Wedbush Securities Inc

Item 5: Fees and Compensation

As previously discussed under Item 4 for Advisory Business, clients whose assets are managed under the
DMT program will pay transaction-based fees, which are different from WS’s standard commission rates.
When WS uses itself as broker to effect a transaction for the account on an exchange of which WS is a
member, WS shall retain all commissions paid by client for effecting such transactions and out of those
commissions WS shall pay to all of its other services provided to the clients. These services include
clearing and settlement of the transaction.

WS offers Financial Planning services for which clients pay a separate fee. The fee charged and
obligations owed to a Financial Planning client is documented in the Financial Planning
Agreement. These fees and obligations may be in addition to those owed for Advisory services. Fees
charged for the Plan are detailed in the Agreement and depend upon the anticipated time allocated to
provide the services requested or the complexity of the plan.

Discretionary Managed Account – Independent Contractor (DMI-IC)
The fee, which is based on the amount of assets under management, covers investment advisory
discretionary services provided by Independent Contractor Financial Consultants and commissions and
markups charged for securities transactions effected through or with WS, provided that the number of
transactions does not exceed certain amount as set forth in the account agreement.

The minimum amount necessary to open the account is $25,000 in assets; however, the Financial
Consultant can request an exception to accept lower minimum account size. The fees charged for
participation in DMI-IC may be higher than if the client were to purchase the individual securities without
participation in DMI-IC. Fees are negotiable and billed in advance on a quarterly basis. The accounts are
subject to a minimum quarterly fee of $62.50 ($250 annually). There is no termination fee, and
terminations result in a pro-rata return of fees billed but not yet incurred.

Financial Consultants on the DMI-IC platform typically assess (1) transactional charges of $14.00 per
trade and (2) an activity assessment fee of $5.95 per trade. These costs are deducted from the account
based upon the frequency stated above. The transactional charge plus the activity assessment charge may
be avoided by engaging a WS Financial Consultant who is not on the Independent Contractor platform.
For those Financial Consultants on the Independent Contractor platform who absorb these charges rather
than assessing these charges to clients, the Financial Consultant will have a potential conflict of interest
in that they have an incentive to place fewer trades in the client’s account in order to avoid these costs and
thereby increase their own compensation.

Further details with respect to the specific fees and additional costs charged by WS are described and
disclosed in the Managed Assets Client Agreement.

Typical Client Fee Schedule is as follows:

                         Account Size                 Annualized Overall Fees (% of assets)

                        Up to $250,000                                  3.00%
                    $250,001 to $500,000                                2.80%
                   $500,001 to $1,000,000                               2.50%
                  $1,000,001 to $3,000,000                              1.90%
                  $3,000,001 to $5,000,000                              1.60%
                    $5,000,001 and above                              Negotiable

Self-Directed Investment Advisory Accounts – Independent Contractor (SDI-IC)

SDI-IC is a non-discretionary program offered by Independent Contractor Financial Consultants in which
the client has the sole authority to purchase and/or sell securities. The SDI-IC program will assess clients
an annual fee, charged in quarterly installments. SDI-IC accounts are designed for investors who regularly
conduct transactions in their portfolio and want their Financial Consultants to provide active
management. These investors prefer to approve all transactions before execution instead of granting
discretion to their Financial Consultant. This type of account is not for clients who are primarily interested
in purchasing money market or mutual funds or in holding inactively traded securities.

The minimum amount necessary to open the SDI-IC account is $25,000 in assets; however, the
independent contractor Financial Consultant can request an exception to accept lower minimum account
size. The fees charged for participation in SDI-IC may be higher than if the client were to purchase the
individual securities without participation in SDI-IC. Clients will pay an annual fee based on the value of
the amount of eligible assets held in the account. Fees are negotiable and billed in advance on a quarterly
basis. There is no termination fee, and terminations result in a pro-rata return of fees billed but not yet
incurred.

SDI-IC Fee

Clients will pay an annual fee based on the value of the amount of eligible assets held in the account.
Should the SDI-IC account value be less than the required minimum opening value on any payment date
as the result of withdrawals by the client, the minimum charge (agreed upon fee percentage x $25,000)
shall apply. Should the SDI-IC account value be less than the required minimum account size on any
payment date solely due to market fluctuations, the SDI-IC fee shall be the SDI-IC account value x the
agreed upon fee percentage. In all instances, the client understands and agrees that WS shall be entitled to
a minimum quarterly fee of $125 ($500 annually) per account.

Financial Consultants on the SDI-IC platform typically assess (1) transactional charges of $14.00 p er trade
and (2) an activity assessment fee of $5.95 per trade. These costs are deducted from the account based
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Item 7: Types of Clients

WS provides advisory services to individuals, high net worth clients, trusts, pension and profit-sharing
plans, foundations/charities, and institutions. The minimum amount necessary to open an advisory
account is typically $100,000 in assets; however, the Financial Consultant can request an exception to
accept a lower minimum account size.

WS provides Research Services when requested by institutional clients, such as pension funds, mutual
funds, insurance companies, hedge funds, private equity funds, trusts and banks, and/or their consultants
and investment advisers. Research clients are not required to open or maintain an account with us in order
to receive Research Services.