Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 126

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 126
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1,259,000 |     |   | 2,152,000 |     |   | (893,000 | ) |
|          |             | $                   | 5,310,000 |     | $ | 5,525,000 |     | $ | (215,000 | ) |

| ● | Gross margin was approximately                                                                                                             
 33.6% and 25.2% for the nine months ended September 30, 2024 and 2023, respectively, based upon total net sales of approximately           
 $5,310,000 and $5,525,000, respectively. As we add more Salute Series sales via online channels, we expect to see our overall              
 gross margin increase. Likewise, as we add more states into our wholesale distribution channel focused solely on high-margin items, rather 
 than any low-margin well vodka in those states, we expect to see additional margin increases. Also, as we add more cases of production     
 through our system, we expect the unabsorbed overhead costs will be reduced as each additive case of new sales volume begins to carry      
 incremental overhead costs as part of the normal manufacturing cost accounting, which should increase our overall margins. Finally, our    
 third-party production contracts were very low margin for us, which is why management made the decision to end those contracts at the      
 end of January 2024. Moving forward, management will focus on higher-margin activities, which we expect will increase our overall          
 margins.                                                                                                                                   |

Sales and Marketing Expenses

Sales and marketing expenses were approximately
$3,760,000 for the nine months ended September 30, 2024 compared to approximately $4,563,000 for the nine months ended September
30, 2023. This approximately $803,000 decrease included:

| Sales and Marketing Expense  |     | Nine Months Ended   
 September 30,       
 (rounded to $000’s) 
 2024                |           |     | 2023 |           |     | Change |          |   |
|:-----------------------------|:----|:--------------------|----------:|:----|:-----|----------:|:----|:-------|---------:|:--|
| Personnel                    |     | $                   | 2,074,000 |     | $    | 2,521,000 |     | $      | (447,000 | ) |
| Tasting Room                 |     |                     |   109,000 |     |