Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 330

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 330
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 stock with exercise prices equal to the value of the underlying stock, as determined by the Company’s Board of Directors
on the date the equity award was granted.

<div align='center'>F-56

Heritage Distilling Holding Company, Inc.
Notes to Consolidated Financial Statements</div>

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

The Board of Directors determines the value of the
underlying stock by considering several factors, including historical and projected financial results, the risks the Company faced at
the time, the preferences of the Company’s stockholders, and the lack of liquidity of the Company’s common stock.

During the years ended December 31, 2023 and 2022,
the Company did not grant any stock option awards. The Company has not granted any stock options since 2019, when the Company’s
2018 Plan was terminated in favor of the 2019 Plan, under which, the Company has granted RSUs. See Note 9.

Stock option awards generally vest on time-based
vesting schedules. Stock-based compensation expense is recognized based on the value of the portion of stock-based payment awards that
is ultimately expected to vest and become exercisable during the period. The Company recognizes compensation expense for all stock-based
payment awards made to employees, directors, and non-employees using a straight-line method, generally over a service period of four years.

Advertising— The Company
expenses costs relating to advertising either as costs are incurred or the first time the advertising takes place. Advertising expenses
totaled $920,879 and $1,223,985 for the years ended December 31, 2023 and 2022, respectively and were included in “Sales and marketing”
in the consolidated statements of operations. Costs were higher in 2022 as one additional large sponsorship contract existed at that time
that was not renewed in 2023.

Income taxes— The Company
follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 740, “Income Taxes”
for establishing and classifying any tax provisions for uncertain tax positions. The Company’s policy is to recognize and include
accrued interest and penalties related to unrecognized tax benefits as a component of income tax expenses. The Company is not aware of
any entity level uncertain tax positions.

Income taxes are accounted for under the asset and
liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the