Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 125

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 125
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 $                   | 3,429,000 |     | $ | 3,460,000 |     | $ |  31,000 |   |

| ● | The larger realized increase                                                                                                                
 in third-party production costs indicates low margins on those efforts, which is the principal reason why management is moving us away      
 from those efforts starting in 2024 as we execute on our plan to open more TBN locations and look to realize significant gains in both      
 topline revenue and high-margin DtC sales of our Salute Series line and expanded wholesale distribution of our core products in key states. 
 Management is also working with our wholesale sales team to move us out of the low-margin well vodka business in favor of higher-margin     
 premium whiskey products.                                                                                                                   |

| ● | The approximately $46,000 in                                                                                                       
 one-time aggregate hand sanitizer cost of sales for the nine months ended September 30, 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 
 nine months ended September 30, 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 $104,000 to approximately $1,654,000 for        
 the nine months ended September 30, 2024 compared to approximately $1,550,000 for the nine months ended September 30, 2023,                  
 indicating an increase in our underutilization of current production capacity. This was driven by out of stock issues, meaning our equipment 
 was not being used as much this year versus the same period of the previous year as we worked through those stocking items as we progressed  
 towards our initial public offering. 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.                               |

Gross Profit

Gross profit was approximately $1,786,000 and
$1,390,000 for the nine months ended September 30, 2024 and 2023, respectively, an increase of approximately $396,000, or 28%, period
over period, and included:

|          | Total Gross Profit | Nine Months Ended   
 September 30,