Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 321

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 321
---
’ historical
payment history, its credit worthiness and economic trends. There was no allowance for credit losses to reflect CECL adoption as of December 31,
2023 and 2022.

<div align='center'>F-51

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

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

Inventories— Inventories
are stated at the lower of cost or net realizable value, with cost being determined under the weighted average method, and consist of
raw materials, work-in-process, and finished goods. Costs associated with spirit production and other costs related to manufacturing of
products for sale, are recorded as inventory. Work-in-process inventory is comprised of all accumulated costs of raw materials, direct
labor, and manufacturing overhead to the respective stage of production. Finished goods and raw materials inventory includes the supplier
cost, shipping charges, import fees, and federal excise taxes. Management routinely monitors inventory and periodically writes off damaged
and unsellable inventory. There was no valuation allowance as of December 31, 2023 and 2022.

The Company holds volumes of barreled whiskey, which
will not be sold within one year due to the duration of the aging process. Consistent with industry practices, all barreled whiskey is
classified as work-in-process inventory and is included in current assets.

Deferred transaction costs —Deferred
transaction costs consist of direct legal, accounting, filing and other fees and costs directly attributable to the proposed Business
Combination Agreement that (see Note 1). Deferred transaction costs were approximately $1,397,964 and $708,817 as of December 31,
2023 and 2022, respectively. As of May 18, 2023, the Business Combination Agreement was terminated. Accordingly, the related balance
of deferred transaction costs related to the Business Combination in the amount of $423,869 were expensed to general and administrative
expense during the period ended June 30, 2023, deferred transaction costs expensed related to the Business Combination Agreement portion
were $208,682 and $215,187 as of June 30, 2023 and December 31, 2022, respectively. Subsequent to the termination of the Business
Combination Agreement, the Company is contemplating an initial public offering (“IPO”). Accordingly, the deferred offering
costs relating to the Company’s contemplated IPO will continue to be deferred and capitalized