Convertible Note & Cap Table Math Guide for Florida

What this calculator does

Run this scenario in DocketMath using the Convertible Note Cap Table calculator.

DocketMath’s Convertible Note & Cap Table Math tool helps you model how a convertible note converts into equity and how that conversion flows through a simple cap table—including:

• Conversion price math (e.g., note converts at the stated discount and/or after a valuation cap)
• Conversion amount (principal vs. principal + accrued interest, depending on your inputs)
• Ownership outcomes for:

  • Noteholders converting into shares
  • Existing shareholders experiencing dilution
  • The post-conversion “fully diluted” structure you can use for follow-on scenarios

This guide is jurisdiction-specific to Florida only for the narrow purpose of discussing time-to-claim considerations tied to certain legal deadlines. It does not provide legal advice, and it does not replace counsel for deal-specific drafting questions.

When to use it

Use DocketMath when you need reliable numbers for any of the following:

• **Term sheet / financing modeling (pre-close)

  • You want to test how different combinations of principal, interest, discount, and valuation cap change who owns what after conversion.
• SAFE/convertible bridge comparisons

  • While SAFEs and convertible notes are drafted differently, the math of conversion outcomes—especially dilution—often needs the same type of modeling.
• Board or investor updates

  • If you’re explaining why dilution changed between rounds, cap table math is easier to communicate with concrete calculations.
• Post-round reconciliation

  • When a conversion event occurs, you may need to sanity-check the implied conversion price and the resulting share count.

Florida timing context (general planning reference)

If you’re dealing with disputes or enforcement questions, Florida’s general statute of limitations is 4 years. The general rule referenced here is:

• Florida Statute § 775.15(2)(d) → 4-year general period
  Source: Florida Senate, Statutes (2004 edition page) https://www.flsenate.gov/Laws/Statutes/2004/775.15?utm_source=openai

⚠️ This is a general/default timeline reference, not a claim-specific guarantee. If your situation involves a particular claim category, the deadline could differ.

Primary CTA (tool): /tools/convertible-note-cap-table

Step-by-step example

Below is a concrete modeling example you can replicate in DocketMath. The goal is to show how changes in inputs affect outputs—especially conversion price, shares issued, and dilution.

Example deal inputs (convertible note)

Assume a convertible note with:

• Principal: $500,000
• Accrued interest included in conversion: Yes (for simplicity)
• Accrued interest: $50,000
• Total converting amount: $550,000
• Discount: 20%
• Valuation cap: $5,000,000
• Pre-money valuation (at conversion event): $8,000,000
• Existing fully diluted shares before conversion: 4,000,000 shares
• No option pool changes (keep it simple for the walkthrough)

Step 1: Compute the “discount implied price” (conversion at discount)

If the company’s pre-money is $8,000,000 and existing shares are 4,000,000, then the implied price per share is:

• Implied price per share = $8,000,000 / 4,000,000
• Implied price per share = $2.00

With a 20% discount, the discounted conversion price becomes:

• Discounted price = $2.00 × (1 − 0.20)
• Discounted price = $1.60

Step 2: Compute the “cap implied price” (conversion at cap)

With a valuation cap of $5,000,000, the cap implied conversion price is based on cap valuation over the same share basis:

• Cap price per share = $5,000,000 / 4,000,000
• Cap price per share = $1.25

Step 3: Choose the conversion price rule (discount vs. cap)

Most common note structures convert at the more favorable price to the noteholder (often the lower price per share). In this example:

• Discount price: $1.60
• Cap price: $1.25
• More favorable to noteholder = $1.25 (lower price)

So conversion price = $1.25 per share.

Step 4: Compute shares issued to the noteholder

Shares issued = conversion amount / conversion price

• Shares to issue = $550,000 / $1.25
• Shares to issue = 440,000 shares

Step 5: Update the cap table and compute dilution

• Pre-conversion shares: 4,000,000
• New shares issued: 440,000
• Post-conversion shares: 4,440,000

Existing shareholders’ ownership dilution (all prior holders combined):

• Existing ownership % post = 4,000,000 / 4,440,000
• Existing ownership % post ≈ 90.09%
• Noteholder ownership % post ≈ 9.91%

Step 6: Sanity check with “implied valuation” intuition

At $1.25 per share, post-money implied equity for the note conversion is consistent with a cap-based price. You can quickly check whether the implied valuation falls near the valuation cap mechanics you expect.

Common scenarios

Convertible note math often varies in ways that materially change outputs. Use these scenarios to guide which inputs you test in DocketMath.

1) Discount-only vs. cap-only

Try running two versions:

• Discount-only: set cap to $0 or leave it blank (depending on how DocketMath expects inputs)
• Cap-only: set discount to 0

What you’ll observe:

• Conversion price switches to whichever clause controls
• Shares issued can jump dramatically if the cap is tight relative to the next round valuation

2) Interest treatment: included vs. excluded

Two common ways to model conversion:

• Include accrued interest in the converting amount
• Exclude interest (convert only the principal)

Expected behavior:

• Including interest increases conversion amount → more shares → more dilution

Checklist idea for your internal runbook:

3) Multiple notes / tranches

If you have:

• Note A: $250,000
• Note B: $300,000

…and each has different caps/discounts (or different terms), then:

• Run each note (or input them together if your tool supports batching)
• Verify:

  • Total new shares = sum of each note’s shares (or aggregated logic)
  • Post-conversion fully diluted totals remain consistent

4) Changes in share base (“fully diluted” shares)

Conversion price sometimes references a share count that is either:

• Common shares outstanding only, or
• Fully diluted shares (includes option pool, warrants, etc.)

Because price per share is share-count sensitive, even a 10% change in the share base can shift conversion price and dilution.

Use this checklist:

5) Different pre-money inputs during modeling

Scenario planning often changes the pre-money valuation at conversion.

Test multiple valuations (e.g., $6M, $8M, $12M) and track:

• When the cap stops being relevant (because the discount price becomes lower)
• When the discount dominates

Tips for accuracy

To get consistent, defensible outputs, focus on data hygiene and clause alignment.

Validate your conversion clause mapping

Before doing the math, make sure the following are consistent with your note agreement:

• Discount percent
• Valuation cap value (and whether it applies)
• Whether conversion uses the more favorable (lower) price to the noteholder
• Whether interest converts alongside principal

Use a disciplined input-to-output worksheet

Create a short internal table for each run:

Track which “price” you’re using

When both cap and discount exist:

• Identify the implied price for discount
• Identify the implied price for cap
• Choose the controlling price per the note’s conversion mechanics

A quick consistency check:

• If cap implied price < discount implied price, the cap likely controls (in “lower price wins” drafts).

Florida timeline reference (if your modeling ties to deadlines)

If your work touches on timing for legal

Related reading

• Inputs you need for convertible note cap table math in United States (Federal) — Input checklist with sourcing guidance
• Worked example: convertible note cap table math in North Carolina — Worked example with real statute citations
• Convertible note cap table math in New Hampshire — Full how-to guide with jurisdiction-specific rules