Glossary of Terms

OTCM PROTOCOL Comprehensive Technical Whitepaper  —  Version 7.0  |  Glossary of Terms

 

📚 Glossary of Terms

This glossary defines all OTCM Protocol-specific terminology, regulatory frameworks, and technical terms used in this whitepaper. Generic blockchain and financial terms familiar to institutional and accredited investors are excluded. Terms marked NEW are introduced in Version 7.0.

 

OTCM PLATFORM & ARCHITECTURE

 

OTCM Protocol Whitepaper V6.1— · The ST22 Digital Securities Platform operated by Groovy Company, Inc. dba OTCM Protocol

📖 Key terminology used throughout the OTCM Protocol whitepaper, organized by domain.

This glossary provides comprehensive definitions for all technical, financial, legal, regulatory, and blockchain-specific terms used throughout this whitepaper. Terms are organized by category for quick reference.

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▪️ Technical and Blockchain Terms

OTCM (OVER THE COUNTER MICROCAP): The official name and acronym for Groovy Company, Inc. dba OTCM Protocol, a Wyoming Corporation. OTCM stands for Over the Counter MicrocapMicrocap), —a directlyWyoming identifyingCorporation (CIK: 1499275). OTCM Protocol provides compliant tokenization and secondary trading infrastructure for OTC microcap securities through the protocol'nine-layer technology stack described in this whitepaper.

ST22 (Security Token 2022)  —  OTCM Protocol's targetproprietary market:digital microcapsecurity publicstandard companies whose shares tradebuilt on OTC (Over-the-Counter) markets and whose shareholders have been trapped by illiquidity. OTCM is also the ticker symbol of the protocol's nativeSolana SPL Token-2022 utilityprogram with Transfer Hook extensions. ST22 tokens represent direct beneficial ownership in Preferred Series M shares held in perpetual custody by Empire Stock Transfer. Issued exclusively through Regulation D Rule 506(c) and governanceRegulation token.S private placements to verified accredited investors. All 42 Transfer Hook security controls are enforced on every transfer.

APICEDEX (APPLICATIONCompliant PROGRAMMINGExchange INTERFACE):for Digital Securities) A set—  OTCM Protocol's purpose-built securities trading infrastructure combining centralized order matching efficiency with decentralized Solana settlement. The exclusive venue for all ST22 token secondary trading. CEDEX is the only trading infrastructure capable of protocolsmaintaining all 42 Transfer Hook security controls on every transaction — external DEXs (Raydium, Orca, Jupiter, Meteora) disable Transfer Hook functionality and toolscannot thatbe allows different software applications to communicate with each other. Usedused for integrating third-party services and enabling programmatic access to platform features.

AUTOMATED MARKET MAKER (AMM): A decentralized exchange protocol that uses mathematical formulas (bonding curves) to price assets automatically, eliminating the need for traditional order books. Provides continuous liquidity through algorithmicST22 trading.

BONDINGOTCM CURVE:Global Unified CEDEX Liquidity Pool  —  The single, protocol-owned liquidity pool shared by all ST22 issuers on CEDEX. Established once by OTCM Protocol's treasury. Deepened continuously by the 5% transaction fee on every CEDEX trade across all issuers, and by investor secondary sale proceeds routing into the pool post-holding period. LP tokens are burned at pool initialization — liquidity withdrawal is mathematically impossible. No per-issuer pools exist.  NEW

Transfer Hook  —  SPL Token-2022 program extension that intercepts every ST22 token transfer and executes 42 sequential security controls before allowing the transaction to complete. Any control failure causes atomic transaction reversion with a specific error code. Transfer Hooks operate at the token transfer primitive — they cannot be disabled, bypassed, or routed around by any party, including OTCM Protocol itself.

Transfer Hook Control 24  —  The specific Transfer Hook control that enforces the mandatory holding period on every ST22 investor wallet. Records the purchase timestamp on-chain at the time of token delivery. Rejects all transfer attempts with Error 6024 (TokensLocked) until the applicable holding period has elapsed: 6 months for U.S. accredited investors (Rule 144) or 12 months for non-U.S. investors (Regulation S). No administrative override exists.  NEW

Alesia Doctrine  —  OTCM Protocol's core security philosophy: compliance enforcement at the lowest possible layer of the technology stack, making regulatory bypass structurally impossible rather than merely discouraged. Named for the strategic encirclement principle — the platform is designed so that no participant, including OTCM Protocol itself, can circumvent the 42 Transfer Hook security controls.

Nine-Layer Architecture  —  OTCM Protocol's complete technology stack: Layer 1 (Solana Foundation), Layer 2 (Transfer Hook Security Enforcement), Layer 3 (Global Unified CEDEX Liquidity Pool), Layer 4 (Custom AMM Engine), Layer 5 (CEDEX Trading Infrastructure), Layer 6 (Oracle Network), Layer 7 (DAO Governance), Layer 8 (Wallet Infrastructure), Layer 9 (Predictive Marketing AI Module).

Custom AMM Engine  —  OTCM Protocol's proprietary Automated Market Maker built specifically to support SPL Token-2022 Transfer Hook enforcement. Operates against the Global Unified CEDEX Liquidity Pool using a Constant Product Market Maker (CPMM) formula (x × y = k). Purpose-built because all major external DEXs disable Token-2022 Transfer Hook functionality.

