View File Edit Assignment 4 (SUM 2019)Shell.docx Q-Search in Document Review SmartArt Tables Charts Document Elements Layout Insert Theme Styles Paragraph Font A Aa A 11 ABC Them Text Box ABE Styles 4 I 2 Assignment 4 (Anti-dilution protection) The founders of a start-up issued themselves 500,000 shares of common stock when the company started. The next year a venture investor provided $1,000,000 in return for preferred stock shares convertible into 500,000 shares of common stock ($2.00 per share). The venture investor negotiated FULL RATCHET anti-dilution protection at the time of the $1,000,000 investment. Subsequently the company needed to raise $625,000 and did so by issuing 500,000 shares of new convertible preferred stock ($1.25 per share). (Use the PP problem as a step by step guide) Initial conversion price is $2/share Company sells 500,000 new shares at $1.25 How many shares are "outstanding" after Round 2 (consider the revised full ratchet conversion price)? What are the percentage ownership interests of the Founders, Round 1 and Round 2 investors after the $625,000 Round 2 investment, based on the Round 1 investors FULL-RATCHET anti-dilution protection? 11 Aa Text Box Styles ABC ABE 5 If the Round 1 investors have weighted average anti-dilution protection, what is the new conversion price for the Round 1 investors after the $625,000 Round 2 investment (down from $2.00)? (Shares x conversion price) +amount raised Original Shares +New Shares ANS: What are the percentage ownership interests of the Founders, Round 1 and Round 2 investors after the $625,000 Round 2 investment, if Round 1 investors have weighted average anti-dilution protection? Print Layout View Sec Pages: 2 of 2 100% AUG T 18 M