POTOMAC INVESTMENT COMPANY

1 Part 2A of Form ADV: Firm Brochure Potomac Investment Company 1221 Jebber Loop The Villages, FL 32162 240-274-7810 phone carol@potomac-investment.com date of the brochure:4/06/2026 This brochure provides information about the qualifications and business practices of Potomac Investment Company. Additional information about Potomac Investment Company also is available on the SEC’s website at www.adviserinfo.sec.gov. If you have any questions about the contents of this brochure, please contact us at 240-274-7810 and/ or carol@potomac-investment.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. The use of the phrase "registered investment advisor" does not imply a certain level of skill or training.  2 Material Changes There are No material changes 2  3 Table of Contents 1.Cover page ……………………………………………………………………………….p.1 2. Material Changes ………………………………………………………………………….p.2 3. Table of Contents……………………………………………………………………………p.3 4. Advisory Business………………………………………………………………………… ..p.4 5. Fees and Compensation…………………………………………………………………….p.4 6. Performance-Based Fees and Side-by-Side Management ……………………………… p.5 7.Types of Clients…………………………………………………………………… ………. p.5 8. Methods of Analysis, Investment Strategies and Risk of Loss…………………………..p.5 9.Disciplinary Information……………………………………………………………………p.5 10.Other Financial Industry Activities and Affiliations…………………………………….p.5 11.Code of Ethics, Participation or Interest in Client Transactions and Personal Tradingp.5 12.Brokerage Practices………………………………………………………………………..p.6 13.Review of Accounts…………………………………………………………………………p.6 14.Client Referrals and Other Compensation……………………………………………….p.6 15. Custody…………………………………………………………………………………….p.6 16.Investment Discretion……………………………………………………………………..p.7 17.Voting Client Securities…………………………………………………………………...p.7 18.Financial Information……………………………………………………………………. p.7 3  4 4. Advisory Business Potomac Investment Company (PIC) is an investment management firm which only handles accounts over which it has full discretion. PIC has been in business since 1985. The sole owner is Carol Greenwald. Potomac invests in publicly traded equity securities, mutual funds and fixed income securities, including government, corporate and municipal bonds as well as money market funds. PIC provides investment advisory services that are tailored to the needs of its individual clients, and we will observe any investment restrictions they impose on types of investments. PIC does not participate in wrap fee programs. As of 2/10/26 PIC had 43 accounts and $105.4 million under discretionary management. 5. Fees and Compensation Fees are based on the value of assets under management on the last day of the quarter. The following table gives the fee schedule: Equities 1% annually Fixed income 1/4% -½ of 1% annually Mutual funds 1/2 of 1% annually Fees are negotiable and accounts usually must have an opening balance of $250,000. This can be waived at Carol Greenwald's discretion. Fees are deducted from client's accounts on a quarterly basis, at the beginning of the quarter, i.e. they are paid in advance of the services provided on a quarterly basis. If a client wishes to terminate the advisory relationship, the client needs only notify PIC and a refund of the pre-paid fee for the remaining period of that quarter will be promptly refunded. The amount owed to the client will be based on the value of the account on the date that notice was given and will be based on the composition of the account (proportion of equities and fixed income and or mutual funds) and the number of days remaining in the billing period. PIC advisory fees are in addition to any management fees that mutual fund companies charge and custodian fees that may be charged by the brokerage company or other custodians of funds. PIC does not have possession of either funds or securities. These are held at Pershing. Clients will incur brokerage and other transaction costs (see section 8 "Brokerage" in this brochure for a fuller discussion.) PIC is a registered broker-dealer and receives brokerage commissions on the purchase and sale of equities and bonds and on some mutual funds. We almost always recommend only no-load mutual funds. We are aware of the potential conflict of interest in being compensated for trades and having full discretion over trading activities and we address this conflict by keeping in mind the absolute duty we owe to our clients for our best advice. Clients receive confirms directly from the brokerage house and are therefore aware of all trades and are free to move their accounts if they believe that there is a conflict. Most of PIC's income is generated by investment advisory services, not from commissions. PIC does not accept performance-based fees. 4  5 6. Performance-Based Fees and Side-by-Side Management Potomac Investment Company does accept performance-based fees. The following table outlines Potomac’s management fees. Equities 1% annually Fixed income 1/4% -½ of 1% annually Mutual funds 1/2 of 1% annually Fees are calculated based on values on the last day of the quarter. 7. Types of Clients Potomac Investment Company's clients include individuals, usually of high net worth, trusts, estates, charitable organizations as well as retirement accounts. The minimum size for opening an account is $250,000 but this may be waived at the discretion of Carol Greenwald. 8.Methods of Analysis, Investment Strategies and Risk of Loss PIC uses fundamental and cyclical analysis as its primary security analysis methods. PIC tries to manage investment risk by diversification (usually not buying more than 5% of any one security), but all investing involves the risk of loss that clients should be prepared to bear. We are not frequent traders, and we rarely use margin accounts. We never use short sales. We are primarily conservative long-term investors who are trying primarily to preserve capital and to have it grow at rates greater than inflation. 