Company reports $196.3 million in net income for the third quarter 2025, or $16.97 per share; compared to a loss of $3.4 million, or ($160.41) per share for the same period of 2024.

Year to date 2025 net income of $185.6 million, compares to $5.4 million in net income for the same period of 2024, an increase of 3,337.0% year over year

Net revenues for the quarter increased 69.9% compared to Q3 2024, on $2.99 million in net revenue during Q3 2025 vs $1.76 million in net revenue for the same period of 2024

Net revenue year to date increased 1.7% compared to the same period of 2024, on $5.4 million in net revenue in 2025 vs $5.3 million for the same period of 2024

Third quarter validator revenue of $1.9 million was earned in just 12 days of operations, at 97.2% gross margin

Going Concern issues resolved

GIG HARBOR, Wash., Nov. 18, 2025 (GLOBE NEWSWIRE) -- IP Strategy (the "Company") (Nasdaq: IPST), the first company to adopt a treasury reserve policy centered on the $IP token powered by the Story AI-native blockchain network, today announced its third quarter financial results for the period ended September 30, 2025.

"With $196.3 million in net income, the third quarter was a transformative period for IP Strategy. During the quarter we successfully completed our $223.8 million PIPE offering focused on the $IP token, from which we acquired 53.2 million $IP tokens, and then launched our industry-leading validator operations using those same tokens to increase net revenues by 69.9%, all while eliminating all secured debt and preparing our transition to becoming an asset light, high-margin enterprise," said CEO, Justin Stiefel. He added, "Notable in this filing is the removal of past going concern reservations, which is attributable to our improved balance sheet, reduced expenses and the addition of the new high-margin revenue from our validator operations."

Seung Yoon "SY" Lee, CEO and Co-Founder of PIP Labs and Chairman of the IP Strategy Advisory Board (and original creator of the Story Network), commented on the Company's initial financial report following the August 15, 2025 closing of the $223.8 million PIPE transaction: "This quarterly report shows the strength upon which the Company is building a multi-pronged approach to channeling the power of AI and intellectual property, including the successful launch of the $IP validator business. With a solid financial foundation from which to build, IP Strategy is poised to take advantage of strategic opportunities during the remainder of 2025 and into 2026, leveraging the power of the Story AI blockchain and the growing demand to protect and monetize IP rights in the era of AI."

Financial Highlights

   -- Net income: $196,263,893 for Q3 2025, resulting from a gain in Fair Value 
      of Intangible Digital Assets of $245,841,410 (management cautioned that 
      fair value gains and losses must be evaluated each period and could 
      result in large swings of token valuations and resulting fair value gains 
      or losses for any particular period); 
 
   -- Net income per share: $16.97 per share in Q3 2025 compared to ($160.41) 
      in Q3 2024; 
 
   -- Revenue: $2,989,001, an increase of 69.7% compared to $1,761,434 for Q3 
      2024; 
 
   -- EBITDA: $246,451,000 for Q3 2025 compared to $(2,442,000) for Q3 2024; 
 
   -- Total Assets: Increased to $482,778,372 compared to $28,000,026 at 
      year-end 2024; 
 
   -- Gross profit: $1,832,003 for Q3 2025 compared to $629,743 for Q3 2024, an 
      increase of 190.9%; 
 
   -- Adjusted gross margin excluding unabsorbed overhead: 65.2% for Q3 2025 
      compared to 63.4% for Q3 2024; and 
 
   -- Stock Split: Effected a 1-for-20 reverse stock split, to ensure Nasdaq 
      Minimum Bid Price compliance 

Net income of $196.3 million takes into account a liability of $49.4 million for estimated deferred future income taxes based on the unrealized gain in fair value of intangible digital assets during the period. Two important notes are made about this estimated tax liability:

