Filed Pursuant to Rule 424(b)(3)
File No. 333-42994
MICROSTRATEGY INCORPORATED
Prospectus Supplement No. 1 dated July 13, 2001
to the Prospectus Dated November 30, 2000
The information in this prospectus supplement concerning the selling
stockholders supplements the statements set forth under the caption "Selling
Stockholders" in the prospectus. This prospectus supplement should be read in
conjunction with the prospectus, which is required to be delivered with this
prospectus supplement.
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Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 8 of the prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
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The information in the following table is presented as of July 5, 2001 and
supersedes in part the information in the table appearing under the heading
"Selling Stockholders" in the prospectus:
Percentage of
Class A Common
Shares of Class A Stock to be
Number of Shares of Number of Shares of Common Stock to Beneficially
Class A Common Stock Class A Common be Beneficially Owned After the
Beneficially Owned Prior Stock Being Offered Owned After Offering
Name of Selling Stockholder to Offering (1)(2) Hereby(3) Offering (1)(4)(5) (1)(4)(5)(6)
---------------------------- ------------------------ ------------------- ------------------ ---------------
HFTP Investment L.L.C. (7) 2,577,909 4,703,592 427,049 1.1%
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(1) Except as otherwise indicated, the number of shares beneficially owned is
determined under rules promulgated by the SEC, and the information is not
necessarily indicative of beneficial ownership for any other purpose. The
selling stockholder has sole voting power and investment power with respect
to all shares listed as owned by the selling
stockholder. The selling stockholder does not own any shares of the class B
common stock of MicroStrategy.
(2) Includes 40,996 shares of our class A common stock issuable as dividends
through July 1, 2001 on our series A preferred stock in lieu of cash, and
2,536,913 shares of class A common stock issuable to the selling
stockholders upon conversion of the shares of our series A convertible
preferred stock and series B convertible preferred stock held by the
selling stockholder. Under the certificates of designations for the series
A convertible preferred stock and the series B convertible preferred stock,
the selling stockholder may not convert preferred shares to the extent such
conversion or exercise would cause the selling stockholder, together with
its affiliates, to have acquired a number of shares of class A common stock
during the 60-day period ending on the date of conversion which, when added
to the number of shares of class A common stock held at the beginning of
such 60-day period, would exceed 9.99% of our then outstanding class A
common stock, excluding for purposes of such determination shares of class
A common stock issuable upon conversion of the preferred shares which have
not been converted. The number of shares in the second column does not
reflect this limitation.
(3) Includes 4,703,592 shares of our class A common stock issued or issuable to
the selling stockholder upon conversion of the series A convertible
preferred stock held by the selling stockholder or as dividends on such
series A convertible preferred stock in lieu of cash, and gives effect to
the sale pursuant to the prospectus prior to July 5, 2001 of a total of
709,383 shares of our class A common stock issued to all the selling
stockholders named in the prospectus to which this prospectus supplement
relates. The actual number of shares of our class A common stock offered
hereby and included in the registration statement of which this prospectus
is a part includes, as provided by Rule 416 under the Securities Act, such
additional number of shares of common stock as may be issued or issuable
upon conversion of our series A convertible preferred stock and as
dividends on the series A convertible preferred stock to prevent dilution
resulting from any stock split, stock dividend or similar transaction.
(4) We do not know when or in what amounts the selling stockholder will offer
shares for sale, if at all. The selling stockholder may sell any or all of
the shares offered by the prospectus as supplemented hereby. Because the
selling stockholder may offer all or some of the shares pursuant to this
offering, and because there are currently no agreements, arrangements or
understandings with respect to the sale of any of the shares that will be
held by the selling stockholder after completion of the offering, we cannot
estimate the number of the shares that will be held by the selling
stockholders after completion of the offering. However, for purposes of
this table, we have assumed that, after completion of the offering, none of
the shares covered by this prospectus will be held by the selling
stockholder.
(5) In connection with the refinancing of our series A preferred stock, we have
filed a registration statement on Form S-3 (File No. 333-64104) relating to
the resale of an aggregate of 25,563,896 shares of class A common stock
issued or issuable to the selling
stockholders named in that registration statement in respect of the
exchange of shares of our series A preferred stock for, and upon conversion
of, shares of our series B preferred stock, series C preferred stock,
series D preferred stock and series E preferred stock, and in payment of
dividends on our series B preferred stock and series C preferred stock in
lieu of cash. As of July 5, 2001, after giving effect to the offerings
described in this prospectus and in the registration statement relating to
the refinancing, the selling stockholder would beneficially own no shares
of our class A common stock.
(6) Calculated based on 36,807,527 shares of class A common stock outstanding
as of June 30, 2001.
(7) Promethean Asset Management, LLC, a New York limited liability company,
serves as investment manager to HFTP Investment L.L.C. and may be deemed to
share beneficial ownership of the shares beneficially owned by HFTP by
reason of shared power to vote and to dispose of the shares beneficially
owned by HFTP. Promethean disclaims beneficial ownership of the shares
beneficially owned by HFTP. Mr. James F. O'Brien, Jr. indirectly controls
Promethean. Mr. O'Brien disclaims beneficial ownership of the shares
beneficially owned by Promethean and HFTP. HFTP is not a registered broker-
dealer. HFTP, however, is under common control with, and therefore an
affiliate of, a registered broker-dealer.