Dilution Event Scoring
A reproducible 0–100 framework for "how dilutive is this name right now."
The point is not to be perfectly accurate — it is to be transparent
and consistent so you can compare across tickers and across time
without drift.
Core principle
Score components, then combine. Never start from gut, then justify.
Each component contributes independently. Final score is a weighted
sum, capped at 100. Every score must be reproducible from the inputs;
if you can't write down which signals fired, you don't have a score —
you have an opinion.
Components and weights
| Component |
Max points |
Sourced from |
| Active ATM detected |
30 |
atm-detection |
| Placement agent tier |
20 |
bank-tier-classification |
| Filing recency |
15 |
filing dates |
| Cash runway |
15 |
last 10-Q "Liquidity" / cash + burn rate |
| Structural toxicity (warrants, ELOC, deep discount) |
10 |
424B / 8-K body |
| Repeat-dilution history (12mo) |
10 |
filing-count over 12-month window |
| Total |
100 |
|
Active ATM detected (0–30)
| State |
Points |
| Confirmed active ATM (3-signal rule passes; recent 10-Q confirms in-use) |
30 |
| Active ATM authorized but no recent 10-Q confirmation of use |
22 |
| ELOC active (Common Stock Purchase Agreement with single counterparty) |
25 |
| Registered direct in last 30 days, no ATM |
12 |
| Effective shelf only (S-3/F-3 effective, no 424B in 6+ months) |
5 |
| No effective shelf, no recent offering |
0 |
Placement agent tier (0–20)
Apply only when an offering or sales agreement is in flight. If no
agent is named or none of the signals above fire, this component is 0.
| Tier |
Points |
| Tier 4 (specialized small-cap placement, e.g., Wainwright on ATM) |
20 |
| Tier 3 (boutique / sector specialist) |
12 |
| Tier 2 (mid-tier full-service) |
6 |
| Tier 1 (bulge bracket) |
2 |
| No agent involved (e.g., S-1 for shell, no underwriter) |
8 (unknown is risk) |
Filing recency (0–15)
The market's memory of a dilution event decays. Recent = more pressure.
| Most recent dilution-relevant filing |
Points |
| 424B / 8-K item 3.02 in last 7 days |
15 |
| In last 30 days |
10 |
| In last 90 days |
5 |
| > 90 days |
0 |
Cash runway (0–15)
Estimate from last 10-Q: (cash + equivalents) / quarterly burn.
Use the most conservative interpretation when data is partial.
| Estimated runway |
Points |
| < 3 months |
15 |
| 3–6 months |
12 |
| 6–12 months |
7 |
| 12–24 months |
3 |
| > 24 months |
0 |
If runway cannot be estimated (no recent 10-Q, going-concern language
without numbers), assign 10 and flag for manual review.
Structural toxicity (0–10)
Read the 424B / agreement for these features. Each present = 2 points,
capped at 10.
- Warrants attached at or below offering price
- Pricing at >15% discount to last close
- ELOC / Standby Equity Purchase Agreement with discount-to-VWAP pricing
- Convertible note with reset / variable conversion
- "Best efforts" placement (no firm commitment)
- Multiple amendments to S-3 in last 12 months (suggests repeat use)
- Going-concern language in the most recent 10-Q
Repeat-dilution history (0–10)
Count distinct dilutive events in the trailing 12 months (424Bs, 8-K
3.02s, S-8 effectivenesses, registered amendments).
| Events in last 12 months |
Points |
| 6+ |
10 |
| 3–5 |
7 |
| 2 |
4 |
| 1 |
2 |
| 0 |
0 |
Score thresholds and actions
| Score |
Label |
Action recommendation |
| 75–100 |
🚨 SEVERE |
Treat as continuous selling pressure. Avoid long. Short candidate on strength. Confirm with atm-detection. |
| 55–74 |
⚠️ HIGH |
Material dilution overhang. Reduce size, no overnight on green days. |
| 35–54 |
⚠️ MODERATE |
Watch carefully. Tradable with discipline. |
| 15–34 |
LOW |
Background risk only; structure looks clean. |
| 0–14 |
MINIMAL |
No active dilution mechanism detected. |
Worked example (illustrative)
Input: ticker XYZ, today.
| Signal |
Score |
| ATM detected: confirmed active, last 10-Q says "$8M sold YTD under ATM" |
30 |
| Agent: H.C. Wainwright on the Sales Agreement (Tier 4) |
20 |
| Most recent 424B5: 5 days ago |
15 |
| Cash runway from last 10-Q: ~4 months |
12 |
| Structural toxicity: warrants attached, going-concern language → 2 + 2 |
4 |
| Repeat dilution: 5 events in 12 months |
7 |
| Total |
88 |
Verdict: SEVERE. Continuous selling overhang; treat any rally as a
print opportunity for the issuer.
Hard rules
- Never publish a score without the component breakdown. A naked
number is not actionable and not auditable.
- Lookahead safety applies to every component. A 424B "in last 7
days" means filing_date <= today AND >= today minus 7 — no future
data. Re-scoring an old date requires the data state AS OF that date.