First, it is important to note that no such tax would be paid until and if the Company were to actually sell any $IP tokens upon which a gain was actually realized. Currently, the vast majority of $IP tokens acquired by the Company in the August 2025 PIPE transaction have a minimum 12 month lockup restriction prohibiting their sale until August 2026 at the earliest and, as a result, no income tax is anticipated to be due in the near future related to these specific $IP tokens. Because the estimated tax was determined based on a particular fair value gain at September 30, 2025 based on a closing price of $IP tokens on such date, the fair value gain (or loss) of such intangible digital assets will likely change at the end of each reporting period, which will cause the reported estimated tax liability at the end of any such period to change according to such future estimated gain or loss. If the token price at December 31, 2025 remains well below the recorded price as of September 30, 2025, all fair value gains currently booked for Q3 would likely lead to a recorded loss for the year.

Second, the calculation of estimated future deferred income taxes in this Q3 report does not yet take into account any existing federal net operating loss ("NOL") carryforwards that may be available to reduce net income for federal tax purposes. The Company noted in its 2024 annual report on Form 10-K that as of December 31, 2024, the Company had identified $61.2 million in federal NOL carryforwards, some or all of which could be used to offset future booked net income to reduce possible tax liabilities. The Company is awaiting the completion of a Section 382 NOL review to determine to what extent past NOLs can be used moving forward, and if so, how much and over what period of time they can be used. The need for the Section 382 review was triggered by the size of the August 15, 2025 PIPE, the total number of new shares issued in that offering relative to the Company's previously outstanding shares of common stock and the ownership changes resulting therefrom. The Company anticipates the Section 382 report will be finalized prior to year end, which would allow for a full year tax and NOL reconciliation in the Company's audited financial statements for fiscal 2025 taking into account the Company's intangible digital asset value as of December 31, 2025 and any resulting gain or loss to be recognized based on the closing price of $IP tokens on such date. The use of any NOLs in the future would allow the Company to reduce future net income and any resulting income tax liabilities therefrom.

Third Quarter Financial Results

The Company reported net sales of $2,989,001 and $1,761,434 for the quarters ended September 30, 2025, and 2024, respectively, an increase of approximately $1,227,567, or 69.7%, period over period. The increase in net sales resulted primarily from $1,908,544 in new revenue for the quarter tied to the Company's $IP token validator service that was launched on September 18, 2025.

The Company reported a positive EBITDA of $246,451,000 for the third quarter 2025 compared to an EBITDA of $(2,442,000) for the same period 2024. The Company reported net income of approximately $196,263,893, or $16.97 per share, for the quarter ended September 30, 2025, compared to a net loss of $(3,432,931), or $(160.41) per share, for the quarter ended September 30, 2024.

Net income included a liability of $49,426,794 for estimated deferred federal taxes on the fair value gain of the Company's intangible digital assets as of September 30, 2025. This deferred tax liability is not due at this time and is subject to change based on future net operating loss carryforwards the Company may apply in the future and future changes in the fair value gain or loss on the intangible digital assets at future period-end reporting dates. $245,841,410 of the third quarter 2025 net income was attributable to the change in fair value of the Company's intangible digital assets based on the $IP token's closing price as of September 30, 2025. The Company expects to incur operating losses and higher operating expenses for the foreseeable future if the value of the $IP token is lower than its acquisition price. Additionally, the Company expects to take certain charges as it continues to consolidate its spirits production capacity and its spirits segment operations, closes retail tasting rooms at the end of 2025, and invests in inventory and digital marketing to support its DtC spirits business.

Net revenue from spirits sales and operations for the quarter ended September 30, 2025 was $1,081,000 compared to $1,774,000 for the same period 2024, a decrease of $693,000 between the periods, due primarily to inventory shortages of key spirits products and reductions in marketing and sales expenditures during the period as the Company focused on closing its August 15, 2025 PIPE transaction. Cost of sales related to the spirits business for the quarter ended September 30, 2025 was $1,104,000 compared to $1,132,000 for the same period 2024, a reduction of $28,000.

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November 18, 2025 10:27 ET (15:27 GMT)