Nantahala Capital Partners,


Fund Investment Objectives

The Fund will seek superior and consistent risk-adjusted returns. The Fund focuses on investments in smaller capitalization equity, fixed-income and equity-derivative securities. The Fund will, however, invest in other asset classes of securities as opportunities arise. The Fund intends to achieve its objectives through value-oriented securities selection and disciplined risk management. There can be no assurance that the Fund will achieve this objective or that substantial losses will not be incurred.