Company: IPST
Filing Date: 2025-12-19
Form Type: S-1/A
Source: 0001213900-25-123872
Chunk: 38

Company: Heritage Distilling Holding Company, Inc.
Filing Date: 2025-12-19
Form: S-1/A
Chunk 38
---
 liquidity of $IP Tokens may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for $IP Tokens and other digital assets. Our shift towards an $IP-focused strategy requires substantial changes in our day-to-day operations and exposes us to significant operational risks. We operate our own validator on the Story Network and do not “delegate” our $IP Tokens to third party validation service providers. In either case, staking increases the risk of loss of $IP Tokens, including through slashing penalties and through increasing vulnerabilities to hacking in the staking smart contracts. Validators also need to maintain uptime in order to maximize their rewards. In addition, the $IP ecosystem may rapidly evolve, with frequent upgrades and protocol changes that may require significant adjustments to our operational setup. The upgrades and protocol changes may require that we incur unanticipated costs and it could cause temporary service disruptions. Technical failures or operational errors could impact our ability to obtain $IP Token rewards or gas fees, 19 which could result in our failure to meet our financial projections. Alternatively, if we had chosen to use a third -partyvalidation service, we would have had to share our staking rewards with that third -partyvalidator, but that third -partyvalidator may have more sophisticated technology which would enable those rewards to be greater. Staked $IP Tokens are also subject to lock -upperiods during which it cannot be withdrawn or sold. This lack of liquidity could limit our ability to respond to market changes or our financial needs. It is possible that we may in the future seek to mitigate this risk through so -called“liquid staking” arrangements, where we deposit $IP Tokens into a smart contract and receive in exchange a “liquid staking token” that would allow us to withdraw our $IP Tokens and associated rewards. The smart contract would then automatically delegate our $IP Tokens to a third -partystaking service provider. We could then engage in other DeFi activities with liquid staking tokens. While we anticipate that the price of liquid staking tokens will correlate to the price of $IP Tokens, there is a possibility that prices will diverge. This could especially happen if the validators deployed by the liquid staking contract are subject to slashing penalties, in which case we may be able to withdraw fewer $IP Tokens than we originally deposited. Any of these operational risks could materially and adversely affect our ability to execute our $IP Tokens strategy and may prevent us from realizing positive returns and could severely hurt our financial condition.