OTC Stocks

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Introduction for the Novice

Sooner or later, usually sooner, you’ll come across something like “OTC MKTS” or “Pink Sheet”, or OTCQX, and wonder what the an “Over-the-counter stock” is. Or maybe you just shrug and don’t worry about it, since you’re day trading on Robinhood and don’t really care. You’re only interested in penny stocks, anyway.

What if I told you that OTC stocks are penny stocks? Interested now?

That’s a really misleading statement, and if you read our amateur investor article then you have an idea of my frustration with the term itself (penny stock).

Generally speaking, “Penny Stocks” refer to any stock trading under $5/share.

Generally speaking, “Penny Stocks” refer to OTC stocks.

Those two statements are not combined, to highlight my major frustration with using “Penny Stock” as a phrase with a static definition., If anything, it’s slang. Generally speaking, “Penny Stocks” will have market caps of $300m or less.

For our purposes, as novice investors, we’re going to accept that the phrase will be used sort of differently sometimes but still mostly refer to the same things.

OTC stocks also have different tiers of security. Stocks on NASDAQ and NYSE, and other major exchanges, aren’t particularly risky. Even the riskiest still meet eligibility requirements to be listed. OTC, on the other hand, have Pink, OTCQB, and OTCQX. Oh, and Grey. Imagine if they let just anyone form a company and list it on a market exchange!

You don’t have to imagine.

OTC stocks are less regulated, often are cheaper to trade via brokers, and tend to have lower volume and thus lower liquidity. Trades can take much longer. Or not. It depends. Let’s look at what some word terms mean.

Pink Sheet Stock

Pink sheets only have one requirement to get listed. A company needs to have one market maker quoting its stock. The listing companies do not have to provide any financial information at all. (A market maker is a person that manipulates the market as a job.).

You only need one human to quote your stock, with zero necessity to give any other information. The stock’s entire existence is the ticker symbol and the price. That’s it. What could possibly go wrong?

Naturally, pink sheet stocks are often literal penny stocks. Often insolvent companies. Many times pure scams.

That doesn’t mean that all pink sheet stocks are a waste of time. Even large multi-nationals list on pink sheets. After all, Nestle doesn’t really need to prove its reputation to investors in America, so why waste the time and money to file with the SEC?

This is the part where most sites stress that they do not give financial advice and to do your due diligence. Well that’s dumb. This site gives financial advice all the time, we’re basically doing it right now. And why bother with looking things up? Gambling is fun.

This the exception. Don’t gamble with mystery pink sheets. That’s just dumb.

At the very least, use common sense. Say you’re comparing two preferred pink sheet stocks. One hasn’t paid a dividend in 6 years. The other has been consistently paying monthly for 18 months, and the share price has remained neutral+. If you make the wrong decision in this scenario, no amount of information being spoon-fed to you is going to help.

There are three tiers of OTC Pink - Current information, limited information, no information.

We won’t copy/paste the details for each information tier, it’s pretty much what it sounds like.

OTCQB

Whereas Pink requires no real anything, OTCQB requires a lot more. Still, this is a much more accessible market specifically for small companies and businesses. Copy/paste incoming. Press CTRL+F and search for “SkipOTCQB” to skip down past this beast.

To be eligible to be quoted on the OTCQB, all companies will be required to:

  • Meet a minimum closing bid price on OTC Markets of $.01 for each of the last 30 calendar days;

  • In the event that there is no prior public market and a 15c2-11 application has been submitted to FINRA by a market maker, OTC Markets can waive the bid requirement at its sole discretion;

  • In the event that a Company is a seasoned public issuer that completed a reverse stock split within 6 months prior to applying to the OTCQB, the Company must have a post reverse split minimum bid price of $.01 at the close of business on each of the 5 consecutive trading days immediately before applying to the OTCQB;

  • In the event the Company is moving to the OTCQB from the OTCQX, it must have a minimum closing bid price of $.01 for at least one (1) of the 30 calendar days immediately preceding;

  • Companies may not be subject to bankruptcy or reorganization proceedings the Company’s application;

  • Either be subject to the reporting requirements of the Securities Exchange Act of 1934 and be current in such reporting obligations or, if an international issuer, be eligible to rely on the registration exemption found in Exchange Act Rule 12g-2(b) and be current and compliant in such requirements or be a bank current in its reporting obligations to its bank regulator;

  • Not be in bankruptcy or reorganization proceedings;

  • Be duly organized, validly existing and in good standing under the laws of each jurisdiction in which it is organized and does business;

  • Submit an application and pay an application and annual fee;

  • Maintain a current and accurate company profile on the OTC Markets website;

  • Use an SEC registered transfer agent and authorize the transfer agent to provide information to OTC Markets about the Company securities, including but not limited to, shares authorized, shares issued and outstanding, and share issuance history; and

  • Submit an OTCQB Annual Certification confirming the accuracy of the current company profile and providing information on officers, directors and controlling shareholders.

