Company: IPST
Filing Date: 2025-12-12
Form Type: S-1/A
Source: 0001213900-25-121277
Chunk: 376

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-12-12
Form: S-1/A
Chunk 376
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 accrued interest components

F-65

Heritage Distilling Holding Company, Inc.
Notes to Consolidated Financial Statements NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

are also included within the single line of change in fair value of convertible notes on the consolidated statements of operations. The convertible notes were reclassified to equity under the terms of the respective promissory note agreements upon the effectiveness of the Company’s IPO on November 25, 2024. (See Notes 5 and 6.)

Warrant liabilities — The Company issued certain warrants for the purchase of shares of its common stock in connection with the Company’s convertible notes (see Note 7) and classified them as a liability on its consolidated balance sheets. These warrants are classified as a liability under ASC 480 as the Company may settle the warrants by issuing a variable number of its common shares and the monetary value of the obligation is based solely or predominantly on a fixed monetary amount known at inception. The warrant liabilities were initially recorded at fair value on the issuance date of each warrant and were subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant liabilities were recognized as a component of other income (expense) in the consolidated statements of operations. Changes in the fair value of the warrant liabilities continued to be recognized until the warrants were exercised, expired or qualified for equity classification. The warrant liabilities were reclassified to equity under the terms of the respective warrant agreements upon the effectiveness of the Company’s IPO on November 25, 2024. (See Notes 5 and 7.)

Concentrations of credit risk — Financial instruments potentially subjecting the Company to concentrations of credit risk consist primarily of accounts receivable, accounts payable and bank demand deposits that may, from time to time, exceed Federal Depository Insurance Corporation (“FDIC”) insurance limits. To mitigate the risks associated with FDIC insured limits the Company recently opened an Insured Cash Swap (“ICS”) service account at its primary bank. Under terms of the ICS, when the bank places funds for the Company using ICS, the deposit is sent from the Company’s transaction account into deposit accounts at other ICS Network banks in amounts below the standard FDIC insured maximum of $ for overnight settling. If the Company’s account exceeds the FDIC limit of $ at the end of the business day, funds are automatically swept out by the Company’s bank and spread among partner banks in accounts, each totaling less than $. This makes the Company’s funds eligible for FD