Learn dilution
Plain-English guides to how small-cap companies raise money and how each raise turns into new shares: warrants, convertibles, preferred stock, ATM programs, equity lines, shelf registrations, S-1s, reverse splits and the SEC forms behind them. Each guide links to live companies DilutionScan covers, so you can see the instrument on a real filing.
Dilution basics
What dilution is, how share counts and float are measured, and how a stock tends to trade after a raise. Every DilutionScan ticker page starts from these numbers.
- How to Trade Penny Stocks Without Getting DilutedA dilution-first guide to penny stocks. How new shares reach the tape, which SEC filings announce them, worked examples, and a 20-minute filing check.
- What Is Stock Dilution? How New Shares Affect YouStock dilution explained with worked numbers: what happens to your ownership when a company issues new shares, and where to spot it coming in SEC filings.
- Float vs Shares Outstanding: What Is the Difference?Float vs shares outstanding explained: how shares outstanding, non-affiliate float and tradeable float differ, where each is disclosed and when each matters.
- Stock Performance After an Offering: How to Measure ItHow to measure stock performance after an offering: pick precise event dates, set return windows, adjust for splits, benchmark the market and mind sample size.
- How to Check a Penny Stock for Dilution in 20 MinutesA six-step filing checklist for dilution risk in a small-cap stock. What to open on EDGAR, which phrases to search for, and the four numbers to write down.
Warrants
Warrants are shares that do not exist yet. DilutionScan lists each warrant series it reads from the filings, with its exercise price and share count, on the ticker page.
- Warrant Overhang: How to Count Shares Not Issued YetWhat warrant overhang is, how to total it from the warrant table in a 10-Q, and how cash, cashless and pre-funded exercises change the eventual share count.
- Warrant Inducement Offers: How Repricing Deals WorkHow a warrant inducement offer works: why holders get a lower exercise price and new warrants for exercising early, and how to count shares added now and later.
- Concurrent Private Placement Warrants ExplainedWhat concurrent private placement warrants are, why registered direct offerings pair with unregistered warrants, and how to count the shares they add later.
- Warrants vs Options: Who Issues Them and Why Only Warrants DiluteA warrant is written by the company and creates new shares when exercised; a listed option is a contract between investors cleared by OCC. How each works.
Convertibles, preferred and toxic financing
Convertible notes and convertible preferred stock turn debt or preferred shares into common stock, sometimes at a moving price. These guides explain the terms DilutionScan reads from each deal.
- Toxic Convertible Notes: How Variable Pricing WorksToxic convertible notes explained: how variable conversion prices, VWAP discounts and lookback windows work, and what happens to share counts with no floor.
- Full Ratchet Anti-Dilution and Price Resets ExplainedFull ratchet vs weighted-average anti-dilution explained, plus price resets, with a worked share-count table as the stock falls from $1.00 to $0.10 per share.
- Prepaid Advance Agreements: How They Become SharesHow a prepaid advance agreement works: cash up front repaid in discounted shares, and how the discount, lookback, floor and triggers set the share count.
- Beneficial Ownership Blockers: 4.99% and 9.99% CapsHow 4.99% and 9.99% beneficial ownership blockers cap a holder's stake at any moment but not total dilution, explained with a worked convert-and-sell cycle.
- Adverse Financing Terms: MFN, Partitions, No MaturityAdverse financing terms that rarely make headlines, from undisclosed balances and partitioned notes to MFN and participation rights, and how each adds dilution.
- Finding the Lender and Deal Terms in SEC FilingsWhere a financing's terms and counterparty are disclosed, from 8-K Items 1.01 and 3.02 to the securities purchase agreement exhibit, with a phrase checklist.
- How to Find Selling Shareholders and Placement AgentsCounterparty disclosures in a prospectus or 8-K: how to identify the holder, placement agent and selling shareholders, what each is paid and what each can sell.
ATM programs and equity lines
At-the-market programs and equity lines let a company sell shares into the market over time. DilutionScan shows each program it finds and how much capacity the filings say is left.
- What Is an ATM Offering? At-the-Market Sales ExplainedWhat an at-the-market (ATM) offering is, how the sales agreement and 424B5 work, how fast an ATM can sell shares, and where its sales show up in later filings.
- Equity Line of Credit (ELOC) Financing ExplainedHow an equity line of credit (ELOC) works, and why share caps, volume limits, ownership blockers and falling prices keep proceeds far below the headline amount.
Shelf registrations, S-3, baby shelf and S-1
A registration statement is what lets a company sell registered shares. These guides cover Form S-3 shelves, the baby shelf limit, Form S-1 and F-1, and the prospectus supplements filed when a shelf is used.
