Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 254

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 254
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/Forced Liquidation |     |                    |     1% |     |          |        |     |                   | 20%          |     |          |              |
| Held to Maturity                       |     |                    |     1% |     |          |        |     |                   | 10%          |     |          |              |

F-24 Heritage Distilling Holding Company, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited) NOTE 8 — FAIR VALUE MEASUREMENT (cont.)

Valuation of Warrant Liabilities— The fair value of the warrant liabilities at issuance and at each reporting period was estimated based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The warrants are free-standing instruments and determined to be liability-classified in accordance with ASC 480. The Company used the PWERM and the Monte Carlo Simulation (“MCS”) to incorporate estimates and assumptions concerning the Company’s prospects and market indications into the models to estimate the value of the warrants. The most significant estimates and assumptions used as inputs in the PWERM and MCS valuation techniques impacting the fair value of the warrant liabilities are the timing and probability of IPO, deSPAC Merger and default scenario outcomes (see the table below). The most significant estimates and assumptions used as inputs in the PWERM and MCS valuation techniques impacting the fair value of the warrant liabilities are those utilizing certain weighted average assumptions such as expected stock price volatility, expected term of the warrants, and risk-free interest rates.

|                                 |     | September 30, 2024 |               |     |          |     |     | December 31, 2023 |               |     |          |     |
|:--------------------------------|:----|:-------------------|:--------------|:----|:---------|:----|:----|:------------------|:--------------|:----|:---------|:----|
| Significant Unobservable Input  |     | Input              
 Range              |               |     | Weighted 
 Average  |     |     | Input             
 Range             |               |     | Weighted 
 Average  |     |
| Expected Term (in years)        |     |                    | 0.122 – 1.081 |     |          |     |     |                   | 0.122 – 1.081 |     |          |     |
| Volatility                      |     |                    | 70%           |     |          | 70% |