Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 323

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 323
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ASC 842, Leases (“ASC 842”) as of January 1, 2022. ASC 842 was adopted using the modified retrospective
transition approach, with no restatement of prior periods or cumulative adjustments to accumulated deficit. Upon adoption, the operating
lease right-of-use (“ROU”) asset was measured at cost, which included the initial measurement of the lease liability, prepaid
rent and initial direct costs incurred by the Company, less incentives received. The operating lease liability represents the present
value of the remaining minimum lease payments as of January 1, 2022. The Company elected the package of three practical expedients,
which allowed an entity to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases,
the lease classification for any expired or existing leases and initial direct costs for existing leases. The Company elected not to apply
the use-of-hindsight to reassess the lease term. The Company elected not to recognize leases with an initial term of 12 months or
less within the consolidated balance sheets and to recognize those lease payments on a straight-line basis in the consolidated statements
of operations over the lease term. The Company elected the practical expedient to not separate lease and non-lease components for all
leases. The new lease accounting standard also provides practical expedients for an entity’s ongoing accounting.

The Company has operating leases for corporate offices,
warehouses, distilleries and tasting rooms that are accounted for under ASC 842. The Company determines if an arrangement is a lease
at inception. Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and operating
lease liabilities represent the Company’s obligation to make lease payments arising from a lease. Operating lease ROU assets and
lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease
term. The Company recognizes lease expense for lease payments on a straight-line basis over the term of the lease. Operating lease ROU
assets also include the impact of any lease incentives. An amendment to a lease is assessed to determine if it represents a lease modification
or a separate contract. Lease modifications are reassessed as of the effective date of the modification. For modified leases, the Company
also reassess the lease classification as of the modification’s effective date.

The interest rate used to determine the present
value of the future lease payments is the Company’s incremental borrowing rate, because the interest rate implicit in the Company’s
operating leases is not readily