Amount of debt $7,500,000

Interest rate APR 11.50% Amortization Schedule

Term (months) 42
Interest only months 6 Interest Principal
Deposit rate 2% Dec-08 0
Jan-09 1 $71,875.00 0
Feb-09 2 $71,875.00 0
Mar-09 3 $71,875.00 0
Apr-09 4 $71,875.00 0
May-09 5 $71,875.00 0
Jun-09 6 $71,875.00 0
Jul-09 7 $71,875.00 $175,445.05
Aug-09 8 $70,193.65 $177,126.40
Sep-09 9 $68,496.19 $178,823.86
Oct-09 10 $66,782.46 $180,537.59
Nov-09 11 $65,052.31 $182,267.74
Dec-09 12 $63,305.58 $184,014.47
Jan-10 13 $61,542.11 $185,777.94
Feb-10 14 $59,761.73 $187,558.31
Mar-10 15 $57,964.30 $189,355.75
Apr-10 16 $56,149.64 $191,170.41
May-10 17 $54,317.59 $193,002.46
Jun-10 18 $52,467.98 $194,852.06
Jul-10 19 $50,600.65 $196,719.40
Aug-10 20 $48,715.42 $198,604.62
Sep-10 21 $46,812.13 $200,507.92
Oct-10 22 $44,890.60 $202,429.45
Nov-10 23 $42,950.65 $204,369.40
Dec-10 24 $40,992.11 $206,327.94
Jan-11 25 $39,014.80 $208,305.25
Feb-11 26 $37,018.54 $210,301.51
Mar-11 27 $35,003.15 $212,316.90
Apr-11 28 $32,968.45 $214,351.60
May-11 29 $30,914.24 $216,405.81
Jun-11 30 $28,840.35 $218,479.70
Jul-11 31 $26,746.59 $220,573.46
Aug-11 32 $24,632.76 $222,687.29
Sep-11 33 $22,498.67 $224,821.37
Oct-11 34 $20,344.14 $226,975.91
Nov-11 35 $18,168.95 $229,151.10
Dec-11 36 $15,972.92 $231,347.13
Jan-12 37 $13,755.84 $233,564.21
Feb-12 38 $11,517.52 $235,802.53
Mar-12 39 $9,257.74 $238,062.30
Apr-12 40 $6,976.31 $240,343.73
May-12 41 $4,673.02 $242,647.03
Jun-12 42 $2,347.65 $244,972.40
tion Schedule

