjusted EBITDA do not reflect our cash expenditures, or future      
 requirements for capital expenditures or contractual commitments;                             |
| ● | Adjusted                                                                                      
 Gross Profit, EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements      
 for, our working capital needs;                                                               |
| ● | Adjusted                                                                                      
 Gross Profit, EBITDA and adjusted EBITDA exclude certain recurring, non-cash charges such     
 as depreciation of property and equipment and, although this is a non-cash charge, the assets 
 being depreciated may have to be replaced in the future;                                      |
| ● | Adjusted                                                                                      
 Gross Profit, EBITDA and adjusted EBITDA exclude income tax benefit (expense); and            |
| ● | Other                                                                                         
 companies in our industry may calculate non-GAAP financial measures differently than we do,   
 limiting their usefulness as comparative measures.                                            |

The following table presents a reconciliation of GAAP Gross Profit to Adjusted Gross Profit by removing unabsorbed overhead for the years ended December 31, 2024 and 2023. Adjusted Gross Margin excluding unabsorbed overhead is the percentage obtained by dividing Adjusted Gross Profit after removing unabsorbed overhead by our GAAP total net sales. It is an analysis that assumes all excess production capacity and space has been used in production and generating revenue, assigning all such overhead costs across all production and revenue. It is especially important in forecasting to larger entities that may