All companies are required to post their initial disclosure on the OTC Markets website and make an initial certification.  The initial disclosure includes:

  • Confirmation that the Company is current in its SEC reporting obligations and has filed all reports with the SEC, that all financial statements have been prepared in accordance with U.S. GAAP, and that the auditor opinion is not adverse, disclaimed or qualified;

  • International Companies – (i) Companies subject to the Exchange Act reporting requirements must be current in such reports; (ii) A company that is not an SEC Reporting Company must be current and fully compliant in its obligations under Exchange Act Rule 12g3-2(b), if applicable, and shall have posted in English through the OTC Disclosure & News Service or an Integrated Newswire, the information required to be made publicly available pursuant to Exchange Act Rule 12g3-2(b) for the preceding 24 months (or from inception if less than 24 months); and all financial statements have been prepared in accordance with U.S. GAAP and that the auditor opinion is not adverse, disclaimed or qualified;

  • Verification that the Company profile is current, complete and accurate;

All companies will be required to file an initial and annual certification on the OTC Markets website, signed by the CEO and/or CFO, stating:

  • The company’s reporting standing (i.e., whether SEC reporting, bank reporting or international reporting) and briefly describing the registration status of the company;

  • If the Company is an International Company and relying on 12g3-2(b), that it is current in such obligations;

  • That the company is current in its reporting obligations to its regulator and that such information is available either on EDGAR or the OTC Markets website;

  • States the law firm and/or attorneys that assist the company in preparing its annual report or 10-K;

  • Confirms that the company profile on the OTC Markets website is current and complete;

  • Identifies any third-party providers engaged by the Company, its officers, directors or controlling shareholders, during the prior fiscal year and up to the date of the certification, to provide investor relations services, public relations services, stock promotion services or related services;

  • Confirms the total shares authorized, outstanding and in the public float as of that date; and

  • Names and shareholdings of all officers and directors and shareholders that beneficially own 5% or more of the total outstanding shares, including beneficial ownership of entity shareholders.

An application to OTCQB can be delayed or denied at OTC Markets’ sole discretion if they determine that admission would be likely to impair the reputation or integrity of OTC Markets Group or be detrimental to the interests of investors.

Requirements for Bank Reporting Companies

Bank reporting companies must meet all the same requirements as all other OTCQB companies except for the SEC reporting requirements.  Instead, bank reporting companies are required to post their previous two years’ and ongoing yearly disclosure that was and is filed with the company’s bank regulator, on the OTC Markets website.

International Companies

In addition to the same requirements for all issuers as set forth above, foreign issuers must be listed on a Qualified Foreign Exchange and be compliant with SEC Rule 12g3-2(b).  Moreover, a foreign entity must submit a letter of introduction from a qualified PAL which states that the PAL has a reasonable belief that the company is in compliance with SEC Rule 12g3-2(b), is listed on a Qualified Foreign Exchange, and has posted required disclosure on the OTC Markets website.  A foreign entity must post two years’ historical and ongoing quarterly and annual reports, in English, on the OTC Markets website which comply with SEC Rule 12g3-2(b).

Ongoing Requirements

  • U.S. OTCQB companies will be required to remain current in their SEC reporting obligations.

  • A foreign company that is not an SEC Reporting Company must remain current and fully compliant in its obligations under Exchange Act Rule 12g3-2(b), if applicable, and in any event shall, on an ongoing basis, post in English through the OTC Disclosure & News Service or an Integrated Newswire, the information required to be made publicly available pursuant to Exchange Act Rule 12g3-2(b).

