Company: IPST
Filing Date: 2025-05-07
Form Type: POS AM
Source: 0001641172-25-009076
Chunk: 109

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-05-07
Form: POS AM
Chunk 109
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   |      2023 |     |   |     Change |   |
|:---------|:------------|:-------------------|----------:|:----|:--|----------:|:----|:--|-----------:|:--|
| Products |             | $                  | 6,615,000 |     | $ | 5,136,000 |     | $ |  1,479,000 |   |
| Services |             |                    | 1,787,000 |     |   | 2,835,000 |     |   | (1,048,000 | ) |
|          |             | $                  | 8,402,000 |     | $ | 7,971,000 |     | $ |    431,000 |   |

| ● | Gross                                                                                              
 margin was approximately 25.3% and 27.0% for the years ended December 31, 2024 and 2023,           
 respectively, based upon total net sales of approximately $8,402,000 and $7,971,000, respectively. 
 As we add more Special Operations Salute 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 high-margin items, rather than 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, which should increase our overall margins. Finally, our third-party 
 production contracts were very low margin for us, which is why management made the decision        
 to end those contracts at the end of January 2024. Moving forward, management will focus           
 on higher-margin activities, which we expect will increase our overall margins.                    |

| 64 |

| ● | Gross                                                                                          
 margin for Products of 6.7% are inclusive of low margin production contracts we ended in       
 2024, the significant amount of unabsorbed overhead we booked (which drags down gross margin   
 based on the amount of unused capacity in our system), and approximately $211,000 in product   
 inventory write downs and adjustments in 2024 compared to a positive inventory adjustment      
 in 2023 of approximately $21,000. As