Bonding Curve  —  A mathematical formulaprice determiningdiscovery mechanism used exclusively for the GROO token price(Groovy asCompany, aInc.'s functionown ofST22 cumulativetoken) supply.during OTCMits implementsinitial abootstrap linearphase. bondingLinear curve:formula: P(n) = P0 + (g × n),. Not applicable to third-party issuer ST22 tokens, which are issued through Regulation D 506(c) private placements directly to accredited investors.

IDOS (Issuer Determination Opportunity Score)  —  A proprietary composite score generated by the Layer 9 Predictive Marketing AI Module, rating the tokenization readiness of OTC microcap companies across EDGAR filing health, shareholder count, trading history, and corporate action indicators. Used to prioritize the issuer acquisition pipeline.

 

SECURITIES STRUCTURE & ISSUANCE

 

Series M Preferred Shares  —  Non-voting, non-dilutive preferred shares created by a third-party issuer through a board resolution and Certificate of Designation filed with the Wyoming Secretary of State. Deposited irrevocably with Empire Stock Transfer under perpetual custody arrangements. Each ST22 token is backed 1:1 by one Series M preferred share. The Series M mechanism provides the legal and economic foundation for Category 1 Model B compliance.  NEW

Certificate of Designation  —  The legal instrument filed by an issuer with the Wyoming Secretary of State authorizing the creation of Preferred Series M shares. Establishes the rights, preferences, and restrictions of the Series M class and constitutes the formal corporate authorization required for SEC Category 1 (Issuer-Sponsored) tokenization.

CUSIP  —  Committee on Uniform Securities Identification Procedures number — a 9-character alphanumeric code identifying a specific security in the United States. CUSIP assignment is a required element of OTCM Protocol's Category 1 compliance architecture, providing a clear ownership chain between the Series M preferred shares and their corresponding ST22 tokens.

Tripartite Agreement  —  The three-party agreement executed among the issuer, OTCM Protocol, and Empire Stock Transfer governing the custody, tokenization, and trading of Series M preferred shares. Establishes the legal relationships, rights, and obligations of each party throughout the lifecycle of the ST22 token issuance.

Protective Conversion Trigger  —  Automatic mechanism converting Series M preferred shares into common stock upon specified events: issuer bankruptcy, SEC enforcement action, criminal indictment of executive officers, or corporate dissolution. Protects ST22 token holders by ensuring they retain equity participation rights in adverse scenarios.

STO (Security Token Offering)  —  A regulated capital raise in which ST22 security tokens are sold to investors under applicable securities law exemptions. On the OTCM Platform, STOs are conducted under Regulation D Rule 506(c) for U.S. accredited investors and Regulation S for non-U.S. investors in offshore transactions. 100% of minted tokens are distributed to verified investors — the issuer receives USD capital proceeds.

 

EMPIRE STOCK TRANSFER & CUSTODY

 

Empire Stock Transfer  —  The independent, SEC-registered transfer agent serving as the qualified custodian and sole investor onboarding authority for all ST22 issuances on the OTCM Platform. Registered under Section 17A of the Securities Exchange Act of 1934. Maintains the authoritative Master Securityholder File for all Series M preferred shares. Performs all investor onboarding functions: KYC, KYB, AML, OFAC/SDN screening, and Wallet Verification. Patrick Mokros serves as President.  NEW

KYC (Know Your Customer)  —  Identity verification process performed exclusively by Empire Stock Transfer for all individual investors seeking to participate in ST22 issuances. Includes government-issued photo ID verification, residential address confirmation, liveness check, and source of funds declaration. Completion of KYC is required before any ST22 tokens are delivered to an investor wallet.

KYB (Know Your Business)  —  Entity investor verification process performed exclusively by Empire Stock Transfer for corporate, fund, trust, and other non-individual investors. Includes verification of legal entity formation documents, Ultimate Beneficial Owner (UBO) identification, signatory authorization, and entity accreditation documentation. Required for all non-individual participants in ST22 issuances.  NEW

AML (Anti-Money Laundering)  —  Screening and monitoring program operated by Empire Stock Transfer to detect and prevent the use of ST22 issuances for money laundering or terrorist financing. Includes risk scoring of investor profiles, source of funds analysis, transaction monitoring, and Suspicious Activity Report (SAR) filing with FinCEN where P0required =under initialthe priceBank Secrecy Act.

OFAC/SDN Screening  —  Real-time verification performed by Empire Stock Transfer against the U.S. Treasury Office of Foreign Assets Control Specially Designated Nationals (0.000001SDN) SOL), g = price gradient (0.0000000079 SOL per token),list and nrelated =sanctions tokensprograms. issued.Applied Priceto increasesall monotonicallyinvestor withonboarding supply.and Post-graduation,updated pricinghourly. transitionsST22 Transfer Hook Control 2 enforces OFAC screening on every on-chain transfer in addition to the CPMMEmpire constantonboarding productcheck.

formula

Wallet xVerification × y— = k.The Thisprocess by which Empire Stock Transfer registers and verifies an investor's Solana wallet address in the Master Securityholder File and the Transfer Hook whitelist before any ST22 tokens are delivered. Wallet addresses not registered with Empire cannot receive ST22 tokens — the Transfer Hook rejects all transfers to unverified wallets.  NEW

Master Securityholder File  —  The authoritative, legally binding record of all Series M preferred share ownership maintained by Empire Stock Transfer. The Master Securityholder File is the canonicalofficial formulashareholder register for all ST22-backed securities. Every ST22 Transfer Hook notification to Empire constitutes an effective entitlement order under UCC Article 8, triggering an update to this file.