Balance Cash balance Interest earned Interest paid

$7,500,000 $7,500,000
$7,500,000 $7,440,625 $12,500 $71,875
$7,500,000 $7,381,151 $12,401.04 $71,875
$7,500,000 $7,321,578 $12,302 $71,875
First 6 months interest only
$7,500,000 $7,261,906 $12,203 $71,875
$7,500,000 $7,202,134 $12,103 $71,875
$7,500,000 $7,142,262 $12,004 $71,875
$7,324,554.95 $6,906,846 $11,904 $71,875
$7,147,428.56 $6,671,037 $11,511 $70,194
$6,968,604.70 $6,434,836 $11,118.40 $68,496
$6,788,067.11 $6,198,240 $10,725 $66,782
$6,605,799.37 When AVID needs $ $5,961,251 $10,330 $65,052
$6,421,784.90 $5,723,866 $9,935 $63,306
$6,236,006.96 $5,486,086 $9,540 $61,542
$6,048,448.64 $5,247,909 $9,143 $59,762
$5,859,092.89 $5,009,336 $8,747 $57,964
$5,667,922.49 $4,770,365 $8,349 $56,150
$5,474,920.03 $4,530,995 $7,951 $54,318
$5,280,067.96 $4,291,227 $7,552 $52,468
$5,083,348.57 $4,051,059 $7,152 $50,601
$4,884,743.94 $3,810,491 $6,752 $48,715
$4,684,236.02 $3,569,521 $6,351 $46,812
$4,481,806.57 $3,328,150 $5,949 $44,891
$4,277,437.17 $3,086,377 $5,547 $42,951
$4,071,109.23 $2,844,201 $5,144 $40,992
$3,862,803.98 $2,601,621 $4,740 $39,015
$3,652,502.47 $2,358,637 $4,336 $37,019
$3,440,185.57 $2,115,249 $3,931 $35,003
$3,225,833.96 $1,871,454 $3,525 $32,968
$3,009,428.16 $1,627,253 $3,119 $30,914
$2,790,948.46 $1,382,645 $2,712 $28,840
$2,570,375.00 $1,137,629 $2,304 $26,747
$2,347,687.71 $892,205 $1,896 $24,633
$2,122,866.34 $646,372 $1,487 $22,499
$1,895,890.43 $400,130 $1,077 $20,344
$1,666,739.33 $153,476 $667 $18,169
$1,435,392.20 -$93,588 $256 $15,973
$1,201,827.99 -$341,064 -$156 $13,756
$966,025.46 -$588,952 -$568 $11,518
$727,963.16 -$837,254 -$982 $9,258
$487,619.42 -$1,085,970 -$1,395 $6,976
$244,972.40 -$1,335,100 -$1,810 $4,673
$0.00 -$1,584,645 -$2,225 $2,348
 No Warrants Warrants - High Warrants - Low
IRR = 18.36% 39.22% 26.32%
Shares
Net interest Post-money
Value per share
-$59,375 Risk free rate
-$59,474 Expire
-$59,573 X
-$59,672 Annual volatility
-$59,772
-$59,871 d1
-$59,971 d2
-$58,682 C
-$57,378
-$56,058 Warrant coverage
-$54,722 -$5,961,251 -$4,679,529 -$5,417,833 Warrant amount
-$53,370 $237,384.63 $237,385 $237,385 number of options
-$52,002 $237,780.27 $237,780 $237,780 Value warrant
-$50,618 $238,176.57 $238,177 $238,177
-$49,218 $238,573.53 $238,574 $238,574 Is it worth it? Calculations
-$47,801 $238,971.16 $238,971 $238,971 If Avid raises money right away
-$46,367 $239,369.44 $239,369 $239,369 Valuation today
-$44,916 $239,768.39 $239,768 $239,768 Amount raised
-$43,449 $240,168.00 $240,168 $240,168 Share of company
-$41,964 $240,568.28 $240,568 $240,568
-$40,461 $240,969.23 $240,969 $240,969 If Avid uses Venture debt to delay fun
-$38,941 $241,370.85 $241,371 $241,371 Valuation after delay
-$37,404 $241,773.13 $241,773 $241,773 Amount raised
-$35,848 $242,176.09 $242,176 $242,176 Share of company
-$34,274 $242,579.71 $242,580 $242,580 Value saved by venture debt
-$32,683 $242,984.01 $242,984 $242,984
-$31,072 $243,388.99 $243,389 $243,389 Total Cost of Venture debt (High warra
-$29,443 $243,794.63 $243,795 $243,795 Total Cost of Venture debt (Low warra
-$27,795 $244,200.96 $244,201 $244,201
-$26,128 $244,607.96 $244,608 $244,608
-$24,442 $245,015.64 $245,016 $245,016
-$22,737 $245,424.00 $245,424 $245,424
-$21,012 $245,833.04 $245,833 $245,833
-$19,267 $246,242.76 $246,243 $246,243
-$17,502 $246,653.17 $246,653 $246,653
-$15,717 $247,064.25 $247,064 $247,064
-$13,912 $247,476.03 $247,476 $247,476
-$12,086 $247,888.49 $247,888 $247,888
-$10,239 $248,301.64 $248,302 $248,302
-$8,372 $248,715.47 $248,715 $248,715
-$6,483 $249,130.00 $249,130 $249,130
-$4,573 $249,545.21 $249,545 $249,545
 Warrant Calculations - Black Scholes Model
High Estimate Low Estimate
11,723,450 11,723,450 Exhibit 4 Common Stock Equivalents
$200,000,000 $88,000,000 Two estimates (High and Low) for the value at the next round
$17.06 $7.51 Value per share = Post Money Value / Shares
3.77% 3.77% Risk free rate: Look up in FRED data, 10-year Treasury at this time
10 10 Term Sheet
$7.51 $7.51 Term Sheet
100% 100% Provided in the author's solution (σ=100% for the Bio-tech sector at this time)
𝑑_1=(ln(𝑆_0/𝐾)+(𝑟+𝜎^2/2)𝑇)/
1.959819 1.700202 (𝜎√𝑇) 𝑑_2=𝑑_1−𝜎√𝑇
-1.2024589923 -1.4620758382
$16.04 $6.80 Use the NORM.S.DIST function 𝑐_0=𝑆_0 �(𝑑_1 )−𝐾𝑒^(−𝑟𝑇) �(𝑑_2 )

