PEGASUS ASSET MANAGEMENT INC

Item 1 Cover Page Pegasus Asset Management, Inc. SEC File Number: 801 – 3186 ADV Part 2A, Brochure Dated: March 11, 2025 Contact: Courtney J. Barba, Chief Compliance Officer 44 Whippany Road, Suite 101 Morristown, New Jersey 07960 www.pegasusassetmgt.com This Brochure provides information about the qualifications and business practices of Pegasus Asset Management, Inc. If you have any questions about the contents of this Brochure, please contact us at (845) 369-9422 or cbarba@pegasusassetmgt.com. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Additional information about Pegasus Asset Management, Inc. also is available on the SEC’s website at www.adviserinfo.sec.gov. References to Pegasus Asset Management, Inc. as a “registered investment adviser” or any reference to being “registered” does not imply a certain level of skill or training.  Item 2 Material Changes The following material changes have been made to this ADV Part 2A Brochure since the March 21, 2024 annual update filing: • As of March 10, 2025, Pegasus Asset Management, Inc. has changed its address to 44 Whippany Road, Suite 101, Morristown, NJ 07960. Pegasus Asset Management, Inc.’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding this Brochure. Item 3 Table of Contents Item 1 Cover Page ....................................................................................................................... 1 Item 2 Material Changes ............................................................................................................. 2 Item 3 Table of Contents ............................................................................................................. 2 Item 4 Advisory Business ........................................................................................................... 3 Fees and Compensation ................................................................................................... 8 Item 5 Performance-Based Fees and Side-by-Side Management ............................................. 10 Item 6 Item 7 Types of Clients ............................................................................................................. 10 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss ...................................... 10 Item 9 Disciplinary Information ............................................................................................... 16 Item 10 Other Financial Industry Activities and Affiliations ..................................................... 16 Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading. 17 Item 12 Brokerage Practices ....................................................................................................... 18 Item 13 Review of Accounts ....................................................................................................... 21 Item 14 Client Referrals and Other Compensation ..................................................................... 22 Item 15 Custody .......................................................................................................................... 22 Item 16 Investment Discretion .................................................................................................... 22 Item 17 Voting Client Securities ................................................................................................. 23 Item 18 Financial Information .................................................................................................... 23 2  Item 4 Advisory Business A. Pegasus Asset Management, Inc. (the “Registrant”) is a New York corporation formed on December 10, 1962. The Registrant became registered as an investment adviser in May 1963. John M. Sebastiano and Rodd D. Berro are the Registrant’s Co-Presidents and principal owners. B. The Registrant offers investment advisory services to its clients, who are generally comprised of: individuals, high net worth individuals, trusts, estates, pension and profit- sharing plans, business entities, and other investment advisers. For the purposes of this Brochure, the term “client” could refer to the Registrant’s direct clients, or those investors for whom Registrant is engaged to provide investment management services according to the sub-advisory engagement described below, as applicable. The Registrant does not hold itself out as providing financial planning and related consulting services except in certain circumstances to the extent specifically requested by the client. INVESTMENT ADVISORY SERVICES The client can determine to engage the Registrant to provide discretionary investment advisory services on a fee-only basis. The Registrant’s annual investment advisory fee is based upon a percentage (%) of the market value of the assets placed under the Registrant’s management. Before Registrant provides investment advisory services, an investment adviser representative will coordinate with each client to develop their personalized investment objectives. The Registrant will then allocate investment assets consistent with the designated investment objectives. Once allocated, the Registrant provides ongoing monitoring and review of account performance and asset allocation as compared to client investment objectives and may periodically execute or recommend execution of account transactions based upon such reviews. Sub-Advisor Arrangements. The Registrant is the co-owner of Pegasus Group, LLC (SEC# 801-60436, CRD# 113499), which is an affiliated SEC-registered investment adviser. Pegasus Group, LLC shall engage the Registrant to provide investment management services according to the terms and conditions of a written Sub-Advisory Agreement. With respect to its sub-advisory services, Pegasus Group, LLC maintains the initial and ongoing day-to-day relationship with the underlying client, including initial and ongoing determination of client suitability for the client’s designated investment strategies and/or programs. If the custodian/broker-dealer is determined by Pegasus Group, LLC, Registrant will be unable to negotiate commissions and/or transaction costs, and/or seek better execution. As a result, clients may pay higher commissions or other transaction costs or greater spreads, or receive less favorable net prices, on transactions for the account than would otherwise be the case through alternative clearing arrangements recommended by Registrant. Higher transaction costs adversely impact account performance. The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions concerning the Registrant’s sub-advisory arrangements. 3  MISCELLANEOUS Registrant provides discretionary investment advisory services on a fee basis as discussed at Item 5 below. Before engaging Registrant to provide investment advisory services, clients are generally required to enter into an Investment Advisory Agreement with Registrant setting forth the terms and conditions of the engagement (including termination), describing the scope of the services to be provided, and the fee that is due from the client. To commence the investment advisory process, Registrant will ascertain each client’s investment objective(s) and then allocate the client’s assets consistent with the client’s designated investment objective(s). Once allocated, Registrant provides ongoing supervision of the account(s). Limitations of Financial Planning and Non-Investment Consulting/Implementation Services. Although the Registrant does not hold itself out as providing financial planning, estate planning or accounting services, to the extent specifically requested by the client, the Registrant, pursuant to the sub-advisory agreement between Registrant and Pegasus Group, LLC may provide limited consultation services to its investment management clients about investment and non-investment related matters, such as estate planning, tax planning, insurance, etc. Registrant shall not receive any separate or additional fee for any such consultation services. Neither the Registrant, nor any of its representatives, serves as an attorney, accountant, or licensed insurance agent, and no portion of the Registrant’s services should be construed as legal, accounting, or insurance brokerage services. Accordingly, Registrant does not prepare estate planning documents, tax returns, or sell insurance products. Unless specifically agreed in writing, neither Registrant nor its representatives are responsible to: implement any financial plans or financial planning advice; provide ongoing financial planning services; or provide ongoing monitoring of financial plans or financial planning advice. The client retains absolute discretion over all financial planning and related implementation decisions and is free to accept or reject any recommendation from Registrant and its representatives. Registrant’s consulting services are completed upon communicating its recommendations to the client. To the extent requested by a client, the Registrant may recommend the services of other professionals for certain non-investment implementation