Business Continuity Plan

DILLON GAGE SECURITIES, INC.

BUSINESS CONTINUITY PLAN
DISCLOSURE STATEMENT

Dillon Gage Securities, Inc. (DGSI) has developed a Business Continuity Plan (BCP) to detail how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information about our BCP.

If after a significant business disruption you cannot contact us as you usually do, at 972-386-2901, you should call our emergency contact number, 214-564-5100, or go to our web site at www.dillongage.com to see if additional information has been posted there. If you cannot access us through either of those means, you should contact our clearing firm, Southwest Securities, Inc., at 214-859-1800 or 866-SWS-5BCP (or www.swst.com) for instructions on how they may provide prompt access to funds and securities, enter orders and process other trade-related, cash, and security transfer transactions for you on our behalf.

We plan to quickly recover and resume business operations after a significant business disruption and respond by: safeguarding our employees and property; making a financial and operational assessment of our resources and capabilities; protecting the firm’s books and records; and allowing our customers to transact business. In short, our BCP is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.

Our BCP deals with: data back up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; impact to critical suppliers, contractors, banks and counter-parties; regulatory reporting; and assuring our customers’ prompt access to their funds and securities if we are unable to continue our business.

Because DGSI does not execute or clear transactions or hold customer funds or securities, our ability and response time to fully resume operations relies heavily on the capabilities of our clearing firm and its BCP. Our clearing firm, Southwest Securities, Inc., backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day, the severity of the disruption, and the status of critical infrastructure, we have been advised by our clearing firm that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments within four (4) hours. Your orders and requests for funds and securities could be delayed during this period.

Significant business disruptions can vary in their scope, in terms of both geography and systems affected. Within each possible scope, the severity of the disruption can also vary from minimal to severe. The following scenarios are presented to disclose our planned approach for dealing with significant business disruptions of varying scopes and severity.

In case of a disruption (e.g., a fire or utility outage) affecting only our firm, a building housing our firm, or our business district:

We intend to continue business and will transfer our operations to an alternate local site as needed. We expect to recover and resume business within 4 hours. If telephone service is available, our registered persons will take your orders or instructions by telephone and relay them to our clearing firm on your behalf via the fastest means available to us.

In case of a disruption (e.g., a natural disaster) severely affecting our city or region:

We intend to continue business. Our response in such a situation will rely heavily on external organizations and systems, and especially on the capabilities of our clearing firm and the availability of critical infrastructure. It may also require us to transfer our operations to a site outside of the affected area, including transporting key personnel, procuring temporary business facilities and equipment, and reestablishing necessary communication links with our clearing firm. We estimate this could take as long as 10 business days. Assuming our clearing firm is also affected by the same disruption and executes their BCP, our objective is to be ready to conduct mission critical functions when they are. If our clearing firm is able to recover and resume business before we are able to do so, we may direct customers to deal directly with Southwest Securities, Inc., at 214-859-1800 or www.swst.com, for order taking and entry as well as to access accounts, funds, and securities.

In case of a nationwide disruption (e.g., a terrorist attack like 9/11) to one or more securities exchanges or related trading or banking services:

We intend to continue business and will await the reopening of the affected institutions. Unless a securities industry holiday is declared, we plan to be open each business day until full functionality is restored. The recovery time in this scenario will be dependent on the timing specified by the affected organizations and systems. We plan to be ready to reopen when they reopen.

In all cases of significant business disruption, our planned recovery times for business resumption, and those of our clearing firm, may be negatively impacted by the unavailability of external resources and other circumstances beyond our control. We will notify you through our web site (www.dillongage.com) or our emergency number (214-564-5100) how to contact us or, if appropriate, our clearing firm. If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customers’ prompt access to their funds and securities.

If you have questions about our business continuity planning, please contact Jon Christiansen at Dillon Gage Securities, Inc., 15301 Dallas Parkway Suite 200, Addison, Texas 75001, or via email at jchristiansen@dillongage.com. The latest revision of this document will always be posted on our web site. You may also request a hard copy of the latest revision at any time by writing to the address above.

Last revised: April 13, 2006