OTC Markets : First Quarter 2024

OTC MARKETS GROUP INC.

A Delaware Corporation

300 Vesey Street

New York, NY 10282

_______________________

Telephone: (212) 896-4400

Corporate website: www.otcmarkets.com

Email: ir@otcmarkets.com

_______________________

Federal EIN: 13-3941069

NAICS: 523210

SIC Code: 6289

Issuer's Quarterly Report

For the quarterly period ended March 31, 2024

(the "Reporting Period")

ISSUER'S EQUITY SECURITIES

COMMON STOCK

Class A Common Stock

$0.01 Par Value Per Share

17,000,000 Shares Authorized

11,971,921 Shares Outstanding as of April 30, 2024

OTCQX: OTCM

OTC Markets Group Inc. is responsible for the content of this Quarterly Report. The securities described in this document are not registered with, and the information contained in this report has not been filed with, or approved by, the U.S. Securities and Exchange Commission.

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OTC MARKETS GROUP INC.

A Delaware Corporation

QUARTERLY REPORT

Cautionary Note Regarding Forward-Looking Statements

Information set forth in this Quarterly Report (the "Quarterly Report") contains forward-looking statements, which involve a number of risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Forward- looking statements can be identified by use of the words "expect," "project," "may," "might," "potential," and similar terms. OTC Markets Group Inc. and its subsidiaries ("OTC Markets Group," "we," or the "Company") caution readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Forward-looking statements involve a number of risks, uncertainties, or other factors beyond OTC Markets Group's control. These factors include but are not limited to: our ability to implement our strategic initiatives; economic, political, and market conditions and price fluctuations; government and industry regulation; U.S. and global competition; changes to trading behavior broadly in the market; and other risk factors discussed under the heading "Risk Factors" in our Annual Report for the year ended December 31, 2023. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Item 1. The exact name of the issuer and the address of its principal executive offices

The name of the issuer is OTC Markets Group Inc.

Company description

OTC Markets Group Inc. (OTCQX: OTCM) operates regulated markets for trading 12,000 U.S. and international securities. Our data-driven disclosure standards form the foundation of our three public markets: OTCQX® Best Market, OTCQB® Venture Market, and Pink® Open Market.

Our OTC Link®Alternative Trading Systems ("ATSs") provide critical market infrastructure that broker-dealers rely on to facilitate trading. Our innovative model offers companies more efficient access to the U.S. financial markets.

OTC Link ATS, OTC Link ECN, and OTC Link NQB are each a Securities and Exchange Commission ("SEC") regulated ATS, operated by the Company's wholly owned subsidiary, OTC Link LLC ("OTC Link"), a Financial Industry Regulatory Authority, Inc. ("FINRA") and SEC registered broker-dealer, member SIPC.

There have been no changes in control of the Company since 1997. OTC Markets Group is currently conducting operations, and it is not now, nor has it at any time been, a "shell company" as that term is defined in the OTCQX U.S. Disclosure Guidelines and the federal securities laws.

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Item 2. Shares outstanding

The Company is authorized to issue 17,000,000 shares of Class A Common Stock of $0.01 par value.

None of OTC Markets Group's Class A Common Stock has been registered under the Securities Act of 1933 (the "Securities Act"), or qualified under any state securities laws, and we have no current plans to register or qualify any of our securities. Certain shares of our Class A Common Stock are currently eligible for resale in the public market pursuant to the exemption from registration offered by Rule 144 under the Securities Act ("Rule 144"). The remaining outstanding shares of our Class A Common Stock are "restricted securities" within the meaning of Rule 144 and may be eligible for resale in the future.

The following table shows the amount of the securities outstanding for our Class A Common Stock as of March 31, 2024 and December 31, 2023:

1. The number of shares freely tradable may include shares held by stockholders owning 10% or more of our Class A Common Stock. These stockholders may be considered "affiliates" within the meaning of Rule 144, and their shares may be "control shares" subject to the volume and manner of sale restrictions under Rule 144.
2. Our officers and directors hold approximately 4.2 million shares of our Class A Common Stock, which may be "control shares" subject to the volume and manner of sale restrictions under Rule 144. These shares are excluded from the number of shares freely tradable.

