Raffles Capital Management LLC

ITEM 5: FEES AND COMPENSATION

        The offering documents for the Fund set forth the specific fees and other material terms
regarding an investment in the Fund. All Investors must pay a management fee to Raffles. The
management fee for the Fund is charged quarterly, in advance, at the rate of 0.25% of the net assets
attributable to each of the Investors. Investors pay the management fee on the first day of each
calendar quarter. RCA, the general partner of the Fund, also receives an annual performance-based
allocation from each Investor in the amount of 20% of profits that exceed a quantitatively-
determined threshold rate. This performance-based allocation is more fully described in Item 6:
Performance-Based Fees and Side-by-Side Management. The management fee and the
performance-based allocation are fixed, but Raffles or RCA, as applicable, has the sole discretion
to waive or reduce either of these with respect to any Investor.

       Under the terms of its advisory agreement with the Fund, Raffles deducts the management
fee mentioned above directly from the Fund. No portion of the management fee is refundable if an
Investor withdraws during a calendar quarter. Investors are not charged any redemption fees.

        Through the Fund, each Investor indirectly pays for its share of all costs and expenses directly
related to investment transactions, including insurance costs, accounting fees relating to the Fund’s
outside accountants, legal fees and expenses, including, but not limited to, fees and expenses
incurred in connection with negotiating and entering into contracts and defending the Fund in any
action or legal proceeding, legal fees related to investment and all direct trading expenses, expenses
incurred in connection with the offering, marketing and sale of limited partnership interests,
regulatory expenses (including filing fees), expenses relating to brokerage commissions,
consultant and professional fees and costs, employee compensation and benefits, clearing and
settlement charges, interest on loans and debit balances, margin interest, broker service fees and
other custodial expenses. Raffles pays for its own direct operating expenses including rent, costs
of administrative personnel, database subscriptions, research costs, and travel and entertainment
costs, without reimbursement from the Fund.

        Neither Raffles nor its principal or any executive officer or employee accepts commissions
or other compensation for the sale of interests in the Fund or in connection with the purchase or
sale of any securities for the Fund.

ITEM 7: TYPES OF CLIENTS

       Raffles provides investment advisory services to the Fund and not individually to the
Investors in the Fund. The Fund requires newly admitted Investors to be “qualified clients” under
the Advisers Act. Additionally, the Fund has a minimum investment requirement of $250,000 for
Investors, although this minimum may be waived or reduced as provided in the Fund’s offering
documents.

ITEM 8: METHOD OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

       All Investors receive a Private Placement Memorandum (a “PPM”) and other offering
documents before being given the opportunity to invest in the Fund. The PPM discusses in detail
the investment objectives, investment strategy and risk factors relating to an investment in the
Fund. The following is a summary of the information that appears in more detail in the PPM, which
should be reviewed by all potential Investors.

Introduction

         Raffles’ investment objective is to achieve superior long-term capital appreciation while
minimizing the risk of permanent capital loss. This objective is pursued by purchasing securities at
significant discounts to Raffles’ estimate of their true economic value. This approach to investing is
commonly referred to as “value investing.” Raffles believes that a diligent and disciplined application
of this investment approach will produce favorable returns to long-term Investors. Regardless of the
investment strategy, potential Investors should be aware that investing in securities involves risk of
loss that Investors must be prepared to bear.

INVESTMENT STRATEGY

        The Fund seeks to attain its investment objective by utilizing a value-based strategy which it
applies in an opportunistic manner. Value investing is the discipline of buying securities that, in the
opinion of Raffles, are selling at an appreciable discount from their underlying value and holding
them until some or all of their value is realized. By purchasing securities at significant discounts from

their conservatively appraised underlying value, Raffles hopes to provide a “margin of safety” that
mitigates the possibility of permanent capital loss. This margin is achieved by purchasing securities
when they sell at a discount to their intrinsic or economic values. Any specific security may not turn
out to be a good investment, due to changes in the company’s or industry’s prospects or an error in
the initial evaluation, but a portfolio of securities purchased with a margin of safety may guard against
capital loss and ultimately provide for capital appreciation.

        Raffles also searches for attractive opportunities to sell “short” securities that it believes are
significantly overvalued, meaning that, in the opinion of Raffles, they are selling at an appreciable
premium to their fundamental value. The Fund does not seek to create an equal dollar weight of long
and short positions (i.e. market neutral) and historically has had a “net long” bias, meaning that the
majority of its portfolio has consisted of “long” positions.

         When searching for undervalued or overvalued opportunities, Raffles embraces a broad and
eclectic approach and researches a wide range of geographical regions, industries and asset classes.
As such, the Fund’s investments are not restricted to any particular category or area and vary over
time. Raffles seeks to identify opportunistic catalysts which, when activated, will hasten the
realization of underlying value. Raffles relies primarily on its own fundamental research.

         Although not a focus of its investment strategy, Raffles at times does use modest levels of
leverage afforded by margin borrowings. Leverage involves the use of borrowed funds to increase
the amount of invested capital in its long or short securities positions. The use of leverage magnifies
the investment results achieved, whether positive or negative, as compared to what would be achieved
if no leverage were employed.

        Raffles also believes that the Fund is better served by concentrating on a smaller number of
securities which Raffles knows a great deal about rather than focusing on a broader universe of less
familiar securities. The Fund’s portfolio is not highly diversified and substantial positions may be
taken in the securities of one or a few select companies. However, Raffles currently anticipates that
no investment (at cost) will have a value of more than 15% of the Fund’s total equity.

Identification of Investment Opportunities

         The Fund seeks to invest in unrecognized, misunderstood and/or out of fashion securities.
Raffles believes that, while markets are efficient in many ways and the number of highly intelligent
investment analysts is large, several factors serve to create investment opportunity for the Fund: the
market’s obsession with short-term investment results; increasing indexation; the burdens of size;
institutional constraints on investments; and the immutable role of fear and greed in the human
psyche, which causes illogical investment behavior or herd mentality. To glean information useful in
identifying investment opportunity, the managers of Raffles scour numerous newspapers, periodicals,
trade publications, annual reports, SEC filings, insider trading data and information available through
the Internet and on-line services. Raffles has also built up a substantial network of contacts among
brokers, money managers, analysts and company executives that are useful sources of information
and investment ideas and, on occasion, retains consultants with specialized knowledge.

Types of Investments

        The Fund’s capital is invested primarily in publicly-traded equity securities as well as debt
and so-called hybrid securities (such as convertible securities), and in options, rights and warrants.
Nevertheless, in the interest of both preserving capital and taking advantage of profit opportunities,
...