OTCQX

The OTC Markets Group, Inc. (“OTC Markets”) is a private company that operates an electronic inter-dealer quotation system that displays quotes and last-sale information for securities. OTC Markets does not require companies whose securities are quoted on its system to meet any eligibility requirements. Companies quoted by OTC Markets are categorized according to the level of disclosure they provide to the public through OTC Markets’ website.

OTCQX is the premier tier of the OTC market, exclusively for companies that meet the highest financial standards and undergo a qualitative review.   Many U.S. companies join OTCQX as the final step toward a NASDAQ or NYSE listing, while others enjoy the efficient compliance-driven and cost-effective model it offers their investors outside of a traditional exchange listing. For companies moving off a U.S. exchange, OTCQX is also an appealing alternative to the OTC Bulletin Board, providing many services the company and their shareholders expect from a stock exchange.

OTCQX is fully electronic and gives investors access through all major online and full-service brokerage firms in the U.S., including Schwab, E*TRADE, Scottrade, TD Ameritrade, and Fidelity. Trades are settled and cleared in the U.S. similar to any NASDAQ or NYSE stock, and trade reports are disseminated through Yahoo, Bloomberg, Reuters, and most other financial data providers. Investors can obtain Real-Time Level 2 Quotes for all OTCQX companies on otcqx.com providing access to detailed market data, including market depth.

OTCQX for U.S. Companies is comprised of two distinct tiers, OTCQX U.S. Premier and OTCQX U.S., each of which has different eligibility requirements. OTCQX U.S. Premier is designed to identify Companies that are of the size and quality to list on a National Stock Exchange. OTCQX U.S. is designed to identify Companies that are operating Companies with audited financials, but not of sufficient size to be OTCQX U.S. Premier.

To be considered for admission to the OTCQX U.S. tier of OTCQX, the Company shall:

a)      As of the most recent annual or quarterly period end, have $2 million in total assets and as of the most recent fiscal year end one of the following:

i.            $2 million in revenues;

ii.            $1 million in net tangible assets;

iii.            $500,000 in net income; or

iv.            $5 million in market value of publicly traded securities;

b)      Have ongoing operations and shall not be a Shell Company, Blank-Check Company, Special Purpose Acquisition Company or Development Stage Company;

c)      Not be subject to any Bankruptcy or reorganization proceedings;

d)      Be duly organized, validly existing and in good standing under the laws of each jurisdiction in which the Company is organized or does business;

e)      Have at least 50 beneficial shareholders, each owning at least 100 shares of the Company’s common stock

f)       Have proprietary priced quotations published by a Market Maker in OTC Link;

g)      Have a minimum bid price of $0.10 per share for its common stock as of the close of the business on each of the 90 consecutive trading days immediately preceding the Company’s application for OTCQX, provided, however, that in the event that:

i.            There has been no prior public market for the Company’s securities in the U.S. and

ii.            FINRA has approved a Form 211 relating to the Company’s securities, then the Company may apply in writing to OTC Markets Group for an exemption from the minimum bid price requirements of this Section 2.2(g), which exemption may be granted by OTC Markets Group in its sole and absolute discretion;

h)      Have:

i.            Audited balance sheets as of the end of each of the two most recent fiscal years, or as of a date within 135 days if the Company has been in existence for less than two fiscal years, and audited statements of income, cash flows and changes in stockholders’ equity for each of the fiscal years immedieatly precedeming the date of each such audited balance sheet (or such shorter period as the Company has been in existence), with each such financial disclosure made in accordance with U.S. GAAP and including all matters of which the Company is aware that are relevant to the Company’s ability to continue as a going concern, including, without limitation, significant conditions and events and the Company’s plans to mitigate such conditions and events; and

ii.            Unaudited interim financial reports, prepared in in conformance with U.S. GAAP, including a balance sheet as of the end of the Company’s most recent fiscal quarter, and income statements, statements of changes in stockholders’ equity and statements of cash flows for the interim period up to the date of such balance sheet and the comparable period of the preceding fiscal year; and

i)        Be included in a Recognized Securities Manual.

 

OTCQX U.S. Premier Eligibility Criteria

To be considered for admission to OTCQX U.S. Premier, the Company must satisfy all

of the eligibility requirements for the OTCQX U.S. tier (set forth in Section 2.2 above),

plus must satisfy the following additional requirements. To qualify for trading on OTCQX

U.S. Premier, a Company must:

a)      As of the most recent fiscal year end, have one of the following qualifications:

i.            average revenues of at least $6 million over the prior three years; or

ii.            (a) $2 million in net tangible assets if in operation for at least three years, or (b) million in net tangible assets if in operation for less than three years;

b)      Have at least 100 beneficial shareholders, each owning at least 100 shares of the Company’s common stock;

c)      Have a minimum bid price of $1.00 per share for its common stock as of the close of business on each of the 90 consecutive trading days immediately preceding the Company’s application for OTCQX. In the event that:

i.            There has been no prior public market for the Company’s securities in the U.S.,

ii.            FINRA has approved a Form 211 regarding the Company’s securities, and

iii.            The bid price for the Company’s securities is equal to or greater than $1.00, then Section 2.3(c)(i) shall not apply;

d)      Meet the financial standards for continued listing on the NASDAQ Capital Market if its securities have not previously been traded on OTCQX U.S. Premier, except that the Company is not required to:

i.            Have a class of securities with at least 300 shareholders,

ii.            Have proprietary priced quotations published by 2 Market Makers, or

iii.            Comply with NASDAQ corporate governance provisions; and

e)      Conduct annual shareholders’ meetings and submit annual financial reports to its shareholders at least 15 calendar days prior to such meetings.

Requirement to Retain a Designated Advisor for Disclosure

Regardless of which tier a Company is eligible for, a U.S. Company that is applying for

admission to OTCQX must retain an Attorney DAD or an Investment Bank DAD.A U.S. Company that desires to apply for admission to OTCQX must submit an application to the OTC Markets. If the desired Attorney DAD or Investment Bank DAD is not already included on

OTC Markets Group’s list of approved Designated Advisors for Disclosure (referred to herein as the “DAD/PAL List”), the Company must submit (i) an “Application to Serve as an Attorney DAD/PAL or Investment Bank DAD/PAL” for ?

Upon receipt of an OTCQX Application for U.S. Companies, OTC Markets Group may:

a)      Require the Company, with the assistance of the Company’s Attorney DAD or Investment Bank DAD, as applicable, to confirm, clarify or modify any information contained in the OTCQX U.S. Application Materials;

b)      Require the Company to provide a further undertaking, or fulfill a further condition, prior to admission;

c)      Delay admission pending the completion of further due diligence; or

d)      Refuse the application if, in its opinion, the admission of the Company’s securities for trading on OTCQX would be likely to impair the reputation or integrity of OTC Markets Group or be detrimental to the interests of investors.

For further information about this article, please contact Brenda Hamilton, Securities Attorney at (561) 416-8956 or info@gopublic101.com,  This information is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please visit www.gopublic101.com pr contact Hamilton and Associates at 101 Plaza Real South, Suite 202N, Boca Raton Florida, (561) 416-8956 or by email at info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.