understanding warrants treatment

Shares PriceSeries A 1,000 $ 1.0 Series A Warrants 1,000 $ 1.0 Options 1,000 $ 0.2 Common 1,000 Dividend per share $ 0.5

Scenario 1: Non Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A.

$0 Before this break point, debt is repaid$0 After this break point, the Series A receives value

$1,500 After this break point, the Common receive value$1,700 After this break point, the $0.20 options exercise (Common at $0.20)$3,300 After this break point, the Series A Warrants converts (Common at $1.0)$4,800 After this break point, the Series A converts (Common at $1.5)

Break Point #1 Debt is repaidDebt Principal $0Debt Interest through OPM Term 4.42% $0

Break Point #1 $0

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.Break Point #2 After this break point, the Series A receives valueBreak Point #1 $0Plus: Series A Liquidation Preference $1,000Plus: Series A Liquidation Dividend $500

Break Point #2 $1,500

Break Point #3 After this break point, the $0.20 options exercise (Common at $0.20)Shares Outstanding 2,000Strike Price $0.20Subtotal $400Less: Cash Proceeds from Option Exercise ($200)Plus Break Point # 2 $1,500


Break Point #4 After this break point, the Series A Warrants converts (Common at $1.0)Shares Outstanding 3,000Strike Price $1.00Subtotal $3,000Less: Cash Proceeds from Option and Warran ($1,200)Plus Break Point #2 $1,500


* Options available are included in this breakpoint.Break Point #5 After this break point, the Series A converts (Common at $1.5)Shares Outstanding 4,000Strike Price $1.50Subtotal $6,000Less: Cash Proceeds from Option and Warran ($1,200)Plus Break Point # 1 $0


Scenario 1: Non Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A. Scenario 2: Non Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

$0After this break point, the Series A receives value $0After this break point, the Common receive value $1,000After this break point, the $0.20 options exercise (Common at $0.20) $2,000After this break point, the Series A Warrants converts (Common at $1.0) $2,200After this break point, the Series A converts (Common at $1.5) $4,800

Break Point #1 Debt is repaidDebt PrincipalDebt Interest through OPM Term (a

Break Point #1

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%. (a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.Break Point #2 After this break point, the Series A receives interim LP and Series A Warrants ExerciseBreak Point #1Plus: Series A Interim LP

Break Point #2

After this break point, the $0.20 options exercise (Common at $0.20) Break Point #3 After this break point, the Series A receive remaining valueBreak Point #1Plus: Series A remaining LPSubtotalPlus: Series A Warrants remaining Value

Break Point #3

After this break point, the Series A Warrants converts (Common at $1.0) Break Point #4 After this break point, the $0.20 options exercise (Common at $0.20)Shares OutstandingStrike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point #3

Break Point #4

* Options available are included in this breakpoint.After this break point, the Series A converts (Common at $1.5) Break Point #5 After this break point, the Series A and Series A Warrants converts (Common at $1.5)

Shares OutstandingStrike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point # 1

Break Point #5

Scenario 2: Non Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

Before this break point, debt is repaidAfter this break point, the Series A receives interim LP and Series A Warrants ExerciseAfter this break point, the Series A receive remaining valueAfter this break point, the Common receives valueAfter this break point, the $0.20 options exercise (Common at $0.20)After this break point, the Series A and Series A Warrants converts (Common at $1.5)

$04.42% $0

Break Point #1 $0

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.After this break point, the Series A receives interim LP and Series A Warrants Exercise

$0$1,000

$0Break Point #2 $1,000

After this break point, the Series A receive remaining value$1,000 1000 1000

$500 .5*2000 1000 2000$1,500 2000 -1000

Plus: Series A Warrants remaining Value $500 2000$0


After this break point, the $0.20 options exercise (Common at $0.20)2,000$0.20$400

Less: Cash Proceeds from Option and Warrants E ($200)$2,000


* Options available are included in this breakpoint.After this break point, the Series A and Series A Warrants converts (Common at $1.5)

4,000$1.50

$6,000Less: Cash Proceeds from Option and Warrants E ($1,200)


Scenario 2: Non Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

After this break point, the Series A receives interim LP and Series A Warrants Exercise

After this break point, the Series A and Series A Warrants converts (Common at $1.5)

Shares PriceSeries A 1,000 $ 1.0 Series A Warrants 1,000 $ 1.0 Options 1,000 $ 0.2 Common 1,000 Dividend per share $ 0.5

Scenario 1: Fully Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A.

