Company: IPST
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001788230-25-000175
Chunk: 359

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Part I, Item 2
Chunk 359
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 important to note that there were no comparable cost of sales in 2024 as we began recognizing staking and validator revenues and incurring related cost of sales upon beginning our validator service on September 18, 2025.

Gross Profit Analysis — Crypto and Related Business

Gross Margin numbers above are based on the total revenues for the nine months ended September 30, 2025 and 2024 as follows:

Total Revenues - Crypto and RelatedNine Months Ended September 30,(rounded to $000’s)Change20252024Blockchain rewards / Validator business $1,909,000 $— $1,909,000  $1,909,000 $— $1,909,000 

•Gross margin was approximately 97.2% and 0% for the nine months ended September 30, 2025 and 2024, respectively, based upon total net revenues of approximately $1,855,000 and $0, respectively.

Sales and Marketing Expenses

Sales and marketing expenses were approximately $4,310,000 for the nine months ended September 30, 2025 compared to approximately $3,760,000 for the nine months ended September 30, 2024. This approximately $550,000 increase included:

Sales and Marketing ExpenseNine Months Ended September 30, (rounded to $000’s)Change20252024Personnel - Cash Wages and Related Expense$2,159,000 $2,074,000 $85,000 Personnel - Share-Based Compensation647,000 — 647,000 Tasting Room63,000 109,000 (46,000)Leases and Rentals653,000 542,000 111,000 Sales and Marketing Expenses243,000 356,000 (113,000)Other545,000 679,000 (134,000)$4,310,000 $3,760,000 $550,000 

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•The approximately $647,000 of personnel - share-based compensation in the nine months ended September 30, 2025, for which there was no such expense in the comparable nine months ended September 30, 2024 included; $511,000 grant of matching non-cash RSU compensation related to deferred compensation. (See Notes 2 and 7 of our condensed consolidated financial statements for the Three and Nine Month Periods ended September 30, 2025 and 202