Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 323

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 323
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 years)               |     | 0.125 – .667      |     | 0.125 – .667 |
| Probability Scenarios                  |     |                   |     |              |
| IPO                                    |     | 70%               |     |              |
| deSPAC                                 |     | 0%                |     |              |
| Default/Dissolution/Forced Liquidation |     | 20%               |     |              |
| Held to Maturity                       |     | 10%               |     |              |

Valuation of Warrant Liabilities — The
fair value of the warrant liabilities at issuance and at each reporting period was estimated based on significant inputs not observable
in the market, which represents a Level 3 measurement within the fair value hierarchy. The warrants are free-standing instruments
and determined to be liability-classified in accordance with ASC 480. The Company used the PWERM and the Monte Carlo Simulation (“MCS”)
to incorporate estimates and assumptions concerning the Company’s prospects and market indications into the models to estimate the
value of the warrants. The most significant estimates and assumptions used as inputs in the PWERM and MCS valuation techniques impacting
the fair value of the warrant liabilities are the timing and probability of IPO, deSPAC Merger and default scenario outcomes (see the
table below). The most significant estimates and assumptions used as inputs in the PWERM and MCS valuation techniques impacting the fair
value of the warrant liabilities are those utilizing certain weighted average assumptions such as expected stock price volatility, expected
term of the warrants, and risk-free interest rates.

|                                 |     | December 31, 2023 |     |          |     | December 31, 2022 |     |          |
|:--------------------------------|:----|:------------------|:----|:---------|:----|:------------------|:----|:---------|
| Significant Unobservable Input  |     | Input             
 Range             |     | Weighted 
 Average  |     | Input             
 Range             |     | Weighted 
 Average  |
| Expected Term (in years)        |     | 0.122 – 1.081     |     |          |     | 0.250 – 0.700     |     |          |
| Volatility                      |     | 70%               |     | 70%      |     | 70.0%             |     | 70.0%    |
| Risk-free Rate                  |     |