MultiCorp International Inc (MCIC)

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OTC MARKETS COMPLIANCE ANALYTICS – RISK SCORING ALGORITHM

The OTC Compliance Analytics product provides broker-dealers and investment managers with a comprehensive, quantitative tool for evaluating and automating risk processes for OTCQX, OTCQB and Pink securities. Each security is given a numerical risk score on a 0-55 point scale. This document outlines how point values are assigned.

Risk Factors
Points Assigned
• IF Current Caveat Emptor = Y then +5
• IF Former Caveat Emptor = Y then +3
Caveat Emptor



Marketplace
• IF Market = Pink No Information or Expert Market then +2
• IF Market = Grey Market AND Security Type = Common Stock then +2
• IF Security Status <> Active then +2
• IF Former Suspended/Revoked Status Flag = Y then + 2
Security Status
• IF Shell status = Y then +3
• IF Former Shell status = Y then +2
Shell
• IF Penny Stock Exempt = N then +3
Penny Stock
• IF Bankrupt = Y then +2
Bankruptcy
• IF Delinquent in reporting obligations = Y then +2
Delinquency


• IF Reverse Split in past year then +1
• IF Most Recent Split factor is <.1 then +2
• IF Multiple Reverse Split value = Y then +1
Reverse Splits
• IF Name Change within past year then +1
• IF More than 1 name change in past 2 years = Y then +1
• IF More than 2 name changes in past 5 years = Y then +1

Name Changes


Market Cap
• IF Market Cap value < 300 MM then +3
• IF Market Cap value > 300 MM and < 400 MM then +2
• IF Market Cap value > 400 MM and < 500 MM then +1
• IF value cannot be calculated then +1
• IF Last Sale < .01 then +3
• IF Last Sale > .01 and < 1.00 then +2
• IF Last Sale > 1.00 and < 5.00 then +1
• IF Last Sale is null then +1

Price
7/2020 1 Version 4.0
OTC MARKETS COMPLIANCE ANALYTICS – RISK SCORING ALGORITHM

• IF Price Change Value > |10%| then +1
• IF Price Change Value > |20%| then +1
• IF Price Change Value > |30%| then +1
• IF Price Change Value = Null then +.5

Price Change


Volume Change
• IF Volume Change Value > 10% then +1
• IF Volume Change Value > 20% then +1
• IF Volume Change Value > 30% then +1
• IF Volume Change Value = Null then +.5



Trade Count Change
• IF Trade Count Change Value > 10% then +1
• IF Trade Count Change Value > 20% then +1
• IF Trade Count Change Value > 30% then +1
• IF Trade Count Change Value = Null then +.5


Shares Out Change
• IF Shares Out Change Value > |5%| then +1
• IF Shares Out Change Value > |10%| then +1
• IF Shares Out Change Value > |20%| then +1
• IF Shares Out Change Value = Null then +.5


Authorized Shares Change
• IF Authorized Shares Change Value > |15%| then +1
• IF Authorized Shares Change Value > |25%| then +1
• IF Authorized Shares Change Value > |50%| then +1
• IF Authorized Shares Change Value = Null then +.5


Promotion
• IF Active Promotion Value = Y then +4
• IF Active Promotion Value = N and Most Recent Promotion Date > Current Date – 6 months then +3
• IF Active Promotion Value = N and (Most Recent Promotion Date > Current Date – 1 Year and < Current Date – 6 Months) then +2
• IF Active Promotion Value = N and Most Recent Promotion Date < Current Date – 1 Year then +1
• IF Shell Risk Flag Value = Y then +2
• IF Shell Risk Flag Value = U and Reporting Standard value <> (International
Reporting or Bank/Thrift Reporting or Insurance Reporting) then +1
• IF Former Shell Risk Flag Value = Y then +1

Shell Risk
• IF Hot Sector Flag value = Y then +2

Hot Sector
• IF Former Hot Sector Flag value = Y then +1

https://www.otcmarkets.com/files/OTC%20Markets%20Compliance%20Analytics%20Algorithm%20-v4.0.pdf