Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 142

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 142
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BITDA                                 |     | $                   | (2,099,000 | ) |     | $    |  (8,066,000 | ) |     | $                   |  (9,836,000 | ) |     | $    |  (9,215,000 | ) |

Liquidity and Capital Resources

We have prepared our financial statements assuming
we will continue as a going concern. Since our inception, we have incurred net losses and experienced negative cash flows from operations
as we have invested in equipment, location buildout, inventory buildout (including laying down barrels of whiskey for aging) and marketing
to grow our presence and brands. To date, our primary sources of capital have been private placements of equity securities, term loans,
and convertible debt. During the nine months ended September 30, 2024 and 2023, we had net income/(loss) of approximately $5,426,000
and $(31,642,000), respectively (of which, approximately $10,058,000 and $(20,577,000), respectively, stemmed from the decrease/(increase)
in fair value of certain convertible notes, warrants and contingencies). We expect to incur additional losses and higher operating expenses
for the foreseeable future as we continue to invest in inventory and the growth of our business.

At September 30, 2024, we had outstanding aged
payables to vendors in the aggregate amount of approximately $5,632,000, inclusive of accrued amounts to service providers who were, or
are, providing services for us related to our IPO. We have reached agreements with most of these aged vendors, including the vendors with
the largest outstanding invoices, to pay such payables upon the closing of our IPO or periodically on payment dates following the closing
of our IPO. Of the aforementioned vendor obligations, approximately $834,000 are for services related to the preparation of our IPO. Most
of the remaining payables relate to services that were agreed upon or contracted for prior to the COVID-19 lockdowns, but were put on
hold or held over during those lockdowns and then restarted after the COVID lockdowns ended pursuant to the terms of the agreements. Many
of those contracts have been completed and will not renew or be renewed, and we expect to make payments to those vendors in a way that
allows us to manage our cash on hand as we grow our higher-margin revenue in 2025. Given our shift away from low-margin products and services,
management believes