Company: IPST
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001788230-25-000126
Chunk: 6

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part II, Item 1
Chunk 6
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Item 1. Legal Proceedings

We may be subject to legal disputes and subject to claims that arise in the ordinary course of business. Although the results of such litigation and claims in the ordinary course of business cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, results of operations, cash flows or financial condition. Regardless of outcome, litigation can have an adverse impact on us because of defense costs, diversion of management resources and other factors. Currently, there is no litigation pending against our company that could materially affect our company, as all of the litigation that was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 has been settled as follows:

On January 31, 2025, CFGI, LLC (“CFGI”) commenced a litigation against us in the Superior Court, Suffolk County, Massachusetts asserting claims arising under a November 1, 2022 written engagement letter agreement whereby CFGI agreed to provide financial, accounting and tax consulting services to us. CFGI contended that it fully performed its obligations under such agreement, but that the parties amended the agreement on or about May 22, 2023 when we fell behind in our payments. CFGI alleges further that, while we made some payments under the amended agreement, CFGI was, at the time of commencement of the litigation,owed approximately $730,000, plus interest.

The Company filed an answer to that complaint on May 12, 2025 and answers to interrogatories on June 10, 2025 to stay current with the litigation process while it worked to negotiate a settlement. As of December 31, 2024, the Company had accrued the entire amount payable to CFGI and the Company was in negotiations with CFGI on alternate payment terms that would have allowed the Company to pay the amounts due to CFGI over time. On July 30, 2025, the parties entered into a settlement agreement whereby the Company paid $500,000 in full satisfaction of all amounts owed to CFGI and the litigation was dismissed with prejudice.

On April 16, 2025, Kaylon McAlister, a former co-founder of Thinking Tree Spirits, filed suit in the Circuit Court of Oregon against Thinking Tree Spirits and our company seeking $470,000 under the Oregon dissenter rights statute, plus interest. While we are reviewing the matter, we believe the amount being sought is without merit and grossly overinflates the value