  • Banks must remain current in their banking reporting requirements;

  • All OTC Markets posting and reports must be timely filed 45 days following the end of a quarter or 90 days following the end of the fiscal year for US issuers and as soon as practicable but no later than 6 months following the end of the fiscal year end or 60 days following the end of a quarter for International companies; where applicable, file a notice of late filing allowing for 5 extra days on a quarterly report and 15 extra days on an annual report;

  • All OTCQB companies will be required to post annual certifications on the OTC Markets website;

  • All companies are required to comply with all federal, state, and international securities laws and must cooperate with all securities regulatory agencies;

  • Must pay the annual fee;

  • All companies must respond to OTC Markets inquiries and requests;

  • All companies must maintain an updated company profile on the OTC Markets website and must submit a Company Update Form at least once every six months;

  • All Companies must file interim disclosures in the event the Company undergoes a reverse merger or change of control and make new updated certifications and disclosure related to the new business and control persons;

  • All OTCQB companies must meet the minimum bid price of $.01 per share at the close of business of at least one of the previous thirty (30) consecutive calendar days; in the event that the price falls below $.01, the company will begin a grace period of 180 calendar days to maintain a closing bid price of $.01 for ten consecutive trading days;

  • Use an SEC registered transfer agent and authorize the transfer agent to provide information to OTC Markets about the Company securities, including but not limited to, shares authorized, shares issued and outstanding, and share issuance history.

SKIPOTCQB

Jesus Christ. Did you read all of that? I sure as shit didn’t. I got enough to know that OTCQB stocks need to be above a penny in value on a consistent basis, and not be in bankruptcy. Hell, there might be caveats, I don’t know. I saw “not be in bankruptcy” and was like “Okay, good enough for me.”

Alright, so OTCQB is actually legit. Or at least, significantly more legit than Pink Sheets. Still riskier than NASDAQ listed stocks, but there will be enough information available to make better choices.

So we can assume that OTCQX is like, twice as good as OTCQB. Let’s find out together, as we copy and paste more information from a better site.

OTCQX

Same deal as OTCQB, you can CTRL+F “SKIPOTCQX”. If you’re like me, you already drew the conclusion that OTCQX is the best of the three.

OTCQX – Requirements for Admission

To be eligible to be quoted on the OTCQX U.S., companies must:

  • Have $2 million in total assets as of the most recent annual or quarter end;

  • As of the most recent fiscal year end have at least 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;

  • Meet one of the following penny stock exemptions under Rule 3a51-1 of the Exchange Act: (i) have a bid price of $5 or more; or (ii) have net tangible assets of $2 million if the Company has been in continuous operation for at least three years, or $5,000,000 if the Company has been in continuous operation for less than three years which qualification can be satisfied as of the end of a fiscal period or as a result of an interim capital raise; or (iii) have average revenue of at least $6,000,000 for the last three years;

  • Not be a blank check or shell company as defined by the Securities Act of 1933 (“Securities Act”);

  • Not be in bankruptcy or reorganization proceedings;

  • Be in good standing in its state of incorporation and in each state in which it conducts business;

  • Have a minimum of 50 beneficial shareholders owning at least one round lot (100 shares) each;

  • Be quoted by a market maker on the OTC Link;

  • Have a minimum bid price of $0.10 per share for its common stock as of the close of business on each of the 30 consecutive calendar days immediately preceding the Company’s application for OTCQX. If (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, then the Company may apply to OTC Markets for an exemption from the minimum bid price requirements, which exemption is at the sole discretion of OTC Markets. In the event that the Company is a Seasoned Public Issuer (i.e., has been in operation and quoted on either OTC Link, the OTCBB or an exchange for at least one year) that completed a reverse stock split within 6 months prior to applying for admission to OTCQX U.S., the Company must have a minimum bid price of $0.10 per share for its common stock as of the close of business on each of the 5 consecutive trading days immediately preceding the Company’s application for OTCQX, after the reverse split;

  • Have GAAP compliant (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 immediately preceding the date of each such audited balance sheet (or such shorter period as the Company has been in existence), and must include all going concern disclosures including plans for mitigation; and GAAP compliant (ii) unaudited interim financial reports, 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

  • Be included in a Recognized Securities Manual or be subject to the reporting requirements of the Exchange Act.