9. Disciplinary Information In 1995, PIC had a registration issue with California and in 2023 a registration issue with Maine. To further check on PIC’s financial professionals, visit Investor.gov/CRS for a free and simple research tool. 10. Other Financial Industry Activities and Affiliations Carol Greenwald is a registered representative at a broker dealer (Potomac Investment Company). Potomac Investment Company is an introducing broker to Herold Lantern & Co. PIC receives 60% of the commissions that HeroldLantern charges for trades. 11. Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Carol Greenwald, the senior investment manager at PIC, often buys or sells for her own personal account the same securities that she buys/sells for client accounts. She believes in her own recommendations. These trades are usually done at the exact same time as they are done for clients. PIC will provide a copy of the company's code of ethics to any client or prospective client upon request. 5  6 12 Brokerage Practices PIC is an introducing broker to Herold Lantern. PIC does not receive soft dollar benefits for execution. PIC directs all its trades through HeroldLantern. PIC is an introducing broker to HeroldLantern and thus does not have to maintain the entire back office and custody needs of a full-service brokerage company, activities in which PIC and Carol Greenwald have no competitive advantage. HeroldLantern also does not require PIC to maintain a given level of trades in order to have this introducing relationship. By directing brokerage, PIC may, however, be unable to achieve the most favorable execution of client transactions, and this practice may cost clients more money. PIC aggregates the purchase or sale of securities for various client accounts. 13. Review of Accounts Carol Greenwald, president of PIC, reviews the accounts at least weekly, and usually daily. Clients are sent quarterly written reports from PIC/Greenwald on the accounts’ performance. Monthly statements are sent by Pershing to the client showing the accounts holdings and activity. 14.Client Referrals and Other Compensation PIC does not receive or give compensation for client referrals. 15. Custody The Maryland Division of Securities takes the position that an advisor who directly deducts fees from clients' accounts is deemed to have custody of client assets. To safeguard client accounts, Potomac takes the follows the following procedures: (1) Potomac has written authorization from the client to deduct advisory fees from the account held with a qualified custodian; (2) each time a fee is directly deducted from a client account, the advisor (A) sends the qualified custodian notice of the amount of the fee to be deducted from the client's account and (B) sends the client an invoice itemizing the fee including the formula used to calculate the fee, the amount of assets under management upon which the fee is based, and the time period covered by the fee; (3) the custodian sends the statements , on at least a quarterly basis, to Potomac's clients showing all disbursements for the custodian account, including the amount of the advisory fees and (4) Potomac notifies the Commissioner of Securities in Maryland in writing on Form ADV that the investment advisor, Potomac Investment Co., intends to use the safeguards provided above. All funds and securities are held at Pershing, a qualified custodian, and Pershing sends monthly account statements directly to PIC's clients. Clients should carefully review those statements. Clients should carefully review those statements to the quarterly statements that they receive from PIC. PIC has an agreement with clients to charge to client accounts one fourth of the annual fee at the beginning of the quarter. PIC files that Agreement with Pershing who is the custodian. PIC has a limited power of attorney agreement to purchase and sell securities in the client's account and an amendment to that authorization to allow PIC to bill the account for payment of management fees. PIC does not withdraw fees from the account. Pershing, the custodian withdraws fees from the account and pays PIC's enumerated bill.PIC sends the client an invoice itemizing the fee including the formula used to calculate the fee, the amount of assets under management upon which the fee is based, and the time period covered by the fee. The custodian, Pershing, sends statements at least quarterly to PIC's clients showing all disbursements for the clients’ accounts, including the amount of the advisory fees. PIC has notified the Commissioner in writing on Form ADV every year since 1985 that the investment advisor intends to use these safeguards. 6  7 Clients are urged to compare the fees on the statements directly sent from the Advisor with those on the brokerage statements sent from the custodian. 16. Investment Discretion PIC always has full discretionary authority over any advisory accounts that it accepts. Before opening accounts, PIC has clients sign a management agreement that states this authority and a power of attorney for PIC to buy and sell in the client's account and to be paid its management fees from the account. The brokerage firm used by Potomac Investment Co., HeroldLantern, is not a discount broker and therefore, the trading commissions are higher than those advertised by on-line discount brokers. 17. Voting Client Securities PIC does not usually vote its clients' securities. 18. Financial Information PIC does not require any prepayments six months in advance. Carol Greenwald is the principal executive officer and management person. Her education and business background are listed below: Pembroke College, BA, phi beta kappa, magna cum laude 1965 Brown University, MA. in economics, 1966 Columbia University, Ph.D in economics, 1971 President, Potomac Investment Co. 1985- present President, Washington Financial Group, 1983-1985 President, National Consumer Cooperative Bank. 1980-1983 Associate Prof., Harvard Business School, 1979-80 Commissioner of Banking, Mass., 1975-1979 Asst. VP, Federal Reserve Bank of Boston,1971-1975 Economist, Federal Reserve System, 1967-1971 7  8 8  9 9  10 10  11 11  12 12  13 13  14 14