⚠️ INVESTMENT RISK DISCLOSURE
✅ SEC CATEGORY 1 COMPLIANT | Issuer-Sponsored Tokenized Securities pursuant to SEC Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets Joint Statement dated January 28, 2026
🚨 PLEASE READ THIS ENTIRE DISCLOSURE CAREFULLY BEFORE USING THE OTCM PROTOCOL PLATFORM
📋 Important Legal Notice
The material on this website is for reference purposes only and is neither an offer nor a solicitation to purchase or sell any security or token in any jurisdiction where such offer or solicitation would be unlawful.
⚖️ Critical Classification Notice
OTCM Protocol operates two fundamentally different token types with distinct risk profiles:
Token Type | Classification | Backing | Risk Profile |
|---|---|---|---|
📜 ST22 Tokenized Securities | SECURITIES | 1:1 Preferred Series "M" shares | Securities investment risks |
🎫 OTCM Utility Token | Utility Token | None | Speculative digital asset risks |
⚠️ CRITICAL: ST22 Tokenized Securities ARE SECURITIES under federal securities laws. Investing in securities involves substantial risk including possible loss of your entire investment. Category 1 compliance provides certain investor protections but does NOT guarantee against loss.
Key Points
Point | Description |
|---|---|
🚫 No Recommendation | None of the information provided constitutes a recommendation that any investment is suitable for any person |
💼 Seek Professional Advice | Persons using this website should consult with qualified financial, legal, and tax advisors |
🔍 Due Diligence Required | Conduct your own due diligence before making any investment decision |
🎖️ Accredited Investors Only | ST22 Tokenized Securities are available only to verified accredited investors under SEC Rule 506(c) |
⚠️ ACCURACY OF INFORMATION
Information Reliability
OTCM Protocol, Inc. does NOT:
Limitation | Description |
|---|---|
📋 Document Review | Does NOT review issuer documents for accuracy or completeness |
✅ Confirmation | Does NOT confirm all information submitted for tokenization |
📊 Verification | Does NOT verify issuer financial statements or business claims |
⚖️ Responsibility | Does NOT take responsibility for information accuracy |
The issuer and its management are primarily responsible for the accuracy of any information regarding the issuer provided on this site.
Financial Reporting Limitations
Many underlying companies have:
Limitation | Description |
|---|---|
📊 Limited Reporting | Limited or no current financial reporting |
📅 Outdated Information | Financial information may be months or years old |
📋 Incomplete Disclosure | Incomplete or missing disclosure documents |
🏛️ No SEC Filings | Many have ceased SEC reporting requirements |
☠️ Ceased Operations | Some may have ceased business operations entirely |
⚠️ WARNING: The information on this site is NOT intended to be used as the sole basis for any investment decision. You must conduct independent due diligence.
🚨 EXTREME INVESTMENT RISKS
Part A: ST22 Tokenized Securities Risks
⚖️ Securities Investment Risks
ST22 Tokenized Securities are securities under federal securities laws. As securities investments, they carry substantial risks:
Risk Category | Description |
|---|---|
💸 Total Loss | You may lose your ENTIRE INVESTMENT |
📉 Market Risk | Token values may decline significantly based on market conditions |
🏢 Issuer Risk | Underlying companies may fail, become insolvent, or commit fraud |
💧 Liquidity Risk | May be unable to sell at desired prices or times |
🎢 Volatility | Prices may experience extreme fluctuations |
📜 Regulatory Risk | Regulations may change, affecting token value or tradability |
🛡️ Category 1 Protections (With Limitations)
ST22 tokens benefit from SEC Category 1 compliant infrastructure, including:
Protection | What It Does | What It Does NOT Do |
|---|---|---|
🏦 SEC-Registered Custody | Empire Stock Transfer holds backing shares | Does NOT insure against issuer failure |
💎 1:1 Equity Backing | Every token backed by real preferred shares | Does NOT guarantee share value |
🛡️ 42 Transfer Hooks | Enforce compliance on every transaction | Does NOT prevent market losses |
🔴 Circuit Breakers | Halt trading during 30% price drops | Does NOT guarantee price recovery |
🔄 Protective Conversion | Auto-converts to common on adverse events | Common stock may be worthless |
📊 Wallet Limits | 4.99% maximum prevents concentration | Does NOT prevent losses |
⚠️ CRITICAL LIMITATION: Category 1 investor protections are designed to ensure compliance and prevent fraud—they do NOT protect against market losses, business failures, or poor investment decisions.
