BASIC AND DILUTED NET INCOME / (LOSS) PER SHARE

The Company computes basic net income / (loss) per share by dividing net income / (loss) for the period by the weighted-average number of common shares outstanding during the period. The Company computes diluted net income / (loss) per share by dividing net income / (loss) for the period by the weighted-average number of common shares outstanding during the period, plus the dilutive effect of the stock options, RSU awards and exercisable common stock warrants, as applicable pursuant to the treasury stock method, and the convertible notes, as applicable pursuant to the if-converted method. The following table sets forth the computation of basic and diluted net income / (loss) per share:


	For the Years Ended December 31,
	2025		2024
Basic earnings per share of common stock:
Numerator:
Net Income / (Loss) for the period	$	(137,715,315)	$	710,458
Preferred stock dividend	(474,806)		(492,366)
Deemed Dividend due to warrant exchange	—		(155,279)
Net Income / (Loss) for the period – basic	$	(138,190,121)	$	62,813
Denominator:
Weighted average number of shares of common stock - basic	8,619,951		64,066
Net Income / (Loss) per share of common stock - basic	$	(16.03)	$	0.98

Diluted earnings per share of common stock:
Numerator:
Net Income / (Loss) for the period - basic	$	(138,190,121)	$	62,813
Change in fair value of dilutive convertible notes	—		(14,028,067)
Net Income / (Loss) for the period - diluted	$	(138,190,121)	$	(13,965,254)
Denominator:
Weighted average number of shares of common stock - basic	8,619,951		64,066
Conversion of convertible notes into common stock	—		130,468
Common warrants	—		159,353
Weighted average number of shares of common stock - diluted	8,619,951		353,887
Net Income / (Loss) per share of common stock - diluted	$	(16.03)	$	(39.46)

Diluted earnings / (loss) per share reflect the potential dilution of securities that could share in the earnings of an entity. For the year ended December 31, 2024, the calculation of diluted earnings per share includes the dilutive effect of shares issued for the conversion of the convertible notes and related warrants and subtracts the related gains from changes in their respective fair values from net income. The following number of shares of common stock from the potential exercise or conversion of outstanding potentially dilutive securities were excluded from the computation of diluted net

income / (loss) per share attributable to common stockholders for the periods presented because including them would have been antidilutive:


	For the Years Ended December 31,
	2025	2024
ISOs	114	300
Equity-classified Warrants	947,956	61,896
Legacy Warrants	221,746	171,997
Representative Warrants	—	4,218
Warrants issued with Preferred Stock (Series B)	35,042	—
Preferred Stock (A series)	858,595	70,736
RSU Awards	517,257	12,279
Total	2,580,710	321,426

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

IP STRATEGY HOLDINGS, INC. Earnings Per Share Disclosure

About Earnings Per Share Disclosures

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