Source: https://guthlabs.ai/docs/instruments/safe-convertible-note-conversion-simple/implementation/

instrument implementation / implementation-contract

# SAFE/Convertible Note Conversion (Simple) implementation

A source-bound implementation contract for SAFE/Convertible Note Conversion (Simple); deployment and executable qualification remain separate.

Status: **VERIFIED_CLEAN**Lifecycle: **implementation-contract**

## Binding contract

This record describes what an executable surface must bind and validate. It does not claim that a public calculator, package, or production route is deployed.

**Record owner**: Guth Instruments

**Lifecycle**: verified-clean

**Evidence ID**: t5-030

**Effect**: Computation or source lookup only

## Input and validation requirements

- Division by zero occurs if fully_diluted_shares is zero while a valuation cap is supplied.

- Division by zero occurs if both valuation-cap pricing and discounted-round pricing produce a conversion price of zero, including a zero priced-round share price or a 100% discount.

- Negative or otherwise invalid valuation caps, share counts, investment amounts, share prices, or discounts are not constrained by the specification.

- A discount below 0% or above 100% is not constrained; values above 100% can produce a negative conversion price.

- If either the valuation cap or discount is omitted, the behavior of min() is unspecified even though the input description says cap and/or discount.

- Fractional shares, rounding rules, and any minimum-share increment are unspecified.

- Using shares/(fully_diluted_shares+shares) for ownership can misstate ownership when the SAFE is post-money, when the option pool changes, or when other securities convert.

## Required corrections

No binding erratum is attached to this unique-name record. Implementers must still preserve the declared units, domain, and failure behavior.

## Inspectable interface fixture

The sample below is evidence for interface and validation tests, not a production implementation.

````
{
  "inputs": {
    "safe_amount": 100000,
    "valuation_cap": 5000000,
    "discount": 0.2,
    "priced_round_share_price": 8,
    "fully_diluted_shares": 1000000
  },
  "expected_outputs": {
    "conversion_price": 5,
    "shares_issued": 20000,
    "resulting_ownership_percent": 1.9607843137
  },
  "working": "Cap price = 5,000,000 / 1,000,000 = 5.00 per share. Discounted round price = 8.00 x (1 - 0.20) = 8.00 x 0.80 = 6.40. Conversion price = min(5.00, 6.40) = 5.00. Shares issued = 100,000 / 5.00 = 20,000. Ownership = 20,000 / (1,000,000 + 20,000) = 20,000 / 1,020,000 = 0.019607843137 = 1.9607843137%."
}
````

## Other records

[01**Overview**](<https://guthlabs.ai/docs/instruments/safe-convertible-note-conversion-simple/>)[02**Mechanism**](<https://guthlabs.ai/docs/instruments/safe-convertible-note-conversion-simple/mechanism/>)[04**Qualification**](<https://guthlabs.ai/docs/instruments/safe-convertible-note-conversion-simple/qualification/>)

## Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

- `VERIFIED_LEDGER.json`

- `evidence-tranche5/tranche5-results.json`