Company: IPST
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001788230-25-000126
Chunk: 300

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 300
---
absorbed overhead over time as our production volumes increase with increased sales and as we reduce overhead costs associated with excess production capacity, warehouse space and other real estate. The combined efforts of increasing high margin product sales and reducing general overhead costs are geared toward reducing our overhead expenses to have our remaining overhead right-sized to our strategy of focusing on producing and selling high margin super premium items. (See below for our discussion on Gross Margins related to unabsorbed overhead in Non-GAAP Financial Measures). 

Gross Profit

Gross profit was approximately $225,000 and $745,000 for the three months ended June 30, 2025 and 2024, respectively, a decrease of approximately $520,000, or 70%, period over period, and included:

Total Gross ProfitThree Months Ended June 30,(rounded to $000’s)Change20252024Products$(24,000)$343,000 $(367,000)Services249,000 402,000 (153,000) $225,000 $745,000 $(520,000)

52

Total Gross MarginThree Months Ended June 30,(rounded to $000’s)Change20252024Products(2.3)%23.7 %(26.0)%Services95.4 %100.8 %(5.3)% 17.0 %40.4 %(23.4)%

It is important to note that the approximately $(24,000) in Products Gross Profits, and the resulting low Gross Margin of (2.3)%,is after layering in the approximately $607,000 in unabsorbed overhead costs. 

Gross Profit - Analysis of Exclusion of Unabsorbed Overhead

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 $583,000 and $854,000 for the three months ended June 30, 2025 and 2024, respectively, a decrease of approximately $271,000, or 31.7%, period over period, and included:

Three Months Ended June 30,(rounded to $000’s)Total Gross Profit - Excluding Unabsorbed Overhead20252024ChangeProducts$(24,000)$343,000 $(367,000)Add Back: Unabsorbed Overhead607,000 511,000