Company: MSTR
Filing Date: 2025-07-07
Form Type: 8-K
Source: 0000950170-25-094137
Chunk: 73

Company: Strategy Inc
Filing Date: 2025-07-07
Form: 8-K
Item: Item 8.01
Chunk 73
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 Stock is subject to adjustment in the manner described in the applicable certificate of designations, which adjustments may result in an increase in the liquidation preference for purposes of Section 305. In addition, if our board of directors does not declare a dividend on our STRK Stock or STRF Stock in respect of any dividend period before the related dividend payment date, the deferred dividend may be treated as an increase in the liquidation preference of STRK Stock or STRF Stock for such purposes. In either case, any increase in the liquidation preference could give rise to a deemed dividend to holders of our Preferred Stock. Although the matter is not entirely clear, we believe any deferred dividend or discount on our Preferred Stock should not be treated as giving rise to a deemed distribution on our Preferred Stock, and any adjustment of the Liquidation Preference of the STRF Stock or STRD Stock in accordance with its terms should not be treated as giving rise to a deemed distribution on our STRF Stock or STRD Stock. However, there is no assurance that the IRS or an applicable withholding agent will not take a contrary position.

In addition, the conversion rate of our STRK Stock is subject to adjustment in certain circumstances. If and to the extent that certain adjustments in the conversion rate (or failures to adjust the conversion rate) increase the proportionate interest of a holder of our STRK Stock in our assets or earnings and profits, the holder of our STRK Stock may be deemed to have received for U. S. federal income tax purposes a deemed distribution without the receipt of any cash or property.

Furthermore, upon a conversion of our STRK Stock into shares of our class A common stock, depending on the circumstances, any class A common stock received in respect of any deferred and unpaid dividend (and any dividend that has been declared and not yet paid as well as any accrued but unpaid dividend in the then-current dividend period) could be treated as a deemed distribution for U. S. federal income tax purposes.

Any deemed distribution on our Preferred Stock or any distribution to holders of our STRK Stock that is paid in shares of our class A common stock will generally be taxable to the same extent as a cash distribution. In addition, for any holder of our Preferred Stock that is a non-U. S. holder, any deemed distribution or non-cash distribution could be subject to U. S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty. Because deemed distributions or non-cash distributions received by a holder of our