8% 8%
$600,000 $600,000
79,893 79,893
$1,281,722.22 $543,417.37

th it? Calculations
aises money right away
$100,000,000
$25,000,000
𝑆ℎ𝑎𝑟𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑐𝑜𝑚𝑝𝑎𝑛�=(𝐴𝑚𝑜𝑢𝑛𝑡 𝑟𝑎𝑖𝑠𝑒𝑑)/(𝑉𝑎𝑙𝑢𝑎𝑡𝑖𝑜𝑛 𝑡𝑜𝑑𝑎�+𝑎𝑚𝑜𝑢𝑛𝑡 𝑟𝑎𝑖𝑠𝑒𝑑)
20.00%

ses Venture debt to delay funding

n after delay $200,000,000
$25,000,000
11.11%
ved by venture debt $17,777,778

st of Venture debt (High warrants) $2,866,366.97 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑣𝑒𝑛𝑡𝑢𝑟𝑒 𝑑𝑒𝑏𝑡=𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑤𝑎𝑟𝑟𝑎𝑛𝑡𝑠+∑▒ 〖�𝑒𝑡 �𝑛𝑡𝑒𝑟𝑒𝑠𝑡〗

st of Venture debt (Low warrants) $2,128,062.11

ry at this time

ch sector at this time)

√𝑇

−𝐾𝑒^(−𝑟𝑇) �(𝑑_2 )
Amount of debt $4,000,000
Interest rate APR 9.55% Amortization Schedule
Term (months) 36
Interest only months 4 Interest Principal
Deposit rate 3% Dec-08 0
Jan-09 1 $31,833.33 0
Feb-09 2 $31,833.33 0
Mar-09 3 $31,833.33 0
Apr-09 4 $31,833.33 0
May-09 5 $31,833.33 $110,252.25
Jun-09 6 $30,955.91 $111,129.68
Jul-09 7 $30,071.50 $112,014.08
Aug-09 8 $29,180.06 $112,905.53
Sep-09 9 $28,281.52 $113,804.07
Oct-09 10 $27,375.83 $114,709.76
Nov-09 11 $26,462.93 $115,622.66
Dec-09 12 $25,542.76 $116,542.82
Jan-10 13 $24,615.28 $117,470.31
Feb-10 14 $23,680.41 $118,405.18
Mar-10 15 $22,738.10 $119,347.48
Apr-10 16 $21,788.29 $120,297.29
May-10 17 $20,830.93 $121,254.66
Jun-10 18 $19,865.94 $122,219.64
Jul-10 19 $18,893.28 $123,192.31
Aug-10 20 $17,912.87 $124,172.71
Sep-10 21 $16,924.67 $125,160.92
Oct-10 22 $15,928.59 $126,156.99
Nov-10 23 $14,924.59 $127,160.99
Dec-10 24 $13,912.60 $128,172.98
Jan-11 25 $12,892.56 $129,193.02
Feb-11 26 $11,864.40 $130,221.18
Mar-11 27 $10,828.06 $131,257.53
Apr-11 28 $9,783.47 $132,302.12
May-11 29 $8,730.56 $133,355.02
Jun-11 30 $7,669.28 $134,416.31
Jul-11 31 $6,599.55 $135,486.04
Aug-11 32 $5,521.30 $136,564.28
Sep-11 33 $4,434.48 $137,651.10
Oct-11 34 $3,339.01 $138,746.58
Nov-11 35 $2,234.82 $139,850.77
Dec-11 36 $1,121.84 $140,963.75
tion Schedule

