Pegasus Group LLC

Item 5           Fees and Compensation

   A. The client can determine to engage the Registrant to provide discretionary investment
      advisory services on a fee-only basis.

         INVESTMENT ADVISORY SERVICES
         Clients can engage the Registrant, through Pegasus Asset Management 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 (between 0.50% and 1.25%) as
         follows:

                 Market Value of Portfolio              % of Assets
                 First $1,000,000                           1.25%
                 Next $1,000,000                            1.00%
                 Next $1,000,000                            0.75%
                 Over $3,000,000                            0.50%

         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
         professional(s) rendering the service(s); prior relationships with the Registrant and/or its
         representatives, and negotiations with the client. 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.

         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.

    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 to buy securities and/or 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.

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-
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Item 7           Types of Clients

         The Registrant’s clients currently include: individuals, high net worth individuals, trusts,
         estates, and business entities. 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 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.