convertible-note-conversion-analysis.docx

1004-00001 · Client 1004 · Advisory Memos

convertible-note-conversion-analysis.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law 1800 Page Mill Road, Suite 200 Menlo Park, California 94025 Telephone: (650) 493-7200

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. Do not distribute without authorization.

Matter Number: 1004-00001

MEMORANDUM

TO: Kevin Ostrowski, Partner, Calderwood & Harkness LLP Morgan Tsai, VP of Legal Affairs, Cobalt Ventures LP

FROM: Garrett Simmons, Lead Associate Leila Nazari, Working Associate

DATE: January 31, 2026

RE: Convertible Note Conversion Analysis — Meridian Diagnostics, Inc. Series Seed Preferred Stock Financing

PURPOSE: This memorandum sets forth a detailed analysis of the mechanics, applicable conversion price, accrued interest calculations, and share issuance computations for the conversion of the outstanding convertible promissory notes of Meridian Diagnostics, Inc. (the "Company") into shares of Series Seed Preferred Stock in connection with the Company's $12,000,000 Series Seed Preferred Stock financing (the "Financing"). This analysis is prepared for the benefit of Cobalt Ventures LP ("Cobalt") in its capacity as the lead investor in the Financing, and for the use of Calderwood & Harkness LLP as counsel to Cobalt in this transaction. All figures herein are based on the terms of the executed term sheet dated December 18, 2025, the Convertible Note Purchase Agreement dated September 12, 2023, the individual promissory notes issued thereunder, and the most recent draft of the Series Seed Preferred Stock Purchase Agreement circulated on January 24, 2026. This memorandum should be read in conjunction with the separate Cap Table Analysis and Tax Structuring Memorandum referenced herein.

I. Executive Summary

Meridian Diagnostics, Inc. is a Delaware C-corporation headquartered at 225 Binney Street, Suite 400, Cambridge, Massachusetts 02142. The Company was incorporated on June 15, 2023, and is engaged in the development and commercialization of point-of-care diagnostic testing platforms for use in clinical laboratory and physician-office settings. On September 12, 2023, approximately three months after its incorporation, the Company issued an aggregate of $2,100,000 in principal amount of convertible promissory notes (the "Notes") pursuant to a Convertible Note Purchase Agreement dated September 12, 2023 (the "Note Purchase Agreement"). The Notes were issued in a friends-and-family convertible note round to two noteholders:

(i) Dr. Margaret Liu, an individual residing in Wellesley, Massachusetts, who purchased a note in the principal amount of $1,200,000; and

(ii) Clearwater Bridge Associates, LLC, a Delaware limited liability company (EIN 86-4319752), with its principal office at 90 Broad Street, Suite 1400, New York, New York 10004, which purchased a note in the principal amount of $900,000.

Under the terms of the Notes, each note converts automatically upon the occurrence of a "Qualified Financing," defined as a preferred stock financing in which the Company raises at least a specified minimum threshold of new equity capital. The Financing—a $12,000,000 Series Seed Preferred Stock round led by Cobalt Ventures Fund III, LP—constitutes a Qualified Financing under the terms of the Notes, and therefore the Notes will convert automatically upon the closing of the Financing.

The anticipated conversion date is February 9, 2026, which is the expected simultaneous sign-and-close date for the Financing. As of that date, we calculate the total conversion amount (comprising aggregate principal and accrued simple interest) to be $2,353,750. The applicable conversion price, determined in accordance with the provisions of the Notes, is $2.1429 per share, which represents a 20% discount to the $2.6786 per share price paid by new-money investors in the Financing. Applying this conversion price, the total number of shares of Series Seed Preferred Stock issuable upon conversion of the Notes is approximately 1,098,362 shares.

It is important to note that these conversion shares are in addition to the 4,479,981 shares of Series Seed Preferred Stock to be issued to new-money investors (including Cobalt Ventures Fund III, LP) in the Financing. Accordingly, the total number of shares of Series Seed Preferred Stock to be outstanding following the closing of the Financing (including both new-money shares and conversion shares) will be approximately 5,578,343 shares. The Amended and Restated Certificate of Incorporation to be filed in connection with the Financing must authorize a sufficient number of shares of Series Seed Preferred Stock to accommodate both tranches.

The sections that follow present the detailed calculations supporting these summary figures, together with an analysis of the procedural, documentation, securities law, and tax considerations attendant to the conversion.

II. Background — The Convertible Notes

A. Issuance and Terms

The Notes were issued on September 12, 2023, pursuant to the Note Purchase Agreement. The Note Purchase Agreement was executed as part of a friends-and-family convertible note round that raised a total of $2,100,000 in aggregate principal amount during the third quarter of 2023. At the time of the note issuance, the Company had been in existence for approximately three months, having been incorporated under the laws of the State of Delaware on June 15, 2023. The Company was at a pre-revenue stage and had limited operating history.

The Company was represented in the original note issuance by Whitfield & Ames LLP, with Catherine Devereaux (partner) and Thomas Whitaker (associate) serving as the principal attorneys on the engagement. Whitfield & Ames LLP continues to serve as Company counsel in connection with the Financing.

As of the date of this memorandum, the Company's remaining cash from the convertible note round is approximately $1,400,000, which reflects a monthly burn rate of approximately $185,000 over the period since the note issuance. This cash position underscores the timeliness of the Financing, as the Company's existing cash resources would be expected to sustain operations for approximately seven to eight additional months in the absence of new equity capital. The urgency of the Financing is a relevant consideration in connection with the negotiation of the conversion terms and the overall timeline for closing.

B. Noteholder Breakdown

The Notes were purchased by two noteholders, each of whom is an accredited investor under Rule 501(a) of Regulation D under the Securities Act of 1933. The noteholders and their respective principal amounts are as follows:

Dr. Margaret Liu. Dr. Liu is an individual investor residing at 14 Chestnut Hill Road, Wellesley, Massachusetts 02481. Dr. Liu purchased a convertible promissory note in the principal amount of $1,200,000, representing approximately 57.1% of the aggregate principal amount of the Notes. Dr. Liu is understood to be a practicing physician and angel investor with prior investments in early-stage healthcare and life sciences companies.

Clearwater Bridge Associates, LLC. Clearwater Bridge Associates, LLC is a Delaware limited liability company with its principal office located at 90 Broad Street, Suite 1400, New York, New York 10004. Its employer identification number (EIN) is 86-4319752. Clearwater Bridge Associates, LLC purchased a convertible promissory note in the principal amount of $900,000, representing approximately 42.9% of the aggregate principal amount of the Notes. Based on representations made in connection with the original note issuance, Clearwater Bridge Associates, LLC qualifies as an accredited investor by virtue of the assets of its members.

C. Key Note Terms

The following is a summary of the principal economic terms of the Notes, each of which is relevant to the conversion analysis set forth in this memorandum:

Principal Amount. The aggregate principal amount of the Notes is $2,100,000, consisting of $1,200,000 in principal amount held by Dr. Margaret Liu and $900,000 in principal amount held by Clearwater Bridge Associates, LLC. Each note was issued at par, with no original issue discount.

Interest Rate. The Notes bear interest at a rate of 5.0% per annum, calculated on a simple (i.e., non-compounding) basis. Interest accrues from the date of issuance and is payable only upon conversion, maturity, or acceleration of the Notes.

Conversion Trigger. The Notes provide for automatic conversion upon the occurrence of a "Qualified Financing," which is defined in the Note Purchase Agreement as a preferred stock financing in which the Company raises at least a specified minimum aggregate amount of new equity capital (exclusive of amounts raised upon conversion of the Notes). We have reviewed the Qualified Financing threshold set forth in Section 2.1(a) of the Note Purchase Agreement and have confirmed that the $12,000,000 Financing satisfies this requirement. Accordingly, the conversion of the Notes will occur automatically upon the closing of the Financing, without any action required on the part of the noteholders.

Conversion discount. The Notes provide for a conversion discount of 20% to the price per share paid by investors in the Qualified Financing. This discount is intended to compensate the noteholders for the additional risk assumed by providing early-stage capital to the Company prior to the establishment of a priced equity valuation.

Valuation Cap. The Notes include a pre-money valuation cap of $25,000,000. The valuation cap sets an upper limit on the effective valuation at which the Notes convert, providing noteholders with price protection in the event that the Company achieves a pre-money valuation in the Qualified Financing that significantly exceeds the $25,000,000 cap.

Conversion Price Determination. Pursuant to Section 2.1(b) of the Note Purchase Agreement, the conversion price applicable to the Notes is the lower of (a) the price obtained by applying the 20% discount to the price per share paid by investors in the Qualified Financing (the "discount Price") and (b) the price obtained by dividing the $25,000,000 valuation cap by the pre-money fully-diluted capitalization of the Company (the "Cap Price"). The use of the lower of these two prices ensures that the noteholders receive the benefit of the more favorable conversion rate, consistent with standard market practice for convertible note instruments.

Maturity Date. The Notes have not reached their stated maturity date as of the anticipated closing date of the Financing. Because the conversion is automatic upon a Qualified Financing, the maturity provisions of the Notes are not implicated in the present analysis.

III. Accrued Interest Calculation

A. Interest Rate and Methodology

As set forth in Section 1 of each individual promissory note, interest accrues on the outstanding principal amount at a rate of 5.0% per annum on a simple interest basis. The Notes explicitly provide that interest shall not compound and that interest shall be computed on the basis of a 365-day year (or a 366-day year in the case of a leap year), with interest accruing for the actual number of days elapsed. For purposes of this memorandum, we have used a monthly approximation (29/12 of a year) to calculate the accrued interest, which we believe to be consistent with the intent of the parties and the conventions typically applied in similar convertible note transactions. If a day-count calculation is preferred, we are prepared to recalculate on that basis; however, any variance is expected to be de minimis.

