Preparation/Review of Financial Reporting Documents



OTC Markets, formally the “Pink Sheets,” is the marketplace for the securities of start-ups and emerging companies. OTC Markets is not a stock exchange, but rather an Internet site authorized by federal regulatory authorities allowing for the sale of free trading securities to the public in the “secondary market.” Use of this term refers to sales from one shareholder to another, and not to sales of securities originating from the issuing company itself.

Following is some introductory information on the OTC Markets website for investors:

OTC Market FAQs

The basis for disclosure required of OTC Markets-eligible companies is SEC Rule 15c2-11 (“Rule”) which is designed to allow non-reporting public companies (those not reporting on EDGAR) securities to be quoted on The Financial Industry Regulatory Authority (“FINRA”) Over-the-Counter Bulletin Board (“OTCBB”) as well as OTC Markets by filing some simple disclosures. An OTC Markets eligible company must be sponsored by at least one securities broker/dealer, known as a “market maker.” Following is the disclosure list from the Rule:

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Companies listed on OTC Markets need an opinion of counsel for each financial report posted on Guidelines for legal counsel’s opinions for OTC Markets periodic reporting basically mirror the Rule. OTC Markets companies file quarterly and annual financial reports. The annual report contains more disclosure. Financial statements do not have to be audited. Click the “sample letter” below for an example of a recent legal opinion prepared on behalf of an OTC Markets client: