From Swamp to Swimming Hole; Let’s Transform the OTC Market

By Steve Reinharz, AITX CEO, Founder and CEO of Robotic Assistance Devices, Inc.

“Know what you own.” It’s one of the few mantras among OTC traders that I whole-heartedly endorse. Okay, I’m coming at this not as a trader but as CEO of a tech start-up looking to share information among the trading community. But trader or “tradee,” I truly believe that what’s good for the goose is good for the gander. Unfortunately, within the OTC universe, I am currently in the minority.

There are many momentum and swing traders out there – I call them “chartists” – investors who are content to buy and sell securities without understanding the business realities those ticker symbols represent. There are also plenty of OTC-traded companies happy to take advantage of these investors’ mindset, offering up positive spin in place of more complete disclosure. I get why they do it, but this dynamic clearly does not create a healthy recipe for fostering long-term business relationships.

If the NYSE and NASDAQ are the major leagues, the OTCs are the minors. “The Pinks,” where my company, AITX, currently trades, are the Class A Rookies. Baseball players don’t dream about spending their careers in the minor leagues. Nor do CEOs dream about spending theirs heading a company that trades on the OTCs, let alone the pink sheets. How we ascend from where we are to where we want to be is a matter of talent, attitude, and discipline. There are countless inspirational quotes to this effect, but one of my favorites is often attributed to a fellow Canadian, Marshall McLuhan. “We become what we behold. We shape our tools and then our tools shape us.” In other words, by emulating the managerial discipline, reporting transparency, and investor outreach of the blue-chip corporate leaders to which we aspire, we set the stage to one day join their ranks. Quite frankly, these words of wisdom should be guiding more of us who are “playing in the minors.”

How do I personally do this for AITX? For starters, I am committed to a methodical, long-term strategy that allows us to unpack the maximum value from our current structure before moving the company to our next stage of growth. Timing is everything, and too many companies are in a rush, looking for short term payoffs that fail to translate into long-term profitability. Our approach may lack appeal to momentum traders but I am much more concerned about what’s best for the long term prospects of investor relationships long term. Those who have stuck with us through the inevitable ups and downs that occur with any growing business have given us incredible support – my approach works.

Secondly, AITX is one of a very small group of OTC companies that are very serious about their reporting policies. We voluntarily choose to adhere to full SEC reporting requirements, similar to what folks on NASDAQ and the NYSE go through. Even though this level of compliance means a lot more work (and expense!) on our end, we want to make sure that we’re perfectly clean, transparent, and on time. The benefits of this are two-fold. First of all, we’re developing good habits that will make for a smooth and straightforward transition as we pop up from the pinks to the QB and beyond. The other benefit of such transparency is the ability to attract a different caliber of investor – those who subscribe to the “know what you own” philosophy. It broadens our appeal to a wider base, positioning us to create relationships from educated investors who will be with us for the long haul.

And finally, let’s talk about investor outreach. This part of my job is driven by passion. Look – you don’t found a company and then spend years pouring your heart into building it up unless you truly believe in its mission and potential for success. If I can share that passion with investors, showing them what their shares of AITX truly represent, then my fire may light a spark, transforming them from traders into evangelists. Our message will be echoed and shared. Word will spread. And AITX’s expansion will be based on our company’s actual appeal and value proposition, not as part of a pump and dump cycle. Now that’s how you grow a company.

OTCs get a bad rap. Often it’s deserved. They’re filled with companies that bend the rules as far as they can, providing investors with information that is incomplete, inaccurate, or both. And they attract a segment of investors whose trading behaviors are disingenuous at best, illegal at worst. But that’s not the whole story. There are also smart, curious investors looking for the next big trend. And plenty of companies like AITX, diamonds-in-the-rough that are doing their best to grow based on solid strategies, strong fundamentals, financial transparency, and by attracting loyal investors. Smart investors. Curious investors.

There’s a huge economic upside to growing these latter categories. More worthy start-ups will succeed. Society will benefit from their innovation. And investors will reap long-term rewards.