Thread by @MilesGCohen

Schenk pulled up the "Certification of designation of series c-2 preferred stock" and is going through it with Mosley.

Breaking until 2 ish PT.

Mosley is back on the stand, and Schenk is having him decipher some handwritten notes he took about #Theranos at an unspecified time.

His hand writing is worse than mine.

Schenk ran Mosley through a slide deck he received from #Theranos. He highlighted many of the statements we have seen from other slide decks in other investors' binders.

They touch on accuracy etc.

The AUSA is asking him if the statements are consistent with his understanding.

"Our certified labs perform precise tests on a sample 1/1000 the size of a typical blood draw. No more big vials to fill. No more searching for a good vein”

For example.

Schenk projects the "Theranos Angiogenesis Study Report" again, with the Pfizer logo. This copy with some highlighting by Mosley

Was this Pfizer document important to you in your decision to invest?

It was.

Who did you think wrote this report?

Pfizer

Why did you think that

[For] one - it's got the Pfizer logo on the top left, and I think that is on every page..."

Schenk highlighted the Theranos address, website and phone number inscribed at the bottom of each report page, which Wade had highlighted w/ Cullen.

Did that make you think pfizer did not draft the document

"No," he testified b/c the conclusions "read as 3d party conclusions"

We saw this exhibit:

Mosley invested in series C-2 at $17 per share.

"Summary capitalization"

SERIES A $0.15
SERIES B $0.18

SERIES C $0.56
SERIES C-1 $3.00
SERIES C-1 $15.00
SERIES C-2 $17.00

Theranos also sent Mosley a projected statement of income in 2013 which estimated $42 million of revenue from "lab services from us retail pharmacies."

"Would it surprise you if #Theranos had very little revenue given these projections?"

"Yes..." he said.

"I would have expected these numbers to be pretty accurate," he testified, citing that 3/4 of the year had already elapsed at this point.

#ElizabethHolmes

Schenk then took Mosley through the press he consumed about #Theranos pre-investment.

"I absolutely read [the Fortune article] before I invested," Mosley testified.

"I thought the company had enormous potential for good in the world to be able to do this kind of testing, a described," Mosley testified.

So Mosley arranged meetings with #ElizabethHolmes and the Walton family, the DeVos family, among other prospective investors.

He described it as a "good investment opportunity"

We are now looking at the memo Mosley wrote for Dr. Henry Kissinger w/ his thoughts on theranos

He testified he based it on the info from the "three inch" high package, the fortune article, the Pfizer report and the Johns Hopkins piece of paper.

"how about convos w/ ms holmes?" Schenk asked

"It likely was, but if you read this most of this is directly traceable to the materials." Mosley replied

"There is substantial data and other info attesting to the quality performance and reliability of the #theranos tech and equipment. There does not appear to be any sign of any question about the quality accuracy or reliability of theranos blood testing technology" Mosley began.

He cited #Theranos as having worked with "10-15" of the "largest" pharmaceutical companies as evidence.

“The most extensive evidence,” of reliability, he wrote, was the Pfizer Angiogenesis report.

"To me it was a demonstration that the equipment could work well in the field when operated by unsophisticated people," he testified mentioning "good quality results."

"[It was a] lengthy report, more than twenty pages long, and it goes into a lot of detail," he also mentioned.

Did you think the conclusions were Pfizers conclusions?

I did.

Schenk brought up the "Pricing of possible investment" section of Mosley's memo.

"Elizabeth Holmes owns all of the Class B common shares which represent almost 50% of the value of the company the class be shares have 100 votes per share."

"It meant that Elizabeth would be absolutely in control of the company," Mosley testified, regardless of how many common shares (with one vote per) were bought.

#ElizabethHolmes #Theranos

Mosley raised 5 questions/concerns/risks in section VI of his memo.

Schenk highlighted that absent from the list of risks, was the idea that the "founder would not be accurate," in her portrayal of company info.

We got some more texts between #ElizabethHolmes and Balwani.

She texted her COO on Nov 20, 2013:

"And planning on including all we sent [XX - missed this word] including the Pfizer report let me know if u disagree," she wrote.

Mosley met with Holmes in Oct. 2014 in California.

"Did you learn the tech was different or did something different?" Schenk asked, comparing what he learned at the meeting to the materials he was sent.

"I did not," he said.

“Personally I would be delighted and honored to be part of your first closing,” Mosley wrote in a follow up email to #ElizabethHolmes after the meeting.

Sunny Balwani sent Mosley, CC’ing Holmes, some investment docs in Oct. 2014

Included — a stock purchase agreement for C2 shares in Theranos.

We are looking at it.

Mosley expounded on section 4.4

"Speculative Nature of Investment"

"Recognizing that it was new tech, and something could happen to not make it as disruptive or effective...," he testified. "I thought I was facing those risks."

"Did I think I had inaccurate information, no"

$5,999,997.00

The amount Mosley wired to Theranos.

Schenk projected the Fedwire to the jurors screens

Wade's got some cross. Probably more than 32 minutes worth, which is what we have left in the day.

"Good afternoon Mr. Mosley...You're now a recovering lawyer is that correct?"

"That's correct."

Wade's building up Cravath Swaine & Moore, asking Mosley to put away his humility as he talks about his former firm.

"Extraordinarily accomplished, yes," Mosley said of the firm's attorneys.

We hear what Mosley does currently — for the first time today.

He works for BBT, where he is still "advis[ing] and work[ing] with high network families," he testified.

The DeVos family were also clients of Mosley's.

"I wasn't involved," he testified, in their investment of $100 million.

Wade is running through many of the high profile clients Mosley's had.

They include the Walmart heirs, the Fiat family, the Cox family.

Wade asked Mosley why he thought Kissinger asked him to look into Theranos — as the former Secretary of State was already on the board.

"He simply wanted my views on the company, the company in general," the witness replied.

#ElizabethHolmes

The judge, Wade, and Mosley shared a laugh about binders.

That's it for today.

Lawyers expect Mosley will be finished tomorrow.

#ElizabethHolmes