Convertible Note & Cap Table Math Guide for Utah

What this calculator does

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

DocketMath’s Convertible Note & Cap Table Math Guide for Utah (calculator: convertible-note-cap-table) helps you model how a convertible note converts into equity and how that conversion changes a cap table after the funding event.

Because you asked for Utah coverage, the main Utah-specific “math impact” isn’t about securities conversion directly—it’s about time-based expectations. Many founders and operators use conversion models alongside broader compliance timelines, including Utah statutes of limitation for certain legal claims. While that doesn’t change conversion mechanics, it can affect how long you may need to retain records or plan for potential disputes.

This guide pairs the calculator workflow with a Utah reference point for timeframes:

The calculator typically covers these moving parts

• Principal (amount invested)
• Interest (if your note accrues interest and converts, or is added to principal)
• Discount rate (e.g., 20% off the next round’s price per share)
• Valuation cap (a maximum implied valuation for conversion)
• Conversion price logic (whichever is more favorable to the noteholder, depending on the note’s terms)
• Shares issued upon conversion
• Post-conversion ownership for all parties in the cap table

Inputs you’ll usually provide

Use the calculator at: /tools/convertible-note-cap-table

Common inputs include:

• Note terms: principal, interest, discount %, cap valuation, conversion event price mechanics
• Cap table: current shares and/or percentages for existing holders
• Option pool and fully diluted assumptions (if applicable to your scenario)
• Whether conversion includes accrued interest

When to use it

Use DocketMath’s calculator when you have to translate convertible note terms into share outcomes. Typical trigger points:

• You’re preparing a priced equity round (Series Seed/Series A) where the note will convert “at the next qualified financing.”
• You’re reconciling multiple notes—especially when each has different caps/discounts.
• You’re forecasting ownership dilution so you can set investor expectations and avoid cap table surprises.
• You’re building a new cap table template for the same company across future rounds.

Utah-related timing considerations (recordkeeping and dispute windows)

Utah’s general civil statute of limitations for certain actions includes:

• Utah Code § 76-1-302 — 4 years (with an exception noted in the court’s legal-help page)

Source: Utah Courts legal-help guidance

• https://www.utcourts.gov/en/legal-help/legal-help/procedures/statute-limitation.html

The Utah Courts page summarizes:

• “Utah Code § 76-1-302 — 4 years — exception P4”

Step-by-step example

Below is a concrete example you can mirror inside DocketMath. Adjust the numbers to match your note.

Scenario setup

Assume:

• Company has 1,000,000 existing shares outstanding (fully issued; ignore options for simplicity).
• There is one convertible note with:

  • Principal: $500,000
  • Accrued interest at conversion: $25,000 (assume interest converts and is added to principal)
  • Total note value converting: $525,000
  • Discount: 20%
  • Valuation cap: $8,000,000
• Next priced round has:

  • Price per share: $6.00
  • (Implied price mechanics: conversion is based on “discount vs. cap,” depending on terms)

We’ll compute the conversion price and shares issued, then update the cap table.

Step 1: Determine the effective conversion price using discount and cap

Most standard structures compute two candidate conversion prices:

1. Discount conversion price
   [ \text{Discount price} = \text{Round price} \times (1 - \text{discount}) ] [ = 6.00 \times (1 - 0.20) = 6.00 \times 0.80 = 4.80 ]

2. Cap-based implied price
   If the note converts at an implied valuation cap of $8,000,000, you need the “cap implied shares at conversion.” In simplified form: [ \text{Implied shares under cap} = \frac{\text{Cap valuation}}{\text{Round price}} = \frac{8,000,000}{6.00} \approx 1,333,333.33 ] Then the implied conversion price is effectively: [ \text{Cap-based price} = \frac{\text{Cap valuation}}{\text{Implied shares}} ]

In practice: DocketMath’s calculator will apply the note’s defined conversion formula. The key math idea for understanding outputs is:

• Discount favors the noteholder by lowering price from $6.00 to $4.80.
• Cap favors the noteholder by limiting the effective valuation, often producing an even lower effective price than the discount would, depending on round pricing and capitalization assumptions.

Step 2: Compute shares issued from the chosen conversion price

Assume the cap produces a more favorable conversion outcome than the discount for this example (a common result when valuation cap is “low” relative to the implied next-round valuation).

Let’s choose conversion price = $4.80 for the walkthrough (i.e., discount dominates). Then:

[ \text{Shares issued} = \frac{\text{Total note value}}{\text{Conversion price}} = \frac{525,000}{4.80} = 109,375 \text{ shares} ]

Step 3: Update the cap table post-conversion

Before conversion:

After conversion:

• New total shares = 1,000,000 + 109,375 = 1,109,375

Step 4: Check “dilution math” expectations

A fast dilution sanity check:

• Dilution to existing holders in this scenario = ~9.78%
  Existing holders drop from 100.00% to 90.22%.

If your agreement uses different capitalization baselines (e.g., fully diluted including options), your resulting numbers will shift.

Common scenarios

Convertible note math gets tricky when the inputs diverge from the simplest model. Here are recurring scenarios where the calculator’s outputs will change meaningfully.

1) Multiple notes with different caps/discounts

If you have:

• Note A: $1.0M principal, 20% discount, $6.0M cap
• Note B: $0.5M principal, 15% discount, $10.0M cap

Each note typically converts using its own cap/discount. The post-conversion cap table then sums all shares issued by each note, and the ownership dilution is proportional to total shares issued.

Checklist:

2) Interest treatment at conversion (add-to-principal vs. pay-in-cash)

Some notes convert principal only; others convert principal plus accrued interest. In the example above, adding $25,000 interest increased the converting value by 5% of principal.

That means:

• Shares issued scale with (principal + interest) / conversion price

Checklist:

3) Cap vs. discount tie-breakers

Many notes use “most favorable” mechanics (e.g., lower of two implied conversion prices). Others define it differently.

Math impact:

4) Option pool / “fully diluted” assumptions

If a new round includes an option pool included in the denominator for conversion calculations, the effective round price mechanics and cap-implied conversion may shift.

Practical outcome:

• More “fully diluted” shares generally increase the denominator and can reduce the effective conversion shares per dollar (depending on the formula).

Checklist:

5) Rounds with different price-per-share mechanics

Not every funding round presents a clean “$X per share.” Some have:

• multiple securities,
• different classes/series,
• warrants with valuation implications.

A calculator can still model the outcome if you translate those mechanics into an effective price-per-share input the note requires.

Tips for accuracy

These practices prevent the most common spreadsheet failures and ensure DocketMath outputs match what your documents say.

Tighten terminology before entering numbers

Use the following definitions in your head while entering inputs:

• Round price per share: the price your note uses for discount calculations
• Valuation cap:

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