- Do not double-count. ATM points already encode the 424B + agent
structure; the "filing recency" component refers to the calendar
age of the most recent filing, not the existence of the filing.
- Re-score at every new filing. A score is a snapshot, not a
permanent label. New 10-Q can drop runway points; new 424B can
restart filing-recency points; an 8-K announcing ATM termination
should drop the ATM points to 0.
- Component weights are not sacred. They are calibrated for
small-cap US/FPI tickers. For different universes (large-cap, REITs,
biotech with milestone-based structures), recalibrate before using.
Anti-patterns
- Scoring on a single signal. "S-3 effective → 100" is not a score,
it's pattern-matching. Always require multi-component composition.
- Hand-waving cash runway. If you can't extract the number, assign
10 and flag — don't assume zero.
- Treating tier as a moral judgment. Tier 4 is a behavior
prediction, not a verdict on the firm. Same for low scores: a clean
Tier 1 underwritten secondary is still dilutive on pricing day.
Workflow
- Collect inputs:
- last effective S-3/F-3, latest 424B*, latest 8-K items
- placement agent name (if any)
- last 10-Q cash + quarterly burn
- 12-month filing history
- For each component, compute the sub-score using the tables above.
Always cite the source filing.
- Sum, cap at 100.
- Output: total score, component breakdown, verdict label, top
contributing signals.
- Stamp with the data-as-of date for reproducibility (lookahead-safety).
Phrases that should trigger this skill
- "how dilutive is X" / "score the dilution risk"
- "dilution score" / "dilution risk score"
- "is this stock about to dump"
- "compare dilution risk between X and Y"
- "rank these tickers by dilution"
What this skill is NOT
This is not a price target or a trading signal. It quantifies the
structural dilution risk in the filings; it does not predict
short-term price moves, scoring trade entries, or confirm execution
mechanics. Combine outputs with price/volume context and your own
trade plan. Required upstream skills: atm-detection,
bank-tier-classification, sec-filing-types, lookahead-safety.
1---2name: dilution-event-scoring3description: Use when assessing, ranking, comparing, or rating dilution risk for one or more small-cap stocks. Produces a transparent 0-100 score integrating ATM activity, placement-agent tier, filing recency, cash runway, warrant attachment, and repeat-dilution history, with auditable component breakdown and action thresholds (SEVERE / HIGH / MODERATE / LOW / MINIMAL).4license: MIT5---67# Dilution Event Scoring89A reproducible 0–100 framework for "how dilutive is this name right now."10The point is not to be perfectly accurate — it is to be **transparent11and consistent** so you can compare across tickers and across time12without drift.1314## Core principle1516**Score components, then combine. Never start from gut, then justify.**1718Each component contributes independently. Final score is a weighted19sum, capped at 100. Every score must be reproducible from the inputs;20if you can't write down which signals fired, you don't have a score —21you have an opinion.2223## Components and weights2425| Component | Max points | Sourced from |26|-----------|-----------:|--------------|27| Active ATM detected | 30 | `atm-detection` |28| Placement agent tier | 20 | `bank-tier-classification` |29| Filing recency | 15 | filing dates |30| Cash runway | 15 | last 10-Q "Liquidity" / cash + burn rate |31| Structural toxicity (warrants, ELOC, deep discount) | 10 | 424B / 8-K body |32| Repeat-dilution history (12mo) | 10 | filing-count over 12-month window |33| **Total** | **100** | |3435### Active ATM detected (0–30)3637| State | Points |38|-------|-------:|39| Confirmed active ATM (3-signal rule passes; recent 10-Q confirms in-use) | 30 |40| Active ATM authorized but no recent 10-Q confirmation of use | 22 |41| ELOC active (Common Stock Purchase Agreement with single counterparty) | 25 |42| Registered direct in last 30 days, no ATM | 12 |43| Effective shelf only (S-3/F-3 effective, no 424B in 6+ months) | 5 |44| No effective shelf, no recent offering | 0 |4546### Placement agent tier (0–20)4748Apply only when an offering or sales agreement is in flight. If no49agent is named or none of the signals above fire, this component is 0.5051| Tier | Points |52|------|-------:|53| Tier 4 (specialized small-cap placement, e.g., Wainwright on ATM) | 20 |54| Tier 3 (boutique / sector specialist) | 12 |55| Tier 2 (mid-tier full-service) | 6 |56| Tier 1 (bulge bracket) | 2 |57| No agent involved (e.g., S-1 for shell, no underwriter) | 8 *(unknown is risk)* |5859### Filing recency (0–15)6061The market's memory of a dilution event decays. Recent = more pressure.6263| Most recent dilution-relevant filing | Points |64|--------------------------------------|-------:|65| 424B / 8-K item 3.02 in last 7 days | 15 |66| In last 30 days | 10 |67| In last 90 days | 5 |68| > 90 days | 0 |6970### Cash runway (0–15)7172Estimate from last 10-Q: `(cash + equivalents) / quarterly burn`.73Use the most