$0 Before this break point, debt is repaid$0 After this break point, the Series A receives value and Warrants Exercise

$1,500 After this break point, the Common and Series A receive value$2,100 After this break point, the $0.20 options exercise (Common at $0.20)


Break Point #1 $0

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.Break Point #2 After this break point, the Series A receives value and Warrants ExerciseBreak Point #1 $0Plus: Series A Liquidation Preference $1,000Plus: Series A Liquidation Dividend $500




Scenario 1: Fully Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A. Scenario 2: Fully Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

$0After this break point, the Series A receives value and Warrants Exercise $0After this break point, the Common and Series A receive value $1,000After this break point, the $0.20 options exercise (Common at $0.20) $2,000

$2,600


Break Point #1

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%. (a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.After this break point, the Series A receives value and Warrants Exercise Break Point #2 After this break point, the Series A receives interim LP and Series A Warrants Exercise

Break Point #1Plus: Series A Interim LP

Break Point #2

After this break point, the $0.20 options exercise (Common at $0.20) Break Point #3 After this break point, the Series A receives remaining valueBreak Point #1Plus: Series A remaining LP (Dividend amount)Plus: Series A Liquidation DividendPlus: Series A Warrants remaining Value (Divide

Break Point #3

Break Point #4 After this break point, the Common and Series A receive valueShares OutstandingStrike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point #3

Break Point #4

Scenario 2: Fully Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

Before this break point, debt is repaidAfter this break point, the Series A receives interim LP and Series A Warrants ExerciseAfter this break point, the Series A receives remaining valueAfter this break point, the Common and Series A receive valueAfter this break point, the $0.20 options exercise (Common at $0.20)

$04.42% $0

Break Point #1 $0


$0$1,000


After this break point, the Series A receives remaining value$1,000

Plus: Series A remaining LP (Dividend amount) $500Plus: Series A Liquidation Dividend $1,500Plus: Series A Warrants remaining Value (Divide $500


After this break point, the Common and Series A receive value4,000$0.20$800



Scenario 2: Fully Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.


Shares PriceSeries A 1,000 $ 1.0 Series A Cap of 3x Series A Warrants 1,000 $ 1.0 Series A reaches CapOptions 1,000 $ 0.2 Series A convertsCommon 1,000 Dividend per share $ 0.5

Scenario 1: Capped Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A.

$0 Before this break point, debt is repaid$0 After this break point, the Series A receives value and Warrants exercise

$1,500 After this break point, the Common receive value$2,100 After this break point, the $0.20 options exercise (Common at $0.20)$9,300 After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0)

$11,300 After this break point, the Series A Warrants converts (Common at $3.0)$12,800 After this break point, the Series A converts (Common at $3.5)


Break Point #1 $0

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.Break Point #2 After this break point, the Series A receives value and Warrants exerciseBreak Point #1 $0Plus: Series A Liquidation Preference $1,000Plus: Series A Liquidation Dividend $500




Break Point #4 After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0)Shares Outstanding 4,000Strike Price $2.00Subtotal $8,000Less: Cash Proceeds from Option Exercise ($200)Plus Break Point #2 $1,500


Break Point #5 After this break point, the Series A Warrants converts (Common at $3.0)Shares Outstanding 3,000Strike Price $3.00Subtotal $9,000Less: Cash Proceeds from Option and Warran ($1,200)Plus Break Point # 1 $0Plus Remaining Max Par of Series A $3,500


