Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 269

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 269
---
 and decrease in fair
value recorded in the income statement as an operating gain of $. The recorded fair value of the acquisition was reviewed as of
September 30, 2024, with no change in fair value deemed necessary.

Under the terms of the TTS acquisition, TTS shareholders
will be eligible to receive contingent earn out payments from the Company through February 21, 2027 of:

| ● | Up to $800,000 per year (payable                                                                                                          
 in Company common stock) in each of the first 3 years post acquisition with the final closing date on December 31, 2026 (for an           
 aggregate of up to $2,400,000), calculated as $1.00 worth of Company common stock for every $1.00 of revenue of TTS brands and activities 
 that exceed the previous year’s TTS associated revenue. Shortfalls in years 1 and 2 to be caught up in years 2 and/or                     
 3, if revenues are then sufficient.                                                                                                       |

| ● | $395,000 if TTS is successful                                                                                                           
 in securing an agreement for a new tasting room location, to be branded TTS and Heritage Distilling, or as a Company approved sub-brand 
 or collective brand, within a certain confidential retail location in Portland OR within 3 years, TTS shareholders will receive         
 an additional $395,000, payable at HDHC’s election either in cash or in shares of the Company’s common stock (based on closing          
 price 30 days post opening of such location).                                                                                           |

The fair value of property and equipment was estimated
by applying the cost approach, which estimates fair value using replacement or reproduction cost of an asset of comparable utility, adjusted
for loss in value due to depreciation and economic obsolescence. The fair value of the contingent earn-out was estimated using a discounted
cash flow approach, which included assumptions regarding the probability-weighted cash flows of achieving certain capacity development
milestones.

F-33 Heritage Distilling Holding Company, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited) NOTE 10 — ACQUISITION OF THINKING TREE SPIRITS (cont.)

Intangible assets were determined to meet the
criterion for recognition apart from tangible assets acquired and liabilities assumed. The fair values of intangible assets were estimated
based on various valuation techniques including the use of discounted cash flow analyses, and multi-period excess earnings valuation approaches,
which use significant unobservable inputs, or Level 3