Balance Cash balance Interest earned Interest paid

$4,000,000 $4,000,000
$4,000,000 $3,978,167 $10,000 $31,833
$4,000,000 $3,956,279 $9,945.42 $31,833
$4,000,000 $3,934,336 $9,891 $31,833
First 6 months interest only
$4,000,000 $3,912,339 $9,836 $31,833
$3,889,748 $3,780,034 $9,781 $31,833
$3,778,618 $3,647,398 $9,450 $30,956
$3,666,604 $3,514,431 $9,118 $30,072
$3,553,698 $3,381,132 $8,786 $29,180
$3,439,894 $3,247,499 $8,452.83 $28,282
$3,325,185 $3,113,532 $8,119 $27,376
$3,209,562 When AVID needs $ $2,979,230 $7,784 $26,463
$3,093,019 $2,844,593 $7,448 $25,543
$2,975,549 $2,709,619 $7,111 $24,615
$2,857,144 $2,574,307 $6,774 $23,680
$2,737,796 $2,438,657 $6,436 $22,738
$2,617,499 $2,302,669 $6,097 $21,788
$2,496,244 $2,166,340 $5,757 $20,831
$2,374,025 $2,029,670 $5,416 $19,866
$2,250,832 $1,892,658 $5,074 $18,893
$2,126,660 $1,755,305 $4,732 $17,913
$2,001,499 $1,617,607 $4,388 $16,925
$1,875,342 $1,479,566 $4,044 $15,929
$1,748,181 $1,341,179 $3,699 $14,925
$1,620,008 $1,202,446 $3,353 $13,913
$1,490,815 $1,063,367 $3,006 $12,893
$1,360,593 $923,940 $2,658 $11,864
$1,229,336 $784,164 $2,310 $10,828
$1,097,034 $644,039 $1,960 $9,783
$963,679 $503,563 $1,610 $8,731
$829,263 $362,737 $1,259 $7,669
$693,776 $221,558 $907 $6,600
$557,212 $80,026 $554 $5,521
$419,561 -$61,859 $200 $4,434
$280,815 -$204,100 -$155 $3,339
$140,964 -$346,695 -$510 $2,235
$0 -$489,648 -$867 $1,122
 No Warrants Warrants - High Warrants - Low
IRR = 11.36% 30.37% 25.30%
Shares
Net interest Post-money
Value per share
-$21,833 Risk free rate
-$21,888 Expire
-$21,943 X
-$21,997 Annual volatility
-$22,052
-$21,506 d1
-$20,953 d2
-$20,394 -$3,381,132 -$2,738,142 -$2,891,172 C
-$19,829 $133,632.76 $133,632.76 $133,633
-$19,257 $133,966.84 $133,966.84 $133,967 Warrant coverage
-$18,679 $134,301.75 $134,301.75 $134,302 Warrant amount
-$18,095 $134,637.51 $134,637.51 $134,638 number of options
-$17,504 $134,974.10 $134,974.10 $134,974 Value warrant
-$16,906 $135,311.54 $135,311.54 $135,312
-$16,302 $135,649.82 $135,649.82 $135,650 Is it worth it? Calculations
-$15,692 $135,988.94 $135,988.94 $135,989 If Avid raises money right away
-$15,074 $136,328.91 $136,328.91 $136,329 Valuation today
-$14,450 $136,669.74 $136,669.74 $136,670 Amount raised
-$13,819 $137,011.41 $137,011.41 $137,011 Share of company
-$13,181 $137,353.94 $137,353.94 $137,354
-$12,536 $137,697.32 $137,697.32 $137,697 If Avid uses Venture debt to delay fun
-$11,885 $138,041.57 $138,041.57 $138,042 Valuation after delay
-$11,226 $138,386.67 $138,386.67 $138,387 Amount raised
-$10,560 $138,732.64 $138,732.64 $138,733 Share of company
-$9,886 $139,079.47 $139,079.47 $139,079 Value saved by venture debt
-$9,206 $139,427.17 $139,427.17 $139,427
-$8,518 $139,775.74 $139,775.74 $139,776 Total Cost of Venture debt (High warra
-$7,823 $140,125.17 $140,125.17 $140,125 Total Cost of Venture debt (Low warra
-$7,120 $140,475.49 $140,475.49 $140,475
-$6,410 $140,826.68 $140,826.68 $140,827
-$5,693 $141,178.74 $141,178.74 $141,179
-$4,967 $141,531.69 $141,531.69 $141,532
-$4,234 $141,885.52 $141,885.52 $141,886
-$3,494 $142,240.23 $142,240.23 $142,240
-$2,745 $142,595.83 $142,595.83 $142,596
-$1,989 $142,952.32 $142,952.32 $142,952
 Warrant Calculations - Black Scholes Model
High Estimate Low Estimate
9,000,000 9,000,000 Exhibit 4 Common Stock Equivalents
$93,750,000 $75,000,000 Two estimates (High and Low) for the value at the next round
$10.42 $8.33 Value per share = Post Money Value / Shares
5.10% 5.10% Risk free rate: Look up in FRED data, 10-year Treasury at this time
10 10 Term Sheet
$6.00 $6.00 Term Sheet
50% 50% Provided in the author's solution (σ=100% for the Bio-tech sector at this time)
𝑑_1=(ln(𝑆_0/𝐾)+(𝑟+𝜎^2/2)𝑇)/
1.462014 1.320886 (𝜎√𝑇) 𝑑_2=𝑑_1−𝜎√𝑇
-0.1191245058 -0.2602528793
$8.04 $6.12 Use the NORM.S.DIST function 𝑐_0=𝑆_0 �(𝑑_1 )−𝐾𝑒^(−𝑟𝑇) �(𝑑_2 )

