| The
Pinks Sheets are relatively unknown or misunderstood by most
investors. There are over 18,000 public companies in the United
States. The largest and most well-known companies trade on
national stock exchanges like the New York Stock Exchange
(NYSE), the NASDAQ system, and the American Stock Exchange
(AMEX).
There are stringent listing requirements that need to be met
and maintained in order to be listed on these exchanges.
The
remaining publicly traded companies that don’t meet
these requirements are traded in the “world” known
as the “non-NASDAQ OTC” market. There are two
main divisions of the OTC market called the OTC Bulletin Board
and the Pink Sheets. OTC Bulletin Board companies (OTCBB)
report their financial health and other public information
through quarterly (10Q) and annual report’s (10k). This
is the most notable difference between the two.
Pink
Sheet companies are not required to disclose financial statements
or company operations. Most companies on the “Pinks”
are there for one of three reasons:
1)
The company is a shell that has no existing operations or
business plan and is just looking to be
purchased.
2) A company is in the developmental stage.
3) A company that chose not to pay the expenses of legal counsel,
accountants, etc. that are necessary to be a
full-reporting company.
Note: Many
small companies would rather cut these expenses and wait until
the company is healthy enough to just skip the OTCBB and move to a national exchange.
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