Company: IPST
Filing Date: 2025-06-04
Form Type: POS AM
Source: 0001641172-25-013501
Chunk: 106

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-06-04
Form: POS AM
Chunk 106
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| ● | Our                                                                                            
 unabsorbed overhead, which is a measure of our capacity relative to our current utilization,   
 decreased by approximately $201,000 to approximately $461,000 for the three months ended       
 March 31, 2025 compared to approximately $662,000 for the three months ended March 31,         
 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.    
 Our goal continues to be the reduction of unabsorbed overhead over time as our production      
 volumes increase with increased sales and as we reduce overhead costs associated with excess   
 production capacity, warehouse space and other real estate. The combined efforts of increasing 
 high margin product sales and reducing general overhead costs are geared toward reducing       
 our overhead expenses to have our remaining overhead right-sized to our strategy of focusing   
 on producing and selling high margin super premium items. (See below for our discussion on     
 Gross Margins related to unabsorbed overhead in Non-GAAP Financial Measures). Unabsorbed       
 overhead includes approximately $2,000 in product inventory write downs and adjustments in     
 the three months ended March 31, 2025 compared to approximately $79,000 in the three months    
 ended March 31, 2024.                                                                          |

Gross Profit

Gross profit was approximately $272,000 and $409,000 for the three months ended March 31, 2025 and 2024, respectively, a decrease of approximately $137,000, or 33.5%, period over period, and included:

|          | Total        
 Gross Profit | Three               
 Months Ended  March 
 31,  (rounded       
 to $000’s)          |    2025 |     |   |    2024 |     |   |   Change |   |
|:---------|:-------------|:--------------------|--------:|:----|:--|--------:|:----|:--|---------:|:--|
| Products |              | $                   |  24,000 |     | $ |  19,000 |     | $ |    5,000 |   |
| Services |              |                     | 248,000 |     |   | 390,000 |     |   | (142,000 | ) |
|          |              | $                   | 272,000 |     | $ | 409,