Strategy Inc. 10.00% Series A Perpetual Strife Preferred Stock

Company Overview

Business Model: Strategy Inc is the world's first and largest Bitcoin Treasury Company, pursuing financial innovation strategies to generate value from its bitcoin holdings, including the development and issuance of novel fixed-income instruments. Concurrently, Strategy Inc is an industry leader in AI-powered enterprise analytics software, advancing its vision of Intelligence Everywhere™. This dual focus on active bitcoin-focused capital management and a scaled operating software business aims for long-term value creation across both digital asset and enterprise analytics markets. Bitcoin serves as the primary treasury reserve asset, supplemented by cash and cash equivalents.

Market Position: Strategy Inc is the largest corporate holder of bitcoin globally, viewing bitcoin as a compelling long-term treasury reserve asset due to its scarcity, durability, and global liquidity. In enterprise analytics, Strategy Inc is recognized as an industry leader in AI-powered solutions, providing a comprehensive portfolio of software and services. Its cloud-native analytics platform, Strategy One™, and universal data layer, Strategy Mosaic™, are utilized across diverse sectors including retail, banking, technology, manufacturing, insurance, consulting, healthcare, telecommunications, and the public sector. The company competes in the highly competitive AI and analytics markets with global Independent Software Vendors such as IBM, Microsoft, Oracle, Salesforce, and SAP.

Recent Strategic Developments:

• Name Change: On August 11, 2025, the company changed its name from "MicroStrategy Incorporated" to "Strategy Inc".
• Bitcoin Strategy Evolution: In 2025, Strategy Inc structured and issued five classes of Preferred Stock instruments (STRF Stock, STRC Stock, STRE Stock, STRK Stock, and STRD Stock), collectively referred to as "digital credit," designed to offer differentiated indirect economic exposure to its Class A common stock and bitcoin holdings.
• USD Reserve Establishment: In December 2025, Strategy Inc established a U.S. dollar reserve (USD Reserve) with a balance of $2.25 billion as of February 13, 2026, to support dividend payments on its preferred stock and interest on outstanding indebtedness.
• Enterprise Analytics Innovation: Strategy Inc has integrated generative AI capabilities into its Strategy One™ and Strategy Mosaic™ platforms to automate and accelerate AI-enabled application deployment and provide conversational AI for non-technical users.
• Cloud Transition: As of January 2025, on-premises product licenses entered an end-of-support cycle, with full support concluding on December 31, 2026, driving customer migration to cloud subscription services.
• Capital Plan: In May 2025, Strategy Inc announced a capital plan to raise $84 billion in the medium-to-long term, comprising $42 billion in equity capital and $42 billion in fixed-income instruments.

Geographic Footprint: Strategy Inc operates globally with sales offices worldwide and critical business operations in Northern Virginia, China, Argentina, and Poland. International revenues constituted 43.0% of total revenues for the year ended December 31, 2025. The company utilizes a third-party data center hosting facility in the United States and other third-party cloud services. For the year ended December 31, 2025, Germany accounted for 10% or more of total consolidated revenues.

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 68.7%
• Operating Margin: -1140.8%
• Net Margin: -806.3%

Investment in Growth:

• R&D Expenditure: $93.9 million (19.7% of revenue)
• Capital Expenditures: $8.2 million
• Strategic Investments:
  • Bitcoin purchases: $22.47 billion in 2025.
  • Advance deposits on a new corporate aircraft: $37.0 million in 2025.

Business Segment Analysis

Software Business

Financial Performance (2025):

• Revenue: $477.2 million (Total revenues for the Software Business segment are equivalent to total consolidated revenues).
• Net Income: $90.7 million.
• Key Growth Drivers:
  • Subscription services revenue increased by $68.9 million (+64.5% year-over-year), driven by conversions from existing on-premises customers, increased usage by existing customers, and new customer sales.
  • Product license revenues decreased by $8.9 million, primarily due to the migration to cloud subscription services.
  • Product support revenues decreased by $39.6 million, mainly due to existing customers converting to cloud subscription services and non-renewals of support contracts.
  • Other services revenues decreased by $6.6 million, reflecting lower demand for consulting and training services.

