Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 343

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 343
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 480 requires a financial instrument to be classified as a liability if such financial instrument contains a conditional
obligation that the issuer must or may settle by issuing a variable number of its equity securities if, at inception, the monetary value
of the obligation is predominantly based on a known fixed monetary amount.

The Company measured the warrant liabilities at
fair value at the respective issuance dates of the 2022 Notes, including the note issued in February 2023, and March 31, 2023
using a probability weighted expected return method and the Monte Carlo Simulation. The fair value of the warrant liabilities at the issuance
dates of the 2022 Notes issued in 2022 was approximately $581,364, of which $300,059 was associated with the related party warrant liabilities.
The fair value of the warrant liabilities at the issuance dates of the 2022 Notes issued in February 2023 was approximately $12,874.
The warrant liabilities are subsequently remeasured to fair value at each reporting date with changes in fair value recognized as a component
of total other income (expense) in the consolidated statements of operations. The Company recorded a net loss of $348,994 and a net gain
of $148,364 resulting from the change in fair value of the warrant liabilities for the years ended December 31, 2023 and 2022, respectively,
of which $149,710 and $68,635, respectively was related to the change in value of the related party warrant liabilities. On December 31,
2023 and 2022, the fair value of the warrant liabilities was $794,868 and $433,000, respectively of which $340,918 and $188,480 were associated
with the related party warrant liabilities.

<div align='center'>F-63

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

NOTE 7 — WARRANT LIABILITIES (cont.)

In April of 2024,under a Securities Exchange Agreement,
the strike price of the warrants became fixed at a negotiated fixed, non-adjustable price of $6.00 per share (as opposed to the previous
pricing which was contingent on the IPO price), whereas these 908,334 warrants now have a fixed price and include a cashless exercise
provision, and will no longer qualify to be classified as liabilities in accordance with ASC 480, and their fair value that has previously
been recorded as warrant liabilities will be reclassified to equity. (See Note