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NewCo Inc.

Pro Forma Cap Table
Start-up Capitalization

Founders
Options Granted
Options Available
Investor 1
Investor 2
Investor 3
Total
Pre-Money Valuation
Price / Share
Total $ Invested
Post-Money Valuation
Date

Common
1,000,000

1,000,000

Total
1,000,000
0
0
0
0
0
1,000,000

%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%

Series A
Investment

$ 1,000,000
$
$
$ 1,000,000
$ 3,000,000
$
3.00
$ 1,000,000
$ 4,000,000
6/30/2009

Series A Funding
Series A
Post-Money
FD
Preferred
Total
%
1,000,000 75.0%
0.0%
0.0%
333,333
333,333 25.0%
0.0%
0.0%
333,333
1,333,333 100.0%

Founders diluted by 25%
Investor desires 25%
ownership.

000 0 0 0 250.0% 0.000.000.0% 0.0% 0.000 $ $ $ $ 3.000 4.666. This values the pre-money company prior to options at $2.0% 20.0% 25.000.0% 0.0% 0.000 New Options True Pre-Money: $ % 80.000 0 0 0 0 0 1.0% 15.250.0% 0.000.0% 0.667 1.000.0% 100.000.0% 100.0% 0.0% 100.000 250.000 2.000 1.0% 0.000 1.40 1.000.400.000 Series A Investment $ $ $ $ 1.667 416.000 6/30/2009 Series A Funding Series A Post-Money Preferred Total 1.000.0% Including options in the pre-money calculation is very common in term sheets.000 % 100.000 250.000 416.000 1.667 FD % 60.000. Note the lower price per share despite same premoney valuation due to the new options.0% 2.000.0% New Option Pool Pre-Money Total 1.NewCo Inc.0% 0. Pro Forma Cap Table Start-up Capitalization Founders Options Granted Options Available Investor 1 Investor 2 Investor 3 Total Pre-Money Valuation Price / Share Total $ Invested Post-Money Valuation Date Common 1.4 .0% 0.000.000 0 250.000 Total 1.0% 0.667 416.

7% 0.000.000 1.667 % 60.5% 0.NewCo Inc.000 411.0% 0.9% 0.0% 45.0% 22.000 0 250.000 4.0% New Option Pool Pre-Money Total 1.0% 0.827.0% 0.0% Note who controls a majority of Preferred.0% 100.000 416.000 $ $ $ $ 3.000 182.000 0 0 0 0 0 1. This is important for voting rights.000.000 6/30/2010 Series B Funding Series B Post-Money Preferred Total 1.8% 0.000.667 0 0 161.500 FD % 36.000 Total 1. .000 4.0% 100.000 5.0% 0.000.000.0% 100.000 416.433 731.000.067 913.000 1.000.767 599.250.0% 0.000 New Options True Pre-Money: $ % 80.0% 2.0% 0.000 Series A Investment $ $ $ $ 1.47 $ 5.119. Pro Forma Cap Table Start-up Capitalization Founders Options Granted Options Available Investor 1 Investor 2 Investor 3 Total Pre-Money Valuation Price / Share Total $ Invested Post-Money Valuation Date Common 1.000.0% % Preferred 0.0% 0.400.000 1.0% 15.0% 0.000 6/30/2009 Series A Funding Series A Post-Money Preferred Total 1.0% 15.000 $ 15.000.000.0% 100.0% 100.000.000.000 $ 10.000.0% 20.1% 54.000 2.000 0 0 0 250.0% 0.0% 21.9% 26.095 Series B Investment $ $ $ $ 1.0% 0.0% 100.000 411.40 1.000.000 0 161.0% 0.000.000.667 416.000 1.0% 0.000 250.000.0% 0.0% New Option Pool Pre-Money Total 1.741.667 New Options True Pre-Money: $ % 54.5% 22.0% 9.7% 0.000 $ 5.000 250.000 % 100.0% 0.667 416.000.666.667 1.000.067 731.0% 25.833 2.0% 0.

000 % 100.000 $ $ $ $ 3.767 599.000 Shares % of Proceeds 0.7x 15.000.0% True Pre-Money: $ 9.000 1.0% 25.000 $ $ 1.000.5% 15.0% 20.000.000 6/30/2010 Exit Waterfall High Scenario $100.067 731.833 416.7% 0.0% 0.000 411.000.40 $ $ 5.667 0 0 161.0% 15.000 $ 7.48 - % of Proceeds 33.382 $ 14.000 - $ 5.433 731.000 Total Proceeds Series B Series A Common Options Total Multiple of Cost Series B Series A Check if Proceeds are above Preference: Series B Series A Dividend $ 0% $ Per Share 5.0% 100.2% 36.0% $100.38 6/30/2011 Value per share if everyone converted to comon.000 $ $ $ $ 5.000 250.000.0% $ 33.0% 2. $ $ $ $ 5.667 1.000.0% A/B convert to common and participate in Common proceeds.48 $ 36.3% 15.000.020 1.000.48 6/30/2011 Exit Value Value Per Share (as-converted basis) Exit Date Liquidation Preferences Series B 1x Straight Preferred Series B Dividend Date 6/30/2010 Total Series B Preference Convert to Common? Series A 1x Straight Preferred Series A Dividend Total Series A Preference Convert to Common? 6/30/2009 Dividend $ 0% $ Per Share 5.000 0 161.40 1.741.000 $ 15.0% 0.991.7% 13.000 Series B Funding Series B Post-Money Preferred Total 1.0% 416.666.000.842 3.667 416.827.000 $ $ 1.0% 0.000 416.0% 100.8% 1.83 3.793 $100.833 2.500 % 36.000 New Options True Pre-Money: $ Pre-Money Valuation Price / Share Total $ Invested Post-Money Valuation Date % 80.0% 0.000 250.3% 15.000 182.000 2.0% $ $ $ $ 33.000.5% 1.000 1.000.492 36.842 3.000 6.0% 0.000 6/30/2009 Series A Funding Series A Post-Money Preferred Total 1.000.40 - $ Shares 913.833 $ 913.198.5% 0.667 416.833 $ 5.667 22.000.000.9% 0. Shares 913.827.5% 15.0% 0.000. Pro Forma Cap Table Start-up Capitalization Founders Options Granted Options Available Investor 1 Investor 2 Investor 3 Total Common 1.0% 0.0x 1.000. Note it is greater than preferences of A and B.000 2.5% 22.0% 15.833 $ 5.47 3.667 416.000 4.2% 36.667 New Options % 54.000 Series A Investment $ $ $ $ 1.991.000 0 0 0 0 0 1.138 7.000 - $ 1.000.000 $ $ $ $ $ 1.48 $ 36.0% 0.000.9% 26.7% 411.492 $ 36. A converts to common.667 2.3% 31.0% 0.83 3.000.000.333 $ 15.0% $ 10.83 41.000 - Lower than preferences of B but higher than A.000.000.400.6x Important criteria of how well the investment performed.48 $ 36.333.1% 54.0% 0.0% % Preferred 0.000.138 B does not participate in Common proceeds.000 416.0% 0.198.741.595.000.47 TRUE $ 0% $ 2.000.382 14. 100.0% 100.0% New Option Pool Pre-Money Total 1.500 Per Share $ 36.7% 0.000 411.000.000 411.000.9% 13.40 Date 6/30/2010 $ - 6/30/2009 $ - TRUE $ Remaining Common Proceeds $100.0% 0.000 1.2x 1.250.0% 100.000.667 100.067 913.000 22.0% 0. VCs typically aim for 4-10x returns.793 100.476.NewCo Inc.830.000.0% 100.0% 0. TRUE Total Preferences Common Proceeds Series B Series A Common Options Total Low Scenario $ 12.667 416.0% 22.833 $ 913.47 $ 5.000 54.830.0% 0.0% New Option Pool Pre-Money Total 1.0% $ 12.0% 21.667 2.095 Series B Investment $ $ $ $ 1.000 416.47 FALSE $ 0% $ 2. .000 $ 36.000 - $ 5.000.000 - $ 1.574.000 $ 5.667 1.333.000.020 1.000.333 15.000. B exercises preference .000 1. OK OK OK OK Important check to make sure investor proceeds are greater than or equal to their preferences.000 0 250.1% $ 5.000.000 $ 4.574.47 - $ 5.000.0% 100.476.000.000.000.40 - $ Shares 913.000 % of Proceeds 33.000 1.000 4.000 5.119.000.000 416.595.667 % 60.000 0 0 0 250.0% 100.0% 45.47 - $ 5.000.8% 0.000 Total 1.