Break Point #6 After this break point, the Series A converts (Common at $3.5)Shares Outstanding 4,000Strike Price $3.50Subtotal $14,000Less: Cash Proceeds from Option and Warran ($1,200)Plus Break Point # 1 $0


$ 3.0 Series A reaches Cap $ 2.0

$ 3.5

Scenario 1: Capped Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A. Scenario 2: Capped Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

$0After this break point, the Series A receives value and Warrants exercise $0After this break point, the Common receive value $1,000After this break point, the $0.20 options exercise (Common at $0.20) $2,000After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0) $2,600After this break point, the Series A Warrants converts (Common at $3.0) $9,800After this break point, the Series A converts (Common at $3.5) $12,800


Break Point #1

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%. (a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.After this break point, the Series A receives value and Warrants exercise Break Point #2 After this break point, the Series A receives interim LP and Series A Warrants Exercise

Break Point #1Plus: Series A Interim LPPlus: Series A Liquidation Dividend

Break Point #2

After this break point, the $0.20 options exercise (Common at $0.20) Break Point #3 After this break point, the Series A receives remaining valueBreak Point #1Plus: Series A remaining LPPlus: Series A Liquidation DividendPlus: Series A Warrants remaining Value

Break Point #3

After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0) Break Point #4 After this break point, the $0.20 options exercise (Common at $0.20)Shares OutstandingStrike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point #3

Break Point #4

After this break point, the Series A Warrants converts (Common at $3.0) Break Point #5 After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0)Shares OutstandingStrike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point # 1

Break Point #5

Break Point #6 After this break point, the Series A and Series A Warrants converts (Common at $3.5)After this break point, the Series A converts (Common at $3.5) Shares Outstanding

Strike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point # 1

Break Point #5

Scenario 2: Capped Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

Before this break point, debt is repaidAfter this break point, the Series A receives interim LP and Series A Warrants ExerciseAfter this break point, the Series A receives remaining valueAfter this break point, the Common and Series A receives valueAfter this break point, the $0.20 options exercise (Common at $0.20)After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0)After this break point, the Series A and Series A Warrants converts (Common at $3.5)

$04.42% $0

Break Point #1 $0


$0$1,000

Plus: Series A Liquidation Dividend $0Break Point #2 $1,000


$500Plus: Series A Liquidation Dividend $1,500Plus: Series A Warrants remaining Value $500





After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0)4,000$2.00

$8,000Less: Cash Proceeds from Option and Warrants E ($200)

$2,000Break Point #5 $9,800

After this break point, the Series A and Series A Warrants converts (Common at $3.5)4,000$3.50





After this break point, the Series A and Series A Warrants reaches cap (Common at $2.0)After this break point, the Series A and Series A Warrants converts (Common at $3.5)

Shares PriceSeries A 1,000 $ 1.0 Series A MPP (including DividSeries A Warrants 1,000 $ 1.0 Series A reaches CapOptions 1,000 $ 0.2 Series A convertsCommon 1,000 Series A Warrants reaches capDividend per share $ 0.5

Scenario 1: Capped Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A.

$0 Before this break point, debt is repaid$0 After this break point, the Series A receives value

$1,500 After this break point, the Common receives value$2,100 After this break point, the $0.20 options exercise (Common at $0.20)$7,300 After this break point, the Series A reaches cap (Common at $1.5)$8,800 After this break point, the Series A Warrants reaches its cap (Common at $2.0)

$10,800 After this break point, the Series A and Series A Warrants converts (Common at $3.0)


Break Point #1 $0

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.Break Point #2 After this break point, the Series A receives valueBreak Point #1 $0Plus: Series A Liquidation Preference $1,000Plus: Series A Liquidation Dividend $500




Break Point #4 After this break point, the Series A reaches cap (Common at $1.5)Shares Outstanding 4,000Strike Price $1.50Subtotal $6,000Less: Cash Proceeds from Option Exercise ($200)Plus Break Point #2 $1,500