conservative interpretation when data is partial.7475| Estimated runway | Points |76|------------------|-------:|77| < 3 months | 15 |78| 3–6 months | 12 |79| 6–12 months | 7 |80| 12–24 months | 3 |81| > 24 months | 0 |8283If runway cannot be estimated (no recent 10-Q, going-concern language84without numbers), assign 10 and flag for manual review.8586### Structural toxicity (0–10)8788Read the 424B / agreement for these features. Each present = 2 points,89capped at 10.9091- Warrants attached at or below offering price92- Pricing at >15% discount to last close93- ELOC / Standby Equity Purchase Agreement with discount-to-VWAP pricing94- Convertible note with reset / variable conversion95- "Best efforts" placement (no firm commitment)96- Multiple amendments to S-3 in last 12 months (suggests repeat use)97- Going-concern language in the most recent 10-Q9899### Repeat-dilution history (0–10)100101Count distinct dilutive events in the trailing 12 months (424Bs, 8-K1023.02s, S-8 effectivenesses, registered amendments).103104| Events in last 12 months | Points |105|--------------------------|-------:|106| 6+ | 10 |107| 3–5 | 7 |108| 2 | 4 |109| 1 | 2 |110| 0 | 0 |111112## Score thresholds and actions113114| Score | Label | Action recommendation |115|-------|-------|-----------------------|116| 75–100 | 🚨 SEVERE | Treat as continuous selling pressure. Avoid long. Short candidate on strength. Confirm with `atm-detection`. |117| 55–74 | ⚠️ HIGH | Material dilution overhang. Reduce size, no overnight on green days. |118| 35–54 | ⚠️ MODERATE | Watch carefully. Tradable with discipline. |119| 15–34 | LOW | Background risk only; structure looks clean. |120| 0–14 | MINIMAL | No active dilution mechanism detected. |121122## Worked example (illustrative)123124Input: ticker XYZ, today.125126| Signal | Score |127|--------|------:|128| ATM detected: confirmed active, last 10-Q says "$8M sold YTD under ATM" | 30 |129| Agent: H.C. Wainwright on the Sales Agreement (Tier 4) | 20 |130| Most recent 424B5: 5 days ago | 15 |131| Cash runway from last 10-Q: ~4 months | 12 |132| Structural toxicity: warrants attached, going-concern language → 2 + 2 | 4 |133| Repeat dilution: 5 events in 12 months | 7 |134| **Total** | **88** |135136Verdict: SEVERE. Continuous selling overhang; treat any rally as a137print opportunity for the issuer.138139## Hard rules1401411. **Never publish a score without the component breakdown.** A naked142 number is not actionable and not auditable.1432. **Lookahead safety applies to every component.** A 424B "in last 7144 days" means filing_date <= today AND >= today minus 7 — no future145 data. Re-scoring an old date requires the data state AS OF that date.1463. **Do not double-count.** ATM points already encode the 424B + agent147 structure; the "filing recency" component refers to the calendar148 age of the most recent filing, not the existence of the filing.1494. **Re-score at every new filing.** A score is a snapshot, not a150 permanent label. New 10-Q can drop runway points; new 424B can151 restart filing-recency points; an 8-K announcing ATM termination152 should drop the ATM points to 0.1535. **Component weights are not sacred.** They are calibrated for154 small-cap US/FPI tickers. For different universes (large-cap, REITs,155 biotech with milestone-based structures), recalibrate before using.156157## Anti-patterns158159- **Scoring on a single signal.** "S-3 effective → 100" is not a score,160 it's pattern-matching. Always require multi-component composition.161- **Hand-waving cash runway.** If you can't extract the number, assign162 10 and flag — don't assume zero.163- **Treating tier as a moral judgment.** Tier 4 is a behavior164 prediction, not a verdict on the firm. Same for low scores: a clean165 Tier 1 underwritten secondary is still dilutive on pricing day.166167## Workflow1681691. Collect inputs:170 - last effective S-3/F-3, latest 424B*, latest 8-K items171 - placement agent name (if any)172 - last 10-Q cash + quarterly burn173 - 12-month filing history1742. For each component, compute the sub-score using the tables above.175 Always cite the source filing.1763. Sum, cap at 100.1774. Output: total score, component breakdown, verdict label, top178 contributing signals.1795. Stamp with the data-as-of date for reproducibility (lookahead-safety).180181## Phrases that should trigger this skill182183- "how dilutive is X" / "score the dilution risk"184- "dilution score" / "dilution risk score"185- "is this stock about to dump"186- "compare dilution risk between X and Y"187- "rank these tickers by dilution"188189## What this skill is NOT190191This is not a price target or a trading signal. It quantifies the192**structural** dilution risk in the filings; it does not predict193short-term price moves, scoring trade entries, or confirm execution194mechanics. Combine outputs with price/volume context and your own195trade plan. Required upstream skills: `atm-detection`,196`bank-tier-classification`, `sec-filing-types`, `lookahead-safety`.
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