Company: IPST
Filing Date: 2025-04-28
Form Type: 10-K
Source: 0001788230-25-000048
Chunk: 153

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-04-28
Form: 10-K
Item: Item 7
Chunk 153
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 moving forward.

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•Our unabsorbed overhead, which is a measure of our capacity relative to our current utilization, increased by approximately $338,000 to approximately $2,550,000 for the year ended December 31, 2024 compared to approximately $2,212,000 for the year ended December 31, 2023. The increase includes non-cash share-based compensation expenses related to RSU grant awards recognized in 2024 totaling approximately $178,000 for production employees compared to no such award recognition in 2023. The additional remaining unabsorbed overhead expense indicates an increase in our underutilization of current production capacity as we moved away from low-margin, high volume products into higher margin products. We expect that our unabsorbed overhead will decrease over time as our production volumes increase with increased sales, as our overhead expenses will be more fully allocated to increased levels of production. (See below our discussion on Gross Margins related to unabsorbed overhead in Non-GAAP Financial Measures).

•Cost of Products Sales includes approximately $211,000 in product inventory write downs and adjustments in 2024 compared to a positive inventory adjustment of approximately $21,000 in 2023. 

Gross Profit

Gross profit was approximately $2,126,000 and $2,151,000 for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $25,000, or 1.2%, period over period, and included:

Total Gross ProfitYears Ended December 31, (rounded to $000’s)Change20242023Products$442,000 $173,000 $269,000 Services1,684,000 1,978,000 (294,000) $2,126,000 $2,151,000 $(25,000)

Total Gross MarginYears Ended December 31,Change20242023Products6.7 %3.4 %3.3 %Services94.2 %69.8 %24.5 % 25.3 %27.0 %(1.7)%

Total SalesYears Ended December 31, (rounded to $000’s)Change20242023Products$6,615,000 $5,136,000 $1,479,000 Services1,787,000 2,835,000 (1,048,000) $8