Product Portfolio:

• Strategy One™: An AI-powered business intelligence platform offering interactive dashboards, enterprise reports, AI agents, and embedded analytics.
• Strategy Mosaic™: A universal data layer designed to establish a single source of truth across diverse data environments, featuring AI-powered data modeling and intelligent architecture for accelerated performance.
• Generative AI Capabilities: Integral to the portfolio, these capabilities automate and accelerate the deployment of AI-enabled applications, making advanced analytics accessible through conversational AI.
• HyperIntelligence™: An innovative feature providing context-based, click-free insights by hovering over keywords.
• Enterprise Semantic Graph™: A powerful metadata layer ensuring data insights are trustworthy across applications and users.

Market Dynamics:

• The platform is built for the cloud, with a containerized architecture optimized for AWS, Azure, and Google Cloud Platform.
• Strategy Inc's cloud solution for government holds FedRAMP Authorization, certifying compliance with U.S. Federal government security and data protection standards.
• Sales are primarily conducted through a direct sales force, complemented by a dedicated Customer Success team.
• Strategic partnerships are maintained with cloud hosting providers, system integrators, consulting firms, value added resellers, managed service providers, and independent software vendors.
• The AI and analytics markets are highly competitive and subject to rapid technological and market changes.

Corporate & Other (Bitcoin Strategy)

Financial Performance (2025):

• Net Loss: $(3,938.8) million.
• Key Performance Drivers:
  • Unrealized loss on digital assets: $(5,403.5) million, primarily due to a decrease in the fair market value of bitcoin during the year.
  • Digital asset custody fees: $(17.4) million.
  • Interest expense, net: $(65.3) million.
  • Income tax benefit: $1,591.7 million.
  • Corporate resources (personnel costs for bitcoin strategy): $(26.7) million.

Bitcoin Holdings & Strategy:

• As of February 13, 2026, Strategy Inc held approximately 717,131 bitcoins, acquired at an aggregate purchase price of $54.5 billion, with an average purchase price of approximately $76,027 per bitcoin. The market price of one bitcoin on Coinbase exchange was $68,734, resulting in an aggregate fair market value of $49.3 billion.
• As of December 31, 2025, the company held 672,500 bitcoins with a carrying value of $58.85 billion.
• Strategy Inc's bitcoin treasury operations include capital markets management, bitcoin acquisition processes, capital and liability management (including the USD Reserve), structuring and managing digital credit instruments, custody and risk management, and advocacy and education.

Capital Allocation Strategy

Shareholder Returns:

• Dividend Payments: Strategy Inc paid $381.4 million in aggregate dividends on its Preferred Stock during 2025. As of February 13, 2026, declared quarterly dividends on STRF Stock, STRE Stock, STRK Stock, and STRD Stock are $32.1 million, $23.0 million, $28.0 million, and $35.1 million, respectively. Monthly dividends on STRC Stock are $32.4 million (at 11.25% per annum).
• Share Repurchases: Not disclosed.
• Future Capital Return Commitments: Strategy Inc has no current plans to declare or pay cash dividends on its Class A or Class B common stock.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $2.30 billion
• Total Debt (net carrying value): $8.19 billion
• Credit Rating: 'B-' from S&P Global Ratings, affirmed in December 2025.
• Debt Maturity Profile (assuming holder put options exercised):
  • 2026: $40.3 million (Other long-term secured debt)
  • 2027: $1.02 billion (2028 Convertible Notes and Other long-term secured debt)
  • 2028: $6.40 billion (2029, 2030A, 2030B, 2031 Convertible Notes)
  • 2029: $800.0 million (2032 Convertible Notes)

Cash Flow Generation (2025):

• Operating Cash Flow: $(67.2) million (net cash used).
• Free Cash Flow: Not explicitly provided, but negative given operating cash flow and capital expenditures.

Operational Excellence

Production & Service Model: Strategy Inc's operational model for its Software Business focuses on the design, development, marketing, and sales of its enterprise analytics software platform. This includes cloud subscriptions and licensing arrangements, along with related services such as product support, consulting, and education. The platform is built on a cloud-native, containerized architecture optimized for major hyperscalers (AWS, Azure, Google Cloud Platform). Key offerings like Strategy One™ and Strategy Mosaic™ leverage AI and advanced analytics to provide business intelligence, data consistency, and actionable insights. The company is transitioning customers from on-premises product licenses (ending support December 31, 2026) to cloud-based subscription offerings.