Break Point #5 After this break point, the Series A Warrants reaches its cap (Common at $2.0)Shares Outstanding 3,000Strike Price $2.00Subtotal $6,000Less: Cash Proceeds from Option and Warran ($200)Plus Break Point # 1 $0Plus Remaining Max Par of Series A $3,000


Break Point #6 After this break point, the Series A and Series A Warrants converts (Common at $3.0)Shares Outstanding 4,000Strike Price $3.00Subtotal $12,000Less: Cash Proceeds from Option and Warran ($1,200)Plus Break Point # 1 $0


Series A MPP (including Divid $ 3.0 Series A reaches Cap $ 1.5

$ 3.0 Series A Warrants reaches cap $ 2.0

Scenario 1: Capped Participating Series A. Dividend for Warrants would be declared from the day it becomes Series A. Scenario 2: Capped Participating Series A. Dividend for Warrants would be declared from the original issue date of Series A.

$0After this break point, the Series A receives value $0After this break point, the Common receives value $1,000After this break point, the $0.20 options exercise (Common at $0.20) $2,000After this break point, the Series A reaches cap (Common at $1.5) $2,600After this break point, the Series A Warrants reaches its cap (Common at $2.0) $7,800After this break point, the Series A and Series A Warrants converts (Common at $3.0) $10,800


Break Point #1

(a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%. (a) The after-tax cost of debt is Silicon Valley Bank's average loan yield as of Q2 2010. The tax rate utilized is 40%.Break Point #2 After this break point, the Series A receives interim LP and Series A Warrants ExerciseBreak Point #1Plus: Series A Interim LPPlus: Series A Liquidation Dividend

Break Point #2

After this break point, the $0.20 options exercise (Common at $0.20) Break Point #3 After this break point, the Series A receives remaining valueBreak Point #1Plus: Series A remaining LPPlus: Series A Liquidation DividendPlus: Series A Warrants remaining Value

Break Point #3

After this break point, the Series A reaches cap (Common at $1.5) Break Point #4 After this break point, the $0.20 options exercise (Common at $0.20)Shares OutstandingStrike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point #3

Break Point #4

After this break point, the Series A Warrants reaches its cap (Common at $2.0) Break Point #5 After this break point, the Series A and Series A Warrants reaches cap (Common at $1.5)Shares OutstandingStrike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point # 1

Break Point #5

Break Point #6 After this break point, the Series A and Series A Warrants converts (Common at $3.0)After this break point, the Series A and Series A Warrants converts (Common at $3.0) Shares Outstanding

Strike PriceSubtotalLess: Cash Proceeds from Option and Warrants EPlus Break Point # 1

Break Point #5


Before this break point, debt is repaidAfter this break point, the Series A receives interim LP and Series A Warrants ExerciseAfter this break point, the Series A receives remaining valueAfter this break point, the Common and Series A receives valueAfter this break point, the $0.20 options exercise (Common at $0.20)After this break point, the Series A and Series A Warrants reaches cap (Common at $1.5)After this break point, the Series A and Series A Warrants converts (Common at $3.0)

$04.42% $0

Break Point #1 $0


$0$1,000

Plus: Series A Liquidation Dividend $0Break Point #2 $1,000


$500Plus: Series A Liquidation Dividend $1,500Plus: Series A Warrants remaining Value $500





After this break point, the Series A and Series A Warrants reaches cap (Common at $1.5)4,000$1.50

$6,000Less: Cash Proceeds from Option and Warrants E ($200)

$2,000Break Point #5 $7,800

After this break point, the Series A and Series A Warrants converts (Common at $3.0)4,000$3.00





After this break point, the Series A and Series A Warrants reaches cap (Common at $1.5)After this break point, the Series A and Series A Warrants converts (Common at $3.0)

understanding warrants treatment

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