OTC Markets Newsletter
OTC Markets Group News April 2014
OTCQB: Building America’s Venture Stage Marketplace

Public venture markets have long played an important role in fostering capital formation and the growth of early stage companies around the world. Since its launch in 1995, the London Stock Exchange’s AIM market has attracted nearly 3,000 venture stage companies which have raised in excess of £85.92 billion (USD $144.28 billion) in new and follow-on offerings. Many of these companies have graduated to the LSE’s Main Market. Likewise in Canada, the Toronto Stock Exchange’s TSX Venture Exchange continues to attract growing companies, particularly in the mining and energy sectors.

Until now, however, the U.S. has lacked a true venture stage marketplace for early and development stage companies. OTC Markets Group is looking to change that...

Last month, we announced changes to OTCQB® to make it a better venture stage marketplace. We introduced new standards to increase the transparency of OTCQB companies, including a minimum one penny ($0.01) bid price requirement and an annual CEO/CFO certification verifying a company’s profile, reporting standard, officers, directors and beneficial shareholders, total shares outstanding and other information. While we are removing sub-penny and bankrupt companies from OTCQB, we will be admitting venture stage companies listed on the AIM, TSX Venture Exchange and other qualified international exchanges that are current in their SEC Rule 12g3-2(b) reporting requirements.

Companies that comply with the new standards will benefit from trading on a better marketplace with other venture stage U.S. and international companies and receive premium corporate services to help them build visibility and improve transparency with investors.

Click to read more.

OTCQB Trading – Then, Now and the Future

When we launched the OTCQB marketplace three years ago, it was intended to help investors identify opportunities and risks by distinguishing SEC and bank reporting companies. Today, OTCQB is the primary marketplace for reporting companies with over 3,000 securities and an average 10 market makers per security.

Likewise, OTC Link® ATS, our SEC regulated alternative trading system with its real-time market data and superior electronic trading functionality has replaced the telephone-based FINRA OTC Bulletin Board as the platform-of-choice for leading broker-dealers trading unlisted equities. Today, broker-dealers and regulators use our market data feeds, marketplace designations and issuer data to monitor best execution, apply risk checks and implement trading controls.

Our information and technology has improved the transactional experience for broker-dealers trading OTCQB securities. The participation of companies willing to provide information about their operations, however, is required for more efficient price formation. A recent survey we conducted of OTCQB executives revealed many believe a lack of standards and information transparency have made OTCQB a riskier marketplace for investors that restricts their trading and hinders their ability to attract a wider group of potential shareholders. A majority of survey respondents indicated they would embrace moderately higher standards for OTCQB and would pay a reasonable fee for a better venture stage marketplace with premium services.

The new standards and eligibility requirements we are introducing are intended to meet these requests while accommodating the unique needs and resources of venture stage companies. Our goal is not to duplicate companies’ existing regulatory reporting requirements, but to create more transparency in areas that pose the greatest challenges to broker-dealers and investors in OTCQB companies. In turn, we will provide these companies with the services they need to improve their transparency, demonstrate their regulatory compliance and grow their visibility with investors.

OTCQX®, OTCQB® and OTC Pink® – Marketplaces for Companies at Every Stage of Their Life Cycles

OTCQX, our best marketplace, allows established, investor-focused U.S. and global companies to maximize their visibility with U.S. investors without the high cost and (often duplicative) reporting standards of a U.S. stock exchange listing. To qualify for OTCQX, companies must meet high financial standards, demonstrate compliance with U.S. securities laws, be current in their disclosure, and be sponsored by a professional third-party advisor. OTCQX standards allow companies to convey their reputation and the integrity of their operations so that they are more favorably viewed by investors and broker-dealers.

We recently streamlined the OTCQX qualification process for U.S. reporting companies and are launching OTCQX Banks to fit the needs of highly regulated community banks. These changes will help OTCQX provide more value to smaller and growth companies that have matured beyond the venture stage.

OTCQB, our venture stage marketplace, is a marketplace in transition. Established as a public market for companies that are current in their reporting to the SEC or a bank regulator, OTCQB is gaining additional standards and eligibility requirements that will transform it into a more transparent marketplace for early and developing U.S. and international companies. Ultimately, OTCQB will play an important role fostering public trading for venture stage U.S. and international companies that don’t yet meet the financial standards of OTCQX, NASDAQ or the New York Stock Exchange yet are committed to providing a high quality trading and information experience for their investors.

