SEGMENT REPORTING
Due to the launch of the $IP Token treasury reserve strategy in August 2025 and continual assessment of the requirements under ASC 280, Segment Reporting, the Company has reassessed its segment conclusions and determined that effective with this Annual Report on Form 10-K, the Company is presenting two operating and reportable segments: one segment that manages the Company’s intangible digital asset treasury (the “IP Strategy Segment”); and one reportable segment that produces and sells alcohol beverages under various brands (the “Heritage Distilling Segment”). In the IP Strategy Segment, the Company’s $IP Token investments are maintained and managed to make a return on investment through validation and staking activities to generate revenue. In the Heritage Distilling Segment, all brands are predominantly beverages that are manufactured using similar production processes, have comparable alcohol content, generally fall under the same regulatory environment, and are sold to the same types of customers in similar size quantities at similar price points and with similar profit margins.
The Company’s CODM is the chief executive officer. The CODM assesses performance for each segment based on revenue and gross profit, which are reported in the consolidated statement of operations. Other costs and expenses of the Company are analyzed on an aggregate basis and not allocated to the segments. The accounting policies for segment reporting are the same as for the Company’s consolidated financial statements. As the Company continues its operations of the $IP treasury strategy, it may provide additional data points to the CODM to assist with decision making that will be evaluated for inclusion in the Company's reportable segment disclosure
The following summarizes the Company’s operations by segment for the years ended December 31, 2025 and 2024. There were no IP Strategy Segment activities prior to August 2025.
| | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2025 | | 2024 |
| Crypto and Related Segment | | | | |
Revenue(b) | | $ | 4,951,565 | | | $ | — | |
| Cost of Revenue | | 234,590 | | | — | |
| Gross Profit | | $ | 4,716,975 | | | $ | — | |
| | | | |
| Spirits Business Segment | | | | |
Revenue(a) | | $ | 5,167,822 | | | $ | 8,402,488 | |
| Cost of Revenue | | 4,324,707 | | | 6,276,641 | |
| Gross Profit | | $ | 843,115 | | | $ | 2,125,847 | |
| | | | |
| Total Revenue | | $ | 10,119,387 | | | $ | 8,402,488 | |
| Cost of Revenue | | 4,559,297 | | | 6,276,641 | |
| Gross Profit | | $ | 5,560,090 | | | $ | 2,125,847 | |
(a) Represented as Product Sales and Distillery Services in the consolidated statement of operations.
(b) Represented as Crypto and Related Revenue in the consolidated statement of operations.
The CODM does not review disaggregated assets on a segment basis, and therefore, such information is not presented. As a result of the change in operating segments, the Company’s reporting units were reassessed, and it was determined that the two operating segments are also reporting units for the purpose of evaluating goodwill for impairment. Since the IP Strategy Segment is a newly-created operating segment that did not have activities prior to the August 2025, all goodwill was attributed to the Heritage Distilling Segment.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.