Company: IPST
Filing Date: 2025-10-16
Form Type: S-1/A
Source: 0001213900-25-099309
Chunk: 153

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-10-16
Form: S-1/A
Chunk 153
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 |            |   |
|:------------|:----|:--------------------------|----------:|:----|:--|----------:|:----|:--|:-----------|:--|
| Products    |     | $                         | 1,899,000 |     | $ | 2,676,000 |     | $ | (777,000   | ) |
| Services    |     |                           |   515,000 |     |   |   873,000 |     |   | (358,000   | ) |
|             |     | $                         | 2,414,000 |     | $ | 3,549,000 |     | $ | (1,135,000 | ) |

•Gross margin was approximately 20.7% and 32.6% (63.9% and 65.6%, excluding unabsorbed overhead) for the six months ended June30, 2025 and 2024, respectively, based upon total net sales of approximately $2,414,000 and $3,549,000, respectively. As we add more Special Operations Salutesales 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 high -marginitems, rather than any low -marginwell 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, which should increase our overall margins. Finally, our third -partyproduction contracts were very low margin for us, which is why management made the decision to end those contracts at the end of January 2024 and phase out producing barrels of whiskey for third parties under contract in late 2024. Moving forward, management will focus on higher -marginactivities, which we expect will increase our overall margins.

88

•Gross margin for Products of 0.1% (55.0% excluding unabsorbed overhead) for the six months ended June30, 2025 compared to 13.6% (57.4% excluding unabsorbed overhead) for the six months ended June30, 2024 are inclusive of low margin production contracts we ended in 2024, the significant amount of unabsorbed overhead we