12% 12%
$480,000 $480,000
80,000 80,000
$642,989.69 $489,960.06

th it? Calculations
aises money right away
$75,000,000
$6,000,000
𝑆ℎ𝑎𝑟𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑐𝑜𝑚𝑝𝑎𝑛�=(𝐴𝑚𝑜𝑢𝑛𝑡 𝑟𝑎𝑖𝑠𝑒𝑑)/(𝑉𝑎𝑙𝑢𝑎𝑡𝑖𝑜𝑛 𝑡𝑜𝑑𝑎�+𝑎𝑚𝑜𝑢𝑛𝑡 𝑟𝑎𝑖𝑠𝑒𝑑)
7.41%

ses Venture debt to delay funding

n after delay $93,750,000
$6,000,000
6.02%
ved by venture debt $1,305,347

st of Venture debt (High warrants) $1,132,637.41 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑣𝑒𝑛𝑡𝑢𝑟𝑒 𝑑𝑒𝑏𝑡=𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑤𝑎𝑟𝑟𝑎𝑛𝑡𝑠+∑▒ 〖�𝑒𝑡 �𝑛𝑡𝑒𝑟𝑒𝑠𝑡〗

st of Venture debt (Low warrants) $979,607.78

ry at this time

ch sector at this time)

√𝑇

−𝐾𝑒^(−𝑟𝑇) �(𝑑_2 )