Company: IPST
Filing Date: 2025-08-15
Form Type: 424B3
Source: 0001641172-25-024441
Chunk: 96

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-08-15
Form: 424B3
Chunk 96
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 awards recognized in the six months ended June 30, 2025 for production employees compared to no such award recognition in 2024.

|          | Cost of Sales | Six                                       
 Months Ended June 30, (rounded to $000’s) |      2025 |     |   |      2024 |     |   | Change   |   |
|:---------|:--------------|:------------------------------------------|----------:|:----|:--|----------:|:----|:--|:---------|:--|
| Products |               | $                                         | 1,872,000 |     | $ | 2,311,000 |     | $ | (439,000 | ) |
| Services |               |                                           |    18,000 |     |   |    81,000 |     |   | (63,000  | ) |
|          |               | $                                         | 1,890,000 |     | $ | 2,392,000 |     | $ | (502,000 | ) |

The approximately $439,000 decrease in net products cost of sales period over period included: a decrease in product cost of approximately $310,000 to approximately $829,000 for the six months ended June 30, 2025, from approximately $1,139,000 for the six months ended June 30, 2024, and a decrease in unabsorbed overhead of approximately $129,000 to approximately $1,043,000 as of June 30, 2025 from approximately $1,172,000 as of June 30, 2024. We made the choice to move our sales focus onto higher margin products and away from low margin well-based products, resulting in fewer cases sold in 2024 relative to 2023. Fewer cases of production carrying the same amount of overhead increases the unabsorbed overhead, and the associated cost per case, using standard cost accounting methodologies. Assuming all other factors remain steady in the business, as we work to grow our Salute Series volume sales, which is our highest margin item, we will begin to see reductions in our unabsorbed overhead overall and per case, leading to higher gross margins. This is purely a function of how much excess capacity we have in our production system at the time while we transition from low margin, but high volume production to higher margin products.

| 58 |

Services cost of sales decreased by approximately $63,000 to approximately