Supply Chain Architecture: Key Suppliers & Partners:

• Cloud Hosting Providers: AWS, Microsoft, STACKIT, and Google (strategic partnerships for cloud-native platform optimization).
• System Integrators, Consulting Firms, VARs, MSPs, ISVs: Strategic partnerships for reselling, supporting, and extending the Strategy Inc platform.
• Bitcoin Custodians: Anchorage Digital Bank N.A., Coinbase Custody Trust Company, LLC, and Fidelity Digital Assets, NA (holding substantially all bitcoin in custody accounts).
• Bitcoin Trade Execution Partners: Affiliates of bitcoin custodians, used for efficient bitcoin acquisition and disposition.

Facility Network:

• Corporate Headquarters: Leased approximately 190,000 square feet in Northern Virginia, with the lease expiring in December 2030.
• Other Offices: Approximately 20,000 square feet in other U.S. locations and 87,000 square feet in various international locations.
• Research & Development: Concentrated in facilities in Northern Virginia, China, Argentina, and Poland.
• Data Centers: Utilizes a third-party data center hosting facility in the United States and other third-party cloud services.

Operational Metrics:

• Total employees: 1,539 as of December 31, 2025 (448 in U.S., 1,091 internationally).

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Strategy Inc primarily sells its offerings through a direct sales force with offices located throughout the world.
• Channel Partners: Strategic partnerships are maintained with a wide variety of third-party vendors, including cloud hosting providers, system integrators, consulting firms, value added resellers, managed service providers, and independent software vendors, who resell, support, or extend the Strategy Inc platform.
• Digital Platforms: Marketing programs leverage digital and social media, search and display advertising, industry and hosted events, webinars, and email to reach prospective buyers and partners.

Customer Portfolio: Enterprise Customers:

• Strategy Inc serves enterprises across a broad spectrum of industries, including retail, banking, technology, manufacturing, insurance, consulting, healthcare, telecommunications, and the public sector.
• Customers include the U.S. government, state and local governments, and government agencies.
• No single customer accounted for 10% or more of net accounts receivable or total consolidated revenues for the year ended December 31, 2025.

Geographic Revenue Distribution (Year Ended December 31, 2025):

• U.S.: 57.0% of total revenue ($272.2 million)
• EMEA (Europe, Middle East, Africa): 34.1% of total revenue ($162.7 million)
• Other Regions (Latin America, Asia Pacific, Canada): 8.9% of total revenue ($42.4 million)
• Germany accounted for 10% or more of total consolidated revenues in 2025.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics:

• AI and Analytics Markets: Characterized by high competition, rapidly changing technology, and dynamic market conditions.
• Digital Assets Market: Bitcoin and other digital assets are novel, highly volatile, and subject to significant legal, commercial, regulatory, and technical uncertainties. The market has historically shown limited liquidity and trading volumes compared to sovereign currencies, with potential susceptibility to market abuse.
• Competitive Landscape: The emergence of alternative digital assets (e.g., stablecoins, central bank digital currencies, proof-of-stake networks) and the increased availability of traditional investment vehicles for bitcoin exposure (e.g., spot bitcoin ETPs, bitcoin futures ETFs) are key dynamics.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors (Enterprise Analytics):

• IBM
• Microsoft
• Oracle
• Salesforce
• SAP

Primary Competitors (Bitcoin Strategy - for Capital):

• Exchange-Traded Products (ETPs) for bitcoin (spot bitcoin ETPs, bitcoin futures ETFs, leveraged bitcoin futures ETFs).
• Bitcoin miners.
• Digital asset exchanges and other digital asset service providers.
• Other companies that hold bitcoin or other digital assets as treasury reserve assets.
• Private funds that invest in bitcoin and other digital assets.
• Traditional financial firms that have entered the digital assets market.

Emerging Competitive Threats:

• New entrants and disruptive technologies in both AI/analytics and digital asset sectors.
• Alternative digital assets, including stablecoins and central bank digital currencies, which could compete with bitcoin as a medium of exchange or store of value.
• Regulatory actions or changes that could alter the digital asset market structure or impact Strategy Inc's ability to execute its bitcoin strategy.

Competitive Response Strategy:

• Strategy Inc aims to maintain its competitive advantage through continuous innovation in its AI-powered analytics offerings and by adapting its bitcoin strategy to evolving market conditions and regulatory environments.
• The company structures diverse "digital credit" instruments to appeal to a broad spectrum of investors, managing its cost of capital and leverage.
• It also engages in advocacy and educational activities to promote the acceptance and value of Bitcoin.

