Securities Law, NYSE, NASDAQ & OTC Markets Listings & Compliance

Annual and Quarterly Reporting Under the OTC Markets Alternative Reporting Standard

Introduction

The OTC Markets Alternative Reporting Standard provides a disclosure framework for companies that are not required to file reports with the SEC. Under this standard, issuers post financial and corporate information to the OTCIQ disclosure portal to satisfy the public-information requirements of Rule 15c2-11. To maintain Current Information status, issuers must publish annual and quarterly reports, officer certifications, and an Attorney Letter with Respect to Current Information.

Who Must Comply With the Alternative Reporting Standard

The standard applies to non-SEC-reporting issuers quoted on OTCID (Current Information) or OTCQB, certain foreign private issuers not filing Form 20-F or 6-K, and private companies seeking quotation under Rule 15c2-11. Failure to post required disclosures leads to downgrade or suspension.

Annual Report Requirements

Annual reports must be uploaded to OTCIQ within 90 days of fiscal year end and include:

• Financial Statements: Balance Sheet, Income Statement, Cash Flows, and Stockholders’ Equity.
• Notes to financials describing accounting policies and significant items.
• If available, auditor’s report with firm credentials.
• Comparative prior-year financial information.
• Management’s Discussion and Analysis (MD&A) covering operations, liquidity, and future plans.
• Corporate Information: business description, officers, directors, share structure, and transfer agent.
• Officer Certification signed by CEO and CFO affirming accuracy of the report.

Quarterly Report Requirements

Quarterly reports must be filed within 45 days of quarter-end and include unaudited financials, MD&A discussion, and updates to share structure or management. Failure to post three consecutive quarters results in downgrade to Limited Information.

Attorney Letter With Respect to Current Information

The Attorney Letter confirms that disclosures are accurate and complete under Rule 15c2-11(a)(5). It must be filed annually within 120 days of fiscal year end or upon OTC Markets request unless the following criteria is met:

• The issuer has maintained “Current Information” status for at least 12 consecutive months
• The company must have timely filed all required annual and quarterly reports for the prior year without interruption or compliance issues.
• The issuer has no material changes in share structure, management, or control.
• Major changes (like reverse splits, mergers, or control shifts) typically require a renewed attorney review.
• The issuer has no regulatory or legal proceedings pending that could affect disclosure reliability.
• The issuer’s financials are reviewed by a PCAOB-registered accountant or reputable preparer, or the company demonstrates consistent, transparent disclosure practices.
• OTC Markets has specifically approved the substitution
• The issuer must receive an OTC Markets compliance confirmation allowing the use of a Management Certification going forward in place of the attorney letter.

Required elements include:

• Issuer’s corporate status and jurisdiction verification.
• Confirmation that disclosures meet Rule 15c2-11 standards.
• Review of financial statements, MD&A, and share structure.
• Attorney’s statement of independence and bar membership status.

Additional Information to Be Disclosed

Issuers must also disclose the following information:

• Material contracts and shareholder agreements.
• Changes in control or major financing transactions.
• Legal proceedings and pending litigation.
• Current website and investor-relations contact details.

OTC Markets Common Reporting Mistakes & Disclosure Failures

• Unsigned or incomplete financial statements.
• Missing MD&A discussion or liquidity analysis.
• Lack of officer certification.
• Attorney letter prepared by unauthorized counsel.
• Failure to respond to OTC Markets inquiries.

Maintaining Current Information Status on the OTC Markets

Issuers must remain current with filings, respond promptly to compliance queries, and ensure attorney letters and financials are up to date. Financial statements older than 16 months trigger automatic downgrade to the Expert Market until compliance is restored.

Conclusion

The Alternative Reporting Standard allows non-SEC-reporting issuers to maintain transparency and market access through OTCIQ filings. Accurate, timely reporting and properly executed Attorney Letters are critical for maintaining Current Information status and investor confidence.

Hamilton & Associates Law Group assists issuers with Rule 15c2-11 compliance, Alternative Reporting Standard filings, and OTCIQ submissions to prevent downgrades or suspension.