Disclosures

Margin Disclosure Statement

Variance Trading is furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review your margin agreement. Consult us regarding any questions or concerns you may have with your margin accounts.

When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price. If you choose to borrow funds, you will open a margin account. The securities purchased are Variance Trading's and/or its clearing agents' collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, Variance Trading and/or its clearing agents can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with Variance Trading directly or through its clearing agents, in order to maintain the required equity in the account.

It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:

You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to Variance Trading and/or its clearing agents to avoid the forced sale of those securities or other securities or assets in your account(s).

Variance Trading and/or its clearing agents can force the sale of securities or other assets in your account(s). If the equity in your account falls below the maintenance margin requirements or Variance Trading's and/or its clearing agents higher "house" requirements, Variance Trading and/or its clearing agents can sell the securities or other assets in any of your accounts held by Variance Trading and/or its clearing agents to cover the margin deficiency. You also will be responsible for any short fall in the account after such a sale.

Variance Trading and/or its clearing agents can sell your securities or other assets without contacting you. Some investors mistakenly believe that they must be contacted for a margin call to be valid, and that Variance Trading and/or its clearing agents cannot liquidate securities or other assets in their accounts to meet the call unless they are contacted first. This is not the case. Variance Trading and/or its clearing agents will attempt to notify customers of margin calls, but is not required to do so. However, even if Variance Trading and/or its clearing agents has contacted a customer and provided a specific date by which the customer can meet a margin call, Variance Trading and/or its clearing agents can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.

You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan,

Variance Trading and/or its clearing agents has the right to decide which security to sell in order to protect its interests. Variance Trading and/or its clearing agents can increase its "house" maintenance margin requirements at any time and is not required to provide you advance written notice, These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause Variance Trading and/or its clearing agents to liquidate or sell securities in your account(s).

You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.

Day Trading Buying Power: The amount of money available to a day trader to buy or sell securities. Buying power is equal to 4 times the NYSE Excess as of the close of business on the previous trading day. The "time and tick" method of calculating Day-Trading Buying Power remains acceptable if the trader does not incur a Day-Trading Call. For example, if the Buying Power is $100,000, a day trader can buy $100,000 worth of stock, and when he or she sells the stock, the Buying Power is available to use again for additional stock purchases. However, if an account incurs a Day-Trading Call, the "time and tick" method of calculation is eliminated and the Buying Power is reduced to 2 times NYSE Excess. This is effective on the trading day the call is incurred and remains in effect until the DAY AFTER the call is satisfied. For example, if a trader has Buying Power of $100,000 and receives a call from Monday's trading, then on Tuesday the trader's Buying Power will be $50,000 and he or she can only use the Buying Power one (1) time in the aggregate. In other words, the Buying Power, once exhausted, will NOT be available for additional stock purchases. Day traders and their MGSPs will be responsible for calculating Buying Power and risk exposure on a daily basis as follows:

• Day Trading Buying Power = Equity - (NYSE Requirement) X 4
• Overnight Buying Power = SMA OR HOUSE EXCESS (whichever is lower) X 2 (Including all current positions)

Note: (NYSE Requirement) = 25% of your overnight long value, 30% of overnight short value, and other applicable maintenance (options, bonds, etc.). This is assuming that all positions are marginable.^[1]

^[1] Variance Trading and/or our clearing department(s) make the determination of the maintenance on an issue. If you have any questions as to whether a stock is marginable the appropriate Variance Trading supervisor should contact the margin department. Remember that IPOs cannot be bought on margin. Securities do not need to be marginable to be sold "short," you must contact the stock loan department to confirm availability.