Baby shelf: what you can actually offer
General Instruction I.B.6 lets a company below the $75 million float use Form S-3 for a primary offering — capped at one third of the float over any twelve calendar months. Three conditions decide whether you have a cap at all, and four staff interpretations decide what the number is.
I.B.6 has three conditions and two of them are yes-or-no. Answer them wrong and the number below is not slightly off — it does not exist.
Within 60 days prior to the date of sale — not the date of filing. That one word is why baby-shelf capacity is re-measured at every takedown and moves with your share price.
Only sales made under I.B.6 belong here. The instruction says “sold … pursuant to this Instruction I.B.6”, so an earlier ATM run while you were still above $75 million, a private placement, or a registered direct on Form S-1 do not consume capacity. Gross proceeds, before underwriting discounts — Instruction 2 says gross.
A structured read of I.B.6, its eight instructions and the staff interpretations that govern the measurement. Not a legal conclusion on eligibility — the cover-page figures go out over counsel's sign-off, and the shell-company and affiliate questions are judgements this tool asks you for rather than makes.
One third of a number that keeps moving
The baby shelf is what Form S-3 leaves you when your float falls below $75 million. General Instruction I.B.1 — the ordinary primary shelf — is gone at that point, and General Instruction I.B.6 takes its place: you may still register and take down a primary offering, but the aggregate market value of what you sell under that instruction in any twelve calendar months may not exceed one third of the common equity held by your non-affiliates. It is the difference between raising opportunistically and raising on a quota, and for most companies in it the quota arrives at the worst possible time, because the thing that put them there was the share price falling.
Three conditions decide whether you have a cap or no instruction at all, and the third one is the one that surprises people. I.B.6(c) requires at least one class of common equity listed and registered on a national securities exchange, which Instruction 8 defines as an exchange registered under Section 6(a) of the Exchange Act. A company quoted on OTCQX, OTCQB or Pink has no baby shelf, at any float. Its primary registration route is Form S-1 — or I.B.1 itself, which, read closely, imposes no listing requirement at all, so a non-listed issuer above $75 million of float is not shut out of the shelf the way a listed issuer below it is capped. The second condition is the shell-company test in I.B.6(b), and anyone who arrived through a reverse merger or a SPAC should find the date the Form 10 information was filed before doing any arithmetic.
The measurement is where the real work is, and it is worth stating precisely because the obvious reading is wrong twice over. First, the float is struck within 60 days prior to the date of sale, not the date of filing — Instruction 1 says sale, and I.B.1’s instruction says filing, and the difference is deliberate. Capacity therefore re-prices at every takedown. Second, the numerator is not all the equity you have raised: the instruction counts only what was sold pursuant to I.B.6, so an earlier ATM under I.B.1, a private placement, or a registered direct on Form S-1 leave your bucket untouched. Companies routinely add up twelve months of every financing and conclude they have nothing left, which is the expensive direction to be wrong in.
Then there are four staff interpretations that change the number rather than decorate it. The cap binds the amount offered by the prospectus supplement, not the amount sold, so a supplement cannot be oversized on the theory that sales will stay inside the limit; but when capacity is measured for a later takedown, only securities actually sold count against it. An offering still open under an earlier continuous supplement consumes capacity even though nothing has been sold under it. A resale registered on I.B.3 for the same investors who bought in the takedown counts too, because the staff reads that structure as evading the size limit. And warrants are valued by the maximum shares underneath them at the same per-share price, even where they cannot be exercised for a year. The last of the four is the only one that helps: a prospectus supplement already on file under I.B.1 before the update at which you dropped below $75 million may be completed in full.
Finally, Instruction 7 puts two of these figures on the outside front cover of the prospectus — the float calculation, and the amount offered under I.B.6 in the prior twelve calendar months ending on the date of the prospectus — and Instruction 5 requires the date used to value what you have already sold to be the same date used to value the float. One date, used twice, printed on the cover. That is the part a reader can check, and it is the part most worth getting right before anyone else does.
Frequently asked questions
Is the one-third measured against the float at the time of filing, or at the time of sale?
At the time of sale, and this is the single most consequential detail in the instruction. Instruction 1 to General Instruction I.B.6 requires the price to be struck 'as of a date within 60 days prior to the date of sale'. Compare I.B.1's own instruction, which says 'within 60 days prior to the date of filing'. Different words, deliberately. So baby-shelf capacity is re-measured at every takedown and moves with your share price — it is not fixed when the shelf goes effective, and a figure computed for the S-3 is not the figure that governs a takedown eight months later.