Interest accrues from the date of issuance of the Notes (September 12, 2023) through and including the conversion date (February 9, 2026). Interest is not payable in cash but is instead added to the principal amount of the Notes for purposes of determining the total conversion amount, and the aggregate of principal and accrued interest converts into shares of Series Seed Preferred Stock at the applicable conversion price.

B. Accrual Period

The accrual period for interest on the Notes runs from September 12, 2023, the date of issuance, to February 9, 2026, the anticipated conversion date. This period spans approximately 29 months, or approximately 2 years and 5 months. For purposes of the calculations set forth in this memorandum, we have used an accrual fraction of 29/12 (i.e., 2.4167 years). This fractional-year approach is consistent with the methodology applied in prior Calderwood & Harkness convertible note conversion analyses and is standard in the venture capital community for instruments of this type.

We note that the precise number of calendar days from September 12, 2023 to February 9, 2026 is 881 days. If interest were calculated on an actual/365 basis, the accrual fraction would be approximately 2.4137 years (881/365), which would produce a modestly lower total accrued interest figure. We have used the 29/12 convention for consistency with the term sheet calculations reviewed by the parties, but recommend confirming the preferred day-count methodology with Company counsel prior to final closing.

C. Aggregate Interest Calculation

The total accrued interest on the Notes is calculated as follows:

Formula: Principal × Rate × (Months / 12)

Calculation: $2,100,000 × 5.0% × (29/12)

$2,100,000 × 0.05 × 2.4167 = $253,750

The total accrued interest across both Notes, from the date of issuance through the anticipated conversion date, is therefore $253,750.

D. Interest Allocation by Noteholder

The accrued interest attributable to each noteholder is proportional to the principal amount of such noteholder's Note and is calculated as follows:

Dr. Margaret Liu:

$1,200,000 × 5.0% × (29/12) = $1,200,000 × 0.05 × 2.4167 = $145,000

Clearwater Bridge Associates, LLC:

$900,000 × 5.0% × (29/12) = $900,000 × 0.05 × 2.4167 = $108,750

E. Total Conversion Amount

The total conversion amount for each noteholder, and in the aggregate, is the sum of the outstanding principal and accrued interest on the conversion date. The following table summarizes the total conversion amounts:

The aggregate total conversion amount of $2,353,750 represents the full economic value of the Notes that will convert into shares of Series Seed Preferred Stock upon closing of the Financing. No portion of the principal or accrued interest will be paid in cash; rather, the entire conversion amount will be applied to the purchase of Series Seed Preferred Stock at the applicable conversion price determined below.

IV. Conversion Price Determination

The conversion price applicable to the Notes is determined by comparing the discount Price and the Cap Price as defined in the Note Purchase Agreement. The noteholders are entitled to convert at the lower of the two prices, which provides them with the more favorable conversion rate. Each calculation is set forth in detail below.

A. Series Seed Price Per Share (Reference Price)

The price per share of Series Seed Preferred Stock to be paid by new-money investors in the Financing (the "Series Seed Price Per Share" or the "Reference Price") is determined by dividing the pre-money valuation of the Company by the pre-money fully-diluted share count.

Pre-Money Valuation. The pre-money valuation of the Company has been established at $30,000,000, as set forth in the executed term sheet dated December 18, 2025, between the Company and Cobalt Ventures Fund III, LP. This valuation was negotiated at arm's length between the Company and Cobalt, taking into account the Company's technology, intellectual property portfolio, market opportunity, development-stage risks, and comparable valuations for companies at a similar stage in the diagnostics sector.

Pre-Money Fully-Diluted Share Count. The pre-money fully-diluted share count used for pricing purposes is 11,200,000 shares. This figure is derived as follows:

• Common Stock outstanding pre-Financing: 10,000,000 shares. This represents the aggregate number of shares of Common Stock outstanding immediately prior to the closing of the Financing, consisting of shares held by the Company's founders and shares issued to employees and consultants under the Company's equity compensation arrangements.

• Option Pool Increase: Under the terms of the Financing, the Company's existing option pool under the 2024 Equity Incentive Plan (which was adopted by the Company's Board of Directors on March 1, 2024) is being increased from 400,000 shares to 1,600,000 shares, representing a net increase of 1,200,000 shares. Consistent with standard venture capital practice, this option pool increase is included in the pre-money fully-diluted share count for pricing purposes, which has the effect of allocating the dilutive impact of the expanded option pool to the pre-money valuation (and therefore to the existing stockholders) rather than to the new-money investors.

• Total Pre-Money Fully-Diluted Shares: 10,000,000 (existing Common Stock) + 1,200,000 (net new option pool shares) = 11,200,000 shares.

We note that, for purposes of the pricing calculation, the denominator does not include the shares issuable upon conversion of the Notes. This is consistent with the terms of the Note Purchase Agreement and standard market practice, under which conversion shares are additive to the post-money capitalization rather than included in the pre-money denominator.

Series Seed Price Per Share Calculation:

$30,000,000 ÷ 11,200,000 = $2.6786 per share (rounded to four decimal places)

Post-Money Valuation. For reference, the post-money valuation of the Company, calculated as the sum of the pre-money valuation and the aggregate new-money investment, is $42,000,000 ($30,000,000 + $12,000,000). This figure does not include the conversion shares and is presented for contextual purposes only.

B. Discount Price

The discount Price is calculated by applying the 20% conversion discount to the Series Seed Price Per Share. The discount provides the noteholders with a per-share conversion price that is 80% of the price paid by the new-money investors in the Financing, reflecting the economic benefit afforded to the noteholders for providing early-stage capital to the Company prior to the priced round.

Calculation: $2.6786 × (1 − 0.20) = $2.6786 × 0.80 = $2.1429 per share

C. Cap Price

The Cap Price is calculated by dividing the $25,000,000 pre-money valuation cap by the same pre-money fully-diluted share count used to determine the Series Seed Price Per Share (i.e., 11,200,000 shares). The valuation cap functions as a ceiling on the effective valuation at which the Notes convert, protecting the noteholders in scenarios where the actual pre-money valuation established in the Qualified Financing significantly exceeds the cap.

Calculation: $25,000,000 ÷ 11,200,000 = $2.2321 per share (rounded to four decimal places)

D. Applicable Conversion Price

Pursuant to Section 2.1(b) of the Note Purchase Agreement, the conversion price applicable to the Notes is the lower of the discount Price and the Cap Price. This mechanism is designed to ensure that the noteholders receive the benefit of whichever conversion methodology produces a more favorable (i.e., lower) per-share price, thereby maximizing the number of shares of Series Seed Preferred Stock issued upon conversion.

Comparing the two prices:

• discount Price: $2.1429 per share

• Cap Price: $2.2321 per share

Because $2.1429 is less than $2.2321, the discount Price is the more favorable price for the noteholders, and accordingly, the 20% discount price of $2.1429 per share is the applicable conversion price.

It is worth noting the economic dynamic at play in this particular transaction. The discount Price governs because the pre-money valuation agreed upon in the Financing ($30,000,000) exceeds the valuation cap ($25,000,000) by a relatively modest margin of $5,000,000, or 20%. In many convertible note transactions, the pre-money valuation of the Qualified Financing exceeds the valuation cap by a substantially greater margin, in which case the Cap Price would govern and would produce a significantly lower conversion price for the noteholders. In this instance, however, the 20% discount produces a lower per-share price than the cap-derived price, which is a function of the specific interplay between the discount percentage, the valuation cap, and the negotiated pre-money valuation. This result is favorable to the noteholders, though the differential between the discount Price and the Cap Price is relatively narrow ($0.0892 per share, or approximately 4.0%).

For all purposes in this memorandum, the applicable conversion price is $2.1429 per share.

V. Share Issuance Calculations

A. Aggregate Shares on Conversion

The total number of shares of Series Seed Preferred Stock issuable upon conversion of the Notes is determined by dividing the total conversion amount (principal plus accrued interest) by the applicable conversion price:

Total Conversion Amount: $2,353,750

Applicable Conversion Price: $2.1429 per share

Shares Issued: $2,353,750 ÷ $2.1429 = approximately 1,098,362 shares of Series Seed Preferred Stock

This figure represents the aggregate number of shares of Series Seed Preferred Stock to be issued to both noteholders upon conversion of the Notes at the closing of the Financing.

B. Per-Noteholder Share Allocation

The shares issuable upon conversion are allocated between the two noteholders in proportion to their respective total conversion amounts (principal plus accrued interest). The per-noteholder allocation is as follows:

The share figures set forth in the table above are approximate and may be subject to minor rounding adjustments as agreed between the parties. The Note Purchase Agreement is silent on the specific rounding convention to be applied, and accordingly, the final per-noteholder share allocation should be confirmed with Company counsel (Whitfield & Ames LLP) and reflected in the definitive Schedule of Investors and the Company's capitalization table. It is customary in transactions of this type to round fractional shares down to the nearest whole share, with no cash payment in lieu of fractional shares, unless the parties agree otherwise.

