Company: IPST
Filing Date: 2025-02-04
Form Type: 424B3
Source: 0001213900-25-010139
Chunk: 327

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-02-04
Form: 424B3
Chunk 327
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expects to receive in exchange for the sale of a product. Revenue is recognized net of any taxes collected from customers, which are subsequently
remitted to governmental authorities. Sales terms do not allow for a right of return unless the product is damaged. Historically, returns
have not been material to the Company. Amounts billed to customers for shipping and handling are included in sales. The results of operations
are affected by economic conditions, which can vary significantly by time of year and can be impacted by the consumer disposable income
levels and spending habits.

Direct to Consumer— The Company sells
its spirits and other merchandise directly to consumers through spirits club memberships, at the Heritage Distilling tasting rooms and
through the internet (e-commerce).

Spirits club membership sales are made under contracts with
customers, which specify the quantity and timing of future shipments. Customer credit cards are charged in advance of quarterly shipments
in accordance with each contract. The Company transfers control and recognizes revenue for these contracts upon shipment of the spirits
to the customer.

Tasting room and internet spirit sales are paid for at the
time of sale. The Company transfers control and recognizes revenue for the spirits and merchandise when the product is either received
by the customer (on-site tasting room sales) or upon shipment to the customer (internet sales).

The Company periodically offers discounts on spirits and other
merchandise sold directly to consumers through spirits club memberships, at the Heritage Distilling tasting rooms and through the internet.
All discounts are recorded as a reduction of retail product revenue.

Wholesale— The Company sells its spirits
to wholesale distributors under purchase orders. The Company transfers control and recognizes revenue for these orders upon shipment of
the spirits from the Company’s warehouse facilities. Payment terms to wholesale distributors typically range from 30 to 45 days.
The Company pays depletion allowances to its wholesale distributors based on their sales to their customers which are recorded as a reduction
of wholesale product revenue. The Company also pays certain incentives to distributors which are reflected net within revenues as variable
consideration. The total amount of depletion allowances and sales incentives for years ended December 31, 2023 and 2022 were $66,271 and
$44,591, respectively.

Third Party— The Company produces
and sells barreled spirits to Third Party customers who either hold them for investment or who have a plan to use the product in the future
once the spirits are finished aging. Third Party Barreled Spirits are paid with a deposit up front, with the remainder billed at the