purposes (i.e., attorneys, accountants, insurance, etc.). Clients are under no obligation to engage the services of any recommended professional, who shall be solely responsible for the quality and competency of the services they provide. If the client engages any unaffiliated recommended professional, and a dispute arises related to the engagement, the client should seek recourse exclusively from and against the engaged professional. The preceding sentence shall not limit or waive any applicable rights under federal or state law, including securities laws and fiduciary obligations that cannot be limited or waived. Retirement Rollovers - Potential for Conflict of Interest: A client or prospective client leaving an employer typically has four options regarding an existing retirement plan (and may engage in a combination of these options): (i) leave the money in the former employer’s plan, if permitted, (ii) roll over the assets to the new employer’s plan, if one is available and rollovers are permitted, (iii) roll over to an Individual Retirement Account (“IRA”), or (iv) cash out the account value (which could, depending upon the client’s age, result in adverse tax consequences). If Registrant recommends that a client roll over their retirement plan assets into an account to be managed by Registrant, such a recommendation creates a conflict of interest if Registrant will earn new (or increase its current) compensation as a result of the rollover. If Registrant provides a recommendation as to whether a client should engage in a rollover or not (whether it is from an employer’s plan 4  or an existing IRA), Registrant is acting as a fiduciary within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement accounts. No client is under any obligation to roll over retirement plan assets to an account managed by Registrant, whether it is from an employer’s plan or an existing IRA. Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding the potential for conflict of interest presented by such rollover recommendation. Cash Positions. Registrant continues to treat cash as an asset class. As such, unless determined to the contrary by Registrant, all cash positions (money markets, etc.) shall continue to be included as part of assets under management for purposes of calculating Registrant’s advisory fee. At any specific point in time, depending upon perceived or anticipated market conditions/events (there being no guarantee that such anticipated market conditions/events will occur), Registrant may maintain cash positions for defensive purposes. In addition, while assets are maintained in cash, such amounts could miss market advances. Depending upon current yields, at any point in time, Registrant’s advisory fee could exceed the interest paid by the client’s money market fund. The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions concerning the Registrant’s fee billing practice. Cash Sweep Accounts. Certain account custodians can require that cash proceeds from account transactions or new deposits, be swept to and/or initially maintained in a specific custodian designated sweep account. The yield on the sweep account will generally be lower than those available for other money market accounts. When this occurs, to help mitigate the corresponding yield dispersion, Registrant shall (usually within 30 days thereafter) generally (with exceptions) purchase a higher yielding money market fund (or other type security) available on the custodian’s platform, unless Registrant reasonably anticipates that it will utilize the cash proceeds during the subsequent 30-day period to purchase additional investments for the client’s account. Exceptions and/or modifications can and will occur with respect to all or a portion of the cash balances for various reasons, including, but not limited to the amount of dispersion between the sweep account and a money market fund, the size of the cash balance, an indication from the client of an imminent need for such cash, or the client has a demonstrated history of writing checks from the account. Please Note: The above does not apply to the cash component maintained within a Registrant actively managed investment strategy (the cash balances for which shall generally remain in the custodian designated cash sweep account), an indication from the client of a need for access to such cash, assets allocated to an unaffiliated investment manager, and cash balances maintained for fee billing purposes. Please Also Note: The client shall remain exclusively responsible for yield dispersion/cash balance decisions and corresponding transactions for cash balances maintained in any Registrant unmanaged accounts. The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding the above. Borrowing Against Assets/Risks. A client who has a need to borrow money could determine to do so by using: 5  • Margin-The account custodian or broker-dealer lends money to the client. The custodian charges the client interest for the right to borrow money, and uses the assets in the client’s brokerage account as collateral or • Pledged Assets Loan- In consideration for a lender (i.e., a bank, etc.) to make a loan to the client, the client pledges its investment assets held at the account custodian as collateral. These above-described collateralized loans are generally utilized because they typically provide more favorable interest rates than standard commercial loans. These types of collateralized loans can assist with a pending home purchase, permit the retirement of more expensive debt, or enable borrowing in lieu of liquidating existing account positions and incurring capital gains taxes. However, such loans are not without potential material risk to the client’s investment assets. The lender (i.e., custodian, bank, etc.) will have recourse against the client’s investment assets in the event of loan default or if the assets fall below a certain level. For this reason, Registrant does not recommend such borrowing unless it is for specific short-term purposes (i.e., a bridge loan to purchase a new residence). Registrant does not recommend such borrowing for investment purposes (i.e., to invest borrowed funds in the market). Regardless, if the client was to determine to utilize margin or a pledged assets loan, the following economic benefits would inure to Registrant: • by taking the loan rather than liquidating assets in the client’s account, Registrant • • continues to earn a fee on such Account assets; if the client invests any portion of the loan proceeds in an account to be managed by Registrant, Registrant will receive an advisory fee on the invested amount; and if Registrant’s advisory fee is based upon the higher margined account value (see margin disclosure at Item 5 below), Registrant will earn a correspondingly higher advisory fee. This could provide Registrant with a disincentive to encourage the client to discontinue the use of margin. The client must accept the above risks and potential corresponding consequences associated with the use of margin or a pledged assets loans. Portfolio Trading Activity / Inactivity. Registrant has a fiduciary duty to provide services consistent with the client’s best interest. Registrant will review client portfolios on an ongoing basis to determine if any trades are necessary based upon various factors, including but not limited to investment performance, market conditions, fund manager tenure, style drift, account additions or withdrawals, the client’s financial circumstances, and changes in the client’s investment objectives. Based upon these and other factors, there may be extended periods of time when Registrant determines that trades within a client’s portfolio are unnecessary. Clients nonetheless remain subject to the fees described in Item 5 during periods of portfolio inactivity. Of course, as indicated below, there can be no assurance that investment decisions made by the Registrant will be profitable or equal any specific performance level(s). Cybersecurity Risk. The information technology systems and networks that Registrant and its third-party service providers use to provide services to Registrant’s clients employ various controls that are designed to prevent cybersecurity incidents stemming from intentional or unintentional actions that could cause significant interruptions in Registrant’s operations and/or result in the unauthorized acquisition or use of clients’ confidential or 6  non-public personal information. In accordance with Regulation S-P, the Registrant is committed to protecting the privacy and security of its clients' non-public personal information by implementing appropriate administrative, technical, and physical safeguards. Registrant has established processes to mitigate the risks of cybersecurity incidents, including the requirement to restrict access to such sensitive data and to monitor its systems for potential breaches. Clients and Registrant are nonetheless subject to the risk of cybersecurity incidents that could ultimately cause them to incur financial losses and/or other