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As of March 31, 2024 and December 31, 2023, there were 1,334 and 1,322 non-objecting beneficial stockholders owning at least 100 shares of the Company's Class A Common Stock, respectively.

Our Class A Common Stock trades on the OTCQX market under the symbol OTCM (CUSIP Number: 67106F108).

Dividends

The declaration of dividends by OTC Markets Group is subject to the discretion of our Board of Directors. Our Board of Directors will consider such matters as general business conditions, financial results, capital requirements, contractual, legal, and regulatory restrictions on the payment of dividends, and other factors as our Board of Directors may deem relevant.

During the Reporting Period, our Board of Directors authorized and approved the following cash dividend:

On May 7, 2024, the Board of Directors authorized and approved a quarterly cash dividend of $0.18 per share of Class A Common Stock. The quarterly cash dividend is payable on June 20, 2024, to stockholders of record on June 6, 2024. The ex-dividend date is June 5, 2024.

Stock Repurchase Program

The Company is authorized to purchase shares from time to time on the open market, from employees and consultants, and through block trades, in accordance with the safe harbor provision of Rule 10b-18 under the Securities Exchange Act of 1934 (the "Exchange Act").

The following table shows purchases by the Company of our Class A Common Stock during the Reporting Period and the number of shares remaining to be purchased under the Company's stock repurchase program:

On March 4, 2024, the Board of Directors refreshed the Company's stock repurchase program, giving the Company authorization to repurchase up to 300,000 shares of the Company's Class A Common Stock.

Item 3. Unaudited interim condensed consolidated financial statements

Copies of the unaudited interim condensed consolidated financial statements of OTC Markets Group for the three months ended March 31, 2024 and March 31, 2023, including the unaudited interim Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Stockholders' Equity, Condensed Consolidated Statements of Cash Flows, and Notes to the condensed consolidated financial statements, are attached hereto as Exhibit 3.1 and are hereby incorporated by reference into this Quarterly Report.

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The unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The accompanying unaudited interim condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal recurring nature. As permitted under U.S. GAAP, certain footnotes or other financial information are condensed or omitted in the unaudited interim condensed consolidated financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report for the year ended December 31, 2023. The December 31, 2023 unaudited Condensed Consolidated Balance Sheet was derived from audited consolidated financial statements contained in our Annual Report for the year ended December 31, 2023. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024.

Item 4. Management's discussion and analysis

Overview

Our mission is to create better informed and more efficient financial markets. We operate three business lines:

• OTC Link LLC is a FINRA member broker-dealer that operates three SEC regulated ATSs.
• Market Data Licensing distributes market data and financial information.
• Corporate Services operates the OTCQX and OTCQB markets and offers issuers disclosure and regulatory compliance products.

We provide critical infrastructure to the U.S. financial markets: connecting brokers, organizing markets, and incentivizing disclosure. Our market data provides price transparency, assists regulated entities in meeting their compliance obligations, and enables better informed investment decisions. Our platform empowers companies to be public and provides a global gateway to access U.S. investors. OTCQX and OTCQB offer companies a choice of premium markets to demonstrate their compliance with securities laws, corporate governance, and commitment to transparency.

Our Business

OTC Link

Our wholly owned subsidiary, OTC Link LLC, a FINRA member broker-dealer, operates OTC Link ATS, OTC Link ECN, and OTC Link NQB, each an SEC-regulated ATS. OTC Link LLC provides regulated quotation, messaging, trade execution, and reporting services to broker- dealers. By offering multiple market models, control of trades, and choice of counterparties, OTC Link allows broker-dealer subscribers to efficiently provide best execution, attract order flow, and comply with FINRA and SEC regulations.

