Company: IPST
Filing Date: 2025-05-21
Form Type: 424B3
Source: 0001641172-25-011934
Chunk: 82

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-05-21
Form: 424B3
Chunk 82
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2025 from approximately $662,000 as of March 31, 2024. We made the choice to move our sales focus onto higher margin products and away from low margin well-based products, resulting in fewer cases sold in 2024 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 Series volume 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.

Services cost of sales decreased by approximately $78,000 to approximately $6,000 for the three months ended March 31, 2025 from approximately $84,000 for the three months ended March 31, 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 
 2025                      |     | Three        
 Months Ended 
 March        
 31,          
 (rounded     
 to $000’s)   
 2024         |         |     | Change |           |     |   |          |
|:--------------------------|:----|:-------------|--------:|:----|:-------|----------:|:----|:--|---------:|
| Product                   
 Cost (from inventory)     |     | $            | 353,000 |     | $      |   552,000 |     | $ | -199,000 |
| Overhead                  
 – Unabsorbed              |     |              | 461,000 |     |        |   662,000 |     |   | -201,000 |
|                           |     | $            | 814,000 |     | $      | 1,214,000 |     | $ | -400,000 |

| Components                
 of Products Cost of Sales |     |        Three 
 Months Ended 
        March 
          31, 
     (rounded 
   to $000’s) |       |   |     |        |       |   |     |      |   |
| 2025                      |     |