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Levels of Reporting by Pubcos

When you look at your microcap public company, that is, not on NASDAQ or other stock exchange, you have four basic levels of reporting.

First you have "fully reporting" companies. Pursuant to Securities Exchange Act of 1934 Section 13, fully reporting companies are required to file annnual (10-K) and quarterly (10-Q) filings, current reports on Form 8-K on material events, and are also subject to the proxy, tender offer, and beneficial ownership rules. The proxy rules require that when a company has an annual meeting, it has to file the meeting materials with the SEC and those materials have to be cleared with the SEC, except for routine matters. Any person who acquires more than 5% of the shares of a fully reporting company has to file a Schedule 13D or 13G, and officers, directors and holders of more than 10% of the common equity have to file ownership reports (Forms 3, 4 and 5) with the SEC when they attain that status and when they buy or sell shares. If they buy and sell within 6 months, the transactions might be matched and any "profit" gets paid to the company.

The second level are "reporting" companies pursuant to Section 15(d) of the Securities Exchange Act of 1934. This is a company that has had a Registration Statement "go effective" under the Securities Act of 1933 during the fiscal year. Until the first 10-K is filed, they are required to file 10-Qs and Current Reports on Form 8-K, but the proxy rules and the other ownership rules are not applicable to them After that 10-K is filed, they no longer have to report unless, prior to filing that 10-K, they file to become "fully reporting" using either a Form 10 or 8-A. That is optional unless they have over a few hundred shareholders of record and have a lot of assets. None of these companies are going to be in pennyland.

Then you have "voluntary filers." These are companies which were 15(d) reporting companies who filed their first 10-K, never filed a Form 10 or 8-A but just kept on filing anyway. They can stop filing anytime without any consequences as far as the SEC is concerned. Most of the scam companies that are filings reports with the SEC come under this classification, because the promoters love it The SEC has limited resources and so it tends not to look too closely at the voluntary filers. They are down the priority list.

Finally, you have those companies filing reports with, formerly known as the "pink sheets." OTC Markets Group had standards that pretty much track the SEC requirements for 10-Qs, 10-Ks and 8-Ks but there is no requirement that the financials be audited. Furthermore, the level of quality on the reporting is usually pretty bad on the basic level. which is the Alteraive Pink. If they do not comply, OTC Markets Group never seems to do anything. There are various tiers of reporting which are more closely monitored, but in reality OTC Markets Group is not really monitoring any Alternative Pink filings.

Of course there are plenty of companies that file no disclosure at all........

Easy enough to see if a company is reporting or just filng on the pinks. Just look them up on and if they have filed a report in the past 90 days or so, they are reporting. But, how can you tell a "fully reporting" company from a plain "reporting" company and for that matter, a voluntary filer?

The first step is for you to look at the list of filings made by the company on go to and input the name of the company. You will see a list of the different filings. On the far right, there is a column titled "Film/File Number." If the numbers on each row begin with an "000" or "001" it is a fully reporting company. If it is only filing under 15(d) or is a voluntary filer, the file number will begin with "333." If the company file number begins with "333," look for the latest filing on S-11 or S-1. It might also be called an SB-2 if its really old. Look for a 10-K filed after that SB-2, S-1 or S-11. If you find one, then the company is a voluntary filer. Now,voluntary filers are supposed to say that they are a voluntary filer on the cover page of their 10-K or 10-Q. None of them do it. The actual way they are supposed to do it is check "yes" on the box after "Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act."

You mght think this latter point is a big fuss about nothing. Who cares if they are voluntary reporters or not? There is very, very critical reason why.If the company is a voluntary filer (and in that case the box should be checked "yes") it is NOT, I repeat NOT, a "reporting issuer" pursuant to Rule 144. That means that restricted stock issued by that company has to be bought and paid for, for a full year, before it can be sold on the public market. I will guaranty you that 9 times out of 10 this is disregarded/unknownn by the voluntary filers and their stock promoters and they are ILLEGALLY removing restrictive legends. This is a serious violation of law.

Here is the official SEC pronouncement on this.

Question 132.09

Question: Does the one-year holding period requirement in Rule 144(d)(1)(ii) apply to the restricted securities of an issuer that submits Exchange Act reports on a voluntary basis?

Answer: Yes. The six-month holding period requirement in Rule 144(d)(1)(i) is applicable only to the restricted securities of an issuer that is, and has been for at least 90 days immediately before the sale, “subject to” the reporting requirements of Exchange Act Section 13 or 15(d). A voluntary filer is not “subject to” Exchange Act Section 13 or 15(d) because it is not obligated to file Exchange Act reports pursuant to either of those provisions. Consequently, the one-year holding period requirement in Rule 144(d)(1)(ii) applies to the restricted securities of a voluntary filer. [Jan. 26, 2009]