OTC Link ATS offers a fully attributable, network-based model for quoting and facilitating transactions in over-the-counter ("OTC") equity securities and serves a diverse community of FINRA member broker-dealers that operate as market makers, agency brokers, and ATSs, including Electronic Communication Networks ("ECNs"). OTC Link ATS consolidates broker- dealer quotations, delivers trade messages, and allows subscribers to execute or negotiate trades with known counterparties. All subscribers to OTC Link ATS are FINRA member broker- dealers, subject to all applicable FINRA rules. Unlike traditional exchanges and matching

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engines, OTC Link ATS is not a party to any trade reports with respect to any trade executions that may result from trade messages.

OTC Link ATS operates as a Qualified Interdealer Quotation System ("Qualified IDQS") as defined in Exchange Act Rule 15c2-11 ("Rule 15c2-11"). In this capacity, OTC Link ATS determines whether a security is eligible to be the subject of quotations under Rule 15c2-11 and makes those determinations publicly available on our website and via our market data feeds. Broker-dealers can rely on our determinations in submitting quotations in securities on our OTC Link ATS.

OTC Link ECN operates as an ECN and functions as a centralized matching engine and router for certain OTC equity securities by providing subscribers with anonymous order matching functionality. OTC Link NQB operates as a fully attributable IDQS and a centralized matching engine, allowing distribution of depth-of-book market data. When orders do not match internally on OTC Link ECN or OTC Link NQB, they are routed to other market destinations. OTC Link ECN and OTC Link NQB act as the executing party on an agency basis in relation to all transactions executed on these platforms. Pursuant to applicable FINRA rules, OTC Link ECN and OTC Link NQB submit trade reports to FINRA's OTC Reporting Facility. All transactions executed on OTC Link ECN and OTC Link NQB are cleared and settled pursuant to a clearing agreement with Apex Clearing Corporation.

Market Data Licensing

Due to the role OTC Link plays in supporting the broker-dealer trading process and our interaction with issuers, we generate a significant amount of market data and information. Our Market Data Licensing business provides our subscribers with access to extensive market data and financial information, including real-time, delayed, and end-of-day quotation and trading data, as well as a security master with issuer-level data. In addition, our Market Data Licensing business offers a number of data products and tools for compliance teams, including our Blue Sky data, which provides state securities law compliance data for a wide spectrum of equity and fixed-income securities. Our Blue Sky data and other compliance data products are available through market data feeds and our Canari® platform.

Our Market Data Licensing business also operates EDGAR® Online, which we acquired in November 2022. EDGAR Online includes the EDGAR Pro platform and provides structured data sets containing company disclosure and financial information from public company filings.

We generate a significant portion of our Market Data Licensing revenues from sales through market data redistributors, some of whom are entitled to redistribution fees and rebates.

We also charge for the display of advertisements on www.otcmarkets.com.

Corporate Services

Our Corporate Services business includes the OTCQX Best Market, the OTCQB Venture Market, the Pink Open Market, and our suite of additional services. These services include the OTC Disclosure & News Service® ("DNS") and OTCIQ Basic, which allow issuers to publish disclosure, news, and company information to our website and other distribution channels, and the Virtual Investor Conferences® ("VIC") product that allows issuers to communicate and engage with stockholders and potential investors through an interactive, online platform.

The OTCQX Best Market provides efficient public trading without the complexity and cost of a national securities exchange listing. To join OTCQX, companies must meet minimum financial, disclosure, and qualitative standards set out in our OTCQX Rules.

The OTCQX market is divided into OTCQX U.S. and OTCQX International. OTCQX for Banks, an expansion of the OTCQX market for U.S. companies, is specifically aimed at meeting the

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needs of community and regional banks. The OTCQX International market is targeted towards

1. large global companies that meet the listing standards of a qualified non-U.S. stock exchange in their primary market and do not see value in meeting multiple regulatory, compliance, disclosure, and accounting standards associated with a U.S. exchange listing, and (ii) emerging growth companies that are listed on a qualified non-U.S. stock exchange and may be working towards a U.S. exchange listing but are not yet ready to deploy the management resources necessary to handle the associated operational complexity and cost burdens.

The OTCQB Venture Market provides public trading for entrepreneurial and development-stage companies and applies standards that promote price transparency and facilitate public disclosure. OTCQB is open to international and domestic companies that meet the OTCQB Standards.