C. Nature of Shares Issued

The shares of Series Seed Preferred Stock issued upon conversion of the Notes will be shares of the same class and series as the shares purchased by the new-money investors under the Series Seed Preferred Stock Purchase Agreement (the "SPA"). The conversion shares will carry the same rights, preferences, and privileges as the new-money shares in all respects, including, without limitation, the following:

• Liquidation Preference: A 1× non-participating liquidation preference, entitling each holder of Series Seed Preferred Stock to receive, upon any liquidation, dissolution, or winding up of the Company (or any deemed liquidation event), an amount per share equal to the original issue price of such share (plus any declared but unpaid dividends thereon), prior and in preference to any distribution to holders of Common Stock. Because the conversion shares are issued at a per-share price of $2.1429, the aggregate liquidation preference attributable to the conversion shares will be approximately $2,353,750 (equal to the total conversion amount).

• Anti-Dilution Protection: Broad-based weighted average anti-dilution protection, as set forth in the Amended and Restated Certificate of Incorporation, providing for an adjustment to the conversion price of the Series Seed Preferred Stock in the event of future issuances of equity securities at a per-share price below the then-applicable conversion price (subject to customary carve-outs for employee equity, strategic transactions, and similar issuances).

• Protective Provisions: Protective provisions requiring the consent of the holders of a majority of the outstanding shares of Series Seed Preferred Stock (voting as a separate class) prior to the Company taking certain specified actions, including amendments to the certificate of incorporation or bylaws that adversely affect the Series Seed Preferred Stock, the authorization or issuance of senior or pari passu securities, the declaration of dividends, and the consummation of any liquidation event.

• Conversion Rights: Each share of Series Seed Preferred Stock is convertible, at the option of the holder, into one share of Common Stock (subject to adjustment for stock splits, dividends, combinations, and similar events), and will convert automatically upon the earlier of (i) the vote or written consent of the holders of a majority of the outstanding shares of Series Seed Preferred Stock or (ii) the closing of a firmly underwritten public offering of Common Stock with aggregate proceeds of at least a specified minimum amount.

All of the foregoing rights, preferences, and privileges will be set forth in the Amended and Restated Certificate of Incorporation of the Company, which is expected to be filed with the Delaware Secretary of State on February 9, 2026, simultaneously with the closing of the Financing.

VI. Impact on Post-Financing Capitalization

A. Aggregate Series Seed Preferred Stock Outstanding Post-Closing

Upon completion of the Financing, the total number of shares of Series Seed Preferred Stock outstanding will consist of both the new-money shares and the conversion shares:

• New-Money Shares: 4,479,981 shares, purchased by the new-money investors at a price of $2.6786 per share for an aggregate purchase price of $12,000,000.

• Conversion Shares: 1,098,362 shares, issued to the noteholders upon conversion of the Notes at a conversion price of $2.1429 per share.

• Total Series Seed Preferred Stock Outstanding: 4,479,981 + 1,098,362 = 5,578,343 shares.

B. Post-Closing Fully-Diluted Capitalization Summary

The following table sets forth the Company's post-closing fully-diluted capitalization, giving effect to both the issuance of new-money shares and the conversion of the Notes:

Several observations regarding the post-closing capitalization are relevant:

Treatment of Conversion Shares in the Capitalization. For purposes of the pre-money valuation and the determination of the Series Seed Price Per Share, the conversion shares were excluded from the denominator. This is consistent with the terms of the Note Purchase Agreement and with standard venture capital market practice. The conversion shares are additive to the post-money fully-diluted share count and are issued at the discounted conversion price. The effect is that the conversion shares create incremental dilution to all other holders (including both the existing Common Stockholders and the new-money Series Seed Preferred Stockholders), though this dilution was anticipated and priced into the negotiated pre-money valuation.

Ownership Percentages. On a post-closing fully-diluted basis, the existing Common Stockholders (founders and employees) will hold approximately 59.6% of the Company's outstanding equity, the option pool will represent approximately 9.5%, the new-money investors will hold approximately 26.7%, and the converting noteholders will hold approximately 6.5%. These percentages are approximate and may shift modestly based on rounding adjustments and any final changes to the option pool size.

Cross-Reference. For detailed breakdowns of individual holder ownership, including the allocation among the several new-money investors (Cobalt Ventures Fund III, LP and participating co-investors), please refer to the Cap Table Analysis prepared separately by Leila Nazari, which is being provided to Cobalt under separate cover.

C. Major Investor Status of Noteholders

Under the terms of the Investors' Rights Agreement to be entered into in connection with the Financing, "Major Investors" are defined as holders of at least 1,000,000 shares of Series Seed Preferred Stock (or Common Stock issued upon conversion thereof). Major Investor status confers certain additional rights, including information rights, pro rata participation rights in future financings, and registration rights.

We have assessed whether either of the converting noteholders will qualify as a Major Investor based on the shares received upon conversion:

• Dr. Margaret Liu: Approximately 627,635 shares of Series Seed Preferred Stock. Dr. Liu's shareholding does not meet the Major Investor threshold of 1,000,000 shares.

• Clearwater Bridge Associates, LLC: Approximately 470,727 shares of Series Seed Preferred Stock. Clearwater Bridge's shareholding does not meet the Major Investor threshold of 1,000,000 shares.

Accordingly, neither noteholder individually qualifies as a Major Investor based on the conversion shares alone. We note that the Major Investor threshold was set with reference to the expected post-closing capitalization and the relative investment sizes of the participants in the Financing. Among all holders of Series Seed Preferred Stock (both new-money and conversion), only Cobalt Ventures Fund III, LP, with approximately 2,687,989 shares (based on its lead investment allocation), is expected to qualify as a Major Investor. This has been confirmed with Cobalt's deal team and is reflected in the current draft of the Investors' Rights Agreement.

Neither Dr. Liu nor Clearwater Bridge Associates, LLC has raised concerns regarding Major Investor status, but to the extent either noteholder seeks to negotiate for additional contractual rights (such as information rights or pro rata participation rights) that are customarily reserved for Major Investors, such requests would need to be addressed in the definitive transaction documentation.

VII. Procedural and Documentation Considerations

A. Conversion Mechanics

The conversion of the Notes is automatic upon the closing of the Qualified Financing. Pursuant to Section 2.1(a) of the Note Purchase Agreement, no election, notice, or other action on the part of the noteholders is required to trigger conversion. Upon the closing of the Financing on February 9, 2026, the Notes will convert simultaneously with the issuance of new-money shares, and the noteholders will become holders of Series Seed Preferred Stock.

Upon conversion, the original promissory notes evidencing the indebtedness of the Company to the noteholders will be cancelled and marked "Converted." The Company will either issue stock certificates to the noteholders evidencing their shares of Series Seed Preferred Stock or, alternatively, record the issuance by book-entry notation through the Company's transfer agent, Ledgermark Transfer Services, Inc., located at 800 North King Street, Suite 302, Wilmington, Delaware 19801. We understand that the Company intends to maintain its capitalization records in book-entry form through Ledgermark, and accordingly, no physical stock certificates are expected to be issued to the noteholders unless specifically requested.

Each noteholder should be advised to surrender the original note instrument to the Company at or promptly following the closing of the Financing. While the surrender of the original note is not a condition precedent to the automatic conversion, it is a ministerial requirement under Section 2.1(d) of the Note Purchase Agreement and is advisable to avoid any ambiguity regarding the cancellation of the underlying indebtedness.

B. Transaction Documentation

The conversion shares will be reflected on the Schedule of Investors attached to the Series Seed Preferred Stock Purchase Agreement (the "SPA"). The Schedule of Investors will identify each noteholder, the number of shares issuable upon conversion, and the conversion price, alongside the new-money investors and their respective share allocations.

In connection with the Financing, each noteholder will be required to execute or become a party to the following transaction documents:

(i) The Series Seed Preferred Stock Purchase Agreement, as a "Purchaser" with respect to the conversion shares;

(ii) The Investors' Rights Agreement, as a party thereto (though, as noted above, neither noteholder will qualify as a "Major Investor" under that agreement);

(iii) The Right of First Refusal and Co-Sale Agreement, as an "Investor" subject to the co-sale and right of first refusal provisions with respect to transfers of Common Stock by the Key Holders (founders); and

(iv) The Voting Agreement, as a party thereto, agreeing to vote their shares in accordance with the voting provisions set forth therein (including provisions regarding the election of the Board of Directors).

The obligation of the noteholders to execute or become parties to these agreements is set forth in Section 2.2 of the Note Purchase Agreement, which provides that, as a condition to the conversion of the Notes, each noteholder shall execute such customary closing documents as may be reasonably required in connection with the Qualified Financing. We have reviewed the current drafts of each of the foregoing agreements and do not anticipate any issues with the noteholders' execution thereof, though we recommend confirming this with Company counsel.

Additionally, the Amended and Restated Certificate of Incorporation to be filed with the Delaware Secretary of State on February 9, 2026, must authorize a sufficient number of shares of Series Seed Preferred Stock to cover both the new-money shares (4,479,981 shares) and the conversion shares (1,098,362 shares), for a total of at least 5,578,343 shares of Series Seed Preferred Stock. We have reviewed the current draft of the Amended and Restated Certificate of Incorporation and confirm that it authorizes 6,000,000 shares of Series Seed Preferred Stock, which is sufficient to accommodate both tranches with a modest reserve.

Whitfield & Ames LLP (Thomas Whitaker) has been requested to confirm the per-noteholder share allocation and to coordinate with the noteholders regarding the execution of the transaction documents and the delivery of counterpart signature pages in advance of the anticipated closing date.

