OTC Markets Crowdfunding Overview. March 2016

Transcription

1 OTC Markets Crowdfunding Overview March 2016

2 Table of Contents OTC Markets Group Company Overview Key Market Statistics OTCQX & OTCQB JOBS Act & Crowdfunding Overview Title II General Solicitation Title III - Crowdfunding Title IV Reg A+ Secondary Trading Case Study Elio Motors 2

3 OTC Markets Group Overview OTC Markets Group (OTCQX: OTCM) operates Open, Transparent and Connected financial markets for 10,000 U.S. and global securities. Through our OTC Link ATS, we directly link a diverse network of broker-dealers that provide liquidity and execution services for a wide spectrum of securities. We organize these securities into markets to inform investors of opportunities and risks: the OTCQX Best Market; the OTCQB Venture Market; and the Pink Open Market. Key Milestones 1999 Electronic Quoting 2003 Electronic Messaging 2007 OTCQX Market 2012 SEC Registered ATS FINRA Broker-Dealer 2014 OTCQB Market 2016 OTCQX Rule Changes 3

4 OTC Markets Group Key Market Statistics Market Snapshot 489 OTCQX 1,015 OTCQB 8,346 Pink 9,850 Securities 3,223 SEC Reporting 680 Banks 1,609 ADRs 2,391 F shares 834 Canadian 3,244 Penny Stock Exempt 91 Countries Market Activity 2015 QX, QB, Pink $199.8 Billion $ Volume 1.4 Trillion shares traded $12.8 Trillion in total market cap $792.7 Million ADV 5.6 Billion avg shares traded per day 60 Graduates to Exchange Listing Exchange Graduates 2015 Snapshot data as of 12/31/2015 4

5 OTC Market Group OTCQX The OTCQX market is designed for companies that meet high financial standards and provide current disclosure. OTCQX Qualifications Meet minimum bid price & market value or net income standards No Penny Stocks No Shell or Blank-Check Companies Common sense corporate governance standards: At least 2 Independent Directors Audit Committee with Majority Independent Directors Specific OTCQX Rules for Reg A+ companies Current in Reg. A Tier 2 ongoing disclosure requirements Annual audit by PCAOB registered auditor File quarterly financials under Form 1-U OTCQX Securities $42.0 Bn $ Vol. Traded $1.4 Tn Total Mkt Cap. $40.5 MM Median Mkt Cap. 5

6 OTC Market Group OTCQB The OTCQB market is designed for growing and venture stage companies. OTCQB - Standards designed for venture stage companies Must be current in reporting with US regulator (SEC, Bank) or listed on a Qualified Foreign Exchange Annual management certification process to verify officers, directors, controlling shareholders, and shares outstanding Minimum bid price test of $0.01 Market structure suited to growth and venture stage companies Dealer centric market provides liquidity options for small cap companies OTCQB Securities $19.7 Bn $ Vol. Traded $57.8 Bn Total Mkt Cap. $9.5 MM Median Mkt Cap. Reg. A Tier 2 ongoing disclosure meets OTCQB continuing disclosure requirements 6

7 JOBS Act & Crowdfunding Overview JOBS Act Capital Formation Provisions Title II General Solicitation under Rules 144A and 506(c) Introducing Transparency into Previously Opaque Private Offering Process Title III Regulation Crowdfunding Online, Community Access to Early-Stage Companies Title IV Regulation A+ Offering Limit Raised to $50 Million Expansion of Blue Sky Preemption and Creation of Freely Tradable Securities 7

8 JOBS Act & Crowdfunding General Solicitation What is General Solicitation? Advertisement of a private securities offering to the general public. Publicly advertising a private issuance may include: Providing the details of the investment, such as the deal terms Revealing material company information that allows investors to make an informed investment decision Public dissemination of quote and pricing information Issuer Requirements: Companies using general solicitation in a Rule 144A or 506(c) offering may solicit/advertise that offering to the general public under the following conditions: Company sells only to QIBs/accredited investors Company takes reasonable steps to verify that purchasers meet the SEC s QIB/accredited investor requirements Offering meets the other applicable requirements of Rule 144A or 506(c) Form D filing requires check the box for general solicitation 8

9 JOBS Act & Crowdfunding Reg. Crowdfunding Offering Limits $1 Million in any 12-month period Investor Limits $2,000 or 5% of annual income or net worth if less than $100K 10% of annual income or net worth if over $100K (not to exceed $100K) Offer through a registered broker or funding portal SEC Filing Requirements/Financial Disclosures Initial Offering Statement & Annual Disclosure Offerings of $100,000 or less: Financials certified by PEO Offerings of more than $100,000, but not more than $500,000: Financials reviewed by independent accountant Offerings of more than $500,000: Audited financials Annual Filings: Certified financials only Resale Restrictions 1 year holding period before resale 9

10 JOBS Act & Crowdfunding Reg. A+ Two Tiers of Offerings Tier 1 - Offerings with a maximum of $20 million in any 12-month period Tier 2 - Offerings of up to $50 million in any 12-month period Initial and Ongoing Disclosure Requirements Tier 1 Annual, unaudited financials Tier 2 Annual audited, semi-annual unaudited, current event disclosure required No Resale Restrictions Securities sold to non-affiliates are immediately available for public resale Blue Sky law preemption 10

11 JOBS Act & Crowdfunding Secondary Trading Secondary Trading Title II General Solicitation Shares are restricted for public resale under Rule 144 for 1 Year After holding period, a broker-dealer may file Form 211 with FINRA to initiate quoting in the OTC market Title III Shares may not be resold for 1 Year After holding period, a broker-dealer may file Form 211 with FINRA to initiate quoting in the OTC market Title IV Shares are freely tradable by non-affiliates after offering closes Broker-dealer may immediately file a Form 211 with FINRA to initiate quoting in the OTC market 211 Process 627 Securities cleared for quoting in

12 Case Study Elio Motors Industry: Motor Vehicles Offering Type: Reg. A+, Tier 2 Offering Size: $25 Million Amount Raised: $17 Million Method: Equity Offering via StartEngine Test the Water: Yes TTW Indication of Interest: $46 Million Public Filing Date with SEC: August 28, 2015 SEC Qualification Date: November 20, 2015 Offering Close Date: February 1, 2016 Secondary Market: OTCQX, February 19, 2016 Form 1-A 12

13 Contact Information Dan Zinn EVP / General Counsel dan@otcmarkets.com 13

14 Appendix Reference Links OTCMarkets.com OTCQX OTCQB Elio Motors Form 1A Filing 14