1:1 Attestation Oracle  — no sigmoidEmpire curveStock variantTransfer's existscryptographic custody verification feed, updated approximately every 400 milliseconds, confirming that the total circulating supply of ST22 tokens does not exceed the number of Series M preferred shares held in custody. Transfer Hook Control 1 rejects any mint or transfer that would cause the protocol.token supply to exceed the custodied share count.

 

CEDEXREGULATORY FRAMEWORK

 

Digital Securities  —  Financial instruments formatted as crypto assets with ownership recorded on a crypto network, as formally defined by SEC Release No. 33-11412 (CENTRALIZED-DECENTRALIZEDMarch EXCHANGE):17, OTCM's2026). purpose-builtST22 securitiestokens tradingsatisfy infrastructureevery achieving simultaneous satisfactionelement of permissionlessthis trading,definition. securitiesThe compliance,formal andclassification custodialof riskST22 elimination.tokens CEDEXas Digital Securities under Release No. 33-11412 is the onlyauthoritative exchangeregulatory purpose-builtbasis to maintain all 42 SPL Token-2022 Transfer Hook controls throughoutfor the full token lifecycle, including post-graduation trading.

CIRCUIT BREAKER: Automated trading halt mechanism triggered by extreme price movements or unusual market conditions. Prevents market manipulation and allows time for information dissemination. OTCM implements 2% price impact limits and 30% volume halt thresholds.

CONSENSUS MECHANISM: Method by which blockchain networks achieve agreement on the current state of the ledger. Examples include Proof of Work (PoW), Proof of Stake (PoS), and Solana's Proof of History (PoH).

DAO (DECENTRALIZED AUTONOMOUS ORGANIZATION): An organization represented by rules encoded as computer programs (smart contracts) that are transparent and controlled by organization members rather than centralized leadership. OTCM uses DAO governance for protocol upgrades with 48-hour timelocks and supermajority thresholds.

DEX (DECENTRALIZED EXCHANGE): A cryptocurrency exchange operating without central authority, using smart contracts for peer-to-peer trading. Examples include Uniswap, Raydium, and Orca. Standard DEXs cannot support OTCM'Platform's compliance requirementsarchitecture.  NEW

SEC Category 1 Model B (Issuer-Sponsored Tokenization)  —  The SEC's preferred tokenization architecture as theyestablished doby notthe invokeJanuary SPL28, Token-20222026 TransferJoint Hooks.

GASStaff FEES:Statement Transactionon feesTokenized paid to processSecurities and validateSEC transactionsRelease onNo. blockchain33-11412. networks. On Solana, these are minimalRequires: (~5,0001) lamportsdirect orissuer ~$0.00025)authorization comparedthrough toboard Ethereum.

HASH/HASHING:resolution, Process(2) ofintegration convertingwith inputthe dataofficial intoshareholder aregister fixed-sizethrough stringan ofSEC-registered characterstransfer using a cryptographic algorithm. Used for data integrity, blockchain security,agent, and immutable(3) auditSEC-registered trails.

LAYERtransfer 2:agent Secondary framework built on top of a Layer 1 blockchain to improve scalability and efficiency. Processes transactions off the main chain while leveraging its security.custody. OTCM Protocol operates asexclusively Layerwithin Category 1 Model B. Category 2 on(Third-Party Solana.

MEVSponsored) (MINER/MAXIMUMtokenization EXTRACTABLEis VALUE): Profit miners or validators can extractdisfavored by reordering,the including, or excluding transactions within blocks they produce. OTCM's architecture prevents MEV extraction through Transfer HooksSEC and Jitonot bundle integration.

MULTI-SIGNATURE (MULTI-SIG): Security feature requiring multiple cryptographic signatures to authorize a transaction. Used for enhanced security of high-value accounts and emergency protocol overrides.

ORACLE: Service providing external data to blockchain smart contracts, bridging on-chain and off-chain information. OTCM uses oracles for custody verification (every ~400ms), OFAC screening, AML risk scoring, and price feeds.

PBFT (PRACTICAL BYZANTINE FAULT TOLERANCE): Consensus algorithm for distributed systems enabling agreement even when some nodes fail or act maliciously. Used alongside Proof of History in Solana.

PROOF OF HISTORY (POH): Solana's innovation creating a historical record proving events occurred in a specific sequence, enabling high throughput of 65,000+ TPS.

RPC (REMOTE PROCEDURE CALL): Protocol for executing code on remote servers. Solana RPC nodes provide API access to blockchain data and transaction submission.

SMART CONTRACT: Self-executing program on a blockchain that automatically enforces agreement terms when predetermined conditions are met. OTCM uses Rust/Anchor smart contracts on Solana.

SPL TOKEN: Token standardsupported on the SolanaOTCM blockchain, similar to ERC-20 on Ethereum. SPL Token-2022 extends this with Transfer Hooks enabling compliance enforcement at the transfer primitive.Platform.