- Baby Shelf Rule Explained: S-3 I.B.6 vs Form S-1The baby shelf rule explained: how Form S-1 and S-3 differ, who can use a shelf, and how I.B.6 caps sales at one-third of public float per 12 months.
- Form S-1 Explained: IPO vs Resale RegistrationForm S-1 explained: IPO vs resale S-1 registrations, how an S-1 moves through S-1/A amendments to effectiveness, and what the 424B4 and 424B3 prospectuses mean.
- S-3 vs S-8: Capital-Raising Shelf or Employee Stock Plan RegistrationForm S-3 registers securities a company can sell to raise cash; Form S-8 registers shares for employee equity plans. Who can file each and what each means.
- How to Read a 424B5 Prospectus SupplementHow to read a 424B5 prospectus supplement in five minutes: the cover, offering summary, dilution table, plan of distribution and baby shelf paragraph, in order.
- Form D and Reg D: Rule 506(b) vs 506(c) ExplainedForm D and Regulation D explained: Rule 506(b) vs 506(c) private placements, the 15-day filing deadline, what a Form D shows and why public companies file one.
Offerings, PIPEs and registered directs
How underwritten offerings, registered direct offerings and PIPEs differ, who buys in each, and what the filings say about price and warrant coverage.
- Registered Direct vs PIPE vs Underwritten OfferingRegistered direct vs PIPE vs underwritten offering: how each sells a block of shares at a fixed price, how each is registered and disclosed, and what fees cost.
- Why Penny Stocks Drop After Good News: The Offering PlaybookWhy a small-cap stock can fall on a strong press release. Registered direct and ATM mechanics, the offering math with a worked example, and the filings to read.
- Authorized Share Increases: Reading the Proxy VoteWhat authorized shares are, why companies ask shareholders to increase them, how to calculate real headroom, and how a reverse split changes the share math.
Reverse splits, listing and halts
Reverse splits, Nasdaq deficiency notices, delistings and trading halts. DilutionScan tracks announced and effective reverse splits on its calendar.
- The Reverse Split Dilution Cycle ExplainedHow reverse splits, resale registrations and convertible financings can repeat as a dilution cycle, with a typical timeline and a worked two-loop share count.
- Reverse Stock Split Explained: How It WorksHow a reverse stock split works, its stages and filings, fractional shares, ADS ratio changes, bid-price rules and Nasdaq's 250-to-1 cap.
- Reverse Split vs Forward Split: Same Math, Opposite ReasonsReverse and forward stock splits compared: the arithmetic, why companies do each, the filings and votes involved, and what happens to authorized shares.
- How to Read the Reverse Split CalendarWhat a row on a reverse split calendar means, where the ratio and effective date come from, and which filings to read before and after the split.
- Nasdaq Deficiency Notices and the $1 Bid Price RuleNasdaq deficiency notices explained: the $1 minimum bid price rule and its 180-day periods, equity and late-filing standards, and the 2025 reverse split limits.
- Form 25 vs Form 15: Delisting vs DeregistrationForm 25 vs Form 15 explained: how delisting removes a stock from an exchange, how deregistration ends SEC reporting, who files each and the timelines.
- Uplisting Explained: Moving From OTC to Nasdaq or NYSEWhat an uplisting from OTC to Nasdaq or NYSE involves, the listing standards a company must meet, and what FINRA's OTC daily list records when it moves.
- Trading Halts Explained: Halt Codes and LULD PausesWhat trading halt codes T1, T2, T12, H10, LUDP and M mean, how Limit Up-Limit Down price bands trigger pauses, and how a halted stock reopens for trading.
- Trading Halt vs SEC Trading Suspension: Exchange Minutes or 10 Business DaysAn exchange trading halt and an SEC trading suspension compared: who orders each, how long they last, what markets they cover, and what happens afterward.
Cash runway and going concern
A company that is running out of cash usually raises money, and raising money usually means new shares. These guides show how runway and going concern warnings are read from the filings.
- Cash Runway: How to Calculate It From a 10-QHow to calculate cash runway from a 10-Q: find the cash, measure monthly burn, adjust for the time since quarter end, and read the notes that change the number.
- Going Concern Warning: What Substantial Doubt MeansWhat a going concern warning means, who decides there is substantial doubt, where it appears in a 10-K or 10-Q, and how to check the cash math behind it.
- NT 10-K and NT 10-Q Late Filing Notices ExplainedNT 10-K and NT 10-Q explained: the Rule 12b-25 extension of 15 or 5 days, what the notice must disclose, and what happens if the report is still late.
