Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 313

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 313
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 the warrant. F-60 Heritage Distilling Holding Company, Inc.
Notes to Consolidated Financial Statements NOTE 5 — CONVERTIBLE NOTES (cont.)

The Company agreed to make royalty payments on the
Whiskey Special Ops 2023 Notes at the rate of $ per bottle of a new product offering of Special Forces labelled spirits. As of December
31, 2023, the Company had sold bottles of the new product offering of Special Forces labelled spirits, representing more than $
in retail shelf value, and recorded $ of royalties due to the Whiskey Special Ops Noteholders. These royalties were eliminated in
conjunction with the exchange of the Whiskey Notes and related Warrants into common stock subsequent to December 31, 2023.

The outstanding balance of the Whiskey Special Ops
2023 Notes and accrued interest may, in whole or part, be converted into common stock prior to maturity at the option of the holder so
long as the price per share is equal to or greater than the original IPO price. Any principal and accrued interest remaining outstanding
upon maturity will be mandatorily converted into common stock of the Company at the rate of $ per $ of outstanding principal and
accrued interest at a price per share equal to the then market price per share, but in no case less than % of the Company’s original
IPO price. The aggregate Fair Value of $ in Whiskey Notes (separately) and the related Fair Value of the Warrant Liability of
$ will be reclassified from being a liability to equity under the terms of the Subscription Exchange Agreement upon the effectiveness
of the Company’s anticipated IPO — which is the remaining prerequisite for the unconditional conversion of the Whiskey Notes
into equity.

Subsequent to December 31, 2023, through April 26,
2024 the Whiskey Notes (including related Warrants based on a $ per share exercise price) agreed to exchange for common stock.
The then outstanding $ (including $ which was with a related party) in aggregate fair value ($ of principal
amount, including accrued interest; $ of proceeds), of which $ was with a related party) of the Whiskey Notes and related
Warrants (Warrant Liability), in accordance with a Subscription Exchange Agreement, exchanged (contingent upon the consummation of this
offering) for a total of shares of our common stock and prepaid warrants to purchase our common stock (of which
shares were with a related party). The aggregate fair value of the exchanged Whiskey Notes and related