adverse consequences. Although the Registrant has established processes to reduce the risk of cybersecurity incidents, there is no guarantee that these efforts will always be successful, especially considering that the Registrant does not control the cybersecurity measures and policies employed by third-party service providers, issuers of securities, broker-dealers, qualified custodians, governmental and other regulatory authorities, exchanges, and other financial market operators and providers. In compliance with Regulation S-P, the Registrant will notify clients in the event of a data breach involving their non-public personal information as required by applicable state and federal laws. reviewing, evaluating, or Client Obligations. In performing its services, Registrant will not be required to verify any information received from the client or from the client’s other professionals and is expressly authorized to rely thereon. Clients are responsible to promptly notify the Registrant if there is ever any change in their financial situation or investment objectives revising Registrant’s previous the purpose of for recommendations or services. Use of Mutual and Exchange Traded Funds. Registrant utilizes mutual funds and exchange traded funds for its client portfolios. In addition to Registrant’s investment advisory fee described below, and transaction and/or custodial fees discussed above, clients will also incur, relative to all mutual fund and exchange traded fund purchases, charges imposed at the fund level (e.g., management fees and other fund expenses). The mutual funds and exchange traded funds utilized by the Registrant are generally available directly to the public. Thus, a client can generally obtain the funds recommended and/or utilized by Registrant independent of engaging Registrant as an investment advisor. However, if a prospective client does so, then they will not receive Registrant's initial and ongoing investment advisory services. Portfolio Activity. Registrant has a fiduciary duty to provide services consistent with the client’s best interest. Registrant will review client portfolios on an ongoing basis to determine if any changes are necessary based upon various factors, including, but not limited to, investment performance, market conditions, fund manager tenure, style drift, account additions or /withdrawals, and/or a change in the client’s investment objective. Based upon these factors, there may be extended periods of time when Registrant determines that changes to a client’s portfolio are unnecessary. Clients remain subject to the fees described in Item 5 below during periods of portfolio inactivity. Of course, as indicated below, there can be no assurance that investment decisions made by the Registrant will be profitable or equal any specific performance level(s). Investment Risk. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended or undertaken by Registrant) will be profitable or equal any specific performance level(s). 7  Disclosure Brochure. A copy of the Registrant’s written disclosure statement as set forth on Part 2 of Form ADV and Form CRS (Client Relationship Summary) shall be provided to each client prior to, or contemporaneously with, the execution of the Investment Advisory Agreement. C. The Registrant provides investment advisory services specifically tailored to the needs of each client. Before providing investment advisory services, an investment adviser representative will coordinate with the client to develop each client’s investment objectives. Then, the Registrant will allocate and/or recommend that the client allocate investment assets consistent with the designated investment objectives. The client may, at any time, impose reasonable restrictions, in writing, on the Registrant’s services. D. The Registrant does not participate in a wrap fee program. E. As of December 31, 2024, the Registrant had $473,152,382.76 in assets under management on a discretionary basis. Item 5 Fees and Compensation A. Clients can engage the Registrant to provide discretionary investment advisory services on a fee-only basis. INVESTMENT ADVISORY SERVICES If a client determines to engage the Registrant to provide discretionary investment advisory services on a fee-only basis, the Registrant’s annual investment advisory fee shall be based upon a percentage (%) of the market value and type of assets placed under the Registrant’s management (generally, between 0.50% and 1.25%) as follows: Market Value of Portfolio % of Assets 1.25% First $1,000,000 1.00% Next $1,000,000 0.75% Next $1,000,000 0.50% Over $3,000,000 In limited circumstances, the Registrant’s investment advisory fee is negotiable at Registrant’s sole discretion, depending upon objective and subjective factors including but not limited to: the amount of assets to be managed; portfolio composition; the scope and complexity of the engagement; the anticipated number of meetings and servicing needs; related accounts; future earning capacity; anticipated future additional assets; the professionals rendering the service; prior relationships with the Registrant or its representatives, and negotiations with the client. In addition, certain legacy clients may have accepted different pre-existing service offerings from Registrant and may therefore receive different services under different fee schedules than as set forth above. As a result of these factors, similarly situated clients could pay different fees, the services to be provided by the Registrant to any particular client could be available from other advisers at lower fees, and certain clients may have fees different than those specifically set forth above. The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding the above fee determination. 8  Conflict of Interest. Registrant shall generally compensate its representatives based upon the revenues derived from accounts that they service. The representative generally maintains the authority to determine/negotiate the percentage advisory fee. Thus, a conflict of interest is presented because the higher the advisory fee, the greater the representative’s (and Registrant’s) compensation. Fee Dispersion. Registrant, in its discretion, may charge a lesser or higher investment advisory fee, charge a flat fee, waive appliable minimum asset or minimum fee levels, waive its fee entirely, or charge fee on a different interval, based upon certain criteria (i.e., anticipated future earning capacity, anticipated future additional assets, dollar amount of assets to be managed, related accounts, account composition, complexity of the engagement, anticipated services to be rendered, grandfathered fee schedules, employees and family members, courtesy accounts, competition, negotiations with client, etc.). Please Note: As a result of the above, similarly situated clients could pay different fees. In addition, similar advisory services may be available from other investment advisers for similar or lower fees. ANY QUESTIONS: Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding advisory fees. Custodian Charges – Additional Fees. As discussed below at Item 12 below, when requested to recommend a broker-dealer/custodian for client accounts, Registrant generally recommends that Schwab serve as the broker-dealer/custodian for client investment management assets. Broker-dealers such as Schwab charge brokerage commissions, transaction, and/or other type fees for effecting certain types of securities transactions (i.e., including transaction fees for certain mutual funds, and mark-ups and mark-downs charged for fixed income transactions, etc.). The types of securities for which transaction fees, commissions, and/or other type fees (as well as the amount of those fees) shall differ depending upon the broker-dealer/custodian. While certain custodians, including Schwab, generally (with the potential exception for large orders) do not currently charge fees on individual equity transactions (including ETFs), others do. There can be no assurance that Schwab will not change their transaction fee pricing in the future. Please Also Note: Schwab may also assess fees to clients who elect to receive trade confirmations and account statements by regular mail rather than electronically. ANY QUESTIONS: Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding the above. Margin Accounts: Risks/Conflict of Interest. Registrant does not recommend the use of margin for investment purposes. A margin account is a brokerage account that allows investors to borrow money for other non-investment borrowing purposes. The broker/custodian charges the investor interest for the right to borrow money and uses the securities as collateral. By using borrowed funds, the customer is employing leverage that will magnify both account gains and losses. Should a client determine to use margin, Registrant will include the entire market value of the margined assets when computing its advisory fee. Accordingly, Registrant’s fee shall be based upon a higher margined account value, resulting in Registrant earning a correspondingly higher advisory fee. As a result, the potential of conflict of interest arises since Registrant may have an economic disincentive to recommend that the client terminate the use of margin. The use of margin can cause significant adverse financial consequences in the event of a market correction. ANY QUESTIONS: Our Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding the use of margin. 