Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 340

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 340
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or shares),
subject to a true-up provision that expires to the price per share of the Company’s anticipated IPO, if lower, (currently
$, or shares). The acquisition will be recorded at a fair value, based on the $ initial payment, and a fair value probability
applied to the contingent earn out payments. The valuation and accounting for this acquisition will be recorded in the Company’s
financial statements for the quarter ended March 31, 2024. The fair value of the acquisition will be re-measured for each subsequent reporting
period until resolution of the contingent earn out payments, and any increases or decreases in fair value will be recorded in the income
statement as an operating loss or gain. Under the terms of the TTS acquisition, TTS shareholders will be eligible to receive contingent
earn out payments from the Company through February 17, 2027 of:

| ● | Up to $800,000 per year (payable in Company common stock) in                                                                         
 each of the first 3 years post acquisition (for an aggregate of up to $2,400,000), calculated as $1.00 worth of Company common stock 
 for every $1.00 of revenue of TTS brands and activities that exceed the previous year’s TTS associated revenue. Shortfalls in years  
 1 and 2 to be caught up in years 2 and/or 3, if revenues are then sufficient.                                                        |

| ● | $395,000 if TTS is successful in securing an agreement for a                                                                         
 new tasting room location, to be branded TTS and Heritage Distilling, or as a Company approved sub-brand or collective brand, within 
 a certain confidential retail location in Portland OR within 3 years, TTS shareholders will receive an additional $395,000, payable  
 at HDHC’s election either in cash or in shares of the Company’s common stock (based on closing price 30 days post opening            
 of such location).                                                                                                                   |

See Note 10 related to the treatment of the shares
owed to TTS shareholders related to recently asserted dissenters’ rights related to that transaction.

On January 31, 2024, we terminated a contract
to produce a world-class gin for a large international spirit brand owner as we shift our focus toward putting our resources into higher
margin activities under our own core brands and programs and reducing risks associated with hourly labor in certain markets. The termination
of this contract is expected to result in decreased production services revenue beginning in the first quarter of