Company: IPST
Filing Date: 2025-08-15
Form Type: 424B3
Source: 0001641172-25-024441
Chunk: 91

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-08-15
Form: 424B3
Chunk 91
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Cost of Sales

Cost of sales were approximately $1,095,000 and $1,098,000 for the three months ended June 30, 2025 and 2024, respectively, a decrease of approximately $(3,000), or 21.0%, period over period. Cost of Sales for the three months ended June 30, 2025 includes approximately $121,000 of non-cash share-based compensation expenses related to RSU grant awards recognized in the three months ended June 30, 2025 for production employees compared to no such award recognition in 2024.

|          | Cost of Sales | Three                                     
 Months Ended June 30, (rounded to $000’s) |      2025 |     |   |      2024 |   |     |   |  Change |   |
|:---------|:--------------|:------------------------------------------|----------:|:----|:--|----------:|:--|:----|:--|--------:|:--|
| Products |               |                                           | 1,083,000 |     |   | 1,101,000 |   |     | $ | (18,000 | ) |
| Services |               |                                           |    12,000 |     |   |    (3,000 | ) |     |   |  15,000 |   |
|          |               | $                                         | 1,095,000 |     | $ | 1,098,000 |   |     | $ |  (3,000 | ) |

The approximately $18,000 decrease in net products cost of sales period over period included: a decrease in product cost of approximately $114,000 to approximately $476,000 for the three months ended June 30, 2025, from approximately $590,000 for the three months ended June 30, 2024, and a increase in unabsorbed overhead of approximately $96,000 to approximately $607,000 as of June 30, 2025 from approximately $511,000 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