ST22January (SECURITY28, TOKEN2026 2022):Joint Staff Statement OTCM's tokenized— securities usingThe thelandmark SPLstatement Token-2022issued standardjointly with integrated Transfer Hooks for compliance verification. Underby the SEC's Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets establishing the definitive regulatory taxonomy for tokenized securities. Established the Category 1 (Issuer-Sponsored) and Category 2 (Third-Party Sponsored) classification framework. Formally validates OTCM Protocol's architecture as the preferred model for compliant securities tokenization.

SEC Release No. 33-11412  —  SEC and CFTC joint interpretation published March 17, 2026 interpretationestablishing (Releasethat No. 33-11412), ST22 tokens are formally classified as Digital Securities — financial instruments formatted as crypto assets with ownership recorded on a crypto network.

TPSnetwork (TRANSACTIONS— PERare SECOND):a Measurerecognized asset class subject to full securities law compliance. ST22 tokens are explicitly designed to satisfy every element of blockchainthis throughputdefinition.

capacity.

Regulation SolanaD achievesRule 65,000+506(c) TPS versus— Ethereum's ~SEC exemption from Securities Act registration permitting general solicitation of securities offerings to verified accredited investors with no limit on the amount raised. The primary offering exemption for U.S. investor participation in ST22 issuances. Requires: (1) all purchasers be accredited investors, (2) issuer take reasonable steps to verify accreditation, and (3) Form D filed with the SEC within 15 TPS.

TRANSFERdays HOOK:of SPLfirst Token-2022sale. mechanism executingAccreditation verification codeis performed by Empire Stock Transfer.

Regulation S  —  SEC exemption permitting offers and sales of securities to non-U.S. persons in offshore transactions without SEC registration. The offering exemption for international investor participation in ST22 issuances. Requires purchasers to not be U.S. persons as defined in Rule 902(k) and not purchasing for the account of any U.S. person. Subject to a 12-month distribution compliance period enforced on-chain by Transfer Hook Control 24.

Rule 144  —  SEC rule governing the resale of restricted securities by non-affiliates. In the OTCM context: ST22 tokens acquired in a Regulation D 506(c) offering are restricted securities subject to a 6-month minimum holding period before resale. The holding period is enforced on-chain by Transfer Hook Control 24, which records the purchase timestamp and rejects all transfer attempts until the period has elapsed.

Rule 144 Holding Period  —  The 6-month minimum period from the date of purchase and full payment during tokenwhich transfers.U.S. accredited investors may not resell or transfer ST22 tokens. Enforced on-chain by Transfer Hook Control 24. After expiry, additional Rule 144 conditions apply: current public information requirement (EDGAR reporting), volume limitations (1% of outstanding per 90-day window), and manner of sale requirements.  NEW

Regulation S Distribution Compliance Period  —  The 12-month period from the date of acquisition during which non-U.S. investors may not offer or sell ST22 tokens to U.S. persons or in the U.S. market. Enforced on-chain by Transfer Hook Control 24. After expiry, tokens may be sold into the Global Unified CEDEX Liquidity Pool subject to all other Transfer Hook controls.  NEW

Form D  —  SEC filing required from the issuer within 15 days of the first sale of securities under a Regulation D exemption. Filed by the ST22 issuer — not by OTCM implementsProtocol. sixContains sequentialinformation hooksabout enforcingthe 42offering, compliancethe controls atomically on every ST22 transfer.

TWAP (TIME-WEIGHTED AVERAGE PRICE): Price average calculated over a time period. Used by OTCM's circuit breaker to detect abnormal price movementsissuer, and preventthe single-blockuse priceof manipulation.proceeds. Annual amendments required until the offering is completed or terminated.

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▪️ Financial Terms

ACCREDITEDAccredited INVESTOR:Investor  —  An individual or entity meeting specific SEC criteria under Rule 506(c)501 of Regulation D,D. includingIndividual minimumthresholds: income thresholdsexceeding ($200,000 individual / ($300,000 joint) in each of the two most recent years, or net worth exceeding $1 million excluding primary residence.

APYresidence, (ANNUALor PERCENTAGEholder YIELD):of AnnualizedSeries return7, rate65, accountingor 82 licenses. Entity thresholds: $5 million or more in assets for compounding.entities not formed to purchase the securities. Accreditation verification is performed exclusively by Empire Stock Transfer for all ST22 issuances.

UCC Article 8  —  Uniform Commercial Code provisions governing the transfer of investment securities. Every ST22 Transfer Hook notification to Empire Stock Transfer upon an on-chain transfer constitutes an effective entitlement order under UCC §8-102(a)(8), triggering an update to the Master Securityholder File. Wyoming's Digital Asset Statute reinforces this compliance framework at the state law level.

Wyoming Digital Asset Statute  —  W.S. 34-29-101 et seq. — Wyoming legislation providing state-law recognition of digital asset ownership, property rights, and transfer mechanics. OTCM stakingProtocol's nodesincorporation offerunder 8–60%the APYWyoming Business Corporation Act (W.S. 17-16-101 et seq.), combined with 2.6-daythe epochsDigital (140Asset compoundingStatute, eventsprovides annually).dual state-law recognition for ST22 token transfers, reinforcing the UCC Article 8 compliance framework.  NEW

BENEFICIALRule OWNERSHIP:15c2-11  —  SEC rule requiring broker-dealers to review and maintain current issuer information before publishing quotations for OTC securities. Companies that fail to maintain current SEC reporting obligations lose broker-dealer quotation eligibility, rendering their shares untradeable. The naturalprimary person(s)regulatory whomechanism ultimatelythat ownstraps orshareholders controlsin anthousands investment,of evenOTC ifmicrocap titlecompanies — the market failure that OTCM Protocol's tokenization infrastructure is helddesigned into another name. SEC requires disclosure of beneficial owners holding more than 5% of public company shares.address.

