Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 143

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 143
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 the use of cash for higher-margin activities and priorities, requiring fewer raw goods units to drive more top line
revenue, and more profitable revenue, will also assist with reducing and eventually eliminating our cash burn. While we believe we have
put in place satisfactory payment terms for the payment of our outstanding payables, there is a risk that one or more of our vendors could
demand a more immediate payment or initiate litigation against us in an attempt to force payment of the amounts owed. In such a case,
the litigation could cause us to incur significant costs defending such action, and any such payment could materially affect our business,
financial condition or liquidity.

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From time to time, we have been out of compliance
with various financial and other debt covenants under the Silverview Loan, which is discussed below, with respect to our failure to meet
certain financial thresholds and tests and the furnishing of some of our consolidated financial statements for the years ended December 31,
2023 and 2022. As of October 1, 2024, the lender waived any existing covenant compliance matters as of December 31, 2023 and 2022
and agreed to forbear from exercising its rights and remedies under the loan agreement for any covenant violations, defaults or breaches
through the Silverview Loan reporting period ending September 30, 2024. During the first nine months of 2024, we were out of compliance
with certain debt covenants in connection with the furnishing of monthly income statements, meeting an EBITDA test, providing a monthly
cash balance report, and providing a monthly operational performance report, of which those covenant breaches were also waived in the
October 1, 2024 Silverview Loan modification. On October 1, 2024, we executed an agreement with our lender, which was further modified
on November 19, 2024, that went into effect upon the closing of our IPO and, among other changes favorable to us, waived any past defaults
and covenant breaches and simplified our financial tests and reporting requirements under the loan agreement, making it easier for us
to remain in compliance as we focus on growing our business. We used a portion of the net proceeds of our IPO to repay a portion of the
principal amount of the Silverview Loan. Our future capital requirements and the adequacy of available funds will depend on many factors.

We believe our cash on hand, together with the
net proceeds, if any, we