Q3 Asset Management Corporation

Item 5           Fees and Compensation

Q3’s Advisory Services

Advisory fees for asset management services are agreed upon at the time of engagement. Fees
are charged quarterly in arrears. For accounts at AXOS Advisor Services and AWM, fees are
based upon the average daily balance of your account. For all other custodians, fees are based
upon the market value of the portfolio, set forth by the client's custodian, as of the last market
day of the relevant calendar month. The last market day is defined as the last day of a billable
month that the stock market is open. The Adviser's quarterly fees are:

                     Standard Fee Schedule                             Destination Fee Schedule
    Portfolio Size           Investment Management Fee    Portfolio Size       Investment Management Fee
   Up to $500,000                 0.5625% Quarterly      Up to $500,000             0.4125% Quarterly
     $500,000+                    0.4625% Quarterly        $500,000+                 0.375% Quarterly

The Destination Fee Schedule will be utilized in situations where a Client employs a 100%
allocation to Q3’s Destination or Voyage strategy. Only one strategy per account is allowed in
order to utilize this fee schedule. Accounts may switch between strategies and fee schedules at
any time in conjunction with strategy changes made to the account. For accounts on custodial
platforms other than AXOS Advisor Services and AWM, where services are initiated at any time
other than the beginning of a calendar quarter, advisory fees will be pro-rated. Any additions of
$25,000 or more deposited to existing accounts will be pro-rated. Partial withdrawals of
$25,000 or more will also be pro-rated for fee purposes. Should a client have more than one
account with Q3, balances will be aggregated when determining fees. Q3 reserves the right to
modify fees outlined in the aforementioned fee schedule, depending upon the nature of the
engagement, complexity of services, time to be incurred, for pre-existing relationships, or other
special situations and at our discretion. Investment Management Fees do not include custodial
fees, service fees and/or transaction fees that may be levied by various custodians, broker-
dealers, mutual funds and insurance companies. Clients may pay more or less than other
client’s receiving similar services. Alternatively, performance-based fee arrangements are
available, and they are discussed in Item 6 of this Brochure.

In the rare case where there is an absence of a portfolio value, Q3 and the client will utilize at
least one independent third party to assess the value of the holdings. Q3 reserves the right to

modify the asset management fee for existing clients with 30 days’ notice. This may occur
when your circumstances or service needs have changed significantly. In such cases, a new or
amended Client Agreement will be provided to the client to sign. Clients are welcome to
terminate services at any time by written notice to Q3.

Payment of investment management fees may be paid directly by you or payment of fees may
be made through a debit directly to your account by the qualified custodian holding your funds
and securities. Direct-bill payments will be due as of the date posted on the invoice. If you have
more than one account, where possible, you may choose to have all fees deducted from a
particular account. For fee deductions, Q3 adheres to the following criteria in accordance with
the United States Securities and Exchange Commission’s Investment Advisers Act of 1940, as
amended (the “Advisers Act”), when payment is made via a qualified custodian: (1) The client
provides written authorization permitting the fees to be paid directly from the client’s account
held by the independent and qualified custodian and the authorization is limited to withdrawing
contractually agreed upon investment advisory fees; (2) The client will directly receive regular
(monthly or quarterly) reports directly from the qualified custodian which reflect the Adviser’s
fee deduction; (3) The frequency of advisory fee withdrawals shall be specified in the written
authorization / agreement; (4) The custodian of the account shall be advised in writing of the
limitation on the Adviser’s access to the account; (5) The client shall be able to terminate the
written billing authorization or agreement at any time.

When clients are invested in Q3’s All-Season affiliated Funds, a portion of the fees associated
with the funds is paid to Q3. Note that such fees are separate from advisory fees charged for
personal investment advisory services. Direct clients of Q3 that are invested in the Funds will
receive a fee credit to the extent that the Funds are utilized, or, the advisory fee will be
reduced by the amount of the expected affiliated fund management fee. Fee credits will be
applied no less frequently than quarterly. Investors should consider the cost to invest in the
Funds versus separately managed accounts. It is possible, based upon the dollar value to be
invested, that the Funds may be less or more expensive than the similar strategies offered in a
separately managed account. Other considerations include the fact that the SMA may offer
more control in harvesting gains and losses for tax purposes.

In situations where accounts are managed via a SDBA where Q3’s affiliated Funds are utilized,
Q3 may pay, out of our own assets, compensation to a Solicitor / Promoter, Registered
Investment Advisor, or other financial intermediary involved. This compensation arrangement
will typically amount to 50% of the fees earned. Details will be outlined in the Investment
Management Agreement signed by the client. Referral compensation paid by Q3 is discussed at
Item 14 of this Brochure.

