SecProbe.io

CORRESP
1
filename1.htm

ERIC
M. HELLIGE

Partner

Direct
Tel: 212-326-0846

Fax:
212-326-0806

ehellige@pryorcashman.com

July
5, 2024

Via
Edgar

Ms. Eiko
Yaoita Pyles

Ms. Jean
Yu

Mr. Thomas
Jones

Mr. Geoffrey
Kruczek

Securities
and Exchange Commission

Division
of Corporate Finance

100 F Street,
N.E.

Washington,
D.C. 20549

    Re:
    Heritage Distilling Holding Company, Inc.

    Amendment No. 1 to Registration Statement on Form
    S-1

    File No. 333-279382

Ladies and
Gentlemen:

On
behalf of our client, Heritage Distilling Holding Company, Inc., a Delaware corporation (the “Company”), and pursuant to
the applicable provisions of the Securities Act of 1933, as amended (the “Securities Act”), and the rules promulgated
thereunder, we hereby file in electronic form the accompanying Amendment No. 1 to Registration Statement on Form S-1 of the Company (“Amendment
No. 1”), marked to indicate changes to the Registration Statement on Form S-1 that was filed with the Securities and Exchange Commission
(the “Commission”) on May 13, 2024.

Amendment
No. 1 reflects the responses of the Company to comments received from the Staff of the Commission (the “Staff”) in a letter
dated June 5, 2024 (the “Comment Letter”). The discussion below is presented in the order of the numbered comments in the
Comment Letter. Certain capitalized terms set forth in this letter are used as defined in Amendment No. 1. For your convenience, references
in the responses to page numbers are to the marked version of Amendment No. 1 and to the prospectus included therein.

Securities and Exchange Commission

July 5, 2024

Page 2

The
Company has asked us to convey the following responses to the Staff:

Registration
Statement on Form S-1

Capitalization,
page 52

 1. Please
                                            address the following comments:

 ● Please
                                            revise your disclosures in the 2nd bullet point of the introductory paragraph to include
                                            a discussion of transactions that are reflected in the Cash balance on a pro forma basis,
                                            including the amount of proceeds you received in each transaction. Please also revise your
                                            dilution disclosures to include similar information.

 Response: As requested by the Staff, the second bullet point of the introductory
paragraph under the caption “Capitalization” on page 53 of Amendment No. 1 and the third paragraph under the caption “Dilution”
on page 56 of Amendment No. 1 have been revised to discuss, among other matters, the two transactions that affected the cash balance in
the capitalization table on a pro forma basis (the sale of additional convertible notes and sale of Series A Preferred Stock), including
the amount of proceeds the Company received in each such transaction. In addition, the Company has included a footnote to the capitalization
table further discussing such pro forma cash adjustments.

The Company has similarly revised the third bullet point of the introductory
paragraph under the caption “Capitalization” to reflect the estimated amount of net proceeds to be received by the Company
from this offering and its concurrent private placement of the Common Warrants that affected the cash balance in the table on a pro forma
as adjusted basis.

 ● We
                                            note that your discussions of items not reflected in the capitalization table on page 53-54
                                            appear to include outstanding warrants that are not disclosed in your historical financial
                                            statements for the fiscal year ended December 31, 2023. Please revise to disclose all the
                                            outstanding warrants including the material terms of your agreements. Also disclose how you
                                            accounted for these warrants and your basis for the accounting treatment.

 Response: With respect to the outstanding warrants that appear in the list of items
not included in the Capitalization table, we have confirmed that such warrants are disclosed in the Company’s historical financial
statements for the fiscal year ended December 31, 2023 (see Note 5 - Convertible Notes (Page F-55); Note 7 - Warrant Liabilities (Page
F-59); Note 8 - Fair Value Measurement (Page F-61); Note 9 - Stockholders’ Equity (Page - F-63); Note 16 - Subsequent Events (Page F-71
of Amendment No. 1)) or for the quarter ended March 31, 2024 (see Note 5 - Convertible Notes (Page F-18); Note 7 - Warrant Liabilities
(Page F-23); Note 8 - Fair Value Measurement (Page F-25); Note 9 - Stockholders’ Equity (Page - F-28); Note 16 - Subsequent Events (Page
F-36) of Amendment No. 1). As requested by the Staff, such discussions include the material terms of such warrants and how they were accounted
for by the Company and the basis for such accounting.