BLUEBlue SKYSky LAWS:Laws  —  State-level securities laws in the United States that regulateregulating the offering and sale of securities to protect investors from fraud. NamedUnder afterRule speculative506(c), schemesfederal withpreemption nounder the National Securities Markets Improvement Act (NSMIA) applies, meaning state securities registration is generally not required for ST22 offerings. However, notice filings and fees may be required in certain states. CLO Jeff Turner (JDT Legal) coordinates state blue sky compliance for all ST22 issuances.

Form 144  —  SEC filing required when an affiliate or holder of restricted securities sells more basis than "blue5,000 sky."

BOOK-ENTRY:shares Securitiesor recorded$50,000 electronicallyof rathera thansecurity issuedin asany physical3-month certificates.period Ownershipunder trackedRule through144. electronic records maintainedFiled by transferthe agentsinvestor — not by OTCM Protocol or clearingEmpire houses.

CUSIP:Stock Nine-characterTransfer. alphanumericThe codeTransfer identifyingHook's Northon-chain Americanholding securitiesperiod forenforcement clearinghelps andinvestors settlement.avoid Required for most publicly traded securities.

HOLDING PERIOD: Minimum time securities must be held before they can be sold.inadvertent Rule 144 requires a six-month holding period for restricted securities.violations.

 

IMPERMANENTCOMPLIANCE LOSS:& AML INFRASTRUCTURE

 

FinCEN (Financial Crimes Enforcement Network) Temporary loss experienced by liquidity providers in AMMs when deposited asset prices change compared to holding assets outside the pool.

LIQUIDITY: Ease with which an asset can be bought or sold without affecting its price. High liquidity means minimal price impact from trades. OTCM's Federated Liquidity Protocol maximizes liquidity per issuer.

LIQUIDITY POOL (LP):— Smart contract containing paired assets enabling decentralized trading. Users provide liquidity in exchange for fees from trades.

LP (LIQUIDITY PROVIDER): Entity supplying assets to a liquidity pool, earning fees from trades executed against the pool.

MARKET CAP (MARKET CAPITALIZATION): Total value of all tokens or shares in circulation, calculated by multiplying current price by circulating supply.

PARI PASSU: Latin term meaning "equal footing" — securities or creditors having equal rights to payment or assets.

SLIPPAGE: Difference between expected and actual trade price due to price movement between order placement and execution.

TOTAL VALUE LOCKED (TVL): Total value of assets deposited in a DeFi protocol, indicating protocol size and user trust.

TRANSFER AGENT: Entity maintaining shareholder records and processing transfers for publicly traded companies. Must be SEC-registered. Empire Stock Transfer serves as OTCM's transfer agent for Preferred Series M shares and ST22 tokens. Pacific Stock Transfer serves as transfer agent for common shares.

VESTING: Process by which tokens or shares become available to a recipient over time rather than immediately. OTCM uses a five-phase vesting schedule: 20% at mint, 20% at graduation, then 20% every 6 months post-graduation.

YIELD FARMING: Practice of lending or staking cryptocurrency in exchange for interest or new tokens as rewards.

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▪️ Legal and Regulatory Terms

AML (ANTI-MONEY LAUNDERING): Legal and regulatory procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. Includes KYC procedures, transaction monitoring, and suspicious activity reporting requirements.

BSA (BANK SECRECY ACT): U.S. legislation (31 U.S.C. § 5311) requiring financial institutions to assist in detecting money laundering through record-keeping and reporting requirements.

CCPA (CALIFORNIA CONSUMER PRIVACY ACT): California state law providing consumers rights over personal information collected by businesses, including right to know, delete, and opt-out of sale of personal information.

CFR (CODE OF FEDERAL REGULATIONS): Codification of U.S. federal agency regulations. Securities regulations appear in Title 17 CFR.

DIGITAL SECURITIES (TOKENIZED SECURITIES): Formal asset class established by the SEC and CFTC in Release No. 33-11412 (March 17, 2026), defined as: "Financial instruments enumerated in the definition of 'security' that is formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks." ST22 tokens are Digital Securities under this definition.

DTC (DEPOSITORY TRUST COMPANY): Subsidiary of DTCC providing custody and book-entry transfer services for eligible securities. Most U.S. publicly traded securities are DTC-eligible.

EDGAR (ELECTRONIC DATA GATHERING, ANALYSIS, AND RETRIEVAL): SEC's electronic filing system where companies submit required disclosures. Public database accessible for researching company filings. Groovy Company, Inc. dba OTCM Protocol — CIK: 1499275.

FATCA (FOREIGN ACCOUNT TAX COMPLIANCE ACT): U.S. legislation requiring foreign financial institutions to report information about accounts held by U.S. taxpayers to the IRS.

