Company: IPST
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001788230-25-000175
Chunk: 343

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Part I, Item 2
Chunk 343
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 from marketing efforts while we worked on our cryptocurrency transition against slightly higher fixed expenses during the period.

Gross Profit - Analysis of Exclusion of Unabsorbed Overhead - Whiskey Business

To provide a more detailed view to our performance for products and services based purely on the direct input costs, we remove unabsorbed overhead expenses for the following analysis. Gross profit excluding unabsorbed overhead was approximately $469,000 and $739,000 for the three months ended September 30, 2025 and 2024, respectively, a decrease of approximately $270,000, or 36.5%, period over period, and included:

Three Months Ended September 30,(rounded to $000’s)Total Gross Profit - Excluding Unabsorbed Overhead - Spirits Business20252024ChangeProducts$(259,000)$257,000 $(516,000)Add Back: Unabsorbed Overhead728,000 482,000 246,000      Products Gross Profit Excluding Unabsorbed Overhead469,000 739,000 (270,000)Services236,000 385,000 (149,000)     Total Gross Profit Excluding Unabsorbed Overhead$705,000 $1,124,000 $(419,000)

Three Months Ended September 30,Total Gross Margin - Excluding Unabsorbed Overhead - Spirits Business20252024ChangeProducts(31.7)%18.7 %(50.4)%Add Back: Unabsorbed Overhead89.2 %35.1 %54.2 %     Products Gross Margin Excluding Unabsorbed Overhead57.5 %53.7 %3.7 %Services89.1 %96.5 %(7.4)%     Total Gross Margin Excluding Unabsorbed Overhead65.2 %63.4 %1.9 %

Gross Margin excluding unabsorbed overhead of 65.2% for the three months ended September 30, 2025 compared to 63.4% for the same period in 2024 is a significant increase, as is the improvement compared to the 55.6% we reported for the full year 2024, indicating our efforts aimed at reducing overhead expenses and focusing on high margin items are starting to bear fruit.

Gross Profit Analysis — Spirits Business

Gross Margin numbers above are based on