Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 173

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 173
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 which they are located. Of the 524 tribal casinos, we estimate that approximately 250 are viable candidates
for our TBN model. We calculate that with 100 TBN production and retail locations up and running in or near tribal casinos and entertainment
districts, the participating tribes collectively can earn revenue from spirits sales and taxes on the products produced on their lands
in excess of $450 million per year, and that we can earn royalties of approximately $45 million annually from these activities
based on the value we bring to the relationships and operations. We believe the combination of growing TBN locations with more consumer
exposure to our brand and products and the resulting product adoption within each region will support wholesale product sales with a positive
feedback loop for our wholesale growth initiatives.

Using a “distributive and localized”
network model, we expect to collaborate with tribes to lead the development of a nationwide tribal network for the production and sale
of premium, branded craft spirits. The network is comprised of tribally-owned, localized distilleries with a centralized high-volume distributive
distillery serving a specific area or region of the United States. Initial distilling production will occur at a single facility
with additional distillers receiving bulk spirits for final production and sale. By using this approach to production, each localized
distillery is expected to be able to produce finished spirits through bottling, canning and labeling without the need for excess distilling
equipment and unused capacity.

We generally seek to negotiate multi-year contracts
with tribes of up to nine years, plus extensions, and to charge a mix of advisory fees and royalties. In exchange for these fees,
we provide services relating to economic analysis, location design, pre-opening hiring and training, marketing support, centralized marketing
development, raw input sourcing, bulk buying power for direct inputs such as glass, labels, caps, merchandise, new product development,
monthly reporting, compliance and back-office support, halo marketing, staff training and new product development. Upon the commencement
of a contract, we charge development fees associated with analysis, pre-design, design and pre-opening service for advising the tribe
on the development of distilleries, tasting rooms and brands, and then charge a royalty on gross revenue once the distillery is operating.
As part of the agreement, the applicable tribe is expected to produce and sell our branded products, and we are expected to work jointly
with the tribe on products and brands unique to the tribe and its locations and regions. We have already entered into agreements with
multiple