Lastly, companies that cannot or choose not to meet the standards of OTCQX or OTCQB trade on OTC Pink, our open marketplace that provides electronic trading in a wide variety of securities. While OTC Pink companies don’t enjoy the same visibility and accessibility as companies that trade on our top marketplaces, their investors receive the benefits of transparent broker-dealer trading with the protection of appropriate compliance processes, risk controls and suitability standards.

With the changes we are making, our marketplaces can meet the needs of companies at every stage of their life cycles.

We look forward to working with our issuers, company advisors, broker-dealers and others in the OTC Markets Group community as we continue to build robust, transparent and well regulated public markets. Thank you for your feedback and continued support.

Click to close.



Changes to the OTCQB Venture Stage Marketplace
We recently announced new eligibility requirements for OTCQB to make it a better venture stage marketplace for early stage and developing U.S. and global companies. Click here to learn more about the new OTCQB requirements.

Important dates to remember:

May 1, 2014:
Companies that do not meet the minimum bid test ($0.01) will be downgraded to OTC Pink
Bankrupt companies will be downgraded to OTC Pink
International Reporting companies on a Qualified Foreign Stock Exchange will be able to apply to trade on OTCQB

120 days after a company’s fiscal year end (FYE):
•   OTCQB companies must comply with the OTCQB standards, starting with companies with a March 31, 2014 FYE
•   Companies that do not comply with the new procedures within the required timeframe will be downgraded to OTC Pink

Prospective OTCQB companies as of May 1, 2014:
•   Submit an application, pay the required fees and follow the new procedures in order to become traded on OTCQB
•   New SEC registered or Bank Reporting issuers will not automatically trade on OTCQB

Please contact our Corporate Services team at issuers@otcmarkets.com or +1.212.896.4420 to learn more.
Get to Know Your Community
[photo] Interview with Alex Guidi, Founder & Chairman of TAG Oil Ltd.

This month, we speak with Alex Guidi, Founder & Chairman of TAG Oil (OTCQX: TAOIF). The Canadian oil and gas company, which joined OTCQX two years ago as part of its strategy to gain greater visibility amongst U.S. institutions and investors, recently embarked on “the most active and diverse drilling campaign” in the company’s history. Mr. Guidi tells us about the company’s exploration programs and growth prospects in New Zealand.

OTC Markets Group: Tell us about TAG Oil Ltd.

Alex Guidi: TAG Oil Ltd. (OTCQX: TAOIF, TSX: TAO) is based in Canada with oil and gas exploration and production operations exclusively in New Zealand, an underexplored region with major exploration potential. With 100% ownership over our core producing assets, including extensive production infrastructure and gas pipeline, TAG is enjoying substantial organic value creation through exploration, discovery, appraisal and development success.

We have established a leading exploration acreage position that covers more than 2.7 million acres. As one of New Zealand's most active onshore/offshore explorers, TAG focuses on lower risk development drilling in discovery areas, and high-impact conventional and unconventional exploration drilling in the Taranaki and East Coast Basins.

Our operations are profitable, TAG has a solid balance sheet, carries no debt, and we are keen to invest our cash flow back into exploration drilling that has potential to materially impact TAG’s reserve base. Readers can download TAG’s informative materials including our Fact Sheet and Corporate Brochures for more information here.

Click to read more.

OTCM: Give a brief update on your production revenue and exploration programs in New Zealand.

AG: Over the first three quarters of FY2014 TAG averaged daily production of 1,992 barrels of oil equivalent per day, and we sold 306,729 barrels of light oil and 1.23 billion cubic feet of natural gas. TAG is in a position to grow near-term production through development of our Cheal oil and gas field and we own and operate $100 million of state-of-the-art infrastructure, including three processing plants and natural gas pipeline to process, control and market our production.

We continue to achieve drilling success, record revenues, and cash flow with high operating netbacks of $78 per barrel of oil and $4.25 per mcf gas received, for a combined netback of $64.63 per barrel of oil equivalent compared to average* North American netbacks of approximately $34 per BOE, resulting in quick payback of capital costs and providing long-term, profitable operations. Revenue for the three months ended December 31, 2013 increased 19% to Cdn$12,939,442 and 35% to Cdn$43,522,224 over the nine month period when compared to the same periods last year. Our Q3 Press Release has this information in more detail: www.tagoil.com/20140214_TAG-2014-Q3-Results.asp. (*Such information is derived from a variety of publicly available information, such as government sources, regulatory agencies, public databases or other industry participants, as at the date stated therein, that TAG believes are predominantly independent in nature.)