9  B. Clients may elect to have the Registrant’s advisory fees deducted from their custodial account. Both Registrant’s Investment Advisory Agreement and the custodial/ clearing agreement may authorize the custodian to debit the account for the amount of the Registrant’s investment advisory fee and to directly remit that management fee to the Registrant in compliance with regulatory procedures. In the limited event that the Registrant bills the client directly, payment is due upon receipt of the Registrant’s invoice. The Registrant deducts fees or bills clients quarterly in advance, based upon the market value of the assets on the last business day of the previous quarter. C. Unless the client directs otherwise or an individual client’s circumstances require, the Registrant generally recommends that Charles Schwab and Co., Inc., an SEC-registered and FINRA member broker-dealer and its affiliates (“Schwab”) serve as the broker- dealer/custodian for client investment management assets. Broker-dealers charge transaction fees for executing certain securities transactions according to their fee schedule, and they or their affiliated custodians also impose additional charges for custodial services / fees associated with maintaining the client’s account. For mutual fund and ETF purchases, clients will incur charges imposed by the respective fund, which represent the client’s pro rata share of the fund’s management fee and other fund expenses. These fees and expenses are described in each fund’s prospectus or other offering documents. The fees charged by the applicable broker-dealer/custodian, and the charges imposed by mutual funds and ETFs, are separate from and in addition to Registrant’s advisory fee referenced in this Item 5. Registrant does not share in any portion of those fees or expenses. D. Registrant’s annual investment advisory fee shall be prorated and paid quarterly, in advance, based upon the market value of the assets on the last business day of the previous quarter. The Registrant does not require a minimum annual fee or asset level for investment advisory services. The Investment Advisory Agreement between the Registrant and the client will continue in effect until terminated by either party by written notice in accordance with the terms of the Investment Advisory Agreement. Upon termination, the Registrant shall refund the pro-rated portion of the advanced advisory fee paid based upon the number of days remaining in the billing quarter. E. Neither the Registrant, nor its representatives accept compensation from the sale of securities or other investment products. Item 6 Performance-Based Fees and Side-by-Side Management Neither the Registrant nor any supervised person of the Registrant is a party to any performance or incentive-related compensation arrangements with its clients. Item 7 Types of Clients The Registrant’s clients currently include: individuals, high net worth individuals, trusts, estates, pension and profit sharing plans, business entities, and other investment advisers. The Registrant does not require a minimum annual fee or asset level for investment advisory services. Registrant shall generally price its advisory services based upon various objective and subjective factors. As a result, our clients could pay diverse fees based upon the type, amount and market value of their assets, the anticipated complexity of the 10  engagement, the anticipated level and scope of the overall investment advisory services to be rendered, and negotiations. Additional factors affecting pricing can include related accounts, employee accounts, competition, and negotiations. As a result of these factors, similarly situated clients could pay diverse fees, and the services to be provided by Registrant to any particular client could be available from other advisers at lower fees. All clients and prospective clients should be guided accordingly. ANY QUESTIONS: Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions regarding advisory fees. Item 8 Methods of Analysis, Investment Strategies and Risk of Loss A. The Registrant may utilize the following methods of security analysis: • Charting - (analysis performed using patterns to identify current trends and trend reversals to forecast the direction of prices) • Fundamental - (analysis performed on historical and present data, with the goal of making financial forecasts) • Technical – (analysis performed on historical and present data, focusing on price and trade volume, to forecast the direction of prices) The Registrant may utilize the following investment strategies when implementing investment advice given to clients: • Long Term Purchases (securities held at least a year) • Short Term Purchases (securities sold within a year) • Trading (securities sold within thirty (30) days) Investment Risk. Investing in securities involves risk of loss that clients should be prepared to bear, including the complete loss of principal investment. Past performance does not guarantee future results. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended or undertaken by Registrant) will be profitable or equal any specific performance level. Investment strategies such as asset allocation, diversification, or rebalancing do not assure or guarantee better performance and cannot eliminate the risk of investment losses. There is no guarantee that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies. Options Strategies. In limited situations, Registrant may engage in options transactions (or engage an independent investment manager to do so) for the purpose of hedging risk and/or generating portfolio income. The use of options transactions as an investment strategy can involve a high level of inherent risk. Option transactions establish a contract between two parties concerning the buying or selling of an asset at a predetermined price during a specific period of time. During the term of the option contract, the buyer of the option gains the right to demand fulfillment by the seller. Fulfillment may take the form of either selling or purchasing a security, depending upon the nature of the option contract. Generally, the 11  purchase or sale of an option contract shall be with the intent of “hedging” a potential market risk in a client’s portfolio and/or generating income for a client’s portfolio. Certain options-related strategies (i.e., straddles, short positions, etc.), may, in and of themselves, produce principal volatility and/or risk. Thus, a client must be willing to accept these enhanced volatility and principal risks associated with such strategies. In light of these enhanced risks, client may direct Registrant, in writing, not to employ any or all such strategies for their accounts. Generally, the Registrant exclusively uses covered call writing options as described below. Covered Call Writing. Covered call writing is the sale of in-, at-, or out-of-the-money call options against a long security position held in a client portfolio. This type of transaction is intended to generate income. It also serves to create partial downside protection in the event the security position declines in value. Income is received from the proceeds of the option sale. Such income may be reduced or lost to the extent it is determined to buy back the option position before its expiration. There can be no assurance that the security will not be called away by the option buyer, which will result in the client (option writer) to lose ownership in the security and incur potential unintended tax consequences. Covered call strategies are generally better suited for positions with lower price volatility. There can be no guarantee that an options strategy will achieve its objective or prove successful. No client is under any obligation to enter into any option transactions. However, if the client does so, they must be prepared to accept the potential for unintended or undesired consequences (i.e., losing ownership of the security, incurring capital gains taxes). ANY QUESTIONS: Registrant’s Chief Compliance Officer, Courtney Barba, remains available to address any questions that a client or prospective client may have regarding options. B. The Registrant’s methods of analysis and investment strategies do not present any significant or unusual risks. However, every method of analysis has its own inherent risks. To perform an accurate market analysis the Registrant must have access to current/new market information. The Registrant has no control over the dissemination rate of market information; therefore, unbeknownst to the Registrant, certain analyses may be compiled with outdated market information, severely limiting the value