HOTSPOT FXR, L.L.C.
RISK DISCLOSURE STATEMENT
OVER THE COUNTER FOREIGN CURRENCY

ANNEX A

This Risk Disclosure Statement describes some, but not all, of the risks of trading in the over the counter foreign currency market ("OTC foreign currency") through Hotspot FXr. Trading in the OTC foreign currency market on a cash, spot or forward basis is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.

Trading is Speculative and Involves a High Degree of Risk. Trading and investment in leveraged OTC foreign currency contracts is speculative and involves a high degree of risk. In particular, because of the low margin required by Hotspot FXr for foreign currency trading, price changes in OTC foreign currency contracts may result in significant losses, which losses may substantially exceed the funds or other assets deposited as margin with Hotspot FXr. Therefore, foreign currency contracts are appropriate only for persons that (a) understand and are willing to assume the economic, legal and other risks involved in such transactions, and (b) are financially able to withstand losses significantly in excess of their initial margin funds and any additional funds deposited with Hotspot FXr to maintain their positions.

Currency Risks. Foreign currencies represent the legal tender of one or more foreign nations and normally are not linked to any intrinsically valuable commodity (such as precious metals). Any transaction involving foreign currencies, including OTC foreign currency contracts, involves risks not common to investments denominated entirely in a person's domestic currency. Such enhanced risks include the risks of political or economic policy changes in a foreign nation, which may substantially and permanently alter the conditions, terms, marketability or price of a foreign currency. The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in a customer's own or another jurisdiction) will also be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

Risk Reducing Orders or Strategies. The placing of certain orders (e.g., 'stop-loss' or 'stop-limit' orders) that are intended to limit losses to certain amounts may not always be effective because market conditions or technological limitations may make it impossible to execute such orders. Strategies using combinations of positions, such as 'spread' and 'straddle' positions, may be as risky or even riskier than simple 'long' or 'short' positions.

Hotspot FXr Prices May Be Different From Prices Reported Elsewhere. The prices posted on Hotspot FXr may not necessarily reflect the broader market for foreign currencies. Additionally, Hotspot FXr will select closing prices to be used in determining margin requirements and in periodically marking to market the positions in customer accounts. Although Hotspot FXr expects that these prices will be reasonably related to those available in what is known as the interbank market, prices Hotspot FXr uses may vary from those available to banks and other participants in the interbank market. Consequently, Hotspot FXr may exercise considerable discretion in setting margin requirements and collecting margin funds.

Suspension or Restriction of Trading and Pricing Relationships. Market conditions (e.g. illiquidity, changes in government regulation or trading restrictions with respect to certain markets) may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions. Hotspot FXr will bear no liability for any failure to effect any such transactions should such events arise.

Weekend Risk, Stop-Loss Orders. Various situations, developments or events may arise over a weekend (Friday 16:30 EST - Sunday 18:00 EST), when the currency markets are generally closed for trading, that may cause the currency markets to open at a significantly different price from where they closed on Friday afternoon. Hotspot FXr customers will not be able to use the Hotspot FXr System to place or change orders over the weekend and at other times when the markets are generally closed. There is a substantial risk that stop-loss orders left to protect open positions held over the weekend will be executed at levels significantly worse than their specified price.

Electronic Trading. Hotspot FXr makes available to customers an electronic system that allows customers to enter orders to buy and sell foreign currency contracts ("Hotspot FXr System"). Trading in OTC foreign currency contracts through the Hotspot FXr System may differ from trading on other electronic trading systems as well as from trading in a conventional or open market. Customers that trade on an electronic trading system are exposed to risks associated with the system including the failure of hardware and software and system downtime, with respect to the Hotspot FXr platform, the individual customer's system(s), and the communications infrastructure (including, without limitation, the Internet), connecting the Hotspot FXr platform with Hotspot's customers. As a result of any system failure or other interruption, orders either may not be executed according to the customer's instructions or may not be executed at all, or a customer may not be able to place or change orders. Hotspot FXr shall not be liable for any such failure of hardware or software, system downtime or communications interruption. Further, Hotspot FXr does not warrant that it (or any customer) will be able to maintain a continuous and uninterrupted link with the Internet and shall have no liability for any such failure.

Limited Government Regulation. Hotspot FXr is registered with the US Commodity Futures Trading Commission ("CFTC") as a futures commission merchant. As such, Hotspot FXr is subject to the antifraud provisions of the Commodity Exchange Act. In addition, Hotspot FXr is a member of the National Futures Association ("NFA") and, therefore, is subject to applicable NFA Compliance Rules and minimum financial requirements. However, neither the CFTC nor any other federal or state authority has adopted a comprehensive regulatory scheme governing OTC foreign currency trading with foreign currency dealers such as Hotspot FXr. In addition, there is no limitation on daily price movements and speculative position limits are not applicable to the regulated exchange markets. Therefore, not all of the customer protections generally found in the regulated exchange markets are not present in the OTC foreign currency market.

Deposited Cash and Other Property; Risk of Default. The transactions you are entering into with Hotspot FXr are not traded on an exchange. Therefore, under the U.S. Bankruptcy Code, your funds may not receive the same protections as funds used to margin or guarantee exchange-traded futures and options contracts, which receive a priority in bankruptcy. Since that same priority has not been given to funds used for off-exchange forex trading, if Hotspot FXr becomes insolvent and you have a claim for amounts deposited or profits earned on transactions with Hotspot FXr , your claim may not receive a priority. Without a priority, you are a general creditor and your claim will be paid, along with the claims of other general creditors, from any monies still available after priority claims are paid. Even customer funds that Hotspot FXr keeps separate from its own operating funds may not be safe from the claims of other general and priority creditors.

Hotspot FXr as Principal. Hotspot FXr acts as the counterparty to all foreign currency contracts executed through the Hotspot FXr System. Hotspot FXr is not required to continue to make markets in foreign currency and may refuse to accept any order for any or no reason, including but not limited to the failure of a customer to have sufficient funds on deposit with Hotspot to margin the position, market volatility and illiquidity in the related interbank foreign currency market. In particular, during periods of market volatility, it may be difficult or impossible to liquidate an existing position, to assess the value of open positions, to determine a fair price or to assess the exposure to risk. For these reasons, transactions in foreign currency involve increased risks.