In terms of exploration potential and upside, TAG has recently embarked on the most active and diverse drilling campaign in corporate history. As mentioned earlier, we are focused on organic value creation through drilling low-risk development wells and high-impact wells in the deeper formations in the Taranaki Basin. At the same time, in the East Coast Basin, we are exploring an unconventional tight oil play targeting the naturally fractured source rocks that has our team very excited about the play’s very large potential. Our first well into the play, the Ngapaeruru-1, intersected 500 feet of potential unconventional oil and gas pay. TAG will soon be drilling the second well, Waitangi-Valley-1, which is also targeting these high quality source rocks that are widespread in our acreage.

OTCM: TAG has set a goal of being the #1 oil and gas producer in New Zealand. What is the potential you’re pursuing in middle earth?

AG: New Zealand has untapped potential and is only lightly explored in comparison to successful regions around the world that have similar geology. TAG has three opportunities we’re actively pursuing: the development, appraisal, exploration and exploitation of our shallow and deep formations, and our unconventional tight oil play in the source rocks.

Since 2010 TAG has drilled 31 successful wells in the Taranaki Basin, with many years of development drilling opportunities remaining in the acreage. It’s where 100% of our current production is being generated and we are investing that cash flow into further development and exploration wells. With our drilling track record, our extensive geological database and a large acreage position that is prospective in multiple formations, we have confidence that we can generate more success.

Our deep Taranaki wells target the Kapuni Formation; they have a mid-range (P50) undiscovered resource potential of 477 billion cubic feet of natural gas and 18 million barrels of condensate. We are also participating in an offshore shallow water prospect called Kaheru-1, with an independently assessed report indicating an undiscovered resource potential for 17 million barrels of condensate net to TAG on a mid-range P50 basis.

Last but not least is the unconventional opportunity in the East Coast Basin. An independent assessment report estimates an undiscovered resource potential of 12.5 billion barrels of undiscovered oil initially in place on a mid-range P50 basis. When you consider the significant undiscovered potential, a ready market for domestic consumption of natural gas, and the premium quality, high-netback oil sold into the Australasian market, TAG’s potential in New Zealand is very compelling.

OTCM: TAG Oil joined OTCQX almost two years ago. How important has it been for you to trade on a premium marketplace in the U.S.?

AG: Given that TAG is increasingly attracting new shareholders and institutions in the U.S., it is becoming extremely important for us to provide a market as well as more exposure to investors through a premium marketplace, which the OTCQX provides. Fidelity Investments based out of Boston is TAG’s largest shareholder and institutional investor, and we are increasing our efforts to reach out to more institutions, brokers and investors. In fact, we invite anyone who is interested to learn more about TAG Oil’s operations, strategy, and potential opportunities to visit our OTC profile page or click the following link to download some TAG materials including our Fact Sheet and Corporate Brochures. (www.tagoil.com/otc-investor.asp) Or call our IR Director and we’ll mail you a printed set.

OTCM: What else should U.S. investors know about TAG Oil?

AG: Exploration is a risky business. However TAG Oil (TAOIF) is an opportunity for investors to participate in a high-impact exploration company with risk mitigated by a foundation of reserves and an established production base. We have years of development drilling opportunities ahead, state-of-the-art infrastructure in place to handle growth, and a portfolio of drilling opportunities with significant undiscovered resource potential.

TAG is currently trading near four-year lows despite being in its strongest position in our corporate history, with the Company’s most active exploration drilling campaign now underway. I’ve never been as excited about TAG Oil’s growth prospects since the inception of the company. In terms of “potential” I don’t know of many other listed companies that compare with TAG Oil.





Disclaimer

Resource Estimates

The resource estimates in this document were prepared by Sproule International Limited and internally by TAG professionals with an effective date of July 31, 2013, and by AJM Petroleum Consultants with an effective date of September 1, 2008. Each is a qualified reserves evaluator in accordance with NI 51-101 and the Canadian Oil and Gas Evaluations Handbook.

Best Estimate is considered to be the best estimate of the in-place volumes that will actually be present. It is equally likely that the actual in-place volumes will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the in-place volumes will equal or exceed the best estimate.

Undiscovered Resources and BOEs

TAG Oil has adopted the standard of six thousand cubic feet of gas to equal one barrel of oil when converting natural gas to “BOEs.” BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Undiscovered Oil Initially-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially in place is referred to as "prospective resources," the remainder as "unrecoverable."