of the Registrant’s analysis. Furthermore, an accurate market analysis can only produce a forecast of the direction of market values. There can be no assurances that a forecasted change in market value will materialize into actionable and/or profitable investment opportunities. The Registrant’s primary investment strategies - Long Term Purchases, Short Term Purchases, and Trading - are fundamental investment strategies. However, every investment strategy has its own inherent risks and limitations. For example, longer term investment strategies require a longer investment time period to allow for the strategy to potentially develop. Shorter term investment strategies require a shorter investment time period to potentially develop but, as a result of more frequent trading, may incur higher transactional costs when compared to a longer term investment strategy. Trading, an investment strategy that requires the purchase and sale of securities within a thirty (30) day period, involves a very short investment time period but will incur higher transaction costs 12  when compared to a short term investment strategy and substantially higher transaction costs than a longer term investment strategy. C. Currently, the Registrant primarily allocates client investment assets among various individual equity and fixed income securities, and, to a lesser extent, among various mutual funds and ETFs on a discretionary basis in accordance with the client’s designated investment objective(s). Each type of investment has its own unique set of risks associated with it. The following provides a short description of some of the underlying risks associated with the types of investments that Registrant uses or recommends: Market Risk. The price of a security may drop in reaction to tangible and intangible events and conditions. This type of risk may be caused by external factors (such as economic or political factors) but may also be incurred because of a security’s specific underlying investments. Additionally, each security’s price can fluctuate based on market movement, which may or may not be due to the security’s operations or changes in its true value. For example, political, economic and social conditions may trigger market events which are temporarily negative, or temporarily positive. Unsystematic Risk. Unsystematic risk is the company-specific or industry-specific risk in a portfolio that the investor bears. Unsystematic risk is typically addressed through diversification. However, as indicated above, diversification does not guarantee better performance and cannot eliminate the risk of investment losses. Value Investment Risk. Value stocks may perform differently from the market as a whole and following a value-oriented investment strategy may cause a portfolio to underperform growth stocks. Growth Investment Risk. Prices of growth stocks tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political and economic developments than other stocks, making their prices more volatile. Small Company Risk. Securities of small companies are often less liquid than those of large companies and this could make it difficult to sell a small company security at a desired time or price. As a result, small company stocks may fluctuate relatively more in price. In general, small capitalization companies are more vulnerable than larger companies to adverse business or economic developments and they may have more limited resources. Commodity Risk. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments. Foreign Securities and Currencies Risk. Foreign securities prices may decline or fluctuate because of: (i) economic or political actions of foreign governments, and/or (ii) less regulated or liquid securities markets. Investors holding these securities are also exposed to foreign currency risk (the possibility that foreign currency will fluctuate in value against the U.S. dollar). Interest Rate Risk. Fixed income securities and fixed income-based securities are subject to interest rate risk because the prices of fixed income securities tend to move in the 13  opposite direction of interest rates. When interest rates rise, fixed income security prices tend to fall. When interest rates fall, fixed income security prices tend to rise. In general, fixed income securities with longer maturities are more sensitive to these price changes. Inflation Risk. When any type of inflation is present, a dollar at present value will not carry the same purchasing power as a dollar in the future, because that purchasing power erodes at the rate of inflation. Reinvestment Risk. Future proceeds from investments may have to be reinvested at a potentially lower rate of return (i.e., interest rate), which primarily relates to fixed income securities. Credit Risk. The issuer of a security may be unable to make interest payments and/or repay principal when due. A downgrade to an issuer’s credit rating or a perceived change in an issuer’s financial strength may affect a security’s value and impact performance. Credit risk is considered greater for fixed income securities with ratings below investment grade. Fixed income securities that are below investment grade involve higher credit risk and are considered speculative. Call Risk. During periods of falling interest rates, a bond issuer will call or repay a higher- yielding bond before its maturity date, forcing the investment to reinvest in bonds with lower interest rates than the original obligations. Regulatory Risk. Changes in laws and regulations from any government can change the market value of companies subject to such regulations. Certain industries are more susceptible to government regulation. For example, changes in zoning, tax structure or laws may impact the return on investments. Mutual Fund Risk. Mutual funds are operated by investment companies that raise money from shareholders and invest it in stocks, bonds, and/or other types of securities. Each fund will have a manager that trades the fund’s investments in accordance with the fund’s investment objective. Mutual funds charge a separate management fee for their services, so the returns on mutual funds are reduced by the costs to manage the funds. While mutual funds generally provide diversification, risks can be significantly increased if the fund is concentrated in a particular sector of the market. Mutual funds come in many varieties. Some invest aggressively for capital appreciation, while others are conservative and are designed to generate income for shareholders. In addition, the client’s overall portfolio may be affected by losses of an underlying fund and the level of risk arising from the investment practices of an underlying fund (such as the use of derivatives). Exchange Traded Fund Risk. ETFs are marketable securities that are designed to track, before fees and expenses, the performance or returns of a relevant index, commodity, bonds or basket of assets, like an index fund. Unlike mutual funds, ETFs trade like common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. In addition to the general risks of investing, there are specific risks to consider with respect to an investment in ETFs, including, but not limited to: (i) an ETF’s shares may trade at a market price that is above or below its net asset value; (ii) the ETF may employ an investment strategy that utilizes high leverage ratios; or (iii) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally. 14  When engaged on a sub-advisory basis by Pegasus Group, LLC, Registrant may also allocate investment management assets on a discretionary basis among one or more of its asset allocation models described below. Each asset allocation model will be monitored and periodically adjusted at Registrant’s discretion based upon the respective investment objectives. Registrant may also manage client portfolios based on the asset allocation models but will modify the allocations based on the client’s unique circumstances and portfolio composition. The asset allocation model management administration has been designed to comply with the requirements of Rule 3a-4 of the Investment Company Act of 1940. Rule 3a-4 provides similarly managed investment programs with a non-exclusive safe harbor from the definition of an investment company. In accordance with Rule 3a-4, the following disclosure is applicable to Pegasus Group, LLC and Registrant (as applicable) when engaging Registrant to manage its client assets in conformity with Registrant’s asset allocation models: 1. Initial Interview – at the opening of the account, Pegasus Group, LLC or Registrant (as applicable), through its designated representatives, shall obtain from the client information sufficient to determine the client’s financial situation and investment objectives; 2. Individual Treatment - the account is managed on the basis of the client’s financial situation and investment objectives; 3. Quarterly Notice – at least quarterly Pegasus Group, LLC or Registrant (as applicable) shall notify the client to advise Pegasus Group, LLC or Registrant (as applicable) whether