To be eligible to be quoted on the OTCQX International, companies must:

  • Have U.S. $2 million in total assets as of the most recent annual or quarter end;

  • As of the most recent fiscal year end, have at least one of the following: (i) U.S. $2 million in revenues; (ii) U.S. $1 million in net tangible assets; (iii) U.S. $500,000 in net income; or (iv) U.S. $5 million in global market capitalization;

  • Meet one of the following penny stock exemptions under Rule 3a51-1 of the Exchange Act: (i) have a bid price of U.S. $5 or more; or (ii) have net tangible assets of U.S. $2 million if the company has been in continuous operation for at least three years, or U.S. $5,000,000 if the company has been in continuous operation for less than three years; or (iii) have average revenue of at least U.S. $6,000,000 for the last three years;

  • Be quoted by a market maker on the OTC Link (which requires a 15c2-11 application if the company is not already quoted on a lower tier of OTC Markets);

  • Not be in bankruptcy or reorganization proceedings;

  • Be included in a Recognized Securities Manual or be subject to the reporting requirements of the Exchange Act;

  • Have its securities listed on a Qualifying Foreign Stock Exchange for a minimum of the preceding 40 calendar days; provided, however, that in the event the company’s securities are listed on a non-U.S. exchange that is not a Qualified Foreign Stock Exchange, then at the company’s request and subsequent to the company providing OTC Markets Group with personal information forms for each executive officer, director, and beneficial owner of 10% or more of a class of the company’s securities and such other materials as OTC Markets Group deems necessary to make an informed determination of eligibility, OTC Markets Group may, upon its sole and absolute discretion, consider the company’s eligibility for OTCQX International;

  • Meet one of the following conditions: (i) be eligible to rely on the registration exemption found in Exchange Act Rule 12g-2(b) and be current and compliant in such requirements; or (ii) have a class of securities registered under Section 12(g) of the Exchange Act and be current in its SEC reporting requirements; or (iii) if such company is not eligible to rely on the exemption from registration provided by Exchange Act Rule 12g3-2(b) because it does not (A) meet the definition of “foreign private issuer” as that term is used in Exchange Act Rule 12g3-2(b) or (B) maintain a primary trading market in a foreign jurisdiction as set forth in Exchange Act Rule 12g3-2(b)(ii), and is not otherwise required to register under Section 12(g), be otherwise current and fully compliant with the obligations of a company relying on the exemption from registration provided by Exchange Act Rule 12g3-2(b).

To be eligible to be quoted on the OTCQX U.S. Premier, companies must:

  • Satisfy all of the eligibility requirements for OTCQX U.S. set forth above;

  • Have (i) At least (a) 500,000 publicly held shares; and (b) $1 million in market value of publicly held shares; and (ii) at least (a) $500,000 in net income (in the latest fiscal year or in two of the last three fiscal years); or (b) $2.5 million in stockholders’ equity; or (c) $35 million in market value of listed securities;

  • Have a minimum of 100 beneficial shareholders owning at least one round lot (100 shares) each;

  • Have a minimum bid price of $1.00 per share for its common stock as of the close of business on each of the 30 consecutive calendar days immediately preceding the Company’s application for OTCQX. If (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 and (iii) the bid price is equal to or greater than $1.00, then the Company may apply to OTC Markets for an exemption from the 30-day minimum bid price requirements, which exemption is at the sole discretion of OTC Markets. In the event that the Company is a Seasoned Public Issuer (i.e., has been in operations and quoted on either OTC Link, the OTCBB or an exchange for at least one year) that completed a reverse stock split within 6 months prior to applying for admission to OTCQX U.S., the Company must have a minimum bid price of $1.00 per share for its common stock as of the close of business on each of the 5 consecutive trading days immediately preceding the Company’s application for OTCQX, after the reverse split;

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

To be eligible to be quoted on the OTCQX International Premier, companies must:

  • Satisfy all of the eligibility requirements for OTCQX International set forth above;

  • As of its most recent fiscal year end, (i) have (a) revenue of U.S. $100 million; (b) global market capitalization of U.S. $500 million, (c) aggregate cash flow for the three preceding years of U.S. $100 million; and (d) minimum cash flow in each of the two preceding years of $25 million; or (ii) have (a) revenue of U.S. $75 million and (b) global market capitalization of $750 million.

To be eligible to be quoted as an OTCQX U.S. Acquisition Company, companies must:

  • Satisfy all of the eligibility requirements for OTCQX U.S. set forth above;

  • Have $25 million in net tangible assets as of the most recent annual or quarterly year end;

  • Have $10 million in market value of publicly traded securities as of the most recent fiscal year end;

  • Have a minimum bid price of $5.00 per share for its common stock as of the close of business on each of the 30 consecutive calendar days immediately preceding the Company’s application for OTCQX; and

  • Be subject to the reporting requirements of the Exchange Act.