Companies that do not meet the standards of, or choose not to apply for, the OTCQX Best Market or the OTCQB Venture Market may have their securities traded on the Pink Open Market. OTC Markets Group categorizes companies on the Pink market as "Pink Current Information" or "Pink Limited Information" based on the sufficiency and timeliness of the information provided to investors. Companies on the Pink market may publish disclosure via DNS, to the SEC, or to certain other regulatory authorities.

We publish issuer and security-level compliance flags to help investors identify opportunities and quantify risk. For example, companies whose stock is the subject of a public interest concern are flagged "Caveat Emptor," or buyer beware.

We also operate an Expert Market® tier with restricted quote distribution. The Expert Market allows broker-dealers to publish unsolicited quotes and meet their best execution responsibilities while serving the needs of sophisticated investors.

Recent Business Developments

On May 1, 2024, OTC Link announced to subscribers that OTC Link ECN and OTC Link NQB intend to launch closing auction functionality on May 16, 2024, beginning with a limited number of symbols. Subscribers with existing access to OTC Link ECN and OTC Link NQB will be able to send auction eligible orders and the OTC Link NQB market data feed will include the closing auction data. This additional functionality is expected to provide greater flexibility to our subscribers in how they engage with our trading platforms; however, it is not yet possible to predict how successful we will be in attracting subscriber trading activity to the closing auction, or to estimate the impact it will have on our financial results.

Recent Regulatory Developments Impacting our Business

Blue Sky Secondary Trading Exemptions for OTCQX and OTCQB

As of May 1, 2024, our OTCQX and OTCQB markets are exempt from state Blue Sky laws regarding secondary trading in 39 states and one U.S territory: Alaska, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho (OTCQX only), Indiana, Iowa, Kansas (OTCQX only), Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont (OTCQX only), Virginia (OTCQX only), Washington, West Virginia, Wisconsin, and Wyoming. State Blue Sky laws generally help investors make informed decisions by mandating that companies disclose accurate and current information when offering or marketing securities. We believe recognition of our markets by state regulators and the resulting Blue Sky exemptions

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make OTCQX and OTCQB more attractive to current and prospective companies. However, the impact of this initiative on our financial results is indirect and therefore difficult to determine.

Trends in Our Business

The economic environment in which we operated during the Reporting Period was characterized by slower global economic growth and persistent, albeit more moderate, inflation, elevated interest rates, changes in trading volumes and trading behavior, and continuing geopolitical developments. The scope and extent of the potential impact of these macro trends on our business in future quarters depend on several factors that are highly uncertain and cannot be predicted. These factors adversely affected certain business drivers and operating metrics, as discussed below. Our overall gross revenues for the Reporting Period declined, reflecting the impact of these factors on our Corporate Services subscribers and our OTC Link business, which more than offset the increase in Market Data Licensing revenues. Additional information regarding the potential risks impacting our business is included in the "Risk Factors" section of our Annual Report for the year ended December 31, 2023.

During the Reporting Period, our Corporate Services business saw a lower average and period- end number of companies subscribing to our premium OTCQX and OTCQB markets, and DNS product compared to the prior year period. OTC Link saw a slight decrease in trading activity compared to the prior year period, resulting in revenues declining slightly as well. Our Market Data Licensing business benefited from continued growth in professional users and enterprise subscribers, as well as from increased revenue from our Blue Sky data product (see Financial Results, below).

For the Reporting Period, 84% of our gross revenues were derived from subscription-based arrangements that are recurring in nature and 16% were transaction-based revenues, compared to 83% and 17%, respectively, for the prior year period. The subscription-based component of our revenues remained relatively unchanged, while the transaction-based component declined 7% as a result of the decline in trading volume, compared to the three months ended March 31, 2023.

OTC Link

Our OTC Link business executed a slightly lower volume of trades on OTC Link ECN and OTC Link NQB and experienced a lower number of trade messages and quotes on OTC Link ATS during the Reporting Period, compared to the prior year period. The total dollar volume traded in OTCQX, OTCQB, and Pink securities increased by 21% from $96 billion in the prior year period to $117 billion in the Reporting Period; however, the share volume traded declined and we had one fewer trading day. The total number of securities quoted by broker-dealers on OTC Link ATS was 12,432 securities as of March 31, 2024, compared to 12,627 securities as of March 31, 2023.

