LEGAL DISCLAIMER V8

LEGAL DISCLAIMER

VERSION 8.0

GROOVY COMPANY, INC. DBA OTCM PROTOCOL

Wyoming Corporation | CIK: 1499275 | OTC: GROO

12 Daniel Rd East, Fairfield, NJ 07004

SEC Category 1 Model B Compliant | Release No. 33-11412 (March 17, 2026)

Issuer-Sponsored Tokenized Securities pursuant to SEC–CFTC Joint Interpretive Release No. 33-11412 (March 17, 2026) and 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.

1. 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 Digital Securities	SECURITIES	1:1 Common Class B Shares (third-party issuers) or Series “S” Preferred Shares (OTCMS)	Securities investment risks
OTCM Utility Token	Utility Token	None	Speculative digital asset risks

CRITICAL: ST22 Digital 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 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 Digital Securities are available only to verified accredited investors under Reg D (U.S.) and non-U.S. persons under Reg S

2. Accuracy of Information

Groovy Company, Inc. dba OTCM Protocol does NOT:

• Review issuer documents for accuracy or completeness

• Confirm all information submitted for tokenization

• Verify issuer financial statements or business claims

• 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 limited or no current financial reporting, outdated financial information (months or years old), incomplete or missing disclosure documents, ceased SEC reporting requirements, or 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.

3. Extreme Investment Risks

Part A: ST22 Digital Securities Risks

Securities Investment Risks

ST22 Digital Securities are securities under federal securities laws pursuant to Release No. 33-11412 (March 17, 2026). 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)

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 Common B shares	Does NOT guarantee share value
42 Transfer Hooks	Enforce compliance on every transaction	Does NOT prevent market losses
Circuit Breakers	Halt trading on >10% move in 5 minutes	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 have lost OTC Markets quotation eligibility, have ceased filing reports with the SEC, may have ceased business operations entirely, are in bankruptcy, insolvency, or financial distress, and may present fraud risk despite due diligence. Reliable information may not be available.

ST22 tokens issued by third-party OTC companies are backed by Common Class B Shares with issuer-designated characteristics:

Characteristic	Status	Risk Implication
Equity Backing	True 1:1 ownership	Equity can lose all value
Conversion Rights	Convertible to common stock	Common stock may be worthless
Dividends	At issuer discretion per Certificate of Designation	No guaranteed income
Voting Rights	Issuer-designated per Certificate of Designation	Varies by issuer — may include full, limited, or no voting
Liquidation	As specified per Certificate of Designation	May receive nothing in bankruptcy

Protective Conversion Trigger Risks

• Common stock received may have ZERO VALUE in bankruptcy

• Conversion is automatic — you cannot opt out

• Not all adverse events trigger conversion

• 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

The OTCM Utility Token is NOT a security, NOT backed by preferred shares or any assets, NOT designed as an investment vehicle, and carries NO guarantee of any value whatsoever.

Part C: General Risks (Both Token Types)

Technology and Smart Contract Risks

Risk	Description
Smart Contract Bugs	Despite formal verification and audits, contracts may contain vulnerabilities resulting 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 under Release No. 33-11412 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 do not prevent
Whale Activity	Large holders affecting price	4.99% limit reduces but does not 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	Jito MEV protection helps but is not perfect

Liquidity Risks

• Liquidity pools may have insufficient depth for large trades

• Large trades may execute at prices significantly worse than expected

• Early-stage tokens have minimal liquidity

• Tokens may never reach graduation threshold

• Circuit breakers may prevent selling during volatility

4. Limited Issuer Obligations

What Issuers Are NOT Required To Do

Issuers of ST22 Digital Securities on the OTCM Protocol platform are NOT required to provide ongoing financial reports, file reports with the SEC, update business information, communicate with token holders, or 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 Model B)

• Must authorize Common Class B creation via board resolution

• Must file Certificate of Designation with issuer’s state of incorporation

• Must deposit shares with Empire Stock Transfer

• Cannot disable Transfer Hook security controls

• Must honor conversion triggers per Certificate of Designation

5. Platform Characteristics

What OTCM Protocol IS

Characteristic	Description
Category 1 Infrastructure	SEC Category 1 Model B compliant ST22 Digital Securities infrastructure under Release No. 33-11412
CEDEX Operator	Operates Compliant Exchange for Digital Securities at cedex.otcm.io
Blockchain Platform	Solana-based tokenization and trading platform with SPL Token-2022 Transfer Hooks
Custody Integration	Integration with Empire Stock Transfer (SEC-registered transfer agent and qualified custodian)
Compliance Infrastructure	KYC/AML/accreditation verification (via Empire) and 42 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

6. Custody Disclaimer

While Empire Stock Transfer provides custody services for shares backing ST22 Digital Securities:

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

7. No Guarantees

Groovy Company, Inc. dba OTCM Protocol makes NO guarantees regarding:

• Token price appreciation or stability

• Continued platform operation or availability

• Liquidity availability for any token

• Accuracy of any information provided

• Suitability of any investment for any person

• Legal or regulatory compliance in all jurisdictions

• Success or viability of any underlying company

• Category 1 protections do NOT prevent investment losses

8. Your Responsibilities

Required Acknowledgments for All Users

• Have read and understood all risks in this disclosure

• Will conduct your own due diligence

• Can afford the TOTAL LOSS of your investment

• Accept all risks associated with Digital Securities and digital assets

• Will seek professional advice as needed

• Will comply with all applicable laws

Additional Acknowledgments for ST22 Digital Securities

• Understand ST22 tokens ARE SECURITIES under federal securities laws

• Qualify as an accredited investor under SEC Rule 501 (U.S.) or as a non-U.S. person under Reg S

• Understand Category 1 protections do NOT prevent losses

• Understand underlying company risks

• Understand protective conversion may result in worthless stock

Additional Acknowledgments for OTCM Utility Token

• Understand OTCM Utility Token has NO ASSET BACKING

• Understand it is highly speculative

• Understand it is NOT an ST22 Digital Security

INVESTING IN ST22 DIGITAL SECURITIES OR OTCM UTILITY TOKENS INVOLVES EXTREME RISK INCLUDING POSSIBLE LOSS OF YOUR ENTIRE INVESTMENT. DO NOT INVEST UNLESS YOU CAN AFFORD TO LOSE EVERYTHING.

9. Contact Information

Contact	Information
General / Investors	invest@otcm.io
Chief Technology Officer	frank@otcm.io
Compliance	compliance@otcm.io
Privacy	privacy@otcm.io
Mailing Address	12 Daniel Rd East, Fairfield, NJ 07004
Phone	1-404-734-3277

Document Information

Field	Value
Document Version	8.0
Effective Date	March 2026
Entity Jurisdiction	Wyoming Corporation
Governing Law	New Jersey State Law and Federal Securities Law
Regulatory Framework	SEC Category 1 Model B — Release No. 33-11412 (March 17, 2026)

These are investments that could result in total loss. ST22 Digital Securities are securities subject to securities laws. OTCM Utility Tokens have no backing whatsoever. Only invest what you can afford to lose completely.

ST22 Digital Securities are Category 5 Digital Securities under SEC–CFTC Release No. 33-11412 (March 17, 2026). The OTCM Utility Token is a utility token with no asset backing. Groovy Company, Inc. dba OTCM Protocol is a Wyoming Corporation (CIK: 1499275).