Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 139

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 139
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 ended December 31, 2023, compared to approximately $2,611,000 for the year ended December 31,
2022. The decrease was primarily due to changes in the interest rate under our $12,250,000 secured credit facility, which interest rate
was 15% during the year ended December 31, 2023, compared to 16.5% for the year ended December 31, 2022.

Income Taxes

The provision for income taxes for the years ended
December 31, 2023 and 2022 was immaterial, primarily as we were in a net loss position for those periods.

Non-GAAP Financial Measures

To supplement our consolidated financial statements,
which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand
and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures
used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not
be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Adjusted Gross Profit and Adjusted Gross Margin:Adjusted
gross profit represents GAAP gross profit adjusted for any nonrecurring gains and losses. Adjusted gross margin represents Adjusted gross
profit as a percentage of total net sales. We use these measures (i) to compare operating performance on a consistent basis, (ii) for
planning purposes, including the preparation of our internal annual operating budget, and (iii) to evaluate the performance and
effectiveness of operational strategies.

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EBITDA and Adjusted EBITDA:EBITDA
represents GAAP net loss adjusted for (i) depreciation of property and equipment; (ii) interest expense; and (iii) provision
for income taxes. Adjusted EBITDA represents EBITDA adjusted for nonrecurring gains and losses. We believe that EBITDA and adjusted EBITDA
help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we include in GAAP
operating loss. These non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information
prepared in accordance with GAAP. There are several limitations related to the use of this non-GAAP financial measure compared to
the closest comparable GAAP measure. Some of these limitations are that:

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