🏢 Underlying Company Risks
Many tokenized securities represent companies that:
Risk Factor | Description |
|---|---|
🏛️ Lost 15c2-11 | Have lost OTC Markets quotation eligibility |
📊 No Reporting | Have ceased filing reports with the SEC |
☠️ Ceased Operations | May have ceased business operations entirely |
💔 Financial Distress | Are in bankruptcy, insolvency, or financial distress |
🎭 Fraud Risk | Despite due diligence, fraud may not be detected |
💧 Dilution Risk | May issue additional shares diluting your ownership |
📋 Limited Information | Reliable information may not be available |
📜 Preferred Share Characteristics
ST22 tokens are backed by Preferred Series "M" shares with specific characteristics and limitations:
Characteristic | Status | Risk Implication |
|---|---|---|
💎 Equity Backing | ✅ True 1:1 ownership | Equity can lose all value |
🔄 Conversion Rights | ✅ Convertible to common | Common stock may be worthless |
💰 Dividends | ⚠️ At issuer discretion | No guaranteed income |
🗳️ Voting Rights | ⚠️ Limited or none | Cannot influence company decisions |
💧 Liquidation | ⚠️ As specified in Certificate | May receive nothing in bankruptcy |
🔄 Protective Conversion Trigger Risks
ST22 tokens include protective conversion triggers that automatically convert Series M preferred to common stock upon certain adverse events. However:
Limitation | Description |
|---|---|
💸 Worthless Common | Common stock received may have ZERO VALUE in bankruptcy |
⚙️ Automatic | Conversion is automatic—you cannot opt out |
📋 Limited Triggers | Not all adverse events trigger conversion |
🚫 No Recovery Guarantee | Conversion does NOT guarantee recovery of investment |
Part B: OTCM Utility Token Risks
🎫 Speculative Digital Asset Risks
The OTCM Utility Token is a utility token with NO asset backing. It carries extreme speculative risks:
Risk Category | Description |
|---|---|
💸 Total Loss | May lose 100% OF VALUE |
🚫 No Backing | NOT backed by securities, assets, or anything of value |
🎢 Extreme Volatility | Prices may swing 90%+ in a single day |
💧 Liquidity Risk | May be unable to sell at any price |
📉 No Floor | No minimum value—can go to effectively zero |
🔧 Utility Dependent | Value depends entirely on platform utility and market sentiment |
⚠️ OTCM Utility Token Is NOT:
What It Is NOT | Description |
|---|---|
📜 NOT a Security | Not an ST22 Tokenized Security |
💎 NOT Backed | Not backed by preferred shares or any assets |
💰 NOT an Investment | Not designed as an investment vehicle |
📈 NOT Guaranteed | No guarantee of any value whatsoever |
Part C: General Risks (Both Token Types)
🔧 Technology and Smart Contract Risks
Risk | Description |
|---|---|
🐛 Smart Contract Bugs | Despite audits, contracts may contain vulnerabilities that could result in total loss |
💻 Exploits | Hackers may discover and exploit unknown vulnerabilities |
⛓️ Blockchain Failures | Solana network outages, congestion, or failures may prevent trading |
🔄 Finality Risks | Blockchain reorganizations could theoretically reverse transactions |
🔑 Key Loss | Lost private keys mean PERMANENT, IRRECOVERABLE loss of tokens |
🎣 Phishing | Fake websites may steal credentials and tokens |
🏦 Oracle Failures | Custody verification oracle failures may affect operations |
📜 Regulatory Uncertainty
Risk | Description |
|---|---|
🏛️ Classification Changes | Regulatory classification may change |
👮 Enforcement Actions | SEC, CFTC, or other agencies may take enforcement actions |
🚪 Platform Shutdown | Regulatory actions could force platform closure |
🌍 Jurisdictional Conflicts | Different jurisdictions may have conflicting regulations |
💰 Tax Uncertainty | Tax treatment may be unclear or unfavorable |
⚖️ Category 1 Changes | SEC Category 1 guidance may be modified or withdrawn |
🎭 Market Manipulation Risks
Despite 42 Transfer Hook security controls, manipulation risks remain:
Risk | Description | Mitigation Limitation |
|---|---|---|