But wait, there’s more!

Requirements for Ongoing Qualification for Quotation on the OTCQX

The following is a summary of the ongoing responsibilities for U.S. OTCQX quoted securities:

  • Compliance with Rules – OTCQX quoted companies must maintain compliance with the OTCQX rules including disclosure requirements. The Company’s DAD/PAL is responsible for reporting their/its potential conflicts of interest;

  • Compliance with Laws – OTCQX quoted companies must maintain compliance with state and federal securities laws and must cooperate with any securities regulators, including self-regulatory organizations;

  • Blue Sky Manual Exemption – Companies must either properly qualify for a blue sky manual exemption or be subject to and current in their Exchange Act reporting requirements;

  • Retention and Advice of DAD – Companies must have a DAD at all times and are required to seek the advice of such DAD as to their OTCQX obligations;

  • Duty to Inform DAD – As part of its duty to seek advice from its DAD, a Company has an obligation to provide disclosure and information to the DAD, including “complete access to information regarding the Company, including confidential and propriety information” and access to personnel;

  • Notification of Resignation or Dismissal of DAD – A Company must immediately notify OTC Markets in writing of the resignation or dismissal of the DAD for any reason;

  • Payment of Fees – a Company must pay its annual fees to OTC Markets;

  • Sales of Company Securities by Affiliates – Prior to transacting in the Company’s securities through a broker-dealer, each officer, director or other affiliate of the Company shall make its status as an affiliate of the Company known to the broker-dealer;

  • Distribution and Publication of Proxy Statements – An OTCQX U.S. Premier company shall solicit proxies for all meetings of shareholders. Companies not subject to the Exchange Act reporting requirements must publish, on the OTC Markets website, copies of all proxies, proxy statements and all other material mailed by the Company to their shareholders within 15 days of such mailing;

  • Redemption Requirements – All redemptions must be either by lot or pro rata and require 15 days’ notice;

  • Changes in Form or Nature of Securities – All changes in form, nature or rights associated with securities quoted on the OTCQX require 20 days’ advance notice to OTC Markets;

  • Transfer Agent – Companies are required to use the services of a registered transfer agent and authorize such transfer agent to share information with OTC Markets;

  • Accounting Methods – Any change in accounting methods requires advance notice of such change and its impact, to OTC Markets;

  • Change in Auditors – All changes in auditor requires prompt notification and a letter from such auditor analogous to Form 8-K requirements;

  • Responding to OTC Markets Group Requests – OTCQX quoted companies are required to respond to OTC Markets comments and amend filings as necessary in response thereto;

  • Ongoing Disclosure Obligations – (i) Companies subject to the Exchange Act reporting requirements must remain current in such reports; (ii) Companies not subject to the Exchange Act reporting requirements must remain current with the annual, quarterly and current reporting requirements of OTC Markets, including posting annual audited financial statements prepared in accordance with GAAP and audited by a PCAOB auditor; (iii) file a notification of late filing when necessary; (iv) quickly release disclosure of material news and recent developments, whether positive or negative, through a press release on the OTC Markets website; (v) an OTCQX Company should also act promptly to dispel unfounded rumors which result in unusual market activity or price variations;

  • General requirements regarding integrity – OTCQX quoted Companies are expected to act professionally and uphold the OTC Markets standards for “high quality”; and to release news and reports that are prepared factually and accurately with neither excessive puffery or conservatism; companies must not report or act in a way that could be misleading; must not inundate with non-material releases; and must not make misleading premature announcements;

  • Maintain Company Updated Profile – OTCQX quoted companies are required to maintain updated accurate information on their profile page and to verify same every six months;

  • DAD Letter – Within 120 days of each fiscal year end and after the posting of the Company’s annual report, every Company must submit an annual DAD letter;

  • To remain eligible for trading on the OTCQX U.S. tier, the Company’s common stock must have a minimum bid price of $0.10 per share as of the close of business for at least one of every thirty consecutive calendar days. In the event that the minimum bid price for the Company’s common stock falls below $0.10 per share at the close of business for thirty consecutive calendar days, a grace period of 180 calendar days to regain compliance shall begin, during which the minimum bid price for the Company’s common stock at the close of business must be $0.10 for ten consecutive trading days;

  • To remain eligible for trading on the OTCQX U.S. Premier tier, the Company’s common stock must have a minimum bid price of $1.00 per share as of the close of business for at least one of every thirty consecutive calendar days. In the event that the minimum bid price for the Company’s common stock falls below $1.00 per share at the close of business for thirty consecutive calendar days, a grace period of 180 calendar days to regain compliance shall begin, during which the minimum bid price for the Company’s common stock at the close of business must be $1.00 for ten consecutive trading days. In the event that the Company’s common stock does not regain compliance during the grace period, the Company shall have a fast-track option to have its securities traded on the OTCQX U.S. tier.

