Convertible Note & Cap Table Math Guide for Oklahoma

What this calculator does

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

DocketMath’s Convertible Note & Cap Table Math Guide calculator (US-OK) is built to help you model the mechanics of a convertible note—specifically how the note converts into equity and how that affects a post-conversion cap table.

Even if you’re not programming spreadsheets, you usually need three core computations:

• Conversion price based on either:

  • a discount (e.g., 20% off the next financing price), and/or
  • a valuation cap (e.g., “convert as if the company is worth no more than $X”).
• Shares issued on conversion using the note principal (and, where applicable, accrued interest).
• Ownership percentages after conversion (and optionally how new investors dilute everyone).

This tool is designed for scenarios common to early-stage financing documents where a note converts at a trigger event such as a qualified equity financing, with a cap and discount structure.

When to use it

Use DocketMath when you need to answer questions like:

• “Given $500,000 of principal, a $5,000,000 cap, and a 20% discount, how many shares will convert at the next round’s price?”
• “What percentage of the company does the note holder end up with—before and after the preferred investors’ new money?”
• “How do changes in the round’s post-money valuation or price per share shift conversion outcomes?”
• “If there’s interest or multiple notes, what happens to each line item and the combined cap table?”

Practical checklist: calculator readiness

Before running the calculator, gather:

• Note principal amount
• Interest treatment (if your note includes it in conversion)
• Valuation cap (if any)
• Discount rate (if any)
• Conversion trigger (typically the next qualified equity financing)
• Next round price per share or enough details to derive it
• Any additional issuance in the round that affects dilution

Step-by-step example

Let’s walk through a realistic example and show how the outputs move as inputs change. Numbers below are illustrative for math modeling.

Scenario inputs

Assume the following:

• Company has 10,000,000 existing shares outstanding.
• A convertible note has:

  • Principal: $500,000
  • Valuation cap: $5,000,000
  • Discount: 20%
  • No interest included (for simplicity)
• Next financing round:

  • Post-money valuation: $20,000,000
  • Pre-money valuation: $17,500,000
  • For math, assume the round is priced so that the price per share is derived from post-money:

    • Price per share = $20,000,000 / (10,000,000 existing shares)
    • Price per share = $2.00
• Round details that matter for cap table:

  • New money will issue 4,000,000 shares at $2.00/share.

Step 1: Compute the two candidate conversion prices

Convertible note conversion typically compares:

1. Cap-based conversion price (computed from cap valuation)
2. Discount-based conversion price (computed from the next round price)

Cap-based conversion price

• Cap is an implied pre-conversion valuation basis: $5,000,000
• Implied shares basis depends on agreement conventions; for this guide’s math, we use the same existing share count basis:
• Implied “cap shares” price basis = $5,000,000 / 10,000,000 = $0.50/share

So, cap-based conversion price = $0.50/share.

Discount-based conversion price

• Next round price = $2.00/share
• 20% discount ⇒ conversion price = $2.00 × (1 − 0.20) = $1.60/share

So, discount-based conversion price = $1.60/share.

Step 2: Select the “more favorable” price

Most standard note terms convert at the lower price (greater share count) when both cap and discount exist.

• Lower of $0.50 and $1.60 = $0.50/share

Step 3: Compute note conversion shares

• Conversion shares = Principal / Conversion price
• $500,000 / $0.50 = 1,000,000 shares

Step 4: Update the cap table

We’ll add:

• Existing shares: 10,000,000
• New round shares: 4,000,000
• Convertible note shares: 1,000,000

Total post-conversion shares:

• 10,000,000 + 4,000,000 + 1,000,000 = 15,000,000 total shares

Ownership percentages:

• Note holder: 1,000,000 / 15,000,000 = 6.67%
• Existing holders: 10,000,000 / 15,000,000 = 66.67%
• New investors: 4,000,000 / 15,000,000 = 26.67%

Step 5: Understand how the outputs change

If the next round price changes, the discount-based option changes too.

Here’s a quick sensitivity snapshot (cap unchanged, discount unchanged):

Because the cap-based price is already the lowest, the note conversion in this example is cap-driven, not discount-driven. If you remove the cap, the note shares would increase when the next round price rises (because the discount price increases too, but fewer shares are issued at higher conversion prices—so the relationship depends on whether the agreement uses a price/valuation basis consistently). DocketMath helps you avoid doing these comparisons by hand.

Common scenarios

Below are frequent patterns you’ll want the calculator to reflect in your modeling. Use the checkboxes to map your situation.

1) Cap + discount both present (conversion at the lower price)

• Choose lower of cap-derived price and discount-derived price.
• Often results in the note holder receiving a meaningfully lower conversion price.

☑ Cap exists
☑ Discount exists
☑ Next financing occurs (conversion trigger met)

2) Only a valuation cap

• Conversion price is cap-derived.
• Changes in the next round price may not affect conversion (depending on share-basis assumptions).

☑ Cap exists
☐ Discount

3) Only a discount

• Conversion price = next round price × (1 − discount).
• The note shares move with the financing pricing.

☐ Cap
☑ Discount

4) Accrued interest included in conversion

Some notes convert:

• principal only, or
• principal + accrued interest, or
• interest only to a certain cap/limit.

This impacts:

• conversion shares
• dilution
• note holder ownership after conversion

☑ Interest included in conversion
☐ Interest excluded

5) Multiple notes / multiple tranches

When there are several convertible instruments:

• each note converts separately
• ownership math can compound dilution effects

☑ Multiple convertible notes
☑ Different caps/discounts/principal amounts

6) New-money issuance in the same event

A common modeling error is converting the note but forgetting that the new equity round creates additional shares that dilute everyone.

☑ Model new investor shares in the same post-money structure
☑ Recompute ownership after both conversion and the financing

Tips for accuracy

Small input differences can cause large changes in conversion math. Use these guardrails to keep results consistent with typical convertible note logic and common cap table modeling practices.

Input discipline: what to verify before you run

A note about time-based constraints (Oklahoma)

Oklahoma has a 1-year statute of limitations for certain actions under 22 O.S. § 152, with specific exceptions listed in that provision. You may see 22 O.S. § 152(H) referenced with a 2-year exception for specified matters.

• General limitations period: 1 year — 22 O.S. § 152
• Exception: 2 years — **22 O.S. § 152(H)

Source: https://www.findlaw.com/state/oklahoma-law/oklahoma-criminal-statute-of-limitations-laws.html

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 California — Full how-to guide with jurisdiction-specific rules