What security did Strategy issue and how much was sold?

Strategy issued 8,500,000 shares of its 10.00% Series A Perpetual Strife Preferred Stock on March 25, 2025, in a public offering registered under the Securities Act of 1933.

How do dividends work on the preferred stock?

Dividends accumulate cumulatively at 10.00% per year on the $100 stated amount and are payable quarterly on March 31, June 30, September 30 and December 31, beginning June 30, 2025, when declared by the board and solely in cash. Unpaid amounts compound quarterly at 100 basis points above the regular rate, rising by 100 basis points per subsequent period up to 18% per year.

Where does this preferred stock rank in Strategy's capital structure?

It ranks senior to the Class A common stock, Class B common stock and the 8.00% Series A Perpetual Strike Preferred Stock for dividends and liquidation distributions. It is junior to Strategy's existing and future indebtedness, structurally junior to the liabilities of its subsidiaries, and subject to any other preferred stock then outstanding.

Can holders force repurchase or can Strategy redeem the shares?

Strategy may redeem all shares for cash if outstanding shares fall below 25% of the amount originally issued or after a Tax Event, at the liquidation preference plus unpaid dividends. Holders may require repurchase at the stated amount plus accumulated unpaid dividends upon a Fundamental Change, as defined in the Certificate of Designations.

What happens if Strategy stops paying dividends?

A failure to declare a dividend by the record date is treated as a notice of deferral, and Strategy must use commercially reasonable efforts over the following 60 days to raise proceeds to cover the deferred dividends. If full accumulated dividends are not declared and paid for four or eight consecutive payment dates, holders gain the right to elect one or more directors, and Strategy is restricted from paying or repurchasing junior securities in certain cases.

Strategy 8-K: Shareholder Matters & Corporate Changes

01—Abstract

Summary

Summary of the 8-K filed March 25, 2025. Cited figures are marked; the original filing is the authoritative source.

On March 25, 2025, MicroStrategy Incorporated d/b/a Strategy ("Strategy") issued 8,500,000 shares of its 10.00%^a Series A Perpetual Strife Preferred Stock in a public offering registered under the Securities Act of 1933, and filed a Certificate of Designations with the Delaware Secretary of State to establish the terms of the stock.

The filing is a Form 8-K under Items 3.03 (Material Modification to Rights of Security Holders), 5.03 (Amendments to Articles of Incorporation or Bylaws) and 9.01 (Financial Statements and Exhibits). The preferred stock has a $100^b stated amount per share and accrues cumulative dividends at 10.00% per year, payable quarterly in arrears beginning June 30, 2025, but only when declared by the board and solely in cash. The security ranks senior to Strategy's Class A common stock, Class B common stock and its 8.00% Series A Perpetual Strike Preferred Stock as to dividends and liquidation distributions.

It is junior to all existing and future indebtedness and structurally junior to the liabilities of Strategy's subsidiaries. Unpaid dividends compound quarterly at an initial rate 100 basis points above the regular rate, rising by 100 basis points for each subsequent dividend period up to a maximum of 18%^c per year. If a dividend is not declared by the record date, a notice of deferral is deemed issued, and Strategy must use commercially reasonable efforts over the following 60 days to raise proceeds to cover the deferred amount.

The liquidation preference is initially $100^d per share but adjusts upward after each business day following the offering, based on sale transactions and the trading prices of the preferred stock. Strategy may redeem all shares for cash if outstanding shares fall below 25% of the amount originally issued, or after a "Tax Event," and holders may require repurchase at the stated amount plus accumulated unpaid dividends upon a "Fundamental Change." Holders also gain director-election rights after four or eight consecutive missed dividend periods, and voting rights on certain charter amendments and business combinations. Full terms are in Exhibit 3.1, the Certificate of Designations, which is incorporated by reference along with the specimen certificate (Exhibit 4.1) and the legal opinion of Wilmer Cutler Pickering Hale and Dorr LLP (Exhibit 5.1).

02—Key points

Key Highlights

Strategy issued 8,500,000 shares of 10.00% Series A Perpetual Strife Preferred Stock on March 25, 2025 in a public offering registered under the Securities Act of 1933.
Each share has a $100 stated amount, and cumulative dividends accrue at 10.00% per year, payable quarterly beginning June 30, 2025 only when declared, and solely in cash.
Unpaid dividends compound quarterly at 100 basis points above the regular rate, increasing by 100 basis points per period up to a maximum of 18% per year.
Failure to declare a dividend by the record date is treated as a notice of deferral, requiring Strategy to use commercially reasonable efforts over 60 days to raise funds to cover the deferred amount.
The preferred ranks senior to the Class A common, Class B common and 8.00% Series A Perpetual Strike Preferred Stock, but junior to all indebtedness and structurally junior to subsidiary liabilities.
The liquidation preference floats above the $100 stated amount based on sale transactions and recent trading prices, and redemption is available for cash only in limited cases (low outstanding count or a Tax Event).
Holders gain the right to elect a director after four or eight consecutive missed dividend periods, plus voting rights on certain charter amendments and business combinations.

03—Questions

Frequently Asked Questions

What security did Strategy issue and how much was sold?
Strategy issued 8,500,000 shares of its 10.00% Series A Perpetual Strife Preferred Stock on March 25, 2025, in a public offering registered under the Securities Act of 1933.
How do dividends work on the preferred stock?
Dividends accumulate cumulatively at 10.00% per year on the $100 stated amount and are payable quarterly on March 31, June 30, September 30 and December 31, beginning June 30, 2025, when declared by the board and solely in cash. Unpaid amounts compound quarterly at 100 basis points above the regular rate, rising by 100 basis points per subsequent period up to 18% per year.
Where does this preferred stock rank in Strategy's capital structure?
It ranks senior to the Class A common stock, Class B common stock and the 8.00% Series A Perpetual Strike Preferred Stock for dividends and liquidation distributions. It is junior to Strategy's existing and future indebtedness, structurally junior to the liabilities of its subsidiaries, and subject to any other preferred stock then outstanding.
Can holders force repurchase or can Strategy redeem the shares?
Strategy may redeem all shares for cash if outstanding shares fall below 25% of the amount originally issued or after a Tax Event, at the liquidation preference plus unpaid dividends. Holders may require repurchase at the stated amount plus accumulated unpaid dividends upon a Fundamental Change, as defined in the Certificate of Designations.
What happens if Strategy stops paying dividends?
A failure to declare a dividend by the record date is treated as a notice of deferral, and Strategy must use commercially reasonable efforts over the following 60 days to raise proceeds to cover the deferred dividends. If full accumulated dividends are not declared and paid for four or eight consecutive payment dates, holders gain the right to elect one or more directors, and Strategy is restricted from paying or repurchasing junior securities in certain cases.

04—Continue

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