Free course · Lesson 5 · 3 min

The baby shelf rule, in one picture

$150.0Mregistered on PNDA’s shelf

$2.2Mwhat it can sell right now

In 3 minutes: the rule behind that gap, in one picture.

Checking your access…

01The rule: 1/3 in 12 months

Is the public float worth under $75M? Then the company can sell at most 1/3 of that value off its shelf in 12 months.

On Panda Desk →DILUTION INSTRUMENTS → Shelf · S-3 $2.2M/$150.0M$150.0M registered. $2.2M left under the cap.

2026 updateIn May 2026 the SEC proposed removing this cap. Release 33-11418 drops Form S-3’s transaction requirements, I.B.6 included; by the SEC’s own count, 1,023 companies would leave the 1/3 limit. It is still a proposal: until a final rule takes effect, the cap applies.

02The price comes from a 60-day window

Public float value = shares held by non-affiliates × a price. That price can come from any day in the 60 days before the sale.

60 days backThe window opens
Any day insideIts price can be used, even the best close
Sale dayThe cap is measured

Form S-3, General Instruction I.B.6, Instruction 1.

03PNDA, in one picture

The cap is one third of the float value. Shelf sales from the last 12 months come out of it.

From PNDA’s float to what it can still sell

Public float value: 3.20M shares × a price from the window

$12.96M

The cap for 12 months: one third

$4.32M

Inside the cap: $2.10M already sold, $2.2M of room

room

sold

$12.96M ÷ 3 = $4.32M, minus $2.10M sold = $2.2M

A $150.0M shelf, and only $2.2M of it can be sold now.

04The 424B5 shows the math

PNDA’s last prospectus supplement, a 424B5, is sized to that room. The numbers sit in the filing itself.

On Panda Desk →FILINGS → 424B5 · 4 days agoBaby shelf room: 1/3 of $12.96M, less $2.10M sold = $2.2M. Flagged DILUTIVE.

For the longRight now the rule holds this shelf to $2.2M, a small supply. But it binds only below $75M, and a higher price lifts the cap: a run can hand the company more to sell.

053 checks for any shelf

Sources

Form S-3, General Instruction I.B.6 and its Instruction 1: the one-third cap over 12 months for a public float under $75M, and the price from any date in the 60 days before the sale.
17 CFR 230.424(b): prospectus supplements.
SEC Release 33-11418 (Registered Offering Reform): proposal (May 18, 2026) to drop Form S-3’s transaction requirements, General Instruction I.B.6 included (pp. 45, 83, 198), and the SEC’s estimate of 1,023 issuers leaving the one-third limit (p. 209). Proposed, not adopted.

Panda Desk shows these rows for any small cap, next to your montage. tspanda.com

Not financial advice. PNDA is fictional, and nothing here is a recommendation to buy or sell.

← Back to all lessons