- Chapter 11 vs Chapter 7: Bankruptcy Stages for StocksChapter 11 vs Chapter 7 bankruptcy for public companies: each stage from petition and DIP financing to emergence, 8-K Item 1.03, and why tickers gain a Q.
Reading SEC forms: 8-K, 6-K, 10-Q and more
Every figure on DilutionScan comes from an SEC filing. These guides explain the forms the dilution data is read from and how to find them on EDGAR.
- 8-K Item Codes Explained: Items 1.01 to 9.018-K item codes explained: what Items 1.01, 2.03, 3.01, 3.02, 5.02 and 9.01 mean, the four-business-day rule, and the item combinations that flag a financing.
- 8-K vs 10-K: Event Report Within Four Business Days or the Audited Annual ReportAn 8-K reports one event within four business days; a 10-K is the audited, certified annual report. How they differ and how one event shows up in both.
- Form 6-K, 20-F and 40-F: Foreign Issuer FilingsForm 6-K, 20-F and 40-F explained: why foreign private issuers file 6-Ks instead of 8-Ks, when a 20-F is due, and how to read a 6-K with no item numbers.
- How to Read a 10-Q and 10-K: Five Sections FirstHow to read a 10-Q or 10-K on a small cap. The five sections that show cash runway, going concern doubt and potential dilution, plus filing deadlines.
- How to Find a Company's Latest 10-K, 10-Q and 8-K FilingsHow to find a company's latest 10-K, 10-Q and 8-K on SEC EDGAR or Signal8, tell filing date from period, spot amendments, and know when the next one is due.
- Proxy Statements: PRE 14A vs DEF 14A ExplainedProxy statements explained: PRE 14A vs DEF 14A, why a preliminary proxy flags a reverse split or share increase, and how those Schedule 14A votes are counted.
- Schedule 13D vs 13G: 5% Ownership Filings ExplainedSchedule 13D vs 13G explained: who must file at the 5% threshold, which holders qualify as passive, the 2024 deadlines and how to read an activist 13D.
- Form 144 Explained: Notice of Proposed SaleForm 144 explained: who files a notice of proposed sale, the 5,000-share and $50,000 thresholds, Rule 144 volume limits, and why it does not prove a sale.
- Form 4 vs Form 144: Planned Insider Sale or Completed TradeForm 144 is a notice of a proposed sale under Rule 144; Form 4 reports a completed insider trade within two business days. Who files each, when and why.
- Form 4 Transaction Codes Explained: P, S, A, M, FForm 4 transaction codes explained: what P, S, A, M, F, G and X mean, why code F is not an insider sale, the two-day filing deadline and 10b5-1 footnotes.
- How to Search SEC EDGAR: CIKs and Accession NumbersHow to search SEC EDGAR: find any filing by company or CIK, read an accession number, and write full-text searches with quotes, OR and exclusions that work.
- SEC Filing Times: Acceptance Time vs Filing DateSEC filing times explained: acceptance time vs filing date vs period of report, the 5:30 p.m. ET EDGAR cutoff and its 10 p.m. exceptions, and why it matters.
Small-cap trading mechanics
Short interest, borrow, relative volume and lockup expirations: the market mechanics that often meet a dilutive raise.
- Short Interest Explained: Days to Cover and BorrowHow short interest is reported to FINRA twice a month, how to calculate days to cover and short % of float, and how borrow fees and the Reg SHO list work.
- Short Interest vs Short Float: Which Number Matters for a SqueezeShort interest is a FINRA share count; short float is that count divided by a float. Why the two differ, which dates they carry, and how to read each.
- Relative Volume (RVOL) and Premarket Trading ExplainedHow relative volume (RVOL) is calculated, how the 4:00 to 9:30 a.m. ET premarket session works, and why the baseline behind an RVOL figure changes the reading.
- IPO Lockup Expiration Explained: 180-Day LockupsHow IPO lockup expirations work: the typical 180-day period, where lockup terms are disclosed, how early releases are announced, and how leak-outs cap selling.
Dilution glossary
Short definitions of the terms you meet on a DilutionScan ticker page and in the filings behind it.
- At-the-market (ATM) offering
- Authorized shares
- Baby shelf rule
- Cash runway
- Cashless exercise
- Days to cover
- Death spiral
- Deficiency notice
- Equity line of credit (ELOC)
- Floorless convertible
- Form 10-Q
- Form 25
Check any ticker for dilution
DilutionScan reads each covered company's SEC filings and lists its warrants, convertibles, ATM programs, shelves and S-1s on one page, with a dilution rating and cash runway.
Educational content only. DilutionScan and Signal8 are not broker-dealers or investment advisers, and nothing here is a recommendation to buy or sell any security.