 With respect to the three tranches of warrants to be issued
upon consummation of the offering, such warrants will expire on the 24, 42 and 60 month anniversaries of the closing of the offering.
Pursuant to GAAP relating to the conditions for recognition of liabilities under ASC-480 or ASC-815, upon issuance, the Company will be
accounting for these warrants as equity instruments, with both the related debit and credit entries being booked to (and offsetting within)
the respective paid in capital account, reflecting net zero impact to pro forma as adjusted paid in capital, stockholders equity, and
capitalization. As these warrants will not be issued and effective until the closing of this offering and there will be a net zero impact
to the pro forma as adjusted column of the Capitalization table from the issuance of these warrants, the Company believes there is no
accounting treatment for these warrants to be reflected in the Capitalization table at this time.

Securities and Exchange Commission

July 5, 2024

Page 3

 2. We
                                            note your response to prior comment 2. Please address the following comments related to the
                                            calculation you provided in Annex A of your response letter dated May 13, 2024.

 ● Tell
                                            us how you arrived at $(20,176,160) and $26,797,284 adjustments in the “Increase in
                                            Debt attributable to increased Fair Value and Exchange related costs” column and “(Exchange
                                            of Certain Debt)” column, respectively. In your
                                            response, also state whether this amount includes any transactions that occurred prior to
                                            December 31, 2023.

 Response: For
                                            the benefit of the Staff, we have annexed to this letter as Annex A a revised table of the
                                            Company’s calculations of (i) the per share increase in pro forma net tangible book
                                            value attributable to the conversion of convertible notes and proceeds from additional Whiskey
                                            Notes subsequent to September 30, 2023 through November 30, 2023, and (ii) the per share
                                            increase in pro forma net tangible book value per share attributable to new investors participating
                                            in this offering.

The changes in Fair Value in revised Annex A are based on valuation
reports provided to the Company by its external valuation consulting firm (see the description of the valuation methodologies for these
instruments on pages 83-84 of Amendment No. 1). The Company’s convertible promissory notes are recognized initially and subsequently
at Fair Value, inclusive of their respective accrued interest at their stated interest rates, which are included in convertible notes
on the Company’s consolidated balance sheets. The changes in the Fair Value of the convertible notes are recorded as “changes
in fair value of convertible notes” as a component of other income (expenses) in the consolidated statements of operations. The
changes in Fair Value related to the accrued interest components are also included within the single line of change in Fair Value of convertible
notes on the consolidated statements of operations.

In
revised Annex A, the Company began with the starting point of Convertible Notes (starting with the prior time period’s Fair Value),
increased / (decreased) by the change in Fair Value between quarterly reporting periods. An increase / (decrease) in the Change in Fair
Value results in a (loss) /gain on the income statement for the respective quarter.

In
the move to pro forma (moving the debt from liability to equity), the Company recorded the then Fair Value reclassification of the debt
to equity. At that point, the Fair Value of the debt is reclassified on the balance sheet from debt to stockholder’s equity.

 The Company has updated Annex A with the values from the most recent reporting
periods and added the extra steps in the process of reclassifying the debt to equity. To assist in the Staff’s review of the relevant
values on Annex A, the revised Annex A has been updated to respond to this comment by BOLDING and italicizing specific dollar
values to address the comment.

The BOLDED and italicized dollar values under
the column headings “Exchange of Certain Debt into Equity (2022 and 2023 Convertible Notes)” - totaling $20,008,458 - and
“Exchange of Certain Debt (2023 Series Whiskey Notes)” - totaling $23,322,064 - show the increases in equity related to the
reclassification of the respective convertible note liabilities and related warrant liabilities into equity. A portion of the value is
credited to retained earnings to reflect the anticipated gain in Fair Value during the period subsequent to March 31 through the date
of this offering. The gain in Fair Value is the result of the aforementioned valuation work performed by the Company’s outside valuation
experts taking into account the several factors described in Amendment No. 1 (see page reference above).

Securities and Exchange Commission

July 5, 2024

Page 4The $19,097,710 and $14,730,085 attributed to common stock
is calculated by dividing the number of shares of common stock and prepaid warrants at the bottom of the column (on a post .57-for-1 split
basis) into the respective dollar value of the notes and warrant liabilities at the top of the column, assuming $5.00 per share, which
is the midpoint of the price range of the common stock set forth on the cover page of the prospectus. Inversely, the number shares of
common stock can be derived by dividing the total dollar value of the respective categories by the assumed $5.00 per share value in this
offering.