The following is a summary of the ongoing responsibilities for OTCQX International quoted securities:

  • Eligibility Criteria – The International company must meet the above eligibility requirements as of the end of each most recent fiscal year;

  • Compliance with Rules – OTCQX quoted companies must maintain compliance with the OTCQX rules, including disclosure requirements. Officers and directors of the company are responsible for compliance and are solely responsible for the content of information;

  • Compliance with Laws – OTCQX quoted companies must maintain compliance with applicable securities laws of their country of domicile and applicable U.S. federal and state securities laws. The company must comply with Exchange Act Rule 10b-17 and FINRA rule 6490 regarding notification and processing of corporate actions (such as name changes, splits and dividends). The company must cooperate with any securities regulators, whether in their country of domicile or in the U.S., including self-regulatory organizations;

  • Blue Sky Manual Exemption – Companies must either properly qualify for a blue sky manual exemption or be subject to and current in their Exchange Act reporting requirements;

  • Retention and Advice of PAL – Companies must have a PAL at all times and are required to seek the advice of such PAL as to their OTCQX obligations;

  • Notification of Resignation or Dismissal of PAL – A company must immediately notify OTC Markets in writing of the resignation or dismissal of the PAL for any reason;

  • Payment of Fees – A company must pay its annual fees to OTC Markets;

  • Responding to OTC Markets Group Requests – OTCQX quoted companies are required to respond to OTC Markets comments and amend filings as necessary in response thereto;

  • Ongoing Disclosure Obligations – (i) Companies subject to the Exchange Act reporting requirements must remain current in such reports; (ii) A company that is not an SEC Reporting Company must remain current and fully compliant in its obligations under Exchange Act Rule 12g3-2(b), if applicable, and in any event shall, on an ongoing basis, post in English through the OTC Disclosure & News Service or an Integrated Newswire, the information required to be made publicly available pursuant to Exchange Act Rule 12g3-2(b); (iii) provide a letter to its PAL at least once a year, no later than 210 days after the fiscal year end, which states that the company (y) continues to satisfy the OTCQX quotation requirements; and (z) is current and compliant in its obligations under Exchange Act Rule 12g3-2(b) and that the information required under such rule is posted, in English, on the OTC Markets website or that the company is subject to the SEC reporting requirements and is current in such reporting requirements;

  • PAL Letter – Within 225 days of each fiscal year end and after the posting of the company’s annual report, every company must submit an annual PAL letter.


SKIPOTCQX

Goddamn. And to think, the requirements for listing on a major exchange are even harder! What do you remember from glancing at the list before skipping down? I caught $.10/share, but I think I saw $1.00/share at one point, too. Maybe one is to qualify, one is to maintain. Either way, the gist is that these stocks will typically be of a higher value.

Why would I want to invest in OTC stocks?

Well, one good reason would be to support companies that align with your interests. For example, MHGU trades on OTCQX. They deal with restaurants and restaurant stuff. They’re based in Grand Rapids. The stock pays dividends. Actually I’d get the preferred shares, MGHUP. Over double the dividend for less than double the share price. Pretty much a no-brainer. As long as you’re comfortable with preferred stocks.

Maybe you’re just for a higher potential gain, and are able/willing to take on significantly increased risk.

Maybe you want to buy warrants. Oh yeah, warrants are traded OTC. That’s a whole other thing.

Didn’t you mention something about Grey stocks?

There’s really no reason for us to be pressing buttons that get us involved in grey sheets. We’re not really equipped with the tools and knowledge for pre-IPO investing, let alone navigating through the myriad of questionable and shady listings.

There is something called a Caveat Emptor to designate stocks you can buy, but are almost guaranteed to take your money forever. That’s kind of the point of the designation.

If you’re like me, your attention span and interest have waned and it’s time to move on.

Now that we have a vague idea of OTC markets, we can be both less scared of them and less eager to get our feet wet. Maybe we’ll just take our next $500 of disposable income and buy shares of MHGUP.

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