A Baby Shelf on Form S-3: What You Need to Know

A baby shelf is a provision of Form S-3 that allows companies to register securities for sale up to one-third of their public float over a 12-month period. This can be a useful option for companies that want to raise capital from the public but do not want to have to file a new registration statement each time they want to sell securities.

To qualify for a baby shelf, a company must meet the following requirements:

• The company must have a public float of at least $75 million.
• The company must have been subject to the reporting requirements of the Securities and Exchange Act of 1934 for at least 12 months.
• The company must have filed a Form S-3 registration statement that has been in effect for at least 12 months.

Once a company has qualified for a baby shelf, it can register securities for sale up to one-third of its public float over a 12-month period. The company can sell the securities at any time during the 12-month period, and it does not have to file a new registration statement each time it sells securities.

Baby shelves can be a useful tool for companies that want to raise capital from the public. They can help companies to raise capital quickly and easily, and they can save companies a lot of time and money.

Here are some of the benefits of using a baby shelf:

• Quick and easy access to capital. A baby shelf allows companies to raise capital quickly and easily, without having to file a new registration statement each time they want to sell securities.
• Reduced costs. A baby shelf can save companies a lot of time and money, as they do not have to file a new registration statement each time they sell securities.
• Increased flexibility. A baby shelf gives companies more flexibility in how they raise capital. They can sell securities at any time during the 12-month period, and they do not have to file a new registration statement each time they sell securities.

Here are some of the risks of using a baby shelf:

• Market conditions. The market conditions may not be favorable for selling securities, which could make it difficult for a company to raise capital.
• Investor demand. There may not be enough investor demand for the securities, which could make it difficult for a company to sell them.
• Competition. There may be too much competition from other companies that are also trying to raise capital.

Overall, a baby shelf can be a useful tool for companies that want to raise capital from the public. It can help companies to raise capital quickly and easily, and it can save companies a lot of time and money. However, there are some risks associated with using a baby shelf, and companies should carefully consider these risks before deciding whether or not to use one.

How to Calculate a Baby Shelf

A baby shelf is a provision of Form S-3 that allows companies to register securities for sale up to one-third of their public float over a 12-month period. This can be a useful option for companies that want to raise capital from the public but do not want to have to file a new registration statement each time they want to sell securities.

To calculate a baby shelf, you will need to know the following information:

• The number of shares of common stock that are outstanding.
• The number of shares of common stock that are held by insiders and by institutional investors.
• The public float.

The public float is the number of shares of common stock that are held by the public. To calculate the public float, you will need to subtract the number of shares that are held by insiders and by institutional investors from the number of shares of common stock that are outstanding.

Once you have the public float, you can calculate the baby shelf by multiplying the public float by one-third. This will give you the maximum number of shares of common stock that you can sell under a baby shelf.

For example, if you have 100 million shares outstanding, 10 million shares are held by insiders and by institutional investors, and the public float is 90 million shares, then you can sell up to 30 million shares under a baby shelf.

It is important to note that the baby shelf calculation is based on the public float as of the date of the registration statement. If the public float changes after the registration statement is filed, you may be able to sell more or less securities under the baby shelf.

To calculate the non-affiliate float for purposes of S-3 eligibility, a company may look back 60 days and select the highest of the last sales prices or the average of the bid and ask prices on the principal exchange.