FATF (FINANCIAL ACTION TASK FORCE): Intergovernmental AML/CFT policy body setting international standards for combating money laundering and terrorist financing.

FINCEN (FINANCIAL CRIMES ENFORCEMENT NETWORK): U.S. Treasury bureau collectingthat collects and analyzing information aboutanalyzes financial transactionstransaction data to combat money laundering, terrorist financing, and related crimes. Empire Stock Transfer files Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) with FinCEN as required under the Bank Secrecy Act. OTCM Protocol is enrolled in FinCEN's Section 314(b) voluntary information-sharing program.

SAR (Suspicious Activity Report)  —  FinCEN filing required when a financial institution detects a transaction of $5,000 or more that it suspects involves money laundering, fraud, or other financial crimes.

FINRA (FINANCIALFiled INDUSTRYby REGULATORYEmpire AUTHORITY):Stock Self-regulatoryTransfer organizationas overseeingpart broker-dealersof inits AML program obligations. The filing requirement is confidential — institutions cannot disclose a SAR filing to the United States. Licenses securities professionals and enforces industry rules.

FORM D: SEC filing required for companies raising capital under Regulation D exemptions. Must be filed within 15 dayssubject of firstthe sale.report.

GDPRSDN (GENERALSpecially DATADesignated PROTECTION REGULATION):Nationals) European Union regulation on data protection and privacy, granting individuals control over their personal data.

HOWEY TEST: Four-part test from the 1946 Supreme Court case SEC v. W.J. Howey Co.— determining whetherThe aOFAC transaction qualifies as an "investment contract" and therefore a security: (1) investmentlist of money, (2) in a common enterprise, (3) with expectation of profits, (4) from efforts of others. The SEC's March 17, 2026 interpretation (Release No. 33-11412) clarified how the Howey test applies to crypto assets and established conditions under which an investment contract can terminate.

KYC (KNOW YOUR CUSTOMER): Process of verifying client identity to prevent fraud, money laundering, and terrorist financing. Includes collecting identification documents and verifying information.

OFAC (OFFICE OF FOREIGN ASSETS CONTROL): U.S. Treasury office administering and enforcing economic sanctions against targeted foreign countries,individuals, entities, and individuals.vessels OTCMwith whom U.S. persons are prohibited from conducting any business. Empire Stock Transfer screens all transfersinvestors against the SDN list during onboarding. Transfer Hook Control 2 provides continuous real-time OFAC screening on every on-chain transfer, updated hourly from OFAC's published SDN list viadata.

FATF (Financial Action Task Force)  —  International standard-setting body establishing AML/CFT requirements for financial institutions and virtual asset service providers. Jurisdictions designated as high-risk by FATF receive enhanced due diligence treatment under Empire Stock Transfer's investor onboarding protocol, including mandatory senior compliance officer approval before investment eligibility is confirmed.

BSA (Bank Secrecy Act)  —  31 U.S.C. § 5311 et seq. — U.S. federal law requiring financial institutions to establish Customer Identification Programs (CIP), file SARs and CTRs, and maintain transaction records. Empire Stock Transfer Hookoperates 2.a BSA-compliant program covering all ST22 investor onboarding and transfer agent functions. OTCM Protocol is enrolled in FinCEN BSA E-Filing for required regulatory submissions.

PCAOB (PUBLICPublic COMPANYCompany ACCOUNTINGAccounting OVERSIGHTOversight BOARD):Board)  —  Organization overseeing audits of public companies to protect investors. Groovy Company, Inc. dba OTCM Protocol is a public reporting company (CIK: 1499275) subject to PCAOB audit standards. Auditors of publicthe companiesCompany must be PCAOB-registered.

 

REGULATIONSOLANA A+:& SPL TOKEN-2022 TECHNICAL TERMS

 

SPL Token-2022 SEC regulations— (17 CFRSolana's §next-generation 230.251–263)token permittingprogram, offeringsdeveloped upby Solana Labs as an upgrade to $75Mthe annuallyoriginal toSPL bothToken accreditedprogram. Introduces advanced compliance features including Transfer Hook extensions, confidential transfer capabilities, metadata extensions, and non-accreditedpermanent investors,delegate subject to investment limits for non-accredited participants.

REGULATION D: SEC regulation providing exemptions from securities registration requirements for private offerings. OTCM utilizes Rule 506(c) permitting unlimited-dollar offerings to verified accredited investors with general solicitation.

REGULATION S: SEC regulations (17 CFR § 230.901–905) for offshore securities offerings to non-U.S. persons. OTCM's Reg S framework governs international investor participation.

RELEASE NO. 33-11412:authorities. The SECfoundational andstandard CFTCon jointwhich interpretation published March 17, 2026, establishing a formal taxonomy for crypto assets under federal securities law. Defines five categories: Digital Commodities, Digital Collectibles, Digital Tools, Stablecoins (GENIUS Act), and Digital Securities.all ST22 tokens are formally classified as Digital Securities under this release.built.

RULE 144:Solana SEC rule allowing public resale of restricted and control securities if certain conditions are met, including holding periods (minimum six months for restricted securities).

RULE 15C2-11: SEC rule— requiring broker-dealersThe toLayer review1 issuerblockchain informationnetwork beforeon publishing quotations for OTC securities. Loss of 15c2-11 eligibility is the primary trigger for OTC market abandonment thatwhich OTCM Protocol addresses.