the client’s financial situation or investment objectives have changed, or if the client wants to impose and/or modify any reasonable restrictions on the management of the account; 4. Annual Contact – at least annually, Pegasus Group, LLC or Registrant (as applicable) shall contact the client to determine whether the client’s financial situation or investment objectives have changed, or if the client wants to impose and/or modify any reasonable restrictions on the management of the account; 5. Consultation Available – Pegasus Group, LLC or Registrant (as applicable) shall be reasonably available to consult with the client relative to the status of the account; 6. Quarterly Report – the client shall be provided with a quarterly report for the account for the preceding period; 7. Ability to Impose Restrictions – the client shall have the ability to impose reasonable restrictions on the management of the account, including the ability to instruct Pegasus Group, LLC or Registrant (as applicable) not to purchase certain securities; 8. No Pooling – the client’s beneficial interest in a security does not represent an undivided interest in all the securities held by the custodian, but rather represents a direct and beneficial interest in the securities which comprise the account; 9. Separate Account - a separate account is maintained for the client with the custodian; 10. Ownership – each client retains indicia of ownership of the account (e.g., right to withdraw securities or cash, exercise or delegate proxy voting, and receive transaction confirmations). The Registrant believes that the applicable investment advisory fee for this service is reasonable in relation to: (1) the advisory services provided; and (2) the fees charged by other investment advisers offering similar services/programs. However, the annual investment advisory fee may be higher than that charged by other investment advisers offering similar services/programs. In addition to the annual investment advisory fee, the client will also incur charges imposed directly at the mutual and exchange traded fund level (e.g., management fees and other fund expenses). The asset allocation models may involve 15  above-average portfolio turnover which could negatively impact upon the net after-tax gain experienced by an individual client in a taxable account. A brief description of each of the asset allocation models follows. Please note that all allocations and model compositions are subject to change at the Registrant’s discretion based generally upon market conditions and the respective investment objectives: Conservative: The primary emphasis is generating a stable level of current income, with future capital appreciation serving as a secondary objective. Modest annual principal fluctuation is expected and acceptable. The model will consist of a determined allocation among equities, fixed income, and cash, with a primary focus on fixed income. Moderate: The primary emphasis is on current income with future capital appreciation serving as a secondary objective. Principal risk and fluctuation are expected and acceptable over the intended investment time horizon (at least 5 years). The model will consist of a determined allocation among equities, fixed income, and cash. Growth and Income: The primary emphasis is on future capital appreciation with income as a secondary objective. Principal risk and fluctuation are expected and acceptable over the intended long-term investment time horizon. The model will consist of a determined allocation among equities, fixed income, and cash, with a primary focus on equities. Allocation subject to change at discretion of Adviser dependent upon market conditions. Growth: This strongly emphasizes future capital appreciation. Principal risk and fluctuation are expected and acceptable over the intended long-term investment time horizon. The model will consist of a determined allocation among equities, fixed income, and cash, with a primary focus on equities. Item 9 Disciplinary Information The Registrant has not been the subject of any disciplinary actions. Item 10 Other Financial Industry Activities and Affiliations As indicated at Item 4 above, Registrant does not serve as an attorney, accountant, or insurance agent, and no portion of our services should be construed as same. Accordingly, Registrant does not prepare legal documents, prepare tax returns, or sell insurance products. To the extent requested by a client, we may recommend the services of other professionals for non-investment implementation purposes (i.e., attorneys, accountants, insurance, etc.). A. Neither the Registrant, nor its representatives, are registered or have an application pending to register, as a broker-dealer or a registered representative of a broker-dealer. B. Neither the Registrant, nor its representatives, are registered or have an application pending to register, as a futures commission merchant, commodity pool operator, a commodity trading advisor, or a representative of the foregoing. C. Other Investment Advisers. As indicated in Item 4 above, the Registrant is the co-owner of Pegasus Group, LLC (SEC# 801-60436, CRD# 113499) which is an affiliated SEC- registered investment adviser firm. Pegasus Group, LLC shall engage the Registrant to 16  provide investment management services on a sub-advisory basis. This arrangement does not present a conflict of interest, because clients do not incur additional or increased advisory fees as a result. However, the Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have about this arrangement. D. The Registrant does not receive, directly or indirectly, compensation from investment advisors that it recommends or selects for its clients. Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading A. The Registrant maintains an investment policy relative to personal securities transactions. This investment policy is part of Registrant’s overall Code of Ethics, which serves to establish a standard of business conduct for all of Registrant’s representatives that is based upon fundamental principles of openness, integrity, honesty and trust, a copy of which is available upon request. In accordance with Section 204A of the Investment Advisers Act of 1940, the Registrant also maintains and enforces written policies reasonably designed to prevent the misuse of material non-public information by the Registrant or any person associated with the Registrant. B. Neither the Registrant nor any related person of Registrant recommends, buys, or sells for client accounts, securities in which the Registrant or any related person of Registrant has a material financial interest. C. The Registrant and/or representatives of the Registrant may buy or sell securities that are also recommended to clients. This practice may create a situation where the Registrant and/or representatives of the Registrant are in a position to materially benefit from the sale or purchase of those securities. Therefore, this situation creates a potential conflict of interest. Practices such as “scalping” (i.e., a practice whereby the owner of shares of a security recommends that security for investment and then immediately sells it at a profit upon the rise in the market price which follows the recommendation) could take place if the Registrant did not have adequate policies in place to detect such activities. In addition, this requirement can help detect insider trading, “front-running” (i.e., personal trades executed prior to those of the Registrant’s clients) and other potentially abusive practices. The Registrant has a personal securities transaction policy in place to monitor the personal securities transactions and securities holdings of each of the Registrant’s “Access Persons”. The Registrant’s securities transaction policy requires that an Access Person of the Registrant must provide the Chief Compliance Officer or their designee with a written report of their current securities holdings within ten (10) days after becoming an Access Person. Additionally, each Access Person must provide the Chief Compliance Officer or their designee with a written report of the Access Person’s current securities holdings at least once each twelve (12) month period thereafter on a date the Registrant selects; provided, however that at any time that the Registrant has only one Access Person, he or she shall not be required to submit any securities report described above. D. The Registrant and/or representatives of the Registrant may buy or sell securities, at or around the same time as those securities are recommended to clients. This practice creates 17  a situation where the Registrant and/or representatives of the Registrant are in a position to materially benefit from the sale or purchase of those securities. Therefore, this situation creates a potential conflict of interest. As indicated above in Item 11.C, the Registrant has a personal securities transaction policy in place to monitor the personal securities transaction and securities holdings of each of Registrant’s Access Persons. Item 12 