I was reading up on some investment agreements and I came upon the following paragraph from one of the agreements:
If there is a Coin or Token Sale before the expiration or termination of this Agreement, the Company must convert all or any part of the Purchase Amount to Common Stock at a conversion price equal to the Discount Percentage multiplied by the Company’s valuation determined through mutual agreement or a 409A valuation from Carta.com or another party expressly approved by the Investor, divided by the Company Capitalization, before the commencement of the Token Sale.
So I am trying to understand the paragraph by using examples and I actually don't understand what company capitalization would be in this case. I am using Purchase amount to be $100,000, Company valuation to be $7,000,000 and Discount percentage is 10%. With those numbers the formula come out to be (90% x 70M) / Company Capitalization.
My question is in this formula what does company capitalization mean and how do I calculate a value for it?