Company: IPST
Filing Date: 2025-12-12
Form Type: S-1/A
Source: 0001213900-25-121277
Chunk: 156

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-12-12
Form: S-1/A
Chunk 156
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46,000 in one -timeaggregate hand sanitizer cost of sales for the year ended December31, 2023 was due to a vendor invoice from 2020 that we did not receive until early 2023 when the vendor audited its billings for prior years. There was no similar expense in the year ended December31, 2024 and we do not anticipate any future expenses associated with hand sanitizer moving forward. •Our unabsorbed overhead, which is a measure of our capacity relative to our current utilization, increased by approximately $338,000 to approximately $2,550,000 for the year ended December31, 2024 compared to approximately $2,212,000 for the year ended December31, 2023. The increase includes non -cashshare -basedcompensation expenses related to RSU grant awards recognized

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in 2024 totaling approximately $178,000 for production employees compared to no such award recognition in 2023. The additional remaining unabsorbed overhead expense indicates an increase in our underutilization of current production capacity as we moved away from low -margin, high volume products into higher margin products. We expect that our unabsorbed overhead will decrease over time as our production volumes increase with increased sales, as our overhead expenses will be more fully allocated to increased levels of production. (See below our discussion on Gross Margins related to unabsorbed overhead in Non -GAAP Financial Measures). •Cost of Products Sales includes approximately $211,000 in product inventory write downs and adjustments in 2024 compared to a positive inventory adjustment of approximately $21,000 in 2023. Gross Profit Gross profit was approximately $2,126,000 and $2,151,000 for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $25,000, or 1.2%, period over period, and included:

| Total Gross Profit 
 2024               |     | Years Ended December 31, 
 (rounded to $000’s)      |      2023 |     |   |    Change |     |   |          |   |
|:-------------------|:----|:-------------------------|----------:|:----|:--|----------:|:----|:--|---------:|:--|
| Products           |     | $                        |   442,000 |     | $ |   173,000 |     | $ |  269,000