Company: IPST
Filing Date: 2025-05-12
Form Type: 424B3
Source: 0001641172-25-009684
Chunk: 105

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-05-12
Form: 424B3
Chunk 105
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4 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 and per case, leading to higher gross margins. This is purely a function of how much excess capacity we have in our production system at the time while we transition from low margin, but high volume production to higher margin products.

| 62 |

Services cost of sales decreased by approximately $754,000 from 2023 to 2024 primarily resulting from us ending a low-margin third party production contract for another brand and the wind down of barrel production for third parties.

|                       | Components                
 of Products Cost of Sales | Years              
 Ended December 31, 
 (rounded           
 to $000’s)         |      2024 |     |   |      2023 |     |   |    Change |
|:----------------------|:--------------------------|:-------------------|----------:|:----|:--|----------:|:----|:--|----------:|
| Product Cost (from    
 inventory)            |                           | $                  | 3,623,000 |     | $ | 2,748,000 |     | $ |   875,000 |
| Overhead – Unabsorbed |                           |                    | 2,550,000 |     |   | 2,215,000 |     |   |   335,000 |
|                       |                           | $                  | 6,173,000 |     | $ | 4,963,000 |     | $ | 1,210,000 |

|                           |     |    Years 
    Ended 
 December 
      31, |       |   |     |      |       |   |     |        |      |    |
| Components                
 of Products Cost of Sales |     |     2024 |       |   |     | 2023 |       |   |     | Change |      |    |
| Product Cost (from        
 inventory)                |     |          |  58.7 | % |     |      |  55.4 | % |     |        |  3.3 | %  |
| Overhead                  
 – Unabsor