C. Securities Law Considerations

The issuance of the conversion shares is being made in reliance on the exemption from registration provided by Regulation D, Rule 506(b) of the Securities Act of 1933, as amended (the "Securities Act"). The following considerations are relevant:

Accredited Investor Status. Both noteholders are accredited investors under Rule 501(a) of Regulation D. Dr. Margaret Liu qualifies as an accredited investor on the basis of her individual net worth (or joint net worth with her spouse) exceeding $1,000,000 (exclusive of primary residence) and/or her annual income exceeding $200,000 in each of the two most recent years. Clearwater Bridge Associates, LLC qualifies as an accredited investor pursuant to Rule 501(a)(8), as each of its equity owners is an accredited investor. Accredited investor questionnaires were completed by both noteholders at the time of the original note issuance, and updated questionnaires should be obtained in connection with the Financing to confirm continued accredited status.

Form D Filing. The conversion shares will be included in the Form D notice filing to be made with the U.S. Securities and Exchange Commission in connection with the Financing. The Form D must be filed no later than February 24, 2026, which is 15 calendar days after the first sale of securities in the offering (i.e., the closing date of February 9, 2026). The Form D will cover both the new-money shares and the conversion shares, as both issuances are part of the same integrated offering under Regulation D.

Blue Sky Filings. State securities law (blue sky) notice filings will be required in the states of residence or principal office of the investors in the Financing, including the noteholders. The following four states have been identified for blue sky compliance in connection with the Financing:

• California — State of residence of certain new-money investors

• Massachusetts — State of residence of Dr. Margaret Liu

• New York — State of principal office of Clearwater Bridge Associates, LLC

• Texas — State of residence of certain new-money investors

The blue sky filings in Massachusetts and New York are specifically necessitated by the conversion of the Notes held by Dr. Liu and Clearwater Bridge Associates, LLC, respectively. Company counsel (Whitfield & Ames LLP) is responsible for coordinating the blue sky filings in all applicable states.

D. Tax Considerations

The conversion of the Notes (including both principal and accrued interest) into shares of Series Seed Preferred Stock may have federal and state income tax implications for both the Company and the noteholders. While a comprehensive tax analysis is beyond the scope of this memorandum, we note the following preliminary considerations:

Company-Level Considerations. The conversion of the Notes may give rise to potential recognition of cancellation of indebtedness ("COD") income by the Company under Section 61(a)(11) of the Internal Revenue Code of 1986, as amended (the "Code"), to the extent that the fair market value of the Series Seed Preferred Stock issued upon conversion is less than the outstanding principal and accrued interest on the Notes. However, because the conversion is occurring in connection with a bona fide equity financing at an arm's-length valuation, and the shares are being issued at a conversion price that is at a discount to (rather than a premium over) the new-money price per share, COD income is unlikely to be a material concern in this instance. The Company should nonetheless consult with its auditors regarding the appropriate accounting treatment.

Noteholder-Level Considerations. The conversion of the Notes may result in the recognition of capital gain or ordinary income by the noteholders, depending on the characterization of the conversion for federal income tax purposes. The treatment of accrued interest as a component of the conversion amount may give rise to ordinary income recognition by the noteholders with respect to the interest component, even though no cash is received. The specific tax treatment applicable to each noteholder will depend on such noteholder's individual tax circumstances.

QSBS Analysis. A separate analysis of the eligibility of the conversion shares for treatment as "qualified small business stock" ("QSBS") under Section 1202 of the Code is addressed in the Tax Structuring Memorandum prepared by Garrett Simmons and Leila Nazari, which is being provided under separate cover. Section 1202 provides for the exclusion of gain on the sale or exchange of QSBS held for more than five years, subject to certain requirements and limitations. The eligibility of the conversion shares for QSBS treatment depends on, among other factors, the Company's status as a "qualified small business" at the time of issuance and the noteholders' holding period for the shares.

Auditor Consultation. The Company's auditors, Graystone & Pallister CPAs, LLP (Robert Milligan, Engagement Partner), should be consulted regarding the proper accounting treatment of the note conversion in the Company's financial statements, including the classification of the conversion shares on the Company's balance sheet and the treatment of accrued interest in the Company's income statement.

VIII. Summary of Key Figures

The following table consolidates the key figures from the analysis set forth in this memorandum for ease of reference:

All figures are subject to confirmation of the day-count methodology for interest accrual, rounding conventions for fractional shares, and any final adjustments to the pre-money fully-diluted share count agreed upon by the parties prior to closing.

IX. Open Items and Next Steps

Based on the foregoing analysis, the following action items remain outstanding and should be addressed prior to the anticipated closing date of February 9, 2026:

1. Confirm Per-Noteholder Share Allocation and Rounding Convention. Coordinate with Whitfield & Ames LLP (Thomas Whitaker) to confirm the final per-noteholder share allocation, including the rounding convention to be applied to any fractional shares. The Note Purchase Agreement is silent on rounding, and we recommend that the parties agree to round fractional shares down to the nearest whole share, with no cash payment in lieu of fractional shares, unless otherwise agreed.

2. Obtain Executed Noteholder Joinder Agreements. Obtain executed joinder agreements or counterpart signature pages from each noteholder (Dr. Margaret Liu and Clearwater Bridge Associates, LLC) to the Series Seed Preferred Stock Purchase Agreement, Investors' Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement. Company counsel should circulate execution copies of these documents to the noteholders no later than February 3, 2026, to allow sufficient time for review and execution prior to closing.

3. Verify Authorization of Series Seed Preferred Stock. Verify that the Amended and Restated Certificate of Incorporation, in its final form, authorizes at least 5,578,343 shares of Series Seed Preferred Stock, sufficient to cover both the new-money shares (4,479,981) and the conversion shares (1,098,362). The current draft authorizes 6,000,000 shares, which is adequate, but this should be confirmed in the final certificate.

4. Coordinate Accounting Treatment. Coordinate with Graystone & Pallister CPAs, LLP (Robert Milligan, Engagement Partner) regarding the proper accounting treatment of the note conversion in the Company's financial statements, including the derecognition of the note liabilities and the corresponding issuance of Series Seed Preferred Stock.

5. Surrender and Cancellation of Original Notes. Ensure that the original promissory notes held by each noteholder are surrendered to the Company and cancelled at or promptly following the closing on February 9, 2026. Company counsel should arrange for the notes to be marked "Converted" and retained in the Company's records.

6. Update Cap Table. Confirm that the Company's capitalization table, maintained with reference to Ledgermark Transfer Services, Inc. (the Company's transfer agent), accurately reflects both the new-money shares and the conversion shares following the closing. The cap table should be reconciled against the Schedule of Investors attached to the SPA and the records of Ledgermark.

7. File Form D and Blue Sky Notices. Ensure that the Form D notice filing is made with the SEC by February 24, 2026, and that blue sky notice filings are made in California, Massachusetts, New York, and Texas in accordance with the applicable filing deadlines in each state.

We believe the foregoing analysis accurately reflects the conversion mechanics, pricing, and share issuance calculations applicable to the Notes in connection with the Financing. We are available to discuss any aspect of this memorandum at your convenience. Please do not hesitate to contact us with any questions or if additional analysis is required.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Garrett Simmons Lead Associate, Tax Calderwood & Harkness LLP

By: ________

Leila Nazari Working Associate, Tax Calderwood & Harkness LLP

Matter No. 1004-00001 Calderwood & Harkness LLP 1800 Page Mill Road, Suite 200 Menlo Park, California 94025 Telephone: (650) 493-7200

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. Distribution is restricted to the named recipients and their authorized representatives.

Noteholder	Principal	Accrued Interest	Total Conversion Amount
Dr. Margaret Liu	$1,200,000	$145,000	$1,345,000
Clearwater Bridge Associates, LLC	$900,000	$108,750	$1,008,750
Aggregate	$2,100,000	$253,750	$2,353,750
Noteholder	Total Conversion Amount	Conversion Price	Shares Issued (approx.)
Dr. Margaret Liu	$1,345,000	$2.1429	627,635
Clearwater Bridge Associates, LLC	$1,008,750	$2.1429	470,727
Total	$2,353,750	—	1,098,362
Category	Shares	% (approx.)
Common Stock (founders and employees)	10,000,000	59.6%
Option Pool (2024 Equity Incentive Plan, post-increase)	1,600,000	9.5%
Series Seed Preferred Stock — New Money	4,479,981	26.7%
Series Seed Preferred Stock — Note Conversion	1,098,362	6.5%
Total Post-Money Fully-Diluted	16,778,343	100.0%
Item	Amount / Detail
Aggregate Note Principal	$2,100,000
Interest Rate	5.0% simple per annum
Accrual Period	September 12, 2023 – February 9, 2026 (approximately 29 months)
Total Accrued Interest	$253,750
Total Conversion Amount (Principal + Interest)	$2,353,750
Series Seed Price Per Share (New Money)	$2.6786
Conversion discount	20%
Discount Price	$2.1429
Valuation Cap	$25,000,000 pre-money
Cap Price	$2.2321

Applicable Conversion Price	$2.1429 (Discount price governs)
Total Shares on Conversion	~1,098,362 shares of Series Seed Preferred Stock
Dr. Margaret Liu — Shares on Conversion	~627,635 shares
Clearwater Bridge Associates, LLC — Shares on Conversion	~470,727 shares
New-Money Shares in Financing	4,479,981 shares
Total Series Seed Preferred Stock Post-Closing	~5,578,343 shares
Post-Money Fully-Diluted Share Count	~16,778,343 shares