Risk Assessment Framework

Strategic & Market Risks

• Bitcoin Price Volatility: Bitcoin is a highly volatile asset, with significant price fluctuations directly influencing Strategy Inc's financial results and the market price of its listed securities. A substantial decline in bitcoin's price could adversely affect the company's ability to meet financial obligations.
• Digital Asset Uncertainty: Bitcoin and other digital assets are novel and subject to significant legal, commercial, regulatory, and technical uncertainties, which could negatively impact bitcoin's price and Strategy Inc's ability to hold or transact in it.
• Competition for Capital: Strategy Inc competes for capital with various entities in the digital asset space, including ETPs and other companies with bitcoin strategies, which could affect the availability and cost of financing for its bitcoin acquisitions.
• Alternative Investment Options: The increased availability of spot bitcoin ETPs and other investment vehicles may divert investor interest from Strategy Inc's listed securities, potentially affecting their market price.
• Software Business Demand: Revenue concentration in a single software platform means a significant decline in demand, adoption, or pricing could materially adversely affect the business.
• AI Integration Risks: Integrating AI into product offerings and operations carries risks of reputational harm, competitive disadvantage, legal liability, and adverse effects from flawed algorithms, biased datasets, or cybersecurity incidents.
• Geopolitical & Macroeconomic Factors: Global events (e.g., war, natural disasters, pandemics) and macroeconomic changes (e.g., interest rates, inflation) can significantly impact the global economy, the bitcoin market, and Strategy Inc's operations.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Dependence on third-party software, systems, and cloud environments means changes or new industry standards could require costly updates or reduce demand for Strategy Inc's software.
• Cybersecurity Threats: High risk of security breaches, cyberattacks, loss or destruction of private keys for bitcoin, or unauthorized access to data, which could lead to loss of bitcoin, reputational damage, and significant legal/financial liabilities. Emerging AI-driven and quantum computing threats are also a concern.
• Software Quality: The complex nature of Strategy Inc's software makes it susceptible to undetected errors, bugs, or security vulnerabilities, potentially reducing demand and leading to litigation.
• Talent Management: Inability to recruit or retain skilled personnel, or the loss of key executives like Michael J. Saylor, could materially adversely affect business operations and financial condition.

Financial & Regulatory Risks

• Profitability Challenges: Strategy Inc may not regain profitability, especially if significant unrealized losses on digital assets occur. Unrealized gains do not generate cash.
• Tax Liabilities: Exposure to greater than anticipated tax liabilities from bitcoin sales, changes in tax laws (e.g., impact of One Big Beautiful Bill Act of 2025 on effective tax rate from 2026), or potential application of Corporate Alternative Minimum Tax if current guidance changes.
• Indebtedness & Debt Service: Substantial indebtedness ($8.25 billion as of December 31, 2025) and associated interest expense ($36.2 million annually) limit financial flexibility. Inability to service debt could lead to default, bankruptcy, or liquidation.
• Preferred Stock Dividends: The ability to pay cash dividends on Preferred Stock is subject to financial condition, cash flow, and capital raising success. Regulatory and contractual restrictions may also limit dividend payments.
• Regulatory Oversight: Strategy Inc's bitcoin strategy subjects it to enhanced regulatory scrutiny from various U.S. and international agencies. A reclassification of bitcoin as a security could lead to Strategy Inc being deemed an "investment company," imposing significant regulatory burdens.
• Data Privacy & Compliance: Compliance with evolving U.S. and international data protection laws (e.g., GDPR, Data Security Program Rule) is critical. Failures could result in fines, litigation, and reputational harm.
• Legal Proceedings: Ongoing class action lawsuit (Dodge Class Action) and other legal proceedings could distract management, harm reputation, and incur substantial costs.

Innovation & Technology Leadership

Research & Development Focus:

• Core Technology Areas: Strategy Inc's R&D is centered on AI-powered enterprise analytics software, aiming to transform complex data environments into unified, insight-driven ecosystems.
• Innovation Pipeline: Key areas include the continuous development of Strategy One™ (cloud-native analytics platform) and Strategy Mosaic™ (universal data layer), with a strong emphasis on integrating generative AI capabilities to automate and accelerate AI-enabled applications. The company also monitors and advocates for the broader Bitcoin ecosystem and technologies like the Lightning Network for expanded use cases.

