Company: IPST
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001788230-25-000062
Chunk: 101

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 101
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orbed Overhead$733,000 $1,071,000 $(338,000)

Three Months Ended March 31, (rounded to $000’s)Total Gross Margin - Excluding Unabsorbed Overhead20252024ChangeProducts2.8 %1.5 %1.3 %Add Back: Unabsorbed Overhead55.0 %53.7 %1.3 %     Products Gross Margin Excluding Unabsorbed Overhead57.9 %55.3 %2.6 %Services97.7 %82.3 %15.4 %     Total Gross Margin Excluding Unabsorbed Overhead67.1 %62.8 %4.3 %

Gross Margin excluding unabsorbed overhead of 67.1% for the three months ended March 31, 2025 compared to 62.8% for the same period in 2024 is a significant increase, as is the improvement compared to the 55.6% we reported for 

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the full year 2024, indicating our efforts aimed at reducing overhead expenses and focusing on high margin items are starting to bear fruit.

Gross Profit Analysis

Gross Margin numbers above are based on the total sales for the three months ended March 31, 2025 and 2024 as follows:

Total SalesThree Months Ended March 31, (rounded to $000’s)Change20252024Products$838,000 $1,232,000 $(394,000)Services254,000 474,000 (220,000) $1,092,000 $1,706,000 $(614,000)

•Gross margin was approximately 24.9% and 24.0% (67.1% and 62.8%, excluding unabsorbed overhead) for the three months ended March 31, 2025 and 2024, respectively, based upon total net sales of approximately $1,092,000 and $1,706,000, 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