CALDERWOOD & HARKNESS LLP Attorneys at Law 1800 Page Mill Road, Suite 200 Menlo Park, California 94025 Telephone: (650) 493-7200 | Facsimile: (650) 493-7201
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. Do not distribute without authorization.
Matter Number: 1004-00001
MEMORANDUM
TO: Kevin Ostrowski, Partner, Calderwood & Harkness LLP Morgan Tsai, VP of Legal Affairs, Cobalt Ventures LP
FROM: Garrett Simmons, Lead Associate Leila Nazari, Working Associate
DATE: January 31, 2026
RE: Convertible Note Conversion Analysis — Meridian Diagnostics, Inc. Series Seed Preferred Stock Financing
PURPOSE: This memorandum sets forth a detailed analysis of the mechanics, applicable conversion price, accrued interest calculations, and share issuance computations for the conversion of the outstanding convertible promissory notes of Meridian Diagnostics, Inc. (the "Company") into shares of Series Seed Preferred Stock in connection with the Company's $12,000,000 Series Seed Preferred Stock financing (the "Financing"). This analysis is prepared for the benefit of Cobalt Ventures LP ("Cobalt") in its capacity as the lead investor in the Financing, and for the use of Calderwood & Harkness LLP as counsel to Cobalt in this transaction. All figures herein are based on the terms of the executed term sheet dated December 18, 2025, the Convertible Note Purchase Agreement dated September 12, 2023, the individual promissory notes issued thereunder, and the most recent draft of the Series Seed Preferred Stock Purchase Agreement circulated on January 24, 2026. This memorandum should be read in conjunction with the separate Cap Table Analysis and Tax Structuring Memorandum referenced herein.
I. Executive Summary
Meridian Diagnostics, Inc. is a Delaware C-corporation headquartered at 225 Binney Street, Suite 400, Cambridge, Massachusetts 02142. The Company was incorporated on June 15, 2023, and is engaged in the development and commercialization of point-of-care diagnostic testing platforms for use in clinical laboratory and physician-office settings. On September 12, 2023, approximately three months after its incorporation, the Company issued an aggregate of $2,100,000 in principal amount of convertible promissory notes (the "Notes") pursuant to a Convertible Note Purchase Agreement dated September 12, 2023 (the "Note Purchase Agreement"). The Notes were issued in a friends-and-family convertible note round to two noteholders:
(i) Dr. Margaret Liu, an individual residing in Wellesley, Massachusetts, who purchased a note in the principal amount of $1,200,000; and
(ii) Clearwater Bridge Associates, LLC, a Delaware limited liability company (EIN 86-4319752), with its principal office at 90 Broad Street, Suite 1400, New York, New York 10004, which purchased a note in the principal amount of $900,000.
Under the terms of the Notes, each note converts automatically upon the occurrence of a "Qualified Financing," defined as a preferred stock financing in which the Company raises at least a specified minimum threshold of new equity capital. The Financing—a $12,000,000 Series Seed Preferred Stock round led by Cobalt Ventures Fund III, LP—constitutes a Qualified Financing under the terms of the Notes, and therefore the Notes will convert automatically upon the closing of the Financing.
The anticipated conversion date is February 9, 2026, which is the expected simultaneous sign-and-close date for the Financing. As of that date, we calculate the total conversion amount (comprising aggregate principal and accrued simple interest) to be $2,353,750. The applicable conversion price, determined in accordance with the provisions of the Notes, is $2.1429 per share, which represents a 20% discount to the $2.6786 per share price paid by new-money investors in the Financing. Applying this conversion price, the total number of shares of Series Seed Preferred Stock issuable upon conversion of the Notes is approximately 1,098,362 shares.
It is important to note that these conversion shares are in addition to the 4,479,981 shares of Series Seed Preferred Stock to be issued to new-money investors (including Cobalt Ventures Fund III, LP) in the Financing. Accordingly, the total number of shares of Series Seed Preferred Stock to be outstanding following the closing of the Financing (including both new-money shares and conversion shares) will be approximately 5,578,343 shares. The Amended and Restated Certificate of Incorporation to be filed in connection with the Financing must authorize a sufficient number of shares of Series Seed Preferred Stock to accommodate both tranches.
The sections that follow present the detailed calculations supporting these summary figures, together with an analysis of the procedural, documentation, securities law, and tax considerations attendant to the conversion.
II. Background — The Convertible Notes
A. Issuance and Terms
The Notes were issued on September 12, 2023, pursuant to the Note Purchase Agreement. The Note Purchase Agreement was executed as part of a friends-and-family convertible note round that raised a total of $2,100,000 in aggregate principal amount during the third quarter of 2023. At the time of the note issuance, the Company had been in existence for approximately three months, having been incorporated under the laws of the State of Delaware on June 15, 2023. The Company was at a pre-revenue stage and had limited operating history.
The Company was represented in the original note issuance by Whitfield & Ames LLP, with Catherine Devereaux (partner) and Thomas Whitaker (associate) serving as the principal attorneys on the engagement. Whitfield & Ames LLP continues to serve as Company counsel in connection with the Financing.
As of the date of this memorandum, the Company's remaining cash from the convertible note round is approximately $1,400,000, which reflects a monthly burn rate of approximately $185,000 over the period since the note issuance. This cash position underscores the timeliness of the Financing, as the Company's existing cash resources would be expected to sustain operations for approximately seven to eight additional months in the absence of new equity capital. The urgency of the Financing is a relevant consideration in connection with the negotiation of the conversion terms and the overall timeline for closing.
B. Noteholder Breakdown
The Notes were purchased by two noteholders, each of whom is an accredited investor under Rule 501(a) of Regulation D under the Securities Act of 1933. The noteholders and their respective principal amounts are as follows:
Dr. Margaret Liu. Dr. Liu is an individual investor residing at 14 Chestnut Hill Road, Wellesley, Massachusetts 02481. Dr. Liu purchased a convertible promissory note in the principal amount of $1,200,000, representing approximately 57.1% of the aggregate principal amount of the Notes. Dr. Liu is understood to be a practicing physician and angel investor with prior investments in early-stage healthcare and life sciences companies.
Clearwater Bridge Associates, LLC. Clearwater Bridge Associates, LLC is a Delaware limited liability company with its principal office located at 90 Broad Street, Suite 1400, New York, New York 10004. Its employer identification number (EIN) is 86-4319752. Clearwater Bridge Associates, LLC purchased a convertible promissory note in the principal amount of $900,000, representing approximately 42.9% of the aggregate principal amount of the Notes. Based on representations made in connection with the original note issuance, Clearwater Bridge Associates, LLC qualifies as an accredited investor by virtue of the assets of its members.
C. Key Note Terms
The following is a summary of the principal economic terms of the Notes, each of which is relevant to the conversion analysis set forth in this memorandum:
Principal Amount. The aggregate principal amount of the Notes is $2,100,000, consisting of $1,200,000 in principal amount held by Dr. Margaret Liu and $900,000 in principal amount held by Clearwater Bridge Associates, LLC. Each note was issued at par, with no original issue discount.
Interest Rate. The Notes bear interest at a rate of 5.0% per annum, calculated on a simple (i.e., non-compounding) basis. Interest accrues from the date of issuance and is payable only upon conversion, maturity, or acceleration of the Notes.
Conversion Trigger. The Notes provide for automatic conversion upon the occurrence of a "Qualified Financing," which is defined in the Note Purchase Agreement as a preferred stock financing in which the Company raises at least a specified minimum aggregate amount of new equity capital (exclusive of amounts raised upon conversion of the Notes). We have reviewed the Qualified Financing threshold set forth in Section 2.1(a) of the Note Purchase Agreement and have confirmed that the $12,000,000 Financing satisfies this requirement. Accordingly, the conversion of the Notes will occur automatically upon the closing of the Financing, without any action required on the part of the noteholders.
Conversion discount. The Notes provide for a conversion discount of 20% to the price per share paid by investors in the Qualified Financing. This discount is intended to compensate the noteholders for the additional risk assumed by providing early-stage capital to the Company prior to the establishment of a priced equity valuation.
Valuation Cap. The Notes include a pre-money valuation cap of $25,000,000. The valuation cap sets an upper limit on the effective valuation at which the Notes convert, providing noteholders with price protection in the event that the Company achieves a pre-money valuation in the Qualified Financing that significantly exceeds the $25,000,000 cap.
Conversion Price Determination. Pursuant to Section 2.1(b) of the Note Purchase Agreement, the conversion price applicable to the Notes is the lower of (a) the price obtained by applying the 20% discount to the price per share paid by investors in the Qualified Financing (the "discount Price") and (b) the price obtained by dividing the $25,000,000 valuation cap by the pre-money fully-diluted capitalization of the Company (the "Cap Price"). The use of the lower of these two prices ensures that the noteholders receive the benefit of the more favorable conversion rate, consistent with standard market practice for convertible note instruments.
Maturity Date. The Notes have not reached their stated maturity date as of the anticipated closing date of the Financing. Because the conversion is automatic upon a Qualified Financing, the maturity provisions of the Notes are not implicated in the present analysis.
III. Accrued Interest Calculation
A. Interest Rate and Methodology
As set forth in Section 1 of each individual promissory note, interest accrues on the outstanding principal amount at a rate of 5.0% per annum on a simple interest basis. The Notes explicitly provide that interest shall not compound and that interest shall be computed on the basis of a 365-day year (or a 366-day year in the case of a leap year), with interest accruing for the actual number of days elapsed. For purposes of this memorandum, we have used a monthly approximation (29/12 of a year) to calculate the accrued interest, which we believe to be consistent with the intent of the parties and the conventions typically applied in similar convertible note transactions. If a day-count calculation is preferred, we are prepared to recalculate on that basis; however, any variance is expected to be de minimis.
