Company: IPST
Filing Date: 2025-12-12
Form Type: S-1/A
Source: 0001213900-25-121277
Chunk: 147

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-12-12
Form: S-1/A
Chunk 147
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 | $      | (1,337,000 | ) |
| Services                       |     |                     |   780,000 |     |   | 1,259,000 |     |        | (479,000   | ) |
|                                |     | $                   | 3,494,000 |     | $ | 5,310,000 |     | $      | (1,816,000 | ) |

•Gross margin was approximately 13.6% and 33.6% (65.0% and 64.8%, excluding unabsorbed overhead) for the nine months ended September30, 2025 and 2024, respectively, based upon total net sales of approximately $3,494,000 and $5,310,000, respectively. As we add more Special Operations Salutesales via online channels, and look to restart digital advertising we expect to see our overall gross margin increase. Likewise, as we add more states into our wholesale distribution channel focused solely on high -marginitems, rather than any low -marginwell vodka in those states, we expect to see additional margin increases. As we move to third party production in 2026 and we move into 2026 with a significantly reduced headcount, we expect unabsorbed overhead to be greatly reduced on a full year basis in 2026 and overall gross profit and gross margin to improve. •Gross margin for Products of (9.5)% (56.7% excluding unabsorbed overhead) for the nine months ended September30, 2025 compared to 15.4% (56.2% excluding unabsorbed overhead) for the nine months ended September30, 2024 are inclusive of low margin production contracts we ended in 2024, the significant amount of unabsorbed overhead we booked (which drags down gross margin based on the

85

amount of unused capacity in our system), and approximately $185,000 in product inventory write downs in the nine months ended September30, 2025 compared to approximately $102,000 in product inventory write downs and adjustments in the nine months ended September30, 2024. As we work to shed some of our excess capacity and overhead, and as we increase our sales of higher margin items, we expect this Products gross margin to increase significantly ( See also below our comments related to this in more detail in Non -GAAP Financial Measures). Gross Profit — Crypto and Related Business Gross profit was