Company: IPST
Filing Date: 2025-05-07
Form Type: POS AM
Source: 0001641172-25-009076
Chunk: 107

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-05-07
Form: POS AM
Chunk 107
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 Apache projects that were in planning phase into construction     
 phase in preparation for openings in late 2025.                                                    |

Cost of Sales

Cost of sales were approximately $6,276,000 and $5,820,000 for the years ended December 31, 2024 and 2023, respectively, an increase of approximately $456,000, or 7.8%, period over period.

|          | Total         
 Cost of Sales | Years              
 Ended December 31, 
 (rounded           
 to $000’s)         |      2024 |     |   |      2023 |     |   |    Change |   |
|:---------|:--------------|:-------------------|----------:|:----|:--|----------:|:----|:--|----------:|:--|
| Products |               | $                  | 6,173,000 |     | $ | 4,963,000 |     | $ | 1,210,000 |   |
| Services |               |                    |   103,000 |     |   |   857,000 |     |   |  (754,000 | ) |
|          |               | $                  | 6,276,000 |     | $ | 5,820,000 |     | $ |   456,000 |   |

The approximately $1,210,000 increase in net products cost of sales period over period included: an increase in product cost of approximately $875,000 to approximately $3,623,000 for the year ended December 31, 2024, from approximately $2,748,000 for the year ended December 31, 2023 which included an increase in unabsorbed overhead of approximately $335,000 to approximately $2,550,000 as of December 31, 2024 from approximately $2,215,000 as of December 31, 2023. 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 Seriesvolume sales, which is our highest margin item, we will begin to see reductions in our unabsorbed overhead overall