v3.25.2
Long-Term Debt
 6 Months Ended
Jun. 30, 2025
Long-Term Debt  
Long-Term Debt

16.Long-Term Debt

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4.25% senior convertible notes due 2030

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On January 28, 2025, the Company entered into a purchase agreement for the sale of $100,000 aggregate principal amount of 2030 Senior Notes in a private offering to qualified institutional buyers. The terms of the 2030 Senior Notes are governed by an Indenture, dated January 28, 2025 (the “2030 Indenture”), between the Company and the trustee.

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The 2030 Senior Notes are general senior, unsecured obligations of the Company and will mature on August 1, 2030, unless earlier converted, redeemed or repurchased. The 2030 Senior Notes bear interest at a rate of 4.25% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2025. The 2030 Senior Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding May 1, 2030, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2025 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2030 Senior Notes on each applicable trading day; (2) during the five business day period after any 10 consecutive trading day period, or the measurement period, in which the trading price (as defined in the 2030 Indenture) per $1,000 principal amount of the 2030 Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the 2030 Senior Notes on each such trading day; (3) if the Company calls such 2030 Senior Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events as set forth in the 2030 Indenture. On or after May 1, 2030 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2030 Senior Notes may convert all or any portion of their 2030 Senior Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the 2030 Indenture.

The conversion rate for the 2030 Senior Notes will initially be 13.0826 shares of the Company’s common stock per $1,000 principal amount of 2030 Senior Notes, which is equivalent to an initial conversion price of approximately $76.44 per share of common stock. The initial conversion price of the 2030 Senior Notes represents a premium of approximately 25.0% over the last reported sale price of the Company’s common stock on the Nasdaq Capital Market on January 23, 2025. The conversion rate for the 2030 Senior Notes is subject to adjustment under certain circumstances in accordance with the terms of the 2030 Indenture. In addition, following certain corporate events that occur prior to the maturity date of the 2030 Senior Notes or if the Company delivers a notice of redemption in respect of the 2030 Senior Notes, it will, in certain circumstances, increase the conversion rate of the 2030 Senior Notes for a holder who elects to convert its 2030 Senior Notes in connection with such a corporate event or convert its 2030 Senior Notes called (or deemed called) for redemption during the related redemption period (as defined in the 2030 Indenture), as the case may be. Initially, a maximum of 1,635,320 shares of the Company’s common stock may be issued upon conversion of the 2030 Senior Notes, based on the initial maximum conversion rate of 16.3532 shares of common stock per $1,000 principal amount of 2030 Senior Notes.

The Company may not redeem the 2030 Senior Notes prior to August 4, 2028. The Company may redeem for cash all or any portion of the 2030 Senior Notes (subject to the partial redemption limitation described in the 2030 Indenture), at its option, on or after August 4, 2028 and prior to the 21st scheduled trading day immediately preceding the maturity date, if the last reported sale price of its common stock has been at least 130% of the conversion price for the 2030 Senior Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2030 Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2030 Senior Notes.

If the Company undergoes a fundamental change (as defined in the 2030 Indenture), then, subject to certain conditions and except as set forth in the 2030 Indenture, holders may require, subject to certain exceptions, the Company to repurchase for cash all or any portion of their 2030 Senior Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2030 Senior Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

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The 2030 Indenture includes customary covenants and sets forth certain events of default after which the 2030 Senior Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the 2030 Senior Notes become automatically due and payable. The following events are considered “events of default” under the 2030 Indenture:

●default in any payment of interest on any 2030 Senior Note when due and payable and the default continues for a period of 30 days;
●default in the payment of principal of any 2030 Senior Note when due and payable at its stated maturity, upon optional redemption, upon any required repurchase, upon declaration of acceleration or otherwise;
●failure by the Company to comply with its obligation to convert the 2030 Senior Notes in accordance with the 2030 Indenture upon exercise of a holder’s conversion right, and such failure continues for three business days;
●failure by the Company to give (i) a fundamental change notice or notice of a make-whole fundamental change, in either case when due and such failure continues for five business days, or (ii) notice of a specified corporate transaction when due and such failure continues for one business day;
●failure by the Company to comply with its obligations in respect of any consolidation, merger or sale of assets;
●failure by the Company to comply with any of its other agreements in the 2030 Senior Notes or the 2030 Indenture for 60 days after written notice of such failure from the trustee or the holders of at least 25% in principal amount of the 2030 Senior Notes then outstanding;
●default by the Company or any of its significant subsidiaries (as defined in the 2030 Indenture) with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed with a principal amount in excess of $15.0 million (or its foreign currency equivalent), in the aggregate of the Company and/or any such significant subsidiary, whether such indebtedness now exists or shall hereafter be created, (i) resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity date or (ii) constituting a failure to pay the principal of any such indebtedness when due and payable (after the expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, and in the cases of clauses (i) and (ii), such acceleration shall not have been rescinded or annulled or such failure to pay or default shall not have been cured or waived, or such indebtedness is not paid or discharged, as the case may be, within 30 days after written notice to the Company by the trustee or to the Company and the trustee by holders of at least 25% in aggregate principal amount of the 2030 Senior Notes then outstanding in accordance with the 2030 Indenture; and
●certain events of bankruptcy, insolvency or reorganization of the Company or any of its significant subsidiaries.

Neither the 2030 Senior Notes, nor any shares of the Company’s common stock issuable upon conversion of the 2030 Senior Notes, have been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws, and unless so registered, may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

The Company accounts for the 2030 Senior Notes as a liability measured at its amortized cost, and no other features of the 2030 Senior Notes are bifurcated and recognized as a derivative. The proceeds from the issuance of the 2030 Senior Notes were approximately $95,984, net of debt issuance costs of $4,016 comprised primarily of commissions paid to the banks, professional and legal expenses relating to the issuance of the debt. The Company used a portion of the proceeds from the 2030 Senior Notes to enter into Capped Calls, as discussed below. The Company intends to use the remainder of the proceeds from this offering for the purchase of Bitcoin and general corporate purposes. The debt issuance costs are being amortized over the term of the 2030 Senior Notes, using the effective interest rate method, and recorded to interest expense on the Company’s condensed consolidated statement of operations. During the three-month period ended June 30, 2025, the effective interest rate on the 2030 Senior Notes, including debt issuance costs, was approximately 5.09%, and $1,220 was recorded as interest expense on the Company’s Unaudited Condensed Consolidated Statement of Operations for the three-month period ended June 30, 2025. During the six-month period ended June 30, 2025, the effective interest rate on the 2030 Senior Notes, including debt issuance costs, was approximately 5.09%, and $2,065 was recorded as interest expense on the Company’s Unaudited Condensed Consolidated Statement of Operations for the six-month period ended June 30, 2025. As of June 30, 2025, the Company accrued an interest of $1,793, which was included in accrued expenses in the Unaudited Condensed Consolidated Balance Sheet. As of June 30, 2025, the carrying value of the 2030 Senior Notes, net of amortization of debt issuance costs was $96,255. Unamortized debt issuance costs as of June 30, 2025 were $3,745.

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Capped Call Transactions

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In connection with the issuance of the 2030 Senior Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers of the 2030 Senior Notes and/or their respective affiliates and/or other financial institutions (the “Option Counterparties”) at a cost of approximately $7,740. The Capped Calls are separate transactions entered into by the Company with each of the Option Counterparties, and are not part of the terms of the 2030 Senior Notes and therefore will not affect any noteholder’s rights under the 2030 Senior Notes. Noteholders will not have any rights with respect to the Capped Calls.

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The Capped Calls cover, subject to anti-dilution adjustments, substantially similar to those applicable to the conversion rate of the 2030 Senior Notes, the number of shares of common stock initially underlying the 2030 Senior Notes, or up to approximately 1,308,258 shares of the Company’s common stock. The Capped Calls are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of 2030 Senior Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted 2030 Senior Notes, as the case may be, with such reduction and/or offset subject to a cap. The strike price of the Capped Calls is $76.44, while the cap price of the Capped Calls is initially $107.01 per share, which represents a premium of 75% over the closing price of the Company’s common stock of $61.15 per share on January 23, 2025 and is subject to certain customary adjustments under the terms of the Capped Calls.

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The Capped Calls are considered indexed to the Company’s common stock and are considered equity classified under GAAP, and were recorded as a reduction to additional paid-in-capital within stockholders’ equity on the Company’s Unaudited Condensed Balance Sheet when the Capped Calls were purchased in January 2025. The Capped Calls are not accounted for as derivatives and their fair value is not remeasured each reporting period.