Interest accrues from the date of issuance of the Notes (September 12, 2023) through and including the conversion date (February 9, 2026). Interest is not payable in cash but is instead added to the principal amount of the Notes for purposes of determining the total conversion amount, and the aggregate of principal and accrued interest converts into shares of Series Seed Preferred Stock at the applicable conversion price.
B. Accrual Period
The accrual period for interest on the Notes runs from September 12, 2023, the date of issuance, to February 9, 2026, the anticipated conversion date. This period spans approximately 29 months, or approximately 2 years and 5 months. For purposes of the calculations set forth in this memorandum, we have used an accrual fraction of 29/12 (i.e., 2.4167 years). This fractional-year approach is consistent with the methodology applied in prior Calderwood & Harkness convertible note conversion analyses and is standard in the venture capital community for instruments of this type.
We note that the precise number of calendar days from September 12, 2023 to February 9, 2026 is 881 days. If interest were calculated on an actual/365 basis, the accrual fraction would be approximately 2.4137 years (881/365), which would produce a modestly lower total accrued interest figure. We have used the 29/12 convention for consistency with the term sheet calculations reviewed by the parties, but recommend confirming the preferred day-count methodology with Company counsel prior to final closing.
C. Aggregate Interest Calculation
The total accrued interest on the Notes is calculated as follows:
Formula: Principal × Rate × (Months / 12)
Calculation: $2,100,000 × 5.0% × (29/12)
$2,100,000 × 0.05 × 2.4167 = $253,750
The total accrued interest across both Notes, from the date of issuance through the anticipated conversion date, is therefore $253,750.
D. Interest Allocation by Noteholder
The accrued interest attributable to each noteholder is proportional to the principal amount of such noteholder's Note and is calculated as follows:
Dr. Margaret Liu:
$1,200,000 × 5.0% × (29/12) = $1,200,000 × 0.05 × 2.4167 = $145,000
Clearwater Bridge Associates, LLC:
$900,000 × 5.0% × (29/12) = $900,000 × 0.05 × 2.4167 = $108,750
E. Total Conversion Amount
The total conversion amount for each noteholder, and in the aggregate, is the sum of the outstanding principal and accrued interest on the conversion date. The following table summarizes the total conversion amounts:
The aggregate total conversion amount of $2,353,750 represents the full economic value of the Notes that will convert into shares of Series Seed Preferred Stock upon closing of the Financing. No portion of the principal or accrued interest will be paid in cash; rather, the entire conversion amount will be applied to the purchase of Series Seed Preferred Stock at the applicable conversion price determined below.
IV. Conversion Price Determination
The conversion price applicable to the Notes is determined by comparing the discount Price and the Cap Price as defined in the Note Purchase Agreement. The noteholders are entitled to convert at the lower of the two prices, which provides them with the more favorable conversion rate. Each calculation is set forth in detail below.
A. Series Seed Price Per Share (Reference Price)
The price per share of Series Seed Preferred Stock to be paid by new-money investors in the Financing (the "Series Seed Price Per Share" or the "Reference Price") is determined by dividing the pre-money valuation of the Company by the pre-money fully-diluted share count.
Pre-Money Valuation. The pre-money valuation of the Company has been established at $30,000,000, as set forth in the executed term sheet dated December 18, 2025, between the Company and Cobalt Ventures Fund III, LP. This valuation was negotiated at arm's length between the Company and Cobalt, taking into account the Company's technology, intellectual property portfolio, market opportunity, development-stage risks, and comparable valuations for companies at a similar stage in the diagnostics sector.
Pre-Money Fully-Diluted Share Count. The pre-money fully-diluted share count used for pricing purposes is 11,200,000 shares. This figure is derived as follows:
• Common Stock outstanding pre-Financing: 10,000,000 shares. This represents the aggregate number of shares of Common Stock outstanding immediately prior to the closing of the Financing, consisting of shares held by the Company's founders and shares issued to employees and consultants under the Company's equity compensation arrangements.
• Option Pool Increase: Under the terms of the Financing, the Company's existing option pool under the 2024 Equity Incentive Plan (which was adopted by the Company's Board of Directors on March 1, 2024) is being increased from 400,000 shares to 1,600,000 shares, representing a net increase of 1,200,000 shares. Consistent with standard venture capital practice, this option pool increase is included in the pre-money fully-diluted share count for pricing purposes, which has the effect of allocating the dilutive impact of the expanded option pool to the pre-money valuation (and therefore to the existing stockholders) rather than to the new-money investors.
• Total Pre-Money Fully-Diluted Shares: 10,000,000 (existing Common Stock) + 1,200,000 (net new option pool shares) = 11,200,000 shares.
We note that, for purposes of the pricing calculation, the denominator does not include the shares issuable upon conversion of the Notes. This is consistent with the terms of the Note Purchase Agreement and standard market practice, under which conversion shares are additive to the post-money capitalization rather than included in the pre-money denominator.
Series Seed Price Per Share Calculation:
$30,000,000 ÷ 11,200,000 = $2.6786 per share (rounded to four decimal places)
Post-Money Valuation. For reference, the post-money valuation of the Company, calculated as the sum of the pre-money valuation and the aggregate new-money investment, is $42,000,000 ($30,000,000 + $12,000,000). This figure does not include the conversion shares and is presented for contextual purposes only.
B. Discount Price
The discount Price is calculated by applying the 20% conversion discount to the Series Seed Price Per Share. The discount provides the noteholders with a per-share conversion price that is 80% of the price paid by the new-money investors in the Financing, reflecting the economic benefit afforded to the noteholders for providing early-stage capital to the Company prior to the priced round.
Calculation: $2.6786 × (1 − 0.20) = $2.6786 × 0.80 = $2.1429 per share
C. Cap Price
The Cap Price is calculated by dividing the $25,000,000 pre-money valuation cap by the same pre-money fully-diluted share count used to determine the Series Seed Price Per Share (i.e., 11,200,000 shares). The valuation cap functions as a ceiling on the effective valuation at which the Notes convert, protecting the noteholders in scenarios where the actual pre-money valuation established in the Qualified Financing significantly exceeds the cap.
Calculation: $25,000,000 ÷ 11,200,000 = $2.2321 per share (rounded to four decimal places)
D. Applicable Conversion Price
Pursuant to Section 2.1(b) of the Note Purchase Agreement, the conversion price applicable to the Notes is the lower of the discount Price and the Cap Price. This mechanism is designed to ensure that the noteholders receive the benefit of whichever conversion methodology produces a more favorable (i.e., lower) per-share price, thereby maximizing the number of shares of Series Seed Preferred Stock issued upon conversion.
Comparing the two prices:
• discount Price: $2.1429 per share
• Cap Price: $2.2321 per share
Because $2.1429 is less than $2.2321, the discount Price is the more favorable price for the noteholders, and accordingly, the 20% discount price of $2.1429 per share is the applicable conversion price.
It is worth noting the economic dynamic at play in this particular transaction. The discount Price governs because the pre-money valuation agreed upon in the Financing ($30,000,000) exceeds the valuation cap ($25,000,000) by a relatively modest margin of $5,000,000, or 20%. In many convertible note transactions, the pre-money valuation of the Qualified Financing exceeds the valuation cap by a substantially greater margin, in which case the Cap Price would govern and would produce a significantly lower conversion price for the noteholders. In this instance, however, the 20% discount produces a lower per-share price than the cap-derived price, which is a function of the specific interplay between the discount percentage, the valuation cap, and the negotiated pre-money valuation. This result is favorable to the noteholders, though the differential between the discount Price and the Cap Price is relatively narrow ($0.0892 per share, or approximately 4.0%).
For all purposes in this memorandum, the applicable conversion price is $2.1429 per share.
V. Share Issuance Calculations
A. Aggregate Shares on Conversion
The total number of shares of Series Seed Preferred Stock issuable upon conversion of the Notes is determined by dividing the total conversion amount (principal plus accrued interest) by the applicable conversion price:
Total Conversion Amount: $2,353,750
Applicable Conversion Price: $2.1429 per share
Shares Issued: $2,353,750 ÷ $2.1429 = approximately 1,098,362 shares of Series Seed Preferred Stock
This figure represents the aggregate number of shares of Series Seed Preferred Stock to be issued to both noteholders upon conversion of the Notes at the closing of the Financing.
B. Per-Noteholder Share Allocation
The shares issuable upon conversion are allocated between the two noteholders in proportion to their respective total conversion amounts (principal plus accrued interest). The per-noteholder allocation is as follows:
The share figures set forth in the table above are approximate and may be subject to minor rounding adjustments as agreed between the parties. The Note Purchase Agreement is silent on the specific rounding convention to be applied, and accordingly, the final per-noteholder share allocation should be confirmed with Company counsel (Whitfield & Ames LLP) and reflected in the definitive Schedule of Investors and the Company's capitalization table. It is customary in transactions of this type to round fractional shares down to the nearest whole share, with no cash payment in lieu of fractional shares, unless the parties agree otherwise.
C. Nature of Shares Issued
The shares of Series Seed Preferred Stock issued upon conversion of the Notes will be shares of the same class and series as the shares purchased by the new-money investors under the Series Seed Preferred Stock Purchase Agreement (the "SPA"). The conversion shares will carry the same rights, preferences, and privileges as the new-money shares in all respects, including, without limitation, the following:
