Mainly applies to convertible securities. Standard provision whereby the conversion ratio is changed accordingly in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder’s potential equity position. Adjustment usually requires a split or stock dividend in excess of 5% or issuance of stock below book value. Share Purchase Agreements also typically contain anti-dilution provisions to protect investors in the event that a future round of financing occurs at a valuation that is below the valuation of the current round.³

Shares acquired in a private placement are considered restricted shares and may not be sold in a public offering absent registration or after an appropriate holding period has expired. Non-affiliates must wait one year after purchasing the shares, after which time they may sell less than 1% of their outstanding shares each quarter. For affiliates, there is a two-year holding period.³

Issuing more shares of a company dilutes the value of holdings of existing shareholders.²

A reduction in the percentage ownership of a given shareholder in a company caused by the issuance of new shares.³

Public securities that are not freely tradable due to SEC regulations. (See also: Securities and Exchange Commission.)³

• An expense recorded to reduce the value of a long-term tangible asset. Since it is a non-cash expense, it increases free cash flow while decreasing the amount of a company’s reported earnings.³
• This term refers to the gradual loss in value of currency, stocks, and material goods. For example, biotechnology can “depreciate” over the course of 4 years.⁴

Registration by a Company of the investor’s sale of the shares purchased by the investor in a private offering.³

Where the graduating class of Incubators and Accelerators is given a chance to pitch to investors. ²

A company that is registered with the SEC under the Exchange Act.³

The regulation that governs the requirements for financial statements under the Securities Act of 1933 and the Securities Exchange Act of 1934.³

The Standard Instructions for Filing Forms Under Securities Act of 1933, Securities Exchange Act of 1934, and Energy Policy and Conservation Act of 1975.³