SARoperates. (SUSPICIOUS ACTIVITY REPORT): FinCEN filingSelected for suspectedits financialhigh crime, required when transactions appear suspicious or exceed reporting thresholdsthroughput ($5,65,000+).

SDN (SPECIALLYTPS), DESIGNATEDsub-400ms NATIONALS):block OFAC list of individualsconfirmation, and entitiesSPL with whom U.S. persons are prohibited from conducting business. Checked on every OTCM transfer viaToken-2022 Transfer Hook 2.

SECcompatibility. (SECURITIESThe AND400ms EXCHANGEblock COMMISSION):time U.S.is federalarchitecturally agencysignificant regulating— securitiesit markets and protecting investors through disclosure requirements and enforcement. Primary regulatory authority for OTCM Protocol and ST22 Digital Securities.

SEC CATEGORY 1 MODEL B: OTCM's regulatory model undermatches the SEC'srefresh tokenizedinterval securities framework —of Empire Stock TransferTransfer's maintains1:1 theattestation authoritativeoracle.

master securityholder file; the Solana blockchain serves as the notification layer. Established by the January 28, 2026 Joint Staff Statement and further validated by Release No. 33-11412

CPMM (MarchConstant 17,Product 2026).Market Maker)

TA-1: Transfer Agent— Registration FormThe filedAMM withformula thex SEC× y = k implemented in OTCM Protocol's Custom AMM Engine for transfer agent compliance and registration.

U.S.C. (UNITED STATES CODE): Codification of U.S. federal statutory law. Securities laws appear in Title 15 U.S.C.

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▪️ Blockchain and Cryptocurrency Terms

CLIFF (VESTING): A period before any vested shares or tokens become available. After the cliff period, vesting may continue on a schedule. Commonly used to ensure long-term commitment.

DEFI (DECENTRALIZED FINANCE): Financial services using smart contracts on blockchains, eliminating intermediaries like banks or brokers. Includes lending, borrowing, trading, and yield farming.

DIGITAL ASSET: Any asset that exists in digital form and comes with the right to use. Includes cryptocurrencies, tokens, NFTs, and digital representations of traditional assets. Under the March 17, 2026 SEC interpretation, digital assets are now classified into five formal categories.

FIAT CURRENCY: Government-issued currency not backed by a physical commodity like gold. Examples include USD, EUR, GBP. Term often used in crypto to distinguish from digital assets.

FUNGIBLE: Property of an asset where individual units are interchangeable and indistinguishable. Dollars and most cryptocurrencies are fungible; NFTs are non-fungible.

GOVERNANCE TOKEN: Token granting holders voting rights in protocol decisions. Used in DAOs for decentralized decision-making. The OTCM utility token provides governance rights, fee discounts (10–50%), and staking eligibility. Under the SEC's March 17, 2026 Digital Tools category, governance tokens performing practical functions may not constitute securities — OTCM's classification is under legal review.

GRADUATION: Irreversible transition from bonding curve pricing to CPMMpost-graduation trading in OTCMthe Protocol.Global OccursUnified whenCEDEX Liquidity Pool. Provides algorithmically-determined pricing and continuous liquidity without requiring traditional market capitalizationmakers. reachesAll theCPMM $250,000arithmetic threshold.uses Bondingu128 curveoverflow-safe funds migrate atomicallycalculations to aprevent permanentlyprecision locked CPMM liquidity pool.errors.

ICOSandwich (INITIAL COIN OFFERING):Attack Fundraising mechanism where new cryptocurrency tokens are sold to investors. Similar to an IPO but for digital assets rather than traditional securities.

NFT (NON-FUNGIBLE TOKEN): Unique digital asset representing ownership of a specific item or content, not interchangeable with other tokens.

OTCM LP (OTCM LIQUIDITY POOL):— Unified capitalA reservemarket servingmanipulation all ST22 tokens through four accumulation mechanisms: bonding curve graduations, trading fees, staking reinvestment, and permanent locks.

PRIVATE KEY: Cryptographic key allowing control of a blockchain wallet and authorization of transactions. Must be kept secret. OTCM wallets are non-custodial — private keys are generated and stored on the user's device.

PUBLIC KEY: Cryptographic identifier serving as a wallet address for receiving cryptocurrency. Can be shared publicly.

RUG PULL: Scam where developers abandon a project and steal investor funds, typically by removing liquidity from pools. OTCM's permanent liquidity locks — LP tokens burned to the dead address — make rug pulls mathematically impossible.

SANDWICH ATTACK: MEV attacktechnique where an attacker places buy and sell orders immediately before and after a victim'starget transaction to profit from the price movement they cause.create. OTCM'OTCM Protocol's 2%Transfer Hook price impact circuit breaker (Control 16 — maximum 2% price impact per transaction) and JitoTWAP bundledeviation integrationcheck prevent(Control this17) attackcollectively vector.

SEEDeliminate PHRASE:the Serieseconomic viability of wordssandwich servingattacks ason theCEDEX.

master

MEV key(Maximal forExtractable aValue) cryptocurrency wallet.— Anyone withProfit thethat seedvalidators phraseor block producers can access wallet funds.