063.55 21.000.553.000 - $ 1.000 - $ 1.000.000.3x 14.65 34.652.000.250.9% 26.400.433 731.38 6/30/2011 Date 6/30/2010 $ 5.000 $ 36.0% 100.667 416.0% 20. Percentage of proceeds is an important way investors look at ownership.40 - $ TRUE Shares 913.000. In a big exit.0% 100.000 4.000 5. $ $ $ $ 100.667 416.0% 15.000 Investor receives preference and participates in Common.000.833 $ 5.0% New Option Pool Pre-Money Total 1.894 2.667 416.000 6/30/2009 Series A Funding Series A Post-Money Preferred Total 1.000.0% 2.894 2.333 1.364 $ 13.203 100.000 $ 8.40 - $ Shares 913.000 New Options True Pre-Money: $ Pre-Money Valuation Price / Share Total $ Invested Post-Money Valuation Date % 80.438.0% 100.667 % 60.000 $ 15.347 1.438.9% 2.5% 0.000.0% 100.0% 25.7% 14.000.049.1% 54.NewCo Inc.500 100.741.55 8.0% 0.833 416.000 6/30/2010 Series B Funding Series B Post-Money Preferred Total 1.833 $ 913.000 2.000.000 416.000 $ 5. effectively "double dipping".000 Shares % of Proceeds 913.000 $ 7.000 4.000 1.667 14.667 15.5% 22.000 250.000.000 411.40 Low Scenario $ 12.049.000 - TRUE Total Preferences $ 5.827.000 416.000 411.067 731.0% $ $ $ $ $ 2.667 2.4x 1.000.65 % of Proceeds 36.000.40 $ $ 5.568 34.8% 0.425 7.000.7% 0.000.333.0% 0.000 6/30/2009 $ - Dividend $ 0% $ Per Share 5.4% 34.02 61.000.47 FALSE $ 0% $ 2.65 34.0% 0.000 $ $ $ $ 3.47 $ 5.0% 2.0% 0.0% New Option Pool Pre-Money Total 1.5% 15.000.1x OK OK OK OK Series B Investment $ $ $ $ 1.000 0 161.000 Per Share % of Proceeds 8.0% 15.000 $ $ 1.5x 1.833 $ 5.000 Total 1.364 7.000 416.000.666.000.000.667 New Options % 54.000.0% 0.000 Per Share 40.833 $ 913.000 15.000.000 250.667 0 0 161.000 36. The smaller the exit.55 8.9% 0.000.000 $ $ 1.48 6/30/2011 Exit Value Value Per Share (as-converted basis) Exit Date Liquidation Preferences Series B Full Participation Series B Dividend Date 6/30/2010 Total Series B Preference Convert to Common? Series A 1x Straight Preferred Series A Dividend Total Series A Preference Convert to Common? 6/30/2009 Dividend $ 0% $ Per Share 5.000 0 0 0 0 0 1.0% 45.7% 0.000 $ 5.741.652.568 34.000 411.0% 0.000 Series A Investment $ $ $ $ 1.000 $ 10.000.767 599.667 1.3% 416.7% $ $ $ $ 7.47 - $ 5.636. Pro Forma Cap Table Start-up Capitalization Founders Options Granted Options Available Investor 1 Investor 2 Investor 3 Total Common 1.667 1.667 2.562 14.000.000 % 100.000.0% 100.0% 0.333 1.242.0% 0.1% 2.000 182.000.741.000.067 913.000.063.0% 0.000.0% $ $ $ $ $ 31.0% 100.0% 0.3% 2.3% 15.0% $100.000 - $ 5.5% 411.0% 21.000 $ 4.000 1.7% 14.000 Remaining Common Proceeds $ 95.425 Common Proceeds Series B Series A Common Options Total Total Proceeds Series B Series A Common Options Total Series B Effective Pre-Money Valuation Effective Post-Money Valuation Multiple of Cost Series B Series A Check if Proceeds are above Preference: Series B Series A $ $ $ $ Shares 913.000.666.0% 22.0% % Preferred 0.636.667 416.40 1.000.0% 0.0% .000.000. participation doesnt matter as much.095 Exit Waterfall High Scenario $100.833 33.333. the more effect participation has.666.553.203 95.12 34.500 % of Proceeds 33.000 2.833 2.000.2% 36.0% 100.47 - $ 5.000.000.000.000.347 1.000 - $ 5.562 14.000 0 250.000 416.0% 0.47 FALSE $ 0% $ 2.000.242.0% 0.2% 1.0% 0.0% True Pre-Money: $ 9.000.500 % 36.667 14.2% $ $ $ $ 36.000 0 0 0 250.000 1.119.000 1.0% $ 12.0% 0.