 Please note the $20,008,458 is on the Company’s balance sheet as
of March 31, 2024, while the $23,311,064 reduced by ($1,091,080) in the column to the left combines to yield the $22,19,984 reflected
on the Company’s March 31, 2024 balance sheet as the Fair Value of the Convertible Whiskey Notes and their related warrant liability.
The ($1,091,080) identified between the two sets of exchanges is the interim Fair Value adjustment applied to the Whiskey Notes through
the date on which they were exchanged for common stock and pre-paid warrants in April 2024, subsequent to the March 31, 2024 reporting
period close.

Please also note the $8,580,979 in retained earnings under
the “Exchange of Certain Debt (2023 Series Whiskey Notes)” column header is the anticipated amount the Company expects to
reflect as income in the fiscal quarter ending June 30, 2024 upon completion of this offering as those notes were exchanged for common
stock and prepaid warrants in the second quarter.

As to the final request of the Staff in this comment, the values
identified under the column heading of “Exchange of Certain Debt into Equity (2022 and 2023 Convertible Notes)” reflect the
transactions of the notes exchanged for common stock and pre-paid warrants in November 2023, prior to December 31, 2023.

Please
note that the share and per share values in revised Annex A take into account the impact of the Company’s 0.57-for-one reverse
stock split that was effected by the Company on May 14, 2024.

 ● We
                                            note that the “offering proceeds/net proceeds” column reflects the payment of
                                            the debt of 2,375,000, but the post offering pro forma net tangible book value does not appear
                                            to reflect the reduction of liabilities for that amount. Please revise accordingly.

    Response:

    The Company would like to alert the Staff that the purpose of Annex A is
not to show the movement of liabilities as they relate to cash on the balance sheet; it is a schedule designed to reconcile stockholders’
equity with net tangible book value in calculating dilution and dilution per share. The repayment of debt does not impact net tangible
book value because it reduces both cash (asset) and debt (liability) equally, thereby being neutral to net tangible book value.

    As a result, the payment of the $2,375,000 in debt does not appear on this
Annex. To see how the $2,375,000 debt payment impacts cash and liabilities, please see the line titled “Notes Payable, Current”
in the table under the caption “Capitalization” on pages 53-54 of Amendment No.1, which reflects the $2,375,000 reduction
in the amount of debt from $14,348,414 to $11,973,414. In addition, the pro form as adjusted column in this table shows the corresponding
decrease in the cash balance resulting from the use of cash to pay down the debt. This is further documented in footnote 1 to the Capitalization
table, which was added in response to the Staff’s comment on this matter.

Securities and Exchange Commission

July 5, 2024

Page 5

 ● Tell
                                            us how you arrived at 3,873,877 and 2,805,962 outstanding shares in the “Exchange of
                                            Certain Debt into Equity” column and “(Exchange of Certain Debt)” column,
                                            respectively. In this regard, show us how these number of shares tie in with your disclosures
                                            in your historical financial statements for the fiscal year ended December 31, 2023 (e.g.,
                                            page F-19 and F-20).

    Response:

    The 3,873,877 and 2,805,962 outstanding shares of common stock in the previous
Annex A were based upon an assumed pro forma 2-for-3 reverse stock split, which was the assumed ratio of the planned reverse stock split
of the common stock at the time of the May 13, 2024 filing of the Company’s registration statement. Subsequent to May 13, 2024,
the Company effectuated its actual .57-for-1 reverse stock split, as disclosed in Amendment No. 1. In the current Annex A and in Amendment
No. 1, the number of shares on the line titled “Pre-Split – common stock” is the number of shares given to note holders
in exchange for the relinquishment of their convertible notes. The numbers of shares referenced in the comment letter (3,873,877 and 2,805,962)
are now actually 3,312,148 and 2,399,090, as shown on the updated Annex A on the line titled December 31 Shares Outstanding. Please note
that the common stock and prepaid warrant numbers have been rounded down, taking into account fractional shares held by some stockholders
after the .57-for-1 reverse stock split.

    Under the column titled “Exchange of Certain Debt into Equity (2022
and 2023 Convertible Notes) in revised Annex A, the $19,097,710 is divided by