Company: IPST
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001788230-25-000175
Chunk: 362

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Part I, Item 2
Chunk 362
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 The decrease in interest expense, period over period, included:  approximately $275,000 in Property Lease Interest and, an approximately $491,000 decrease in other interest expense, primarily as a result of the settlement of the Silverview loan in August 2025. Additionally, Factoring and Channel Partner loans were paid in 2024 precipitating a decrease of interest of approximately $87,000. 

Gain on Extinguishment of Debt

In conjunction with the settlement of the Silverview loan in August 2025 approximately $2,611,000 was recognized as gain on settlement. The approximately $12,620,000 in principal and interest due on the loan was paid with approximately $7,046,000 in cash and 200,000 warrants (with a value of approximately $2,964,000).

Gain on Intangible Digital Assets

Change in fair value of intangible digital assets resulted in a gain of approximately $245,841,000 for the nine months ended September 30, 2025 (based on a closing price on September 30, 2025 of $8.54 per $IP Token), compared to $0 for the nine months ended September 30, 2024, as we began recognizing fair value adjustments on $IP Tokens in the current quarter. The gain was primarily attributable to favorable market movements in the quoted price of $IP Tokens held for investment, including approximately $275,699,823 related to tokens acquired in the quarter and remeasured at higher fair values. We measure fair value using quoted prices in our principal market at the end of each reporting period, with changes recognized in Change in Fair Value of Intangible Digital Assets on the condensed consolidated statements of operations.

Income Taxes

As of September 30, 2025 we recorded a provision for income taxes (of 21%) and a deferred income tax liability of $49,426,794 based on its year to date net income before income taxes. In recording the deferred tax liability, we fully reserved against our net operating loss carryforwards, not assuming the use of any of our accrued loss carryforwards at this time. We are awaiting the completion of a Section 382 net operating loss (“NOL”) review to determine to what extent past NOLs can be used moving forward, and if so, how much and over what period of time they can be used. As of December 31, 2024,we had $61,234,307 in federal net operating loss carryforwards, some