Company: IPST
Filing Date: 2025-12-12
Form Type: S-1/A
Source: 0001213900-25-121277
Chunk: 146

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-12-12
Form: S-1/A
Chunk 146
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 the result of fewer cases being produced as we continued our shift in focus from low margin wholesale products into high margin DtC products. •The decrease to $0 in third -partyproduction costs in 2025 is due to no such activity in the nine months ended September30, 2025. •Our unabsorbed overhead, which is a measure of our capacity relative to our current utilization, increased by approximately $142,000 to approximately $1,796,000 for the nine months ended September30, 2025 compared to approximately $1,654,000 for the nine months ended September30, 2024. The unabsorbed overhead expense indicates our underutilization of current production capacity as we move away from low -margin, high volume products into higher margin products. Unabsorbed overhead includes approximately $2,000 in product inventory write downs and adjustments in the nine months ended September30, 2025 compared to approximately $79,000 in the nine months ended

83

September30, 2024. 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. (See below for our discussion on Gross Margins related to unabsorbed overhead in Non -GAAP Financial Measures). Cost of Sales — Crypto and Related Business Cost of sales were approximately $53,000 and $0 for the nine months ended September 30, 2025 and 2024, respectively, an increase of approximately $53,000 or 100%, period over period. Cost of sales consisted primarily of technology platform expenses, external engineering support, consulting services, and blockchain transaction fees related to crypto operating activities. There were no comparable cost of sales in 2024 as we began recognizing staking and validator revenues and incurring related cost of sales once our validator services was operational on September 18, 2025.

| Cost of Sales – Crypto and Related 
 2025                               |     | Nine Months Ended   
 September 30,       
 (rounded to $000’s) |   2024 |     |   |   |     | Change |        |
|:-----------------------------------|:----|:--------------------|-------:|:----|:--|:--|:----|:-------|-------:|
| Crypto and Related expenses        |     | $                   | 53,000 |     | $ | — |