• Liquidation Preference: A 1× non-participating liquidation preference, entitling each holder of Series Seed Preferred Stock to receive, upon any liquidation, dissolution, or winding up of the Company (or any deemed liquidation event), an amount per share equal to the original issue price of such share (plus any declared but unpaid dividends thereon), prior and in preference to any distribution to holders of Common Stock. Because the conversion shares are issued at a per-share price of $2.1429, the aggregate liquidation preference attributable to the conversion shares will be approximately $2,353,750 (equal to the total conversion amount).
• Anti-Dilution Protection: Broad-based weighted average anti-dilution protection, as set forth in the Amended and Restated Certificate of Incorporation, providing for an adjustment to the conversion price of the Series Seed Preferred Stock in the event of future issuances of equity securities at a per-share price below the then-applicable conversion price (subject to customary carve-outs for employee equity, strategic transactions, and similar issuances).
• Protective Provisions: Protective provisions requiring the consent of the holders of a majority of the outstanding shares of Series Seed Preferred Stock (voting as a separate class) prior to the Company taking certain specified actions, including amendments to the certificate of incorporation or bylaws that adversely affect the Series Seed Preferred Stock, the authorization or issuance of senior or pari passu securities, the declaration of dividends, and the consummation of any liquidation event.
• Conversion Rights: Each share of Series Seed Preferred Stock is convertible, at the option of the holder, into one share of Common Stock (subject to adjustment for stock splits, dividends, combinations, and similar events), and will convert automatically upon the earlier of (i) the vote or written consent of the holders of a majority of the outstanding shares of Series Seed Preferred Stock or (ii) the closing of a firmly underwritten public offering of Common Stock with aggregate proceeds of at least a specified minimum amount.
All of the foregoing rights, preferences, and privileges will be set forth in the Amended and Restated Certificate of Incorporation of the Company, which is expected to be filed with the Delaware Secretary of State on February 9, 2026, simultaneously with the closing of the Financing.
VI. Impact on Post-Financing Capitalization
A. Aggregate Series Seed Preferred Stock Outstanding Post-Closing
Upon completion of the Financing, the total number of shares of Series Seed Preferred Stock outstanding will consist of both the new-money shares and the conversion shares:
• New-Money Shares: 4,479,981 shares, purchased by the new-money investors at a price of $2.6786 per share for an aggregate purchase price of $12,000,000.
• Conversion Shares: 1,098,362 shares, issued to the noteholders upon conversion of the Notes at a conversion price of $2.1429 per share.
• Total Series Seed Preferred Stock Outstanding: 4,479,981 + 1,098,362 = 5,578,343 shares.
B. Post-Closing Fully-Diluted Capitalization Summary
The following table sets forth the Company's post-closing fully-diluted capitalization, giving effect to both the issuance of new-money shares and the conversion of the Notes:
Several observations regarding the post-closing capitalization are relevant:
Treatment of Conversion Shares in the Capitalization. For purposes of the pre-money valuation and the determination of the Series Seed Price Per Share, the conversion shares were excluded from the denominator. This is consistent with the terms of the Note Purchase Agreement and with standard venture capital market practice. The conversion shares are additive to the post-money fully-diluted share count and are issued at the discounted conversion price. The effect is that the conversion shares create incremental dilution to all other holders (including both the existing Common Stockholders and the new-money Series Seed Preferred Stockholders), though this dilution was anticipated and priced into the negotiated pre-money valuation.
Ownership Percentages. On a post-closing fully-diluted basis, the existing Common Stockholders (founders and employees) will hold approximately 59.6% of the Company's outstanding equity, the option pool will represent approximately 9.5%, the new-money investors will hold approximately 26.7%, and the converting noteholders will hold approximately 6.5%. These percentages are approximate and may shift modestly based on rounding adjustments and any final changes to the option pool size.
Cross-Reference. For detailed breakdowns of individual holder ownership, including the allocation among the several new-money investors (Cobalt Ventures Fund III, LP and participating co-investors), please refer to the Cap Table Analysis prepared separately by Leila Nazari, which is being provided to Cobalt under separate cover.
C. Major Investor Status of Noteholders
Under the terms of the Investors' Rights Agreement to be entered into in connection with the Financing, "Major Investors" are defined as holders of at least 1,000,000 shares of Series Seed Preferred Stock (or Common Stock issued upon conversion thereof). Major Investor status confers certain additional rights, including information rights, pro rata participation rights in future financings, and registration rights.
We have assessed whether either of the converting noteholders will qualify as a Major Investor based on the shares received upon conversion:
• Dr. Margaret Liu: Approximately 627,635 shares of Series Seed Preferred Stock. Dr. Liu's shareholding does not meet the Major Investor threshold of 1,000,000 shares.
• Clearwater Bridge Associates, LLC: Approximately 470,727 shares of Series Seed Preferred Stock. Clearwater Bridge's shareholding does not meet the Major Investor threshold of 1,000,000 shares.
Accordingly, neither noteholder individually qualifies as a Major Investor based on the conversion shares alone. We note that the Major Investor threshold was set with reference to the expected post-closing capitalization and the relative investment sizes of the participants in the Financing. Among all holders of Series Seed Preferred Stock (both new-money and conversion), only Cobalt Ventures Fund III, LP, with approximately 2,687,989 shares (based on its lead investment allocation), is expected to qualify as a Major Investor. This has been confirmed with Cobalt's deal team and is reflected in the current draft of the Investors' Rights Agreement.
Neither Dr. Liu nor Clearwater Bridge Associates, LLC has raised concerns regarding Major Investor status, but to the extent either noteholder seeks to negotiate for additional contractual rights (such as information rights or pro rata participation rights) that are customarily reserved for Major Investors, such requests would need to be addressed in the definitive transaction documentation.
VII. Procedural and Documentation Considerations
A. Conversion Mechanics
The conversion of the Notes is automatic upon the closing of the Qualified Financing. Pursuant to Section 2.1(a) of the Note Purchase Agreement, no election, notice, or other action on the part of the noteholders is required to trigger conversion. Upon the closing of the Financing on February 9, 2026, the Notes will convert simultaneously with the issuance of new-money shares, and the noteholders will become holders of Series Seed Preferred Stock.
Upon conversion, the original promissory notes evidencing the indebtedness of the Company to the noteholders will be cancelled and marked "Converted." The Company will either issue stock certificates to the noteholders evidencing their shares of Series Seed Preferred Stock or, alternatively, record the issuance by book-entry notation through the Company's transfer agent, Ledgermark Transfer Services, Inc., located at 800 North King Street, Suite 302, Wilmington, Delaware 19801. We understand that the Company intends to maintain its capitalization records in book-entry form through Ledgermark, and accordingly, no physical stock certificates are expected to be issued to the noteholders unless specifically requested.
Each noteholder should be advised to surrender the original note instrument to the Company at or promptly following the closing of the Financing. While the surrender of the original note is not a condition precedent to the automatic conversion, it is a ministerial requirement under Section 2.1(d) of the Note Purchase Agreement and is advisable to avoid any ambiguity regarding the cancellation of the underlying indebtedness.
B. Transaction Documentation
The conversion shares will be reflected on the Schedule of Investors attached to the Series Seed Preferred Stock Purchase Agreement (the "SPA"). The Schedule of Investors will identify each noteholder, the number of shares issuable upon conversion, and the conversion price, alongside the new-money investors and their respective share allocations.
In connection with the Financing, each noteholder will be required to execute or become a party to the following transaction documents:
(i) The Series Seed Preferred Stock Purchase Agreement, as a "Purchaser" with respect to the conversion shares;
(ii) The Investors' Rights Agreement, as a party thereto (though, as noted above, neither noteholder will qualify as a "Major Investor" under that agreement);
(iii) The Right of First Refusal and Co-Sale Agreement, as an "Investor" subject to the co-sale and right of first refusal provisions with respect to transfers of Common Stock by the Key Holders (founders); and
(iv) The Voting Agreement, as a party thereto, agreeing to vote their shares in accordance with the voting provisions set forth therein (including provisions regarding the election of the Board of Directors).
The obligation of the noteholders to execute or become parties to these agreements is set forth in Section 2.2 of the Note Purchase Agreement, which provides that, as a condition to the conversion of the Notes, each noteholder shall execute such customary closing documents as may be reasonably required in connection with the Qualified Financing. We have reviewed the current drafts of each of the foregoing agreements and do not anticipate any issues with the noteholders' execution thereof, though we recommend confirming this with Company counsel.
Additionally, the Amended and Restated Certificate of Incorporation to be filed with the Delaware Secretary of State on February 9, 2026, must authorize a sufficient number of shares of Series Seed Preferred Stock to cover both the new-money shares (4,479,981 shares) and the conversion shares (1,098,362 shares), for a total of at least 5,578,343 shares of Series Seed Preferred Stock. We have reviewed the current draft of the Amended and Restated Certificate of Incorporation and confirm that it authorizes 6,000,000 shares of Series Seed Preferred Stock, which is sufficient to accommodate both tranches with a modest reserve.
Whitfield & Ames LLP (Thomas Whitaker) has been requested to confirm the per-noteholder share allocation and to coordinate with the noteholders regarding the execution of the transaction documents and the delivery of counterpart signature pages in advance of the anticipated closing date.