📈📉 Pump and Dump | Coordinated buying followed by selling | Circuit breakers pause but don't prevent |
🐋 Whale Activity | Large holders affecting price | 4.99% limit reduces but doesn't eliminate |
📱 Social Manipulation | False information spreading | Cannot be prevented by technology |
🤝 Coordination | Private groups coordinating trades | Difficult to detect |
🤖 Bot Trading | Sophisticated bots with advantages | MEV protection helps but isn't perfect |
💧 Liquidity Risks
Risk | Description |
|---|---|
🏜️ Insufficient Depth | Liquidity pools may have insufficient depth for large trades |
📉 Extreme Slippage | Large trades may execute at prices significantly worse than expected |
📈 Bonding Curve Effects | Early-stage tokens have minimal liquidity |
❌ Graduation Failure | Tokens may never reach graduation threshold |
🔴 Trading Halts | Circuit breakers may prevent selling during volatility |
📋 LIMITED ISSUER OBLIGATIONS
What Issuers Are NOT Required To Do
Issuers of ST22 Tokenized Securities on the OTCM Protocol platform:
NOT Required | Description |
|---|---|
📊 No Financial Reporting | Are NOT required to provide ongoing financial reports |
📋 No SEC Filings | Are NOT required to file reports with the SEC |
📈 No Business Updates | Are NOT required to update business information |
💬 No Communication | Are NOT required to communicate with token holders |
🎯 No Performance | Are NOT required to achieve any business objectives |
⚠️ IMPORTANT: Tokenization of a security on the OTCM Protocol platform does NOT create any ongoing filing or reporting obligations for the issuer beyond the Certificate of Designation requirements.
What Issuers ARE Required To Do (Category 1)
Required | Description |
|---|---|
📋 Board Resolution | Must authorize Series M creation |
📜 Certificate of Designation | Must file with Wyoming Secretary of State |
🏦 Custody Deposit | Must deposit shares with Empire Stock Transfer |
🛡️ Transfer Hook Compliance | Cannot disable security controls |
🔄 Protective Conversion | Must honor conversion triggers per Certificate |
🏢 PLATFORM CHARACTERISTICS
What OTCM Protocol IS
Characteristic | Description |
|---|---|
⚖️ Category 1 Infrastructure | SEC Category 1 compliant tokenized securities infrastructure |
🏦 CEDEX Operator | Operates Compliant Exchange for Digital Securities |
🔗 Blockchain Platform | Solana-based tokenization and trading platform |
🤝 Custody Integration | Integration with Empire Stock Transfer (SEC-registered transfer agent) |
🛡️ Compliance Infrastructure | KYC/AML/accreditation verification and Transfer Hook enforcement |
What OTCM Protocol Is NOT
NOT | Description |
|---|---|
🏛️ NOT a National Exchange | Not a registered national securities exchange |
👔 NOT a Broker-Dealer | Not a registered broker-dealer |
💼 NOT an Investment Advisor | Not a registered investment advisor |
🏦 NOT a Transfer Agent | Not a transfer agent (Empire Stock Transfer provides custody) |
📋 NOT Providing Advice | Does NOT provide investment, legal, or tax advice |
⛓️ BLOCKCHAIN AND SMART CONTRACT RISKS
Technology Risks Include:
Risk Category | Specific Risks |
|---|---|
🐛 Contract Vulnerabilities | Undiscovered bugs, logic errors, reentrancy attacks |
💻 Platform Exploits | DeFi exploits, flash loan attacks, oracle manipulation |
⛓️ Network Issues | Congestion, outages, fee spikes, finality delays |
🔐 Security Breaches | Platform hacks, key compromises, phishing attacks |
🔧 Upgrade Risks | Contract upgrades may introduce new vulnerabilities |
🤝 Composability Risks | Interactions with other protocols may create unexpected issues |
🏦 CUSTODY DISCLAIMER
While Empire Stock Transfer Inc. provides custody services for shares backing ST22 tokens:
Limitation | Description |
|---|---|
🚫 No SIPC | Custody is NOT covered by SIPC insurance |
🚫 No FDIC | Custody is NOT covered by FDIC insurance |
📉 No Value Guarantee | Empire Stock Transfer does NOT guarantee share value |