Does every dollar of equity we raised in the last twelve months count against the cap?
No, and assuming it does is the most common way companies under-raise. The text limits 'the aggregate market value of securities sold by or on behalf of the registrant pursuant to this Instruction I.B.6' during the twelve months. Sales made under I.B.1 while you were still above $75 million do not count. Nor does a private placement, nor a registered direct on Form S-1, nor an exempt offering. Only I.B.6 sales consume I.B.6 capacity. The exception is the anti-evasion case in CDI 116.25, where a concurrent resale registered on I.B.3 for the same investors does count.
Can we file a supplement for more than the cap and simply sell less?
No. CDI 116.22 addresses exactly that: remaining capacity 'is measured immediately prior to the registered takedown and applies to the amount of securities offered for sale pursuant to the prospectus supplement, not the amount actually sold.' The good news in the same CDI is the other direction — when you measure capacity for a later takedown, only the securities actually sold count against the limit, so the unsold balance of a finished supplement does not haunt you.
We have an ATM running. Can we start a second offering?
You can, but the first one's unsold balance eats the second one's room. CDI 116.23 works a numeric example: $10 million of capacity, a $5 million continuous offering begun on 7 June of which $2.5 million has sold, and a new supplement on 14 June. Capacity is $7.5 million — only sold securities count — but because $2.5 million is still being offered under the June 7 prospectus, the new supplement may only offer $5 million. The staff's reason is given in a sentence: 'To permit otherwise would allow a company to do in two or more transactions what it cannot do in one transaction.'
We are quoted on OTCQB. How much can we raise off a baby shelf?
Nothing — there is no baby shelf. I.B.6(c) requires at least one class of common equity listed and registered on a national securities exchange, which Instruction 8 defines as an exchange registered under Section 6(a) of the Exchange Act. OTCQX, OTCQB and Pink are not. Two things worth knowing rather than guessing: I.B.1 has no listing condition at all, so a non-listed company with non-affiliate float of $75 million or more can register a primary shelf offering under I.B.1; and below that the route is Form S-1, which has no float condition and no one-third cap, but cannot be taken down the way a shelf can.
What happens if our float goes back above $75 million?
The cap stops applying going forward. Instruction 3 says that where the float 'equals or exceeds $75 million subsequent to the effective date of this registration statement, then the one third limitation on sales specified in General Instruction I.B.6(a) shall not apply to additional sales made pursuant to this registration statement on or subsequent to such date', and the registration statement is thereafter considered filed under I.B.1. Read the timing in those words carefully: it frees sales made on or after the crossing date, not the offering retrospectively.
We were above $75 million when we filed a prospectus supplement, and then fell below at our annual update. Is the supplement dead?
No, and this is the newest piece of guidance in the area. CDI 116.26, issued 19 March 2026, says that where a company had an effective Form S-3 and a prospectus supplement on file in reliance on I.B.1, and at its next Section 10(a)(3) update no longer meets the $75 million requirement but remains eligible under I.B.6, the staff 'will not object if the company continues offering and selling the full amount of securities covered by the prospectus supplement that was filed prior to the Section 10(a)(3) update' — even where that amount exceeds the I.B.6 limits. It is an accommodation for the supplement already on file, not an enlargement of capacity for anything new, and because it is only months old it is worth putting in front of counsel by its number.
How do warrants count?
By the shares underneath them, not by their own value. Instruction 2 says that for derivative securities convertible into or exercisable for common equity, you calculate the aggregate market value of the underlying shares — the maximum number of shares they are exercisable for as of a date within 60 days prior to the sale, multiplied by the same per-share price used for the float. CDI 116.24 closes the obvious gap: Instruction 2 applies 'even when the warrants are not exercisable for common stock within 12 months'. A one-year lockup on exercise does not keep the warrants out of the numerator.
Is this instruction going away?
It is proposed to. SEC Release 33-11418, 'Registered Offering Reform' (File No. S7-2026-17, published in the Federal Register on 26 May 2026, comments closed 27 July 2026), would eliminate the $75 million minimum public float in I.B.1 and, because the other transaction requirements only exist for companies that fail that test, would eliminate General Instructions I.B.2 through 6 along with it. The Commission's own estimate in the release is that 1,023 issuers currently subject to the one-third limit would no longer face it. As at 2 October 2026 it remains a proposed rule with no adopting release, so I.B.6 governs in full — but date your workpaper.