C. Securities Law Considerations
The issuance of the conversion shares is being made in reliance on the exemption from registration provided by Regulation D, Rule 506(b) of the Securities Act of 1933, as amended (the "Securities Act"). The following considerations are relevant:
Accredited Investor Status. Both noteholders are accredited investors under Rule 501(a) of Regulation D. Dr. Margaret Liu qualifies as an accredited investor on the basis of her individual net worth (or joint net worth with her spouse) exceeding $1,000,000 (exclusive of primary residence) and/or her annual income exceeding $200,000 in each of the two most recent years. Clearwater Bridge Associates, LLC qualifies as an accredited investor pursuant to Rule 501(a)(8), as each of its equity owners is an accredited investor. Accredited investor questionnaires were completed by both noteholders at the time of the original note issuance, and updated questionnaires should be obtained in connection with the Financing to confirm continued accredited status.
Form D Filing. The conversion shares will be included in the Form D notice filing to be made with the U.S. Securities and Exchange Commission in connection with the Financing. The Form D must be filed no later than February 24, 2026, which is 15 calendar days after the first sale of securities in the offering (i.e., the closing date of February 9, 2026). The Form D will cover both the new-money shares and the conversion shares, as both issuances are part of the same integrated offering under Regulation D.
Blue Sky Filings. State securities law (blue sky) notice filings will be required in the states of residence or principal office of the investors in the Financing, including the noteholders. The following four states have been identified for blue sky compliance in connection with the Financing:
• California — State of residence of certain new-money investors
• Massachusetts — State of residence of Dr. Margaret Liu
• New York — State of principal office of Clearwater Bridge Associates, LLC
• Texas — State of residence of certain new-money investors
The blue sky filings in Massachusetts and New York are specifically necessitated by the conversion of the Notes held by Dr. Liu and Clearwater Bridge Associates, LLC, respectively. Company counsel (Whitfield & Ames LLP) is responsible for coordinating the blue sky filings in all applicable states.
D. Tax Considerations
The conversion of the Notes (including both principal and accrued interest) into shares of Series Seed Preferred Stock may have federal and state income tax implications for both the Company and the noteholders. While a comprehensive tax analysis is beyond the scope of this memorandum, we note the following preliminary considerations:
Company-Level Considerations. The conversion of the Notes may give rise to potential recognition of cancellation of indebtedness ("COD") income by the Company under Section 61(a)(11) of the Internal Revenue Code of 1986, as amended (the "Code"), to the extent that the fair market value of the Series Seed Preferred Stock issued upon conversion is less than the outstanding principal and accrued interest on the Notes. However, because the conversion is occurring in connection with a bona fide equity financing at an arm's-length valuation, and the shares are being issued at a conversion price that is at a discount to (rather than a premium over) the new-money price per share, COD income is unlikely to be a material concern in this instance. The Company should nonetheless consult with its auditors regarding the appropriate accounting treatment.
Noteholder-Level Considerations. The conversion of the Notes may result in the recognition of capital gain or ordinary income by the noteholders, depending on the characterization of the conversion for federal income tax purposes. The treatment of accrued interest as a component of the conversion amount may give rise to ordinary income recognition by the noteholders with respect to the interest component, even though no cash is received. The specific tax treatment applicable to each noteholder will depend on such noteholder's individual tax circumstances.
QSBS Analysis. A separate analysis of the eligibility of the conversion shares for treatment as "qualified small business stock" ("QSBS") under Section 1202 of the Code is addressed in the Tax Structuring Memorandum prepared by Garrett Simmons and Leila Nazari, which is being provided under separate cover. Section 1202 provides for the exclusion of gain on the sale or exchange of QSBS held for more than five years, subject to certain requirements and limitations. The eligibility of the conversion shares for QSBS treatment depends on, among other factors, the Company's status as a "qualified small business" at the time of issuance and the noteholders' holding period for the shares.
Auditor Consultation. The Company's auditors, Graystone & Pallister CPAs, LLP (Robert Milligan, Engagement Partner), should be consulted regarding the proper accounting treatment of the note conversion in the Company's financial statements, including the classification of the conversion shares on the Company's balance sheet and the treatment of accrued interest in the Company's income statement.
VIII. Summary of Key Figures
The following table consolidates the key figures from the analysis set forth in this memorandum for ease of reference:
All figures are subject to confirmation of the day-count methodology for interest accrual, rounding conventions for fractional shares, and any final adjustments to the pre-money fully-diluted share count agreed upon by the parties prior to closing.
IX. Open Items and Next Steps
Based on the foregoing analysis, the following action items remain outstanding and should be addressed prior to the anticipated closing date of February 9, 2026:
1. Confirm Per-Noteholder Share Allocation and Rounding Convention. Coordinate with Whitfield & Ames LLP (Thomas Whitaker) to confirm the final per-noteholder share allocation, including the rounding convention to be applied to any fractional shares. The Note Purchase Agreement is silent on rounding, and we recommend that the parties agree to round fractional shares down to the nearest whole share, with no cash payment in lieu of fractional shares, unless otherwise agreed.
2. Obtain Executed Noteholder Joinder Agreements. Obtain executed joinder agreements or counterpart signature pages from each noteholder (Dr. Margaret Liu and Clearwater Bridge Associates, LLC) to the Series Seed Preferred Stock Purchase Agreement, Investors' Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement. Company counsel should circulate execution copies of these documents to the noteholders no later than February 3, 2026, to allow sufficient time for review and execution prior to closing.
3. Verify Authorization of Series Seed Preferred Stock. Verify that the Amended and Restated Certificate of Incorporation, in its final form, authorizes at least 5,578,343 shares of Series Seed Preferred Stock, sufficient to cover both the new-money shares (4,479,981) and the conversion shares (1,098,362). The current draft authorizes 6,000,000 shares, which is adequate, but this should be confirmed in the final certificate.
4. Coordinate Accounting Treatment. Coordinate with Graystone & Pallister CPAs, LLP (Robert Milligan, Engagement Partner) regarding the proper accounting treatment of the note conversion in the Company's financial statements, including the derecognition of the note liabilities and the corresponding issuance of Series Seed Preferred Stock.
5. Surrender and Cancellation of Original Notes. Ensure that the original promissory notes held by each noteholder are surrendered to the Company and cancelled at or promptly following the closing on February 9, 2026. Company counsel should arrange for the notes to be marked "Converted" and retained in the Company's records.
6. Update Cap Table. Confirm that the Company's capitalization table, maintained with reference to Ledgermark Transfer Services, Inc. (the Company's transfer agent), accurately reflects both the new-money shares and the conversion shares following the closing. The cap table should be reconciled against the Schedule of Investors attached to the SPA and the records of Ledgermark.
7. File Form D and Blue Sky Notices. Ensure that the Form D notice filing is made with the SEC by February 24, 2026, and that blue sky notice filings are made in California, Massachusetts, New York, and Texas in accordance with the applicable filing deadlines in each state.
We believe the foregoing analysis accurately reflects the conversion mechanics, pricing, and share issuance calculations applicable to the Notes in connection with the Financing. We are available to discuss any aspect of this memorandum at your convenience. Please do not hesitate to contact us with any questions or if additional analysis is required.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Garrett Simmons Lead Associate, Tax Calderwood & Harkness LLP
By: ________
Leila Nazari Working Associate, Tax Calderwood & Harkness LLP
Matter No. 1004-00001 Calderwood & Harkness LLP 1800 Page Mill Road, Suite 200 Menlo Park, California 94025 Telephone: (650) 493-7200
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. Distribution is restricted to the named recipients and their authorized representatives.
Noteholder | Principal | Accrued Interest | Total Conversion Amount
Dr. Margaret Liu | $1,200,000 | $145,000 | $1,345,000
Clearwater Bridge Associates, LLC | $900,000 | $108,750 | $1,008,750
Aggregate | $2,100,000 | $253,750 | $2,353,750
Noteholder | Total Conversion Amount | Conversion Price | Shares Issued (approx.)
Dr. Margaret Liu | $1,345,000 | $2.1429 | 627,635
Clearwater Bridge Associates, LLC | $1,008,750 | $2.1429 | 470,727
Total | $2,353,750 | — | 1,098,362
Category | Shares | % (approx.)
Common Stock (founders and employees) | 10,000,000 | 59.6%
Option Pool (2024 Equity Incentive Plan, post-increase) | 1,600,000 | 9.5%
Series Seed Preferred Stock — New Money | 4,479,981 | 26.7%
Series Seed Preferred Stock — Note Conversion | 1,098,362 | 6.5%
Total Post-Money Fully-Diluted | 16,778,343 | 100.0%
Item | Amount / Detail
Aggregate Note Principal | $2,100,000
Interest Rate | 5.0% simple per annum
Accrual Period | September 12, 2023 – February 9, 2026 (approximately 29 months)
Total Accrued Interest | $253,750
Total Conversion Amount (Principal + Interest) | $2,353,750
Series Seed Price Per Share (New Money) | $2.6786
Conversion discount | 20%
Discount Price | $2.1429
Valuation Cap | $25,000,000 pre-money
Cap Price | $2.2321
Applicable Conversion Price | $2.1429 (Discount price governs)
Total Shares on Conversion | ~1,098,362 shares of Series Seed Preferred Stock
Dr. Margaret Liu — Shares on Conversion | ~627,635 shares
Clearwater Bridge Associates, LLC — Shares on Conversion | ~470,727 shares
New-Money Shares in Financing | 4,479,981 shares
Total Series Seed Preferred Stock Post-Closing | ~5,578,343 shares
Post-Money Fully-Diluted Share Count | ~16,778,343 shares

MEMORANDUM

CALDERWOOD & HARKNESS LLP

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