If shares are not registered with the SEC they can not be traded. They can issue as many shares as the company wants. But market makers can't trade unregistered shares. There is no dilution with resticted or unregistered shares changing hands.
Believe it or not, event pinks have some rules which must be followed.
Pinks rarely find anyone who would buy their shares, except retail. LOL What they, & actually all the OTC market, does to raise cash, is issue common as a bonus to VCs, which give them cash loans.
Say a VC gives a BB stock a $500k cash loan at 9% interest for 2 years. Included within this funding deal, the company will issue say 10 million shares of common and warrants to buy another 3 million at a discount, exercisable in 6 months.
The company gets the cash, the venture capital firm gets common to dump for profits, into a run they create and if all goes as the game normally goes, 9 months later the VCs exercise the warrants and create a second pop off the next price bottom.
By then the company is behind on the loan repayment, because they are still not profitable and they try to renegotiate the loan for more again. This process is happening over and over again in pennyland with all stocks & companies needing cash, of the exchanges.
