In short, the OTCBB is an electronic quotation system that will display real-time quotes, volume information and last-sale prices for over-the-counter (usually known as OTC) equity securities that are not listed on the National Securities Exchange or NASDAQ Stock Market.
By OTC Equity Security we mean it can include foreign, national and regional equity issues, warrants, ADR ( American Depositary Receipts) and DPP (Direct Participation Programs). In other instances an OTC is referred to microcap stocks or penny stocks. By penny it means that it will quite often be less than $1 overall.
There are definitely more effective ways of going public and one of those ways is by using Pink Sheets. At least with Pink Sheets you don't have to file regular financial information and you do not need to pay the couple of hundred thousand to trade on a big market exchange.
The downfall of doing an over-the-counter listing is that every company must file current financial reports with the SEC or with their banking or insurance regulators which makes it harder, but the profit potential is enormous. For example, you may have a blue chip company that will find it hard to double in size, but by going through the OTCBB you can almost double it overnight, and who would not like the prospect of doubling their profit?
There is also a general attitude, that by investing in the OTCBB, it involves a more 'riskier' investment since a company can trade without any regulatory or listing requirements which will provide security to potential shareholders in the long run. No conclusive research has ever indicated such results. It's also harder to get your company listed on the NASDAQ because of the listing requirements, and it will definitely be easier to list on the OTCBB in general as a comparison.
There is no minimum level of financial standards that need to be met, neither is there a distinctive business relationship between the quotation and the issuers in general. Only financial statements will be required and no other quantitative listing requirements, meaning once again, it's relatively easier to get listed on the OTCBB. But since the company does not have to report to the public, it makes it harder to find any information that would help a potential investor make the right decision.
It really depends on the risks involved and if you're willing to undertake it. There are traditional methods of trading with the OTCBB and it includes calling in or directly, but it can also be done online by using a software platform to do this. You may want to look into the advantages of trading stocks online as well.
Before considering the Over-The Counter-Bulletin-Board, sit down with an established 'Going Public' Firm that has a clear idea on what will be involved in getting your company on the OTCBB. By talking to an experienced Securities Law Attorney, you can ensure that you get a good overview of the actual requirements needed for trading on the OTCBB.
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