Since custodians do not verify the accuracy of the advisory fee calculation, you should review
each custodial statement and promptly contact Q3 if any questions should arise. Clients must
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Item 7   Types of Clients and Minimum Conditions

Q3 Asset Management’s client services are primarily provided to individuals; pension and
profit-sharing plans; trusts, estates and charitable organizations; corporations or other business
entities; and occasionally to associations or groups.

Q3 Asset Management imposes a minimum portfolio size of $75,000. Q3 reserves the right to
waive the minimum based upon individual circumstances, pre-existing relationships, where
the minimum can be met within a specified time period, or at Q3’s officers’ sole discretion.
Investment advisory services are not appropriate for all persons and/or entities. Therefore, Q3
reserves the right to decline to provide services to any person or firm.

If an account is subject to the Employee Retirement Income Security Act of 1974, as amended,
(“ERISA”), the Adviser acknowledges that Adviser is a fiduciary within the meaning of the Act
and the ERISA Client is a named fiduciary with respect to the control or management of the
assets in the Account. In each instance, the client will agree to obtain and maintain a bond
satisfying the requirements of Section 412 of ERISA and to include the Adviser and the Adviser’s
principals, agents, and employees under those insured under that bond and will deliver to the
Adviser a copy of the governing plan documents. If the Account assets for which the Adviser
provides services represent only a portion of the assets of an employee benefit plan, client will
remain responsible for determining an appropriate overall diversification policy for the assets
of such plan.

If Q3 provides individual advisory services to a client whose portfolio of assets includes assets
held within a retirement plan, the client must understand that the Adviser’s advice and
recommendations are limited to the offerings in the plan and the plan’s service provider(s).

Item 8   Method of Analysis, Investment Strategies and Risk of Loss

Investing in securities involves risk of loss that you should be prepared to bear. Additionally,
because many of Q3 Asset Management’s strategies have a low correlation to the broader
market, it’s possible that a client’s account may depreciate in value over periods of time when
the market appreciates in value. Q3 attempts to measure an investor’s risk tolerance, time
horizon, goals and objectives through a data-gathering process in an effort to determine an
investment plan or portfolio to best fit the investor’s profile. The client’s participation and
delivery of accurate and complete information are critical to this process. These investment
strategies may not be appropriate for every type of investor.

Q3 provides advisory services for portfolios ranging from conservative to aggressive, designed
to help meet the varying needs of investors. The Adviser (in conjunction with the Solicitor /
Promoter when applicable) selects the strategy combination suited to their individual needs

after clients have defined their objectives, risk tolerance and time horizon. Portfolio holdings
are generally derived through methods associated with quantitative analysis. Q3 places more
emphasis on “technical” screens rather than “fundamental” screens. Note that conservative
investors at Q3 may have exposure to investments strategies that utilize inverse or leveraged
investment products, which can be used to hedge the equity exposure (risk) of an overall
portfolio, and strategically increase exposure during certain periods of time.

Generally speaking, technical analysis does not attempt to measure a security's intrinsic value,
but instead uses charts and other tools to identify patterns that can suggest future activity. The
field of technical analysis is based on three assumptions:

1.   The market is a discounting mechanism.
2.   Price moves in patterns.
3.   History often repeats itself.

In general terms, technical analysis deals with reading stock charts and this process is broadly
described as a method of evaluating securities by analyzing statistics generated by market
activity, such as past price and volume. Technical analysts do not attempt to measure a
security's intrinsic value but instead use charts and other tools to identify patterns that can
suggest future activity. It is a discipline for forecasting the direction of prices through the study
of past market data. Technical analysts lean towards the belief that the historical performance
of stocks and markets are likely indications of future performance.

Technical analysis can be difficult, as analysts need to learn various indicators and patterns and
understand how they relate to investor sentiment and behavior. Analysts also have to devise
methods of how these issues may impact stock price. Like other analysis methods, technical
analysis is not 100% percent accurate or reliable. Relative success depends on the analyst, the
analysis tools and the stock or market itself. The interpretation of technical indicators is
subjective. The same indicator could be interpreted as bullish by one side of the camp and as
bearish by the other side of the technical camp. The subjective aspect of technical analysis gives
way to another drawback of technical analysis which is the validation of a biased view. The
analyst may have already formed a view based on the state the economy is currently or the
situation of the market and sector the company is operating in.

Investors should not expect to remain fully invested at all times, as most of the Adviser’s
models maintain the ability to move into “cash equivalent”, “money market” or “defensive”
positions.

Additionally, some of the Adviser’s programs maintain the ability to invest in “inverse” or
“leveraged” products which may carry a higher level of risk. Many of Q3’s strategies may utilize
short-term trading strategies in an effort to capitalize upon shorter term market moves and as a
result it’s possible that a high number of transactions may occur over a relatively short period of
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