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Exploration for hydrocarbons is a speculative venture necessarily involving substantial risk. TAG's future success in exploiting and increasing its current reserve base will depend on its ability to develop its current properties and on its ability to discover and acquire properties or prospects that are capable of commercial production. However, there is no assurance that TAG's future exploration and development efforts will result in the discovery or development of additional commercial accumulations of oil and natural gas. In addition, even if further hydrocarbons are discovered, the costs of extracting and delivering the hydrocarbons to market and variations in the market price may render uneconomic any discovered deposit. Geological conditions are variable and unpredictable. Even if production is commenced from a well, the quantity of hydrocarbons produced inevitably will decline over time, and production may be adversely affected or may have to be terminated altogether if TAG encounters unforeseen geological conditions. TAG is subject to uncertainties related to the proximity of any reserves that it may discover to pipelines and processing facilities. It expects that its operational costs will increase proportionally to the remoteness of, and any restrictions on access to, the properties on which any such reserves may be found. Adverse climatic conditions at such properties may also hinder TAG's ability to carry on exploration or production activities continuously throughout any given year.

The significant positive factors that are relevant to the resource estimate are:

  • Proven production in close proximity;
  • Proven commercial quality reservoirs in close proximity; and
  • Oil and gas shows while drilling wells nearby.

The significant negative factors that are relevant to the resource estimate are:

  • Tectonically complex geology could compromise seal potential; and
  • Seismic attribute mapping in the two, deep, liquids’-rich gas plays can be indicative but not certain in identifying proven resource.

Forward-Looking Statements

Statements contained in this document that are not historical facts are forward-looking statements that involve various risks and uncertainty affecting the business of TAG. Such statements can be generally, but not always, identified by words such as “expects”, “plans”, “anticipates”, “intends”, “estimates”, “forecasts”, “schedules”, “prepares”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. All estimates and statements that describe TAG’s objectives, goals, production rates, optimization, infrastructure capacity and or future plans with respect to the drilling in the Taranaki, Canterbury and East Coast Basins are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties including, without limitation: risks associated with oil and gas exploration, development, exploitation and production, geological risks, marketing and transportation, the risk associated with estimating undiscovered original initially-in-place described above, availability of adequate funding, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, and changes in the regulatory and taxation environment. Actual results may vary materially from the information provided in this document, and there is no representation by TAG Oil that the actual results realized in the future will be the same in whole or in part as those presented herein.

Other factors that could cause actual results to differ from those contained in the forward-looking statements are also set forth in filings that TAG and its independent evaluator have made, including TAG's most recently filed reports in Canada under NI 51-101, which can be found under TAG's SEDAR profile at www.sedar.com. TAG undertakes no obligation, except as otherwise required by law, to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors change.

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Light Up The Market
Follow us on Twitter at @OTCMarkets to keep up with OTCQX companies Lighting Up Their Market

GWR Global Water Resources Corp. (OTCQX: GWGWF) Lomiko Metals Inc. (OTCQX: LMRMF)

Santacruz Silver Mining Ltd. (OTCQX: SZSMF)
GWR Global Water Resources Corp. (OTCQX: GWGWF), Lomiko Metals Inc. (OTCQX: LMRMF), and Santacruz Silver Mining Ltd. (OTCQX: SZSMF) Light up the Market in April to celebrate joining OTCQX!
Monthly Trade Summary

March 2014

Marketplace Designations # of Securities Monthly Dollar Volume Monthly Dollar Volume
per Security
YTD Dollar Volume Aggregate Market Capitalization
(in Millions)*
OTCQX® 334 $3,388,595,507 $10,145,496 $10,559,631,469 $1,613,610
OTCQB® 3,185 $12,556,326,266 $3,942,332 $27,662,128,090 $260,839
OTC Pink® Current Information 3,285 $10,930,726,944 $3,327,466 $31,979,850,531 $12,484,958
OTC Pink Limited Information 356 $329,440,986 $925,396 $796,253,027 $7,572
OTC Pink No Information 2,697 $1,351,415,836 $501,081 $4,345,502,016 $57,509
Totals 9,857 $28,556,505,539 $2,897,079 $75,343,365,134 $14,424,489
*Data as of March 31, 2014
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Events, Webinars & Sponsorships
News
OTCM Hosted Events and Webinars:

OTCQX Senior Executive and Advisor Forum - Vancouver (May 8, 2014)

Forum on OTCQX and OTCQB Marketplace Changes - Los Angeles (May 6, 2014)

Introducing OTCQX Banks: A Public Marketplace for Regional and Community Banks Webinar (Archived replay of April 15 webinar)


OTCM CEO to speak at:


Growth Capital Expo 2014 (April 29-May 1, 2014)


Contact us if you are interested in meeting us at one of these events.

