Audits and Reporting

Audits and Reporting Requirements for Rhino Biotech Limited

As a foreign biotech company listed on OTC Markets, the specific auditing and reporting requirements depend on the tier of the listing: OTCQX, OTCQB, Pink (Current, Limited, or No Information), or the Expert Market. Below is a breakdown, including the Expert Market requirements:

1. Auditing Requirements

  • OTCQX and OTCQB:
  • Audited Financials: Companies must provide annual audited financial statements compliant with U.S. GAAP or IFRS.
  • Auditor Registration: The audits must be performed by a PCAOB-registered auditor.
  • Pink (Current Information):
  • Audited financials are generally required but have more flexibility than OTCQX or OTCQB.
  • Pink (Limited or No Information):
  • Audited financials are not mandatory, and disclosure requirements are minimal.
  • Expert Market:
  • No Audit Requirement: Companies in the Expert Market are not required to provide audited financials.
  • The Expert Market is designed for broker-dealer use, not retail investors, meaning disclosure requirements are minimal.

2. Reporting Requirements

  • OTCQX and OTCQB:
  • Periodic Reports: Companies must file annual and quarterly reports consistent with U.S. SEC or alternative OTC-approved standards.
  • Material Disclosures: Prompt disclosure of significant corporate events is required via platforms like EDGAR or OTCIQ.
  • Ongoing Transparency: Company profiles must remain accurate and up-to-date.
  • Pink (Current Information):
  • Annual and Quarterly Disclosures: Companies must file reports through OTCIQ with basic financial data and material updates.
  • Transparency is required but less rigorously enforced compared to OTCQX and OTCQB.
  • Pink (Limited or No Information):
  • Reporting is minimal or nonexistent. Disclosure requirements are largely voluntary and unregulated.
  • Expert Market:
  • No Reporting Requirements: Companies in the Expert Market are not obligated to disclose financial reports or updates to investors.
  • The tier caters to broker-dealers and institutional investors, who typically rely on private communication or bespoke agreements for information.
  • Public disclosure is generally not expected, creating very limited transparency for investors.

3. Key Considerations for Foreign Companies

  • Home Country Standards: Foreign companies may comply with their home country's reporting standards if they meet U.S. equivalency rules.
  • SEC Rule 12g3-2(b): Some foreign issuers may qualify for an exemption, reducing their need for SEC registration while still disclosing material information publicly.
  • Expert Market Foreign Companies: Being in the Expert Market often exempts foreign companies from regulatory disclosures required in more retail-facing tiers, making it a less demanding option.

4. Consequences of Non-Compliance

  • OTCQX/OTCQB/Pink (Current Information):
  • Companies failing to meet reporting or audit standards may be downgraded to a lower tier or delisted entirely.
  • Expert Market:
  • As there are no public-facing reporting requirements, compliance issues are rare. However, companies in the Expert Market may struggle with visibility and liquidity due to the lack of investor transparency.

Summary

Rhino Biotech Limited’s compliance obligations depend on its OTC tier. If listed in the Expert Market, it has minimal reporting and auditing obligations but trades primarily for institutional or professional investors. This tier provides the least regulatory burden but limits market visibility and retail investor access.