Dilution Terms Glossary: Float & Share Terms

Direct answer: Plain-English definitions for the dilution and float terms that actually move small caps. Float, shares outstanding, authorized shares, ATM, shelf, S-1, 424B5, warrant, convertible, PIPE, ELOC, baby shelf, cash runway, short interest, restricted shares. A sentence or two each. No jargon left hanging.

What are the core share-count terms?

People mix these three up all the time. That's where most of the float confusion starts.

• Float is the number of shares the public can actually trade. It leaves out the locked-up insider stock, restricted shares, and control blocks. Small float, and the same order flow shoves the price around a lot harder.
• Shares outstanding is every share the company has issued and that exists right now. Public, insiders, institutions, all of it. This number sits at or above the float, never below.
• Authorized shares is the ceiling. It's the max the company is legally allowed to issue under its charter. The distance between authorized and outstanding? That's the room they've got to print new stock. Room to dilute.

What are the SEC filings that signal dilution?

Dilution isn't done in the dark. It gets registered and disclosed. Here's where it lives.

• S-1 is a registration statement, often an IPO or a fresh registration of shares. It tells the market a company plans to sell stock to the public.
• Shelf (S-3) lets a company register a batch of securities now and sell them later, in pieces, whenever. Call it pre-approval for future raises. A shelf getting filed doesn't mean money got raised. It means the plumbing is in place.
• 424B5 is a prospectus supplement. A company files it when it actually prices and sizes an offering off an existing shelf. This is usually where a real, dated dilutive raise shows its face.
• Baby shelf is an S-3 used by a smaller company whose public float sits under $75M. The "baby shelf rule" caps it at selling one-third of that float over any rolling 12 months. That's a governor on how fast it can dilute.

What are the dilution instruments themselves?

The actual tools companies reach for when they want to raise money by issuing shares.

• ATM (at-the-market offering) lets a company drip shares straight into the open market at whatever the price is, whenever it feels like it, up to a registered amount. Quiet. Continuous.
• Warrant is a contract. It gives the holder the right to buy shares from the company at a set price before it expires. Exercise the warrants, new shares get created, the count goes up.
• Convertible is a note or preferred share that can turn into common stock, often at a discount to market. When the conversion price floats with the stock, a falling price means more shares issued. That feedback loop is the thing traders watch like hawks.
• PIPE (private investment in public equity) is a private sale of stock or convertibles to a handful of chosen investors, usually at a discount, often with a resale registration to follow. The shares are new. Once they're registered and free to trade, your float grows.
• ELOC (equity line of credit) lets a company sell shares to one committed investor over time, on demand, up to a dollar cap. Same idea as an ATM, except there's a single counterparty pulling from a set line.

What are the risk and pressure terms?

These don't mint shares on their own. What they tell you is how close dilution is and how squeezed a float already is.

• Cash runway is cash on hand divided by quarterly burn. It gives you a rough count of quarters before the money's gone. Short runway, higher odds of a dilutive raise. Simple math.
• Short interest is the number of shares currently sold short, usually quoted as a percent of float. High short interest on a thin float sets up sharp moves in both directions.
• Restricted shares can't be sold freely yet. Lock-ups, Rule 144 holding periods, contract terms, take your pick. They sit outside today's float. But they can walk into it later and fatten up the tradable supply.

See it yourself

Every term up there points at something public. Pull the filings on SEC EDGAR and read them in order:

• 10-Q / 10-K for share counts on the cover page, cash and burn in the financial statements, dilution instruments buried in the notes.
• 8-K for material events between filings, including announced financings, PIPEs, and ELOCs.
• S-1 / S-3 for registration statements and shelves. A shelf sets up future raises.
• 424B5 for the prospectus supplement where a specific offering gets priced and sized.

Reading one filing doesn't get you much. Stacking them by date does. Grab the share count off the last 10-Q, the shelf off the S-3, the offering off the 424B5, the update off the 8-K. Each one is a dated data point. When two of them disagree, say the cover-page share count against a more recent filing, that disagreement is telling you something changed in between. Go find out what.

That's the whole FloatVerify approach. Every float, dilution, and cash-burn figure comes sourced and dated, sitting right next to where it came from. When two sources don't line up, we put the gap on the table instead of tucking it away. Float contradictions are rare, a handful out of dozens, but when one turns up it's exactly what you want in front of you before the crowd catches on.

FAQ

What's the difference between float and shares outstanding? Shares outstanding is every share that exists. Float is only the slice the public can trade. Float leaves out locked-up, restricted, and control shares, so it's always equal to or smaller than shares outstanding.

Which filing actually prices a dilutive raise? Usually a 424B5, the prospectus supplement filed off an existing shelf. That's where the offering gets sized and priced, which makes it the cleanest dated record of a real raise.

Is a warrant the same as a convertible? No. A warrant is a right to buy new shares at a set price. A convertible is debt or preferred stock that turns into common shares, sometimes at a floating, discounted price. Both add shares. The mechanics aren't the same.

What's a baby shelf? An S-3 shelf used by a company with under $75M in public float. The baby shelf rule holds it to selling one-third of that float per rolling 12 months, capping how fast it can dilute.

Do restricted shares count in the float? Not while they're restricted. But lock-ups expire and holding periods end, so restricted shares can later join the float and grow the tradable supply.

Want float, dilution instruments, and cash burn for a US small cap in one place, every figure sourced and dated? FloatVerify tracks float, dilution, and cash burn for US small caps, so the terms in this glossary turn into numbers you can actually read. → floatverify.com

Informational only. Not investment advice. Data, not advice.