EDI Financial’s Continuity Plan Statement

We have developed a business continuity plan that covers the broker-dealer operations of EDI Financial, Inc. (“EDIF”). It is designed to ensure that EDIF is prepared to continue providing service to our clients in the event that we experience a significant disruption of any kind to our business operations. The plan addresses business disruptions of varying severity and scope at our headquarters. It provides for testing at least annually and in response to any material changes affecting our business, and takes into consideration our critical third-party relationships. Although it is impossible to anticipate every scenario, we believe that our plan will enable us to resume doing business upon the occurrence of those events that are most likely to affect our headquarters and our data centers.

As part of our plan, we have a geographically diverse back-up facility complete with space for key employees as well as telephones, computers, and other necessary hardware. This facility is located on a separate power grid from our headquarters and is serviced by a different power provider. It has local and long distance telephone service providers that are distinct from those that service EDIF’s headquarters.

What follows is a description of how EDIF will respond to the following four types of disruptions: (1) a firm-only disruption, (2) a disruption that affects a single building, (3) a disruption that affects the entire city or business district, and (4) a disruption that affects the entire Southwest region. We have also included information about how long we expect it to take us to recover from these disruptions.

Firm-Only Disruptions

To respond to a disruption that affects only EDIF, such as a computer virus, we have developed an emergency response/crisis management. This team has, in the past, successfully guided us through disruptions that have affected our operations and has done so through the use of a crisis communications system and through procedures that address life, health, and safety issues; damage assessment; damage mitigation; personnel mobilization; and mission-critical systems. If this type of disruption takes place, we intend to restore all critical services within one day after the disruption occurs. However, in light of the various types of disruptions of this nature that could take place, it may take longer for us to resume operations in one or more of the services during any particular disruption.

Disruptions that Affect a Single Building

In the event of a disruption that affects EDIF headquarters and such as a fire in the building, our plan calls for a response involving multiple locations. We will resume critical services by moving key personnel to various locations and, to the extent necessary to our back-up facility. Certain key personnel may also work remotely by connecting to the network from a remote location. In addition to relocating key personnel to back-up faculties, we will, if necessary, transfer responsibility for certain operations and support services to our offsite offices. We intend to resume operations in all of our critical service areas within one day after a disruption of this nature occurs. It may, however, take as long as two or three days to continue doing business in one or more critical service areas depending on the availability of data a applications from our data centers.

Disruptions Affecting the Entire City or Business District

If a disruption significant enough to affect the entire city of business district, such as a terrorist attack, cuts off access to EDIF headquarters, under our plan we will resume critical services at our back-up facilities and certain EDIF offsite offices. As above, certain key employees will work remotely and certain operations and support services would be handled by other EDIF offices. We intend to resume operations in all of our critical service areas within one day after a disruption on the availability of data and applications from our data center and on the availability of key employees.

Disruptions Affecting the Entire Southwest Region

In the event of a disruption that affects the entire Southwest region such as a regional power outage, we will resume critical service areas from back-up facilities and certain of EDIF offsite locations. Although EDIF intends to resume operations within one day after the disruptions occurs, one or more of our critical service areas may not be able to resume operations until the disruptions is over.

In all of the situations described above, EDIF expects to resume operations within the specified time frames. However, in the event that a business disruption results in a significant loss of life at our headquarters or otherwise results in our key employees being unavailable or unable to report to their designated back-up facility, the recovery times described above may be significantly increased. Furthermore, although we expect to continue operating regardless of the type of disruption, it is impossible to anticipate every scenario. It is, therefore, possible that a significant business disruption could result in EDIF deciding that we are unable to continue doing business. In those situations, our plan provides procedures to help ensure that our customers have prompt access to their funds and securities. If you cannot reach us as you usually do at (214) 528-4090, you should contact our clearing firm, First Southwest Company, at (214) 953-4000 or their web site at www.firstsw.com for instructions on how it may provide prompt access to funds and securities, enter orders and process other trade-related, cash and security transactions for you.

We are continuing to devote substantial resources to the enhancement of our business continuity plan. In addition, we may enter into agreements with other firms to perform certain clearing and services functions on our behalf in the event of a disruption, until we have the capability to resume performing those tasks. Finally, we are working towards a target point of readiness in which we will be able to resume operations within a time period that is consistent with evolving industry standards even if our key employees are unavailable.

EDIF’s business continuity plan is subject to modification. We will promptly post information about updates or modifications to the plan on our website. You can also obtain updated information about the plan by requesting a written copy by mail. All requests for updated information should be sent to the following address:

EDI Financial, Inc.
Attn: Michael Young
12221 Merit Drive
Suite 1020
Dallas, TX 75251