Brokerage Practices A. Upon client request, Registrant will recommend a broker-dealer/custodian for execution and/or custodial services. Registrant generally recommends that investment management accounts be maintained at Schwab. Before engaging Registrant to provide investment management services, the client will be required to enter into a formal Investment Advisory Agreement with Registrant setting forth the terms and conditions under which Registrant shall manage the client’s assets, and a separate custodial/clearing agreement with each designated broker-dealer/custodian. Depending on which custodian clients select to maintain their account, they may experience differences in customer service, transaction timing, the availability of sweep account vehicles and money market funds, and other aspects of investing. Factors that the Registrant considers in recommending Schwab (or any other broker- dealer/custodian to clients) include historical relationship with the Registrant, financial strength, reputation, execution capabilities, pricing, research, and service. Although the commissions and/or transaction fees paid by Registrant’s clients will conform to the Registrant’s duty to seek best execution, a client may pay a commission that is higher than another qualified broker-dealer might charge to execute the same transaction where the Registrant determines, in good faith, that the commission/transaction fee is reasonable. In seeking best execution, the determinative factor is not the lowest possible cost, but whether the transaction represents the best qualitative execution, taking into consideration the full range of the broker-dealer services, including the value of research provided, execution capability, commission rates, and responsiveness. Accordingly, although Registrant will seek competitive rates, it may not necessarily obtain the lowest possible commission rates for client account transactions. The brokerage commissions or transaction fees charged by the designated broker-dealer/custodian are exclusive of, and in addition to, Registrant’s investment management fee. Non-Soft Dollar Research and Additional Benefits Although not a material consideration when determining whether to recommend that a client utilize the services of a particular broker-dealer/custodian, Registrant receives from Schwab (or could receive from other broker-dealer/custodians, unaffiliated investment managers, vendors, investment platforms, and/or product/fund sponsors) without cost (and/or at a discount) support services and/or products, certain of which assist the Registrant to better monitor and service client accounts maintained at such institutions. The support services that Registrant receives can include: investment- related research, pricing information and market data, software and other technology that provide access to client account data, compliance and/or practice management- related publications, discounted or free consulting services, discounted and/or free travel and attendance at conferences, meetings, and other educational and/or social events, marketing support, computer hardware and/or software and/or other products used by Registrant in furtherance of its investment advisory business operations. As indicated above, certain of the support services and/or products that Registrant can receive may assist the Registrant in managing and administering client accounts. 18  Others do not directly provide such assistance, but rather assist the Registrant to manage and further develop its business enterprise. The receipt of these support services and products presents a conflict of interest because the Registrant has the incentive to recommend that clients utilize Schwab as a broker-dealer/custodian based upon its interest in continuing to receive the above-described support services and products, rather than based on a client’s particular need. There is no corresponding commitment made by the Registrant to Schwab or any other entity to invest any specific amount or percentage of client assets in any specific mutual funds, securities or other investment products as a result of the above arrangement. The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding the above arrangements and conflicts of interest presented. Schwab Advisor Services™ Schwab Advisor Services™ is Schwab’s business serving independent investment advisory firms like Registrant. Schwab Advisor Services™ provides Registrant and its clients with access to its institutional brokerage –trading, custody, reporting and related services – many of which are not typically available to Schwab retail customers. Schwab also makes available various support services and additional economic benefits (“Additional Benefits”). Some of those support services and Additional Benefits help Registrant manage or administer its clients’ accounts while others help Registrant manage and grow its business. As part of the Additional Benefits, Schwab may also provide monetary assistance to Registrant or to third parties on Registrant’s behalf to defray certain costs towards certain technology, compliance, legal, business consulting and other related expenses. Schwab’s support services are generally available on an unsolicited basis (Registrant does not have to request them) and at no charge to Registrant. The availability of these services from Schwab benefits Registrant because Registrant does not have to produce or purchase them. Registrant is not required to pay for Schwab’s services. A more detailed description of Schwab’s Additional Benefits follows. Services that Benefit the Client Schwab’s institutional brokerage services include access to a broad range of investment products, execution of securities transactions, and custody of client assets. The investment products available through Schwab include some to which Registrant might not otherwise have access or that would require a significantly higher minimum initial investment by Registrant’s clients. Schwab’s services described in this paragraph generally benefit Registrant’s clients and their accounts. Services that May Not Directly Benefit the Client Schwab also makes available to Registrant other products and services that benefit Registrant but may not directly benefit Registrant’s clients or their accounts. These products and services assist Registrant in managing and administering its clients’ accounts. They include investment research, both Schwab’s own and that of third parties. Registrant may use this research to service all or some substantial number of its clients’ accounts, including accounts not maintained at Schwab. In addition to investment research, Schwab also makes available software and other technology that: • provide access to client account data (such as duplicate trade confirmations and account statements); 19  • facilitate trade execution and allocate aggregated trade orders for multiple client accounts; facilitate payment of Registrant’s fees from Registrant’s clients’ accounts; and assist with back-office functions, recordkeeping and client reporting. • provide pricing and other market data; • • educational conferences and events; technology, compliance, legal, and business consulting; Services that Generally Benefit Only Registrant Schwab also offers other services intended to help Registrant manage and further develop its business enterprise. These services include: • • • publications and conferences on practice management and business succession; • access to employee benefits providers, human capital consultants and insurance providers; and • marketing consulting and support. Schwab may provide some of these services itself. In other cases, it will arrange for third-party vendors to provide the services to Registrant. Schwab may also discount or waive its fees for some of these services or pay all or a part of a third party’s fees. Schwab may also provide Registrant with other benefits such as occasional business entertainment of its personnel. Additional Benefits Received Registrant has and may continue to receive certain Additional Benefits that may or may not be offered to the Registrant again in the future. Schwab provides the Additional Benefits to Registrant in its sole discretion and at its own expense, and neither the Registrant nor its clients pay any fees to Schwab for the Additional Benefits. The Additional Benefits are generally provided on an unsolicited basis. The recommendation by Registrant or its representatives that a client select Schwab as designated broker-dealer/custodian for their accounts or transfer their account assets from another broker-dealer/custodian to Schwab presents a conflict of interest, because Registrant had and may continue to have the incentive to make such a recommendation based on its interest in receiving the Additional Benefits to benefit its business interests, rather than based on clients’ interest in receiving the best value in custody services and the most favorable execution of transactions. To mitigate this conflict of interest, Registrant will only recommend that a client select Schwab as broker-dealer/custodian if it reasonably believes that the arrangement in the best interests of its clients based upon the factors discussed throughout this Item 12. Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions about this conflict of interest. 1. The Registrant does not receive referrals from broker-dealers. 2. Directed Brokerage. The Registrant does not generally accept directed brokerage arrangements (when a client requires that account transactions be executed through a specific broker-dealer). In such client directed arrangements, the client will negotiate terms and arrangements for their account with that broker-dealer, and Registrant will not seek better execution services or prices from other broker-dealers or be able to “batch” the client’s transactions for execution through other broker-dealers with orders 20  transaction costs adversely for other accounts managed by Registrant. As a result, the client may pay higher commissions or other transaction costs or greater spreads, or receive less favorable net prices, on transactions for the account than would otherwise be the case. If the client directs Registrant to execute securities transactions for the client’s accounts through a specific broker-dealer, the client correspondingly acknowledges that such direction may cause the accounts to incur higher commissions or transaction costs than the accounts would otherwise incur had the client determined to execute account transactions through alternative clearing arrangements that may be available through impact account performance. Registrant. Higher Transactions for directed accounts will generally be executed following the execution of portfolio transactions for non-directed accounts. The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions about the above. Order Aggregation. Transactions for each client account generally will be effected independently unless Firm decides to purchase or sell the same securities for several clients at approximately the same time. The Firm may (but is not obligated to) combine or “batch” such orders for individual equity transactions (including ETFs) with the intention to obtain better price execution, to negotiate more favorable commission rates, or to allocate more equitably among the Firm’s clients’ differences in prices and commissions or other transaction costs that might have occurred had such orders been placed independently. Under this procedure, transactions will be averaged as to price and will be allocated among clients in proportion to the purchase and sale orders placed for each client account on any given day. In the event that the Firm becomes aware that a Firm employee seeks to trade in the same security on the same day, the employee transaction will either be included in the “batch” transaction or transacted after all discretionary client transactions have been completed. The Firm shall not receive any additional compensation or remuneration as the result of such aggregation. B. To the extent that the Registrant provides investment management services to its clients, the transactions for each client account generally will be executed independently, unless the Registrant decides to purchase or sell the same securities for several clients at approximately the same time. The Registrant may (but is not obligated to) combine or “bunch” such orders to seek best execution, to negotiate more favorable commission rates or to allocate equitably among the Registrant’s clients differences in prices and commissions or other transaction costs that might have been obtained had such orders been placed independently. Under this procedure, transactions will be averaged as to price and will be allocated among clients in proportion to the purchase and sale orders placed for each client account on any given day. The Registrant shall not receive any additional compensation or remuneration as a result of such aggregation. Item 13 Review of Accounts A. For those clients to whom Registrant provides investment supervisory services, account reviews are conducted on a monthly basis by the Registrant’s Principals, Rodd D. Berro, John M. Sebastiano and/or its representatives. All investment supervisory and financial planning clients are advised that it remains their responsibility to advise the Registrant of any changes in their investment objectives and/or financial situation. All clients (in person or via telephone) are encouraged to review financial planning issues, investment objectives and account performance with the Registrant on an annual basis, as applicable. 21  B. The Registrant may conduct non-periodic account reviews upon triggering events, such as but not necessarily limited to changes in client investment objectives or financial situation, market corrections, and client request. C. Clients are provided with at least quarterly transaction confirmation notices and summary account statements directly from the broker-dealer/custodian for their accounts. Item 14 Client Referrals and Other Compensation A. As referenced in Item 12 above, the Registrant may receive economic benefits from broker dealers, and other economic benefits such as support services and/or products without cost or at a discount received from Schwab. Registrant can also receive similar support services and/or products from various other broker-dealers/custodians. Registrant’s clients do not pay more for investment transactions executed and/or assets maintained at Schwab or any other broker-dealers/custodians or other entities as a result of this arrangement. There is no corresponding commitment made by the Registrant to Schwab or any other entity to invest any specific amount or percentage of client assets in any specific mutual funds, securities or other investment products as a result of the above arrangements. The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions about this arrangement and the conflicts of interest presented. B. Neither the Registrant nor related persons of the Registrant compensate non-supervised persons for client referrals. Item 15 Custody The Registrant shall have the ability to have its advisory fee for each client debited by the custodian on a quarterly basis. Clients are provided with transaction confirmation notices and regular summary account statements directly from the broker-dealer/custodian for the client accounts. Those clients to whom Registrant provides investment advisory services will also receive a quarterly report from the Registrant. To the extent that the Registrant provides clients with periodic account statements or reports, Registrant urges clients to carefully review those statements and compare them to custodial account statements. Registrant’s statements may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities. The account custodian does not verify the accuracy of the Registrant’s advisory fee calculations. Item 16 Investment Discretion The client can determine to engage the Registrant to provide investment advisory services on a discretionary basis. Before the Registrant assumes discretionary authority over a client’s account, the client shall be required to execute an Investment Advisory Agreement, naming the Registrant as the client’s attorney and agent in fact, granting the Registrant full authority to buy, sell, or otherwise execute investment transactions involving the assets in the client’s name found in the discretionary account. 22  Clients who engage the Registrant on a discretionary basis may, at any time, impose restrictions, in writing, on the Registrant’s discretionary authority. (i.e., limit the types/amounts of particular securities purchased for their account, exclude the ability to purchase securities with an inverse relationship to the market, limit or proscribe the Registrant’s use of margin, etc.). Item 17 Voting Client Securities A. The Registrant does not vote client proxies. Clients maintain exclusive responsibility for: (1) directing the manner in which proxies solicited by issuers of securities beneficially owned by the client shall be voted, and (2) making all elections relative to any mergers, acquisitions, tender offers, bankruptcy proceedings or other type events pertaining to the client’s investment assets. B. Clients will receive their proxies or other solicitations directly from their custodian. Clients may contact the Registrant to discuss any questions they may have with a particular solicitation. Item 18 Financial Information A. The Registrant does not solicit fees of more than $1,200, per client, six months or more in advance. B. The Registrant is unaware of any financial condition that is reasonably likely to impair its ability to meet its contractual commitments relating to its discretionary authority over certain client accounts. C. The Registrant has not been the subject of a bankruptcy petition. ANY QUESTIONS: The Registrant’s Chief Compliance Officer, Courtney J. Barba, remains available to address any questions that a client or prospective client may have regarding the above disclosures and arrangements. 23