We executed an average of approximately 34,000 transactions per day on OTC Link ECN and OTC Link NQB during the Reporting Period, compared to an average of approximately 35,000 transactions per day during the prior year period.

Gross revenues from OTC Link ECN and OTC Link NQB decreased 8%, compared to the prior year period. OTC Link ECN and OTC Link NQB generated $2.5 million in transaction-based revenues during the Reporting Period and paid $1.5 million in transaction-based expenses in the form of rebates for posted liquidity, compared to $2.7 million in transaction-based revenues and $1.8 million in transaction-based expenses in the prior year period. The transaction-based revenues and transaction-based expenses that OTC Link generates, as well as OTC Link's regulatory and clearing costs, which are included in professional and consulting fees, are

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positively correlated with the volume of trading activity on our markets. However, future trading volumes remain highly uncertain and cannot be predicted.

The number of unique subscribers to OTC Link's trading platforms was 135 as of March 31, 2024, compared to 134 as of the prior year period. The number of broker-dealer subscribers to OTC Link ECN was 112 as of March 31, 2024, up from 102 subscribers as of March 31, 2023. OTC Link ATS had 82 broker-dealer subscribers as of March 31, 2024, compared to 88 subscribers as of March 31, 2023. We expect to continue to attract new subscribers to our OTC Link platform and to grow our market share; however, the total addressable market is relatively limited.

Effective January 1, 2024, we increased certain OTC Link fees.

Market Data Licensing

In our Market Data Licensing business, the number of professional users subscribing to our data products increased 4% to 28,051 as of March 31, 2024, up from 27,004 as of March 31, 2023, driving an 8% year over year increase in revenues derived from professional users.

The number of non-professional users of our market data saw a continued decline during the Reporting Period compared to the prior year period, decreasing by 18% to 10,927 users as of March 31, 2024, down from 13,353 users as of March 31, 2023. As a result, revenues from non-professional users declined 18% year over year. The number of non-professional users of our market data generally correlates to the level of retail participation in the U.S. equity markets. Non-professional users' interest in our data tends to fluctuate significantly in response to volatility in the markets and changes in retail trading activity, and we may experience a further decline in the number of users in the future.

We continue to focus resources on developing and enhancing the relevance of our data products for our Market Data Licensing subscribers. As of March 31, 2024, we had 55 subscriptions to our Compliance Data or Compliance Analytics products, compared to 54 as of March 31, 2023. The EDGAR Online business, which offers SEC disclosure and financial data for issuers and their securities, had approximately 500 subscribers as of March 31, 2024.

Effective January 1, 2024, we increased certain Market Data Licensing fees.

Corporate Services

During the Reporting Period, our Corporate Services business saw a lower average and period- end number of companies on our premium OTCQX and OTCQB markets, and a reduced number of DNS subscribers, compared to the prior year period. The month-to-month variability in subscriber numbers is driven by new sales, offset by voluntary non-renewals, and the impact of compliance downgrades, which occur when companies are removed from OTCQX or OTCQB for noncompliance with the OTCQX Rules or the OTCQB Standards, or corporate events such as mergers, acquisitions, or other change of control events.

The OTCQX Best Market had 577 companies as of March 31, 2024, compared to 593 companies as of March 31, 2023. The decline stems from a lower number of OTCQX companies as of December 31, 2023, and a lower retention rate, offsetting increased sales during the Reporting Period, as our OTCQX companies and prospects continued to navigate an uncertain global macroeconomic environment. Companies on our OTCQX market choose to renew their services at the end of each calendar year. For the annual OTCQX subscription period beginning January 1, 2024, we achieved a 93% retention rate, compared to 95% retention rate achieved for the annual subscription period beginning January 1, 2023.

As of March 31, 2024, there were 1,115 companies on the OTCQB Venture Market, compared to 1,218 companies as of March 31, 2023. During the Reporting Period, continued challenging

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