Company: IPST
Filing Date: 2025-08-26
Form Type: S-1
Source: 0001213900-25-080839
Chunk: 383

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-08-26
Form: S-1
Chunk 383
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PWERM”) and the Discounted Cash Flow (“DCF”) method to incorporate estimates and assumptions concerning the Company’s prospects and market indications into a model to estimate the value of the notes. The most significant estimates and assumptions used as inputs in the PWERM and DCF valuation techniques impacting the fair value of the Convertible Notes are the timing and probability of an IPO, deSPAC Merger and default scenario outcomes (see the table below). Specifically, the Company discounted the cash flows for fixed payments that were not sensitive to the equity value of the Company at payment by using annualized discount rates that were applied across valuation dates from issuance dates of the Convertible Notes to their unconditional conversion at the initial public offering price of $4.00 per share on November 25, 2024. The discount rates were based on certain considerations including time to payment, an assessment of the credit position of the Company, market yields of companies with similar credit risk at the date of valuation estimation, and calibrated rates based on the fair value relative to the original issue price from the Convertible Notes. Upon the consummation of the Company’s initial public offering on November 25, 2024, the 2022 and 2023 Notes in the following table were exchanged and reclassified into equity (see Note 5), and were $0 as of December 31, 2024, The significant unobservable inputs that were included in the valuation of the 2022 and 2023 Convertible Notes as of December 31, 2023 include:

|                                        |     | December 31, 2023 |     |               |
|:---------------------------------------|:----|:------------------|:----|:--------------|
| Significant Unobservable Input         |     | Input             
 Range             |     | Weighted      
 Average       |
| Discount Rate                          |     | 48.5%             |     | 48.5%         |
| Expected Term (in years)               |     | 0.122 – 1.081     |     | 0.122 – 1.081 |
| Probability Scenarios                  |     |                   |     |               |
| IPO                                    |     | 70%               |     |               |
| deSPAC                                 |     | 0%                |     |               |
| Default/Dissolution/Forced Liquidation |     | 20%               |     |               |
| Held to Maturity                       |     | 10%               |     |               |

Upon