Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 145

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 145
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 loan, after which time we could prepay the loan with no premium
due. We are now past that initial 24-month window and can prepay all or some of the outstanding balance without penalty. The Silverview
Loan is secured by substantially all of our assets.

The original Silverview Loan contained certain
financial and other debt covenants that, among other things, imposed certain restrictions on indebtedness, liens, investments and capital
expenditures. The financial covenants required that, at the end of each applicable fiscal period, as defined pursuant to the Silverview
Loan agreement, we either had (i) an EBITDA interest coverage ratio up to 2.00 to 1.00, or (ii) a cash interest coverage ratio
of not less than 1.25 to 1.00. Commencing with the fiscal quarter ending June 30, 2021, we were required to maintain liquidity of
not less than $500,000. The Silverview Loan was used for general corporate purposes, including working capital needs and capital expenditures.
The covenants and tests have since been deleted as part of the October 1, 2024 and November 19, 2024 loan modifications.

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As discussed above, in the past, we have violated
various financial and other debt covenants regarding our failure to comply with the financial covenants and to timely furnish our consolidated
financial statements for the year ended December 31, 2023. As the chance of meeting the same or more restrictive covenants at subsequent
compliance measurement dates within the following year was remote, we determined that the Silverview Loan should be classified as a current
liability as of September 30, 2024. As of September 30, 2024 and December 31, 2023 and 2022, the outstanding balance of the Silverview
Loan was $12,250,000. The lender had previously agreed to waive any existing covenant compliance matters as of December 31, 2022
and to forbear from exercising its rights and remedies under the loan agreement through December 31, 2023. In June 2024, we reached
an agreement in principal to modify the Silverview Loan in the following ways. The modification, which was executed by the parties on
October 1, 2024, and was further modified on November 19, 2024, and went into effect