🏢 Custodian Risk | Custodian failure could affect operations |
🔗 Oracle Dependency | Custody verification depends on oracle systems |
🚫 NO GUARANTEES
OTCM Protocol, Inc. makes NO guarantees regarding:
No Guarantee | Description |
|---|---|
📈 Price Performance | Token price appreciation or stability |
🖥️ Platform Availability | Continued platform operation or availability |
💧 Liquidity | Liquidity availability for any token |
✅ Information Accuracy | Accuracy of any information provided |
🎯 Suitability | Suitability of any investment for any person |
⚖️ Regulatory Compliance | Legal or regulatory compliance in all jurisdictions |
🏢 Issuer Success | Success or viability of any underlying company |
🛡️ Loss Prevention | Category 1 protections do NOT prevent investment losses |
👤 YOUR RESPONSIBILITIES
By using the OTCM Protocol platform, you acknowledge that you:
Required Acknowledgments for All Users
Acknowledgment | Description |
|---|---|
✅ Read Risks | Have read and understood all risks in this disclosure |
✅ Due Diligence | Will conduct your own due diligence |
✅ Afford Loss | Can afford the TOTAL LOSS of your investment |
✅ Risk Acceptance | Accept all risks associated with tokenized securities and digital assets |
✅ Professional Advice | Will seek professional advice as needed |
✅ Compliance | Will comply with all applicable laws |
Additional Acknowledgments for ST22 Securities
Acknowledgment | Description |
|---|---|
✅ Securities | Understand ST22 tokens ARE SECURITIES |
✅ Accredited Status | Qualify as an accredited investor under SEC Rule 501 |
✅ Category 1 Limitations | Understand Category 1 protections do NOT prevent losses |
✅ Issuer Risk | Understand underlying company risks |
✅ Conversion Risk | Understand protective conversion may result in worthless stock |
Additional Acknowledgments for OTCM Utility Token
Acknowledgment | Description |
|---|---|
✅ No Backing | Understand OTCM Utility Token has NO ASSET BACKING |
✅ Speculative | Understand it is highly speculative |
✅ Not Security | Understand it is NOT an ST22 security |
📞 CONTACT INFORMATION
For questions about risks:
Contact | |
|---|---|
📧 General Inquiries | legal@otcm.io |
🛡️ Compliance | compliance@otcm.io |
🔒 Privacy | privacy@otcm.io |
🏢 Issuer Relations | issuers@otcm.io |
🚨 FINAL WARNING
⚠️ INVESTING IN ST22 TOKENIZED SECURITIES AND OTCM UTILITY TOKENS
INVOLVES SUBSTANTIAL RISK AND MAY RESULT IN TOTAL LOSS.
📜 ST22 TOKENIZED SECURITIES ARE SECURITIES under federal securities laws.
Category 1 compliance provides certain protections but does NOT guarantee
against investment losses, issuer failures, or market declines.
🎫 OTCM UTILITY TOKENS HAVE NO ASSET BACKING and are highly speculative
digital assets that may become completely worthless.
🏢 UNDERLYING COMPANIES may have ceased operations, may be in financial
distress, and may provide limited or no financial information.
🛡️ CATEGORY 1 INVESTOR PROTECTIONS are designed to ensure compliance
and prevent fraud—they do NOT protect against market losses or poor
investment decisions.
💸 ONLY INVEST WHAT YOU CAN AFFORD TO LOSE COMPLETELY.
IF YOU DO NOT UNDERSTAND THESE RISKS, DO NOT USE THE PLATFORM.📋 Document Information
Field | Value |
|---|---|
📄 Document Version | 3.0 |
📅 Last Updated | January 2026 |
📍 Jurisdiction | Wyoming, United States |
⚖️ Governing Law | Wyoming State Law and Federal Securities Law |
🏛️ Regulatory Framework | SEC Category 1 (Issuer-Sponsored Tokenized Securities) |
⚠️ Remember: These are investments that could result in total loss. ST22 tokens are securities subject to securities laws. OTCM Utility Tokens have no backing whatsoever. Only invest what you can afford to lose completely.
© 2026 OTCM Protocol, Inc. | All Rights Reserved
ST22 Tokenized Securities are securities under federal securities laws pursuant to SEC Category 1 (Issuer-Sponsored Tokenized Securities) framework. The OTCM Utility Token is a utility token with no asset backing.