Intellectual Property Portfolio:

• Patent Strategy: Strategy Inc relies on copyrights, patents, trademarks, trade secrets, confidentiality procedures, and contractual commitments to protect its intellectual property. The company acknowledges the risk of third-party infringement claims and the potential for its IP to be challenged or invalidated.
• IP Litigation: The company periodically receives notices of alleged intellectual property infringement, which can be time-consuming and costly to address.

Technology Partnerships:

• Strategy Inc maintains strategic alliances with major cloud hosting providers, including AWS, Microsoft, STACKIT, and Google, to optimize its cloud-native architecture and extend its platform's reach.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Strategy Inc's future success is dependent on its ability to attract, train, assimilate, and retain highly skilled personnel, as well as the continued service of Michael J. Saylor.

Board Composition: The Board of Directors has the authority to elect directors to fill vacancies. Michael J. Saylor, as the beneficial owner of the majority of Class B common stock, controls approximately 40.1% of the total voting power as of December 31, 2025, giving him significant influence over matters requiring stockholder approval. The audit committee of the board oversees the cybersecurity risk management framework, with board members possessing significant software technology experience contributing their expertise.

Human Capital Strategy

Workforce Composition:

• Total Employees: As of December 31, 2025, Strategy Inc had 1,539 employees.
• Geographic Distribution: 448 employees were based in the United States, and 1,091 were based internationally.
• Skill Mix: The company emphasizes attracting, retaining, and developing "highly skilled personnel" across technology and other industries.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Strategy Inc continuously strives to understand the drivers of talent attraction, retention, and sustainable engagement in each of its operating geographies.
• Retention Strategies: The company benchmarks employee benefits against industry and local market standards and offers worldwide equity compensation programs to provide opportunities for employees to share in the appreciation of its Class A common stock.
• Employee Value Proposition: Focuses on creating an agile, evolving environment that supports employee growth and thriving, with initiatives that reward personal excellence and creativity.

Diversity & Development:

• Development Programs: Strategy Inc invests in preparing a highly skilled workforce through technical boot camps, regular training workshops, and various other learning experiences.
• Culture & Engagement: The company aims to foster an environment where employees can flourish, respond quickly to client demand, and enhance their connections with colleagues and communities globally.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Digital Assets: The regulatory landscape for bitcoin and digital assets is rapidly evolving and uncertain. U.S. federal and state agencies (e.g., Financial Crimes Enforcement Network, Commodity Futures Trading Commission, Securities and Exchange Commission, Financial Industry Regulatory Authority, Department of Justice, Internal Revenue Service) are actively examining digital asset operations, focusing on illicit activities and consumer protection.
• Commodity Exchange Act (CEA): The Commodity Futures Trading Commission views Bitcoin as a "commodity" under the CEA, granting it broad enforcement authority over market manipulation and fraud in spot digital asset markets.
• Securities Laws: While senior Securities and Exchange Commission officials have indicated bitcoin is not a "security," a contrary determination could classify Strategy Inc as an "investment company" under the Investment Company Act of 1940, subjecting it to significant additional regulatory controls.
• Anti-Money Laundering (AML) & Sanctions: Bitcoin's anonymity makes it susceptible to misuse for criminal activities. Strategy Inc has implemented policies and procedures to comply with applicable AML and sanctions laws.
• Payment Stablecoins: The Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), enacted in July 2025, establishes a federal framework for payment stablecoins, treating them as payment systems and mandating fiat-backed reserves and AML safeguards.
• Digital Asset Market Clarity Act of 2025 (CLARITY Act): Passed by the U.S. House of Representatives in July 2025, this bill distinguishes between digital commodities and digital securities, granting the Commodity Futures Trading Commission jurisdiction over digital commodities.
• International Compliance: Listing STRE Stock on the Luxembourg Stock Exchange's Euro MTF subjects Strategy Inc to certain disclosure and other requirements under applicable EU regulations, including the Markets in Crypto Assets Regulation (MiCA).

Trade & Export Controls:

• Data Security Program Rule: The U.S. Department of Justice’s National Security Division implemented this rule on April 8, 2025, restricting the transfer, sale, or sharing of sensitive personal data to or with entities in "countries of concern." Compliance may require modifications to data handling practices and could increase operational costs.

