Company: IPST
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-006695
Chunk: 58

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 58
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| ● | difficulties consolidating facilities or transferring processes 
 and know-how;                                                   |

| ● | difficulties reducing costs of the acquired company’s 
 business;                                             |

| ● | diversion of management’s attention from our management; 
 and                                                      |

| ● | adverse impacts on retaining existing business relationships 
 with customers.                                              |

Our recent acquisition of Thinking Tree Spirits could present several challenges or potential liabilities that could adversely affect our business, including the following:

| ● | we may not be able to fully integrate the acquired brands or 
 products into our platform;                                  |

| ● | we may not be able to recover the cost of the investment in     
 a way that makes the acquisition profitable or a good decision; |

33

| ● | we may suffer reputational harm in the communities in which                                 
 Thinking Tree Spirits is located from people who object to a local business being acquired; |

| ● | we may not have been given all relevant information during our                                                                        
 due diligence process, which could have affected our decision to proceed with the acquisition or could have allowed us to renegotiate 
 the purchase price or other terms;                                                                                                    |

| ● | we are obligated by certain earn-out provisions of our purchase                                                                           
 contract to issue to the sellers of Thinking Tree Spirits additional shares of our common stock over the next three years if the Thinking 
 Tree Spirits brands grow in revenue over that period, which could lead to dilution for all other shareholders; and                        |

| ● | as the purchaser in the acquisition, we may be subject to litigation                                                                      
 related to certain acts of Thinking Tree Spirits or its management that occurred prior to the acquisition, including wrongful termination 
 or age discrimination claims, securities fraud, whistleblower issues or other matters, known or unknown to us at the time.                |

Certain former Thinking Tree Spirits shareholders opposed our acquisition of that company and filed a notice exercising dissenters’ rights, and while we believe we have resolved such matter, there still remains some uncertainty regarding what future rights such dissenters may have. In July 2024, three Thinking Tree Spirits shareholders provided Thinking Tree Spirits a notice of dissent to our proposed acquisition of Thinking Tree Spirits on the terms set forth in our acquisition agreement for that company. In July 2024, such former shareholders notified Thinking Tree Spirits and us of their intention to commence litigation to seek damages against Thinking Tree Spirits and us if we do not pay such former shareholders an amount in cash that they allege is the fair value of the shares of capital stock they held in Thinking Tree Spirits as required by