Community banks get their own stock exchange - Long Island Business News (April 21, 2014) (subscription required)

OTC Markets Group Approves StockCross Financial Services as Corporate Broker for OTCQX® Banks - press release (April 16, 2014)

Bitcoin bound for 'guns and gold crowd' - Financial Times (April 13, 2014) (subscription required)

BNY Mellon and OTC Markets Group Launch OTCQX® ADR 30 Index, Powered by BNY Mellon DR IndicesSM - press release (April 9, 2014)

An eye on growth markets - IR Magazine (April 2014)

OTC Markets Provides Data to REDI - Traders Magazine (April 2014) (subscription required)

Shiseido Company Begins Trading on OTCQX® - press release (April 1, 2014)

The truth about the OTC markets - FOX Business Network (March 31, 2014)

OTC Markets rolling out new standards for QB listings - The Deal Pipeline (March 26, 2014) (subscription required)
Merging www.otcqx.com and www.otcmarkets.com
To streamline the investor experience by making it easier to access company information in one central location, we are retiring www.otcqx.com and are merging the content with www.otcmarkets.com.

Visitors to a company quote page on www.otcqx.com will be automatically redirected to the quote page on www.otcmarkets.com. Information published through www.OTCIQ.com, including company profiles, financials, news, and disclosure, will continue to feed to quote pages on www.otcmarkets.com.

Please contact our Corporate Services team at issuers@otcmarkets.com or +1.212.896.4420 with any questions or concerns.

Regulation & Compliance
Market Data Updates
Revised Migration Date for New FINRA ORF Platform
  FINRA has revised the migration date for firms to begin reporting OTC equity security trades and trades in restricted equity securities effected pursuant to Securities Act Rule 144A to the new OTC Reporting Facility (ORF) technology platform to September 15, 2014. For additional information please click here. In addition, FINRA has published a new FINRA OTC Reporting Facility (ORF) Migration Website.

Proposed Amendment to Require New Certification upon Filing a Form 211
  FINRA has filed with the SEC a proposal to amend FINRA Rule 6432 (Compliance with the Information Requirements of SEA Rule 15c2-11) that would requires members to certify that they have not accept any payment or other consideration for market making from issuers and related persons. More information may be found here.

New Requirements Require Alternative Trading Systems to Report Weekly Volume Information
  The SEC approved a rule change to require alternative trading systems (ATS) to (i) report to FINRA weekly volume information and number of securities transactions within the ATS by security and (ii) acquire and use a single, unique market participant identifier (MPID) when reporting information to FINRA. OTC Link® ATS will be required to comply with this rule effective May 12, 2014. The full notice can be found here.

SEC Releases Proposed Rules on Regulation A+

  On December 18, 2013 the SEC released proposed rules on Regulation “A+” which are intended to increase access to the capital markets for smaller issuers mandated by Title IV of the JOBS Act. Proposed rule amendments can be found here. Comments to the rule proposal can be found here. OTC Markets Group’s letter commenting on the proposed rules may be found here.
OTC Markets Group and BNY Mellon recently launched the OTCQX ADR 30 Index (Bloomberg/Reuters: OTCQX30; Thomson: DGCQX). The new index is comprised of the top 30 OTCQX American Depositary Receipts (ADRs) based on market capitalization.

The OTC Compliance Data File was recently introduced to provide broker-dealers and compliance/risk mitigation teams with key compliance data points.
Data on 10,000 U.S. and global securities on the OTCQX, OTCQB, and OTC Pink marketplaces
Includes Penny Stock, bankruptcy, shell, and caveat emptor status, as well as marketplace designations
Delivered daily in pipe-delimited format
Click here to learn more.

OTC Markets Group will decommission the ASCII Reference Data and Trade channels on the evening of May 2, 2014. The ASCII channels have been replaced by binary versions which offer more data points and require less bandwidth.


For more information, contact our Market Data Services at +1.212.220.2166 or marketdata@otcmarkets.com.

Fact of the Month
$33.86 billion was traded in OTCQX, OTCQB and OTC Pink ADRs in Q1, a quarter-on-quarter increase of 29% and a year-over-year increase of 53%.

OTCQX New Additions
Our Marketplaces
5 new companies joined OTCQX in April:



3 new companies joined OTCQX in March:



A complete list of OTCQX companies is available on www.otcmarkets.com.
OTCQX
The Best Marketplace

OTCQB
The Venture Stage Marketplace

OTC Pink
The Open Marketplace
Contact Us
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