Free course · Lesson 12 · 4 min

Price protection and cashless warrants

$4.50PNDA’s warrant strike today

1.2Mnew shares waiting behind it

In 4 minutes: how some warrants get a lower strike or more shares, what cashless means, and where to read the terms.

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01Price protection: the strike can drop

Some warrants carry price protection. If the company later sells shares below the strike, the strike drops to that lower price.

A new offeringpriced below the old strike

triggers the clause

The strike resetsdown to the new price

can also bring

More sharessome contracts also add warrants

Often called a ratchet. Some contracts reset on other events too; the contract says which, if any.

On Panda Desk →DILUTION INSTRUMENTS → Warrants · $4.50 - 1.2M - 28-07-31The two numbers a reset can change: the price, and sometimes the count.

02One cheap raise, two hits

A raise below an old strike brings its own new shares. With protected warrants, it also makes the old ones cheaper to use, and sometimes more numerous.

Hit 1the new offering’s own shares

Hit 2old warrants at a lower strike, sometimes more of them

03Cashless: shares without paying

Some contracts let the holder exercise cashless, paying nothing. The holder then gets fewer shares, worth only the gain above the strike.

Normal exercisePays the strike. Gets every share the warrant covers. The company gets the cash.

CashlessPays nothing. Gets fewer shares. The company gets no cash.

04It is all in the contract

None of this shows on the chart. It is written in the warrant contract, usually filed as an exhibit to the 8-K that announced the deal.

Deal signedthe warrant terms are set, protection included
Within 4 business daysthe 8-K is due, usually with the contract attached
Any later raisecompare its price with the old strikes

In the contract, search for “cashless” and for how the exercise price adjusts.

On Panda Desk →FILINGS → 8-K Items 1.01/3.02 · 59 days agoThe deal that created PNDA’s $4.50 warrants: where their terms are written.

05Keep the strike in view

Hidden Levels lists the price levels buried in the filings that are not obvious. PNDA’s $4.50 strike is one, tied to the deal it came from.

On Panda Desk →AI Insight → Hidden Levels · 4.50 · 3.39 · 2.80 · 2.754.50: the July PIPE warrants, 1.20M shares, 5 years.

What Panda Desk does not showWhether a warrant has price protection, and of what kind. That is in the contract.

For the longA raise priced below old strikes can bring new shares from two sources. Before you hold through one, check whether the old warrants reset.

063 checks on any warrant

Sources

Form 8-K: the current report, due within four business days of the event; Item 3.02 covers unregistered sales of equity, such as a PIPE and its warrants.

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.

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