Company: IPST
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001788230-25-000175
Chunk: 295

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Part II, Item 8
Chunk 295
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 net sales of approximately $3,494,000 and $5,310,000, respectively. As we add more Special Operations Salute sales via online channels, and look to restart digital advertising 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. As we move to third party production in 2026 and we move into 2026 with a significantly reduced headcount, we expect unabsorbed overhead to be greatly reduced on a full year basis in 2026 and overall gross profit and gross margin to improve.

•Gross margin for Products of (9.5)% (56.7% excluding unabsorbed overhead) for the nine months ended September 30, 2025 compared to 15.4% (56.2% excluding unabsorbed overhead) for the nine months ended September 30, 2024 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 $185,000 in product inventory write downs in the nine months ended September 30, 2025 compared to approximately $102,000 in product inventory write downs and adjustments in 

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the nine months ended September 30, 2024. As we work to shed some of our excess capacity and overhead, and as we increase our sales of higher margin items, we expect this Products gross margin to increase significantly (See also below our comments related to this in more detail in Non-GAAP Financial Measures).

Gross Profit — Crypto and Related Business

Gross profit was approximately $1,855,000 and $0 for the nine months ended September 30, 2025 and 2024, respectively, an increase of approximately $1,855,000, or 100%, period over period, and included:

Total Gross Profit - Crypto and RelatedNine Months Ended September 30,Change20252024Crypto and Related$1,855,000 $— $1,855,000  $1,855,000 $— $1,855,000 

Total Gross Margin - Crypto and RelatedNine Months Ended September 30,Change20252024Crypto and Related97.2 %— %97.2 %