Legal Proceedings:

• Dodge Class Action: A putative class action lawsuit was filed on July 21, 2025, in the Court of Chancery of the State of Delaware against Strategy Inc and its Board of Directors. The lawsuit alleges violations of the Delaware General Corporation Law regarding an amendment to the STRK Stock certificate of designations and asserts a claim for breach of fiduciary duty.
• Brazil Matter: Strategy Inc's Brazilian subsidiary entered into leniency agreements with Brazilian authorities (SG/CADE in September 2020, CGU/AGU in July 2024, CGE-SP/PGE-SP in April 2025) following non-compliance with local procurement regulations. Payments of approximately $1.1 million in July 2024 and $0.4 million in April 2025 were made.
• Other Legal Proceedings: Strategy Inc is involved in various other legal proceedings arising in the normal course of business, which management does not expect to have a material adverse effect on its financial position, results of operations, or cash flows.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: Strategy Inc reported an effective tax rate of 30.4% for the year ended December 31, 2025, on a pretax loss of $5.53 billion, primarily driven by the tax effect of the unrealized loss on digital assets and a tax benefit related to share-based compensation.
• Geographic Tax Planning: Most of Strategy Inc's income is taxable in the U.S., with a significant portion under the Global Intangible Low-Taxed Income regime, transitioning to the Net Controlled Foreign Corporation Tested Income regime after the enactment of the One Big Beautiful Bill Act of 2025.
• Tax Reform Impact:
  • One Big Beautiful Bill Act of 2025 (OBBBA): Enacted July 4, 2025, this act will decrease the deduction allowable under the Net Controlled Foreign Corporation Tested Income regime from 50% to 40% starting fiscal year 2026, which is expected to increase Strategy Inc's effective tax rate. The act did not materially impact 2025 income tax expense.
  • Inflation Reduction Act of 2022 (IRA): Interim Guidance issued on September 30, 2025, clarifies that unrealized gains and losses on digital asset holdings can be disregarded when computing Adjusted Financial Statement Income for Corporate Alternative Minimum Tax (CAMT) purposes. Strategy Inc plans to exclude these, and as a result, does not expect to become subject to CAMT due to unrealized bitcoin gains.
• Deferred Tax Liabilities: As of December 31, 2025, Strategy Inc had deferred tax liabilities of approximately $1.93 billion, primarily related to the unrealized gain on its bitcoin holdings.
• Deferred Tax Assets: As of December 31, 2025, deferred tax assets were $4.5 million.
• Valuation Allowance: A valuation allowance of $0.5 million was maintained as of December 31, 2025, primarily related to foreign tax credits in certain jurisdictions deemed unlikely to be realized.
• Net Operating Loss (NOL) Carryforwards: As of December 31, 2025, Strategy Inc had $1.10 billion in U.S. NOL carryforwards (indefinite carryforward) and $7.6 million in foreign NOL carryforwards. Gross state NOLs amounted to $1.77 billion, with some expiring between 2034 and 2044 and the remainder carrying forward indefinitely.
• Unrecognized Tax Benefits: As of December 31, 2025, gross unrecognized income tax benefits, including accrued interest, totaled $13.4 million.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage:
  • Cyber Insurance: Strategy Inc maintains cyber insurance to help cover costs associated with certain cybersecurity events.
  • Directors & Officers (D&O) Liability Insurance: In June 2025, Strategy Inc secured new commercial D&O liability insurance policies providing $120 million in aggregate coverage for a one-year term. Prior to this, Michael J. Saylor provided indemnification for certain excluded claims, but this arrangement was not extended beyond June 2025.
  • Bitcoin Custodian Insurance: Strategy Inc's bitcoin custodians (Coinbase Custody Trust Company, LLC, Anchorage Digital Bank N.A., and Fidelity Digital Assets, NA) maintain commercial insurance coverage of $320.0 million, $100.0 million, and in excess of $100.0 million, respectively, in aggregate across all their customers. Strategy Inc does not maintain separate insurance for potential bitcoin losses.
• Risk Transfer Mechanisms:
  • Custodial Agreements: Strategy Inc's custodial services contracts include liability provisions holding custodians responsible for losses directly caused by their material breach, gross negligence, fraud, or willful misconduct. These contracts generally exclude liability for losses arising from blockchain protocol failures, third-party attacks not resulting from custodian breach, Strategy Inc's errors, or other events outside the custodians' control.
  • Contractual Risk Allocation: The company engages in contractual risk allocation with its custodians and other third parties, though specific details beyond custodian agreements are not provided.