SERIES M SHARES: Preferred Series "M" shares — non-voting, non-dividend preferred shares created specifically for tokenization and permanently deposited with Empire Stock Transfer under irrevocable custody. Each Series M share is represented 1:1extract by onereordering, ST22 Security Token.

SLASHING: Penalty mechanism in Proof of Stake networks where validators lose a portion of staked tokens for maliciousincluding, or negligentexcluding behavior.

SOL:transactions Nativewithin cryptocurrency of the Solana blockchain, used for transaction fees and staking.

SOLANA: High-performance blockchain supporting 65,000+ TPS with ~400ms block times using Proof of History consensus.blocks. OTCM Protocol's LayerTransfer 1Hook infrastructurearchitecture blockchain.

SOLST— (DEPRECATED):specifically Legacythe termprice forimpact and TWAP controls — is designed to eliminate MEV extraction opportunities on ST22 Security Tokens — no longer used. Current official designation is ST22 (Security Token 2022). Retained for historical reference only.

ST22 (SECURITY TOKEN 2022): OTCM's tokenized securities using the SPL Token-2022 standard. Under the SEC's March 17, 2026 interpretation (Release No. 33-11412), ST22 tokens are formally classified as Digital Securities — financial instruments formatted as crypto assets with ownership recorded on a crypto network, backed 1:1trades by Preferredpreventing Serieslarge-impact Mtransactions sharesand heldfront-running scenarios.

Circuit Breaker  —  Automated trading halt mechanism implemented in irrevocable custody at Empire Stock Transfer.

STAKING: Locking cryptocurrency to support network operations in exchange for rewards. OTCM stakingProtocol's nodesTransfer provideHook 8–60%controls. APYTwo with 2.6-day epochs.

WALLET: Software or hardware storing private keys for accessing and managing cryptocurrency. Types include hotvariants: (online)1) andprice cold (offline) wallets. OTCM provides purpose-built iOS and Android securities wallets with embedded KYC/AML compliance.

WASH TRADING: Illegal practice of buying and selling the same asset to create a misleading appearance of market activity. OTCM's AML analytics scoring and circuit breakers detect and prevent wash trading patterns.

WEB3: Concept of a decentralized internet built on blockchain technology, emphasizing user ownership and control of data.

WHALE: Individual or entity holding large amounts of cryptocurrency capable of significantly impacting market prices. OTCM's 4.99% wallet concentration limit and 30% volume haltimpact circuit breaker protect— againstrejects whaleindividual manipulation.transactions exceeding 2% price impact (Control 16); (2) volume-based halt — suspends trading for 24 hours if any single wallet attempts to sell more than 30% of circulating supply within a 24-hour window (Control 18).

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▪️ SEC Filing Terms

10-K:CPI (Cross-Program Invocation) Annual report— required bySolana mechanism allowing one smart contract program to call functions in another. OTCM Protocol implements CEI (Checks-Effects-Interactions) pattern enforcement in all Transfer Hook controls to prevent reentrancy attacks via CPI — a critical security control given the SECfinancial providing a comprehensive overviewnature of athe company's business, financial condition, and results of operations.platform.

 

reportrequiredby

10-Q:KEY PERSONNEL & ENTITIES Quarterly

the

 SEC

providing unaudited financial statements and updates on a company's financial position.

8-K: Current report filed with the SEC announcing major events or corporate changes of importance to shareholders.

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Groovy Company, Inc. dba OTCM Protocol · —  The legal entity operating the OTCM Protocol ST22 Digital Securities Platform. A Wyoming CorporationCorporation. ·Ticker: invest@otcm.ioGROO. ·SEC otcm.ioEDGAR CIK: 1499275. Corporate address: 12 Daniel Rd East, Fairfield, NJ 07004. OTCM stands for Over the Counter Microcap.

Berj Abajian  —  Chief Executive Officer of Groovy Company, Inc. dba OTCM Protocol.

Frank Yglesias  —  Chief Technology Officer and Board Member of Groovy Company, Inc. dba OTCM Protocol. Contact: frank@otcm.io.

Patrick Mokros  —  Chief Operating Officer of Groovy Company, Inc. dba OTCM Protocol. Also serves as President of Empire Stock Transfer. Disclosure: this dual role is a related-party relationship disclosed in the Company's SEC filings.

Jeff Turner (JDT Legal)  —  Chief Legal Counsel / CLO of Groovy Company, Inc. dba OTCM Protocol. Founder of JDT Legal. Responsible for all SEC filings, offering exemption structuring, blue sky compliance, and CLO review of all investor onboarding documentation.

John Morgan  —  Vice President of Issuer Services at Groovy Company, Inc. dba OTCM Protocol. Former Fortune 100 executive and microcap public company CEO. Leads issuer acquisition and onboarding.

Pacific Stock Transfer  —  The SEC-registered transfer agent for Groovy Company, Inc.'s common shares. Separate from Empire Stock Transfer, which handles Preferred Series M shares and ST22 token custody.

JDT Legal  —  The securities law firm of Jeff Turner, CLO of OTCM Protocol. Responsible for legal structuring of all ST22 issuances, including Regulation D 506(c) and Regulation S compliance, Form D preparation, and state blue sky coordination.

 

Groovy Company, Inc. dba OTCM Protocol  |  CIK: 1499275  |  Version 7.0  |  March 2026  |  Confidential